Insolvency Code Timelines - Belated Building Tax claim Rejected
NCLT Upholds Liquidator's Decision to Deny Tax Claim Filed 944 Days Late, Emphasizes Strict Adherence to IBC Timelines
Kochi, September 18, 2025: In a significant ruling, the Kochi Bench of the National Company Law Tribunal (NCLT) dismissed the appeal filed by the Tahsildar of Kanayannur Taluk, challenging the rejection of its belated tax claim by the liquidator of Koyenco Autos, a company undergoing liquidation proceedings. The statutory authority had sought the inclusion of a building tax liability in the liquidation process, which was filed 944 days after the stipulated deadline.
The case revolved around the insolvency proceedings of Koyenco Autos, which had been placed under liquidation on November 4, 2022, following unsuccessful attempts at corporate resolution under the Insolvency and Bankruptcy Code (IBC), 2016. The Tahsildar submitted its claim for building tax dues amounting to over Rs. 70 lakh on April 8, 2025, long after the liquidation estate was fully realized and distributed among stakeholders as per Section 53 of the IBC.
The Tribunal, comprising Member (Judicial) Shri Vinay Goel and Member (Technical) Smt. Madhu Sinha, upheld the liquidator’s decision to reject the claim, emphasizing that the liquidation process mandates strict adherence to timelines. The Tribunal noted that the liquidation estate had already been closed, with all proceeds distributed as per statutory requirements.
During the proceedings, it was revealed that the building tax assessment orders were under judicial scrutiny by the Kerala High Court, with no final decision yet attained. The Tribunal observed that reopening the liquidation process for liabilities still under challenge would be contrary to the objectives of the IBC, which aims at speedy and effective resolution of insolvency proceedings.
The liquidator, represented by Advocate AC Venugopal, had argued that the claim was inadmissible due to the delay and lack of submission during the Corporate Insolvency Resolution Process (CIRP) period. The liquidation process had been conducted in accordance with the IBBI (Liquidation Process) Regulations, 2016, and the liquidation account had been closed, with dissolution proceedings underway.
The Tribunal highlighted the importance of adhering to prescribed timelines in insolvency proceedings to ensure fairness and efficiency. It cited previous judgments, including those from the Supreme Court, reinforcing the principle that claims must be submitted within the statutory period to be entertained.
This judgment underscores the importance for creditors and statutory authorities to remain vigilant and proactive in filing claims within the designated timelines during insolvency proceedings. The decision is a reminder of the rigid framework within which the IBC operates, prioritizing the swift resolution of financial distress and protection of stakeholder interests.
As the liquidation process of Koyenco Autos nears completion, this ruling fortifies the stance that belated claims cannot disrupt the distribution of the liquidation estate, ensuring that the process remains uncompromised and efficient.
Tahsildar, Kanayannur Taluk v. Vibin Vincent, (NCLT)(Kochi Bench) : Law Finder Doc Id # 2780765
