TaxTMI 
TaxTMI 
2025 (9) TMI 877
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....aged in the manufacture of critical closed die forged parts for engines and chassis for heavy commercial vehicles. The company was taken over for its rehabilitation by Tarini Steels Ltd. under the scheme sanctioned by the erstwhile Board for Industrial & Financial Reconstruction (BIFR) under the provisions of erstwhile SICA, 1985, vide order dated 07.11.2014, which was also modified by the Hon'ble Delhi High Court's orders dated 15.05.2015 and 27.05.2015. 3. In the event of change of management under the BIFR scheme, the said scheme became binding on all concerned in terms of provisions of Section 19(3) r/w Section 18(8) of erstwhile SICA, 1985. The sanctioned scheme provided an option to unsecured creditors either to accept 15% of the Principal amount or to wait for recovery of full dues after the scheme worked itself out. The appellant stated that notwithstanding the provisions contained in the sanctioned scheme, the sole Respondent/Axis Bank continued to charge interest between 14.75% and 16.00% p.a. as against 12% p.a. w.e.f. 31.03.2011 and this aspect was brought to the notice of the bank and thereafter the extra interest charged was reversed/credited on 16.03.2017 ....
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....ject to the provisions of the said resolution plan and thus the differential amount of interest charged in excess of 12% from 01.12.20216 to 30.11.2018 (Rs. 38,01,590/-) required to be credited in the bank account of the appellant for which he made various representation to the bank. 9. It is further stated that even after various letters written to the bank by the appellant only one letter has been replied and thereafter, on 10.06.2019 the bank erroneously declared that the appellant/CD has failed to convert the cash credit into a fresh term loan as per the BIFR scheme and thus the scheme has not been implemented by the appellant itself and in this view the bank sought refund of excess interest of Rs. 118 lakhs which was credited in the bank account of appellant on 16.03.2017 for the period commencing from April 2011 to September 2016 and further the bank also decided to charge higher interest rate than provided in the BIFR scheme till 25.05.2017 i.e. the date of commencement of the insolvency. 10. It is also the case of the appellant that he was constrained to approach the adjudicating authority by filing an application bearing MA No. 2585 of 2019 seeking appropriate direct....
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....016, the bank started calculating interest between 14.75% - 16.00% p.a. against the terms of the approved BIFR scheme and excess interest to the tune of Rs. 82,42,351/- was debited from the account of the Appellant and the same was not credited, despite many requests made by the appellant. 16. It is also submitted that the approved BIFR scheme became binding on all stake holders in terms of provisions of Section 19(3) r/w Section 18(8) of erstwhile SICA, 1985 but notwithstanding the provisions contained in the sanctioned scheme, the sole Respondent/Axis Bank continued to charge interest between 14.75% and 16.00% p.a. as against 12% p.a. w.e.f. 31.03.2011 and when this aspect was brought to the notice of the bank, the extra interest charged was credited in the appellant's cash credit account by Rs. 1,18,46,343.12/-. However now the Bank is reclaiming that amount in the, garb Rs. 1,18,46,343.12/-b that the BIFR Scheme has failed, while by approval of a Resolution plan by the Adjudicating Authority apart from the provisions of the Resolution Plan the beneficial concessions provided in the BIFR scheme remained continue and this aspect of the matter has not been considered by the Adj....
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....n approved by the Adjudicating Authority, shall accept the restructured amounts due to them under the resolution plan; and (e)pass such other and/or further order(s) and/or direction(s) as the facts and circumstances of the case may warrant". 22. In crux, the appellant case was that the Trinity Auto Components Ltd. (TACL) was taken over for its rehabilitation by Tarini Steels Ltd. (TSL) under the scheme sanctioned by BIFR under the provisions of erstwhile SICA, 1985 on 07.11.2014 which was further modified by the orders dated 15.05.2015 and 27.05.2015 passed by the Hon'ble High Court of Delhi. The Respondent/Axis Bank appears to be the Sole Creditor of CD. According to appellant, CD in the aforesaid scheme was granted some benefits and concessions so far as the creditor/Respondent Axis Bank Ltd. is concerned and the same has been highlighted in clause 15.0(I) of the scheme which has been reproduced by the appellant in the appeal paper book and the same benefits/concessions, so far as the axis bank ltd. is concerned is being also reproduced by us herein below: Axis Bank Ltd. Secured Creditor "(a) The existing dues of Axis Bank Ltd. the sole secured lender of TAC....
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....s was being done even after the approval of the BIFR scheme and the resolution plan approved by the adjudicating authority. 25. It is stated that when this aspect was brought in the knowledge of Respondent Axis Bank by way of a notice of date 16.03.2017 Rs. 1,18,46,343.12/- were reverted back in the account of the CD as the differential of interest overcharged by the Respondent/Bank. The appellant is of the view that the bank has calculated this amount at first only till 30.11.2016 as opposed to the terms of sanctioned BIFR scheme and as per the calculation of the appellant this amount should have come as Rs. 44,40,761/- which has been charged in excess and must be credited in the bank account of the appellant and secondly pursuant to the Repeal of the SICA, bank started charging interest between 14.75% -16.00% p.a. resulting in extra interest charged for the period from 01.12.2016 to 30.11.2018 which also comes about Rs. 38,01,590/-and thereby a total amount of Rs. 82,42,351/- was required to be paid by the Respondent Bank to the appellant for overcharging the rate of interest in violation of the provisions contained under the BIFR scheme. 26. It is contended by Ld. Counsel ....
