Late Claims, a Decree, and a Related-Party Claimant
Verdant Agro Ltd entered CIRP on 1 March 2025. The RP published a claim notice with a last date of 15 March 2025. Bank A filed a claim of ₹12 crore on 10 March. Bank B filed a claim of ₹8 crore on 25 March, stating that the notice went to its old address; its claim is based on a 2020 decree that has not been executed. Supplier C filed an operational claim of ₹1 crore on 12 March. D, a sister company of Verdant, filed a claim of ₹5 crore on 14 March based on an inter-corporate deposit. D’s director is also a director of Verdant. The RP has admitted Bank A, Supplier C and D, and is unsure about Bank B. The CoC is to be constituted. Bank A wants to know its voting share and whether D can vote on the resolution plan.
1. Can the RP admit Bank B’s claim filed on 25 March 2025? Consider the 90-day window and limitation.
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Yes, the RP can admit it if satisfied with the cause shown. Regulation 12(2) of the CIRP Regulations permits the RP to accept a late claim up to 90 days from the insolvency commencement date if sufficient cause exists. Here, 1 March 2025 + 90 days = 30 May 2025, so 25 March 2025 is well within the window. The wrong-address explanation may be sufficient cause if the notice was indeed defective.
On limitation, the claim is based on a 2020 decree. Execution of a decree is governed by Article 136 of the Limitation Act, which gives 12 years, so a 2020 decree is not time-barred in 2025. The RP should verify the decree, the amount, and whether it remains enforceable, but neither the late filing nor limitation is an automatic bar. If the RP rejects the claim, it should record reasons; a court/AA may require the CoC to be reconstituted if the claim is later admitted.
2. Can D be a member of the CoC and vote? How does D’s claim affect Bank A’s voting share?
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D is a related party of the corporate debtor: it is a sister company and shares a common director, which falls within the s.5(24) related-party definition. Under the proviso to s.21(2), a related party of the corporate debtor cannot be a member of the CoC. Its claim may still be admitted as a financial debt, but it has no voting rights.
Voting share is therefore computed among the financial creditors who are members. Assuming Bank B is admitted, the voting pool is Bank A ₹12 crore + Bank B ₹8 crore = ₹20 crore. Bank A’s share is 12/20 = 60%, and Bank B’s is 40%. D’s ₹5 crore is excluded from the denominator. Supplier C is an operational creditor and is not a CoC member; employee dues are not financial debts. If Bank B is not admitted, Bank A would hold 100% - which shows why the Bank B admission decision matters commercially.
3. Bank B is admitted after the first CoC meeting has already approved a plan with 75% of Bank A’s vote. Is the approval valid?
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It is vulnerable and should not be treated as final. The CoC must be constituted with the correct financial creditors. Once Bank B’s claim is admitted, it is entitled to voting rights, and the voting share changes from Bank A alone to 60:40. A plan approved before that reconstitution did not reflect the statutory CoC. The RP should reconstitute the CoC, circulate the plan and the revised voting share, and put the plan to a fresh vote. If D was allowed to vote, that is a further defect because a related party cannot be a CoC member. The safe course is to re-vote; otherwise the approval may be challenged and the resolution plan may be rejected.