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TMI Blog2021 (12) TMI 1417X X X X Extracts X X X X X X X X Extracts X X X X ..... Insolvency and Bankruptcy Code, 2016 ('the Code' hereinafter) for the insolvency resolution of corporate debtor applicant (Garden Silk Mills Limited.) 2. The present application is filed by the applicant through Senior Vice President-Commercial & HR, who is authorised by the Board Resolution to present this application. 3. The respondent challenges by way of the Tax Appeal the order No.A/10145-10146 dated 03.02.2016 passed by the Custom Excise Service Tax Appellate Tribunal ('the CESTAT' hereinafter) whereby it confirmed the demand of excise duty to the extent of Rs.30,19,18,590/-. 4. During the pendency of the Tax Appeal, the Corporation Bank as financial creditor of the applicant had filed the Insolvency Petition under Section 7 of the Code read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudication Authority) Rules, 2016 against the applicant as the corporate debtor. After assignment of debts, the Corporation Bank got substituted by financial creditors- Invest Assets Securitization and Reconstruction Private Ltd. ('the Invest' hereinafter). The Insolvency Petition was admitted on 24.06.2020 by the NCLT and Corporate Insolvency Resolution Process ('the CIRP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 20. The applicant has also attempted to explain the different Articles of RP have provided in detailed as to how the statutory dues and claims arising out of the proceedings need to be settled in a particular fraction/fashion. 7.2 It is further the say of the applicant that the NCLT eventually by approval order dated 01.01.2021 allowed the Approval Application and the RP of successful resolution applicant had been finalized. This plan would be binding all stakeholders and creditors of the applicant in terms of Section 31(1) of the Code including the respondent. Once it is approved, the same would bind on all creditors including the respondent. 7.3 The applicant has also relied on the decision of the Apex Court rendered in case of Committee of Creditors of Essar Steel India Limited vs. Satish Kumar Gupta, reported in (2020) 8 SCC 531 where the Apex Court has held that once a Resolution Plan is approved by the CoC, it shall be binding on all stakeholders. All claims shall have to be submitted and decided by the RP so that a prospective resolution applicant knows exactly what needs to be paid in order, it may then take over and run the business of the corporate debtor. 7.4 It appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... addition to those reliefs. We grant/approve the prayers as regard to various reliefs/concessions sought by the Resolution Applicant subject to condition that such grant/approval is in accordance with the scheme and provisions of Insolvency & Bankruptcy Code, 2016 and CIRP Regulations made there-under. It is further clarified that relevant applicable provisions of all laws, to the extent such provisions/statutes are not overridden by the scheme and provisions of IBC, 2016, shall remain applicable and be complied by Corporate Debtor / Resolution Applicant. 18. We are further of the opinion that Resolution Applicant of the corporate debtor will have all liberty to approach or may approach the concerned Statutory/Competent Authority for any concession, waiver or exemption as per the applicable laws. We further clarify that approval of the Resolution Plan does not mean automatic waiver or abetment of legal proceedings, if any, which are pending by or against the Corporate Debtor as those are the subject matter of the concerned competent authorities having their proper/own jurisdiction to pass any appropriate order as the case may be as per the provisions of relevant statutes. We furt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on into private limited company, the MoA and AoA of the Corporate Debtor shall be amended and filed with the RoC for information and record as prescribed 22. In view of the above, the revised 'Resolution Plan' annexed with IA No. 661 of 2020 filed in CP (IB) No. 453 of 2018 is hereby approved, which shall be binding on the Corporate Debtor and its employees, members, creditors, guarantors and other stakeholders involved in the Resolution Plan including Resolution Applicant. 23. Urgent certified copy of this order, if applied for, to be issued to all concerned parties upon compliance with all requisite formalities." 