9911796707
TMI Blog2024 (10) TMI 575X X X X Extracts X X X X X X X X Extracts X X X X ..... approval of the Resolution Plan by the National Company Law Tribunal (for short, 'the NCLT') under the Insolvency and Bankruptcy Code, 2016 (hereinafter called as the 'I & B Code'), were heard together on consent of the learned counsels for the parties for their disposal by common judgment. 2. The Petitioner, in all these three writ petitions, challenge the demands, which are subject matter of each of them as would be detailed in the paragraphs to follow; on identical grounds in relying upon the judgment in the case of Ghanashyam Mishra & Sons Private Limited-V-Edelweiss Asset Reconstruction Company Limited; (2021) 9 SCC 657, which has been relied upon in the judgments passed by this Court in cases of Ferro Alloys Corporation Limited -V- State of Odisha & others; W.P.(C) No. 20286 of 2020 decided on 10.12.2021, M/s. Sree Metaliks Limited-V-State of Odisha; W.P.(C) No.8259 of 2019 decided on 21.06.2021 order dated 08.12.2022 passed in case of Adhunik Metaliks Limited-V-State of Odisha & Others; W.P.(C) No. 1553 of 2022 decided on 21.06.2021 and batch. It is stated that the demands, which have been impugned in these writ petitions are in clear violation of the provisions contained ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... H-1 bidder. But EARP failed to satisfy CoC in the negotiation. Therefore, the Resolution Plan submitted by the EARP was rejected in the 9th Meeting of the CoC held on 31.03.2018. The CoC then sat for negotiation with GMSPL (H-2 bidder). That Resolution Plan of GMSPL was also found to be unacceptable. In such situation, the CoC in its 10th Meeting held on 03.04.2018 took a decision to annul the existing process and initiate the process afresh in inviting Resolution Plans only from the applicants who had earlier expressed their interest. Communication in that regard being made with those Applicants, who had earlier submitted their EOI, three Resolution Plans were received from EARP, GMSPL and SREI Infrastructure Finance Limited (hereinafter referred to as "SIFL"). These three Resolution Plans were taken up for consideration by the CoC in its 11th Meeting held on 13.04.2018. Undertaking the exercise of evaluation of the Resolution Plans, then the CoC rated the GMSPL as the H-1 bidder. The CoC thereafter held further negotiations with the GMSPL. After several rounds of negotiations, the Resolution Plan of the GMSPL was considered by the CoC for its approval. Finally in the 12th Meeting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the RP. 3.4. The NCLT, by a detailed order dated 22.06.2018 dismissed both the applications; first one CA(IB) No. 398/KB/2018 and the second one:-CA(IB) No.470/KB/2018) filed by EARC. The third application:- CA(IB) No.509/KB/2018) filed by the District Mining Officer, Department of Mining & Geology, Jharkhand was also dismissed. The NCLT, by its final order, approved the Resolution Plan, which had been duly approved by the CoC by more than 89.23% voting share in terms of the provision of section 31 (1) of the I & B Code as binding upon the Corporate Debtor, its employees, members, creditors, co-ordinators and other stake holders involved in the Resolution Plan with further order that the Revival Plan of the Company in accordance with the approved Resolution Plan shall come into force with immediate effect and the moratorium order passed under section 14 of the I & B Code shall cease to have the effect. The RP at the same time was directed to forward all the records relating to the conduct of the CIRP and the Resolution Plan to the Insolvency and Bankruptcy Board of India for being recorded on the Data Base. 3.5. On that very date, i.e. 22.06.2018, the application numbered as C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... application before the Court of competent jurisdiction against the Corporate Debtor; the Sundergarh Mine and Transport Workers' Union may move before the Civil Court or a Court of competent jurisdiction and may file an application before the Labour Court for appropriate reliefs in favour of the workmen concerned or against the Corporate Debtor, if they have actually worked and had not been taken care in the Resolution Plan; (d) No ground as is permissible under sub-section (3) of Section 61 of I & B Code is made out and such relief is thus not grantable and the Appellant therein (Deepak Singh) may move the appropriate forum for appropriate relief." (Emphasis Supplied) 3.9. The GMSPL, being aggrieved by said observations, as underlined above, made by the NCLAT as regards the claims advanced by the Appellants before it, which though were not included in the Resolution Plan, but as per the observations could be agitated before other forums, carried the Appeal to the Hon'ble Supreme Court. 