TMI Blog2021 (7) TMI 462X X X X Extracts X X X X X X X X Extracts X X X X ..... 39 - JHARKHAND HIGH COURT] is distinguishable on facts as it proceeded on its peculiar facts pertaining to the criminal misappropriation of the statutory dues and cannot be made applicable to the facts of present case - Further, in Electrosteel [ 2020 (5) TMI 39 - JHARKHAND HIGH COURT] , the Registered office and principal place of business of the corporate debtor therein was in the State of Jharkhand. However, the public announcement was not published in any newspaper of Jharkhand but was published in the Business Standard, Kolkata Edition. In the facts of the present case, the public announcements were published by the IRP / RP in accordance with the Regulation 6 of the CIRP Regulations. The civil application succeeds and is hereby allowed - CIVIL APPLICATION (FOR ORDERS) NO. 1 of 2020 In R/TAX APPEAL NO. 754 of 2007 - - - Dated:- 5-2-2021 - HONOURABLE MR. JUSTICE J.B.PARDIWALA AND HONOURABLE MR. JUSTICE ILESH J. VORA MR. MIHIR JOSHI, LD. SR. COUNSEL WITH MR. GAURAV MATHUR, LD. ADVOCATE FOR SINGHI CO FOR THE PETITIONER MR DHAVAL D VYAS FOR THE RESPONDENT ORDER PER : HONOURABLE MR. JUSTICE J.B.PARDIWALA 1. On 1st February, 2021, this Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he same. Moreover, the case does not fall under the exceptions. Therefore, the appeal is liable to be withdrawn. However, we have to seek approval from the Competent Authority before withdrawing the same and we are in the process for acquiring the same. Accordingly, further instructions for withdrawal of appeal shall be conveyed upon receipt of the directions from the Principal Commissioner, Customs, Jamnagar on top priority. Regards Piyush Thaker, Superintendent. 5. The plain reading of the communication, referred to above, would suggest that the tax appeal should otherwise also not be entertained having regard to the monetary limit as prescribed. This would be one additional ground over and above the ground raised by the applicant for the purpose of disposal of the tax appeal. Mr. Vyas submits that within a day or two, the Principal Commissioner, Customs, Jamnagar should inform what is to be done with the tax appeal. Apart from the issue of monetary limit, we want the Principal Commissioner, Customs, Jamnagar to apply his mind so far as the sanction of the Final Resolution Plan dated 25th May, 2018 is concerned. If the tax appeal is not to be presse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The Bill of Entries were assessed provisionally. On the basis of the test report received from the Customs Central Excise Laboratory, Vadodara, it was noticed that there was a difference of 40 Kcal/Kg on Air Dry Basis per MT. Based on the said reports the competent authority made the final assessment of the Bills of Entry. The final assessment of Bills of Entries was not challenged by the Corporate Debtor. 5.2 The Superintendent however issued notice u/s.28 for the recovery of the differential amount as per Section 18(2) and 28 of the Customs Act, 1962. The proceedings were dropped vide order dated 31.03.2005. The said order was challenged by the department before the Commissioner (Appeals) by filing an Appeal, which was allowed vide order dated 09.05.2006 observing that it was legally incorrect for the superintendent himself to have issued the notice when he had already concluded the final assessment for it would amount to self review. 5.3 The OIA came to be set-aside by the CESTAT vide the order dated 16.11.2016 directing the Commissioner Appeals to rehear the appeals. 6. It is the case of the applicant that a resolution plan, once approved, is binding on all the cre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilities of the Corporate debtor for the period till the transfer date. 4. Ground III (at Page 119 of Enclosure A) of the Civil Appeal Nos. 630 634 of 2019 reads as under: III. THAT, the learned Tribunal ought to have appreciated that the Resolution Plan submitted by the respondent had been finalised in absentia as the Department was neither made a party in the Committee of Creditors not in the application filed before NCLT or NCLAT. The decision had been taken in complete violation of the principles of natural justice and Central Government revenue involving more than ₹ 144.96 Cr has been adversely affected without giving any opportunity of hearing to the Department. The finality attached to the Resolution Plan under section 31 of IBC, 2016 without considering the legitimate claim of the Department is against the principles of natural justice. The claim of the Department was reduced by the CoC which was duly approved by NCLT/NCLAT without giving an opportunity to justify their claim. The steps taken by the Resolution Professional/ CoC to verify only the limited claim of the Department in absentia is totally against the principles of natural justice and thus n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Code and is clearly clarificatory in nature, and retrospective in its operation. This position is also made clear from the Statement of Objects and Reasons in respect of the amendment dated 5.8.2019 (Enclosure B) placed before the Parliament, the relevant extract whereof reads as under: (f) to amend sub-section (1) of section 31 of the Code to clarify that the resolution plan approved by the Adjudicating Authority shall also be binding on the Central Government, any State Government or any local authority to whom a debt in respect of payment of dues arising under law for the time being in force, such as authorities to whom statutory dues are owed, including tax authorities (Emphasis Supplied) (c) Hon ble Supreme Court in a judgment reported in 2018 (17) SCC 394 in the matter of State Bank of India v/s V. Ramakrishnan, (Enclosure C) while construing the amendment Ordinance dated 6.8.2018, amending Section 14(3) of the Code, relying on recommendation given in the Report of the insolvency Law Committee for such amendment held that a clarificatory/ declaratory amendment would operate retrospectively. II. The Appellant s dues ought to have been disc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Appeals) set aside the Order in Original on the ground that once the bills of entry are finally assessed and such assessment is not questioned, no demand can be raised as if the assessment is in review. (Para 6 at Page nos. 40-41 of the Appeal) (It is noteworthy that finalisation of bill of entry would mean that appropriate customs duty was paid by Binani.) (iv) The order of Commissioner (Appeals) was carried in appeal before Hon ble CESTAT, who vide Order dated 16.11.2006 remanded the matter to the Commissioner (Appeals) to decide the issue of merits, ignoring the Assessment of Bills of