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2020 (11) TMI 1073 - Tri - Insolvency and BankruptcyEffect of moratorium on passing of Liquidation order - HELD THAT - It is not in dispute that impugned order has been passed subsequent to the order of liquidation being passed by this Adjudicating Authority in the case of Corporate Debtor. The legal position is that on passing of the order of liquidation, the moratorium placed under Section 14 of IBC, 2016 comes to an end. Further, as per provision of Section 33(5) of IBC, 2016, the legal proceedings can be continued against the Corporate Debtor during the course of liquidation. There are no merit in this application. The same is, therefore, dismissed.
Issues:
1. Stay on the operation of order dated 18.06.2018 and recovery notice issued on 12.09.2018. 2. Proceedings under GST laws in contravention of the provisions of IBC, 2016. Analysis: Issue 1: Stay on the operation of order and recovery notice The Applicant sought a stay on the operation of an order dated 18.06.2018 and a recovery notice issued on 12.09.2018. The Corporate Debtor had been admitted into Corporate Insolvency Resolution Process (CIRP) by an order dated 17.08.2017, triggering the moratorium under Section 14 of the Insolvency & Bankruptcy Code, 2016 (IBC, 2016). Despite this, proceedings under GST laws continued, leading to the order of liquidation being passed by the GST Authority on 11.05.2018, with a liquidator appointed. The GST Authority subsequently issued an assessment order on 18.06.2018 and a recovery notice on 12.09.2018. The Applicant argued that these actions were in contravention of the IBC, 2016, and should be quashed. However, the Tribunal noted that the order of liquidation marked the end of the moratorium under IBC, 2016, and legal proceedings could continue against the Corporate Debtor during liquidation as per Section 33(5) of the IBC, 2016. Consequently, the Tribunal found no merit in the application and dismissed it. Issue 2: Proceedings under GST laws in contravention of IBC, 2016 The crux of the matter revolved around the Applicant's contention that the proceedings under GST laws were conducted in contravention of the provisions of the IBC, 2016. The Applicant argued that the order and recovery notice issued by the GST Authority post the liquidation order should be quashed. However, the Tribunal, after considering the submissions and the legal framework, found that the actions taken by the GST Authority were permissible under the IBC, 2016. The Tribunal highlighted that once the order of liquidation is passed, the moratorium ceases, allowing legal proceedings to continue against the Corporate Debtor during liquidation. Therefore, the Tribunal dismissed the application, emphasizing the legal position that supported the actions of the GST Authority in this case. In conclusion, the Tribunal dismissed the application seeking a stay on the operation of the order and recovery notice, as it found that the actions taken by the GST Authority post the liquidation order were in accordance with the legal provisions of the IBC, 2016. The Tribunal's decision was based on the understanding that the moratorium under IBC, 2016 ends upon liquidation, enabling legal proceedings to proceed against the Corporate Debtor.
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