Court quashes demand notices, orders state refund; emphasizes resolution plan binding effect

The Court quashed the demand notices, directing the State to refund or adjust the excess amounts paid by FACOR under protest. The writ petition was disposed of without costs, emphasizing the binding effect of an approved resolution plan under the Insolvency and Bankruptcy Code on all stakeholders, including government entities.

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Issues Involved:
1. Issuance of Mining Dues Clearance Certificate (MDCC).
2. Renewal of trading license.
3. Validity of demand notices issued by the State.
4. Applicability of the Approved Resolution Plan (ARP) under the Insolvency and Bankruptcy Code (IBC).
5. Refund or adjustment of excess amounts paid by the Petitioner.

Detailed Analysis:

1. Issuance of Mining Dues Clearance Certificate (MDCC):
The petitioner, FACOR, sought a direction for the issuance of an MDCC from the Director of Mines, Government of Odisha, as a prerequisite for renewing its trading license under the Orissa Minerals Rules, 2007. FACOR argued that, in view of the approved Resolution Plan (ARP) by the National Company Law Tribunal (NCLT), the Director of Mines was legally obliged to consider earlier dues as 'Nil' and issue the MDCC. The Court initially required FACOR to appear before the Director of Mines, who subsequently rejected FACOR's application for MDCC, leading to the present writ petition.

2. Renewal of Trading License:
FACOR applied for the renewal of its trading license, which was contingent upon furnishing a valid MDCC. The Court noted that FACOR had paid amounts under protest and was issued the MDCC, and its trading license was renewed. The petition's scope was thus limited to seeking a refund or adjustment of the excess amount paid.

3. Validity of Demand Notices Issued by the State:
FACOR contended that the demands raised by the State pertained to periods before the 'plan effective date' of the ARP and were therefore extinguished. The State argued that the demands were enforceable under the Supreme Court's order in Common Cause v. Union of India and that neither the NCLT nor the Resolution Professional could invalidate these demands. The Court, however, found that the demands were not enforceable post-ARP approval, as they pertained to a period before the 'plan effective date.'

4. Applicability of the Approved Resolution Plan (ARP) under the Insolvency and Bankruptcy Code (IBC):
The ARP approved by the NCLT provided for the extinguishment of all claims, demands, liabilities, and obligations of FACOR for periods prior to the 'plan effective date.' The Court emphasized that, under Section 31(1) of the IBC, the ARP binds all stakeholders, including the State Government. The Supreme Court's decision in Committee of Creditors of Essar Steel India Limited reinforced that once a resolution plan is approved, it binds all creditors and stakeholders, ensuring that the successful resolution applicant starts with a "fresh slate."

5. Refund or Adjustment of Excess Amounts Paid by the Petitioner:
The Court directed the State to refund or adjust the excess amount of Rs. 12,02,28,202/- paid by FACOR under protest. This direction was based on the finding that the demands raised against FACOR were unsustainable in law, as they were extinguished by the ARP.

Conclusion:
The Court quashed the impugned demand notices and directed the State to refund or adjust the amounts paid by FACOR under protest. The writ petition was disposed of with no order as to costs. The judgment reaffirmed the binding nature of an approved resolution plan under the IBC on all stakeholders, including government authorities.

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