The National Company Law Appellate Tribunal (NCLAT), Chennai Bench, has dismissed an appeal filed by the Tamil Nadu State Tax Department, reaffirming that statutory claims raised after the conclusion of liquidation proceedings cannot be entertained. The Appellate Tribunal stressed that the Insolvency and Bankruptcy Code, 2016 is built on strict timelines and does not permit reopening of concluded liquidation processes to accommodate delayed claims.
The Bench comprising Justice Sharad Kumar Sharma (Judicial Member) and Jatindranath Swain (Technical Member) held that once liquidation proceedings reach finality and assets are distributed in accordance with law, there is no scope for revival of the process. The appeal was found to be devoid of merit and was dismissed outright.
The case arose from the liquidation of Sri NagaNanthana Mills Ltd, which was ordered by the National Company Law Tribunal (NCLT), Chennai Bench, on June 21, 2018. Following the liquidation order, the liquidator issued a public announcement on June 27, 2018, inviting claims from all stakeholders, with July 26, 2018 as the last date for submission.
Despite this, the Tamil Nadu State Tax Department filed its claim after a delay of 351 days. The liquidator rejected the claim on several grounds, including non-compliance with prescribed timelines, failure to follow the procedure under the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016, and the bar of limitation under Regulation 16(1).
The Appellate Tribunal noted that the rejection of the claim was duly communicated to the department. However, the department did not challenge the decision within the statutory period under Section 42 of the IBC, which allows an appeal to the Adjudicating Authority within 14 days. Instead, it approached the NCLT much later by filing applications seeking condonation of delay and setting aside of the rejection. These applications were dismissed by the NCLT, leading to the present appeal before the NCLAT.
Upholding the NCLT’s decision, the NCLAT observed that the appellant failed to adhere to statutory timelines at every stage. It further held that even after giving the benefit of limitation exclusions during the Covid-19 period as directed by the Supreme Court, the applications filed in 2023 were clearly time-barred.
The Tribunal also took note that by the time the tax department approached the forum, the liquidation process had substantially progressed and the assets of the corporate debtor had already been distributed under the waterfall mechanism prescribed in Section 53 of the IBC.
Emphasising certainty and finality in insolvency proceedings, the NCLAT held that once the stage under Section 53 is crossed, no interference is permissible. Reopening liquidation proceedings at such an advanced stage would undermine the very objective of the insolvency framework, which is to ensure time-bound and conclusive resolution. The Tribunal categorically ruled that liquidation proceedings, once concluded, cannot be reopened to entertain belated claims, even when raised by statutory authorities. Finding no infirmity in the NCLT’s order, the appeal was dismissed and no relief was granted to the Tamil Nadu State Tax Department.
