TaxTMI 
TaxTMI 
2021 (3) TMI 557
X X X X Extracts X X X X
X X X X Extracts X X X X
....ccessful Resolution Applicant of the Corporate Debtor i.e., M/s Maruti Cotex Limited. The first Respondent (R1) is the Resolution Professional of the Corporate Debtor. Second Respondent (R2) is the petitioning creditor in the Company Petition. Third Respondent (R3) is the Maharashtra Industrial Development Corporation (M.I.D.C) against whom reliefs are sought. 2. The Corporate Insolvency Resolution Process (CIRP) of the Corporate Debtor was initiated by order of this Bench dated 08/05/2019 on a petition filed by R2 against the Corporate Debtor. This Bench by an order dated 02/07/2020 approved the Resolution Plan submitted by the Applicant. 3. R3 is a Government of Maharashtra undertaking which is established under the provisions of the Maharashtra Industrial Development Act, 1961 (MID Act, 1961) with the objective of ensuring planned and accelerated industrial development in the State of Maharashtra. R3 allotted Plot Nos. T-17 and T-17 (Part) respectively admeasuring 2,64,966 square meters and 57,143 square meters of land, in favour of the Corporate Debtor vide agreement of lease dated 29/03/2007. Subsequently, vide pre-determined lease deed dated 31/12/2007, R3 granted lease....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ng the Resolution Plan approved on 02/07/2020. Since R3 has not issued 'No Objection Certificate' to mortgage the leased land, the Applicant is not in a position to avail the loan sanctioned by HDFC and to further implement the Resolution Plan. 9. R3 on 02/11/2020, issued the following letter to the Applicant: "Maharashtra Industrial Development Corporation (Adopted enterprise of the Government of Maharashtra) Date:- 02/11/2020 Ref: C80846 To, M/s Maruti Cotex Limited, 405, Maker Chamber - V, Nariman Point, Mumbai 400021. Sub:- Kagal-Hatkanangale 5 Star Industrial Area (Regarding Transfer of Plot No. T-17 and T-17 Part, area admeasuring 3,22,109 Square Meters) Sir, This is to inform you that the Plot No. T-17 and T-17 Part admeasuring 3,22,109 Square meters in Kagal - Hatkanangale 5 Star Industrial Area is in the name of M/s Maruti Cotex Ltd. J.M. Financial Asset Reconstruction Co. Pvt. Ltd. has filed a petition before the National Company Law Tribunal (NCLT), Mumbai as the land owner M/s Maruti Cotex Ltd. has been unable to pay off its debts to several financial ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....pondent No. 3 with regard to the building completion certificate is illegal, unlawful and contrary to the provisions of the Insolvency and Bankruptcy Code, 2016 and no such charge can be raised today or in the future; e. Pending the hearing and final disposal of the present application, extend the period of implementation of the sanctioned resolution plan; f. For costs of this application. 11. The Applicant pleaded the following in support of the prayers: A. On the initiation of CIRP and on approval of the Resolution Plan, the Applicant has already pumped in money to the extent of Rs. 24.50 Crores and arranged for performance guarantee of Rs. 7.50 Crores. The balance to be infused is Rs. 45.11 Crores. B. Due to unexpected Covid-19 pandemic there is delay in the implementation of the Resolution Plan and this Tribunal by an order dated 07/09/2020 extended the time for compliance of the terms of the approved Resolution Plan until 26/11/2020. C. R3 filed claim of Rs. 2.92 Crores in the CIRP. Enquiries revealed that R3 was raising an additional demand for Rs. 16.6 Crores approximately towards transfer charges, penalty for late submission o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ping on increasing its various claims without any basis. Since no dues certificate and no objection certificate was not issued by R3, the Applicant is not in a position to avail loan from HDFC Bank which has affected the implementation of the Resolution Plan. M. As per Section 31 of the Code, plan sanctioned by this Authority is binding on all stakeholders including R3. 12. Respondent Nos. 1 & 2 did not file any reply to the Application, no relief is claimed against them however, they took part in the hearing. Reply of R3: 13. Respondent No. 3 filed reply to the Application and submitted as below: A) Upon the completion of CIRP, which came to an end on the approval of the Resolution Plan, this Application filed under section 60(5)(c) of the Code, cannot be decided by this Tribunal and this Tribunal does not have jurisdiction to decide the questions raised by the Applicant. The Code itself is not applicable and only the general law is applicable. B) R3's dues as enunciated in the letter dated 02/11/2020 are squarely covered under Regulation 31(b) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... arise prior to the Insolvency Commencement Date, for it to be regarded as an Operational Debt and does not stand dealt with under Resolution Plan. The Applicant's reliance on the Judgment of the Hon'ble Supreme Court in the Essar's Case stating that the Successful Resolution Applicant cannot be faced with any undecided claim is thoroughly misconceived and contrary position would lead to manifest and irreconcilable absurdity. Therefore, the Tribunal does not have jurisdiction under Section 60(5) of the Code and is not a forum to determine the validity of the levy by R3 which necessarily arises after completion of CIRP of the Corporate Debtor. I) The Applicant's submission that the applicability of transfer fee is attracted only when there is transfer of shareholding and not when there is fresh issue of share is wholly misconceived and opposed to the R3's circulars. J) Further the question whether the levy is attracted only upon the transfer and not upon the issue of shares effecting a change in shareholding cannot be decided by NCLT. K) The Applicant's contention that the change in shareholding is effected by the operation of law and is binding on R3 as p....