TaxTMI 
TaxTMI 
2024 (10) TMI 575
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....e District-Khurda, Odisha in view of the approval of the Resolution Plan by the National Company Law Tribunal (for short, 'the NCLT') under the Insolvency and Bankruptcy Code, 2016 (hereinafter called as the 'I & B Code'), were heard together on consent of the learned counsels for the parties for their disposal by common judgment. 2. The Petitioner, in all these three writ petitions, challenge the demands, which are subject matter of each of them as would be detailed in the paragraphs to follow; on identical grounds in relying upon the judgment in the case of Ghanashyam Mishra & Sons Private Limited-V-Edelweiss Asset Reconstruction Company Limited; (2021) 9 SCC 657, which has been relied upon in the judgments passed by this Court in cases of Ferro Alloys Corporation Limited -V- State of Odisha & others; W.P.(C) No. 20286 of 2020 decided on 10.12.2021, M/s. Sree Metaliks Limited-V-State of Odisha; W.P.(C) No.8259 of 2019 decided on 21.06.2021 order dated 08.12.2022 passed in case of Adhunik Metaliks Limited-V-State of Odisha & Others; W.P.(C) No. 1553 of 2022 decided on 21.06.2021 and batch. It is stated that the demands, which have been impugned in these writ petitions are in....
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....8th Meeting held on 14.03.2018 declared EARP as the H-1 bidder. But EARP failed to satisfy CoC in the negotiation. Therefore, the Resolution Plan submitted by the EARP was rejected in the 9th Meeting of the CoC held on 31.03.2018. The CoC then sat for negotiation with GMSPL (H-2 bidder). That Resolution Plan of GMSPL was also found to be unacceptable. In such situation, the CoC in its 10th Meeting held on 03.04.2018 took a decision to annul the existing process and initiate the process afresh in inviting Resolution Plans only from the applicants who had earlier expressed their interest. Communication in that regard being made with those Applicants, who had earlier submitted their EOI, three Resolution Plans were received from EARP, GMSPL and SREI Infrastructure Finance Limited (hereinafter referred to as "SIFL"). These three Resolution Plans were taken up for consideration by the CoC in its 11^th Meeting held on 13.04.2018. Undertaking the exercise of evaluation of the Resolution Plans, then the CoC rated the GMSPL as the H-1 bidder. The CoC thereafter held further negotiations with the GMSPL. After several rounds of negotiations, the Resolution Plan of the GMSPL was considered by ....
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....red Sixty Crore Fifty One Lakh) as per Form-B submitted before the RP. 3.4. The NCLT, by a detailed order dated 22.06.2018 dismissed both the applications; first one CA(IB) No. 398/KB/2018 and the second one:-CA(IB) No.470/KB/2018) filed by EARC. The third application:- CA(IB) No.509/KB/2018) filed by the District Mining Officer, Department of Mining & Geology, Jharkhand was also dismissed. The NCLT, by its final order, approved the Resolution Plan, which had been duly approved by the CoC by more than 89.23% voting share in terms of the provision of section 31 (1) of the I & B Code as binding upon the Corporate Debtor, its employees, members, creditors, co-ordinators and other stake holders involved in the Resolution Plan with further order that the Revival Plan of the Company in accordance with the approved Resolution Plan shall come into force with immediate effect and the moratorium order passed under section 14 of the I & B Code shall cease to have the effect. The RP at the same time was directed to forward all the records relating to the conduct of the CIRP and the Resolution Plan to the Insolvency and Bankruptcy Board of India for being recorded on the Data Base. 3.5....
