Appeal automatically abates when resolution plan approved under insolvency proceedings per Rule 22

CESTAT Bangalore held that an appeal abates when NCLT approves a resolution plan under insolvency proceedings. Following Mumbai Bench precedent in Alok Industries Ltd and Gujarat HC ruling, the Tribunal applied Rule 22 of CESTAT (Procedure) Rules, 1982. The court emphasized that as a statutory creature, CESTAT cannot exceed powers vested under statute or rules. Once Interim Resolution Professional is appointed or resolution plan approved, appeals automatically abate per Rule 22, making any order beyond statutory powers non-est in law.

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Issues:
Whether the appellants are entitled to continue with the Appeal and claim relief after the Order of NCLT approving the resolution plan has been passed.

Analysis:
The appeal was filed against the Order-in-Original No.1/2012-Commr. dated 31.7.2012 by the Commissioner of Customs, Mangalore. The appellant contested the Order of the Commissioner under Section 129A of the Customs Act, 1962. However, during the pendency of the appeal, Standard Chartered Bank initiated Corporate Insolvency Resolution Process (CIRP) against the appellant as the Corporate Debtor, leading to the approval of the Resolution Plan by the NCLT on 24.07.2019. Subsequently, the appellants filed a miscellaneous application before the Tribunal, citing the abatement of the appeal post the NCLT's approval of the Resolution Plan.

The main issue revolved around whether the appellants could continue with the appeal and claim relief after the NCLT approved the resolution plan. The Rule 22 of CESTAT (Procedure) Rules, 1982 was crucial in determining the abatement of the appeal post the NCLT's approval. The Mumbai Bench of the Tribunal in a previous case highlighted that Rule 22 becomes applicable once the successor interest with sufficient rights is appointed by the NCLT to continue the proceedings. In the absence of such an application by the successor interest, the appeal stands abated as per the Rule.

The Tribunal, along with other Benches, reiterated that appeals abate as per Rule 22 of the CESTAT Procedure Rules, 1982, upon the approval of the resolution plan by the NCLT. The Hon'ble Gujarat High Court also upheld the abatement of appeals in similar circumstances. It was emphasized that the Tribunal's powers are limited to those vested under the statute or rules framed under the statute. Any order passed beyond these powers would be legally non-existent. Therefore, the Tribunal concluded that the appeal abates once the Insolvency Resolution Professional (IRP) is appointed and/or the Resolution plan is approved, in line with Rule 22 of CESTAT (Procedure) Rules, 1982.

In conclusion, the Tribunal held that the appeal abates post the approval of the Resolution Plan by the NCLT, in accordance with Rule 22 of CESTAT (Procedure) Rules, 1982. The consistent view expressed by the Tribunal and the legal framework supported the abatement of the appeal, leading to the dismissal of the appellant's claim for relief.

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