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2021 (2) TMI 13 - Tri - Insolvency and BankruptcyImplementation of Resolution Plan - seeking directions to be given to the Sugar Commissioner, Maharashtra State, to the Collector/Sub-Divisional Officer/Gram Panchayat/Talathi of Sakharwadi for removing the entry of Government of Maharashtra - HELD THAT - The alleged act on the part of Respondent in not withdrawing and/or recalling its order of issuance of R.R.C. is causing enormous harm, loss and injury to the Applicant. The said immoveable property vests and/or stands transferred in favour of the Applicant in furtherance of the said Order dated 11-11-2019 of this Tribunal. The Applicant is deprived of the effective use of the said immoveable property on account of the aforesaid act on the part of the Respondent despite the Applicant having paid the entire amount of consideration. Also, the Applicants' title to the said immoveable shall continue to be defective till such time the said Order of R.R.C. continues to be operative and/or not withdrawn. Further, on account of non-removal and/or continuance of R.R.C. on the immoveable property, prejudice is caused to the Applicant not only in carrying on, running and operating the said sugar plant, payment of wages and salaries to workers and labourers, procurement of sugarcane from the farmers but also implementations and giving effect to the approved Resolution Plan. This non-implementation of the Resolution Plan is also causing great prejudice to the poor farmers and therefore, keeping their interest in view along with the interest of the Corporate Debtor Company and according to the provisions of law, this application needs to be allowed. Once the Resolution Plan is approved under section 31 of the Code, all the assets and benefits of the contracts of the Corporate Debtor stands unconditionally transferred and assigned and vested in the Successful Resolution Applicant free from all encumbrances. Further, all persons including Central and State Government as well as the Local Authorities are bound by the said Order. However, Respondent No. 1 despite being bound by the said Order dated 11-11-2019 did not recall his orders dated 26-4-2018 and 18-9-2019 issuing Revenue Recovery Certificates (RRCs) of the sum of ₹ 4783.98 lakhs and ₹ 138.92 lakhs aggregating to ₹ 4925.80 lakhs creating a charge on the immoveable property of the Corporate Debtor in the land revenue records. The Respondent has mentioned that this Tribunal has no jurisdiction to entertain this application as there is an alternate remedy available. But Section 60(5) of the Code read with Rule 11 of the NCLT Rules, 2016 which deals with the inherent powers of the NCLT very well empowers this Tribunal entertain and adjudicate this application as it directly relates to the CIRP of the Corporate Debtor. It is pertinent to note here that under section 3 of the Sugarcane Control Order, 1966, titled Fair and Remunerative Price of Sugarcane payable by producer of sugar including sub-sections 3(8) 3(9), provides that the Collector merely acts as an authority to recover from the said producer of sugar in a case where the producer of sugar has defaulted in paying the whole or any part of the price of sugarcane to the growers of sugarcane - It is clear that the later non-obstante clause of the Parliamentary enactment will also prevail over the limited Vnon-obstante clause contained in Section 4 of the Maharashtra Act. For these reasons, we are of the view that the Maharashtra Act cannot stand in the way of the corporate insolvency resolution process under the Code.' It is clear that Section 238 of the Code is an overriding provision and has an overriding effect on all the other laws. The company is already into CIRP and therefore, no question as to the jurisdiction of this Bench to hear and decide this matter arise - it is believed that the amount specified in the certificate has already been paid directly to the farmers in accordance and in furtherance of the Order of this Tribunal approving the Resolution Plan. Therefore, there appears no apparent reason to keep these properties as a charge/encumbrance on the past dues of the Corporate Debtor. This is merely delaying the process of CIRP and causing prejudice to the interests of the farmers. Application allowed.
Issues Involved:
1. Validity of the Revenue Recovery Certificate (RRC) issued by the Sugar Commissioner. 2. Compliance with the approved Resolution Plan under the Insolvency and Bankruptcy Code, 2016. 3. Jurisdiction of the National Company Law Tribunal (NCLT) to entertain the application. 4. Impact of the RRC on the implementation of the Resolution Plan and the rights of the Successful Resolution Applicant. Detailed Analysis: 1. Validity of the Revenue Recovery Certificate (RRC) issued by the Sugar Commissioner: The Applicant, Shri Dutt India Pvt. Ltd., contested the RRC issued by the Sugar Commissioner, Maharashtra State, which created a charge on the immovable properties of New Phaltan Sugar Works Limited. The RRC was issued due to the Corporate Debtor's failure to pay the Fair and Remunerative Price (FRP) to farmers for the sugarcane supplied during the crushing season of 2017-18. Despite the Tribunal's order dated 11-11-2019 approving the Resolution Plan, the RRC remained in effect, causing hindrance to the implementation of the Resolution Plan. The Tribunal noted that the RRC should have been withdrawn following the approval of the Resolution Plan, as the dues were to be settled under the Plan. 2. Compliance with the approved Resolution Plan under the Insolvency and Bankruptcy Code, 2016: The Resolution Plan, approved by the Committee of Creditors (CoC) and the Tribunal, required the Applicant to pay dues amounting to ?25,59,49,888/- to the farmers within a specified period. The Applicant complied by paying a significant portion and securing the remaining amount with a Bank Guarantee. The Tribunal emphasized that once a Resolution Plan is approved under Section 31 of the Code, all assets and benefits of the Corporate Debtor are transferred to the Successful Resolution Applicant free from all encumbrances. The Tribunal found that the Respondent's failure to withdraw the RRC was causing undue harm to the Applicant and obstructing the implementation of the approved Resolution Plan. 3. Jurisdiction of the National Company Law Tribunal (NCLT) to entertain the application: The Respondent argued that the NCLT lacked jurisdiction to entertain the application due to the availability of an alternative remedy and pending appeals. However, the Tribunal asserted its jurisdiction under Section 60(5) of the Insolvency and Bankruptcy Code, 2016, which empowers it to adjudicate matters related to the Corporate Insolvency Resolution Process (CIRP). The Tribunal referenced Section 238 of the Code, which provides it with overriding authority over other laws, ensuring that the CIRP process is not hindered by conflicting statutes. 4. Impact of the RRC on the implementation of the Resolution Plan and the rights of the Successful Resolution Applicant: The Tribunal observed that the continued existence of the RRC and the charge on the immovable properties was causing significant prejudice to the Applicant, hindering the operation of the sugar plant, payment of wages, and procurement of sugarcane. The Tribunal highlighted that the purpose of the CIRP is to ensure the revival of the Corporate Debtor and facilitate the realization of dues by creditors. The Tribunal concluded that the Respondent's actions were contrary to the provisions of the Insolvency and Bankruptcy Code, 2016, and directed the Sugar Commissioner to remove the entry of the Government of Maharashtra on the 7/12 extracts of New Phaltan Sugar Works Limited. Conclusion: The Tribunal allowed the Interlocutory Application No. 1055 of 2020, directing the Sugar Commissioner, Maharashtra State, and the relevant authorities to remove the entry of the Government of Maharashtra on the 7/12 extracts of New Phaltan Sugar Works Limited within one week. The Tribunal reaffirmed that the Resolution Plan, once approved, binds all parties, including government authorities, and all encumbrances on the Corporate Debtor's assets are to be released in favor of the Successful Resolution Applicant. The application was disposed of accordingly.
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