Tribunal upholds demand notice, sets aside detention orders under IBC sections

The Tribunal dismissed the application challenging the demand notice issued by PSIEC, holding it valid as the enhanced land compensation was not a statutory due under Section 31 of the IBC. However, the Tribunal allowed the application to set aside the attachment and detention orders by the Commissionerate of Central Excise, applying Section 32A of the IBC, extinguishing any claims against the applicant and directing the release of the detained goods.

---

---

Issues Involved:
1. Legality of the demand notice issued by the respondent corporation.
2. Applicability of Section 32A of the IBC, 2016 concerning attachment and detention orders by the Commissionerate of Central Excise.

Detailed Analysis:

IA No.598/2021:

1. Demand Notice Legality:
- The applicant, SEL Manufacturing Company Limited, sought to set aside a demand notice dated 05.03.2021 issued by Punjab Small Industries & Export Corporation Limited (PSIEC) for an amount payable before the Corporate Insolvency Resolution Process (CIRP).
- The applicant argued that the demand notice is unsustainable as it pertains to a period prior to the CIRP and is barred by Sections 31 and 32A of the IBC, 2016. The demand notice also hinders the sale of a non-core asset, which is crucial for repaying financial creditors.
- The respondent contended that the demand arises from conditions in the allotment letter dated 01.12.1995, which includes clauses about price variation and lease rent. The respondent emphasized that the applicant, as the successor, is liable for the unpaid amounts and that the demand was upheld by the High Court and Supreme Court.

2. Resolution Plan and Statutory Provisions:
- The applicant relied on Section 31 of the IBC, which states that an approved resolution plan is binding on all creditors and extinguishes claims not included in the plan. The applicant also cited Supreme Court judgments supporting their stance.
- The respondent argued that the enhanced land compensation is not a statutory due but a condition of the allotment, affecting the title of the property. They also highlighted that the respondent was unaware of the CIRP proceedings and that the applicant had not disclosed ongoing litigation regarding the enhanced compensation.

3. Tribunal’s Observations:
- The Tribunal noted that the enhanced compensation arises from conditions in the allotment letter and is not a statutory due. The PSIEC was unaware of the CIRP proceedings, and the applicant had not informed the IRP or CoC about the pending litigation.
- The Tribunal referred to the Supreme Court's decision in the Municipal Corporation of Greater Mumbai (MCGM) Vs. Abhilash Lal, emphasizing that Section 238 of the IBC does not override public authorities' rights to control their properties.
- The Tribunal concluded that the additional payment is for rectifying the title defect and not linked to the CIRP. Therefore, the resolution plan cannot override PSIEC's control over the property.

4. Judgment:
- The Tribunal dismissed the application, holding that the enhanced land compensation is not a statutory due under Section 31 of the IBC. The demand notice issued by PSIEC stands valid.

IA No.599/2021:

1. Attachment and Detention Orders:
- The applicant sought to set aside attachment and detention orders issued by the Commissionerate of Central Excise, arguing that the resolution plan extinguishes such claims and that Section 32A of the IBC applies.
- The respondent stated that the applicant had taken input credit and owed interest, which was confirmed by the CESTAT and the High Court of Himachal Pradesh. The respondent detained goods to secure payment, and the CoC did not consider this during the CIRP.

2. Tribunal’s Observations:
- The Tribunal noted that the interest liability existed before the CIRP initiation, and the goods were detained to secure payment. The respondent did not file a claim during the CIRP.
- The Tribunal emphasized that Section 32A of the IBC applies, as the offenses were committed before the CIRP, and the resolution plan results in a change of management.

3. Judgment:
- The Tribunal allowed the application, setting aside the attachment and detention orders. The respondent was directed to release the detained goods, and any claims against the applicant were extinguished.

Conclusion:
The Tribunal dismissed IA No.598/2021, upholding the demand notice by PSIEC, and allowed IA No.599/2021, setting aside the attachment and detention orders by the Commissionerate of Central Excise, applying Section 32A of the IBC.

---