NCLAT sets aside order, remands income tax recovery case involving Rs 16 crore government dues as secured claims

The NCLAT set aside the NCLT Guwahati order and remitted the matter back for fresh consideration. The case involved income tax recovery proceedings where the tax department had filed claims totaling Rs. 16,20,25,953 for assessment years 2013-14 and 2014-15 through Form B dated 14.11.2017, prior to the resolution plan approval on 20.09.2018. The NCLAT held that the adjudicating authority failed to consider that government dues constitute secured creditor claims and that proper bank attachment procedures were followed after non-compliance with recovery notices.

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Issues Involved:
1. Validity of the attachment orders issued by the Income Tax Department.
2. Implementation and compliance with the approved Resolution Plan.
3. Admissibility and treatment of the Income Tax Department's claims.
4. Impact of the Supreme Court's judgment in "State Tax Officer (1) Vs. Rainbow Papers Limited" on the case.
5. Jurisdiction and powers of the Resolution Professional and Adjudicating Authority.
6. Finality and modification of the Resolution Plan post-approval.

Detailed Analysis:

1. Validity of the attachment orders issued by the Income Tax Department:
The Income Tax Department issued attachment notices under Section 226(3) of the Income Tax Act, 1961, attaching sums for the assessment years 2014-15. The Adjudicating Authority set aside these attachment orders, allowing the company to operate its bank account without obstructions from the Income Tax Department. The Tribunal emphasized that the claim at this stage could not be entertained as it was filed 15 months after the approval of the Resolution Plan.

2. Implementation and compliance with the approved Resolution Plan:
The Adjudicating Authority directed the Resolution Applicant to strictly implement the Resolution Plan as approved, without any violation. The Petitioner was also directed to file a compliance report within 15 days, ensuring that all current statutory dues, including EPF, Income Tax, and GST, were paid up-to-date.

3. Admissibility and treatment of the Income Tax Department's claims:
The Income Tax Department's claims for the assessment years 2013-14 and 2014-15 were filed before the date of admitting the insolvency application. The Resolution Professional initially considered these claims as contingent liabilities due to pending appeals with the Commissioner of Income Tax (Appeals). The Tribunal noted that the Resolution Professional had acknowledged these dues and had communicated that they would be payable by the new promoter after the final order by the CIT(A). The Tribunal held that the claims could not be entertained after 15 months of the approval of the Resolution Plan, as they were not fresh claims but rights laid to claims made before the NCLT.

4. Impact of the Supreme Court's judgment in "State Tax Officer (1) Vs. Rainbow Papers Limited" on the case:
The Tribunal relied on the Supreme Court's judgment in "State Tax Officer (1) Vs. Rainbow Papers Limited," which emphasized that statutory dues are secured creditors and must be considered in the Resolution Plan. The Tribunal observed that the facts of the instant appeal were covered by the ratio of the aforesaid judgment, which had not been considered by the Adjudicating Authority.

5. Jurisdiction and powers of the Resolution Professional and Adjudicating Authority:
The Tribunal noted that the Resolution Professional's role is to collect claims and prepare the information memorandum, not to adjudicate claims. The communication made by the Resolution Professional regarding the contingent liabilities was not binding on the successful resolution applicant. The Tribunal emphasized that the Adjudicating Authority must ensure that the Resolution Plan meets the requirements of Section 30(2) of the IBC.

6. Finality and modification of the Resolution Plan post-approval:
The Tribunal highlighted that once the Resolution Plan is approved by the Committee of Creditors and the Adjudicating Authority, it becomes binding on all stakeholders and cannot be altered or modified. The Tribunal noted that the claim of the Income Tax Department was accepted to the extent of Rs. 1,97,92,084/-, and an amount of Rs. 1,20,23,691.03 was paid towards full and final settlement. The Tribunal held that any further claims beyond what was admitted by the Resolution Professional would lead to a modification of the Resolution Plan, which is not allowed under the IBC.

Conclusion:
The Tribunal set aside the impugned order dated 20.01.2021 passed by the Adjudicating Authority (NCLT, Guwahati Bench) and remitted the matter back to the Adjudicating Authority to hear the parties afresh, considering the facts and the Supreme Court's judgment in the "Rainbow Papers Limited" case. The Tribunal directed the Adjudicating Authority to pass fresh orders expeditiously.

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