TaxTMI 
TaxTMI 
2021 (1) TMI 995
X X X X Extracts X X X X
X X X X Extracts X X X X
....r, 2019 alleging that the appellant had issued non-convertible debenture securities in 2013-14 but failed to make the necessary disclosures as required under the LODR Regulations. 3. In response to the show cause notice, the appellant replied that on 15th June, 2017 Reserve Bank of India directed the lenders to commence insolvency proceedings against the appellant under the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as 'IBC') based on which the State Bank of India filed a petition before the National Company Law Tribunal, Mumbai bench (hereinafter referred to as 'NCLT') for the commencement of the corporate insolvency resolution process. The petition was admitted on 18th July, 2017 and a resolution professional was appointed. Thereafter, resolution professional invited prospective investors to submit a resolution plan. A consortium comprising of AION Investments Private II Limited and JSW Steel Limited submitted a resolution plan and eventually after undergoing due process, NCLT by an order dated 24th July, 2018 approved the resolution plan. On this basis, the consortium acquired the management control of the company on 31st August, 2018. New B....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ppellant and Mr. Mustafa Doctor, Senior Advocate assisted by Mr. Mihir Mody and Mr. Shehaab Roshan, Advocates for the Respondent. 8. The issue that arises for consideration in the present appeal is, whether the impugned order imposing penalty upon the appellant for alleged contravention during the period prior to the approval of the resolution plan could be passed by the adjudicating officer. The submissions of the learned senior counsel for the appellant is, that no show cause notice could be issued nor the impugned order could be passed which is contrary to the approved resolution plan and which is binding on the respondent under section 31 and 32A of the IBC. 9. In this regard section 31(1) of the IBC reads as follows: "31. Approval of resolution plan.-(1) If the Adjudicating Authority is satisfied that the resolution plan as approved by the committee of creditors under sub-section (4) of section 30 meets the requirements as referred to in sub-section (2) of section 30, it shall by order approve the resolution plan which shall be binding on the corporate debtor and its employees, members, creditors, including the Central Government, any State Government or any loc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ts (including such mining leases or rights as may have lapsed, expires or may have been cancelled) and/or agreements in relation to mining rights held by, the Company, its subsidiaries or its associates (other than the bank guarantees required to be provided by the Company in relation to the mines allocated to the Company (i.e. Gare Palma IV/7 coal mine, the Hahaladdi iron-ore mine, the Gaitra limestone mine and the Guma-Pausari limestone mine); (C) any investigation, inquiry or show-cause, whether civil or criminal. (D) any non-compliance of provisions of any laws, rules, regulations, directions, notifications, circulars, guidelines, policies, licenses, approvals consents or permissions; (E) change of control, transfer charges, unearned increase, compensation, or any other such liabilities whatsoever under any contract, agreement, lease, license, approval, consent, privilege or permission to which the Company or its subsidiaries, joint ventures or associates are entitled. (F) any leasehold rights or freehold rights to movable or immovable properties or the possession of the Company; (G) any contracts, agreements or commitments made by the Company; and (H) cross subsidies availed b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ture, (including without limitation, the proceedings specifically set out in Annexure 2 and Part A of Annexure 4), in relation to any period prior to the Acquisition or arising on account of the Acquisition shall be deemed to be withdrawn or dismissed and all liabilities or obligations in relation thereto, whether or not set out in the A/L Statement, the balance sheets of the Company or the profit and loss account statements of the Company or the February 21 Creditors List, will be deemed to have been written off in full and permanently extinguished by virtue of the order of the NCLT approving this Resolution Plan, and the Company and/or Consortium shall at no point of time be, directly or indirectly, held responsible or liable in relation thereto. By virtue of the order of the NCLT approving this Resolution Plan all new inquiries, investigations, notices, suits, claims, disputes, litigations or other judicial, regulatory or administrative proceedings against, or in relation to, or in connection with the Company or the affairs of the Company in relation to any period prior to the Acquisition or arising on account of the Acquisition." (Emphasis Supplied) 12. A perusal of....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... for the reason that this provision ensures that the successful resolution Applicant starts running the business of the corporate debtor on a fresh state as it were. 67. 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 a appropriate forum in terms of Section 60(6) of the Code, also militates against the rationale of Section 31 of the Code. As 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 up which would throw into uncertainty amounts payable by a prospective resolution Applicant who successfully take over the business of the corporate debtor. All claims must be submitted to and decided by the resolution professional so that a prospective resolution Applicant knows exactly what has to be paid in order that it may then take over and run the business of the corporate debtor. This the successful resolution Applicant does on a fresh slate, as has been pointed ou....