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TMI Blog2022 (10) TMI 801X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 18.07.2017 Date of Public Announcement of CIRP by the Resolution Professional appointed by NCLT. 19.07.2017 Date of the Resolution Plan. 12.04.2018 Date of Approval of the Resolution Plan by the Committee of Creditors. 20.06.2018 Date of the NCLT Order approving the Resolution Plan 08.03.2019 Closing date (i.e. the date on which all the implementation steps set-out in Annexure 2 to Resolution Plan are completed) 14.09.2020 2.2 The Appellant is engaged in the manufacture of excisable goods falling under Chapter 52, 54, 55, 56 and 63 of the Central Excise Tariff Act, 1985. Appellant, at the relevant time, availed Cenvat credit on inputs, input services and capital goods for the manufacture of the said goods. Alleging short payment of duty by the impugned order dated 27.04.2012 a demand of Rs 22,08,161/- for the period 2004-2009 was confirmed against them. Further by impugned order dated 09.03.2018 demand proposing reversal of CENVAT Credit of Rs 2,23,607/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h arise relating to the period prior to the closing date, the Resolution Pan clearly provided that no further payments are due to and all liabilities of the operational creditors stand fully and finally satisfied and settled. Section 31(1) of the IBC provides for the binding nature of the Resolution Plan. In terms of Section 31(1) of the IBC, the approved resolution plan shall be binding on the corporate debtor and its creditors, including the Central Government, any State Government to whom a debt in respect of the payment of dues arising under any law for the time being in force. In view of the above, the Appellant submits that since the demand confirmed vide the impugned Orders relates to the period (i) 2004-05 to 2008-09 and (ii) 2008-09 to 2014- 15, which is prior to the Closing Date (i.e.14.09.2020), the same shall immediately, irrevocably and unconditionally stand fully and finally discharged and settled as per the Resolution Plan and no action or proceedings can be initiated against the Appellant for its recovery. the Resolution Plan approved by the NCLT is binding on all stakeholders, which includes the Central Government. Therefore, as provided in the approved Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4.1 We have considered the submissions made by both the sides. 4.2 Undisputedly the proceedings against the appellant in the present two appeals had been initiated against the appellant in these two appeals under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC) on 18.07.2017. Public Announcement in this regards was made by the Resolution Professional appointed by NCLT on 19.07.2017. Resolution Plans were submitted by the various parties including, a consortium of J M Financial Asset Reconstruction Company and JMFARC- march 2018-Trust (together called JM) and Reliance Industries Limited (RIL) (collectively called Resolution Applicant). The plan dated 12.04.2018 filed by the Resolution Applicant was approved by the NCLT vide its order dated 8th March 2019. Certain clarifications and corrections in the order dated 8th march 2019 were made by the order dated 26th July 2019. Relevant extracts from the order of the NCLT necessary for us reproduced below: Sl No 4 in table appended in para 14 of order dated 8th March 2019 as corrected by order dated 26th July 2019 reads as follows: S. No Section/ Regulation Req ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 19 of the Resolution Plan viz. all legal proceedings initiated before any forum by or on behalf of the financial creditors to enforce any rights or claims against the Company/Corporate Debtor or enforce or invoke any security, interest and/or guarantee, over the assets of the Company/Corporate Debtor, shall immediately, irrevocably and unconditionally stand withdrawn, abetted, settled and/or extinguished. Provided however any rights or claims of the financial creditors with respect to Existing Promoters Guarantees shall continue against such guarantors . Approval of the Resolution Plan does not mean automatic waiver or abetment of any legal proceedings which are pending by or against the Company/ Corporate Debtor as those are the subject matter of the concerned Competent authorities having their proper/own jurisdiction to pass any appropriate order as the case may be. The Resolution Applicants on approval of the Plan may approach the Competent Authorities/Courts/Legal Forums/offices-Govt, or Semi Govt./ State or Central Govt. for appropriate relief(s) sought for in Clause No. 3.2.3 (iii) of the Resolution Plan at Page No. 19. 