The strict timelines under the Insolvency and Bankruptcy Code must be adhered to, and delays beyond prescribed periods cannot be condoned without sufficient cause.

ORDER

The present two applications, IA No. 1601/2023 and IA No. 1602/2023, have been filed by the Assistant Commissioner of Central Goods and Service Tax, Division-Samba (hereinafter referred to as ‘the Applicant’) are interrelated and taken up together for the sake of convenience.

2. IA No. 1601/2023 is filed under Section 5 of the Limitation Act, 1963, read with Rule 11 of the National Company Law Tribunal Rules, 2016, seeking condonation of a delay of 120 days in filing the accompanying appeal under Section 42 of the Insolvency & Bankruptcy Code, 2016 (hereinafter referred to as 'the Code'). This appeal challenges the rejection of the Applicant’s claim by the Liquidator vide letter dated 07.02.2023.

3. IA No. 1602/2023 is filed under Section 42 of the Code, read with Rule 11 of the National Company Law Tribunal Rules, 2016. This application seeks to set aside the Liquidator’s rejection of the Applicant’s claim dated 07.02.2023 and a direction to the Liquidator to consider the claim filed by the Applicant Department on 02.02.2023.

4. Brief Facts & Applicant’s Contentions (Common to both IAs):

4.1. The Applicant submits that the delay of 120 days in filing the appeal (IA No. 1601/2023) was neither intentional nor deliberate but occurred due to administrative reasons inherent in a Government Department, necessitating adherence to proper channels and procedures.

4.2. The Applicant contends that the Liquidator of M/s Emsons Organics Limited (Respondent/Corporate Debtor) failed to inform the Department about the ongoing Corporate Insolvency Resolution Process (CIRP) of the Corporate Debtor. It was only in response to a personal hearing notice sent by the Applicant-Department that the Liquidator intimated, vide letter dated 20.12.2022, that the Corporate Debtor was undergoing liquidation proceedings.

4.3. Following this intimation, the Applicant Department, vide letter dated 02.02.2023, requested the Liquidator to adjust pending demands against the Corporate Debtor. The said claim was subsequently rejected by the Liquidator vide letter dated 07.02.2023.

4.4. The Applicant states that upon examining the rejection on 09.02.2023, a decision was made to seek legal advice for challenging the rejection letter. The process of taking legal advice, engaging counsel, drafting, filing, and pursuing the matter consumed time, leading to the appeal (IA No. 1602/2023) being filed on 07.07.2023, which is 120 days beyond the statutory period of 14 days prescribed under Section 42 of the Code.

4.5. The Applicant highlights that M/s Universal Agro Links, a partnership concern, previously had outstanding Central Excise Duty demands against it, including an Order-in-Original dated 24.06.2016 for INR 1009.35 lakhs (Duty & Penalty) and a Show Cause Notice dated 23.06.2010 for INR 380.57 lakhs (Duty). This concern was later taken over by M/s Emsons Organics Limited, the Corporate Debtor.

4.6. The CIRP against the Corporate Debtor commenced on 27.09.2019, and a Liquidator was appointed. The Applicant avers that despite Section 17(2) of the Code vesting the Interim Resolution Professional (IRP) with the management and access to books of accounts, the IRP/Liquidator failed to take cognizance of the government dues, which ought to have been reflected in the Corporate Debtor's books.

4.7. Reliance is placed on the Hon'ble NCLT, New Delhi judgment in State Bank of India v. ARGL Ltd. CP No. (IB) 531(Pb)/2017, decided on 16.03.2018], where it was held that government dues are always reflected in the books of accounts and the RP/IRP is required to take cognizance of such dues.

4.8. Further reliance is placed on:

● Sh. Virender Singh v. M/s. Theme Export Pvt. Lt