2 Supreme Court on Recovery of Tax Dues Vis-À-Vis Claim Under IBC

In Ruchi Soya Industries Ltd. v. Union of India (2022) 380 ELT 8; (2022) 3 TMI 60 (SC), the appellant company filed a civil appeal challenging the order of Karnataka High Court which dismissed the petition in 2012 [Ruchi Soya Industries Ltd. v Union of India (2012) 281 ELT 406; (2012) 10 TMI 234 (Karnataka)]

The earlier petitions were filed by present appellant seeking issuance of mandamus directing that, the Notification No. 38 of 2002-Cus (N.T.) dated 13th June, 2002 was not applicable to the imported goods consisting of 1647.414 metric tonnes of crude palmolein covered under the Bill of Entry for Home Consumption dated 12th June, 2002. These were rejected.

However, in the interim during pendency, one of the bankers to the appellant, viz Standard Chartered Bank filed application under section 7 of the Insolvency and Bankruptcy Code, 2016(IBC) before the Mumbai bench of National Company Law Tribunal (NCLT) for initiation of Corporate Insolvency Resolution Process (CIRP). As is required under the IBC framework, the said application was admitted and subsequently, Resolution Professional (RP) filed an application under section 30(6) of the IBC Code for approval of resolution plan submitted by the resolution applicant.

NCLT later approved the resolution plan of the successful resolution applicant vide order dated 24.07.2019 and 04.09.2019 as a result of which management of the company vested in the successful resolution applicant.

The question before the apex court in the instant case was whether the claim of the present respondent which was admittedly not lodged before the Resolution Professional after public notices were issued under Sections 13 and 15 of the IBC could be considered?

It was contended by the appellant that the issue on hand was squarely covered by the law laid down by this Court in the case of Ghanashyam Mishra & Sons Pvt. Ltd. v. Edelweiss Asset Reconstruction Company Ltd. & Ors. (2021) 9 SCC 657 (SC). However, so far as the demand, which is the subject matter of the present proceedings is concerned, no claim was lodged in respect thereof, and as such, in view of the law laid down by Supreme Court while interpreting. Section 31 of the IBC, the respondents were now not entitled to claim any amount, which is not a part of the Resolution Plan.

On the other hand, revenue pleaded that there was certain confusion as to whether the operational debt as defined under section 5(21) of the IBC would cover the claim of the respondent /Revenue. In view of said confusion, there was a possibility that the office of the respondent might not have lodged the claim with respect to the present proceedings.

The court observed that the present case on hand was squarely covered by the law laid down by Apex Court in the case of Ghanashyam Mishra & Sons Pvt. Ltd. v. Edelweiss Asset Reconstruction Company Ltd. & Ors. [(2021) 9 SCC 657 (SC)].

It will be relevant to refer to Paragraph 102 of the said judgment which reads as under:

“102. In the result, we answer the questions framed by us as under:

102.1. That once a resolution plan is duly approved by the adjudicating authority under sub­section (1) of Section 31, the claims as provided in the resolution plan shall stand frozen and will be binding on the corporate debtor and its employees, members, creditors, including the Central Government, any State Government or any local authority, guarantors and other stakeholders. On the date of approval of resolution plan by the adjudicating authority, all such claims, which are not a part of resolution plan, shall stand extinguished and no person will be entitled to initiate or continue any proceedings in respect to a claim, which is not part of the resolution plan.

102.2. The 2019 Amendment to Section 31 of the I&B Code is clarificatory and declaratory in nature and therefore will be effective from the date on which the I&B Code has come into effect.

102.3. Consequently all the dues including the statutory dues owed to the Central Government, any State Government or any local authority, if not part of the resolution plan, shall stand extinguished and no proceedings in respect of such dues for the period prior to the date on which the adjudicating authority grants its approval under Section 31 could be continued.”

It therefore, appeared that admittedly, the claim in respect of the demand which is the subject matter of the instant proceedings was not lodged by the respondent after public announcements were issued under Sections 13 and 15 of the IBC. As such, on the date on which the Resolution Plan was approved by the NCLT, all claims stood frozen, and no claim, which is not a part of the Resolution Plan, would survive.

The apex court thus held that the appeals deserve to be allowed only on this ground and that the claim of the respondent, which is not part of the Resolution Plan, does not survive. The amount deposited by the appellant at the time of admission of the appeals along with interest accrued thereon is directed to be refunded to the appellant.

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