2022 (10) TMI 740 - Tri - Insolvency and Bankruptcy

Seeking modification of the order, limited up to waivers as sought under the Resolution Plan - section 60(5) of Insolvency and Bankruptcy Code, 2016 read with Rule 11 of NCLT Rules, 2016 - HELD THAT - All the past liabilities arising out of any levies/tax dues to any government authorities, etc. which are not part of the Resolution Plan and pertaining to Corporate Insolvency Process period shall stand extinguished from the date of approval of the Resolution Plan. The authorities have to file the claim before the RP before the approval of Resolution Plan by the CoC. At this stage, we cannot burden the Resolution Applicant with the liabilities that had arisen before the approval of the Resolution Plan. This bench is of the view that the income tax liability on notional income arising on implementation of the Resolution Plan due to writing back of the unpaid dues to the creditors in the books of Corporate Debtor is to be waived off. Accordingly, such liabilities are waived off. Application are disposed of as partly-allowed.

Summary

Issues:
1. Modification of order under Insolvency and Bankruptcy Code, 2016 regarding waivers sought in Resolution Plan.

Analysis:
The judgment pertains to an application filed by the Resolution Applicant seeking modification of an order under the Insolvency and Bankruptcy Code, 2016, regarding waivers sought in the Resolution Plan. The Tribunal noted that the Resolution Plan had specific provisions related to waivers of liabilities, including past tax dues and levies, and directed that any waivers sought must be subject to approval by the concerned authorities. The Applicant sought specific waivers for various liabilities, including income tax and GST liabilities accrued during the Corporate Insolvency Resolution Process (CIRP) period and post-closing date liabilities. The Tribunal considered each relief sought by the Applicant in detail.

The Tribunal granted relief for waivers of income tax and GST liabilities accrued during the CIRP period and post-closing date, as requested by the Applicant. However, for the waiver of fees and stamp duty for filing Form SH-7 with the Ministry of Corporate Affairs, the Tribunal directed the Applicant to approach the relevant authority under the Companies Act for consideration. Additionally, the Tribunal decided to waive the income tax liability on notional income arising from the Resolution Plan's implementation due to writing back of unpaid dues to creditors in the Corporate Debtor's books.

Furthermore, the Tribunal provided the Applicant with a 6-month period post the Closing Date to assess the status of permits, approvals, and consents to ensure compliance without facing government investigations or actions for non-compliances. The time period for Resolution Plan implementation was also extended by 6 months. The Tribunal granted relief related to tagging the present Interlocutory Application with another pending application before the Bench.

In conclusion, the Tribunal partially allowed the applications, granting specific waivers while directing the Applicant to follow the prescribed procedures for certain relief requests. The judgment emphasized the importance of compliance and provided extensions to facilitate the Resolution Plan's effective implementation.