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TMI Blog2024 (11) TMI 733X X X X Extracts X X X X X X X X Extracts X X X X ..... ds the property tax in respect of the said flats owned by the petitioner for the period prior to 26.03.2021, which, according to learned counsel for the petitioner, is the "effective date" in respect of the resolution plan approved by the NCLT and NCLAT qua the petitioner. It is also sought that a fresh demand be raised for the period w.e.f. 27.03.2021 only in respect to the flats owned by the petitioner i.e. Flat Nos. 109 to 112. 2. The background of the matter is that in 2017, the petitioner underwent Corporate Insolvency Resolution Process ("CIRP"); in the said process JSW Steel Ltd. submitted a resolution plan which was approved by Committee of Creditors under Section 30(4) of Insolvency & Bankruptcy Code, 2016 ("IBC"). The National Company Law Tribunal (NCLT) has approved the said plan under Section 31 of the IBC vide order dated 05.09.2019 in CP (IB) 202(PB)/2017. The said resolution plan was confirmed by the National Company Law Appellate Tribunal vide Order dated 17.02.2020 in Company Appeal (AT) (Insolvency) No. 957 of 2019. In term of Section 31(1) of the IBC, the said resolution plan became binding on all the stakeholders including the Central Government, any State Gove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 20) 8 SCC 531; ii. Ghanashyam Mishra & Sons (P) Ltd. v. Edelweiss Asset Reconstruction Co. Ltd., (2021) 9 SCC 657; iii. Ruchi Soya Industries Ltd. v. Union of India, (2022) 6 SCC 343; iv. CIT v. Monnet Ispat & Energy Ltd., (2018) 18 SCC 786; v. Enforcement Directorate v. Axis Bank, (2019) 259 DLT 500; vi. Pioneer Urban Land and Infrastructure Ltd. v. Union of India, (2019) 8 SCC 416. 5. Learned standing counsel for the MCD/respondents relies upon the reasoning contained in the impugned Common Assessment Order dated 02.03.2024, which inter alia reads as under: "9) With due regard to the confirmation order dated 17.02.2020 by Hon'ble NCLAT regarding Resolution Plan, as referred to above, it is worthwhile to mention that Delhi Municipal Corporation Act, 1957 is a statute specifically dealing with "taxation" under "Chapter VIII" of the Act and Section 123 of the Act provides that Property Tax is a first charge on premises or the property on which they are assessed. In other words, a property tax is levied on the "property" itself and is recoverable from the "property" itself and whosoever be the owner or occupier of the property is liable to pay such property tax. In case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ution plan, as approved by the Committee of Creditors ("CoC"), meets the requirements of Section 30(2) IBC. When the resolution plan does not meet the requirements of Section 30(2), the same cannot be approved. **** 48. A resolution plan which does not meet the requirements of sub-section (2) of Section 30 IBC, would be invalid and not binding on the Central Government, any State Government, any statutory or other authority, any financial creditor, or other creditor to whom a debt in respect of dues arising under any law for the time being in force is owed. Such a resolution plan would not bind the State when there are outstanding statutory dues of a corporate debtor. **** 52. If the resolution plan ignores the statutory demands payable to any State Government or a legal authority, altogether, the adjudicating authority is bound to reject the resolution plan. 53. In other words, if a company is unable to pay its debts, which should include its statutory dues to the Government and/or other authorities and there is no plan which contemplates dissipation of those debts in a phased manner, uniform proportional reduction, the company would necessarily have to be liquidated and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue proceedings for the recovery of debts owed to them. Relevant extracts of the said judgment are as under: "78. Perusal of the SOR would reveal that one of the prime objects of the I&B Code was to provide for implementation of the insolvency resolution process in a time-bound manner for maximisation of value of assets in order to balance the interests of all stakeholders. However, it was noticed that in some cases there was extensive litigation causing undue delays resultantly hampering the value maximisation. It was also found necessary to ensure that all creditors are treated fairly. It was therefore in view of the various difficulties faced and in order to fill the critical gaps in the corporate insolvency framework, it was necessary to amend certain provisions of the I&B Code. Clause (f) of Para 3 of the SOR of the Insolvency and Bankruptcy Code (Amendment) Bill, 2019 would amply make it clear that the legislative intent in amending sub-section (1) of Section 31 of the I&B Code was to clarify that the resolution plan approved by the adjudicating authority shall also be binding on the Central Government, any State Government or any local authority to whom a debt is owed in re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... further claim after the resolution plan is approved. So, that is going to be a major sense of assurance for the people who are using the resolution plan. She has categorically stated that she would want all the Hon'ble Members to recognise this message and communicate further that the I&B Code gives that comfort to all new bidders. They need not be scared that the taxman will come after them for the faults of the earlier promoters. She further states that once the resolution plan is accepted, the earlier promoters will be dealt with as individuals for their criminality but not the new bidder who is trying to restore the company. **** 84. It is clear that the mischief which was noticed prior to amendment of Section 31 of the I&B Code was that though the legislative intent was to extinguish all such debts owed to the Central Government, any State Government or any local authority, including the tax authorities once an approval was granted to the resolution plan by NCLT; on account of there being some ambiguity, the State/Central Government authorities continued with the proceedings in respect of the debts owed to them. In order to remedy the said mischief, the legislature th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plan shall stand frozen and will be binding on the corporate debtor and its employees, members, creditors, including the Central Government, any State Government or any local authority, guarantors and other stakeholders. On the date of approval of resolution plan by the adjudicating authority, all such claims, which are not a part of resolution plan, shall stand extinguished and no person will be entitled to initiate or continue any proceedings in respect to a claim, which is not part of the resolution plan. 102.2. The 2019 Amendment to Section 31 of the I&B Code is clarificatory and declaratory in nature and therefore will be effective from the date on which the I&B Code has come into effect. 102.3. 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. 11. In Ruchi Soya (supra), it was found that Government/Revenue did not lodge its claim before resolution professional, af ..... X X X X Extracts X X X X X X X X Extracts X X X X
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