NCLAT Sets Aside NCLT’s Order Allowing Time-Barred Claim in Voluntary Liquidation Process [Read Order]

The National Company Law Appellate Tribunal (NCLAT) has set aside an order of the Adjudicating Authority that had permitted a creditor to intervene in a concluded voluntary liquidation process, despite the claim being filed beyond the prescribed limitation period.

The appeal was filed by the liquidator of Nextgen Procon Pvt. Ltd., challenging an order dated 6 August 2024 passed by the NCLT, New Delhi, which allowed a Section 60(5) application by M.R.A. Associates Pvt. Ltd., the respondent, to intervene and raise a claim during the pendency of the dissolution proceedings.

Nextgen Procon Pvt. Ltd. had entered into a project management and technical audit agreement with M.R.A. Associates in 2013. The agreement was terminated prematurely within 18 months, after which the respondent raised an invoice dated 18.09.2015 for ₹49.32 lakh, an amount contested by the corporate person via emails and legal replies.

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Despite exchanges of legal notices and denials, no claim was filed by the respondent during the voluntary liquidation process initiated in early 2018. The liquidator, after issuing a public announcement on 7 February 2018 and fixing the deadline for claim submissions as 7 March 2018, proceeded to complete the liquidation. The final report was submitted to the Registrar of Companies and IBBI by May 2019.

Just as the liquidator filed an application for dissolution under Section 59(7) of the Code, the respondent sent an email on 28.05.2019, claiming dues. However, instead of submitting a valid claim, they filed an intervention application on 28.08.2019, based on the same 2015 invoice.

This application was initially dismissed by the NCLT in 2021 on grounds of limitation. However, upon appeal, the NCLAT had directed the Adjudicating Authority to reconsider the effect of a 2016 email that allegedly acknowledged the debt. This led to the order dated 6 August 2024, which the liquidator challenged again—arguing that even with the 2016 email, the claim remained time-barred.

The NCLAT Bench, comprising Justice Rakesh Kumar Jain (Judicial Member) and Mr. Indevar Pandey (Technical Member), agreed with the appellant’s arguments. It ruled that even if the date of the 2016 email was considered for the purpose of limitation, the three-year period expired on 17 July 2019, while the intervention application was filed more than a month later, on 28 August 2019.

The Tribunal observed that the respondent had slept over its rights and failed to act during key stages, including when notices were issued under Section 8 of the Code, when the public announcement for claims was made, and even during the initial round of liquidation compliance.

Holding that the NCLT erred in reopening a concluded process based on a time-barred claim, the NCLAT allowed the appeal and set aside the impugned order, noting that permitting such interventions at a terminal stage would undermine the objectives of a time-bound, creditor-driven voluntary liquidation framework under IBC.

The Tribunal asserted that finality in liquidation must be respected, especially when the process has been completed as per the prescribed legal procedure and timelines.

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