NCLAT held that post-CIRP claims, which were not included in the approved Resolution Plan, cannot be entertained within the insolvency process, and the appellant is required to seek appropriate remedies under applicable law outside the insolvency framework.
The National Company Law Appellate Tribunal (NCLAT), Principal Bench headed by Justice Ashok Bhushan (Chairperson) and Technical Members Mr. Barun Mitra and Mr. Arun Baroka reviewed an appeal and held that claims or demands arising after the approval of a Resolution Plan in a Corporate Insolvency Resolution Process (CIRP) cannot be enforced against the corporate debtor within the Resolution Plan framework, and such claims must be pursued through appropriate remedies outside the CIRP as permissible by law.
The National Company Law Appellate Tribunal (NCLAT) addressed two matters in this case. The first was an application (I.A. No. 7419/2024) seeking condonation of a 15-day delay in filing the appeal. The appellant justified the delay by explaining the procedural steps involved, including obtaining the panel advocate’s opinion, subsequent recommendations by the Regional Office, and assignment to the current advocate by the Zonal Office. The Tribunal, finding sufficient cause in the application, condoned the delay.
In the second matter (Comp. App. (AT) (Ins.) No. 1987/2024), the appeal challenged an order dated August 6, 2024, passed by the National Company Law Tribunal (NCLT), Mumbai Bench. The respondent had sought relief declaring a demand of ₹7,29,906 raised by the appellant under Sections 14B and 7Q of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952, as unlawful. The Corporate Insolvency Resolution Process (CIRP) for the corporate debtor had concluded with the approval of the Resolution Plan on January 31, 2020, whereas the demand in question arose from an order issued on June 9, 2023.
The appellant cited a precedent from Employees Provident Fund Organization v. Mr. Subodh Kumar Agarwal & Ors. to argue for liberty to pursue remedies outside the Resolution Plan framework. However, the Tribunal rejected the appellant’s reliance on this judgment, noting that the observations therein did not grant any liberty for post-CIRP claims to be pursued within the Resolution Plan. The NCLAT affirmed that demands crystallized after the CIRP could not be considered as part of the Resolution Process and upheld the NCLT's decision to declare the demand unlawful.
Concluding that the appellant’s arguments lacked merit, the NCLAT dismissed the appeal, reiterating that it was for the appellant to explore legal remedies outside the purview of the CIRP as per applicable law.
Mr. Gaurav Varma and Ms. Aditi Sharma, Advocates represented the Appellant.
Mr. Milan Singh Negi, Nikhil Kumar and Ms. Akriti Gupta, Advocates appeared for the Respondents.
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