Mumbai, April 14, 2026: The Mumbai bench of the National Company Law Tribunal (NCLT) has partly allowed an application filed by Kohinoor City Office Towers Industrial Estate & Premises Co-operative Society Ltd., directing the liquidator of Firestar Diamond International Pvt. Ltd. to clear certain outstanding dues as part of liquidation costs.
Post-liquidation dues to be treated as priority
The tribunal held that maintenance charges and property tax dues accruing after the commencement of liquidation on February 26, 2020, must be treated as “liquidation costs” and paid in priority.
“The Society has, by way of the present Interlocutory Application, sought the following reliefs against Respondent the Liquidator of the Corporate Debtor, that the maintenance dues incurred during the CIRP period be reclassified and paid in priority as CIRP costs, on the ground that the same were erroneously treated as operational debt and that the maintenance dues and property tax dues pertaining to the period during which the units of the Corporate Debtor stood attached by the ED be recognized and discharged in priority as liquidation costs,” the order copy reads
CIRP classification plea rejected
However, it refused the society’s claim to classify earlier dues during the Corporate Insolvency Resolution Process (CIRP) period as CIRP costs, noting that such classification requires approval from the Committee of Creditors (CoC), which was absent in this case.
Background of the dispute
The dispute arose in the liquidation proceedings of Firestar Diamond International Pvt. Ltd., whose three commercial units in Kohinoor City, Kurla, were attached by the Enforcement Directorate (ED) between 2018 and 2022 under the Prevention of Money Laundering Act (PMLA).
Following initiation of insolvency proceedings in September 2019 and subsequent liquidation in February 2020, the society filed claims exceeding ₹1.85 crore towards maintenance dues, later submitting additional claims for subsequent periods.
The liquidator admitted part of the claim as operational debt and later paid dues only for the period after the ED handed over the properties in May 2022.
Tribunal clarifies legal position
The tribunal clarified that maintenance dues during the CIRP period cannot be treated as CIRP costs unless they are directly related to the insolvency process and approved by the CoC.
It further held that maintenance and property tax dues arising after liquidation commencement qualify as liquidation costs since they are necessary for preserving and protecting the assets.
Observations on ED attachment
On the issue of ED attachment, the bench observed, “Since the subject properties were not confiscated by the ED under the Prevention of Money Laundering Act, 2002 ("PMLA"), the title to and ownership of the said properties continued to vest in the Corporate Debtor at all material times. We are of the view that a provisional or confirmed attachment order under the PMLA freezes the property but does not extinguish the title of the owner or transfer it to the government. Confiscation has the effect of vesting the property in the Union of India.”
Impact on asset value
Emphasising the practical impact, the tribunal noted that non-payment of such dues could reduce the value and marketability of the assets, adversely affecting stakeholders.
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Direction to liquidator
Accordingly, the NCLT directed the liquidator to pay the outstanding maintenance dues to the society and property tax arrears to the Municipal Corporation for the period after February 26, 2020, treating them as part of liquidation costs with priority in distribution.
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