TMI Blog2021 (9) TMI 157X X X X Extracts X X X X X X X X Extracts X X X X ..... a? (v) Whether the petitioner obtained the order from the adjudicating authority in contravention of Section 30 and Section 31 of the IBC Code, 2016 read with CIRP Regulations without disclosing in the Resolution Plan, the liability towards Entry tax when it was simultaneously contesting the proceedings before the Hon'ble High Court in its writ jurisdiction and also did not move any application before the Hon'ble High 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ER 1. Heard Sri Manish Goyal, learned Additional Advocate General assisted by Sri C.B. Tripathi, learned Special counsel for the Staterespondents. Sri Rahul Agarwal and Sanyukta Singh, learned counsel counsel for the petitioner are also present. 2. This bunch of writ petitions, has been heard on several occasions and the arguments of learned counsels for the parties were noted. 3. It would be appropriate to summarise the facts of the case as under:- FACTS:- (i) M/s Bhushan Steel Limited is a 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C. The resolution plan so submitted by M/s Tata Steel Ltd., was approved with addendum thereto on 20.03.2018. On 23.03.2018, the Resolution Professional filed an application for approval of the resolution plan before the Adjudicating Authority/ NCLT. On 15.05.2018, the Adjudicating Authority/ NCLT approved the resolution plan submitted by the Resolution Professional, making binding on all the creditors in terms of Section 31(1) of the IBC, with clarification/ observation that the relief and concession set-forth in Annexure-8 to the resolution plan must abide by the directions issued in the preceding paragraphs. Thus, the application filed by the RP for accepting the resolution plan approved by the CoC and submitted by the resolution applicant, i.e. Tata Steel Ltd., was accepted with clarification and modification as mentioned by the Adjudicating Authority in the aforesaid order dated 15.05.2018. The operative portion of the order 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 d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ex-Management is directed to cooperate in all respects during the implementation of the resolution plan. Liberty is granted to the Monitoring Agency to apply for any further direction against the Ex-Management, its Directors or any other officers, if such a necessity arises. All other application are also disposed of. (vii) It appears that in some cases M/s Bhushan Steel lost before the Supreme court and some of the writ petitions were also dismissed and even subsequent to the aforesaid order of the Adjudicating Authority, certain tax liabilities were also crystallised by way of assessment orders which resulted in recovery proceedings against M/s Tata Steel BSL Ltd. (the name of the company changed w.e.f. 27.11.2018). M/s Tata Steel BSL Ltd. participated in the aforesaid assessment proceedings and the assessment orders were passed. The creation of demand and recovery of amount gave rise to the filing of the present set of writ petitions. (viii) From the averments 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 Annexur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egularize any non-compliances under the Applicable Law (including non-registration, inadequate / non-stamping of documents as required under Applicable Law) existing prior to the Closing Date. 10.1.2 The relevant Governmental Authorities shall not initiate any investigations actions or proceedings in relation to any non-compliance with Applicable Law by the Company during the period prior to the Closing Date. Neither shall the Resolution Applicant, nor the Company, nor their respective directors, officers and employees appointed on and as of the Closing Date be liable for any violations, liabilities, penalties or fines with respect to or pursuant to the Company not having in place the requisite licenses and approvals required to undertake its business as per Applicable Law, or any non-compliances of applicable Law by the Company. Further, the relevant Governmental Authorities will provide a reasonable period of time after the Closing Date, for the Resolution Applicant to assess the status of any non-compliances under the Applicable Law (including with respect to applicable environmental laws, directions or orders by the Ministry of Environment and Forest, permits, clearances ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (b) all Tax Liabilities (including interest and penally) and tax proceedings arising in respect of periods up to the Closing Date, including such liabilities/ proceedings for periods up to the Closing Date that may crystallize subsequent to the Closing Date in respect of on-going or potential income tax litigations at all levels, including but not limited to for the following issues: (i) Disallowance of capital subsidy received from the State Government by way of exemption/reduction of Sales Tax; (ii) Disallowance of bogus expenses; and (iii) Disallowance of bogus purchase of Zinc. 10.1.5 SEBI shall exempt compliance with the provisions of Regulation 37 of the listing Regulations and the SEBI circular dated March 10, 2017 on Schemes of arrangement by Listed Entities and Relaxation under sub-rule (7) of Rule 19 of the Securities Contracts (Regulation) Rules, 1957 , in respect of the schemes of arrangement and also permit a scheme of arrangement involving the Company and the Resolution Applicant during the period that the Resolution Applicant holds in excess of 75% of the paid up equity share capital of the Company, 10.1.6 The Ministry of Corporat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Sundargarh districts of Odisha, to the extent required, for change of control pursuant to the implementation of this plan. 10.1.12 Notwithstanding the terms of the relevant agreements with the suppliers / customers of the Company, as the case may be, the Adjudicating Authority shall direct that prior approval of the counterparties shall not be required to be separately obtained for change in control/ constitution of the Company pursuant to the terms of this plan and the counterparties shall not terminate or take any adverse actions against the Company on account of such change in control / constitution of the Company. The Adjudicating Authority shall also direct the customers / suppliers to waive all objections or liabilities of the Company, arising out of non-compliance by the Company for obtaining prior consent for appointment of the Resolution Professional and in respect of the implementation of this Plan. An indicative list of agreements of the Company with such suppliers /customers is set out in Annexure 22. 