3.9.1. It was contended from the side of the GMSPL before the Hon'ble Supreme Court that the commercial wisdom of CoC in accepting and rejecting the Resolution Plan, being the paramount, the int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orporate Debtor (OMML) accruing prior to the transfer date, i.e., Plan Effective Date with further observation that the consequence thereof shall follow and this has been reported in (2021) 9 SCC 657. 5. (A). W.P.(C) No. 1497 of 2024 The Petitioner in this writ petition, has prayed for quashment of the letters dated 02.09.2017 (Annexures-3 & 4) issued by the Deputy Director of Mines, Koira Circle, Koira, the Opposite Party No. 3 seeking recovery of Rs. 3,08,83,673.24 (Rupees Three Crore Eight Lakhs Eighty Three Thousand Six Hundred Seventy Three and Twenty Four Paise) and Rs. 80,65,67,970.62 (Rupees Eighty Crore Sixty Five Lakhs Sixty Seven Thousand Nine Hundred Seventy and Sixty-Two Paise). The raised demands are towards the compensation amount payable under section 21 (5) of the Mines And Minerals (Development And Regulation) Act, 1957 (in short, the 'MMDR Act') in respect of Bhanjikusum Manganese Mine and Orahuri Manganese Mine by the Petitioner-Company. B. W.P.(C) No. 2304 of 2024 In this writ petition, as above, the Petitioner has prayed for quashment of the letters dated 24.09.2019 and 21.07.2020 issued by the Deputy Director of Mines, Koira Circle, Koira Division in resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .01.2019, (e-''I) 22.01.2019, (f''-II) 03.02.2020 and (h''-II) 03.02.2020 in respect of Bhanjikusum Mines under Annexure-8 series." It is pertinent to indicate at this stage that the demands under all the letters mentioned in (I) relate to 'Dead Rent' and 'Surface Rent' except the one under letter (a'-I) which is towards Royalty as stated therein indicating the period. The demands under letters shown in (II) also concern with 'Dead Rent' & 'Surface Rent' whereas those demands under III (a'-I) is towards Royalty. Similarly, the demand under letters (IV-b''-I) relates to Royalty when others are for Dead Rent and Surface Rent. SUBMISSIONS 6. Mr. S.K. Dash, learned Counsel appearing for the Petitioner of all these writ petitions submitted that as held by the Hon'ble Supreme Court in a series of decisions that once the Adjudicating Authority (NCLT) approves the Resolution Plan subject to the orders passed in the Appeals, it shall be binding on everyone including the Corporate Debtor and its employees, members, creditors including the Central Government or State Government or any Local Authority to whom a debt is owed in respect of the payment of dues arising under any law for the tim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the demand raised by the District Mining Officer, Department of Mining and Geology, Jharkhand, which having been so raised was not admitted by the RP and considered by the CoC, has also failed when the NCLT rejected the said application (CA (IB) No.509/KB/2018) filed by the District Mining Officer, Department of Mining and Geology, Jharkhand and that has attained finality. In support of the aforesaid submissions, learned counsel for the Petitioner very much relied upon the decision in case of the Appeal filed by the present successful Resolution Applicant, i.e, Ghanashyam Mishra & Sons Private Limited (Supra), which have been relied upon by this Court in the judgment passed in the case of Ferro Alloys Corporation Limited (Supra), M/s. Sree Metaliks Limited (Supra) and Adhunik Metaliks Limited (Supra). Stand of The State 6.1. Mr. G.N. Rout, learned Additional Standing Counsel for the Opposite Parties placed reliance on certain observations of the Hon'ble Supreme Court in the case Common Cause (Supra) and particularly to the directions issued in Para-188 thereof. He submitted that the liability arising out of the said judgment of the Hon'ble Supreme Court was fully binding on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the Liquidation, if Resolution plan/s is/are not received or rejected and thus Resolution is not possible. 9. The core issue being the alleged outstanding dues owed by the Petitioner-Company to the Opposite Parties; it is not disputed that majority of the aforementioned demands pertain to the period prior to the approval of the Resolution Plan of the Petitioner by the NCLT by order dated 22.06.2018. Be it stated at this stage, that the part of the demands as have been made under the letters referred to in prayers as at I(b), I(c), I(d), I(f) and I(h); II(e-I), (d-I), (e-I), (f-I); and III (b'-I), (c'-I) of W.P.