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TMI Blog2021 (9) TMI 157X X X X Extracts X X X X X X X X Extracts X X X X ..... public limited company registered under the Companies Act. It was also registered under U.P Tax on Entry of Goods into Local Areas Act, 2007, the U.P. VAT Act, 2008 and Central Sales Tax Act, 1956. (ii) It appears that M/s Bhushan Steel Ltd. incurred huge loan liabilities. Therefore, pursuant to the directions issued by the Reserve Bank of India, the Corporate Insolvency Resolution Process (for short "CIRP") with respect to Bhushan Steel Ltd., was initiated by the State Bank of India (S.B.I.) (a lender bank) which filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 (for short "IBC") being Company Petition No.(IB)-201(PB)/2017 on 05.07.2017 before the National Company Law Tribunal (in short "NCLT"), i.e. Adjudicating Authority. (iii) The aforesaid petition of the S.B.I. was admitted by the Adjudicating Authority on 26.07.2017 and an Interim Resolution Professional (in short "IRP") was appointed under Section 13 of the IBC to be incharge of the affairs and management of the aforesaid Bhushan Steel Ltd. in accordance with Section 17 of the IBC. A public announcement was made by the IRP in terms of Section 15 of the IBC inviting for claims by all the cre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder of the Adjudicating Authority/ NCLT dated 15.05.2018 is reproduced below: "81. In view of the above we accept and approve the CoC approved resolution plan of HI Resolution Applicant-TSL. We also approve the appointment of monitoring agency from the date of the approval of the CoC approved resolution plan to function until the closing date i.e. the date on which the implementation of the steps set out in Annexure-5 of the CoC approved resolution plan would be completed. The monitoring agency shall have the same function, power and protection as conferred on the resolution professional under the Code and the CoC shall continue with its role and responsibility and have protection as set out in the Code including approving the matter as has been approved during the period prior to effective date. 82. In respect of the relief and concession as set forth in Annexure-8 it is not possible for us to issue any directions except to say that the monitoring agency alongwith the resolution applicant may make a claim before the authorities which shall be considered in accordance with law. Moreover, these reliefs and concession are also not condition precedent for the acceptance of resolu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made in the writ petition, the counter affidavit as well the discussion made in the order of the Adjudicating Authority/ NCLT dated 15.05.2018, it appears that one of the major point on facts is Annexure-8 to the resolution application. Copy of the aforesaid Anenxure-8 has been filed by the petitioners in Volume 1A, along with a supplementary affidavit in Writ Tax No.1085 of 2018 annexing therewith copy of application bearing Company Application No.244 of 2018 filed by the Resolution Professional before the Adjudicating Authority. Annexure-8 of the aforesaid application is reproduced below: Annexure 8:- "Extracts of Sections 10.1 and 10.2 of the COC Approved Resolution Plan (Resolution Plan of H1 Resolution Applicant as amended and supplemented by the First Addendum and the Second Addendum) Capitalised terms used but not defined in this Annexure shall have the meaning ascribed to them in the COC Approved Resolution Plan. 10.1 Reliefs and Concessions sought by the Resolution Applicant: Regulation 37(1) of the CIRP Regulations provides a resolution plan may provide for the measures required for implementing it, including but not limited to obtaining necessary approvals from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icable Law (including with respect to applicable environmental laws, directions or orders by the Ministry of Environment and Forest, permits, clearances and forest related clearances) and to procure that the Company regularizes such non-compliances under the Applicable Law existing prior to the Closing Date. 10.1.3 Under Section 115JB of the Income-tax Act, 1961, assessee company for which a rehabilitation scheme was approved or reference was made under the provisions of the erstwhile Sick Industrial Companies (Special Provisions), Act, 1985 was not subject to minimum alternate tax until the net worth becomes positive. Accordingly, a similar benefit ought to be extended to a resolution plan approved in accordance with the IBC since the IBC supersedes all other Applicable Law and deals with the same subject matter as the erstwhile Sick Industrial Companies (Special Provisions), Act, 1985. In light of this, The Central Board of Direct Taxes, Department of Revenue, Ministry of Finance, Government of India (hereinafter referred to as "CBDT/DOR") shall: (i) exempt income / gain / profits, if any, arising as a result of giving effect to the Plan from being subjected to minimum alternat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplicant holds in excess of 75% of the paid up equity share capital of the Company, 10.1.6 The Ministry of Corporate Affairs and / or the Adjudicating Authority shall exempt compliance with the provisions of Chapter XV of the Companies Act, 2013 (and the corresponding rules issued under the Companies Act, 2013). In respect of schemes of arrangement contemplated under the Plan. 10.1.7 The Department of Registration and Stamps of the relevant states (including Odisha, Maharashtra and Uttar Pradesh) and the Ministry of Corporate Affairs shall exempt the Resolution Applicant and the Company. From the levy of stamp duty and fees applicable in relation to this Plan and its implementation. 10.1.8 The Competition Commission of India: (i) shall permit the Resolution Applicant to make payment of the CIRP Costs and liquidation value due to Operational Creditors within the prescribed period under the IBC and the CIRP regulations: and (ii) shall not consider such payments to be in breach of the Competition Act, 2002. 10.1.9 The concerned state revenue/ stamp authorities are requested to waive penalties for non-registration and inadequate/ non-stamping of the documents executed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... non-compliance, default, breach, etc., during the period prior to the Closing Date, in relation to: (i) any contractual arrangements of the Company with counter-parties, including Governmental Authorities (such as IDCO, UPSIDC, SIPCOT, etc.); and (ii) failure to take or obtain any approvals, consents or permits relating to use of land for premises for industrial purposes. 