10.1.13 The Adjudicating Authority shall direct that the Company shall not be liable for any non-compliance, default, breach, etc., during the period prior ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gy Power Purchase Agreements, any power if purchased by the Company from Bhushan Energy Limited shall be at the rate prescribed by the expert appointed by the Resolution Professional and provided as a part of the Data Room. Other than for such power purchase, Bhushan Energy Limited shall not have any other claims against the Company, and (B) that all claims of the Company against the aforementioned counterparties shall remain outstanding, due and payable in accordance with the terms of the aforesaid agreements. Upon termination of the aforementioned Agreements, the Resolution Applicant and the Company may enter into discussions with Bhushan Energy Limited and Vistrat Real Estates Private Limited to enter into fresh agreements on mutually agreeable terms on an arms length basis. 10.1.18 The Adjudicating Authority to permit supply from Tata Steel s captive mines to the Company to improve business viability and operations of the Company. 10.1.19 The Directorate of Industries shall waive the requirement of obtaining an approval for change in ownership/ constitution / management of the Company and shall continue to grant state and other incentives. 10.1.20 The relev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce shares, including the right to receive dividend, conversion rights, voting rights, rights covering operation and management of the Company, whether in law, contractually or otherwise; (c) Any person (including the Existing Promoter Group) that has provided any form of security for and on behalf of, and / or in order to secure any obligations of the Company (whether by way of hypothecation, pledge, mortgage, guarantee or otherwise), shall not be entitled to exercise any 33 subrogation rights, directly or indirectly, in respect of such arrangement, and they shall have no rights or claims against the Company. All obligation, liabilities, claims or proceedings against the Company in this regard shall be deemed to be owed to the relevant security provider and due as of the insolvency Commencement Date, and shall immediately, irrevocably and unconditionally stand extinguished, waived, withdrawn and abated on and from the Closing Date. The Existing Promoter Group and any other security provider shall have deemed to have waived the right of subrogation against the Company and the Company shall not be liable in respect of any such claims, demands or proceedings. 10.1.24 The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect of the reliefs stated in (a) to (d) above, if SEBI issues any circulars, notifications, amendments, etc. relaxing any provision of the aforementioned SEBI regulations post the Closing Date, then the benefit of such relaxation should also be available to the Company and the Resolution Applicant. 10.1.27 The Ministry of Corporate Affairs shall relax and waive the procedural requirements under the Companies Act in respect of change in the registered price of the Company either to another premises within New Delhi or any other location outside New Delhi. 10.1.28 The Resolution Applicant be granted such reliefs and concessions as granted by the Adjudicating Authority from time to time in favour of resolution applicants for corporate insolvency resolution processes of other corporate (debtors as maybe beneficial to the Resolution Applicant and/or the Company for successful corporate insolvency resolution of the Company and which shall not adversely impact the financial proposal under this Plan for the Financial Creditors. 10.1.29 The Adjudicating Authority shall approve the terms set out in Section 8.7.3(i) and Section 8.7.5 of this plan respectively. 10.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... instrumentality of India as applicable, or any political subdivision thereof or any other applicable jurisdiction, any court, tribunal or arbitrator or other adjudicatory authority, and any securities exchange or body or authority regulating such securities exchange. Insolvency Commencement Date July 26, 2017 Taxes Any tax on income, capital stock, profits, gross receipts, sales, use, value added, transfer, registration, stamp, premium, excise, customs duties, octroi, service taxes, severance, environmental, real property, movable property, ad valorem, occupancy, license, occupation, employment, payroll, disability, workers compensation, withholding, estimated or other similar tax, duty, fee, assessment or other governmental charge or deficiencies thereof (including all interest and penalties thereon and additions thereto), and customs duties (x) The claims of statutory creditors have been provided in Part-C of Annexure-8 of the resolution plan contains the details of the total Outstanding Operational Debt (excluding claims of the workmen and employees) as stated in Part-A, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... referred in Annexure-10 aforesaid, contains particulars applicable laws and proceeding against the company . Serial Nos.52, 53, 54, 55, 56, 57 and 58 of it reads as under: 52. The Central Sales Tax Act, 1956 53.Relevant VAT and Trade Tax laws of respective states 54.Relevant Entry Tax laws of respective states 55. The Integrated Goods and Services Tax Act, 2017 56. The Central Goods and Services Tax Act, 2017 57. Goods and Services Tax laws of respective States and Union Territories 58. GST (Compensation to States) Act, 2017 4. The facts as mentioned above have not been disputed by learned counsels for the parties. Thus, the facts aforenoted are undisputed facts. 5. Learned Additional Advocate General has made elaborate submissions. Considering the submissions of learned counsel for the petitioner on earlier occasions and the submissions made by learned Additional Advocate General today, the following questions are being framed for determination with the consent of the learned counsels for the parties:- QUESTIONS:- (i) Whether the element of entry tax falls in the definition of the term Tax as contained i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ployed under Section 77 of U.P. VAT Act is relatable to the exercise of the sovereign power of the State or is it relatable to a common law of the term Charge employed under the statutory law. (xii) Whether Section 238 of IBC Code,2016 will have any consequences when it is pithily operating in a different field and will not override the provisions of the VAT Act or U.P. Tax on Entry of Goods Act, 2007 or Central Sales Tax Act, 1956? (xiii) Whether the date of taxable event will be relevant consideration or the date of assessment/demand will be relevant consideration for the effective date under the resolution plan as per the provision of U.P. VAT Act or U.P. Tax on Entry of Goods Act,2007? (xiv) Whether controversy involved in these writ petitions is concluded by the judgement of Hon ble Supreme Court in Ghanshyam Mishra and sons Pvt. Ltd. vs. Edelweiss Asset Reconstructions Company Ltd., 2021 SCC OnLineSC 313? (xv) Whether in view of Section 31 of the Insolvency and Bankruptcy Code, 2016 ( Code ) (as amended till date), the terms of the Resolution Plan once approved by the NCLT, is binding on all creditors of the Petitioner, including the Respondents? (x ..... X X X X Extracts X X X X X X X X Extracts X X X X
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