(C) No. 2307 of 2024 as indicated in the foregoing paragraph-5(C), are prior to the approval of the Resolution Plan by the NCLT, which has attained finality by the order of the Hon'ble Supreme Court, as aforestated and a part relates to the period thereafter which have been demanded in a composite manner. Furthermore, when the demands which from the subject matter of the writ petition as at (A) relate to the compensation under section 21 (5) of the MMDR Act; those of the writ petition at 'B' concern with the deficit stamp duty and registration fees which have been cal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rkman or employee of the corporate debtor, shall submit claim with proof to the interim resolution professional in person, by post or by electronic means in Form B of the Schedule: Provided that such person may submit supplementary documents or clarifications in support of the claim before the constitution of the Committee. (2) The existence of debt due to the operational creditor under this regulation may be proved on the basis of- (a) the records available with an information utility, if any; or (b) other relevant documents, including- (i) a contract for the supply of goods and services with corporate debtor; (ii) an invoice demanding payment for the goods and services supplied to the corporate debtor; (iii) an order of a court or tribunal that has adjudicated upon the non-payment of a debt, if any; (iv) financial accounts. (v) copies of relevant extracts of Form GSTR-1 and Form GSTR-3B filed under the provisions of the relevant laws relating to Goods and Services Tax and the copy of e-way bill wherever applicable: Provided that provisions of this sub-clause shall not apply to those creditors who do not require registration and to those goods and services ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olvency Resolution Process for Corporate Persons) (Fifth Amendment) Regulations, 2020; (d) filed with the Adjudicating Authority; and (e) presented at the first meeting of the committee." 11. The scenario that on the basis of aforesaid recapitulation of facts, would indicate that after the public announcement with regard to the initiation of the CIRP after admission of the application under section 7 of the I & B Code read with Rule 4 of the Insolvency and Bankruptcy (Application of Adjudicating Authority) Rules, 2016 adhering to the provisions contained in section 13 & 15 of the I & B Code read with Regulation 6 of the Insolvency Resolution Process Regulations was made, these demands, which are raised under the letters impugned in the writ petition were not advanced and claimed by the Opposite Parties, being the Operational Creditor. The Counter filed by the Opposite Parties is conspicuously silent on that score. It is no where stated in the said Counter that the Opposite Parties had made any response after the adjudication of moratorium for the purposes referred to in section 14 of the I & B Code and public announcement of the initiation of CIRP calling for submission of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lan by NCLT other than workmen dues as above, even if not recorded in books of accounts including any penalties or fines outstanding to my government or regulator (including demands raised under MMDR Act) or under any few for the time being in force would be subject to a 100% write-off on the basic amount with nothing paid towards overdue, penal or compound interest or any other additional charges by whatever named called. Neither OMML nor the Resolution Applicants shall be required shall be required to bear any other liabilities prior to the date of approval of the resolution plan by the NCLT including but not limited to tax liability (which includes interest tax liability and direct tax liability) and contingent liabilities." Sub-clause (e) & (f) of Clause 5 of Para-IV are also relevant for the purpose and thus are extracted hereinbelow:- "(e) Operational Creditors (other than workmen and employees) who have submitted claims. As per Regulation 38(1) of the CIRP Regulations, Liquidation Value due to Operational Creditors shall be brought in priority 30 days; in the instant case this value is NIL. However, the Resolution Applicants propose to infuse an amount of Rs. 7.40 cro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of the Hon'ble Supreme Court in case of Common Cause (Supra); the same has nothing to do with CIRP and it has to be shouldered by the successful Resolution applicant, who chose to manage and run the Corporate Debtor-Company. 