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the application. 14. We have heard the counsel for the parties at length and have perused the pleadings, basing on the same the following are our observations and findings. 15. Section 60(5) of the Code provides as below: "Notwithstanding anything to the contrary contained in any other law for the time being in force, the NCLT shall have jurisdiction to entertain or dispose of - (a) Any application or proceeding by or against the corporate debtor or corporate person. (b) Any claim made by or against the corporate debtor or corporate person, including claims by or against any of its subsidiaries situated in India, and (c) Any question of priorities or any question of law or facts, arising out of or in relation to the insolvency resolution or liquidation proceedings of the corporate debtor or corporate person under this Code." 16. R3 submitted its claims after the approval of Resolution Plan. R3 was aware of the CIRP and had filed the claim of Rs. 2.92 Crores as an Operational Creditor before the Resolution Professional. The claim has been dealt with in the Resolution Plan. 17. Presently the R3 has made a claim of Rs. 3.50 crores appro....
X X X X Extracts X X X X
X X X X Extracts X X X X
....olution professional in running the business corporate debtor as a going concern; (d) Any costs incurred at the expense of the Government to facilitate the insolvency resolution process, and (e) Any other costs as may be specified by the Board." 23. Regulation 31 of the CIRP Regulations provides as below: "31. Insolvency resolution process costs" under Section 5(13)(e) shall mean - (a) amounts due to suppliers of essential goods and services under Regulation 32; (aa) fee payable to authorised representative under [subregulation (8)] of regulation 16A; (ab) out of pocket expenses of authorised representative for discharge of his functions under [section 25A]; (b) amounts due to a person whose rights are prejudicially affected on account of the moratorium imposed under section 14(1)(d); (c) expenses incurred on or by the interim resolution professional to the extent ratified under Regulation 33; (d) expenses incurred on or by the resolution professional fixed under Regulation 34; and (e) other costs directly relating to the corporate insolvency resolution process and approved by the committee....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mentation of the Resolution Plan or that the statutory authorities are bound to grant approval / sanction / no due certificate, etc., cannot be accepted, in view of the fact that R3 issued show cause notice for noncompliance of construction in the year 2014, but did not take any action till the approval of the Resolution Plan. 27. The submission of R3 that the Resolution Plan is binding on the statutory authority only to the extent of such authorities are creditors of the Corporate Debtor, as dealt in the Resolution Plan is correct, but R3 cannot be a creditor in waiting to make a claim from the Successful Resolution Applicant. 28. R3 submitted that there is no conflict or inconsistency between the MID Act and the Code. It is also submitted that the Code cannot override any other law listed under exclusive purview of the State under List 2 of Schedule VII of the Constitution of India. This is not an issue here. The issue here is, whether the action of R3 in making delayed claim with the Successful Resolution Applicant is in order or not. The answer would have to be an emphatic no. Hence there is no necessity to analyse whether Code overrides MID Act or not. 29. It is also ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... this judgment, it is difficult to accept Shri Rohatgi's argument that that part of the resolution plan which states that the claims of the guarantor on account of subrogation shall be extinguished, cannot be applied to the guarantees furnished by the erstwhile directors of the corporate debtor. So far as the present case is concerned, we hasten to add that we are saying nothing which may affect the pending litigation on account of invocation of these guarantees. However, the NCLAT judgment being contrary to Section 31(1) of the Code and this Court's judgment in State Bank of India (supra), is set aside. 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 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 up which would throw into ....