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2025 (2) TMI 1170 - AT - Central ExciseDismissal/abatement of appeals filed before the Tribunal in view of the approval of the Resolution Plan by the National Company Law Tribunal (NCLT) under the Insolvency and Bankruptcy Code (IBC) 2016 - HELD THAT - This Tribunal lacks the jurisdiction to render an opinion on a matter relating to the settling of pending claims which are not an issue pending before this Tribunal. The Customs Act 1962 and the Insolvency Bankruptcy Code 2016 operate in their own spheres leaving little room for this Tribunal to render an opinion on the matter. The CESTAT Benches including that at Chennai have been consistently ordering the abatement of appeals wherever the Resolution Plan is shown to have accepted by the Adjudicating Authority as seen from Order of Mumbai Bench of CESTAT in the case of M/s. Jet Airways (India) Ltd. Vs. Commissioner of Service Tax Mumbai Anr. 2023 (5) TMI 767 - CESTAT MUMBAI . It is a well-accepted norm of judicial discipline that a Bench of lesser quorum / strength should follow the view taken by Bench of larger quorum / strength in a case whose ratio covers the legal issue involved in the impugned matter more so when it is based on the precedence of earlier judgments on the matter. Conclusion - i) The approval of a Resolution Plan by the NCLT under the IBC extinguishes statutory dues. ii) The appeals should be abated or dismissed in view of the Resolution Plan s approval. Appeal abated.
1. ISSUES PRESENTED and CONSIDERED
The core legal questions considered by the Tribunal in this matter are:
2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Effect of NCLT-approved Resolution Plan on pending appeals before the Tribunal Relevant legal framework and precedents: The Insolvency and Bankruptcy Code, 2016, particularly Section 31, empowers the NCLT to approve a Resolution Plan for a corporate debtor. The Supreme Court in Ghanashyam Mishra & Sons Pvt. Ltd. v. Edelweiss Asset Reconstruction Company Ltd. held that all dues owed to government authorities, including statutory dues, if not part of the approved Resolution Plan, stand extinguished and no proceedings in respect of such dues prior to the approval date can continue. Court's interpretation and reasoning: The Tribunal noted that the NCLT, Chennai had approved the Resolution Plan in the appellant's case. The Tribunal referred to the Supreme Court's ruling which establishes that statutory dues not included in the Resolution Plan are extinguished upon approval. The Tribunal acknowledged that the Department had not made any claims before the Corporate Insolvency Resolution Process, and the Resolution Plan's para 8 explicitly stated that all claims were "irrevocably and unconditionally settled, discharged and extinguished in perpetuity." Key evidence and findings: The appellant placed on record the Tribunal's earlier Final Order dated 15.02.2024 dismissing their appeals on this basis. The Resolution Plan's approval and its terms were key factual elements. Application of law to facts: The Tribunal accepted the legal principle that the approval of the Resolution Plan extinguishes claims for dues prior to the date of approval, and therefore, the appeals challenging such dues could not be sustained. Treatment of competing arguments: The appellant refrained from making submissions on merits relying on the prior order. The Tribunal noted the appellant's position but expressed reservations about following the earlier order's statement on extinguishment of claims "in perpetuity" as it considered that issue outside its jurisdiction. Conclusions: The Tribunal held that appeals should be abated or dismissed in view of the Resolution Plan's approval and the Supreme Court's ruling, effectively ending the proceedings on the statutory dues claims raised in the appeals. Issue 2: Jurisdiction of the Tribunal to opine on settlement and extinguishment of claims under the Resolution Plan Relevant legal framework and precedents: The Customs Act, 1962 and the Insolvency and Bankruptcy Code, 2016 govern their respective domains. The Tribunal's jurisdiction is limited to adjudicating appeals under Customs and Central Excise laws, and it does not extend to matters governed exclusively by the IBC or NCLT decisions. Court's interpretation and reasoning: The Tribunal expressed that it lacked jurisdiction to render an opinion on the settlement of pending claims not directly before it. The extinguishment of claims under the Resolution Plan is a matter under the IBC and the NCLT's domain, and the Tribunal cannot override or comment on such matters beyond its statutory mandate. Key evidence and findings: The Tribunal relied on the statutory framework and the separation of jurisdiction between Customs/Excise authorities and insolvency proceedings. Application of law to facts: Even though the Tribunal accepted the principle of extinguishment of claims post-Resolution Plan approval, it refrained from making any order declaring claims settled "in perpetuity" as that would exceed its jurisdiction. Treatment of competing arguments: The appellant's reliance on the earlier order's language was noted, but the Tribunal distinguished the present case on jurisdictional grounds. Conclusions: The Tribunal concluded that it cannot pass orders on the extinguishment of claims beyond its statutory remit and limited itself to abating the appeals. Issue 3: Precedential value and judicial discipline in following larger bench or division bench rulings Relevant legal framework and precedents: The principle of judicial discipline mandates that a bench of lesser strength follows the decisions of a bench of larger strength or a division bench on the same legal issue. The Tribunal referred to consistent orders from various CESTAT benches, including Mumbai and Chennai, following the Supreme Court's decision in Ghanashyam Mishra. Court's interpretation and reasoning: The Tribunal emphasized that it would follow the ratio decidendi of the Division Bench's earlier order dated 15.02.2024, which dismissed the appeals on the basis of the Resolution Plan's approval and the Supreme Court's ruling. Key evidence and findings: The Tribunal cited multiple orders from other benches that abated appeals under similar circumstances, reinforcing the binding nature of such precedents. Application of law to facts: The Tribunal applied the principle of judicial discipline to ensure consistency and avoid conflicting decisions on the same legal issue. Treatment of competing arguments: No contrary argument was advanced against following the Division Bench's ruling. Conclusions: The Tribunal held that the present appeals must be abated following the Division Bench's precedent and the Supreme Court's authoritative ruling. 3. SIGNIFICANT HOLDINGS The Tribunal's crucial legal reasoning is encapsulated in the following verbatim excerpt from the Division Bench order relied upon: "The Hon'ble Supreme Court in the case of Ghanashyam Mishra & Sons Pvt. Ltd. Vs Edelweiss Asset Reconstruction Company Ltd. - (2021) 9 SCC 657 has held that all dues including the statutory dues owed to the Central Government any State Government or any local authority including tax authorities, if not part of the resolution plan, shall stand extinguished and no proceedings in respect of such dues for the period prior to the date on which the adjudicating authority grants its' approval under Section 31 of IBC can be continued." Core principles established include:
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