Meenakshi And Kushal Goyal vs Amit Agarwal And Ors

[Arising out of order dated 01.05.2024 passed by the Adjudicating Authority (National Company Law Tribunal, New Delhi, Principal Bench), in I.A. 961/2024 in (IB) - 630(PB)/2019]

IN THE MATTER OF: MEENAKSHI AND KUSHAL GOYAL Through Mr. Rahul Mehandru Sector 4-C, Shashri Nagar, Mangi Gobindgarh, Distt. Fatehgarh Sahib, Punjab-147301 ...Appellant

Versus

1. AMIT AGARWAL 11-63, Vijay Chowk, Laxmi Nagar, New Delhi - 110092. ...Respondent No. 1

2. COMMITTEE OF CREDITORS Through State Bank of India Stressed Asset Management Branch (SAMB) Sco No. 99-107, 1st Floor, Pragati Bhawan Sector 8-C, Chandigarh - 1600009. ...Respondent No. 2

3. EXCISE AND TAXATION OFFICER-CUM- ASSESSING AUTHORITY Room No. 303, 2nd Floor, Mini Secretariat, Kaithal - 136027 Kaithal, Haryana. ...Respondent No. 3

Present: For Appellant : Mr. Sumesh Dhawan, Ms. Vatsala Kak, Mr. Raghav Dembla, Mr. Shaurya Shyam and Mr. Ashish Dhaka, Advocates.

For Respondents : Mr. Pankaj Agarwal and Mr. Shashwat Srivastava, Advocates for R-1.

Mr. Amit Agarwal, Advocate for RP.

Mr. Ankur Mittal and Ms. Preety Choudhary, Advocates for R-2/CoC. Mr. Virender Ganda Sr. Advocate with Ms. Akansha Mathur and Mr. Asraf Belal, Advocates for R-4/ Objector.

JUDGMENT

ASHOK BHUSHAN, J.

This Appeal by a Successful Resolution Applicant (SRA) has been filed

challenging the Order dated 01.05.2024 passed in I.A. 961/2024 filed by the

Resolution Professional (RP). The Adjudicating Authority allowed Prayer (c) of

the Application, aggrieved by which Order, this Appeal has been filed.

2. Brief facts necessary to be noticed for deciding the Appeal are:

i. The Corporate Debtor, Mastana Foods Private Limited came to be

admitted in Corporate Insolvency Resolution Process (CIRP) by Order

dated 18.09.2019.

ii. In response to `Form-G' issued by the RP, Resolution Plan was

submitted and in the 10th Committee of Creditors (CoC) Meeting held

on 07.11.2020, Resolution Plan of the Appellant along with the

Addendum dated 12.10.2020 was duly approved by 100% CoC.

iii. The Excise & Taxation Officer, Officer-Cum-Assessing Authority,

Kaithal State of Haryana filed an I.A. 95/2021 & I.A. 1374/2021 before

the Adjudicating Authority which was allowed on 16.02.2021 and

16.04.2021.

iv. This Appellate Tribunal vide Order dated 22.03.2022, set aside the

Orders of Adjudicating Authority dated 16.02.2021 and 06.04.2021.

Comp. App. (AT) (Ins.) No. 1022 of 2024 2 of 10 v. On 06.09.2022, the Hon'ble Supreme Court delivered its Judgment in

the matter of `State Tax Officer' Vs. `Rainbow Papers Limited',

reported in (2022) SCC OnLine SC 1162.

vi. Hon'ble Supreme Court vide its Order dated 31.10.2022 stayed the

operation of the Order dated 22.03.2021 passed by this Appellate

Tribunal.

vii. Hon'ble Supreme Court vide Order dated 22.01.2024 allowed the Civil

Appeals filed by the Excise & Taxation Officer, Officer-Cum-Assessing

Authority setting aside the Order dated 22.03.2022 passed by the

Appellate Tribunal in view of the decision of the Hon'ble Supreme Court

in `State Tax Officer' (Supra).

viii. After the Judgment of the Hon'ble Supreme Court I.A. 961/2024 was

filed by the RP before the Adjudicating Authority. Adjudicating

Authority who has reserved the Judgment in I.A. 5283/2022, i.e. Plan

approval Application de-reserved the same.

ix. By Order dated 01.05.2024, Adjudicating Authority disposed of the

Application, I.A. 961/2024, allowing the Prayer (c), aggrieved by which

Order this Appeal has been filed.

