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TMI Blog2023 (2) TMI 1319X X X X Extracts X X X X X X X X Extracts X X X X ..... rm - B dated 14.11.2017 by Income Tax Department. It is also observed that on 25.10.2018, the Appellants received a draft of Rs. 41,22,407 from the Resolution Professional as a tranche payment. Further, the Appellants received another draft of Rs. 78,90,284 vide letter dated 07.01.2019 as a full and final payment totalling to Rs. 1,20,23,691 which is not even 15% of the outstanding demand. The Respondent was asked to pay the outstanding demand vide letter no. 674 dated 12.03.2019. However, the Respondent wrote to the Appellants for extinguishing all claims against them relating to the period prior to the date of order of the NCLT since as per the approved resolution plan at clause 12.1 no other amount was to be paid to the Operational Creditors. The Appellants filed an application for review of the order passed by the NCLT dated 20.09.2018 with necessary directions to the Resolution Professional for submission of the revised resolution plan incorporating the entire amount alleged to be due to the Appellants. The stay granted by the Appellate Authority had since expired on 13.12.2019 and therefore, the Respondent was requested to pay the outstanding demand for the Assessment Year 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iv) The demand of the Respondents for Rs. 5,38,41,660/- for Assessment Year 2011-2012 should be extinguished; v) The demand of the Respondents for Rs. 460,29,210/- for Assessment Year 2012-2013 should be extinguished; vi) The demand of the Respondents for Rs. 6,69,84,657/- for Assessment Year 2013-2014 should be extinguished; vii) The demand of the Respondents for Rs. 6,69,84,657/- for Assessment Year 2014-2015 should be extinguished; viii) Any other demand prior to 20th September, 2018 should be extinguished; ix) Ad-interim order in terms of prayers above. By which the Adjudicating Authority passed the following order: "16. Since the Respondents have not filed any claims for the period from 1986-87 except 2013-14 and 2-014-15 before the Resolution Professional / before the approval of the Resolution Plan, the left-over claims of the Respondents from 1986-87 till the approval of the Resolution Plan, if it is filed now or in the future, is not be entertained by the Resolution Applicant / Corporate Debtor. i. Company can operate the Bank Account without any obstructions from the Income Tax Department. ii. The Resolution Applicant / the Petitioner is hereby d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l would not grant immunity to the Respondent from recovery of tax dues. The Resolution Professional in a written communicated dated 31.07.2018 the Income Tax Department that "The matter is still pending in the CIT (Appeals) and till date no order of judgment is passed by them, the corporate debtor also consider your claim as contingent liability in the books of accounts of the company. We are also in the same opinion that your claim is a future obligation for ACIL and cannot be considered as current liability, the payable amount is also not certain at present (it may increase or decrease upon the judgment) and also involved uncertainty as per the provisions of applicable laws and accounting standards. The matter will be finalized after the final order is given by the CIT, so in that circumstances we cannot admit your claim because if we admit your claim then there is no validity of filing of appeal with CIT. We have to wait for the final order of the CIT (Appeals). We also want to intimate you that this is a statutory liability and I the CIT also in the future demanded the same then in that case if it all the resolution process completes then the new promoter of ACIL has to pay the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Hon'ble NCLT dated 20.09.2018 with necessary directions to the Resolution Professional for submission of the revised resolution plan incorporating the entire amount alleged to be due to the Appellants. Subsequently, the Hon'ble NCLT, Guwahati vide its order dated 22.10.2019 stated that since the IRP intimated the Department that the demand after finalization of appeal by CIT(A) would be payable by the new promoter, such written intimation of the IRP is to be read with the new resolution plan and the demand of the Appellants is duly considered and the Appellants have a right to lay its claim before the new promoter of the Respondent Company. v) The Appellants vide letter bearing no. ITBA/COM/F/17/2019- 20/1021317132(1) dated 29.11.2019 wrote to the Respondent for payment of outstanding dues along with interest under Section 220(2) of the Income Tax Act, 1961. In response to this, the Respondent stated that the demands of the Appellants are premature as it is pending with CIT(A) for Assessment Year 2013- 14 and with the ITAT, Guwahati Bench for the Assessment Year 2014-15. Further, the Respondent also stated that the demand for Assessment Year 2014- 15 has been stayed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder fails to take into account that the Resolution Professional had intimated on 31.07.2018 that the dues of the Income Tax department as and when they became payable after the appeal process would be payable by the successful resolution applicant. The Appellants have made the recovery of the outstanding demand for the Assessment Year 2013-14 and 2014-15 vide Form B on 14.11.2017 which is prior in time to the resolution plan being approved on 20.09.2018. The Tribunal vide its order dated 22.10.2019 stated that since the IRP intimated the department that the demand after finalization of appeal by CIT(A) would be payable by the new promoter, such written intimation of the IRP is to be read with the new resolution plan and the demand of the Appellants is duly considered and the Appellants have a right to lay its claim before the new promoter of the Respondent Company. 