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....od of moratorium, it would be open for the persons to move before a Civil Court or to move an application before the Court of competent jurisdiction against the Corporate Debtor; the Sundergarh Mine and Transport Workers' Union may move before the Civil Court or a Court of competent jurisdiction and may file an application before the Labour Court for appropriate reliefs in favour of the workmen concerned or against the Corporate Debtor, if they have actually worked and had not been taken care in the Resolution Plan; (d) No ground as is permissible under sub-section (3) of Section 61 of I & B Code is made out and such relief is thus not grantable and the Appellant therein (Deepak Singh) may move the appropriate forum for appropriate relief." (Emphasis Supplied) 3.9. The GMSPL, being aggrieved by said observations, as underlined above, made by the NCLAT as regards the claims advanced by the Appellants before it, which though were not included in the Resolution Plan, but as per the observations could be agitated before other forums, carried the Appeal to the Hon'ble Supreme Court. 3.9.1. It was contended from the side of the GMSPL before the Hon'ble Supreme Court ....
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.....e., GMSPL in finally holding and declaring that the Respondents therein are not entitled to recover any claims or claim any debt owed to them from the Corporate Debtor (OMML) accruing prior to the transfer date, i.e., Plan Effective Date with further observation that the consequence thereof shall follow and this has been reported in (2021) 9 SCC 657. 5. (A). W.P.(C) No. 1497 of 2024 The Petitioner in this writ petition, has prayed for quashment of the letters dated 02.09.2017 (Annexures-3 & 4) issued by the Deputy Director of Mines, Koira Circle, Koira, the Opposite Party No. 3 seeking recovery of Rs. 3,08,83,673.24 (Rupees Three Crore Eight Lakhs Eighty Three Thousand Six Hundred Seventy Three and Twenty Four Paise) and Rs. 80,65,67,970.62 (Rupees Eighty Crore Sixty Five Lakhs Sixty Seven Thousand Nine Hundred Seventy and Sixty-Two Paise). The raised demands are towards the compensation amount payable under section 21 (5) of the Mines And Minerals (Development And Regulation) Act, 1957 (in short, the 'MMDR Act') in respect of Bhanjikusum Manganese Mine and Orahuri Manganese Mine by the Petitioner-Company. B. W.P.(C) No. 2304 of 2024 In this writ petition, as above, th....
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.....2019 and (c'-I) 07.09.2019 in respect of Pattamunda Mines under Annexure-7 series; and IV. Letters dated (a''-I) 05.05.2018, (b''-I), (c''-I) 28.11.2018, (c''-I) 16.01.2019, (d''-II) 16.01.2019, (e-''I) 22.01.2019, (f''-II) 03.02.2020 and (h''-II) 03.02.2020 in respect of Bhanjikusum Mines under Annexure-8 series." It is pertinent to indicate at this stage that the demands under all the letters mentioned in (I) relate to 'Dead Rent' and 'Surface Rent' except the one under letter (a'-I) which is towards Royalty as stated therein indicating the period. The demands under letters shown in (II) also concern with 'Dead Rent' & 'Surface Rent' whereas those demands under III (a'-I) is towards Royalty. Similarly, the demand under letters (IV-b''-I) relates to Royalty when others are for Dead Rent and Surface Rent. SUBMISSIONS 6. Mr. S.K. Dash, learned Counsel appearing for the Petitioner of all these writ petitions submitted that as held by the Hon'ble Supreme Court in a series of decisions that once the Adjudicating Authority (NCLT) approves the Resolution Plan subject to the orders passed in the Appeals, it shall be binding on everyone including the Corporate Debtor and....
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....the 2019 Amendment to section 31 of the I & B Code is clarificatory and declaratory in nature and, therefore, will be effective from the date on which the I & B Code has come into effect. He next submitted that the demand raised by the District Mining Officer, Department of Mining and Geology, Jharkhand, which having been so raised was not admitted by the RP and considered by the CoC, has also failed when the NCLT rejected the said application (CA (IB) No.509/KB/2018) filed by the District Mining Officer, Department of Mining and Geology, Jharkhand and that has attained finality. In support of the aforesaid submissions, learned counsel for the Petitioner very much relied upon the decision in case of the Appeal filed by the present successful Resolution Applicant, i.e, Ghanashyam Mishra & Sons Private Limited (Supra), which have been relied upon by this Court in the judgment passed in the case of Ferro Alloys Corporation Limited (Supra), M/s. Sree Metaliks Limited (Supra) and Adhunik Metaliks Limited (Supra). Stand of The State 6.1. Mr. G.N. Rout, learned Additional Standing Counsel for the Opposite Parties placed reliance on certain observations of the Hon'ble Supreme Cour....
