NCLT approves IDBI Bank's plan for corporate insolvency, dismisses appeals under Section 14

The National Company Law Tribunal (NCLT), Ahmedabad, approved the resolution plan of IDBI Bank Limited for the insolvency resolution of the corporate debtor on 20.12.2022. The Tribunal dismissed appeals by the Revenue and the Assessee as not maintainable due to the moratorium under Section 14 of the Insolvency and Bankruptcy Code. However, the Interim Resolution Professional and the Revenue were granted liberty to take necessary actions to restore the appeals if needed. The order was pronounced on 13/03/2023.

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Issues Involved:
1. Approval of the resolution plan by NCLT.
2. Application of Section 14 of the Insolvency and Bankruptcy Code (I&B Code), 2016.
3. Impact of the resolution plan on statutory dues and pending proceedings.
4. Dismissal of appeals by the Revenue and Assessee.

Summary:

1. Approval of the resolution plan by NCLT:
The National Company Law Tribunal (NCLT), Ahmedabad, approved the resolution plan of IDBI Bank Limited for the insolvency resolution of the corporate debtor (the assessee) on 20.12.2022. The assessee's counsel argued that all appeals filed by the assessee should be allowed and requested directions for the Assessing Officer to modify, revise, reduce, or cancel the demand according to Section 156A of the Income Tax Act, 1961.

2. Application of Section 14 of the Insolvency and Bankruptcy Code (I&B Code), 2016:
Section 14 of the I&B Code provides for a moratorium prohibiting the institution or continuation of suits or proceedings against the corporate debtor, transferring or disposing of its assets, and recovering any property by an owner. The moratorium remains effective until the completion of the corporate insolvency resolution process or the approval of the resolution plan by the adjudicating authority.

3. Impact of the resolution plan on statutory dues and pending proceedings:
The Supreme Court in Ghanashyam Mishra & Sons Pvt. Ltd. Vs. Edelweiss Asset Reconstruction Company Ltd. held that once a resolution plan is approved, all claims not part of the resolution plan are extinguished, and no proceedings can continue for such claims. The Telangana High Court in Sirpur Paper Mills Ltd. ruled that statutory dues not included in the resolution plan are extinguished, and related proceedings cannot continue. The Tribunal noted that Section 238 of the IBC gives it an overriding effect over other laws, including the Income Tax Act.

4. Dismissal of appeals by the Revenue and Assessee:
The Tribunal dismissed the appeals of both the Revenue and the Assessee as not maintainable in the present format, citing the moratorium under Section 14 of the I&B Code. However, liberty was granted to the Interim Resolution Professional (IRP) or his successor to implead themselves on behalf of the assessee company and to the Revenue to file a Miscellaneous Application to restore the appeals if desired.

Conclusion:
All appeals filed by the Revenue and the Assessee were dismissed as not maintainable in the present format, with liberty granted to the IRP and the Revenue to take appropriate actions to restore the appeals if necessary. The order was pronounced in the open court on 13/03/2023.

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