4. Further, these dues are of the Revenue Department and if not paid the Appellants would be in great difficulty and grave injustice would be caused to the Revenue Department and a huge loss to the public exchequer. The demand for Assessment Year 2013-14 and 2014-15 was payable by the new promoter of the Respondent Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as on the date of CIRP. 7. It is further submitted that on 25.10.2018, the Appellants received a draft of Rs. 41,22,407 from the Resolution Professional as a tranche payment. Further, the Appellants received another draft of Rs. 78,90,284 vide letter dated 07.01.2019 as a full and final payment totaling to Rs. 1,20,23,691 which is not even 15% of the outstanding demand. The Respondent was asked to pay the outstanding demand vide letter no. 674 dated 12.03.2019. However, the Respondent wrote to the Appellants for extinguishing all claims against them relating to the period prior to the date of order of the Hon'ble Bench of NCLT since as per the approved resolution plan at clause 12.1 no other amount was to be paid to the operational creditors. In view of the above, the Appellants filed an application for review of the order passed by the NCLT dated 20.09.2018 with necessary directions to the Resolution Professional for submission of the revised resolution plan incorporating the entire amount alleged to be due to the Appellants. Subsequently, the NCLT vide its order dated 22.10.2019 stated that since the Resolution Professional intimated the Appellants that the demand after finaliz ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0.2019 passed by the NCLT. It is respectfully submitted that once NCLT had directed that the emails of the Resolution Professional are to be treated as part of the resolution plan, it was clearly open to the Income Tax Department / Appellants to take necessary steps available to them under law for recovery of their dues. If the Respondent was aggrieved by the order of the NCLT dated 22.10.2019 he had the remedy to appeal before this Appellate Tribunal within 30 days of passing of the order which he failed to do. Thus, the order dated 22.10.2019 has attained finality and cannot be challenged in the same forum. 10. The Ld. Counsel for the Appellants also placed reliance on the judgment of the Hon'ble Supreme Court in the case of "State Tax Officer (1) Vs. Rainbow Papers Limited, Civil Appeal No. 1661 of 2020 dated 06th September, 2022" wherein Hon'ble Supreme Court held as hereunder: "41. Section 31 of the IBC which provides for approval of a Resolution Plan by the Adjudicating Authority makes it clear that the Adjudicating Authority can approve the Resolution Plan only upon satisfaction that the Resolution Plan, as approved by the Committee of Creditors (CoC), meets the requireme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reditors. The resolution plan is also required to provide for the management of the affairs of the corporate debtor after approval of the resolution plan and also the implementation and supervision of the resolution plan. Clause (e) of sub-section (2) of Section 30 of the I&B Code also casts a duty on RP to examine that the resolution plan does not contravene any of the provisions of the law for the time being in force." 43. The learned Solicitor General rightly argued that when a grievance was made before the Adjudicating Authority with regard to a Resolution Plan, the Adjudicating Authority was required to examine if the Resolution Plan met the requirements of Section 30(2) of the IBC. The word "satisfied" used in Section 31(1) contemplates a duty on the Adjudicating Authority to examine the Resolution Plan - The Resolution Plan cannot be approved by way of an empty formality. 44. Section 61(3) of the IBC which stipulated the grounds for challenge to the approval of a Resolution Plan, is set out hereinbelow for convenience :- "61. Appeals and Appellate Authority.--(1)… (2) … (3) An appeal against an order approving a resolution plan under Section 31 m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onform to the statutory provisions of the IBC, and held: - "147. In terms of Regulation 39(4), the RP shall endeavour to submit the resolution plan approved by the CoC before the adjudicating authority for its approval under Section 31 IBC, at least fifteen days before the maximum period for completion of CIRP. Section 31(1) provides that the adjudicating authority shall approve the resolution plan if it is satisfied that it complies with the requirements set out under Section 30(2) IBC. Essentially, the adjudicating authority functions as a check on the role of the RP to ensure compliance with Section 30(2) IBC and satisfies itself that the plan approved by the CoC can be effectively implemented as provided under the proviso to Section 31(1) IBC. Once the resolution plan is approved by the adjudicating authority, it becomes binding on the corporate debtor and its employees, members, creditors, guarantors and other stakeholders involved in the resolution plan...". 