Department Of State Tax Submits Belated Claim To Liquidator Due To Personal Medical Difficulty Of Officer-In-Charge, NCLT Mumbai Condones Delay Of 92 Days
The National Company Law Tribunal (NCLT), Mumbai Bench, comprising of Shri Kuldip Kumar Kareer (Judicial Member) and Shri Anil Raj Chellan (Technical Member), has allowed the belated claim filed by Department of State Tax before the Liquidator, while holding the failure of Officer-in-Charge to file claim within time due to personal medical difficulty to be a 'sufficient cause' for condonation...
The National Company Law Tribunal (NCLT), Mumbai Bench, comprising of Shri Kuldip Kumar Kareer (Judicial Member) and Shri Anil Raj Chellan (Technical Member), has allowed the belated claim filed by Department of State Tax before the Liquidator, while holding the failure of Officer-in-Charge to file claim within time due to personal medical difficulty to be a 'sufficient cause' for condonation of delay.
BACKGROUND FACTS
EPC Constructions India Limited (“Corporate Debtor”) was admitted into Corporate Insolvency Resolution Process (“CIRP”) by the NCLT. The Department of State Tax (“Tax Department/Appellant”) submitted its claim within stipulated time in the CIRP.
Subsequently, the NCLT ordered Liquidation of the Corporate Debtor on 07.05.2021.
On 19.05.2021, the Liquidator made public announcement for submission of claims against the Corporate Debtor. The Liquidator addressed an email to the Tax Department on 25.05.2021, requesting to submit claims on or before 17.06.2021.
On 18.09.2021, the Tax Department submitted its claim after 92 days of delay in Form-B for Rs.103 Crores along with proof. The Liquidator rejected the claim on the premise that the last date of submission of the claim had lapsed on 17.06.2021.
The Tax Department filed an application under Section 42 of IBC before the NCLT, seeking condonation of delay of 92 days in lodging its claim with the Liquidator and condonation of delay of 203 days in filing the said application. It was submitted that the Officer-in-Charge of the State Tax Department was undergoing certain personal medical difficulty, due to which the claim could not be submitted within time.
Further, the Tax Department in February 2023 requested the Liquidator to provide the financials and annual reports for F.Y. 2017-18 onwards. The Liquidator provided the annual report for the F.Y. 2017-18 and stated that due to non-cooperation of the Corporate Debtor, financial statement for period after 2018-19 has not been finalized.
The Tax Department contended that the financials of the Corporate Debtor for F.Y. 2007-08 and 2008-09 show non-payment of taxes on account of disputes. The financials for the subsequent periods were finalized by the Liquidator and the tax dues might have been recorded in the books of Corporate Debtor, as orders for those dues were passed by Tax Department after 31.03.2018. Thus, when the financials for the period 2018-19 are finalized, they should contain the dues raised by the Tax Department and evidently, that the Liquidator is aware of such statutory dues.
NCLT VERDICT
The Bench observed that the Liquidator was aware of the Tax Department's claim, as evident from the financial statements of Corporate Debtor and the claim filed in CIRP proceedings.
It was opined that the inability to file claim in time due to personal medical difficulty of Officer concerned was a sufficient cause for condonation of delay in filing of claim. The Bench took the view that the delay of 203 days in filing of application under Section 42 of IBC is also condonable by the NCLT.
“It can also be seen from the submissions that the sole reason for not admitting the claim of the Appellant is the delay in filing the claim with the Liquidator. It is true that the Appellant seeking condonation of delay is required to show sufficient cause for the delay as held in the Authorities cited by the Respondent. The reason/grounds stated by the Appellant for condonation of delay are, in our opinion, sufficient cause for condonation of delay. The delay in submission of this Application against the rejection of claim by the Liquidator is also condonable by the Adjudicating Authority.”
It was observed that the liquidation proceedings are still underway, and the admission of claim which is a statutory dues will not derail the liquidation proceedings. Accordingly, the Bench has directed the Liquidator to consider the claim of Tax Department.
Case Title: IDBI Bank Limited v M/s Essar Projects (India) Limited
Case No.: CP (IB) No. 1832/MB/C-II/2017
Counsel for Applicant: Adv. Amar Mishra
Counsel for Respondent: Adv. Shriraj Khambete