2022 (3) TMI 862 - AT - Central Excise

Validity of claim before the Resolution Professional in respect of the confirmed demands by Deputy Commissioner CGST Central Excise Division Chandrapur - HELD THAT - A three judges bench of Hon ble Supreme Court has in the case of Ghanashyam Mishra Sons 2021 (4) TMI 613 - SUPREME COURT considered similar issue and it was held that 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. This Tribunal has no jurisdiction to entertain the present appeal. The same is accordingly abated in terms of Rule 22 of CESTAT (Procedure) Rules 1982.

Summary

Issues:
1. Interpretation of Resolution Plan approval by NCLT and NCLAT
2. Application of Rule 22 of CESTAT (Procedure) Rules, 1982
3. Binding effect of Resolution Plan on creditors post approval

Analysis:
1. Interpretation of Resolution Plan approval by NCLT and NCLAT:
The appellant's counsel argued that the Resolution Plan prepared by the Resolution Professional and approved by the NCLT was binding, as the Revenue had made its claims before the Resolution Professional. The Resolution Plan was approved by the NCLT and NCLAT, with the Revenue accepting the NCLAT's order. Citing the decision of the Hon'ble Supreme Court in a similar case, the appeal was deemed infructuous and abated in accordance with Rule 22 of the CESTAT (Procedure) Rules, 1982.

2. Application of Rule 22 of CESTAT (Procedure) Rules, 1982:
The Tribunal considered the submissions and referred to the Hon'ble Supreme Court's decision in Ghanashyam Mishra & Sons, where it was clarified that once a Resolution Plan is approved by the Adjudicating Authority under Section 31 of the Insolvency and Bankruptcy Code, the claims provided in the plan become binding on the Corporate Debtor and all stakeholders. Any claims not part of the Resolution Plan are extinguished upon approval, preventing further proceedings on those claims. As a result, the Tribunal concluded that it lacked jurisdiction to entertain the appeal and abated it under Rule 22 of the CESTAT (Procedure) Rules, 1982.

3. Binding effect of Resolution Plan on creditors post approval:
The Supreme Court's verdict emphasized that once a Resolution Plan is approved, all claims specified in the plan become frozen and binding on the Corporate Debtor and stakeholders. Any claims not included in the plan are extinguished, prohibiting any further action on those claims. The 2019 amendment to Section 31 of the Insolvency and Bankruptcy Code was deemed clarificatory and declaratory, effective from the enactment of the Code. Consequently, all dues, including statutory ones, not part of the Resolution Plan are extinguished post-approval, preventing any proceedings on such dues prior to the Adjudicating Authority's approval under Section 31.

This comprehensive analysis of the judgment highlights the key legal interpretations and implications regarding Resolution Plan approvals, Rule 22 of CESTAT (Procedure) Rules, and the binding effect of Resolution Plans on creditors post-approval, as elucidated by the Hon'ble Supreme Court's decision in Ghanashyam Mishra & Sons.