Resolution Plan Finality: NCLAT Dismisses Late Claims

On March 07, 2025, the National Company Law Appellate Tribunal (NCLAT), Principal Bench, New Delhi, issued its judgment in Company Appeal (AT) (Insolvency) No. 128 of 2025. The Tribunal dismissed the appeals filed by homebuyers who attempted to have their claims, submitted belatedly, accepted after the Resolution Plan was approved. The core of the decision rests on the principle that once the Resolution Plan is approved by both the Committee of Creditors (CoC) and the Adjudicating Authority, the plan becomes final and binding on all stakeholders. Belated claims filed long after the prescribed deadlines—despite the appellants’ arguments regarding insufficient personalized notification—are deemed extinguished.

 Case Synopsis 

The appellants in this matter are homebuyers who had invested in the “Earth Iconic” project. They received allotment letters and made substantial installment payments against the project’s sale consideration. However, due to the financial distress of Earth Infrastructure Ltd. (EIL) and subsequent Corporate Insolvency Resolution Process (CIRP) proceedings initiated against EIL and later against Celestial Estate Pvt. Ltd. (CEPL), the situation became complicated.

Key facts include:

1. Initial Allotment and Payments: The appellants received their allotment letters and paid installments as per the sale consideration.
2. Commencement of CIRP: CIRP was initiated against EIL on June 06, 2018, and against CEPL on March 11, 2019.
3. Claim Filing Deadline: The Resolution Professional (RP) invited claims on March 27, 2019, with the last date for filing being April 10, 2019.
4. Approval of Resolution Plan: The resolution plan was submitted on November 04, 2019, approved by the CoC on November 16, 2019, and later sanctioned by the Adjudicating Authority on March 15, 2021.
5. Belated Claim Submission: The appellants eventually filed their claim on December 10, 2023—well beyond the established deadlines.

Critical Timelines and Procedural Issues

A concise timeline highlights the procedural flow and the significant delay in the appellants’ actions:

Event	Date	Observation
Claim Filing Deadline (per RP)	April 10, 2019	Last date set for submission of claims
Submission of Resolution Plan	November 04, 2019	Plan filed with the RP
Approval by Committee of Creditors (CoC)	November 16, 2019	Plan approved by creditors
Approval by Adjudicating Authority	March 15, 2021	Resolution Plan becomes final
Belated Claim Filing by Appellants	December 10, 2023	Delay exceeds four years from the original deadline

The enormous delay—over 1700 days from the filing deadline—was a pivotal factor in the Tribunal’s decision. The appellants’ argument that their names were recorded in the Corporate Debtor’s CRM and that they should have been individually notified was rejected, as the RP’s public notifications met the statutory requirements under the Insolvency and Bankruptcy Code (IBC) and IBBI Regulations.

Legal Basis and Judicial Precedents

The NCLAT’s decision is firmly anchored in established legal principles:

Frozen Claims Doctrine:

Once a Resolution Plan is approved, all claims not incorporated within the plan are considered void. The Tribunal underscored that reopening the plan for belated claims would fundamentally undermine the time-bound nature of the CIRP.

Precedential Support:

The judgment draws on key precedents such as:

• Ghanshyam Mishra and Sons Pvt. Ltd. vs. Edelweiss Asset Reconstruction Co. Ltd. (2021) 9 SCC 657, which affirms that claims outside an approved plan become extinguished.
• M/s RP Infrastructure Ltd. vs. Mukul Kumar & Anr., reinforcing that new claims cannot be entertained once the plan is approved by the CoC and the Adjudicating Authority.

Doctrine of Res Judicata:

The Tribunal invoked the principle that a final determination on claims prevents subsequent litigation on the same matter, thereby barring any re-agitation of claims that have been conclusively rejected.

Implications for Stakeholders

The ruling carries significant consequences for various parties involved in CIRP:

For Homebuyers and Other Creditors:

• Timely Action is Imperative: Stakeholders must monitor insolvency proceedings diligently and file claims within the stipulated deadlines to safeguard their interests.
• No Reopening Post-Approval: Once the Resolution Plan is approved, any claim submitted belatedly is irrevocably extinguished, ensuring that the plan remains free from surprise liabilities.

For Resolution Professionals and the SRA:

• Finality of the Plan: The decision confirms that resolution professionals are not obligated to reconsider claims that are filed after the resolution plan has been finalized.
• Protection Against Uncertainty: By preventing the reopening of the plan, the ruling shields the SRA from potential uncertainties and continuous litigation, thereby stabilizing the resolution process.

For the Corporate Debtor:

• Operational Certainty: The approved Resolution Plan provides a “fresh slate” for the Corporate Debtor, enabling a clear path forward for its revival without the burden of unforeseen claims.

Takeaways and Future Directions

This judgment reaffirms the sanctity of the CIRP process under the IBC:

1. Strict Adherence to Deadlines: The decision underscores the necessity for creditors to adhere strictly to the prescribed timelines.
2. Prevention of Process Disruption: Allowing belated claims would disrupt the resolution process and potentially lower the liquidation value of the Corporate Debtor’s assets.
3. Judicial Consistency: The ruling is consistent with prior decisions and sets a clear precedent that once a Resolution Plan is approved, it is final and binding on all stakeholders.

Concluding Remarks

The NCLAT’s March 07, 2025 order is a critical affirmation that an approved Resolution Plan cannot be reopened to accommodate belated claims. The judgment not only protects the integrity and time-bound structure of the CIRP but also serves as a stern reminder to creditors about the importance of exercising due diligence in safeguarding their rights. By relying solely on the public notice mechanism and established legal precedents, the Tribunal has ensured that the resolution process remains final, thereby promoting certainty and stability in insolvency proceedings.