# 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-03336. The Corporate Debtor was admitted into Corporate Insolvency Resolution Process (CIRP) vide…

- **Court:** NCLT
- **Order date:** 6 Apr 2022
- **Citation:** TCN-2022-NCLT-03336
- **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-cbab0001

## Summary

### Background

The Corporate Debtor was admitted into Corporate Insolvency Resolution Process (CIRP) vide Order dated 30th May 2017. Since no Resolution Plan was received, an order for initiation of liquidation of the Corporate Debtor was passed on 23rd March, 2018. Certain litigations arose regarding the dues of employees, 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, LML Limited, underwent Corporate Insolvency Resolution Process (CIRP) initiated on May 30, 2017. Due to the absence of a resolution plan, liquidation was ordered on March 23, 2018. Prior to the liquidation, certain employees had pending dues, leading to awards by the Labour Authority on September 30, 2020, and recovery certificates issued on May 25, 2021. The liquidator informed the Labour Authorities about the ongoing 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. The key facts are the initiation of CIRP and subsequent liquidation, the existence of employee dues, the awards and recovery certificates issued by the Labour

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## Issues and analysis

### Issue 1: Whether the recovery proceedings initiated by the Labour Authority are valid in light of the …

**Ratio:** Section 33(5) of the IBC states that after passing a liquidation order, no suit or legal

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

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**Interpretation:** Section 33(5) is interpreted to mean that while existing proceedings can

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**Application:** The court applied this principle by declaring the recovery proceedings related

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## Parties

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

## Timeline

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

## 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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