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....f Corporate Insolvency Resolution and Liquidation. The I&B Code is divided into two halves. Firstly, sections 1 to 32 are concerned with reconstruction of the Company by Resolution Process. Secondly, Section 33 onwards deal with the Liquidation, if Resolution plan/s is/are not received or rejected and thus Resolution is not possible. 9. The core issue being the alleged outstanding dues owed by the Petitioner-Company to the Opposite Parties; it is not disputed that majority of the aforementioned demands pertain to the period prior to the approval of the Resolution Plan of the Petitioner by the NCLT by order dated 22.06.2018. Be it stated at this stage, that the part of the demands as have been made under the letters referred to in prayers as at I(b), I(c), I(d), I(f) and I(h); II(e-I), (d-I), (e-I), (f-I); and III (b'-I), (c'-I) of W.P.(C) No. 2307 of 2024 as indicated in the foregoing paragraph-5(C), are prior to the approval of the Resolution Plan by the NCLT, which has attained finality by the order of the Hon'ble Supreme Court, as aforestated and a part relates to the period thereafter which have been demanded in a composite manner. Furthermore, when the demands which from....
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....ppointment of the interim resolution professional. (3) The applicant shall bear the expenses of the public announcement which may be reimbursed by the committee to the extent it ratifies them. 7. Claims by operational creditors.- (1) A person claiming to be an operational creditor, other than workman or employee of the corporate debtor, shall submit claim with proof to the interim resolution professional in person, by post or by electronic means in Form B of the Schedule: Provided that such person may submit supplementary documents or clarifications in support of the claim before the constitution of the Committee. (2) The existence of debt due to the operational creditor under this regulation may be proved on the basis of- (a) the records available with an information utility, if any; or (b) other relevant documents, including- (i) a contract for the supply of goods and services with corporate debtor; (ii) an invoice demanding payment for the goods and services supplied to the corporate debtor; (iii) an order of a court or tribunal that has adjudicated upon the non-payment of a debt, if any; ....
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.... for inspection by members, partners, directors and guarantors of the corporate debtor or their authorized representatives; (c) displayed on the website, if any, of the corporate debtor; (ca) filed on the electronic platform of the Board for dissemination on its website: Provided that this clause shall apply to every corporate insolvency resolution process ongoing and commencing on or after the date of commencement of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Fifth Amendment) Regulations, 2020; (d) filed with the Adjudicating Authority; and (e) presented at the first meeting of the committee." 11. The scenario that on the basis of aforesaid recapitulation of facts, would indicate that after the public announcement with regard to the initiation of the CIRP after admission of the application under section 7 of the I & B Code read with Rule 4 of the Insolvency and Bankruptcy (Application of Adjudicating Authority) Rules, 2016 adhering to the provisions contained in section 13 & 15 of the I & B Code read with Regulation 6 of the Insolvency Resolution Process Regulations was made, these demands, whic....
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.... the fact that Government of Jharkhand, having raised the issue before the NCLT, as stated in the aforesaid paragraphs has failed to succeed in keeping the demand alive in ensuring its payment from the Petitioner-Company, which too has attained finality, being carried uptil the Hon'ble Supreme Court. In Section-C of the Resolution Plan in sub-clause-'d' of Clause-5 of Para-IV, the followings find mention and those run as under:- ''(b) Statutory Liabilities All other statutory liabilities existing as at the date of approval of the Resolution Plan by NCLT other than workmen dues as above, even if not recorded in books of accounts including any penalties or fines outstanding to my government or regulator (including demands raised under MMDR Act) or under any few for the time being in force would be subject to a 100% write-off on the basic amount with nothing paid towards overdue, penal or compound interest or any other additional charges by whatever named called. Neither OMML nor the Resolution Applicants shall be required shall be required to bear any other liabilities prior to the date of approval of the resolution plan by the NCLT including but not lim....
