TaxTMI 
TaxTMI 
2022 (11) TMI 866
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....The two appeals being disposed of through this common judgment are filed under sub section 61(1) of the Insolvency and Bankruptcy Code, 2016 (in short 'IBC') assailing the order of the Adjudicating Authority (National Company Law Tribunal, New Delhi) dated 23.8.2021 (hereinafter called 'Impugned Order') in IA No. 182/2020 in CP (IB) No. 1411/ND/2018 [which is assailed in CA (AT) (Ins.) No. 32/2022] and in IA No. 182/2020 in CP (IB) No. 1411/ND/2018 [which is assailed in CA (AT) (Ins.) No. 1132/2022]. 2. The Applicant (Ashok Kumar, Resolution Professional of the corporate debtor Indianroots Shopping Limited) had filed IA No. 182/2020 before the Adjudicating Authority seeking directions to the Income Tax Department and the Excise and Taxation Department, Government of Haryana to pay the Corporate Insolvency Resolution Process (in short 'CIRP') dues and expenses by the Resolution Professional (in short 'RP') in proportion to its voting share in the Committee of Creditors (in short 'CoC'). Company Appeal (AT) (Ins) No. 32 of 2022 (Appeal I) 3. Bereft of the unnecessary details, the case of the Appellant Income tax Department in CA (AT) (Ins) No. 32 of 2022 is that the 7th meeting of....
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....ng Authority. The Appellants in both the appeals are operational creditors of the corporate debtor M/s. Indianroots Shopping Limited. Both the Appellants are aggrieved by the fact that the 7th CoC meeting held in the CIRP of the corporate debtor, the respective shares of the Appellants in the CIRP cost were fixed and the Appellants were directed through the Impugned Order to pay them immediately. Thus, the Appellants in both the appeals have similar grievance against the Impugned Order, and therefore, both the appeals captioned above are being disposed of through this common judgment. 7, We heard the arguments advanced by the Learned Counsels for Appellants and Respondents in both the appeals and perused the respective records. 8. The Learned Counsel for Appellant Income Tax Department has submitted that a departmental representative could not attend the 7th meeting of the CoC held on 6.12.2019 and the CoC comprises only of operational creditors, as there is no financial creditor in the CIRP. He has further submitted that the Income Tax Department has voting share of 85.226% in the CoC and another operational creditor, the Excise and Taxation Department, Government of Haryana hav....
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....ayment of RP's fees and CIRP cost was necessary, a decision was taken in the 7th CoC meeting regarding the proportional share of various operational creditors and the amounts due from each operational creditor, which are included in the minutes of the meeting was communicated to the operational creditors including the Income Tax Department and the Excise & Taxation Department, Government of Haryana. 11. The Learned Counsel for Resolution Professional has further submitted that all the other operational creditors except the Income Tax Department and the Excise and Taxation Department, Government of Haryana have deposited their due shares in the CIRP costs and RP's fees with the RP, and after passing of the liquidation order, the Liquidator, who was the erstwhile RP, is unable to make any progress in liquidation process for want of funds to cater to necessary expenses. She has also submitted that the Income Tax Department did not challenge the decision taken in the CoC meeting on 6.12.2019, and it is only when the Impugned Order was passed on an application bearing No. IA No. 182/2020 that was filed by the RP, that the Income Tax Department has raised the issue of illegality of the ....
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....ed that the duty of CoC is to fix the expenses related to CIRP and the fees of RP as provided in Regulation 34, but the payment of CIRP cost has to be made in accordance with the 'water fall mechanism' given in section 53 of IBC, where the CIRP cost and the liquidation cost get the first priority in payment and such payment has to be made once the liquidation process is completed. He has claimed that payment against the claims of Excise and Taxation Department have not accrued to the department and hence for the department to pay a substantial amount as its share of CIRP cost is not only unfair and but also prejudicial to the interest of the department. He has lastly argued that once the liquidation process is completed, the CIRP cost and liquidation process cost shall get first priority in payment from the sale of the liquidation estate. 15. The relevant sub-section 8 of section 21, including the proviso thereto, and relevant clauses of Regulations 31, 33 and 34 of CIRP Regulations are reproduced hereunder for easy reference: - I. "Section 21 (8) of IBC 21. Committee of Creditors - xx xx xx xx (8) Save as otherwise provided in this Code, all decisions of the committee of ....
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....51% of voting share in the CoC. We note that the notice for 7th CoC meeting was sent and delivered to both the Appellants viz. Income Tax Department and Excise and Taxation Department and they chose not to be present in the said meeting, whereupon the RP adjourned the meeting to hold it with their participation. It is noted that both the Appellants again chose to be absent in the re-assembled 7th CoC meeting, which was taking place after being adjourned once, and wherein decision regarding the CIRP cost, RP's fees, etc. were taken. We also note that in compliance of the decision taken, the other operational creditors have deposited their respective share of the CIRP cost, without raising any demur as has been claimed by the Learned Counsel for Respondent and also that both the Appellants have not challenged the decision taken in the 7th meeting of CoC in the stipulated time period. 17. The 7th CoC meeting took place on 6.12.2019 and the minutes of the meeting, which record the proportional shares of all the operational creditors towards CIRP cost and RP fees, were duly communicated to operational creditors, including the Appellants. It is also a fact that both the Appellants did n....