# In the matter of LML Limited IA No. 243 & 351-ALD-2021 in CP (IB) No. 55-ALD-2017

> NCLT judgment dated 2022-04-06. Citation: TCN-2022-NCLT-03339. The Corporate Debtor was admitted into Corporate Insolvency Resolution Process (CIRP) vide…

- **Court:** NCLT
- **Order date:** 6 Apr 2022
- **Citation:** TCN-2022-NCLT-03339
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/lml-limited-ia-no-243-351-ald-2021-in-cp-ib-no-55-ald-2017-92de782c

## Summary

### Background

The Corporate Debtor was admitted into Corporate Insolvency Resolution Process (CIRP) vide Order dated 30th May 2017. As no resolution plan was received, an order for liquidation was passed on 23rd March 2018. Certain litigations arose regarding the dues of the employees of the Corporate Debtor, with awards passed by the Competent Labour Authority on 30th September 2020 and recovery certificates issued on 25th May 2021. The liquidator apprised the Assistant Labour Authorities that the Corporate Debtor is under liquidation and claims should be distributed as per Section 53 of the Insolvency & Bankruptcy Code, 2016 (IBC).

## Facts

The Corporate Debtor was admitted into CIRP on May 30, 2017, and subsequently, liquidation was ordered on March 23, 2018, due to the absence of a resolution plan. Prior to the liquidation, certain litigations were ongoing regarding the dues of the Corporate Debtor's employees. The Competent Labour Authority passed an award on September 30, 2020, and a recovery certificate was issued on May 25, 2021, for these dues. The liquidator informed the Assistant Labour Authorities about the liquidation and the applicability of Section 53 of the IBC. The liquidator then filed an application seeking to nullify the recovery notices issued by the Labour Authority, arguing that they contravened the IBC provisions. The proceedings for recovery of certain sums belonging to the

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## Issues and analysis

### Issue 1: Whether the recovery proceedings initiated by the Labour Authority are valid after the liquidation …

**Ratio:** The moratorium under Section 14 of the IBC applies only during the CIRP period. After a

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**Reasoning:** The court reasoned that the recovery proceedings were already existing and continued

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**Interpretation:** The court interpreted that the moratorium under Section 14 ceases to apply once

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**Application:** Since the recovery proceedings were initiated before the liquidation order,

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## Parties

- **Judges:** Rajasekha…; Virendra Kumar…
- **Appellants:** LML Limited…
- **Respondents:** LML LIM…; Government of NCT…

## Timeline

- **2017-05-30 — Admission in…**: Corporate Debtor admitted into Corporate…
- **2018-03-23 — Liquidation…**: Order for initiation of liquidation…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 14 — Moratorium](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-14)

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