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2022 (10) TMI 801 - AT - Central ExciseSeeking abatement of appeal - CIRP proceedings under IBC - continuance of proceedings after death or adjudication as an insolvent of a party to the appeal or application - short payment of duty - reversal of CENVAT Credit - Case of Revenue is that subsequent to the order of the NCLT approving the resolution plan, the appeal stands abated and all the issues arising out of the order appealed against have acquired finality with the said order of NCLT approving the resolution plan - Rule 22 of the CESTAT Procedure Rules, 1982 - HELD THAT - With the approval of the resolution plan the corporate debtor was managed by a monitoring committee (MC) which is comprised of the erstwhile resolution professional (as he will become after the Resolution Plan) and 4 representatives of the Financial Creditors. During the period following the approval of the CCI until the closing date, the corporate debtor will be managed by a reconstituted MC comprising of 4 representatives of the Financial Creditors, 2 representatives of the Resolution applicants and the erstwhile Resolution professional. After the closing date, a new board of Directors constituted by the Resolution Applicants will replace the MC and it will have adequate representation from the members of the Resolution Applicants and as requirements under applicable law. Further it is also quite evident that control and management of the corporate debtor has passed on to the resolution applicants who in turns are successor interest in the management of the corporate debtor and have been authorized specifically to approach any Competent Authorities/Courts/Legal Forums/offices-Govt, or Semi Govt./ State or Central Govt. for appropriate relief(s). Thus it is quite evident that on the date of approval of the resolution plan, the successor interest to the corporate debtor has been appointed who has been asked given the resolution authority to represent before the relevant authorities. However from the date of approval of the resolution plan by the NCLT, the appeal filed by the applicant has abated and CESTAT has become functus officio in the matters relating to this appeal. Further it is also settled that the impugned order s in the appeals have got merged in the order of the NCLT approving the Resolution Plan. The appeals filed abate as per the Rule 22 of the CESTAT Procedure Rules, 1982, with effect from the date of the approval of the resolution plan by the NCLT - Since the appeals have abated the miscellaneous application filed by the applicant/appellant does not survive.
Issues Involved:
1. Applicability of the Resolution Plan approved by the NCLT. 2. Abatement of the appeal under Rule 22 of the CESTAT Procedure Rules, 1982. 3. Refund of pre-deposit following the approval of the Resolution Plan. Issue-wise Detailed Analysis: 1. Applicability of the Resolution Plan approved by the NCLT: The appellant underwent proceedings under the Insolvency and Bankruptcy Code, 2016 (IBC), initiated by its financial creditors. The NCLT admitted the petition on 18.07.2017, and a Resolution Professional was appointed. The Resolution Plan dated 12.04.2018 was approved by the NCLT on 08.03.2019. The appellant argued that all demands/liabilities for the period prior to the closing date (14.09.2020) should be considered discharged and settled as per the Resolution Plan. The Resolution Plan is binding on all stakeholders, including the Central Government, as per Section 31(1) of the IBC. The appellant cited Supreme Court decisions in Committee of Creditors of Essar Steel Ltd. vs. Satish Kumar Gupta & Ors (2020) and Ghanashyam Mishra & Sons Pvt. Ltd. vs. Edelweiss ARC (2021) to support the binding nature of the Resolution Plan on all creditors, including statutory dues. 2. Abatement of the appeal under Rule 22 of the CESTAT Procedure Rules, 1982: The revenue argued that subsequent to the NCLT's approval of the Resolution Plan, the appeal stands abated, and all issues arising from the order appealed against have acquired finality. Rule 22 states that if an appellant is adjudicated as insolvent, the appeal shall abate unless an application for continuance is made by the successor-in-interest. The Tribunal noted that no such application was filed by the successor-in-interest, leading to the appeal's abatement. The Tribunal emphasized that the control and management of the corporate debtor had passed to the resolution applicants, who are authorized to represent before relevant authorities. 3. Refund of pre-deposit following the approval of the Resolution Plan: The appellant claimed a refund of pre-deposit based on the Supreme Court's judgment in Ruchi Soya Industries Ltd. vs. Union of India (2022), which held that claims not part of the Resolution Plan do not survive, and amounts deposited as pre-deposit should be refunded. However, the Tribunal noted that with the appeal's abatement, CESTAT has become functus officio, and the impugned orders have merged with the NCLT's order. The Tribunal referred to the Bombay High Court's decision in Godrej and Boyce Manufacturing Company [2009 (233) ELT 446 (Bom)], which laid down the conditions for the doctrine of merger, emphasizing that the appeal should have been heard and decided on merits for the doctrine to apply. Conclusion: The Tribunal concluded that the appeals filed abate as per Rule 22 of the CESTAT Procedure Rules, 1982, effective from the date of the approval of the Resolution Plan by the NCLT. Consequently, the miscellaneous application filed by the appellant does not survive. The Tribunal disposed of the appeals and the miscellaneous application accordingly.
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