Moratorium under IBC prevents continuation of pending proceedings; appeals rendered infructuous during CIRP and only plan claims enforced.

ITAT considered whether pending appeals become infructuous upon initiation of CIRP and imposition of the IBC moratorium under section 14; it applied the principle that commencement of CIRP and approval of a resolution plan bind the corporate debtor and stakeholders and that the IBC has overriding effect under section 238, citing coordinate-bench precedents in tax matters. The Tribunal held that only claims included in the resolution plan may be enforced, other proceedings become infructuous for the CIRP duration, limitation is excluded for the moratorium period, and dismissed the appeals without adjudicating tax merits.

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Issues: (i) Whether the appeals before the Tribunal are rendered infructuous by the initiation of Corporate Insolvency Resolution Process (CIRP) and enforcement of moratorium under the Insolvency and Bankruptcy Code, 2016?

Analysis: The Tribunal examined the effect of initiation of CIRP under the Insolvency and Bankruptcy Code, 2016 and the moratorium under section 14 which prohibits continuation of pending proceedings against the corporate debtor during the moratorium. The Tribunal noted authorities holding that on commencement of CIRP and upon approval of a resolution plan under section 31 the plan becomes binding on the corporate debtor and its stakeholders and that the IBC has overriding effect by virtue of section 238. The Tribunal relied on coordinate-bench precedents applying these principles to income-tax proceedings and observed that only claims made part of the resolution plan can be enforced while other proceedings become infructuous for the duration of the CIRP; further, the moratorium period is excluded for limitation purposes under settled law.

Conclusion: The appeals are dismissed as infructuous on account of the initiation of CIRP and the moratorium under the Insolvency and Bankruptcy Code, 2016; no adjudication on the merits of the tax issues was undertaken.

Ratio Decidendi: Where CIRP has been initiated and moratorium under section 14 of the Insolvency and Bankruptcy Code, 2016 is in force, pending adjudicatory proceedings against the corporate debtor become infructuous and the IBC, by virtue of section 238, overrides inconsistent provisions of other laws until resolution is concluded or the moratorium is lifted.

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