10.1.14 The Adjudicating Authority shall direct that all proceedings, investigations, inquiries, etc. made, commenced or initiated by any person (including SEBI) against the Company in relation to the period prior to the Closing Date shall irrevocably and unconditionally stand abated, withdrawn, settled and/or extinguished, and the company shall have no Liability in this regard. 10.1.15 The Adjudicating Authority shall direct relevant Governmental Authorities to: (i) refund all duties / taxes paid under protest by the Company in respect of Tax related litigations; and (ii) continue with Tax credits and State incentives available to the Company. 10.1.16 The Adjudicating Authority shall direct termination of all agreements / arrangements between the Company and the persons classified as related parties (in acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntives. 10.1.20 The relevant Governmental Authority in relation to Tax shall waive any Tax or interest and shall not initiate any penal proceedings in case of non-fulfilment of any obligations of the Company in relation to which benefit has been claimed by the Company prior to the effective Date, including in relation to non-fulfilment of export obligation in respect of customs incentive including but not limited to imports under Export Promotion Capital Goods licenses, non-submission of forms for concessional duty rates, non fulfilment of conditions relating to grant of state incentives etc. 10.1.21 The Adjudicating Authority shall direct that: (A) pending the occurrence of the Closing Date, no Financial Creditor shall be entitled to take, initiate or continue any steps or proceedings against the Company or its assets (whether by way of demand, legal proceedings, alternative determination process (including arbitration or an expert determination process), the levying of distress, execution of judgment or otherwise) in any jurisdiction whatsoever for the purpose of obtaining payment of any Liability, or for the purpose of placing the Company into liquidation or any analogous pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall incur no Liabilities, directly or indirectly (including but not limited to debt servicing Liabilities), other than to the extent specified in this Plan, for the period from the Insolvency Commencement Date until the Closing Date, further, the Company shall not incur any Liabilities post the Closing Date which relate to a period prior to the Closing Date, other than pursuant to or as per the Plan. 10.1.25 The Reserve Bank of India shall permit repayment or settlement of the ECBs as well as ECA lenders, as the case may be, by the Company, including novation of any ECB/ECA facility from the Financial Creditors in favour of the Resolution Applicant as per the terms of this Plan. 10.1.26 SEBI shall: (a) provide dispensation from Regulation 31A(7)(b) of the SEBI (Listing obligations and Disclosure Requirements) Regulations, 2015 in respect of shareholding of the Existing Promoter Group post re-classification of the Existing Promoter Group to public shareholder category to be counted towards satisfaction of the minimum public shareholding requirement; (b) exempt compliance, for a period of 3 (three) years from the Closing Date, with provisions of the SEBI (Listing Obligatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Resolution professional along with certain representatives of Deloitte Touche Tohmatsu India LLP as the Monitoring Agency for the period from the Effective Date until the Closing Date in accordance with the terms of this Plan. The Monitoring Agency shall have the same functions, powers and protections as ascribed to the Resolution Professional under the Code. The CoC shall continue with its roles and responsibilities, and have protections, as set out in the IBC including approving the matters as are being approved during the period prior to the effective Date. 10.1.31 The obligation of the Guarantors shall not be extinguished or waived towards the Financial Creditors for such Personal Guarantee Amount and the rights of subrogation of the Guarantors shall stand waived. The secured Financial Creditors shall be entitled to take all steps and remedies and recourse available to them under Applicable Laws for the invocation of the Personal Guarantees and the recovery of the Personal Guarantee Amount from the Guarantors provided that the Company and/or the Resolution Applicant shall not be made a party to any such recovery proceedings against the Guarantors. 10.2 It is clarifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal creditors that are subjudice which includes various writ petition filed before the Orrisa High Court and Delhi High Court as well several cases pending before different subordinate courts or authorities but it does not include any of the writ petitions filed before this court or SLP filed before the Hon'ble Supreme Court. At the end of the Annexure-10, a note has been added that "in addition to the list above, the subjudice claims listed in Annexure-12 are also deemed to be incorporated herein". (xiii) Annexure-11 contains claims of operation creditor that are contingent which are reproduced below: "ANNEXURE 11: CLAIMS OF OPERATIONAL CREDITORS THAT ARE CONTINGENT Part A | Contingent Liabilities as set out under the Annual Report for FY 16-17 Sr. No. Nature of Contingent Liability Amount as of March 31, 2017 (in Rs. lakh) 1. Sales Tax 120,953.36 2. Excise Duty / Custom Duty / Service Tax 57,105.35 3. Entry Tax 79,755.57 4. Income Tax 51,188.67 5. Bills discounted 6. Others 11,688.34 7 Claims / Disputed bills not acknowledged 22,562.00 8 Water conservation fund 14,333.80 Total 357,587.09 Part B | Potential lia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court intimating the Hon'ble High Court about appointment of the interim Resolution Professional? (vi) Whether on account of active concealment of facts the petitioner has disentitled itself in equity for any relief from this Hon'ble Court and to maintain judicial discipline, conflicting orders by coordinate benches cannot be passed? (vii) Whether the amount of tax collected by the petitioner from their customers or end consumers is a tax which goes in the corpus of the petitioner or it is a delegated duty being discharged by the petitioner fulfilling the obligations of the State in the capacity of Trustee? (viii) Whether being in the position of Trustee and admittedly not in a position to restitute, the principles of unjust enrichment will come into play or not? (ix) Whether the power to tax being sovereign, any incidental law can take away the sovereign power of the State? (x) Whether statutory frame work under which tax was collected by the petitioner having pith and substance in List-Il of the VIIth Schedule to the Constitution of India, a law relating to insolvency, which is essentially a law under List-III of the VIIth Schedule to the Constitution of India c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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