3. We have heard Learned Counsel Mr. Sumesh Dhawan appearing for the

Appellant, Learned Counsel Mr. Ankur Mittal appearing for the CoC, Learned

Sr. Counsel Mr. Virender Ganda appearing for the Intervener, Learned

Counsel Mr. Pankaj Agarwal appearing for R-1 and Learned Counsel Mr. Amit

Agarwal appearing for the RP.

Comp. App. (AT) (Ins.) No. 1022 of 2024 3 of 10

4. Learned Counsel for the Appellant submits that the Resolution Plan of

the Appellant has been approved by the CoC with 100% votes and after the

Judgment of the Hon'ble Supreme Court dated 22.01.2024, Appellant has

filed an Affidavit on 18.03.2024, where it offered to undertake the entire

liability of Excise & Taxation Officer, Officer-Cum-Assessing Authority. It is

submitted that what Hon'ble Supreme Court directed on 22.01.2024 was to

comply with the Judgment of the Hon'ble Supreme Court in `State Tax

Officer' (Supra) and when Appellant has agreed to accept the entire liability

of Excise & Taxation Officer, Officer-Cum-Assessing Authority, no further

steps were required except to consider the Plan approval Application which is

pending before the Adjudicating Authority. It is submitted that RP may issue

fresh `Form-G' by starting the CIRP Process denovo, which has never the

intention of the Hon'ble Supreme Court while passing its Order dated

22.01.2024. Hon'ble Supreme Court only intended that Order of the Hon'ble

Supreme Court in `State Tax Officer' (Supra) be complied with, no direction

was issued to start the CIRP Process denovo.

5. Learned Counsel appearing for the CoC submitted that CoC is bound

to comply with the Order of the Hon'ble Supreme Court and RP's Application

was only seeking directions to conduct the ongoing CIRP which has allowed

by the Adjudicating Authority. Appellant has no cause to file this Appeal. The

Hon'ble Supreme Court has granted time to complete the process within 90

days which clearly proves that process has to be undertaken and completed.

6. Learned Counsel for the RP submitted that in pursuance of the Order

passed by the Adjudicating Authority, RP proposed to place an agenda before

the CoC seeking its decision for future course of action, but on account of

Comp. App. (AT) (Ins.) No. 1022 of 2024 4 of 10 pendency of this Appeal, agenda could not be placed before the CoC. Counsel

for the RP submits that it is the CoC which is empowered to take all decision

regarding CIRP Process and CIRP Process is conducted under the CoC. Hence

it is for the CoC to take a call with regard to further steps. It is submitted

that there is no ground to interfere with the Impugned Order.

7. Learned Sr. Counsel Mr. Virender Ganda appearing for the

Intervener/Unsuccessful Resolution Applicant submits that the clear

intendment of the Order of the Hon'ble Supreme Court was that a fresh CIRP

process be conducted. It is submitted that had the Hon'ble Supreme Court

not intended to initiate fresh CIRP Process, there was no occasion to grant 90

days time for completing the process.

8. We have considered the submissions of the Counsel for the Parties and

perused the record.

9. From the facts as noticed above, it is clear that Resolution Plan which

was submitted by the Appellant was approved on 07.11.2020 by the CoC. It

was the Excise & Taxation Officer, Officer-Cum-Assessing Authority filed its

Application before the Adjudicating Authority for accepting its claim which

was allowed by the Adjudicating Authority. However, the said Orders was

reversed by this Appellate Tribunal, against which, Civil Appeal No. 7514-

7515/2022 was filed. The Order of the Hon'ble Supreme Court has been

brought on record by the Appellant. The Order of the Hon'ble Supreme Court

dated 22.01.2024 is as follows:

"IA No.180405 of 2022

The learned counsel appearing for the original respondent has no objection for allowing this

Comp. App. (AT) (Ins.) No. 1022 of 2024 5 of 10 application, as now the respondent sought to be substituted has been appointed as the Resolution Professional. Accordingly, the application is allowed.

Civil Appeal Nos.7514-7515 of 2022 These appeals were kept pending, as the Review Petitions filed in the case of State Tax Officer v. Rainbow Papers Limited1 (Civil Appeal No.1661 of 2020 etc.) on which reliance has been placed were pending. Now, the Review Petitions have been dismissed.

In the light of the decision dated 6th September, 2022 in the case of State Tax Officer v. Rainbow Papers Limited, we set aside the impugned order dated 22nd March, 2022 passed by the National Company Law Appellate Tribunal. It is obvious that these appeals will be governed by the directions issued in the said decision.

The appeals are accordingly allowed on the above terms.

Cause Title be amended accordingly.

