While Approving A Plan, Shall Not Waive Off Statutory Obligations Of The Corporate Debtor: NCLT Mumbai

The National Company Law Tribunal (“NCLT”), Mumbai Bench, comprising of Shri H.V. Subba Rao (Judicial Member) and Ms. Anu Jagmohan Singh (Technical Member), while adjudicating a petition filed in Corporation Bank v General Composite Pvt. Ltd., has approved a resolution plan and directed that such approval shall not waive off any of the statutory obligations/liabilities of the Corporate Debtor and shall be dealt by the appropriate Authorities in accordance with law. Further, any waiver sought in the resolution plan shall be given subject to the approval of the concerned Authorities, in light of Supreme Court judgment in Ghanshyam Mishra and Sons Private Limited v/s. Edelweiss Asset Reconstruction Company Limited. Background Facts General Composite Private Limited (“Corporate Debtor”) was admitted into Corporate Insolvency Resolution Process (CIRP) by the NCLT. Mr. Pushkar Gulati (“Successful Resolution Applicant/SRA”) submitted a resolution plan which was approved by the Committee of Creditors (CoC). The Resolution Plan proposed to pay Rs. 11.53 Crores as against an outstanding of 14 Crores. An application under Section 30(6) of IBC was filed by the Resolution Professional before the NCLT for approval of the plan. The SRA provided payment of Rs. 2,00,000/- towards the statutory dues (Income Tax) payable as per FY 2021. However, no claim has been received from the Income Tax Authority. NCLT Verdict The Bench approved the Resolution Plan of the SRA and held that the approval of the plan shall not waive off any of the statutory obligations/liabilities of the Corporate Debtor and shall be dealt by the appropriate Authorities in accordance with law. Any waiver sought in the resolution plan shall be given subject to the approval of the concerned Authorities, in light of Supreme Court judgment in Ghanshyam Mishra and Sons Private Limited v/s. Edelweiss Asset Reconstruction Company Limited. “The approval of the Resolution Plan shall not be construed as waiver of any statutory obligations/liabilities of the Corporate Debtor and shall be dealt by the appropriate Authorities in accordance with law. Any waiver sought in the Resolution Plan, shall be subject to approval by the Authorities concerned in light of the Judgment of Supreme Court in Ghanshyam Mishra and Sons Private Limited v/s. Edelweiss Asset Reconstruction Company Limited.” The relevant paragraphs of the Ghanshyam Mishra judgment are extracted herein below: “..On the date of approval of the 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.” “95. (i) Once a resolution plan is duly approved by the adjudicating authority under sub-section (1) of Section 31, the claims as provided in the resolution plan shall stand frozen and will be binding on the corporate debtor and its employees, members, creditors, including the Central 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 the 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; (ii) 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 Code has come into effect; (iii) 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.” Case Title: Corporation Bank v General Composite Pvt. Ltd. Case No.: CP (IB) No. 703 /MB/C-I/2019 Counsel For Applicant: Ms. Bindu Bhatia, Advocate a/w Mr. Ankur Kumar, RP. Counsel for Respondent: Mr. Gauraj Shah a/w Ms. Priyanka Sinha i/b A&P Partners, Advocate. Click Here To Read/DownloadOrder

While Approving A Plan, Shall Not Waive Off Statutory Obligations Of The Corporate Debtor: NCLT Mumbai

Pallavi Mishra

This is a premium content
Available exclusively to
Our subscribers

INR 1099+GST

Tags

While Approving A Plan, Shall Not Waive Off Statutory Obligations Of The Corporate Debtor: NCLT Mumbai

Pallavi Mishra

This is a premium content Available exclusively to Our subscribers

INR 1099+GST

Tags

This is a premium content
Available exclusively to
Our subscribers