In a recent decision, the National Company Law Appellate Tribunal (NCLAT) has reaffirmed the strict timelines inherent to insolvency proceedings under the Insolvency and Bankruptcy Code (IBC). The tribunal ruled against a creditor who submitted a late claim, underscoring the importance of adhering to deadlines within the IBC framework.

The case, Pooja Mehra v. Nilesh Sharma & Ors., involved a homebuyer who had invested ₹50 lakh in a Noida housing project. When the developer, Dream Procon Pvt Ltd, defaulted, insolvency proceedings were initiated. Mehra, the homebuyer, submitted her claim significantly late – 552 days after the Committee of Creditors (CoC) had already approved a resolution plan.

NCLAT: No Indulgence for Those Who ‘Sleep on Their Rights’

In its ruling, the NCLAT bench, comprising Chairperson Ashok Bhushan and technical member Arun Baroka, emphasised, “The appellant was sleeping over his rights. A person who sleeps over his rights ought not to be given any indulgence.”

The tribunal further stated that IBC proceedings are designed to be time-bound, and allowing belated claims would undermine the process. They noted that while creditors have some leeway to file claims after the initial deadline, there are limits to these extensions.

Implications for Creditors and Resolution Plans

The NCLAT’s decision highlights the significance of timely action for creditors involved in IBC proceedings. Failure to submit claims within designated timeframes can result in their exclusion from the resolution process. The ruling also underscores the need to protect the integrity of approved resolution plans.