NCLT Kochi Condones 470-Day Delay in Federal Bank’s Claim, Cites Suppression by Bankrupt

April 10, 2026 : The National Company Law Tribunal (NCLT), Kochi Bench, has condoned a delay of 470 days in filing a claim by Federal Bank Limited in bankruptcy proceedings against personal guarantor Reena Paul, holding that the delay was sufficiently explained due to suppression of material facts by the bankrupt.

The order was passed by Judicial Member Shri Vinay Goel in an application filed by Federal Bank seeking condonation of delay and a direction to the Bankruptcy Trustee to admit and process its claim under the Insolvency and Bankruptcy Code, 2016.

The Tribunal noted that bankruptcy proceedings against Reena Paul were initiated on 18 April 2024, and a public announcement inviting claims was duly made. However, the bank submitted that it had no knowledge of the proceedings and became aware only upon receiving an email from the Bankruptcy Trustee on 13 June 2025. It subsequently filed its claim on 1 July 2025, which was rejected as time-barred.

On facts, the Tribunal found that the bankrupt had failed to disclose critical information, including the existence of a residential property in Anna Nagar, Chennai, and its mortgage in favour of Federal Bank. The record showed persistent non-cooperation, despite multiple directions from the Tribunal, with disclosure of the mortgaged property emerging only belatedly during proceedings concerning non-cooperation.

In this backdrop, the Tribunal held that the Bankruptcy Trustee could not have identified the bank as a creditor at the initial stage, and therefore no individual notice could be issued. The delay in filing the claim was thus attributable to the bankrupt’s suppression rather than any negligence on the part of the creditor.

Relying on Rule 12(3) of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Bankruptcy Process for Personal Guarantors) Rules, 2019, read with Section 176 of the Code, the Tribunal observed that a creditor may submit proof of claim until the stage of final dividend. Since the bankruptcy estate had not yet been realised and no dividend distribution had commenced, the window for filing claims remained open.

The Tribunal also referred to Section 177 of the Code, emphasizing that creditors who prove their claims after declaration of dividends cannot disturb past distributions but are entitled to participate in future ones. This, the Tribunal noted, reflects a legislative intent not to exclude genuine claims on technical grounds, particularly where no prejudice is caused to other stakeholders.

Taking note that the Bankruptcy Trustee had no objection to condonation and that a prima facie secured debt existed, the Tribunal held that denying participation to the bank would result in manifest injustice.

Accordingly, the delay of 470 days was condoned, and the Bankruptcy Trustee was directed to admit and process Federal Bank’s claim in accordance with law.

Case Details:
Federal Bank Limited v. C. Prabhakaran, Bankruptcy Trustee (in the matter of Reena Paul)
IA(IBC)/356/KOB/2025 in CP(IBC)/48/KOB/2023