48. A resolution plan which does not meet the requirements of Sub-Section (2) of Section 30 of the IBC, would be invalid and not binding on the Central Government, any State Government, any statutory or other author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l reduction, the company would necessarily have to be liquidated and its assets sold and distributed in the manner stipulated in Section 53 of the IBC. 54. In our considered view, the Committee of Creditors, which might include financial institutions and other financial creditors, cannot secure their own dues at the cost of statutory dues owed to any Government or Governmental Authority or for that matter, any other dues. 55. In our considered view, the NCLAT clearly erred in its observation that Section 53 of the IBC over-rides Section 48 of the GVAT Act. Section 53 of the IBC begins with a non-obstante clause which reads :- "Not withstanding anything to the contrary contained in any law enacted by the Parliament or any State Legislature for the time being in force, the proceeds from the sale of the liquidation assets shall be distributed in the following order of priority..........." 56. Section 48 of the GVAT Act is not contrary to or inconsistent with Section 53 or any other provisions of the IBC. Under Section 53(1)(b)(ii), the debts owed to a secured creditor, which would include the State under the GVAT Act, are to rank equally with other specified debts includin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bility towards any Operational Creditors and other creditors with respect to any claims (as defined under the Code) relating in any manner to the period prior to the Effective Date. All claims (whether final or contingent, whether disputed or undisputed and whether or not notified to or claimed against ACIL) of all Government Authorities (including in relation to Taxes and all other dues and statutory payments to any Government Authority) relating to the period prior to the Effective Date, shall stand fully and finally discharged and settled. In this regard referred following judgments: • Essar Steel India Limited Committee of Creditors v. Satish Kumar Gupta, (2020) 8 SCC 531 : 2019 SCC OnLine 1478 Page 616. • Ghanashyam Mishra & Sons (P) Ltd. v. Edelweiss Asset Reconstruction Co. Ltd., (2021) 9 SCC 657; (2021) 4 SCC (Civ) 638 : 2021 SCC OnLine SC 313 Page 699. • Manish Kumar v. Union of India (2021) 5 SCC 1 : 2021 SCC OnLine SC 30 Page 161. • Department of Goods & Service Tax, Deputy Commissioner of CGST, Kadi v. Technovaa Plastic Industries Pvt. Ltd. and Anr 2021 OnLine NCLAT 499. 13. It is further submitted that the Resolution Plan duly approved ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... does not deal with any further entitlement to the Appellants beyond what is admitted by the Resolution Professional. In this regard referred following judgment. • Mack Star Marketing Pvt. Ltd. v. Ashish Chawchharia Resolution Professional of Jet Airways (India) Pvt. Ltd., 2019 SCC OnLine SC 73. 16. It is further submitted that the Appellate Tribunal has no inherent power to review. A mere perusal of the NCLAT Rule, 2016 unerringly point out that there is no express Rule for 'Review'. There can be no two opinions of a prime fact that Rule 11 of NCLAT Rules, 2016 is not a substantive Rule which confers any power or jurisdiction on the 'Tribunal'. • Kapra Mazdor Esta Union v. Brla Cotton Spg. And Wvg. Mills Ltd. (2005) 13 SCC 777 : 2006 SCC (L&S) 1635. • Kuntesh Gupta v. Hinu Kanya Mahavidyalaya (1987) 4 SCC 525 : 1987 SCC (L&S) 491. • Deepakk Kumar v. M/s Phoenix ARC Pvt. Ltd., Company Appeal (AT) (Insolvency) No. 848 of 2019. • Swiss Ribbons Pvt. Ltd. v. Union of India & Ors. (2019 SCC OnLine SC 73). 17. It is further submitted that the Appellant relied upon the judgment passed by the Hon'ble Supreme Court in the case of "State Tax Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se 12.1 no other amount was to be paid to the Operational Creditors. The Appellants filed an application for review of the order passed by the NCLT dated 20.09.2018 with necessary directions to the Resolution Professional for submission of the revised resolution plan incorporating the entire amount alleged to be due to the Appellants. Subsequently, the NCLT vide its order dated 22.10.2019 stated that since the Resolution Professional intimated the Appellants that the demand after finalization of appeal by CIT(A) would be payable by the new promoter, such written intimation of the Resolution Professional is to be read with the new resolution plan and the demand of the Appellants is duly considered and the Appellants have a right to lay its claim before the new promoter of the Respondent Company. Thereafter, the Appellants vide letter bearing no. ITBA/COM/F/17/2019-20/1021317132(1) dated 29.11.2019 (Annexure A/7) wrote to the Respondent for payment of outstanding dues along with interest under Section 220(2) of the Income Tax Act, 1961. Further, the Respondent stated that the demands of the Appellants are premature as it is pending with CIT(A) for Assessment year 2013-14 and with the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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