The Insolvency and Bankruptcy Code, 2016, is a self-contained, exhaustive code; where a specific statutory remedy (e.g., Section 42 appeal) is provided, writ jurisdiction under Article 226 cannot be invoked to bypass the NCLT-NCLAT-Supreme Court hierarchy without exceptional grounds.

JUDGMENT

1.Heard.

2.Since the filing of the writ petition, the 4 petitioner, Chellasamy, passed away on 27.12.2023, as evidenced by the death certificate produced before this Court. The said certificate also records that he is survived by his wife, T. Stella. In the tripartite agreement dated 28.05.2024, signed by all five petitioners, the deceased Chellasamy was represented by his wife, T. Stella, who signed the agreement as his legal heir. In view of the above, this Court, by order dated 17.04.2025, suo motu impleaded T. Stella as Petitioner No. 4(b) in the writ petition, dispensing with the necessity for filing a formal application for substitution.

3.The petitioners have filed the present writ petition challenging the communication issued by the second respondent in response to their letter dated 22.12.2020, wherein it was informed that the National Company Law Tribunal, Chennai, had ordered the liquidation of M/s. Associated Cylinders & Accessories Private Limited by order dated 16.07.2018. It was further stated that, in terms of Section 53 of the Insolvency and Bankruptcy Code, 2016, the distribution of assets was to be effected upon commencement of the liquidation process. The company had treated the petitioners as falling within the definition of “workers” under Section 53(1)(b)(i) and, with the consent of the secured creditor, had disbursed the first tranche of payment to all employees. They were st rd also informed that the 1 and 3 petitioners had resigned from the company in the year 2014. It was further clarified that both the first and second tranches of distribution had been made strictly in accordance with the provisions of the IBC, 2016, and as such, the request for further distribution from the liquidation account could not be acceded to. Aggrieved by the said communication, the petitioners seek a direction to the respondents to settle their dues in accordance with the orders passed by the National Company Law Tribunal.

4.When the writ petition was taken up for hearing on 06.09.2021, notice was ordered to the respondents. The first respondent, which is under liquidation, entered appearance through the second respondent—the Official Liquidator—who filed a counter affidavit dated 13.04.2025. In the said counter, it was submitted that, under Section 40 of the Insolvency and Bankruptcy Code, 2016, the Liquidator is empowered, upon verification of claims under Section 39, to either admit or reject such claims. In the event of rejection, the aggrieved creditor is entitled, under Section 42 of the Code, to prefer an appeal before the Adjudicating Authority within a period of 14 days. Alternatively, the petitioners also have a remedy under Section 60(5) of the Code to approach the National Company Law Tribunal if they are aggrieved by the non-admissibility of their claims. It was therefore contended that the invocation of writ jurisdiction under Article 226 of the Constitution is not tenable in the absence of any extraordinary or exceptional circumstances.

5.The Liquidator further stated that petitioners 1 to 3, along with other employees, had earlier filed a petition under Section 9 of the IBC, 2016 on 25.08.2017, seeking initiation of corporate insolvency resolution process (CIRP) against the first respondent company, treating themselves as operational creditors. The said petition was admitted by the NCLT, Chennai, on 10.01.2018. Initi