CIRP-IV Rplan-Post/After Approval Issues/Implementation

Once the claim was returned by Resolution Professional, there is no substantive claim to be included in the Resolution Plan in the absence of re-submission of the said claim | Merely because the waiver was not allowed by the NCLT while approving the Resolution Plan would not, ipso facto, resurrect the right of claim – Union of India Vs. OCL Iron and Steel Ltd. – Delhi High Court

Hon’ble Division Bench of Delhi High Court while dismissing LPA held that the appellant did not take appropriate steps in law to lay its claim in time and by prescription of law, that is the IBC, and supervening circumstances, claims not forming part of the Resolution Plan as approved, stood extinguished. Besides, the “clean slate” theory.

Once the claim was returned by Resolution Professional, there is no substantive claim to be included in the Resolution Plan in the absence of re-submission of the said claim | Merely because the waiver was not allowed by the NCLT while approving the Resolution Plan would not, ipso facto, resurrect the right of claim – Union of India Vs. OCL Iron and Steel Ltd. – Delhi High Court Read Post »

Provisions of Income Tax Act do not create any charge or security interest | Resolution Professional (RP) is empowered to seek additional evidence to analyse claims | CIRP Regulation does not provide any discretion to RP for admitting a claim after the extended period| Posting the status of claims on Corporate Debtor’s website & IBBI portal amounts to deemed knowledge and constructive notice – Commissioner of Income Tax (TDS-1), Mumbai Vs. Mr. Sundaresh Bhat RP of JBF Petrochemical Ltd. – NCLAT New Delhi

In this important judgment, Hon’ble NCLAT clarifies various issues related:

A. Powers of Resolution Professional in verification of claim.
B. CIRP Regulation does not provide any discretion to RP for admitting a claim after the extended period.
C. Putting up status of claims of the creditors on the websites of Corporate Debtor as well as the IBBI portal is amounted to deemed knowledge and constructive notice on the creditors with respect to rejection of its claim.
D. Whether such undecided claims can be entertained once the Resolution Plan is approved by the CoC and the Adjudicating Authority.
E. The provisions of Income Tax Act do not create any charge or security interest.

Provisions of Income Tax Act do not create any charge or security interest | Resolution Professional (RP) is empowered to seek additional evidence to analyse claims | CIRP Regulation does not provide any discretion to RP for admitting a claim after the extended period| Posting the status of claims on Corporate Debtor’s website & IBBI portal amounts to deemed knowledge and constructive notice – Commissioner of Income Tax (TDS-1), Mumbai Vs. Mr. Sundaresh Bhat RP of JBF Petrochemical Ltd. – NCLAT New Delhi Read Post »

In terms of Section 31 of IBC, all demands raised against the Corporate Debtor pertaining to the period prior to the Resolution Plan effective date stand automatically extinguished in terms of approved Resolution Plan – Orissa Manganese & Minerals Ltd. Vs. State of Odisha and Ors. – Orissa High Court

Hon’ble Orissa High Court held that:
(i) Successful Resolution Applicant should start with fresh slate on the basis of the Resolution Plan approved shunning its prior status as Corporate Debtor
(ii) Upon approval of the Resolution Plan, the Corporate Debtor no more stands as the Corporate Debtor and it is only under the legal obligation as being in the management of the Corporate Debtor strictly in terms of the Resolution Plan.
(iii) In terms of Section 31 of IBC, all those impugned demands raised against the Corporate Debtor pertaining to the period prior to the Plan Effective Date stand automatically extinguished in terms of Approved Resolution Plan.

