IBC-Case Laws-High Courts

After approval of Resolution Plan under IBC, demands raised under GST assessment stands extinguished – Patna Highway Projects Ltd. Vs. The State of Bihar and Ors. – Patna High Court

Hon’ble Patna High Court held that the tax dues for the respective assessment years were not included in the resolution plan. The State has not challenged the resolution plan by way of an Appeal or a proceeding before this Court. The resolution plan has been approved on 10.05.2022 and before that the State has not approached the R.P. or the NCLT. In the above circumstances, we have to follow the consistent declaration of law made by the Hon’ble Supreme Court in Ghanashyam Mishra & Sons Pvt. Ltd. v. Edelweiss Asset Reconstruction Company Ltd. & Ors. (2021) ibclaw.in 54 SC, CoC of Essar Steel India Ltd. v. Satish Kumar Gupta & Ors. (2019) ibclaw.in 07 SC and Ruchi Soya Industries Ltd. Vs. Union of India & Ors.(2022) ibclaw.in 11 SC and the demands raised by the assessment orders, of tax due for the years 2020-21 and 2022-23 stands extinguished; subject only to the contingency of a liquidation proceeding if the resolution plan fails.

After approval of Resolution Plan under IBC, demands raised under GST assessment stands extinguished – Patna Highway Projects Ltd. Vs. The State of Bihar and Ors. – Patna High Court Read Post »

On the dishonour of cheques issued in the name of Company under CIRP, Directors cannot be said to be in control and management of the affairs of the company and cannot be prosecuted – Varun Vs. Toolika Pandey – Delhi High Court

Hon’ble High Court held that post the issuance of the moratorium, it is the Insolvency Resolution Professional who has the authority to operate the bank accounts of the company, and on the dishonour of the cheques issued in the name of the company under CIRP, the accused persons/directors therein cannot be said to be in control and management of the affairs of the company, and, therefore, cannot be prosecuted.

On the dishonour of cheques issued in the name of Company under CIRP, Directors cannot be said to be in control and management of the affairs of the company and cannot be prosecuted – Varun Vs. Toolika Pandey – Delhi High Court Read Post »

If Municipal Corporation did not lodge its claim in respect of Property Tax dues against the Corporate Debtor during CIRP, any statutory dues prior to the date on which Resolution Plan is approved cannot be demanded/recovered – Bhushan Power and Steel Ltd. Vs. Municipal Corporation of Delhi and Anr. – Delhi High Court

Hon’ble Delhi High Court held that:
(i) In essence, once a resolution plan is approved by the Adjudicating Authority under Section 31(1) of the IBC, all stakeholders including Central Government, any State Government or any local authority are bound by its terms, and any claims or dues including statutory dues owed to the governmental agencies which are not a part of the approved resolution plan are extinguished.
(ii) In the present case, the MCD did not lodge its claim in respect of property tax dues against the petitioner during the CIRP. Admittedly, the claim of the MCD is not a part of the approved resolution plan. Consequently, prima facie, any statutory dues owed to the MCD by the petitioner prior to the date on which the resolution plan is approved i.e. 26.03.2021, cannot be demanded/recovered.

If Municipal Corporation did not lodge its claim in respect of Property Tax dues against the Corporate Debtor during CIRP, any statutory dues prior to the date on which Resolution Plan is approved cannot be demanded/recovered – Bhushan Power and Steel Ltd. Vs. Municipal Corporation of Delhi and Anr. – Delhi High Court Read Post »

Any proceedings for assessment, reassessment or re-computation initiated in terms of the faceless assessment procedure under Section 144B of Income Tax Act, 1961, after approval of Resolution Plan is contrary to the Clean Slate theory under IBC – M Tech Developers Pvt. Ltd. Vs. National Faceless Assessment Centre, Delhi and Anr. – Delhi High Court

Hon’ble Delhi High Court held that:

(i) The Section 144B of the Income Tax, 1961 power entails proceedings for assessment, reassessment or re-computation being initiated in terms of the faceless procedure of assessment as prescribed therein. Any effort to assess, reassess or re-compute could tend to lean towards a re-computation of liabilities which otherwise stands freezed by virtue of the Resolution Plan having been approved. Such an action or recourse would clearly be barred by Section 31 of the IBC.
(ii) A Section 144B action is what the Supreme Court frowned upon and chose to describe as the “hydra head ” and thus being contrary to the clean slate principle which the IBC advocates.
(iii) Referring Dishnet Wireless Ltd. Vs. Assistant Commissioner of Income Tax (OSD) (2022) ibclaw.in 141 HC held that the IBC does not erect different levels of protection or insulation dependent upon whether corporate insolvency had been initiated voluntarily or on the basis of a petition referable to Section 7 of the IBC.
(iv) The Tax Authorities cannot sustain the invocation of Section 144B based on their own failure to lodge a claim within the time stipulated.

Any proceedings for assessment, reassessment or re-computation initiated in terms of the faceless assessment procedure under Section 144B of Income Tax Act, 1961, after approval of Resolution Plan is contrary to the Clean Slate theory under IBC – M Tech Developers Pvt. Ltd. Vs. National Faceless Assessment Centre, Delhi and Anr. – Delhi High Court Read Post »

Pleadings Under Section 23(4) of Arbitration and Conciliation Act, 1996 before the Arbitral Tribunal would include the rejoinder or replication/surrejoinder filed with the permission of the Court – Buoyant Technology Constellations Pvt. Ltd. Vs. Manyata Infrastructure Developments Pvt. Ltd. and Anr. – Karnataka High Court

Hon’ble Karnataka High Court held that in terms of Section 23(4) of Arbitration and Conciliation Act, 1996, pleadings before the Arbitral Tribunal would include statement of claim, objections, counterclaim and objections to counterclaim. At this stage, it would be useful to refer Order VI Rule 1 of CPC which defines ‘pleading’. In terms of Order VI Rule 1 of CPC, ‘pleading’ shall mean plaint or written statement. Rejoinder or replication could be filed with the permission of the Court. When the rejoinder or replication is filed with the permission of the Court, then it would form part of pleadings. When this Court granted liberty to the petitioner to file surrejoinder and in terms of the said liberty, the petitioner filed surrejoinder. When such surrejoinder is filed on the liberty granted by this Court, it would form part of the pleadings.

Pleadings Under Section 23(4) of Arbitration and Conciliation Act, 1996 before the Arbitral Tribunal would include the rejoinder or replication/surrejoinder filed with the permission of the Court – Buoyant Technology Constellations Pvt. Ltd. Vs. Manyata Infrastructure Developments Pvt. Ltd. and Anr. – Karnataka High Court Read Post »

Moratorium under Section 14 of IBC prohibiting the proceeding under Section(s) 138/141 Negotiable Instruments Act, 1881 will not be applicable against the Directors of the Corporate Debtor – Gurmeher Singh Vs. State of U.P. and Anr. – Allahabad High Court

Hon’ble Allahabad High Court referring the judgments in P. Mohanraj and Ors. v. Shah Brothers Ispat Pvt. Ltd. (2021) ibclaw.in 24 SC and Narindar Garg and others vs. Kotak Mahindra Bank Ltd. and Ors. (2022) ibclaw.in 29 SC held that on commencement of insolvency resolution process, the moratorium under Section 14 of IBC prohibiting the proceeding under Section(s) 138/141 Negotiable Instruments Act, 1881 will be applicable only against the corporate debtor and not against the natural persons like the directors of the company for their vicarious liability.

Moratorium under Section 14 of IBC prohibiting the proceeding under Section(s) 138/141 Negotiable Instruments Act, 1881 will not be applicable against the Directors of the Corporate Debtor – Gurmeher Singh Vs. State of U.P. and Anr. – Allahabad High Court Read Post »

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