Approved Resolution Plan Extinguishes Unincluded Customs Claims: CESTAT Chennai

Reliance Communications Infrastructure Ltd. Vs Commissioner of Customs (CESTAT Chennai)

Summary: The Customs, Excise and Service Tax Appellate Tribunal, Chennai considered whether proceedings in a customs appeal could continue after approval of a resolution plan for the appellant-company, Reliance Communications Infrastructure Limited, under the Insolvency and Bankruptcy Code, 2016. The appeal had arisen from Order-in-Appeal C.Cus.II No. 888/2015 dated 03.09.2015. When the matter was taken up, none appeared for the appellant. The Revenue informed the Tribunal during earlier hearings that Corporate Insolvency Resolution Process proceedings had been initiated and that the resolution plan of the company had been approved by the National Company Law Tribunal.

The Revenue subsequently produced the NCLT order dated 19.12.2023 approving the resolution plan of Reliance Projects & Property Management Services Limited, the Successful Resolution Applicant, for resolution of Reliance Communications Infrastructure Limited. The Tribunal noted that the NCLT order expressly provided that the approved resolution plan would be binding on the Corporate Debtor, employees, members, creditors, including the Central Government, State Government or local authority to whom statutory dues were payable, guarantors and other stakeholders.

The Tribunal then relied substantially on the Supreme Court judgment in Ghanashyam Mishra and Sons Pvt. Ltd. v. Edelweiss Asset Reconstruction Company Ltd., which held that once a resolution plan is approved under Section 31(1) of the Insolvency and Bankruptcy Code, claims forming part of the plan stand frozen and become binding, while claims not forming part of the approved plan stand extinguished and proceedings concerning such claims cannot be initiated or continued. The Supreme Court also held that statutory dues payable to the Central Government, State Government or local authority, if not included in the resolution plan, stand extinguished.