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....e Corporate Debtor from the Petitioner-Company through other modes approaching other forms. 14. The Opposite Parties are the State and its Officials, who are squarely bound by the ARP. In the Counter affidavit filed from the side of the Opposite Parties, they do not state anywhere that the claim in respect of the demands raised under the letters, which have been impugned in the writ petitions had ever been raised during the process at any time, i.e., CIRP or even thereafter, before NCLT or NCLAT. Their categorical stand is that since the foundation of later demands is on account of the direction in the judgment of the Hon'ble Supreme Court in case of Common Cause (Supra); the same has nothing to do with CIRP and it has to be shouldered by the successful Resolution applicant, who chose to manage and run the Corporate Debtor-Company. 15. The position of law in this regard, has been well settled in Committee of Creditors of Essar Steel (I) Ltd. v. Satish Kumar Gupta; (2020) 8 SCC 531. The Hon'ble Supreme Court has held that under section 31 (1) of the I & B code, once the CoC approves the Resolution Plan, it binds all the stake holders. It has been observed therein referring to ....
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.... viz., provision for payment of insolvency resolution process costs, provision for payment of debts of operational creditors, which shall not be less than the amount to be paid to such creditors in the event of liquidation of the Corporate Debtor under section 53; or the amount that would have been paid to such creditors, if the amount to be distributed under the resolution plan had been distributed in accordance with the order of priority in sub-section (1) of section 53, whichever is higher. The resolution plan is also required to provide for the payment of debts of financial creditors, who do not vote in favour of the resolution plan, which also shall not be less than the amount to be paid to such creditors in accordance with sub-section (1) of section 53 in the event of a liquidation of the Corporate Debtor. Explanation 1 to clause (b) of sub-section (2) of Section 30 of the I&B Code clarifies for the removal of doubts, that a distribution in accordance with the provisions of the said clause shall be fair and equitable to such creditors. The resolution plan is also required to provide for the management of the affairs of the Corporate Debtor after approval of the resolution pla....
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....served that once the Resolution Plan is approved, it becomes binding on the stakeholders including creditors. Relevant paragraphs of the judgement read as under: "65. Bare reading of Section 31 of the I&B Code would also make it abundantly clear, that once the resolution plan is approved by the Adjudicating Authority, after it is satisfied, that the resolution plan as approved by CoC meets the requirements as referred to in sub-section (2) of Section 30, it shall be binding on the Corporate Debtor and its employees, members, creditors, guarantors and other stakeholders. Such a provision is necessitated since one of the dominant purposes of the I&B Code is, revival of the Corporate Debtor and to make it a running concern. 66. The resolution plan submitted by successful resolution applicant is required to contain various provisions, viz., provision for payment of insolvency resolution process costs, provision for payment of debts of operational creditors, which shall not be less than the amount to be paid to such creditors in the event of liquidation of the Corporate Debtor under section 53; or the amount that would have been paid to such creditors, if the amount to....
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.... a running establishment. The legislative intent of making the resolution plan binding on all the stakeholders after it gets the seal of approval from the Adjudicating Authority upon its satisfaction, that the resolution plan approved by CoC meets the requirement as referred to in sub-section (2) of Section 30 is, that after the approval of the resolution plan, no surprise claims should be flung on the successful resolution applicant. The dominant purpose is, that he should start with fresh slate on the basis of the resolution plan approved. 69. This aspect has been aptly explained by this Court in the case of Committee of Creditors of Essar Steel India Limited through Authorised Signatory (supra). "107. For the same reason, the impugned NCLAT judgment [Standard Chartered Bank v. Satish Kumar Gupta, 2019 SCC OnLine NCLAT 388] 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....
