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2021 (4) TMI 624 - Tri - Insolvency and BankruptcySeeking extinguishing of demand towards Central Sales Tax and VAT - Extinguishing of demand prior to 20th September, 2018 - HELD THAT - In the approved Resolution Plan, it was clearly stated that barring aside the claims admitted and forming part of the Resolution Plan any other claim and/or demand prior to the effective date shall stand extinguished. The Hon ble Supreme Court of India in the matter of COMMITTEE OF CREDITORS OF ESSAR STEEL INDIA LIMITED THROUGH AUTHORISED SIGNATORY VERSUS SATISH KUMAR GUPTA OTHERS 2019 (11) TMI 731 - SUPREME COURT upholding the constitutional validity of the Insolvency and Bankruptcy Code (Amendment) Act, 2019 has held that Ultimately it is the commercial wisdom of the requisite majority of the CoC that must prevail on the facts of any given case, which include distribution of assets. It is, therefore, not possible that the AA and consequently the NCLAT would be vested with the discretion that it vested in the CoC. Since the Respondents have not filed their claims relating to the earlier period till the date of approval of the Resolution Plan before the Resolution Professional during the CIRP period/ before the approval of the Resolution Plan, the claims of the Respondents, if it is filed now or in future, is not to be entertained by the Resolution Applicant / Corporate Debtor - application disposed off.
Issues Involved:
1. Extinguishment of tax demands prior to the effective date of the Resolution Plan. 2. Validity and enforceability of claims not submitted during the CIRP period. 3. Implementation and compliance with the approved Resolution Plan. Issue-Wise Detailed Analysis: 1. Extinguishment of Tax Demands Prior to the Effective Date of the Resolution Plan: The Corporate Debtor (Applicant) filed IA No.20 of 2020 under Section 60(5)(c) of the Insolvency and Bankruptcy Code, 2016, seeking the extinguishment of demands made by the Respondent for Central Sales Tax and Value Added Tax amounting to ?17,96,20,631/- and ?3,22,59,067/- respectively, and any other demand prior to 20th September 2018. The Resolution Plan approved on 20.09.2018 clearly stated that any claims or demands prior to the effective date would stand extinguished. Despite the Applicant's communication to the Respondent regarding the approval of the Resolution Plan and the settlement of claims, the Respondent did not respond or file any claims during the CIRP period. 2. Validity and Enforceability of Claims Not Submitted During the CIRP Period: The Respondent failed to file its claims with the Interim Resolution Professional (IRP) or the Resolution Professional (RP) during the CIRP. The approved Resolution Plan explicitly mentioned that any liabilities, including those to Operational Creditors and other creditors, relating to the period before the effective date, would be deemed settled and extinguished. The Supreme Court's ruling in the case of Committee of Creditors of Essar Steel India Ltd. Vs. Satish Kumar Gupta & Ors. reinforced that all claims should be submitted and decided during the CIRP to avoid uncertainties for the successful Resolution Applicant. 3. Implementation and Compliance with the Approved Resolution Plan: The Tribunal directed that since the Respondent did not file their claims during the CIRP, any future claims would not be entertained by the Resolution Applicant or the Corporate Debtor. The Tribunal ordered that the company could operate its bank account without any obstructions from the Respondent. The Resolution Applicant was directed to strictly implement the approved Resolution Plan without any violations and to file a compliance report detailing the payment of statutory dues. Additionally, the Monitoring and Supervising Committee was instructed to submit a status report on the implementation of the Resolution Plan. Order: The Tribunal concluded that the Respondent's claims, if filed now or in the future, would not be entertained due to their failure to file during the CIRP period. The company was allowed to operate its bank account without obstructions, and the Resolution Applicant was directed to implement the Resolution Plan and file a compliance report. The Monitoring and Supervising Committee was also directed to submit a status report on the implementation of the Resolution Plan. Accordingly, IA No.20 of 2020 was disposed of with the above observations and directions.
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