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November 4, 2023

Bankruptcy court can allow a delayed claim from revenue department in Liquidation proceedings

Bankruptcy court can allow a delayed claim from revenue department in Liquidation proceedings

The bankruptcy court in Mumbai has allowed the revenue department’s application to direct the liquidator of EPC Constructions India (formerly Essar Projects) to include its claim of over Rs. 103 crore even after delay of 92 days.

EPC has an admitted liability of over Rs. 11,000 crore towards its creditors and the National Company Law Tribunal (NCLT) admitted the company for liquidation on May 7, 2021, after lenders failed to receive any viable revival plan.

“The liquidation proceedings are still underway and the admission of a claim, which is statutory due, will not derail/protract the liquidation proceedings in respect of the debtor (EPC Construction),” said the division bench of judicial member Kuldip Kumar Kareer and technical member Anil Raj Chellan.

Last year, the state tax department moved the Mumbai bench of NCLT, seeking to allow a delay of 92 days in filing the claim with the company’s liquidator and sought to direct the liquidator to include the claim.

“From the facts, it appears that the tax department filed its claim during CIRP within the specified time and the delay in filing the claim occurred during liquidation,” said Jyoti A Singh, founder of law firm AJA Legal. “The liquidator was duty bound to consolidate the claims as per Section 38 of IBC read with regulation 12(2)(c ) of Liquidation Regulations taking into account the claims collated by him during CIRP.”

Originally, in January 2018, the company was admitted under the corporate insolvency resolution process (CIRP) and it was admitted for liquidation in 2021. The tax department submitted its claim, stating that the last date of submission of the Claim had lapsed.

“This order certainly becomes precedent along with few other such judgements already pronounced by different benches of NCLT”, said NPS Chawla, co-founder of law firm Aekom Legal.

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