2025 (8) TMI 85 - HC - Central Excise

Appeal Found Maintainable; Case Remanded for Tribunal to Consider NCLT Order Dated August 9, 2024

The HC held that the appeal was maintainable and that the subsequent NCLT order dated 09 August 2024 must be considered. The matter was remanded to the ... Maintainability of appeal - appropriate forum - question raised in the context of the NCLT’s order dated 09 August 2024 - substantial questions of law or not - HELD THAT:- Given the provisions of the IBC and the law laid down in Ghanashyam Mishra [2021 (4) TMI 613 - SUPREME COURT], this subsequent development in the form of NCLT’s order dated 09 August 2024 cannot be ignored. An opportunity to place this subsequent development before the Tribunal will serve the interest of justice because even the Respondent will have ample opportunity to make their submissions and deal with this subsequent development. If the Appellant’s arguments based on such subsequent developments are accepted, then the matter, at least in relation to the Appellant, might perhaps be concluded before the Tribunal. However, if the Tribunal does not accept the Appellant’s arguments, then the Appellant will undoubtedly be able to challenge the Tribunal’s order, including on grounds related to this subsequent development. At that point, the effect of this subsequent development would be a question legitimately involved in the appeal the Appellant may decide to pursue. Likewise, the Respondent will also have the opportunity to appeal the Tribunal’s order if they are dissatisfied with it. It would not be appropriate to decide this Appeal based on the subsequent development by shutting out an opportunity to the Respondent to deal with this subsequent development, if necessary, by placing any additional but relevant facts concerning this issue. The Tribunal is requested to decide the remanded Appeal as expeditiously as possible and in any event by 31 December 2025 - Appeal disposed off. ISSUES: Whether a subsequent development, specifically the NCLT's order approving a resolution plan under the Insolvency and Bankruptcy Code, can be taken into consideration in an appeal under Section 35G of the Central Excise Act, 1944.Whether such a subsequent development, not raised before the Appellate Tribunal, constitutes a substantial question of law involved in the appeal.Whether the appeal can be disposed of on the ground of the subsequent NCLT order by setting aside the Appellate Tribunal's impugned order without providing an opportunity to the Respondent to make submissions. RULINGS / HOLDINGS: The Court held that the question of taking into account the NCLT's subsequent order 'could not have been raised before the Tribunal,' and therefore, 'such a question cannot be said to be involved in the present Appeal.'Despite the above, the Court recognized that 'this subsequent development in the form of NCLT's order dated 09 August 2024 cannot be ignored' given the provisions of the Insolvency and Bankruptcy Code and relevant Supreme Court precedent.The Court ruled that the matter is remanded to the Tribunal to consider the subsequent development, allowing the Respondent to make submissions and present relevant material, thus rejecting disposal of the appeal solely on the basis of the NCLT order without hearing the Respondent. RATIONALE: The Court applied Section 35G of the Central Excise Act, which requires that a substantial question of law must ordinarily have arisen and been raised before the Appellate Tribunal to be involved in the appeal before the High Court.The Court relied on the legal framework under the Insolvency and Bankruptcy Code and the Supreme Court's interpretation in Ghanashyam Mishra and Sons Private Limited Vs. Edelweiss Asset Reconstruction Company Limited, which holds that past liabilities may stand extinguished upon approval of a resolution plan by the NCLT.The Court noted that earlier High Court decisions did not consider whether a subsequent development not raised before the Tribunal could be entertained, highlighting a doctrinal nuance regarding the timing and admissibility of such issues in appeals under Section 35G.The Court emphasized the principles of natural justice by ensuring both parties have the opportunity to address the impact of the subsequent NCLT order before the Tribunal, thereby avoiding premature disposal of the appeal.