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2021 (12) TMI 851 - HC - Insolvency and BankruptcyRenewal of trading licence in terms of the Orissa Minerals (Prevention of theft, Smuggling Illegal Mining and Regulation of Possession, Storage, Trading and Transportation) Rules, 2007 - rejection of FACOR s representation for waiving the demand raised against it by virtue of the Resolution Plan approved by the National Company Law Tribunal (NCLT), Cuttack Bench - HELD THAT - The central issue being the alleged outstanding dues owed by FACOR to the Opposite Parties. It is not disputed by the State that the aforementioned demand pertains to the period prior to the plan effective date of the ARP. As pointed out in the rejoinder affidavit, the ARP also talks about government dues which fall within the definition of 'operational debt as indicated in Section 5 (21) of the IBC - Section 31(1) of the IBC further makes it clear that once the ARP is in place, approved by the CoC, it shall be binding on the corporate debtor and its employees, members, creditors including the Central Government, any State Government to whom a debt in respect of the payment of dues arising under any law for the time being in force, such as authorities to whom statutory dues are owed, guarantors and other stakeholders involved in the resolution plan. The plea of the Opposite Parties that the State Authorities were unable to file their respective claims before the NCLT in the sum of ₹ 204,63,06,573/- since it has not finalized and in any event NCLT is not competent to decide the legality of the demands is untenable. Under Section 3(6) of the IBC a claim inter alia includes a right to payment, whether or not such right is reduced to judgment, fixed, disputed, undisputed, weaken, equitable secured or unsecured . In terms of Section 31 of the IBC, the ARP is binding on all creditors including Central Government and the State Government. Since all of the impugned demands raised against FACOR pertain to the period prior to the Plan Effective date i.e. 31st January, 2020, all such demands stand automatically extinguished in terms of the ARP - the impugned demand raised against the Petitioner by the Opposite Parties are unsustainable in law. Petition disposed off.
Issues Involved:
1. Issuance of Mining Dues Clearance Certificate (MDCC). 2. Renewal of trading license. 3. Validity of demand notices issued by the State. 4. Applicability of the Approved Resolution Plan (ARP) under the Insolvency and Bankruptcy Code (IBC). 5. Refund or adjustment of excess amounts paid by the Petitioner. Detailed Analysis: 1. Issuance of Mining Dues Clearance Certificate (MDCC): The petitioner, FACOR, sought a direction for the issuance of an MDCC from the Director of Mines, Government of Odisha, as a prerequisite for renewing its trading license under the Orissa Minerals Rules, 2007. FACOR argued that, in view of the approved Resolution Plan (ARP) by the National Company Law Tribunal (NCLT), the Director of Mines was legally obliged to consider earlier dues as 'Nil' and issue the MDCC. The Court initially required FACOR to appear before the Director of Mines, who subsequently rejected FACOR's application for MDCC, leading to the present writ petition. 2. Renewal of Trading License: FACOR applied for the renewal of its trading license, which was contingent upon furnishing a valid MDCC. The Court noted that FACOR had paid amounts under protest and was issued the MDCC, and its trading license was renewed. The petition's scope was thus limited to seeking a refund or adjustment of the excess amount paid. 3. Validity of Demand Notices Issued by the State: FACOR contended that the demands raised by the State pertained to periods before the 'plan effective date' of the ARP and were therefore extinguished. The State argued that the demands were enforceable under the Supreme Court's order in Common Cause v. Union of India and that neither the NCLT nor the Resolution Professional could invalidate these demands. The Court, however, found that the demands were not enforceable post-ARP approval, as they pertained to a period before the 'plan effective date.' 4. Applicability of the Approved Resolution Plan (ARP) under the Insolvency and Bankruptcy Code (IBC): The ARP approved by the NCLT provided for the extinguishment of all claims, demands, liabilities, and obligations of FACOR for periods prior to the 'plan effective date.' The Court emphasized that, under Section 31(1) of the IBC, the ARP binds all stakeholders, including the State Government. The Supreme Court's decision in Committee of Creditors of Essar Steel India Limited reinforced that once a resolution plan is approved, it binds all creditors and stakeholders, ensuring that the successful resolution applicant starts with a "fresh slate." 5. Refund or Adjustment of Excess Amounts Paid by the Petitioner: The Court directed the State to refund or adjust the excess amount of ?12,02,28,202/- paid by FACOR under protest. This direction was based on the finding that the demands raised against FACOR were unsustainable in law, as they were extinguished by the ARP. Conclusion: The Court quashed the impugned demand notices and directed the State to refund or adjust the amounts paid by FACOR under protest. The writ petition was disposed of with no order as to costs. The judgment reaffirmed the binding nature of an approved resolution plan under the IBC on all stakeholders, including government authorities.
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