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2023 (3) TMI 650 - HC - Insolvency and BankruptcySeeking permission to petitioner no. 1 to place its indents on the e-indenting system of the respondent relating to supply of raw materials - right over the siding or a license to use the siding - HELD THAT - The decision in West Bengal State Electricity Distribution Company Limited vs. Sri Vasavi Industries Limited 2022 (7) TMI 580 - CALCUTTA HIGH COURT make it clear that any claim not made during the course of CIRP and before approval of resolution plan shall automatically be extinguished and the corporate debtor is deemed to start its operations with a clean slate after the resolution plan is approved. In the present case, the respondent Railways admittedly failed to lodge its claims before the Resolution Professional or the Committee of Creditors during the CIRP. Simply put, the dues which the Railways omitted to claim are no longer in existence by operation of law. It is further evident that the Railways is attempting to foist its demands on the petitioners through a belated window which it cannot do after the law laid down by the Supreme Court. It is also significant that the letter of 21st September, 2015 is addressed to Ramswarup Loh Udyog which merged into the petitioner no. 1 in 2007. This letter does not raise any other issue save and except that Ramswarup Loh Udyog has been de-licensed from 1st September, 2014 for non-payment of dues amounting to Rs. 12,51,416/-. Hence, the claim of the Railways is a monetary claim, simpliciter. Since the claim stood extinguished on and from 4th September, 2019 when the petitioner no. 1 emerged successful from the CIRP, the Railways cannot penalize the petitioners for non-payment of dues including creating operational firewalls on the e-indenting system. Application allowed and disposed of with a direction on the respondent South Eastern Railway to permit the petitioner no. 1 to place its indents for supply of raw material on the e-indenting system within 7 days from the date of communication of this judgment.
Issues involved:
The petitioners seek a mandamus on the respondent South Eastern Railway to allow the petitioner to place its indents on the e-indenting system for the supply of raw materials. The petitioners challenge the demand made by the Railways and seek permission to place their indents. Issue 1: Mandamus on the respondent South Eastern Railway The petitioners, engaged in manufacturing steel, sought a mandamus on the respondent South Eastern Railway to allow them to place indents on the e-indenting system for the supply of raw materials. The petitioner no. 1, after undergoing Corporate Insolvency Resolution Process (CIRP), intended to resume business and required raw materials for transportation to its siding. However, the e-indenting system was unresponsive, and the respondent did not respond to the petitioner's request for a joint inspection of the siding. The petitioners' plea was based on the need to resume operations and the unresponsiveness of the e-indenting system. Issue 2: Challenge to the Demand by Railways The petitioners were aggrieved by the demand made by the Railways, including an earlier demand, which they claimed was contrary to the law as pronounced by the Supreme Court. The Railways demanded payment of dues, citing non-payment by Ramswarup Loh Udyog and asserting that the petitioners needed to make a fresh application for raw materials. The petitioners challenged the demand and sought direction to place their indents for the supply of raw materials on the e-indenting system. Resolution and Legal Analysis The undisputed facts revealed that the CIRP of the petitioner culminated in a Resolution Plan approved by the NCLT and confirmed by the NCLAT and the Supreme Court. The Resolution Plan came into force after the approval, and the demands by Railways predated the approval. The Supreme Court's decisions established that claims not made during CIRP and before the approval of the resolution plan are extinguished, and the corporate debtor starts operations with a clean slate post-approval. The Railways failed to lodge claims during CIRP, and the belated demands were deemed extinguished by law. Consequently, the claim against the petitioners was considered a monetary claim that stood extinguished post-resolution plan approval. Judgment The Court allowed the petition and directed the respondent South Eastern Railway to permit the petitioner to place indents for the supply of raw material on the e-indenting system within 7 days from the date of the judgment. The decision was based on the legal principles that extinguished claims post-resolution plan approval cannot be enforced, and the corporate debtor operates with a clean slate.
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