In terms of Section 31 of IBC, all demands raised against the Corporate Debtor pertaining to the period prior to the Resolution Plan effective date stand automatically extinguished in terms of approved Resolution Plan – Orissa Manganese & Minerals Ltd. Vs. State of Odisha and Ors. – Orissa High Court Read Post »

Order passed under Section 45A of ESI Act, 1948 by the ESI Dept. during CIRP for recovery of the claimed amount is in violation of Section 14 of the Code – Saurabh Chawla RP Harig Chankshaft Ltd. Vs. Employee State Insurance Corporation – NCLT Allahabad Bench

Hon’ble NCLT Allahabad Bench held that:

(i) The actions of the ESI Dept. with respect to the issuance of an order demanding a contribution within 15 days is in violation and clearly inconsistent with the provisions of the Code.
(ii) All the provisions of the Code have overriding effect over all other laws in the country for the time being in force in case provisions of those laws are in conflict with the provisions of the Code.
(iii) Once the claim has been processed in accordance with the provisions of the Code, the Respondent cannot pursue recovery through a separate proceeding under any other Law.

Order passed under Section 45A of ESI Act, 1948 by the ESI Dept. during CIRP for recovery of the claimed amount is in violation of Section 14 of the Code – Saurabh Chawla RP Harig Chankshaft Ltd. Vs. Employee State Insurance Corporation – NCLT Allahabad Bench Read Post »

Rule 22 of the CESTAT (Procedure) Rules, 1982 is not applicable in cases where the Resolution Plan has been approved under the IBC – Patanjali Foods Ltd. Vs. Commissioner of Customs – Karnataka High Court

Hon’ble Karnataka High Court held that:

(i) The Custom Dept. not having made any claim before the IRP during the CIRP process and the demand not having been part of the resolution plan, has stood extinguished and cannot be continued.
(ii) As per Rule 22 of CESTAT (Procedure) Rules, 1982, in the event a party to the appeal dies or is adjudicated as an insolvent or in the case of a company, is being wound up, the appeal would abate.
(iii) It is clear that Rule 22 of the CESTAT (Procedure) Rules, 1982 would not be attracted in a case where the resolution plan has been approved by the IBC.

Rule 22 of the CESTAT (Procedure) Rules, 1982 is not applicable in cases where the Resolution Plan has been approved under the IBC – Patanjali Foods Ltd. Vs. Commissioner of Customs – Karnataka High Court Read Post »

Can Monitoring Committee of the Corporate Debtor file an application under Section 33(3) of IBC for liquidation of the Corporate Debtor on non-implementation of the Resolution Plan? – Mr. T. Sathisan, Monitoring Committee Chairman of Splendid Metal Products Ltd. Vs. Invent Assets Securitisation and Reconstruction Pvt. Ltd. – NCLT Hyderabad Bench

In this case, an application has been filed under Section 33(3) of IBC by the Chairman of the Monitoring Committee & Erstwhile Resolution Professional (RP) of the Corporate Debtor, seeking Orders for Liquidation of the Corporate Debtor, as the Resolution Plan approved by this Tribunal has not been implemented by the Successful Resolution Applicants (SRAs).

Hon’ble NCLT Hyderabad Bench held that under Section 33(3), the application for liquidation order can be made by any person, other than the Corporate Debtor, whose interests are prejudicially affected by the contravention of the Approved Resolution Plan.

Can Monitoring Committee of the Corporate Debtor file an application under Section 33(3) of IBC for liquidation of the Corporate Debtor on non-implementation of the Resolution Plan? – Mr. T. Sathisan, Monitoring Committee Chairman of Splendid Metal Products Ltd. Vs. Invent Assets Securitisation and Reconstruction Pvt. Ltd. – NCLT Hyderabad Bench Read Post »

Can even after approval of Resolution Plan under Insolvency Code, proceedings under Consumer Protection Act before NCDRC be continued? – Jet Airways India Ltd. Vs. Naveen Rai and Anr. – Delhi High Court

Hon’ble Delhi High Court dismisses writ petition against an order of NCDRC wherein NCDRC called a copy of the resolution plan as well as the information memorandum and also directed that Authorised Representative of the Monitoring Committee to appear before NCDRC to decide the issue whether the provisions of Section 238 of the IBC prohibit the redressal of a claim under the Consumer Protection Act, 1986, in cases where such a claim was not staked by the complainant before the Insolvency Resolution Professional during the moratorium period and subsequently the proceedings under the IBC have attained finality with the consequential approval of the Resolution Plan by NCLT.