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....h, with respect to the proceedings, which arise after 16.8.2019, there will be no difficulty. After the 67 amendment, any debt in respect of the payment of dues arising under any law for the time being in force including the ones owed to the Central Government, any State Government or any local authority, which does not form a part of the approved resolution plan, shall stand extinguished.... 79. In the Rajya Sabha debates, on 29.7.2019, when the Bill for amending I&B Code came up for discussion, there were certain issues raised by certain Members. While replying to the issues raised by certain Members, the Hon'ble Finance Minister stated thus: "IBC has actually an overriding effect. For instance, you asked whether IBC will override SEBI. Section 238 provides that IBC will prevail in case of inconsistency between two laws. Actually, Indian courts will have to decide, in specific cases, depending upon the material before them, but largely, yes, it is IBC. There is also this question about indemnity for successful resolution applicant. The amendment now is clearly making it binding on the Government. It is one of the ways in which we are providing that.....
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....approval was Granted to the resolution plan by NCLT; on account of there being some ambiguity, the State/Central Government authorities continued with the proceedings in respect of the debts owed to them. In order to remedy the said mischief, the legislature thought it appropriate to clarify the position, that once such a resolution plan was approved by the Adjudicating Authority, all such claims/dues owed to the State/Central Government or any local authority including tax authorities, which were not part of the resolution plan shall stand extinguished. 93. As discussed hereinabove, one of the principal objects of I&B Code is, providing for revival of the Corporate Debtor and to make it a going concern. I&B Code is a complete Code in itself. Upon admission of petition under Section 7, there are various important duties and functions entrusted to RP and CoC. RP is required to issue a publication inviting claims from all the stakeholders. He is required to collate the said information and submit necessary details in the information memorandum. The resolution applicants submit their plans on the basis of the details provided in the information memorandum. The resolution plan....
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....s not part of the resolution plan; 102.2 The 2019 amendment to Section 31 of the I&B Code is clarificatory and declaratory in nature and therefore will be effective from the date on which I&B Code has come into effect; 102.3 Consequently all the dues including the statutory dues owed to the Central Government, any State Government or any local authority, if not part of the resolution plan, shall stand extinguished and no proceedings in respect of such dues for the period prior to the date on which the Adjudicating Authority Grants its approval under Section 31 could be continued." 18. In the present case, therefore, once the Resolution Plan was approved by the NCLT, which attained finality as per the order of the Hon'ble Supreme Court, it is no more open for the Opposite Parties to again raise the demands for the very period covered by the Resolution Plan, which in other words to say that no claim for the period prior to 22.06.2018, the date of approval of the Resolution Plan by the NCLT, i.e., the Plan Effective Date, could have been raised by the Opposite Parties and such demands to the extent as they cover the period up to 22.06.2018 stand automatically exti....
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....ition on the enforcement of the I & B Code. It was further contended as a corollary, that the enforcement of sections 78, 79, 94-187 etc. in terms of the said notification under the I & B Code in relation to personal guarantors is ultra vires the power granted to the Central Government. The conclusion in the said case reads as under:- "111. In view of the above discussion, it is held that approval of a resolution plan does not ipso facto discharge a personal guarantor (of a corporate debtor) of her or his liabilities under the contract of guarantee. As held by this court, the release or discharge of a principal borrower from the debt owed by it to its creditor, by an involuntary process, i.e. by operation of law, or due to liquidation or insolvency proceeding, does not absolve the surety/guarantor of his or her liability, which arises out of an independent contract. 112. For the foregoing reasons, it is held that the impugned notification is legal and valid. It is also held that approval of a resolution plan relating to a corporate debtor does not operate so as to discharge the liabilities of personal guarantors (to corporate debtors). The writ petitions, trans....