NCLAT upheld the liquidator’s rejection of claims for interest and damages assessed after the liquidation commencement date, ruling that such post-liquidation assessments are inadmissible.
The National Company Law Appellate Tribunal (NCLAT), New Delhi Bench led by Justice Ashok Bhushan (Chairperson) and Technical Members Mr. Barun Mitra and Mr. Arun Baroka reviewed an appeal and observed that claims for interest and damages assessed after the liquidation commencement date are inadmissible under the IBC and Liquidation Regulations, emphasizing that all claims must be filed as on the liquidation commencement date, and any subsequent assessments or claims cannot be entertained.
The National Company Law Appellate Tribunal (NCLAT) heard the appeal filed by the Assistant Provident Fund Commissioner, challenging the order of the National Company Law Tribunal (NCLT) dated 23.07.2024, which dismissed the application for setting aside the liquidator’s communications rejecting the claim for additional payment of ₹16,58,159. The liquidator had refused to accept the claim through communications dated 22.08.2022 and 11.11.2022. The appellant sought a direction from the NCLT to allow the additional payment, arguing that the damages and interest pertained to periods prior to the liquidation commencement date of 09.10.2019.
The NCLT rejected the application, noting that the order assessing interest and damages under Sections 7A and 7Q of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952, was passed on 10.03.2021 and 21.04.2021, respectively—well after the liquidation had commenced. The tribunal concluded that the claim could not be entertained as it was based on assessments made post-liquidation. The appellant argued that the NCLT failed to consider that the interest liability at 12% pertained to the period from April 2016 to February 2018, predating the liquidation commencement, and thus it should have been allowed up to the liquidation date at least.
In response, the liquidator's counsel submitted that the appellant’s initial claim, which was filed before the liquidation, did not include the interest and damages now being claimed. The interest and damages were only assessed in 2021, and the liquidator rightly declined these additional claims since they arose after the liquidation commencement. The respondent relied
on the NCLAT judgment in Regional Provident Fund Commissioner v. Manish Kumar Bhagat and Another, REEDLAW 2023 NCLAT Del 10529, which held that claims for damages under Section 14B post-CIRP could not be admitted. The respondent also referred to DBS Bank India Ltd. v. Kuldeep Verma in Company Appeal (AT) (Insolvency) No. 1048 of 2024, emphasizing that claims filed or assessed after the liquidation commencement date cannot be entertained under the statutory framework of the IBC and Liquidation Regulations, 2016.
The NCLAT upheld the NCLT’s decision, stating that the statutory scheme mandates that all claims must be filed as on the liquidation commencement date. Any claims assessed or filed thereafter, including interest or damages, are inadmissible. The tribunal found no error in the liquidator’s rejection of the claim and the NCLT’s dismissal of the application. Consequently, the appeal was dismissed, with each party bearing its own costs.
Mr. Hitesh Sachar, Ms. Anju Jain and Dev Inder Singh, Advocates represented the Appellant.
Mr. Ravi Raghunath, Advocate appeared for Respondent.
Subscribers can access the Case, including Case Analysis, Ratio Decidendi, Headnotes, Briefs, Case Research, Cited Case Laws, Case Law Cross-references, and the latest updates on Statutes, Notifications, Circulars, Guidelines Press Release and more.
Click on the Citation/Link to access these resources
Comments