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.... of the appellant was demanded and thus the Tribunal has committed an illegality in not acceding to the request made by the appellant. 29. Ld. Counsel for the Respondent submits that the Bank has complied with all the provisions of the BIFR scheme by sanctioning additional financial assistance and reducing the interest rate to 12% and also that the excess amount of Rs. 118.46 lakhs charged earlier was also credited in the bank account of the appellant. However, even if the bank has performed and complied his part in the BIFR scheme the applicant failed and it is in this background, in the event of the failure of the BIFR scheme, the Respondent Bank has sought the refund of the amount credited by it to the appellant vide letter dated 10.06.2019. 30. It is also submitted that by the approval of the resolution plan by Ld. Tribunal, the BIFR scheme stands replaced/superseded by the provisions of the approved Resolution Plan and general provisions pertaining to the relief and concessions earlier granted to the appellant in the BIFR scheme would not have any application. 31. The Tribunal in paragraph 19 and 21 of the impugned judgment has dealt with the rival contentions of the ....
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....for the period from 25.05.2017 to 28.08.2018 in deviation from the approved Resolution Plan, the Respondent is held liable to refund the said differential interest. Accordingly, M.A. No. 2585 of 2019 is partially allowed to the extent of refund/adjustment of differential interest from 25.05.2017 to 28.08.2018. Parties are, however, left to bear their costs". 32. In nutshell, it is transpired that appellant is claiming the benefits given to it under the BIFR scheme as well as in the resolution plan and the Respondent has stated that since it has fulfilled his part/obligation in the BIFR scheme and appellant did not fulfil the same therefore after the approval of the resolution plan which has eclipsed the BIFR scheme, he is entitled to get back the amount of Rs. 118.46 lakhs which was credited by it into the bank account of the appellant as differential interest, in view of the low rate of interest provided, in the BIFR scheme. 33. It is also pertinent to mention here and is also recorded by the adjudicating authority in the impugned order that in the resolution plan it was provided that the Respondent Bank shall provide further credit of Rs. 400 lakhs for working capital along....
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....d be deemed to have been extinguished. 37. Section 31(1) of the IBC stipulates that an approved resolution plan is binding on all the stakeholders including creditors. The clean slate principle ensures that the SRA, which assumes control of the CD, free from undisclosed or unaddressed liabilities should receive the CD without any further encumbrance and it is on the principle of value maximisation and revival of the CD and also on the principle that SRA must not come across a situation which was not contemplated by it, any past claim could not be claimed. 38. Hon'ble Supreme Court in Ghanashyam Mishra and Sons Pvt. Ltd. vs. Edelweiss Assets Reconstruction Company Ltd. & Ors. 2021 Vol 9 SCC 657 categorically held that all claims not forming part of the approved resolution plan stand extinguished upon approval of the same. The relevant portion of the aforesaid law is being reproduced as under: "86. 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 func....
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....entral Government, any State Government or any local authority, guarantors and other stakeholders. On the date of approval of resolution plan by the Adjudicating Authority, all such claims, which are not a part of resolution plan, shall stand extinguished and no person will be entitled to initiate or continue any proceedings in respect to a claim, which is not part of the resolution plan; Thus, in view of above precedent no proceedings in our considered opinion, with regard to the pre-CIRP dues can be initiated or continued after the approval of the resolution plan including statutory and operational claims. This principle of clean slate was reiterated to prevent surprise claim which may undermine the finality of the resolution process of a CD. 39. In CoC of Essar Steel India Ltd. vs. Satish Kumar Gupta & Ors., 2020 (Vol 8) SCC 531, Hon'ble Supreme Court again highlighted the binding nature of the resolution plan so far as all stakeholders are concerned, affirming that the CoC's commercial wisdom in approving the plan is paramount and not subject to judicial interference unless seems violative of Section 30(2) of the Code. 40. In Ebix Singapore Pvt. Ltd. vs. CoC of Educomp....
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....stent law including SICA. 44. Hon'ble Supreme Court in Swiss Ribbons Pvt. Ltd. & Anr. vs. Union of India & Ors. 2019 (4) SCC 17, upheld the constitutional validity of the IBC, emphasizing its objective to replace the inefficacious SICA regime with a creditors driven, time bound resolution process. Therefore, in our considered view any unresolved claim from a BIFR scheme, which according to the parties has failed, must be treated as a claim of that party under Section 3(6) of the IBC and must be adjudicated within the framework of the Code. The failure of the BIFR scheme to us, does not create an independent cause of action that too after the approval of the resolution plan by none other than the Respondent itself. Likewise, scheme of Section 10 of the IBC also contemplates and places an obligation in the corporate applicant to place all the information including all claims etc., to be mentioned in the application moved for initiation of CIRP and once the amount claimed by the appellant is not included in the resolution plan, the same in our considered opinion is extinguished by virtue of the finality attached to a resolution plan approved by a adjudicating authority, as discusse....