In the matter of M/s. Palm Lagoon Backwater Resorts Private Limited (under liquidation)
Company Appeal (IBC)/01/KOB/2024 to Company Appeal (IBC)/10/KOB/2024 in TIBA/09/KOB/2019
Facts:
1. Corporate Debtor was admitted into CIRP vide an order dated 20.09.2019. The Corporate Debtor entered into liquidation and the Respondent herein was appointed as the liquidator. Pursuant to the liquidation order, the Respondent issued a public announcement inviting claims. A Letter dated 28.01.2022 was issued to the employees herein regarding the same.
2. Appellants had submitted their claim in Form-E as prescribed under Regulation 19 of the Insolvency and Bankruptcy (Liquidation Process) Regulations, 2016, but these claims were rejected by the Respondent citing a delay of 40 days.
3. Appellant is filing the appeal against the above decision of Respondent rejecting the claim.
Issue: Whether the appeal can be allowed ?
Arguments:
Appellant:
1. Counsel submitted that Hon’ble High Court, while disposing of Annexure A8 Writ Petition, directed the Appellants vide Annexure A3 order to approach this Hon’ble Tribunal under Section 42 seeking for condonation of delay in submitting the claim within 2 weeks of receipt of the copy of the order.
2. Counsel submitted that there was no mention of the due date in the Annexure A6 letter sent by the Respondent, within which the claim has to be submitted because of which there was no guidance to the Appellants regarding the timelines prescribed under the Code. It was submitted that Appellants are poor illiterate employees and can only understand Malayalam. The only Malayalam newspaper in which the liquidator has advertised the public announcement inviting the claim was the Mangalam newspaper, but it is not a widely circulated newspaper in Kerala. Hence, the Appellants had no means to know the due date.
Respondent:
1. Counsel submitted that the Appellants herein have not produced any proof that they continued to be employed from December 2014 to February 2016. The wage slip specifically produced by the Appellant in Company Appeal (IBC)/01/KOB/2024 does not prove his employment till 2016.
2. Counsel submitted that the claims were rejected prima facie due to a delayed receipt without verifying the facts. However, this rejection was not challenged by the employees by filing an appeal before the NCLT as required under Section 42 of the Code. Also, no evidence was submitted by the employees to show that they were in fact employed by the CD, for them to be eligible to receive the arrears in accordance with the Annexure A5 order
Decision: NCLT allowed the appeal.
Rationale:
1. It held that the stake of the employees/workmen who depend upon these meagre amounts to sustain their living will be prejudiced if this minor delay is not condoned.
2. It held that there is no wilful delay or latches on the part of the appellants herein who are the employees/workmen of the CD, in filing the claim before the respondent/liquidator. This Bench therefore takes a lenient view and hereby condones the delay of 40 days in submitting the claims in the ‘interest of justice’ as no prejudice will be caused to the liquidation process of the CD.
Order:
