TaxTMI 
TaxTMI 
2020 (11) TMI 727
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....ctor, The Assitant Commissioner I, Office of the Assistant Commissioner, Department of Commercial Taxes, The Regional Provident Fund Commissioner II, The Enforcement Officer, Employees Provident Fund Organization, The Joint Director General of Foreign Trades, The Deputy Director General of Foreign Trades,], The Secretary of Eloor Municipality, The Gujarat Industrial Development Corporation, The Regional Manager, Gujarat Industrial Development Corporation, The Deputy Executive Engineer, Gujarat Industrial Development Corporation , Narmada Clean Tech, represented by its Managing Director, The Assistant Commissioner of Sales Tax, The Assistant Commissioner of Professional Tax The Gujarat Industrial Development Corporation and another Versus Merchem Limited and another The Department of Factory & Boilers and another Versus Merchem Limited and another Assistant Commissioner Versus Merchem Limited and another The Tahsildar (Land), Paravoor Taluk & Another Versus Merchem Limited & Another The Electrical Inspector and another Versus Merchem Limited another Hon'ble Mr. Ashok Kumar Borah, Member (Judicial) For applicants in MA.9/KOB/2019 :Advocates. RaviRajagopalan/Ramal....
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.... the Successful Resolution Applicant ("SRA") by the Chennai Bench of NCLT under Section 31(1) of the Code, by its Order dated 23 January 2019 passed in M.A 515 of 2018 in CP (IB) 689 of 2017. 5. Pursuant to the approval of the Resolution Plan, the total Resolution Plan amount of Rs. 115.2520 Crores had been remitted by the SRA into the account opened with lead member of the Committee of Creditors, the State Bank of India, Palarivattom Branch, Kochi on 18.03.2019, for being disbursed to the stakeholders in trust, by the Resolution Professional in accordance with the approved Resolution Plan. The said amount is being disbursed to all the stakeholders by the Resolution Professional, who is in charge of the disbursal of the Plan as approved by the NCLT, Chennai Bench, upon completion of the necessary documentation /formalities required on the part of the stakeholders 6. The learned counsel for the RP stated that the aforesaid Resolution Plan is presently under implementation with the management of the Corporate Debtor Company/Applicant having been taken over by the SRA and its nominees assuming office as its Directors. 7. The learned counsel further stated that Respondents 1 t....
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.... the Corporate Debtor by the new Board of Directors, the Corporate Debtor has communicated with every one of the Respondents herein, bringing to their attention the fact that their action as above enumerated in points (a) to (d) is contrary to the provisions of the Code and had called upon them to co-operate for the orderly implementation of the approved Resolution Plan and assist in the revival of the operations of the Corporate Debtor. 12. The copies of the said communication with every one of the Respondents, individually and their responses is provided in the communication trail, with the Respondents would show that, notwithstanding the entreaties of this Applicant, inviting their attention to the provisions of law, the Respondents have continued to maintain their belligerent stand, professing ignorance of the relevant statutory obligations on them and insisting on remittance of the amounts due in the name of the Corporate Debtor in their books, which claim/obligation/debt, this Applicant had been discharged from, under the approved Resolution Plan. 13. The Applicant further submits that as of date, the Respondents have refused to heed the Applicant's request but are ....
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.... as enumerated in point (a) to (d) mentioned above is contrary to law, in derogation of their statutory obligations and designed to the art the successful implementation of a Resolution Plan approved by the Chennai Bench of NCLT under Section 31(1) of the Code. 19. The Applicant further submitted that the Corporate Debtor apart from being prejudiced by the aforesaid actions of the Respondents, is also forced to incur costs because of the delay in the sanction of renewals/extensions /permissions by the Respondents which is impacting the timely implementation of the approved Resolution Plan. It is further submitted that despite the plan being approved in January 2019, the Resolution Applicant and the Corporate Debtor are being made to run from pillar to post by these Statutory Authorities, who are bound to respond quickly and, in a time bound manner, in line with the essence of the Code. Therefore, in the light of the foregoing circumstances, the applicant prayed to allow this application and dismiss all other application filed separately. COUNTER FILED BY R1 & R2 : 20. The R1 & R2 submitted that these respondents issued communication No. L-1/7995/2017/F&B dated 27.03.2018 t....
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....f Factories Act and Kerala Factory Rules cannot be extinguished. 24. It is their further submission that neither the applicant's company nor the Resolution Professional has at any time intimated/put on notice, the respondent 1 & 2 about the above CIRP. In view of the lack of notice the respondents have been deprived of making its claim before the Resolution Professional. The learned counsel stated that the insolvency proceedings have been maliciously and fraudulently instituted by the Company itself to deprive its creditors their statutory dues. The proceedings are, therefore, malafide and cannot be permitted to be proceeded with its present form. COUNTER FILED BY R3 & R4: 25. The 3rd Respondent in its counter stated that the respondent is a Statutory Body constituted under Section 4 of the Water (Prevention and Control of Pollution) Act, 1974 (hereinafter referred to as Water Act) for discharging its duties and functions under the above Act within the territory of State of Kerala. With regard to the averment to the effect that the respondent Nos. 3 and 4 have not filed any claim before the IRP or RP with respect to their alleged antecedent operational debt in accordance w....
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....ed by the Hon 'ble Supreme Court, 3 Companies including M/s. Merchem have to bear the expenses towards the supply of drinking water to the affected communities at Eloor Municipality. As per the judgment dated 20.10.2009 in W.P.(C) No. 15311/2009, the Hon'ble High Court has held that the direction issued by the PCB to IRE Ltd. to pay water charges under the principal of "polluter pays" does not warrant interferences and the said Company is liable to remit their share. The said judgment was upheld by the Division Bench of the Hon'ble High Court vide its judgment dated 11.10.2017 in Writ Appeal No. 2884/2009 (reported in 2017 (5) KHC 468 in the case of Indian Rare Earths Ltd. vs. State of Kerala & Ors. In this regard it is to be noted that M/s. Merchem Ltd. has also filed a Writ Petition before the Hon'ble High Court as W.P.(C) No. 20184/2006 challenging the direction issued by the Board to make contribution for setting up water supply system. The above Writ Petition was dismissed vide judgment dated 28-3-2018, which categorically establish the fact that M/s. Merchem Ltd. is liable to bear their share of expenses towards the water supply to the affected families of Elo....
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....s and it cannot be write off altogether on the ground that the claim was not submitted to RP or IRP, as this liability arose during the exercise of various statutory provisions of the Electricity Act, 2003, CEA Regulations 2010, Kerala Chief Electrical Inspector and Electrical Inspectors (Powers and Functions) Rules 2013. A Resolution Plan proposed by a Resolution Applicant can be approved by the Tribunal, if it satisfies the provisions of Section 30(2)(e) of I & B Code 2016. That is the reason why NCLT approved the Resolution Plan after rejecting the concession/reliefs sought in Para 8.1 (B,C,D,E,F,G,H,IJ,K,L,M,T,U), 8.2,8.4,8.10 of the Resolution Plan. 33. It is their further case that the claim made by Government Department in relation to inspection fee stands valid due to disallowing items 8.4 by the NCLT in its order dated 23.01.2019. Moreover, the company has not filed the application with relevant documents for renewal or revalidation. 34. The learned counsel appearing for R5 & R6 argued that as the NCLT disallowed applicants' claim No. 8.4 and passed its order there is no derogation of the order of the NCLT and that, no provisions of the Code are violated by the Respo....
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....applicant neither settled the due amount nor approached the respondents for reconnection. Therefore, the Revenue Recovery proceedings were initiated on 04.07.2018. As of now the arrears comes to Rs. 2,69,987/-. It is also stated that connection with consumer No. KLY/5206/N was given to the applicant on 01.02.1997. The said connection was disconnected on 08.11.2019 due to non- payment. Reconnection can be done on clearing the arrears of Rs. 404/-. 37. The learned counsel for the respondents submitted that as per the directions of the Hon'ble Supreme Court monitoring committee, drinking water has to be supplied to 2144 families in polluted area in Eloor Municipality @ 15 KL per month and the water charges for the same has to be collected from four polluting companies by the Pollution Control Board and has to be remitted to these respondents. The applicant company is one among the four and has to remit the water charges. But it has not paid the same and hence the Pollution Control Board has not so far remitted the water charges to these respondents. The writ petition filed by the applicant company before the Hon'ble High Court of Kerala was dismissed by the judgement dated ....
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....ion Plan. It is clear from that the claims from the Governmental Department such as the 10th Respondent shall stand valid since the NCLT has rightly disallowed item 8.4. So the claim of the 10th Respondent is absolutely valid. COUNTER FILED BY R12 & R13: 42. Respondents No. 12 and 13 in their counter submitted that the applicant, Merchem Limited is a Rubber Chemicals Manufacturing Company incorporated under the Companies Act, 1956 and a unit of the same is functioning at Eloor Village from 1997. Finding the company encroached 52.500 cents of puramboke land in Survey No. 185/16 of Eloor Village, and erected structures over the same, the Tahsildar, Paravur initiated steps against them, in accordance with the provision of Kerala Land Conservancy Act, 1957 against the company, and imposed "Nirodhanakaram" 'as per the Proceedings No. B5-11998/96 dated 03.07.1997. It is pertinent to note here that the company admitted the encroachment by paying the "Nirodhanakaram" till the Financial Year 2006-2007. The imposition of "Nirodhanakaram" was cancelled by the Respondents' office as per Proceedings No. D1-4704/07 dated 16.06.2007 and steps for initiating the eviction of the company f....
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....dge about the dues to Government of Kerala as the Government land was leased out to the company. This is easily verifiable from companies' books of accounts according to Sec. 17(2)(d) of I &B Code 2016 and the RP or IRP have the authority to access the above said documents. The Resolution Professional could have informed about the preparation of Resolution Plan well in advance to these Respondents. But the Government of Kerala came to know about it only on the perusal of the above said letter of the Resolution Professional stating that the Resolution Plan has been approved by the NCLT, Chennai Bench. In this connection it may be noted that the NCLT approved the Resolution Plan vide order dated 23.01.2019 by granting concession /exceptions as enumerated under para 7.2 ( A&B) and 8.1 (A, N, O, P. Q. R, S), Para No. 8.3,8.5,8.6,8.7,8.8 and 8.9 of the Resolution Plan. Concession sought in the Resolution Plan Viz 8.1(B, C,D,E.F.G.H,I,J,K,L,M,T,U) 8.2,8.4,8.10 stands disallowed by the NCLT, so the applicant is not in a position to enjoy concessions with respect to matters referred in the above items including Government dues. COUNTER FILED BY R14: 45. In their counter, Respondent N....
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....existing during the resolution process and it cannot be written off altogether on the ground that it was not submitted claims before the RP or IRP, as this liability arose during the exercise of various statutory provisions of KGST & KVAT Act. COUNTER FILED BY R15 & R16: 48. Respondent Nos. 15 & 16 in their counter submitted that in the case of failure on the part of the employer to deposit the legitimate dues of workers under Section 7A of the EPF Act, the Regional Provident Fund Commissioners/ Assistant Provident Fund Commissioners, who are statutory authorities under the EPF Act are empowered to determine the amount due from any employer under any provisions of the EPF Act. 49. They have further submitted that the Applicant M/s Merchem Limited is an establishment covered under the provisions of Provident Fund Act 1952 with code No.KR/KCH/13674 under the jurisdiction of Regional Provident Fund Commissioner-I, Kochi. The applicant Company was brought under the purview of the EPF Act with effect from 01.05.1993 and allotted a sub-code KR/KCH/13674A with effect from 01.06.1997, and is therefore required to comply with the Provisions of the EPF Act and Schemes framed thereun....
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....the GIDC for land to start its business in Gujarat. GIDC allotted Plot No. 24/1 admeasuring 40,600 Sq.m at Panoli Industrial Estate. Another property was also allotted in Plot No. 24 ad measuring 48,803.37 Sq.m at Panoli Industrial Estate. The GIDC has since then been providing services to the above applicant to operate the above industrial estates for which the company is liable to make payment in accordance with law. The total dues on Plot No. 24/1 as on 19.06.2019 is Rs. 13,93,763 and the total dues on Plot No. 24 as on 19.06.2019 is Rs. 16,76,869/-. The total dues towards water supply and drainage cess on both Plot No. 24 and 24/1 as on 31.05.2019 is Rs. 73,05,181/-. Further, notified tax with respect to plot No. 24 is Rs. 51,78,712/- and with respect to plot No. 24/1 is Rs. 37,56,762/-. In fact, the above claims are statutory dues admitted by the applicant and protected by the order dated 23.01.2018. 55. The applicant company nor the Resolution Professional has at any time intimated/put on notice, the GIDC about the above proceedings. In view of the lack of notice, the GIDC has been deceived into not making its claim before the Resolution Professional. The GIDC believes tha....
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....ovisions of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred as the 'Code'). The 2nd applicant is a notified Local Self Government Authority under Section 277 of the Gujarat Municipalities Act,1963. The Panoli Notified Area Authority is a secured operational creditor under the provisions of the Insolvency and Bankruptcy Code, 2016. 59. The learned counsel for the applicants raised the same contentions made in the counter filed by them in MA/09/KOB/2020, being the Respondent No. 12, requiring the Corporate Debtor to be liquidated in the manner as laid down in Section 33 of the Code. To fortify the argument, the learned counsel for the applicants referred to the following decisions: i. Arcelormittal India Pvt. Ltd. V. Satish Kumar Gupta & others (2019) 2 SCC 1 ii. Gursimran Singh, Director of Downtown Temptations Pvt. Ltd. V. Indiabulls Housing Finance Ltd. (2018) SCC online NCLAT 874 iii. Vijay Kumar Choudary and Another V. Educomp Infrastructure & School and Others (2019) SCC online NCLAT 1200 iv. Canara Bank V. State of T.N & Another (2000) 3 SCC 210 MA/16/KOB/2020 60. This MA has been filed by the Department of Factory & ....
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....applicant is the statutory authority under the State of Kerala and the 1st respondent- Corporate Debtor is an assessee on the rolls of the applicant bearing TIN 32150247445. The assessee/ Corporate Debtor is in arrears of a total amount of Rs. 32,66,54,410/- as tax penalty and interest. The learned counsel further stated that all these arrears were duly communicated to the assessee as and when they are generated. It is further stated that the statutory dues are admitted and protected by the order dated 23.01.2019, but the respondent/ Corporate Debtor filed an application to write off the whole claims. Therefore, the applicant seeks the Corporate Debtor to be liquidated in the manner as laid down in Section 33 of the Code. MA/18/KOB/2020 65. This MA was filed by the Tahsildar (Land) and The District Collector under Section 60 (5) under Section 60 (5) read with Section 33 of the Insolvency and Bankruptcy Code, 2016, (who is Respondent No.12 in MA/9/KOB/2020) seeking the following reliefs: i. Declare that the Committee of Creditors and the appointment of the Insolvency Professional appointed under the above proceedings have become time barred and Fanctus-officio and the....
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.... binding on the petitioners. 68. The learned counsel for the applicant submitted that the applicant is the statutory authority under the State of Kerala to execute the provisions of Electricity Act, 2003, CEA Regulations, 2010, Kerala Chief Electrical Inspector and Electrical Inspectors (Powers & functions) rules, 2013. Their case is that the 1st respondent company/ Corporate Debtor has been given connection with HT Connection with Consumer Nos. LCN/25/3284 (Merchem Ltd) and LCN/31/3414 (Merchem India Pvt. Ltd.). Respondent Company has failed to remit the periodical inspection fee of the electrical installation of the company as per Regulation 30 of Central Electricity Authority (Measures relating to Safety and Electric supply) Regulation, 2010. The said dues comes to Rs.1,82,015/- and Rs.89,004/- from 2012-13 to 2016-17. It is further stated that the statutory dues are admitted and protected by the order dated 23.01.2019 but respondent filed MA/9/KOB/2020 to write off the whole claims. Hence, among other prayers, the applicant sought to liquidate the Corporate Debtor under Section 33 of the Code, so that they can approach the liquidator for getting their dues. COMMON COUNTER....
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....roved Resolution Plan. The proposition of law is that upon approval of a Resolution Plan, the Corporate Debtor stands discharged from claims and those claims which were not filed within time shall abate. It is further stated that this proposition of law has been laid down by the Hon'ble Supreme Court in Essar Steel Ltd (C.A 8766-67 of 2019) dated Nov 15,2019. 73. The learned counsel for the respondent company-Corporate Debtor during argument submitted that the Applicants of M.As have also raised a specious plea that they are statutory creditors, claiming under a statute and hence their claims cannot abate. However, in the light of Section 238 of the Code and the Judgement of the Hon'ble Supreme Court in SLP No 6483 of 2018 in Pr CIT Vs Monnet Ispat & Energy Ltd (Orders dated 10-0ct-2018), the said plea is unsustainable. 74. The applicants herein having failed in their statutory duties to file claims on time, now cannot plead ignorance of law or that they had no notice or the proceedings would not bind them. The non-filing of claim by the Applicants in time constitutes laches on their part and would operate to extinguish the debts due-if any and the claim thereof there....
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....MA 12 of 2020 (R20), MA 16 of 2020 (R1), MA 17 of 2020, MA 18 of 2020 (R12) and MA 19 of 2020 (R6)before this Tribunal seeking to set aside the approved Resolution Plan and order Liquidation of the Corporate Debtor so as to evade discharging their obligations under the approved Resolution Plan. Counter of Respondents R1, R2, R3, R4, R5, R6, R7, R8, R9, R10, R11, R12, R13, R14, R15, R16, R19, R20, R21 and R22 are on record. Respondent Nos. 7, 8, 9 filed counter on 29.01.2020, but it is seen that they have been set exparte on 11.12.2019. However, vide order dated 04.11.2020 in IA No. I.A. No.180/KOB/2020 in M.A. No.09/KOB/2020 in CP(IB) /689/2017 the ex parte declaration against Respondents 7, 8 & 9 has been set aside. Hence, the counter filed by them has been considered. 79. The question that arises for consideration is whether after approval of Resolution Plan by the Adjudicating Authority, the claims made by the creditors can be entertained? In such an event the remedies available has been enumerated under Section 31 (1) of the Code, which reads thus: - "If the Adjudicating Authority is satisfied that the resolution plan as approved by the committee of creditors under ....
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....rise in the future. Hence, in a situation where the claims submitted by the creditors, inclusive of the operational creditors, have been duly met by the applicant, no question of reclaiming the full amount or a part of it or some different amount arises which pertains to a period prior to commencement of CIRP. 84. In this context, I would like to refer the judgement of the Hon'ble Supreme court in the case of Committee of Creditors of Essar Steel India Limited Vs. Satish Kumar Gupta & Ors. Supreme Court [Civil Appeal No.8766-67/2019 and other petitions] ("Essar Case") 2019 SCC OnLine SC 1478, in which the Apex Court held as under:- "88. For the same reason, the impugned NCLAT judgment in holding that claims that may exist apart from those decided on merits by the resolution professional and by the Adjudicating Authority/ Appellate Tribunal can now be decided by an appropriate forum in terms of Section 60(6) of the Code, also militates against the rationale of Section 31 of the Code. A successful resolution applicant cannot suddenly be faced with "undecided" claims after the resolution plan submitted by him has been accepted as this would amount to a hydra head popping u....
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....e Government or the legal authority having statutory claim, come within the meaning of OC. It was held that operational debt in normal course means a debt arising during the operation of a CD. Only when the CD is operational and remains a going concern, the statutory liability, such as payment of Income Tax, Value Added Tax etc., will arise. As the 'Income Tax', 'Value Added Tax' and other statutory dues arising out of the existing law, arises when the CD is operational, such statutory dues have direct nexus with operation of the CD. Therefore, all statutory dues, including 'Income Tax', 'Value Added Tax' etc. come within the meaning of operational debt. Consequently, 'Income Tax Department of the Central Government' and the 'Sales Tax Department(s) of the State Government' and 'local authority', who are entitled to dues arising out of the existing laws, are OCs. 88. In "Swiss Ribbons Pvt. Ltd. & Anr. vs. Union of India & Ors.─ Writ Petition (Civil) No. 99 of 2018", the Hon'ble Supreme Court while dealing with the different provisions of the 'I & B Code', including Section 5(20), observed as follows: "23. A perusal of the definition of "financial creditor" and "fi....
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....is that the impugned order dated 23.01.2019 (Approved Resolution Plan) in MA/515/2018 in CP/689/IB/2017 protects the interest of these respondents, as the relevant demands raised by Merchem against these respondents were not accepted, for the reason that they were not provided any individual notice of the insolvency proceedings commenced against the Corporate Debtor by the RP, and therefore, the statutory liabilities are bound to be paid. 93. To sum up the above question, it is evident that the Resolution Plan as approved by the Committee of Creditors is by and large sanctioned by the Order dated 23.01.2019. In the judgement of the Hon'ble Apex Court in K Sashidhar & Indian Overseas Bank &ors.[Civil Appeal No. 10673/2018], Date of order: 05.02.2019, it has been made clear that the role of COC is quite vital for deciding the fate of the company. It has been held that the Adjudicating Authority is not required to go into the merits or reasoning of the decision taken by the COC for approval or rejection of a Resolution Plan. The only benchmark which is set up to be determined by the Adjudicating Authority is to see whether the plan has been approved by 75% voting of the COC or not?....
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....he scope of any suggestion or alteration in the impugned resolution plan is very limited. As far as the procedures to be followed concerned, in this case, all the procedures have been correctly followed as per the provisions of the Insolvency Code, therefore, the Resolution Plan has been approved. It is also found that RP in accordance with Regulation 2 (a) and (b) has issued statutory notice in Form A to be published both in the State of Kerala (Registered office of the Corporate debtor) and State of Gujarat (Corporate Debtors place of business) in English and Vernacular newspapers. In view of the above facts, the Respondents herein cannot plead ignorance and the non-filing of claim before the IRP/RP within time constitute laches on their part. Section 31 of I & B Code was amended vide Gazette Notification dated 06.08.2019. As per the amended provision of Section 31 of the Code, the approved Resolution Plan has been made binding on the Corporate Debtor, its employees, members and all creditors including the Central Government, any State Government or any local authority to whom a debt in respect of the payment of dues arising under any law for the time being in force is owed. With....
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.... a company enters the ambit of insolvency under IBC. 97. I have also gone through the following judgements to come into a conclusion whether the dues of the statutory creditors can be allowed after approval of Resolution Plan:- i. The Code envisages submission of claims by creditors in time. Non-submission of claims in a CIRP timely may lead to loss to the State Exchequer. In State of Haryana Vs. Uttam Strips Ltd. [Company Appeal (AT) (Insolvency) No. 319/2020], the Hon'ble NCLAT observed that the appellant had failed to file the claim before the RP and has no right to claim its dues from the Resolution Applicant. It was held that a successful Resolution Applicant cannot be burdened with past liabilities since this would make it impossible for it to run the business, ultimately defeating the entire purpose and mechanism of the Code. The Adjudicating Authority, in T. R. Ravichandran, RP Vs. The Asst. Commissioner (ST and 12 Ors) [MA 1298/2019 in IBA/130/2019], held that being an operational creditor, the tax authorities are at liberty to make their claims before the Resolution Professional (RP) instead of insisting upon him to pay the pre-admission dues before accepting ....