9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2024 (11) TMI 733 - HC - IBCDemand of property tax by the Municipal Corporation of Delhi (MCD) for the period prior to the effective date of the resolution plan - Section 123D of DMC Act, 1957 - HELD THAT - In Ghanashyam Mishra 2021 (4) TMI 613 - SUPREME COURT , it was noticed that the mischief that was sought to be remedied by the legislature by amending Section 31(1) of IBC was that despite the legislative intent to extinguish debts upon approval of the resolution plan, there were instances where State/Central Government authorities continued to pursue proceedings for the recovery of debts owed to them - 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.' In the present case, the MCD did not lodge its claim in respect of property tax dues against the petitioner during the CIRP. Admittedly, the claim of the MCD is not a part of the approved resolution plan. Consequently, prima facie, any statutory dues owed to the MCD by the petitioner prior to the date on which the resolution plan is approved i.e. 26.03.2021, cannot be demanded/recovered. The decision of Rainbow Papers 2022 (9) TMI 317 - SUPREME COURT does not detract from the above inasmuch as unlike in the said case, the concerned statutory authority (MCD) did not lodge its claim before the resolution professional during the CIRP initiated qua the petitioner. Further, MCD has not challenged the approval of resolution plan by the Adjudicating Authority. An ad-interim order is passed staying the operation of the impugned Common Assessment Order dated 02.03.2024 (to the extent it relates to Flat Nos. 109 to 112 owned by the petitioner). However, the petitioner is directed to pay the property tax for the period after 26.03.2021 - List on 25.07.2024.
Issues Involved:
1. Whether the property tax demand by the Municipal Corporation of Delhi (MCD) for the period prior to the effective date of the resolution plan is legally sustainable. 2. The applicability and overriding effect of the Insolvency and Bankruptcy Code (IBC) over the Delhi Municipal Corporation (DMC) Act, 1957. 3. The binding nature of the resolution plan approved by the National Company Law Tribunal (NCLT) and National Company Law Appellate Tribunal (NCLAT) on statutory authorities. 4. The failure of MCD to lodge its claim during the Corporate Insolvency Resolution Process (CIRP). Detailed Analysis: 1. Property Tax Demand by MCD: The petitioner challenged the property tax demand made by the MCD for the period prior to the effective date of the resolution plan, arguing that all liabilities and obligations related to outstanding government dues before the effective date, 26.03.2021, were extinguished as per the resolution plan approved by the NCLT and NCLAT. The petitioner contended that the demand for property tax from 01.04.2004 to 31.03.2024 was contrary to the provisions of the IBC and the orders of the NCLT and NCLAT. The court found merit in the petitioner's argument that the resolution plan, which did not include the MCD's claim, extinguished such dues for the period before the effective date. 2. Overriding Effect of IBC: The petitioner asserted that the IBC has an overriding effect over the DMC Act, 1957, as per Section 238 of the IBC, which stipulates that the provisions of the IBC will prevail in case of inconsistencies between two laws. The court noted that the IBC aims to provide a clean slate for the resolution applicant by extinguishing all claims not included in the resolution plan. This was supported by precedents such as Essar Steel India Ltd. and Ghanashyam Mishra & Sons (P) Ltd., which emphasized that once a resolution plan is approved, it is binding on all stakeholders, including government authorities. 3. Binding Nature of the Resolution Plan: The resolution plan approved by the NCLT under Section 31 of the IBC is binding on all stakeholders, including statutory authorities like the MCD. The court referred to the judgments in Ghanashyam Mishra and Ruchi Soya, which clarified that once a resolution plan is approved, all claims not part of the plan are extinguished, preventing any further claims by government authorities. The court highlighted that the legislative intent behind the IBC amendments was to ensure that once a resolution plan is approved, no further claims can be made by government authorities for dues not included in the plan. 4. MCD's Failure to Lodge Claim: The court observed that the MCD did not lodge its claim for property tax dues during the CIRP, and the claim was not part of the approved resolution plan. As per the precedent set in Ruchi Soya, claims not lodged during the CIRP and not included in the resolution plan do not survive post-approval. The court noted that MCD's failure to challenge the approval of the resolution plan further weakened its position. Conclusion: The court granted an ad-interim order staying the operation of the impugned Common Assessment Order by the MCD to the extent it related to the flats owned by the petitioner. The petitioner was directed to pay property tax only for the period after 26.03.2021. The respondents were instructed to file a reply within four weeks, with a rejoinder from the petitioner to follow within two weeks thereafter. The matter was listed for further hearing on 25.07.2024.
|
