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M/S RPS Infrastructure Ltd. vs. Mukul Kumar

Civil Appeal · 2023 INSC 816Decided 11 Sept 2023
Civil Appeal No. 5590 of 2021
Sanjay Kishan Kaul · Sudhanshu Dhulia

Background

RPS Infrastructure had won an arbitration award against a corporate debtor (KST Infrastructure) for a real-estate development dispute, but the debtor's challenge to that award was still pending when the debtor entered insolvency proceedings. The Resolution Professional invited claims through public newspaper notices, but RPS filed its claim 287 days after the deadline, only after the resolution plan had already been approved by the Committee of Creditors, and the claim was rejected as time-barred. RPS argued it was unaware of the insolvency proceedings and that its claim, being contingent on a pending arbitration appeal, should still have been factored in.

Decision Breakdown

The Supreme Court held that public announcement of the CIRP through newspapers, as required under the IBC and its regulations, creates "deemed knowledge" for all creditors, including commercial entities like RPS: its claim of ignorance was not an acceptable excuse. The Resolution Professional had made genuine efforts to obtain the debtor's records (even filing a formal application for them) and could not be faulted for failing to include an undisclosed liability. Relying on its earlier ruling in Essar Steel, the Court held that allowing late claims after a resolution plan is approved would create endless uncertainty for resolution applicants, and dismissed the appeal.

Lesson Learnt

Creditors and claimants must stay vigilant and act promptly once insolvency proceedings against a debtor are publicly announced. Courts will not entertain very late claims after a resolution plan has already been approved, even if the claimant later blames lack of actual notice.

Official source (sci.gov.in)View Judgment (PDF)

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