Can even after approval of Resolution Plan under Insolvency Code, proceedings under Consumer Protection Act before NCDRC be continued? – Jet Airways India Ltd. Vs. Naveen Rai and Anr. – Delhi High Court Read Post »

Any dues claimed/ unclaimed for the period up to the date of approval of the Resolution Plan stands extinguished even Income Tax Demand Notice related to CIRP period – Gandhamardhan Sponge Industries Pvt. Ltd. Vs. Income Tax Department and Anr. – NCLT Kolkata Bench

In this case, CIRP was commenced on 04.10.2019 and Resolution plan was approved on 25.03.2021. Income Tax Department issued Demant Notice on 25.01.2024 related to Financial Year 2019-2020.

Hon’ble NCLT Kolkata Bench held that any dues claimed/unclaimed for the period up to the date of approval of the resolution plan stands extinguished. The notice and demand in question is for the Financial Year 2020, whereas the resolution plan was approved on 25.03.2021. Therefore, any dues up to that period stood extinguished consequent to the approval of the resolution plan.

Any dues claimed/ unclaimed for the period up to the date of approval of the Resolution Plan stands extinguished even Income Tax Demand Notice related to CIRP period – Gandhamardhan Sponge Industries Pvt. Ltd. Vs. Income Tax Department and Anr. – NCLT Kolkata Bench Read Post »

The continuation of existing income tax proceedings and the initiation of new income tax proceedings, as they relate to operations prior to the CIRP, are totally prohibited after the approval of the Resolution Plan – Uttam Value Steels Ltd. and Anr. Vs. Assistant Commissioner of Income Tax and Ors. – Bombay High Court

Hon’ble Bombay High Court (Division Bench) held that once a resolution plan is duly approved under Section 31(1) of the IBC, the debts as provided for in the resolution plan alone shall remain payable and such position shall be binding on, among others, the Central Government and various authorities, including tax authorities. All dues which are not part of the resolution plan would stand extinguished and no person would be entitled to initiate or continue any proceedings in respect of any claim for any such due. No proceedings in respect of any dues relating to the period prior to the approval of the resolution plan can be continued or initiated.

The continuation of existing income tax proceedings and the initiation of new income tax proceedings, as they relate to operations prior to the CIRP, are totally prohibited after the approval of the Resolution Plan – Uttam Value Steels Ltd. and Anr. Vs. Assistant Commissioner of Income Tax and Ors. – Bombay High Court Read Post »

The pendency of litigations initiated by any person or stakeholder is not a justifiable ground for non-implementation of Resolution Plan unless stayed by a Court/ Tribunal – Darwin Platform Infrastructure Ltd. Vs. Union Bank of India and Ors. – NCLT Mumbai Bench

In this judgment, Hon’ble NCLT Mumbai Bench clarifies the following issues:

A. Can status of the Corporate Debtor reflected as “active, non-compliant” in the records of MCA be a reason of non-implementation of Resolution Plan?
B. Is Pendency of litigations initiated by any person or stakeholder a justifiable ground for non-implementation unless the implementation is stayed by a court/tribunal?
C. Whether invocation and encashment of PBG furnished for Resolution Plan as per Regulation 36B of CIRP Regulations, is legal and proper?
D. Whether an extension of timelines for implementation of approved Resolution Plan should be granted?
E. In the event of non-extension of time for implementation of the Resolution Plan, can CIRP be restored?

The pendency of litigations initiated by any person or stakeholder is not a justifiable ground for non-implementation of Resolution Plan unless stayed by a Court/ Tribunal – Darwin Platform Infrastructure Ltd. Vs. Union Bank of India and Ors. – NCLT Mumbai Bench Read Post »

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