4.3 From the above it is quite evident that with th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riod as it may deem fit. Learned advocate has labored to explain why this rule should not be made applicable in his case. However in view of the fact as stated in the para 4.2 and 4.3 above we are of the view that moment the successor interest with sufficient rights to be represented is appointed by the NCLT this rule will become applicable and it is for the successor interest to make an application for continuance of the proceedings. In the present case no such application has been filed by the successor interest for the continuance of the proceedings and hence the appeal stands abated by the operation of this rule. 4.5 Resolution plan specifically has in respect of operational creditors states as follows: 3.3 Operational Creditors (including the Central Government, State Government or any local authority) 3.3.1 Amount to be paid to Operational Creditors pursuant to this Plan As per the Information Memorandum, the liquidation value of the Company is Rs. 4433,00,00,000 (Rupees Four Thousand Four Hundred Thirty Three Crores only), which is less than the sum of Estimated CIRP Costs and Outstanding Financial Debt, therefore, the liquidation value available to Oper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... against the Company in relation to any payments required to be made by the Company under Applicable Law (including Taxes), or in relation to any breach, contravention or non compliance of any Applicable Law (including criminal laws), whether or not such claim was notified to or claimed against the Company at such time, and whether or not such Governmental Authority was aware of such claim at such time, in relation to the period prior to the Closing Date, is a claim and debt , each as defined under the IBC, and would consequently qualify as operational debt (as defined under the IBC) and therefore, the full amount of such claims shall be deemed to be owed and due as of the Closing Date, the liquidation value of which is NIL and therefore, no amount is payable in relation thereto. (ii) In accordance with the foregoing, all claims (final or contingent, whether dispute or undisputed, and whether notified to or claimed against the Company) of all Governmental Authorities (including in relation to Taxes, and all other dues and statutory payments to any Governmental Authority), relating to the period prior to the Closing Date, shall stand fully and finally discharged and settled. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r not it was aware of such claim at such time), or if the claim(s) filed by any person has been rejected and/or not been admitted by the Resolution Professional (including any claim against the Company from GAIL (India) Limited arising directly or indirectly under, out of, or in relation to the gas sale agreement dated May 27, 2013 entered into between GAIL (India) Limited and the Company), then: (a) all such obligations, claims and liabilities of the Company (whether final or contingent (whether crystallized or not), whether disputed or undisputed, and whether or not notified to or claimed against the Company; (b) all outstanding disputes or legal proceedings in respect of such claims; and (c) all rights or claims of such persons against the Company; in each case, relating to the period prior to the Closing Date, shall immediately, irrevocably and unconditionally stand extinguished and waived on the Closing Date, and the Company shall have no Liabilities in respect of such claim(s). Provided however any rights or claims of the Financial Creditors with respect to Existing Promoter Guarantees can continue against such guarantors -- 3.3.7 No action by Operational Creditors ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t; (iii) Consequently 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. 4.7 CBIC has vide Instruction No.1083/04/2022-CX9 dated 23.05.2022 has laid down the guidelines (SOP) for NCLT cases. The said instructions at para-1 and 2 records as follows - Subject: Standard Operating Procedure (SOP) for NCLT cases in respect of the Insolvency and bankruptcy Code (IBC) - reg I am directed to inform the Insolvency and Bankruptcy Board of India has requested that role of GST and Customs authorities in certain key issues under the Insolvency and bankruptcy Code, 2016 needs to be formulated. Further, GST and Customs Authorities have been classified as operational creditors and are required to submit their claims against corporate debtors when the Corporate insolvency and resolution process is initiated and public announcement inviting claims is made by the insolvency profession ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d and universal application. Merely because there are two orders, one by the inferior authority and the other by a superior authority passed in an appeal or revision, it cannot be said that there is a merger of the two orders irrespective of the subject matter of the appellate or revisional order and this scope of the appeal or revision contemplated by the particular statute. A Court or Tribunal while applying the doctrine must consider the nature of the order and the scope of the statutory provisions conferring the appellate or revisional jurisdiction. 35. The following principles will have to be considered while applying the doctrine of merger in the context of the provisions of The Central Excise Act, 1944 . 1. In the proceedings from which the matter arises, the Court or Tribunal hearing the appeal or revision, should have jurisdiction to decide all issues arising from the said order of the inferior Court or Tribunal from whose order the proceedings arise. 2. The Appeal should not have been dismissed on the ground of limitation or failure to deposit as ordered. The Appeal should have been heard and decided on merits on the issues raised and/or could have been ..... X X X X Extracts X X X X X X X X Extracts X X X X
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