CST dues claim rejected in CIRP: liability quantified at Rs 35.55 lakh, settled for 0.5%, appeal disposed by consent

In a challenge concerning rejection of a statutory dues claim in a CIRP, the NCLAT accepted a consensual resolution after the total CST liability for the relevant assessment years was quantified at Rs. 35,55,420/-. Applying the settlement mechanism under clause 8.3.3 of the approved resolution plan, the successful resolution applicant agreed to pay 0.5% of the quantified amount (Rs. 17,777/-) in full and final settlement, and the claimant authority agreed, on instructions, to waive any further claims or objections. With the resolution professional supporting this pragmatic course, the appeal was disposed of on the basis of consent.

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1. ISSUES PRESENTED AND CONSIDERED

(i) Whether the dispute regarding the Appellant's delayed claim in the CIRP and the challenge to rejection/condonation required adjudication on merits, or could be resolved and the appeal disposed of on the basis of the parties' recorded mutual consent to settle the claim in terms of the Resolution Plan.

(ii) What binding direction, if any, ought to be issued to give effect to the parties' consensus on payment towards the Appellant's statutory dues in accordance with the relevant clause of the approved Resolution Plan.

2. ISSUE-WISE DETAILED ANALYSIS

Issue (i): Disposal of the appeal on the basis of mutual consensus instead of deciding condonation/rejection on merits

Legal framework (as considered by the Court): The Court proceeded on the basis that the CIRP had resulted in an approved Resolution Plan containing a specific treatment for government/statutory dues (referred to during hearing as clause 8.3.3), and that the appeal before it could be disposed of on terms agreed by the parties on record during the hearing.

Interpretation and reasoning: The Court recorded that the total CST-related amount for the relevant assessment years was Rs. 35,55,420/-. During hearing, the successful resolution applicant agreed to pay 0.5% of this amount (Rs. 17,777/-) "towards the settlement of the matter" in accordance with the relevant plan clause. The Appellant, on instructions, accepted this proposal and stated it had no further claims or objections. The resolution professional supported this course as pragmatic. On this express consent of both sides, the Court treated the settlement as sufficient to resolve the controversy in appeal and therefore did not undertake a determinative merits ruling on whether the delay ought to be condoned or whether the earlier rejection was legally sustainable.

Conclusion: The appeal was disposed of on the mutually agreed settlement terms recorded in open court, without a conclusive adjudication on the condonation/rejection issue.

Issue (ii): Directions necessary to implement the settlement amount payable under the Resolution Plan

Legal framework (as considered by the Court): The Court applied the parties' agreed implementation of the Resolution Plan's treatment of such dues (0.5%), and issued directions to operationalise that consensus.

Interpretation and reasoning: Having recorded the agreed computation (0.5% of Rs. 35,55,420/- = Rs. 17,777/-) and the Appellant's acceptance in full settlement with no further claims/objections, the Court found it appropriate to bind the successful resolution applicant to a time-bound payment direction so the dispute concludes finally on those terms.

Conclusion: The successful resolution applicant was directed to pay Rs. 17,777/- to the Appellant within 15 days, and the appeal (and any pending applications) was disposed of accordingly, with no order as to costs.

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