Entry (Para 4 at Page no. 45 of Appeal). This order is subject matter of challenge in the Appeal. (v) Accordingly, duty under finalised assessment is already paid and there was neither a demand for payment of such duty nor can any claim exist for the same. However, ignoring the final assessment, the Commissioner (Appeal) is to decide on the claim under the show cause cum demand notice. Such claim is yet to be adjudicated and is therefore not a crystallised amount. The same is clearly contingent upon a decision in litigation, falling under Clause 1.7.14 read with Clause 4.3 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g on the basis of its understanding of contingent debt . (g) Without prejudice to the above, and considering that the Claim of the Appellant is clearly a contingent claim / liability under the Approved Plan, and no payment under Part E to Schedule 2 (page no. 232) is proposed for contingent liabilities, its verification or otherwise by the Resolution Professional is inconsequential. III. Reliance placed on the judgment reported in 2020 SCC Online Jhar 454 in the matter of Electrosteel Steels Limited v/s State of Jharkhand is misconceived. (a) The reliance on the judgment of Electrosteel (Supra) is misplaced, misconceived and improper. (b) It is submitted that under the provisions of Regulation 6 of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 ( the CIRP Regulations ), an Interim Resolution Professional ( IRP ) appoint by the Adjudicating Authority on admission of a petition for initiating the CIRP in respect of the Corporate Debtor is required to issue a public announcement calling for claims in one English and one regional language newspaper having wide circulation at the location of the corporate office and principa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he ninetieth day of the insolvency commencement date. (c) The Applicant submits that such action of publication and filing of claims are undertaken by the IRP or the RP much before a resolution applicant comes into the picture, which happens pursuant to publication of an Expression of Interest ( EOI ) under Regulation 36A of the CIRP Regulations. Once the EOI is published, the IRP / RP issues an Information Memorandum and an Evaluation Matrix under Regulation 36B read with Regulation 36 of the CIRP Regulations, pursuant to which a resolution applicant submits a resolution plan. A resolution applicant, the Applicant in the present case, solely relies on the data made available to it by the IRP / RP, in respect of the Corporate Debtor, including the claims against it, in order to submit its resolution plan. The process prior to it is neither in the knowledge of nor controlled by a resolution applicant. A copy of the CIRP Regulations is at Enclosure D. 10. Submissions on behalf of the Department; The applicant has relied on Section 31(1) of the IBC, 2016 to contend that the resolution plan approved under the Code binds the Central Government and Local Authorit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , any liability for tax, interest or penalty relating to the period prior to the transfer date for which the assessments have not been completed. The liability as per the final assessment cannot be brought under clause (a) for it covers liabilities other than Tax which are in litigation with the creditors. This clause may be view in conjunction with clause 6.2.3.2 which clearly provides that the corporate debtor is fully resolving the liabilities of the operational statutory creditors at the relevant resolution amount as distinguished from discharge provided for the operational trade creditors. Regulation 36 provides, 36.(2)(a) assets and liabilities with such description, as on the insolvency commencement date, as are generally necessary for ascertaining their values. Explanation.- Description includes the details such as date of acquisition, cost of acquisition, remaining useful life, identification number, depreciation charged, book value, and any other relevant details. (b) the latest annual financial statements; (c) audited financial statements of the corporate debtor for the last two financial years and provisional financial statements for the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have to be withdrawn. Therefore, unless the dues as per the final assessment to the Operational Statutory Creditor I.e. Appellant department is paid in full as provided in Clause 6.2.3.2, the said provisions of resolution plan would not mandate withdrawal / disposal of the Appeal. ANALYSIS 11. We are of the view that once a resolution plan is approved, all the claimants in respect of a corporate debtor are dealt with under such plan as held by the Supreme Court in the case of Committee of Creditors of Essar Steel India Ltd. vs. Satisk Kumar Gupta Ors., reported in 2020 (8) SCC 531. We quote the relevant observations as contained in Paras-105 and 107 respectively; 105. Section 31(1) of the Code makes it clear that once a resolution plan is approved by the Committee of Creditors it shall be binding on all the stakeholders, including the guarantors. This is for the reasons that this provision ensure that the successful resolution applicant starts running the business of the corporate debtor on a fresh slate as it were. . 107 For the same reason, the impugned NCLAT judgment in holding that claims that may exist apart from those decided on merits by the resol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rosteel (supra) reads as under: 18. .. It is submitted that the State Government was never involved in the resolution process and there was a valid reason for the same, in asmuchas, the notice required to be issued under Section 13 of the IB Code, which ought to have been issued in the State of Jharkhand, where the petitioner Company is having its registered office as well as principal place of business, but the said notice was never published in the State of Jharkhand, rather the notice which has been brought on record as Annexure 7 to the supplementary affidavit filed by the petitioner, clearly shows that it was published only in Kolkata Edition of Business Standard on 24.07.2017 .. (Emphasis Supplied) (e) It is on the aforesaid finding on facts, that the Jharkhand High Court in the Paragraphs Nos. 27 and 28 respectively of Electrosteel (supra) found that the Commercial Tax department had no opportunity to participate in the CIRP process and rejected the writ petition challenging the garnishee orders issued by the Jharkhand Commercial Tax department. (f) In the facts of the present case, the public announcements were published by the IRP / RP in accordance wi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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