Pendency Of Proceedings Elsewhere No Ground For Delay; NCLT Kochi Rejects Customs' Claim Filed 787 Days Late

A coram of Judicial Member Vinay Goel and Technical Member Madhu Sinha observed,

"The pendency of an appeal or other proceeding before a different forum cannot be considered a sufficient or valid ground for non-filing of a claim within the prescribed period. If such a plea is accepted, it would defeat the very purpose of a time-bound liquidation process and open the floodgates for stale claims The bench further observed that the expectation of due diligence applies equally to government departments, and the appellant was required to be vigilant once the corporate debtor was admitted into CIRP."

The tribunal stressed that the timelines under the IBC and the IBBI regulations “are mandatory in nature and are intended to ensure expeditious completion of the insolvency and liquidation process."

The appeal was filed by the Assistant Commissioner of Customs after the liquidator rejected its delayed claim in the liquidation of Rubberwood India Pvt. Ltd. The company was admitted into CIRP on 17 May 2022 and ordered into liquidation on 15 December 2022.

The liquidator issued a public announcement on 20 December 2022 calling for claims up to 20 January 2023. The Customs Department filed its claim in Form C only on 17 March 2025, admitting a delay of 787 days. Its total claim of over Rs 64 lakh consisted of over Rs 14 lakh as duty confirmed in 2009 and over Rs 50 lakh as interest calculated up to 17 May 2022.

The department submitted that it could not file the claim earlier because an appeal filed by the suspended management before the CESTAT, Bangalore, remained pending until it was closed as abated on 26 September 2024.

The tribunal rejected this explanation and said that such a pendency without any stay or injunction is not a ground to file belated claim. The tribunal said, “Mere pendency without a stay does not constitute sufficient cause for condonation. Such prolonged inaction cannot be condoned as bona fide.”

The tribunal also observed that the Customs Department had long been aware of the statutory demand and yet took no steps to file its claim during either the Corporate Insolvency Resolution Process or within the prescribed liquidation period.

It added that even after the appeal abated on 26 September 2024, the department waited nearly six months before sending its first communication to the liquidator on 12 March 2025, and formally filed its claim only on 17 March 2025.

The liquidator submitted that the claim was filed beyond the 30 day period mandated under the Liquidation Regulations. He also pointed out that a portion of the claim included interest calculated beyond the liquidation commencement date, which is inadmissible.

The liquidation estate includes leasehold rights over 4.58 acres of land auctioned in October 2023 for Rs 23.7 crore. Distribution of proceeds is currently stayed by the Kerala High Court in separate proceedings concerning EPFO dues.

Citing precedents of the Supreme Court, High Courts and the NCLAT, the tribunal reiterated that time is the essence of the process envisaged under the IBC and that courts cannot condone delays arising from inaction or negligence.

Accordingly it observed, “If this Adjudicating Authority were to allow the delay-condonation application in the present case, it would set an erroneous precedent and defeat the very purpose of the Code.”

The appeal was dismissed for lack of sufficient cause to condone the inordinate delay.

Case Title: Assistant Commissioner of Customs v. Renahan Vamakesan and Anr.

Case Number: Company Appeal (IBC)/6/KOB/2025 IN IA (IBC)/408/KOB/2022 IN CP (IBC)/26/KOB/2022

For the Appellant: Advocate Suvin R Menon

For the Respondent: Advocate Akhil Suresh