2021 (6) TMI 1160 - HC - Insolvency and Bankruptcy

Filing of fresh claims after Resolution Plan is approved - demand of outstanding water tax dues - HELD THAT - The settled legal position is that once a resolution plan is approved by the CoC and meets the requirements of Section 30 (2) of the IBC, it is binding on all creditors, guarantors, employees and other stake holders. From the point of view of the company that is undergoing the reconstruction, it cannot after the resolution plan is approved, be faced with fresh claims pertaining to the very period for which the plan has been approved. This has been explained by the Supreme Court in The Committee of Creditors of Essar Steel India Limited v. Satish Kumar Gupta 2019 (11) TMI 731 - SUPREME COURT where it was held that A successful resolution Applicant cannot suddenly be 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 would throw into uncertainty amounts payable by a prospective resolution Applicant who successfully take over the business of the corporate debtor. In the present case, once the resolution plan was approved by the NCLT, and affirmed by the NCLAT in appeal, it was not open to Opposite Party No.2, which in fact participated in the resolution plan by submitting a claim, to again raise a demand for the very period covered by the resolution plan. In other words, no claim for the period between December 2009 up to 7th November 2017, the date of approval of the resolution plan could have been raised by Opposite Party No.2. Such demands to the extent they cover the period up to 7th November, 2017 are plainly unsustainable in law. Opposite Parties 1 to 3 will revise their demand by limiting it to the period from 7th November, 2017 and in the first instance issue a show cause notice (SCN) to the Petitioner giving it a reasonably sufficient time to reply to it - Thereafter the Opposite Parties 1 to 3 will proceed to pass appropriate orders to finalise the demand after verifying the claim of the Petitioner that it has been paying the water tax dues from January, 2019 onwards - petition disposed off.

Summary

Issues:
Challenge to demand notice for outstanding water tax dues and related notices raising a demand of Rs.1.98 crores. Interpretation of Insolvency and Bankruptcy Code, 2016 (IBC) regulations regarding submission of claims. Validity of demand notice issued after approval of resolution plan under IBC.

Analysis:
The petitioners challenged a demand notice for water tax dues and related notices demanding Rs.1.98 crores. The Board for Industrial and Financial Reconstruction (BIFR) admitted a petition for financial rehabilitation filed by the petitioners. Subsequently, a creditor filed an application under the Insolvency and Bankruptcy Code, 2016 (IBC) due to default in repayment. The Interim Resolution Professional (IRP) invited claims, and it was noted that the Opposite Party failed to submit a claim in the proper form as required by IBC Regulations.

After the resolution application of the petitioner's promoter was approved, the Opposite Party addressed a letter to reconcile arrears of water tax dues. Despite objections raised by the petitioner, a demand notice was issued for a significant sum covering a period from December 2009 to March 2019. The respondents admitted that the claim for water tax due until January 2017 was submitted to the IRP but not in the proper form as required.

The Court referred to the settled legal position that once a resolution plan is approved under IBC, it is binding on all stakeholders, and fresh claims for the same period are impermissible. Citing Supreme Court judgments, the Court emphasized that successful resolution applicants should not face surprise claims outside the approved resolution plan. In this case, demands for the period covered by the resolution plan approval were deemed unsustainable in law.

The Court directed the respondents to revise their demand limiting it to the period after the approval of the resolution plan and verify the petitioner's claim of paying water tax dues from January 2019 onwards. The petitioner was given the opportunity to respond to any revised demand, with the option to seek remedies if aggrieved. The writ petition was disposed of accordingly.