Supreme Court Allows Late Claim in Insolvency Proceedings Citing COVID-19 Extensions
The case of GPR Power Solutions Pvt. Ltd. v. Supriyo Chaudhuri & Ors. addresses the issue of claim submissions in insolvency proceedings and the impact of COVID-19-related extensions on limitation periods. The Supreme Court set aside the National Company Law Appellate Tribunal’s (NCLAT) decision, allowing GPR Power Solutions’ claim in the Corporate Insolvency Resolution Process (CIRP) of Rohit Ferro Tech Ltd. under the Insolvency and Bankruptcy Code (IBC).
The judgment reiterates the binding nature of the Supreme Court’s COVID-19-related extension orders and emphasizes the need for procedural fairness in insolvency cases.
Background of the Case
GPR Power Solutions Pvt. Ltd. was a creditor of Rohit Ferro Tech Ltd., a corporate debtor undergoing CIRP. The appellant, GPR Power Solutions, had a claim of Rs.1,13,38,651 against the corporate debtor, but its claim submission was delayed due to a lack of awareness about the ongoing insolvency proceedings.
The Resolution Professional rejected the claim, citing that it was filed beyond the prescribed time. The National Company Law Tribunal (NCLT) dismissed the appellant’s plea to condone the delay, and NCLAT upheld this decision. GPR Power Solutions then approached the Supreme Court.
Arguments by the Petitioner
GPR Power Solutions Pvt. Ltd., represented by its CEO S. Damodaran, argued:
- The claim delay was caused by a lack of awareness due to the COVID-19 lockdowns.
- The Supreme Court had issued a suo motu order extending limitation periods due to the pandemic.
- The rejection of the claim was arbitrary and against the principles of natural justice.
Arguments by the Respondent
The Resolution Professional, represented by Supriyo Chaudhuri, contended:
- The CIRP process had strict timelines that could not be extended indefinitely.
- The appellant was negligent in monitoring its claims and missed multiple deadlines.
- The rejection of the claim was in line with the IBC framework, which prioritizes timely resolution.
Supreme Court’s Judgment
The Supreme Court, comprising Justices Indira Banerjee and J.K. Maheshwari, ruled in favor of the appellant, stating:
“Since the appellant was required to file its claim within 3 months from 11.02.2020 and the appellant actually filed the claim well before 14.01.2021, the claim ought not to have been rejected. The order dated 22.03.2020 of this Court was subsisting and in force.”
The Court cited its earlier suo motu order in Suo Motu Writ Petition (Civil) No. 3 of 2020, which had extended all limitation periods due to the pandemic:
“We declare that this order is a binding order within the meaning of Article 141 on all courts/tribunals and authorities.”
The Supreme Court found that the NCLT and NCLAT had erred by not considering this order. It ruled:
- The rejection of GPR Power Solutions’ claim was unjustified given the COVID-19 extensions.
- The claim was filed within the extended limitation period and should have been considered.
- The orders of the NCLAT and NCLT were set aside, and the appellant’s claim was allowed.
Conclusion
This ruling affirms the importance of procedural fairness in insolvency proceedings and ensures that claimants are not unfairly penalized for delays caused by exceptional circumstances. It establishes that COVID-19-related extensions must be applied consistently across judicial and quasi-judicial bodies.
Petitioner Name: GPR Power Solutions Pvt. Ltd..Respondent Name: Supriyo Chaudhuri & Ors..Judgment By: Justice Indira Banerjee, Justice J.K. Maheshwari.Place Of Incident: Kolkata, West Bengal.Judgment Date: 29-11-2021.
Don’t miss out on the full details! Download the complete judgment in PDF format below and gain valuable insights instantly!
Download Judgment: gpr-power-solutions-vs-supriyo-chaudhuri-&-supreme-court-of-india-judgment-dated-29-11-2021.pdf
Directly Download Judgment: Directly download this Judgment
See all petitions in Bankruptcy and Insolvency
See all petitions in Corporate Compliance
See all petitions in Judgment by Indira Banerjee
See all petitions in Judgment by J.K. Maheshwari
See all petitions in allowed
See all petitions in supreme court of India judgments November 2021
See all petitions in 2021 judgments
See all posts in Corporate and Commercial Cases Category
See all allowed petitions in Corporate and Commercial Cases Category
See all Dismissed petitions in Corporate and Commercial Cases Category
See all partially allowed petitions in Corporate and Commercial Cases Category
