NCLT Mumbai: CIRP Dues Not Automatically IRP Costs; Maintenance & Property Tax During Liquidation (Even Under ED Attachment) Qualify as Liquidation Costs

April 2, 2026 : The National Company Law Tribunal (NCLT), Mumbai Bench-I, has clarified that maintenance and property tax dues arising during the Corporate Insolvency Resolution Process (CIRP) cannot be automatically classified as insolvency resolution process (IRP) costs merely because they accrued during that period. Such costs must be directly related to the CIRP and require approval of the Committee of Creditors (CoC).

The Bench comprising Sushil Mahadeorao Kochey (Judicial Member) and Sanjiv Dutt (Technical Member) delivered the ruling in an application filed by Kohinoor City Office Towers Industrial Estate & Premises Co-operative Society Limited against the Liquidator of Firestar Diamond International Pvt. Ltd.

The Tribunal noted that under Section 5(13) of the Insolvency and Bankruptcy Code, 2016 read with Regulation 31 of the CIRP Regulations, a cost qualifies as CIRP cost only if it is directly related to the insolvency process and approved by the CoC. In the present case, the CoC had not approved the maintenance dues, and the applicant had not raised such claims during the CIRP period. The Tribunal held that “mere fact that the dues have arisen during the CIRP period would not be determinative” of their classification as CIRP costs.

On the issue of liquidation costs, the Tribunal took a different view. Referring to Regulation 2(1)(ea) of the Liquidation Regulations, it held that maintenance charges and property tax dues arising during liquidation qualify as liquidation costs since they are necessary for preserving and protecting the assets of the corporate debtor. The Bench emphasized that non-payment of such dues could render assets unusable and reduce their realizable value, thereby prejudicing stakeholders.

Importantly, the Tribunal addressed the impact of attachment by the Enforcement Directorate (ED) under the Prevention of Money Laundering Act (PMLA). It held that attachment merely freezes the property and does not transfer ownership to the government. Since the properties in question were not confiscated, they continued to vest in the corporate debtor and formed part of the liquidation estate. Consequently, the Liquidator remained obligated to preserve these assets, including by paying maintenance and statutory dues.

The Tribunal further clarified that property tax dues accruing prior to the liquidation commencement date cannot be treated as CIRP costs in the absence of CoC approval. However, dues arising after the liquidation commencement date stand on the same footing as maintenance charges and qualify as liquidation costs.

Accordingly, the NCLT partly allowed the application and directed the Liquidator to discharge outstanding maintenance charges and property tax dues accrued from the liquidation commencement date (26 February 2020) till the period of ED attachment, treating them as liquidation costs. The plea to treat CIRP-period dues as IRP costs was rejected.

Case Title: Kohinoor City Office Towers Industrial Estate & Premises Co-op. Society Ltd. v. Santanu T. Ray & Anr.
Case No.: IA No. 4520/2025 in CP (IB) No. 2096/2019