ONE PAGE 22 – In the matter of M/s Sujana Universal Industries Ltd

ONE PAGE 22 – In the matter of M/s Sujana Universal Industries Ltd
Shall an approved Rplan get waiver on statutory obligations & liabilities under IBC?
Court:  NCLT Hyd & NCLAT Chennai Bench AT# 7/2021 Dt 17.05.2021

1. Background:Appeal filed by the Successful Resolution Applicant (RA) against order passed by NCLT in IA-868/2020 for the approval of Rplan u/s 30(6) of the Code. NCLT allowed application for approval of Rplan with certain observations in its order:

a. Sec 79 of IT Act provides carry forward and set off of losses in a closely held company only if there is continuity in the beneficial owner of the shares carrying not less than 51% of voting power, on the last day of the year/s in which the loss was incurred.

b. As per 79(2)(c) nothing contained in this Sec 79 shall apply where a change in the shareholding takes place in a previous year pursuant to a resolution plan approved under IB Code, after giving a reasonable opportunity of being heard to the IT Commissioner. In this case, IT Commissioner did not respond to the notices sent by RP, and hence NCLT directed that in terms of Sec 79(2)(c), assessed tax losses of the CD shall be allowed to carried forward as per provisions of law.

c. Approved Rplan shall not get any waiver from statutory obligations/liabilities. It has to be dealt in accordance with the appropriate authorities as per relevant laws & is subject to approval of concerned authorities.Appellant is aggrieved with this observation because the financial viability of Rplan is seriously affected & undecided claims that will crop up. It is contrary to the provisions of IBC when COC using its commercial wisdom approved the Rplan 80.64% voting share. RA starts on fresh slate and cannot be burdened with liabilities which are not envisaged prior to take over of business.

2. Case Laws:

a. Parveen Bansal Vs Amit Spinning Industries Ltd(NCLT,PB):Statutory obligations/liabilities has to be dealt in accordance with relevant laws, by appropriate authorities. Approved Rplan will not give any waiver to the same.

b. Ghanashyam Mishra & Son P Ltd V Edelweiss ARC Ltd (SC):Once Rplan is approved, claims as provided in it shall stand frozen & will be binding on all stakeholders including Govt. Claims, not part of the RPlan shall stand extinguished.

c. Jaypee Kensington Boulevard Apartments Welfare Assn V NBCC (I) Ltd:If NCLT finds shortcoming in the Rplan vis-à-vis specified parameter, it will only send it back to COC for resubmission, but cannot interfere in commercial aspects.

d. COC of Essar Steel vs. Satish Kumar Gupta (SC):RA cannot be allowed to face hydra head suddenly popping up after approval of Rplan in relation to CD liabilities.

e. Indian Opportunities P Ltd & Vistra ITCL (I) Ltd V Sai Wardha Power Generation Ltd (NCLT, Hyd):NCLT gave waiver on collection of stamp duty, fees for implementation of Rplan & other dues in respect of Govt prior to the effective date.

f. Leo Edibles v Tax Recovery Officer-ITax (AP-HC): Tax Dept cannot claim any priority in payment from Liquidation assets merely because the IT Dept has issued attachment order prior to initiation of Liquidation Proceedings.

3. NCLAT EVALUATION & JUDGMENT: NCLAT evaluated in detail the instant matter with reference  to Sections 30, 31, 32 & 61 of IBC, CIRP Regulations 37, 39 and Sec28(iv), 56, 115(j)(b) & 170 of IT Act and held that NCLT’s observation “ if any waiver is sought in the Rplan, the same shall be subject to approval by the concerned Authorities” is not in the form of imposition of additional condition, thereby opening the plan in regards to undecided claims. NCLT is within its limits to express its opinion and the instant appeal sans merits; hence dismissed with no costs.

MS Mano Ranjani

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