TMI Blog2021 (12) TMI 1417X X X X Extracts X X X X X X X X Extracts X X X X ..... 2-2021 - HONOURABLE MS. JUSTICE SONIA GOKANI AND HONOURABLE MS. JUSTICE NISHA M. THAKORE Appearance: For the Petitioner(s) No. Mr Anand Nainawati (5970) For the Respondent(s) Mr Ankit Shah (6371) IA JUDGMENT (PER : HONOURABLE MS. JUSTICE SONIA GOKANI) 1. Present application is preferred by the original respondent on the ground that the pending Tax Appeal has become infructuous and non-est in view of the order passed on 01.01.2021 in I.A.No.661 of 2020 with I.A.No.759 of 2020 in C.P.(I.B.) No.453 of 2018 (Insolvency Petition) passed by the National Company Law Tribunal, Ahmedabad Bench ( the NCLT hereinafter) approving the Resolution Plan (Second Revised Resolution Plan dated 19.09.2020 including Addendum dated 23.09.2020) of MCPI Private Limited. This has been done by the NCLT in exercise of its power under Section 31 (1) of the 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 applicati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... value of setting the dues of the secured financial creditors. Consequently, the liquidation value of the applicant was computed as NIL with respect to all other creditors including towards Operational Creditors such as the respondent. In respect of the operational debt which included statutory dues and tax liabilities under Section 30 of the Code, where the Operational Creditors were entitled to the liquidation value at minimum. 7.1 It is further the say of the applicant that during the CIRP of the applicant, the RP published the Form-G under Rule 36A(1) of the CIRP Regulations, inviting prospective resolution applicant for submitting their debts and Expression of Interest ( the EOI hereinafter) and eventually the revised regulation plan was submitted following the negotiation with Coc and RP. The second revised regulation plan was submitted on 19.09.2020 and addendum on 23.09.2020. 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 app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f justice. 9. We notice that the order of NCLT dated 01.01.2021 has after detailed discussion, directions and observations in summation said thus: 16. Thus the Resolution Plan filed with the Application meets the requirements of Section 30(2) of I B Code, 2016 and Regulations 37, 38, 38(1A) and 39(4) of IBBI (CIRP) Regulations, 2016. The Resolution Plan is also not in contravention of any of the provisions of Section 29A. The RP has also certified that the Resolution Plan approved by CoC does not contravene any of the provisions of the law for the time being in force. The Compliance Certificate is placed on record. The Resolution Plan has been approved by the CoC with 100% voting share. 17. The Resolution Plan contains various reliefs and concessions as per annexure-f of the said Resolution Plan. Certain reliefs have been granted specifically hereinabove. Hence, general exemption granted now is in 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... records relating to the conduct of the corporate insolvency resolution process and Resolution Plan to the Insolvency and Bankruptcy Board of India to be recorded in its database. 20. Prayers in terms of (A), (B), (C) and (D) under the Prayer Petition of IA 661 of 2020 in CP (IB) 453 of 2018 are hereby granted. The Resolution Plan stands modified to the extent of our direction given in this order and to be read along with such directions. Accordingly, IA 661 of 2020 and IA 759 of 2020 in CP (IB) 453 of 2018 are allowed and disposed of in terms indicated above. 21. The permission for reduction of capital, as approved in the Resolution Plan is also granted. The amalgamation of MCPI Polyester Private Limited into the Corporate Debtor in terms of and as envisaged in the Scheme of Amalgamation of MCPI Polyester Private Limited into the Corporate Debtor annexed as Annexure 11 to the Resolution Plan is also approved. Accordingly, after conversion 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 N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... keholders and on humanitarian grounds it was required that their dues should be paid to the fullest extent and hence Resolution Plan contains corresponding allocation to them. Other Operational Creditors (Other than Workman and Employees and Statutory Dues) who provide continuous support to the Corporate Debtor to ensure that in the future also their support is received to run the Corporate Debtor, the Resolution Plan provided for allocation ex gratia to such Operational Creditors. It is argued that although if the Company was to go in Liquidation the Operational Creditors would have got Nil, still the Resolution Plan made provisions for Workman and Employees and other Operational Creditors (Other than Workman and Employees and Statutory Dues) and thus the Resolution Plan was not bad in law. It is argued that the CoC has considered the Resolution Plan and approved the same in commercial wisdom and may not be interfered with. The Resolution Professional has 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Statutory Dues, Liabilities including outstanding government authority dues, taxes, etc.) were Rs.4,827,297,551/- (which includes amounts admitted on provisional as well as contingent basis). Then there are dues which were admitted by Operational Creditors (Other than Workmen and Employees and statutory dues) which were of Rs. 213,192,038/- (including amount admitted on/contingent basis). Considering these amounts and the Liquidation Value, it is difficult to find fault with the Resolution Plan as has been approved. There is substance in the submissions made by the Resolution Professional that if the Corporate Debtor was to go in Liquidation, the Appellant would get Nil amount. 9. Keeping in view judgment in the matter of Ghanashyam Mishra and Sons Private Limited Through the Authorized Signatory Vs. Edelweiss Asset Reconstruction Company Limited Through the Director Ors. Civil Appeal No. 8129 of 2019 passed by the Hon'ble Supreme Court of India on 13th April, 2021, 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 Vy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e rationale of Section 31 of the Code. A successful resolution applicant cannot suddenly by faced with undecided claims after the resolution plan submitted by him has been accepted as this would amount to a hydra head popping up which throw into uncertainty amounts payable by a prospective resolution applicant who would successfully take over the business of the corporate debtor. All claims must be submitted to and decided by the resolution professional so that a prospective resolution applicant knows exactly what is to be paid in order that it may then take over and run the business of the corporate debtor. This the successful resolution applicant does on a fresh slate as has been pointed out by us hereinabove (Emphasis Supplied) 12. In our opinion, the judgment of the Jharkhand High Court in the case of Essar Steel Limited (Supra) is of no avail to the Department for the following reasons: (i) In Electrosteel (supra) the matter pertained to the amount recovered by an assessee from 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 Corp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hallenge to the approved plan failed. We are of the view that it is not open to the Department to, once again raise the issue by taking shelter of Electro Steel (Supra). 14. For all the foregoing reasons, the civil application succeeds and is hereby allowed, and consequently the Tax Appeal No.754 of 2007 is disposed of accordingly. 13.1 There does not appear to be any further challenge before the Apex Court after once the NCLAT has approved the Resolution Plan. In wake of the settled position of the law, once the Resolution Plan is approved and the approval order has been given under Section 31(1) of the Code, which has been also confirmed by the NCLAT, the same would have an overriding effect over all other laws and force including the Central Excise Act, 1944 and therefore, the appeal is not survived. 14. This court notices that the Tax Appeal is admitted on 18.07.2013 for consideration of the following substantial questions of law: (A) Whether in the facts and circumstances of the case, the Tribunal 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 te ..... X X X X Extracts X X X X X X X X Extracts X X X X
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