TaxTMI 
TaxTMI 
2020 (3) TMI 855
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..... A demand letter was given by the bank on August 25, 2016, to which the petitioners gave a reply on September 2, 2016. The respondent no.2 advised the PMPL to appear before its committee on November 8, 2016. Pursuant to an order dated November 30, 2016 passed by this court in a writ petition filed by the PMPL against the declaration of wilful default, a detailed representation was filed on December 14, 2016 by PMPL to the bank against the declaration of wilful defaulter. 3. The respondent no.2‐bank gave a reply to the representation on December 29, 2016. Vide order dated January 9, 2017, the Identification Committee on wilful defaulter passed an order, declaring the petitioners and PMPL as wilful defaulters. 4. Subsequently, upon moving this court, an order was passed by a coordinate bench on January 20, 2017, directing the Identification Committee to disclose the order passed classifying the account of PMPL as wilful defaulter, to be communicated within a week. 5. On January 24, 2017, a letter was addressed to the petitioners whereby the petitioners were informed that on January 9, 2017, the wilful defaulter Identification Committee had declared the company and its....
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....inst the order dated December 17, 2018, the petitioners preferred appeals, which were dismissed on January 18, 2019, wherein the division bench went into the merits of the matter and sustained the order of the learned Single Judge, affirming the declaration by the Review Committee. 12. Subsequently, on February 22, 2019, the National Company Law Tribunal, Kolkata, accepted the resolution plan providing for transfer of PMPL and all its assets and properties to the Essel Mining and Industries Limited. On the strength of such resolution, whereby the debts of the company were resolved, the petitioners moved a special leave petition before the Supreme Court and a division bench of the Supreme Court, vide order dated May 8, 2019, observed that the petitioners wished to make a representation to the Review Committee of the respondent no.2‐bank in the light of the subsequent events, on the issue that since the assets of PMPL had since been sold in liquidation of the company's debts by virtue of the corporate resolution, whether the classification of the petitioners as wilful defaulter should continue. The petitioners were permitted to make such representation within a limited perio....
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....mittee, which is not contemplated by law. 18. It is further argued that, in view of the PMPL itself being absolved of its wilful defaulter tag while the Committee of creditors had accepted the resolution plan and upon a consequent transfer of PMPL to ESSEL Mining and Industries Limited, the petitioners, as promoters/directors of PMPL, could not remain to be tagged as wilful defaulters since the said tag had been erased by the resolution process itself. It is argued that the liability of the petitioners could not exceed that of the company itself. The liabilities of the latter having been extinguished by virtue of the resolution, the petitioners could not be continued to be declared as wilful defaulters. 19. Learned senior counsel for the petitioners next argues that the Review Committee as well as the Identification Committee adopted erroneous legal principles in labelling the petitioners as wilful defaulters as well. It is argued on basis of the July 1, 2015 Circular that a 'unit' was to be held a wilful defaulter. The expression 'unit' separately included individuals, juristic persons and all other forms of persons enterprises whether incorporated or not, as per clause 2.12....
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.... 25. It is further submitted that the resolution of the claim for loan by the resolution process could not have any bearing on the declaration of the petitioners as wilful defaulters in their capacities of promoters/directors of PMPL. Even if the assets of PMPL merged with another company and the dispute as regards the loan debts was resolved between the corporate debtors and the creditors as well as all necessary parties, the tag of wilful default, even though removed from the company, would be sustained as far as the petitioners are concerned. The petitioners were, in their capacities as promoters and directors, liable for the offences on which the wilful default declaration was made and there was no reason why they should be absolved from such liability by the resolution of the company's loan. It is argued by learned senior counsel for the respondents that the petitioners subjected themselves to the Review Committee pursuant to the order of the Supreme Court, in terms of the Master Circular dated July 1, 2015. As such, the decision of the Review Committee is binding on them. 26. It is further argued that the petitioners were very much represented before the said committee a....
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.... of corporate resolution and its effect on the 'wilful defaulter' tag on the petitioners. 33. Hence, the first issue raised by the petitioners has to be turned down, since the Review Committee was justified in restricting its enquiry only to such subsequent event and its effect and not reopening the merits of the declaration of wilful defaulters by the Identification Committee, since the same had already attained finality. 34. However, as far as the subsequent event is concerned, the petitioners are justified in arguing that since the wilful default tag was attached to the petitioners merely in the capacity of the promoters and directors of the defaulting company, which itself had been absolved of such default, automatically removing its wilful defaulter tag, such tag could not be sustained thereafter. The petitioners were castigated as wilful defaulters only due to the alleged actions taken by them in commission of the default by PMPL. Hence, the term 'wilful default', even in respect of the petitioners, does not pertain to their general conduct as company officials but is restricted to the default committed by the company, of which they were promoters/directors. As such, it....