CESTAT dismisses excise duty recovery appeal as statutory dues extinguished under approved IBC resolution plan

CESTAT Chennai dismissed the department's appeal for recovery of excise duty following SC precedent in Ghanashyam Mishra case. The NCLT Chennai approved a resolution plan under IBC, and since the department failed to file claims during the corporate insolvency resolution process, all statutory dues including excise duty demands prior to plan approval stood extinguished. The resolution plan specifically provided that all claims would be irrevocably settled and discharged in perpetuity.

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Issues Involved:

1. Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code, 2016 (IBC 2016).
2. Approval and binding nature of the Resolution Plan by the NCLT and Supreme Court.
3. Extinguishment of statutory dues and claims not included in the Resolution Plan.

Summary:

Corporate Insolvency Resolution Process (CIRP):
The appellant company underwent Corporate Insolvency Resolution Proceedings as per the Insolvency & Bankruptcy Code, 2016, with the insolvency commencement date being 17-Aug-17. A public announcement was issued on 24-Aug-17, calling creditors to submit proof of their claims by 07-Sep-17. The respondent did not file any claim pursuant to this announcement.

Approval and Binding Nature of the Resolution Plan:
A resolution plan was prepared, approved by the Committee of Creditors, and subsequently by the NCLT, Chennai on 25/27-Jun-19. Although the NCLAT set aside this approval, the Supreme Court reinstated it on 28-Feb-20, making the resolution plan final. As per Sec. 31(1) of the IBC, 2016, the resolution plan approved by the NCLT is binding on the corporate debtor and its creditors, including the Central Government.

Extinguishment of Statutory Dues and Claims:
The resolution plan defined "Statutory Dues" and detailed their treatment, proposing a maximum payment of Rs. 7.01 crores, primarily to the electricity department. All other claims, including those under litigation or dispute, were to be settled at NIL value. The NCLT-approved plan stated that any claims or demands not included would be permanently extinguished, with no further obligations on the corporate debtor.

The Supreme Court in Ghanashyam Mishra & Sons Pvt Ltd v. Edelweiss Asset Reconstruction Company Ltd (2021) 9 SCC 657 ruled that post-approval of the resolution plan, no dues not part of the plan can be recovered from the corporate debtor.

Judgment:
The Tribunal noted that the demands disputed in these appeals, for periods from 2006 to 2017, are covered by the NCLT-approved resolution plan and confirmed by the Supreme Court. Consequently, these demands stand irrevocably settled and extinguished. The appeals are dismissed as the Department did not make any claims during the Corporate Insolvency Resolution Process.

Conclusion:
The appeals against the orders O.I.O. No. 5/2017, O.I.O. No. 4/2015 read with O.I.A. No. 240/16, and O.I.O. No. 28/2018 read with O.I.A. No. 656/18 are dismissed, with all claims being irrevocably extinguished as per the approved resolution plan.

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