Read Time: 04 minutes

Synopsis

The National Company Law Tribunal (NCLT) has granted approval for a delayed claim of Rs. 2 lakhs made by the Securities and Exchange Board of India (SEBI) against a corporate debtor. The NCLT also noted that this belated claim will not affect the distribution of funds as per the priority set out in Section 53 of the Insolvency and Bankruptcy Code, 2016.

“Natural corollary to this is, if determination of the statutory dues is allowed during liquidation period then filing of the claim arising out of such determination cannot be barred under IBC otherwise it would amount to empty formality. The only restriction the belated claimant has to face is that it cannot disturb the amount already distributed as per waterfall mechanism under Section 53 of the IBC,” the court said.

The NCLT Mumbai bench, consisting of Justice Lakshmi Gurung and Technical Member Charanjeet Singh Gulati, heard an appeal challenging the liquidator's rejection of SEBI's belated claim of 288 days.

The liquidation proceedings began against the corporate debtor on October 18, 2021. However, SEBI's Adjudicating Officer issued an order on February 17, 2022, imposing a penalty of Rs. 2 lakhs on the corporate debtor.

The liquidator rejected the claim of SEBI on the grounds that the claim must exist as of the date of commencement of liquidation of the Corporate Debtor i.e., 18 October 2021.

The securities market regulator filed an appeal against the order of the liquidator. The NCLT allowed the appeal and said that,

“It is settled law that any creditor who files belated claim has to suffer the consequences that it is entitled to receive the amount only from the left over assets of CD and has no right to disturb the distribution already made,” the order reads.

Advocate Gayatri Mohite appeared for SEBI. 

Advocate G Aniruth appeared for the liquidator. 

Case title: SEBI vs Vishal Gisulal Jain