2024 (2) TMI 906 - AT - Central Excise

Recovery of excise duty, which got extinguished on approval of resolution plan - HELD THAT - The NCLT, Chennai has approved Resolution Plan vide its order No.25/27-June 2019. The Hon'ble Supreme Court in the case of GHANASHYAM MISHRA AND SONS PRIVATE LIMITED THROUGH THE AUTHORIZED SIGNATORY VERSUS EDELWEISS ASSET RECONSTRUCTION COMPANY LIMITED THROUGH THE DIRECTOR ORS. 2021 (4) TMI 613 - SUPREME COURT has held that all dues including the statutory dues owed to the Central Government any State Government or any local authority including tax authorities, 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 of IBC can be continued. It is also stated that the Department has not made any claim before the Corporate Insolvency Resolution Process in respect of the demands arising out of the orders impugned in these three appeals. Since the Resolution Plan has been approved, as per para 8 of the Resolution Plan, all claims shall stand irrevocably and unconditionally settled, discharged and extinguished in perpetuity. Appeal dismissed.

Issues Involved:

1. Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code, 2016 (IBC 2016).
2. Approval and binding nature of the Resolution Plan by the NCLT and Supreme Court.
3. Extinguishment of statutory dues and claims not included in the Resolution Plan.

Summary:

Corporate Insolvency Resolution Process (CIRP):
The appellant company underwent Corporate Insolvency Resolution Proceedings as per the Insolvency & Bankruptcy Code, 2016, with the insolvency commencement date being 17-Aug-17. A public announcement was issued on 24-Aug-17, calling creditors to submit proof of their claims by 07-Sep-17. The respondent did not file any claim pursuant to this announcement.

Approval and Binding Nature of the Resolution Plan:
A resolution plan was prepared, approved by the Committee of Creditors, and subsequently by the NCLT, Chennai on 25/27-Jun-19. Although the NCLAT set aside this approval, the Supreme Court reinstated it on 28-Feb-20, making the resolution plan final. As per Sec. 31(1) of the IBC, 2016, the resolution plan approved by the NCLT is binding on the corporate debtor and its creditors, including the Central Government.

Extinguishment of Statutory Dues and Claims:
The resolution plan defined "Statutory Dues" and detailed their treatment, proposing a maximum payment of Rs. 7.01 crores, primarily to the electricity department. All other claims, including those under litigation or dispute, were to be settled at NIL value. The NCLT-approved plan stated that any claims or demands not included would be permanently extinguished, with no further obligations on the corporate debtor.

The Supreme Court in Ghanashyam Mishra & Sons Pvt Ltd v. Edelweiss Asset Reconstruction Company Ltd (2021) 9 SCC 657 ruled that post-approval of the resolution plan, no dues not part of the plan can be recovered from the corporate debtor.

Judgment:
The Tribunal noted that the demands disputed in these appeals, for periods from 2006 to 2017, are covered by the NCLT-approved resolution plan and confirmed by the Supreme Court. Consequently, these demands stand irrevocably settled and extinguished. The appeals are dismissed as the Department did not make any claims during the Corporate Insolvency Resolution Process.

Conclusion:
The appeals against the orders O.I.O. No. 5/2017, O.I.O. No. 4/2015 read with O.I.A. No. 240/16, and O.I.O. No. 28/2018 read with O.I.A. No. 656/18 are dismissed, with all claims being irrevocably extinguished as per the approved resolution plan.

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