10. When the order of NCLT challenged by the present respondent before the NCALT, the Appellate Tribunal has held thus: "4. The Learned Counsel for the Respondent No. 1- Resolution Professional 4. relying on the Reply filed by the Respondent No. 1 argued that all necessary steps in conformity with the provisions of the IBC were taken and then I.A. 661 of 2020 for approval of Resolution Plan was put up before the Adjudicating Authority. The Plan of Respondent No. 2-MCPI Pvt. Ltd. Was approved by the Committee of Creditors. The approved Resolution Plan propo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s also argued that Annexure 5 filed with the Resolution Plan gives a list of various litigations with regard to the claim made by the Appellant and in such factual background the claim made by the Appellant was admitted only on contingent basis and now with the Approval of Resolution Plan, the claim would not be enforceable. The claim made by the Appellant was less than 10% of the aggregate debt of Corporate Debtor and thus the Appellant was not entitled to even notice under Section 24(3) of IBC. 5. The Respondent No. 2-SRA has submitted that the Resolution Plan has been approved by 100% voting in favour and that the Resolution Professional had collated and verified claims of Financial Creditors and Operational Creditors and compiled the total admitted claims. The Liquidation Value of the Corporate Debtor was valued at far below the amounts due and payable even to the secured Financial Creditors. It was found that the Liquidation Value was insufficient to even meet the required value for settling the dues of secured Financial Creditors and consequently Liquidation Value was Nil for all other Creditors. Still the Resolution Plan has provisions for Workmen/Employees and Other Opera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1, the Resolution Plan as has been passed is binding on the Appellant." 11. We have heard the learned advocate, Mr.Anand Nainawati appearing for the applicant and learned senior standing counsel, Mr.Dhaval Vyas for the respondent. 12. Learned senior standing counsel, Mr.Dhaval Vyas has attempted to point out to this Court the objection on the part of the appellant authority which is unhappy with the approval of the RP of the Resolution Applicant on 01.01.2021. According to the respondent, what had been approved had no viable plan to pay the huge amount of dues payable by the Corporate Debtor to the department. The department also in its email on 09.02.2021 has given the reasons for approval of NIL value of the statutory dues along with the approved RP. It is also the say that the NCLT and NCLAT have grossly erred in passing the impugned order. 13. Learned advocate, Mr.Nainawati has relied on the order of this Court passed in I.A.1 of 2020 in Tax Appeal No.754 of 2007 in case of Ultratech Nathdwara Cement Limited (Earlier Known As Binani Cement Limited) vs. The Commissioner Of Customs (preventive) where also the challenge was to the maintainability of the Tax Appeal in light of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom its customers, which were not considered by the Resolution Professional while verifying the claims. In the facts of the present case since (a) since there was a final assessment, the Corporate Debtor would necessarily have paid the duty; (b) the demand against the Corporate Debtor was raised independent of the assessment and was dropped by the Assistant Commissioner and such dropping of the demand was confirmed by the Commissioner (Appeals); (c) The CESTAT remanded the matter to the Commissioner (Appeals) to ignore the assessment and decide the demand on merits. Such adjudication has not taken place. In the circumstances, Electrosteel (supra) 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. (d) Further, in Electrosteel (supra), 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. The relevant extract of Paragraph no. 18 of Electr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has committed substantial error of law in holding that the respondent is entitled to utilize the CENVAT credit available in his account after reversing credit in terms of rule 57AG (3) of CENVAT credit Rules for payment of duty under NotificationNo.6/2000 after 01.04.2000 and consequently extending benefit thereof to the respondent? (B) Whether in the facts and circumstances of the case, the Tribunal has committed substantial error of law in setting aside order of the Commissioner, Central Excise & Customs, Surat-I imposing penalty of Rs.4,99,50,965/- (D.T.Division, Jolwa) and Rs.6,55,61,563/- (D.W. Division, Vareli) is imposed on the assessee under Rule 173 Q, 57 AH and Section 11AC of the Central Excise Act, 1944? (C) Whether in the facts and circumstances of the case, the Tribunal has committed substantial error of law in not confirming order of the Commissioner, Central Excise & Customs, Surat-I to levy interest from the respondent under rule 57AH of the Central Excise Rules, 1944 read with Section 11AB of the Central Excise Act, 1944?" 15. Keeping legal issue open for being considered at a future date and subject to the possibility of success before the Apex Court if at a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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