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TMI Blog2024 (12) TMI 989X X X X Extracts X X X X X X X X Extracts X X X X ..... pending for a prior period and is quantified subsequent to the approval of the Resolution Plan is an argument in sophistry. If this argument is accepted then all authorities would be in a position to keep assessment/re-assessment pending till completion of the Resolution Plan, and thereafter, culminate the same and saddle the successful Resolution Applicant with an unknown burden. Such an action cannot be countenanced as the same would be an anathema to the fundamental principles of the moratorium provided under the Code. The law cannot be read in a manner wherein the basic structure of the Code is breached by hindering the flow of the same by creation of roadblocks and dams the underlying principle of the Code is to give a fresh start to the Resolution Applicant. Any new liability being fastened after the approval of the Resolution Plan would inherently and palpably be illegal and go beyond the Lakshman Rekha of the Code. The impugned assessment order is quashed and set aside. - Hon'ble Shekhar B. Saraf And Hon'ble Vipin Chandra Dixit JJ. For the Petitioners : Ms. Arti Agarwal with Ms. Mahima Jaiswal and Mr. Rishabh Jain, Advocate For the Respondents : Mr. Gaurav Mahaja ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 this would amount to a hydra head popping up which would throw into uncertainty amounts payable by a prospective resolution applicant who 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, the NCLAT judgment must also be set aside on this count. (Emphasis by me) 6. She further submits that since as per the Resolution plan, all pending proceedings are extinguished, now the Resolution Applicant cannot be burdened with this assessment order which is not part of the Resolution Plan. The provisions of IBC ensures that the successful resolution applicant starts running the business of the corporate debtor as a fresh innings after the approval of resolution plan. However ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arely cover the Central Government, any State Government or any local authorities. The legislature noticing that on account of obvious omission certain tax authorities were not abiding by the mandate of the I B Code and continuing with the proceedings, has brought out the 2019 Amendment so as to cure the said mischief. We therefore hold that the 2019 Amendment is declaratory and clarificatory in nature and therefore retrospective in operation. 88. There is another reason which persuades us to take the said view. Clause (10) of Section 3 of the I B Code defines creditor thus: creditor means any person to whom a debt is owed and includes a financial creditor, an operational creditor, a secured creditor, an unsecured creditor and a decree-holder; 89. Subsections (20) and (21) of Section 5 of the I B Code define operational creditor and operational debt respectively as such: operational creditor means a person to whom an operational debt is owed and includes any person to whom such debt has been legally assigned or transferred; operational debt means a claim in respect of the provision of goods or services including employment or a debt in respect of the payment of dues arising under a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on the judgment of this Court in Essar Steel (India) Ltd. (CoC) [Essar Steel (India) Ltd. (CoC) v. Satish Kumar Gupta, (2020) 8 SCC 531 : (2021) 2 SCC (Civ) 443]. 93. The Calcutta High Court in Akshay Jhunjhunwala v. Union of India [Akshay Jhunjhunwala v. Union of India, 2018 SCC OnLine Cal 142] has also taken a view that the claim of operational creditor will also include a claim of a statutory authority on account of money receivable pursuant to an imposition by a statute. We are in agreement with the views taken by these courts. 94. Therefore, in our considered view, the aforesaid provisions leave no manner of doubt to hold that the 2019 Amendment is declaratory and clarificatory in nature. We also hold that even if the 2019 Amendment was not effected, still in light of the view taken by us, the Central Government, any State Government or any local authority would be bound by the resolution plan, once it is approved by the adjudicating authority (i.e. NCLT). CONCLUSION 95. In the result, we answer the questions framed by us as under: (i) That once a resolution plan is duly approved by the adjudicating authority under sub-section (1) of Section 31, the claims as provided in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , such proceedings pertain to the period prior to the approval of the resolution plan. The outcome of such proceedings, particularly if adverse to the Petitioner-Assessee, would clearly be in relation to tax claims for the period prior to the approval of the resolution plan. The resolution plan came to be approved on May 6, 2020. Any attempt to re-agitate the assessment for AY 2016-17, evidently and squarely, constitutes pursuit of claims for the period prior to even the initiation of the CIRP. The conduct of such proceedings would be directly in conflict with the law declared in Ghanshyam Mishra, which makes it clear that continuation of existing proceedings and initiation of new proceedings that relate to operations prior to the CIRP are totally prohibited after the approval of the resolution plan. Consequently, nothing in the Impugned Proceedings can legitimately survive. 9. Mr. Mahajan, learned counsel appearing on behalf of the respondent authorities has supported the assessment order on the ground that no proper information was given by the petitioner to the Income Tax Authorities with regard to resolution plan. Ergo, the assessment that was carried out by means of faceless a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claim before the Resolution Professional, and accordingly, the argument that the department was not aware of the IBC proceedings holds no water. 13. Even assuming that the department was not informed about the proceedings, the law is very clear as expounded in the judgments cited above. The resolution applicant cannot be saddled with new claims once a resolution plan has been approved. 14. The argument that an assessment that has been kept pending for a prior period and is quantified subsequent to the approval of the Resolution Plan is an argument in sophistry. If this argument is accepted then all authorities would be in a position to keep assessment/re-assessment pending till completion of the Resolution Plan, and thereafter, culminate the same and saddle the successful Resolution Applicant with an unknown burden. Such an action cannot be countenanced as the same would be an anathema to the fundamental principles of the moratorium provided under the Code. The law cannot be read in a manner wherein the basic structure of the Code is breached by hindering the flow of the same by creation of roadblocks and dams the underlying principle of the Code is to give a fresh start to the Res ..... X X X X Extracts X X X X X X X X Extracts X X X X
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