15. The position of law in this regard, has been well settled in Committee of Creditors of Essar Steel (I) Ltd. v. Satish Kumar Gupta; (2020) 8 SCC 531. The Hon'ble Supreme Court has held that under section 31 (1) of the I & B code, once the CoC approves the Resolution Plan, it binds all the stake holders. It has been observed therein referring to section 31 of the I & B Code, which runs thus:- It has been observed that:- "Section 31 (1) of the Code makes it clear that once a resolution plan is approved by the Committee of Creditors it shall be binding on all stakeholders, including guarantors. This is for the reason that this provision ensures that the successful resolution applicant starts running the business of the corporate debtor on a fresh slate as it were." It has been further held that:- "All claims must be submitted to and decided by the resolution professional so that a prospective resolution applicant knows exactly what has to be paid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... less than the amount to be paid to such creditors in accordance with sub-section (1) of section 53 in the event of a liquidation of the Corporate Debtor. Explanation 1 to clause (b) of sub-section (2) of Section 30 of the I&B Code clarifies for the removal of doubts, that a distribution in accordance with the provisions of the said clause shall be fair and equitable to such creditors. 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 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. 60. Perusal of Section 29 of the I&B Code read with Regulation 36 of the Regulations would reveal, that it requires RP to prepare an information memorandum containing various details of the Corporate Debtor so that the resolution applicant submitting a plan is aware of the assets and liabilities of the Corporate Debtor, including the details about the creditors and the amounts claimed by them. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orate Debtor and to make it a running concern. 66. The resolution plan submitted by successful resolution applicant is required to contain various provisions, viz., provision for payment of insolvency resolution process costs, provision for payment of debts of operational creditors, which shall not be less than the amount to be paid to such creditors in the event of liquidation of the Corporate Debtor under section 53; or the amount that would have been paid to such creditors, if the amount to be distributed under the resolution plan had been distributed in accordance with the order of priority in sub-section (1) of section 53, whichever is higher. The resolution plan is also required to provide for the payment of debts of financial creditors, who do not vote in favour of 62 the resolution plan, which also shall not be less than the amount to be paid to such creditors in accordance with sub-section (1) of section 53 in the event of a liquidation of the Corporate Debtor. Explanation 1 to clause (b) of sub-section (2) of Section 30 of the I&B Code clarifies for the removal of doubts, that a distribution in accordance with the provisions of the said clause shall be fair and equitabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 07. For the same reason, the impugned NCLAT judgment [Standard Chartered Bank v. Satish Kumar Gupta, 2019 SCC OnLine NCLAT 388] in holding that claims that may exist apart from those decided on merits by the resolution professional and by the Adjudicating Authority/Appellate Tribunal can now be decided by an appropriate forum in terms of Section 60 (6) of the Code, also militates against the rationale of Section 31 of the Code. A successful resolution applicant cannot suddenly be faced with "undecided" claims after the resolution plan submitted by him has been accepted as 65 this would amount to a hydra head popping up which would throw into uncertainty amounts payable by a prospective resolution applicant who would successfully take over the business of the corporate debtor. All claims must be submitted to and decided by the resolution professional so that a prospective resolution applicant knows exactly what has to be paid in order that it may then take over and run the business of the corporate debtor. This the successful resolution applicant does on a fresh slate, as has been pointed out by us hereinabove. For these reasons, NCLAT judgment must also be set aside on this count." ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 238 provides that IBC will prevail in case of inconsistency between two laws. Actually, Indian courts will have to decide, in specific cases, depending upon the material before them, but largely, yes, it is IBC. There is also this question about indemnity for successful resolution applicant. The amendment now is clearly making it binding on the Government. It is one of the ways in which we are providing that. The Government will not raise any further claim. The Government will not make any further claim after resolution plan is approved. So, that is going to be a major, major sense of assurance for the people who are using the resolution plan. Criminal matters alone would be proceeded against individuals and not company. There will be no criminal proceedings against successful resolution applicant. There will be no criminal proceedings against successful resolution applicant for fraud by previous promoters. So, I hope that is absolutely clear. I would want all the hon. Members to recognize this message and communicate further that this Code, therefore, gives that comfort to all new bidders. So now, they need not be scared that the taxman will come after them for the faults of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are various important duties and functions entrusted to RP and CoC. RP is required to issue a publication inviting claims from all the stakeholders. He is required to collate the said information and submit necessary details in the information memorandum. The resolution applicants submit their plans on the basis of the details provided in the information memorandum. The resolution plans undergo deep scrutiny by RP as well as CoC. In the negotiations that may be held between CoC and the resolution applicant, various modifications may be made so as to ensure, that while paying part of the dues of financial creditors as well as operational creditors and other stakeholders, the Corporate Debtor is revived and is made an on-going concern. After CoC approves the plan, the Adjudicating Authority is required to arrive at a subjective satisfaction, that the plan conforms to the requirements as are provided in sub-section (2) of Section 30 of the I&B Code. Only thereafter, the Adjudicating Authority can Grant its approval to the plan. It is at this stage, that the plan becomes binding on Corporate Debtor, its employees, members, creditors, guarantors and other stakeholders involved in the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry period covered by the Resolution Plan, which in other words to say that no claim for the period prior to 22.06.2018, the date of approval of the Resolution Plan by the NCLT, i.e., the Plan Effective Date, could have been raised by the Opposite Parties and such demands to the extent as they cover the period up to 22.06.2018 stand automatically extinguished in terms of the Resolution Plan. 19. The observations made above in the case of the Appeal filed by the present successful Resolution Applicant in the case of Ghanashyam Mishra & Sons (Supra) provide the answer to the submission of the learned Counsel for the State that the dues arising out of the judgment of the Hon'ble Supreme Court in case of Common Cause (Supra) were not specifically dealt with in the ARP. In fact, we find that the NCLT, in its order of approval of the Resolution Plan passed on 22.06.2018, has taken note of the same in paragraphs 58-68. As pointed out, in the Appeal filed by the present successful Resolution Applicant i.e. Ghanashyam Mishra & Sons (Supra) before the Hon'ble Supreme Court after confirmation of the approved Resolution Plan by CoC by the order/judgment of the NCLT and NCLAT with certain obser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of an independent contract. 112. For the foregoing reasons, it is held that the impugned notification is legal and valid. It is also held that approval of a resolution plan relating to a corporate debtor does not operate so as to discharge the liabilities of personal guarantors (to corporate debtors). The writ petitions, transferred cases and transfer petitions are accordingly dismissed in the above terms, without order on costs." 21. The ratio as above in the aforesaid decision thus does not come to the aid of the Opposite Parties in support of the demands in view of the distinguishable factual settings of the present case before us wherein the Petitioner is challenging the demands made by the Opposite Parties, which pertain to the period prior to the Plan Effective Date. We, therefore, are of the considered view that said decision in case of Lalit Kumar Jain (Supra) would not come to the rescue of the Opposite Parties in so far as the demands raised pertaining to the period prior to the Plan Effective Date. 22. As pointed out in Ghanashyam Mishra & Sons Private Limited (Supra), the approval of the Resolution Plan, no surprise claim should be flung on the Resolution Plan as ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