We grant 90 days' time to the substituted Resolution Professional to complete the entire process."

10. The Hon'ble Supreme Court in the above Order has referred to the

directions issued in the Judgment of the Hon'ble Supreme Court in `State

Tax Officer' (Supra). The Judgment of `State Tax Officer' (Supra), where

in Paragraphs 55 to 59, following has been laid down:

"55. In our considered view, NCLAT clearly erred in its observation that Section 53 IBC overrides Section 48 of the GVAT Act. Section 53 IBC begins with a non obstante clause which reads:

"53. Distribution of assets.--(1) Notwithstanding anything to the contrary contained in any law enacted by the Parliament or any State Legislature for the time being in force, the proceeds from the sale of the liquidation assets shall be distributed in the following order of priority...."

Comp. App. (AT) (Ins.) No. 1022 of 2024 6 of 10

56. Section 48 of the GVAT Act is not contrary to or inconsistent with Section 53 or any other provisions of IBC. Under Section 53(1)(b)(ii), the debts owed to a secured creditor, which would include the State under the GVAT Act, are to rank equally with other specified debts including debts on account of workman's dues for a period of 24 months preceding the liquidation commencement date.

57. As observed above, the State is a secured creditor under the GVAT Act. Section 3(30) IBC defines "secured creditor" to mean a creditor in favour of whom security interest is credited. Such security interest could be created by operation of law. The definition of "secured creditor" in IBC does not exclude any Government or Governmental Authority.

58. We are constrained to hold that the appellate authority (NCLAT) and the adjudicating authority erred in law in rejecting the application/appeal of the appellant. As observed above, delay in filing a claim cannot be the sole ground for rejecting the claim.

59. The appeals are allowed. The impugned orders [Tourism Finance Corpn. of India Ltd. v. Rainbow Papers Ltd., 2019 SCC OnLine NCLAT 910] , [STO v. Chandra Prakash Jain, 2020 SCC OnLine NCLAT 536] are set aside. The resolution plan approved by the CoC is also set aside. The resolution professional may consider a fresh resolution plan in the light of the observations made above. However, this judgment and order will not prevent the resolution applicant from submitting a plan in the light of the observations made above, making provisions for the dues of the statutory creditors like the appellant."

11. It was after the Judgment of the Hon'ble Supreme Court in Appeals filed

by Excise & Taxation Officer, Officer-Cum-Assessing Authority that I.A. No.

961/2024 was filed by the RP. In I.A. No. 961/2024, following prayers were

made by the RP:

Comp. App. (AT) (Ins.) No. 1022 of 2024 7 of 10 "(a) Take judgement/ final order dated 22.01.2024 passed by Hon'ble Supreme Court of India in Excise And Taxation Officer Of State Tax vs. Ashok Kumar Juneja in Civil Appeal Nos.7514-7515 of 2022 on record;

(b) De-reserve order and Dispose the I.A. No. 5283 of 2020 filed by Erst While/ Resolution Professional namely Mr. Ashok Kumar Juneja for seeking the Approval of the Resolution Plan.

(c) Direct and Pass appropriate orders for Applicant to conduct the ongoing Corporate Insolvency Resolution Process for M/s Mastana Foods Private limited."

12. Prayers (a) & (b) already allowed by the Adjudicating Authority by Order

dated 13.03.2024 and by Order impugned dated 01.05.2024 for Prayer (c) has

been allowed. Directions issued by the Hon'ble Supreme Court in `State Tax

Officer' (Supra), have been noticed by the Adjudicating Authority in the

Order and has thereafter disposed of the Application. The Prayer (c) was

"direct and pass appropriate Orders for Applicant to conduct the ongoing

Corporate Insolvency Resolution Process for M/s. Mastana Food Private Ltd".

From the facts noted above, it is clear that under the Order passed by the

Hon'ble Supreme Court in the Appeal filed by Excise & Taxation Officer,

Officer-Cum-Assessing Authority, the process was to be completed within 90

days and for taking steps in pursuance of the Order of the Hon'ble Supreme

Court dated 22.01.2024, I.A. was filed by the RP. Adjudicating Authority by

the Impugned Order has allowed the Application in terms of Prayer (c) but has

not issued any direction as to what process, RP has to conduct. The

expression used is "conduct the ongoing Corporate Insolvency Resolution

Process for M/s. Mastana Foods Private Limited".

13. Learned Counsel for the RP very fairly has submitted that RP has

proposed an agenda to be placed before the CoC for taking a call regarding

Comp. App. (AT) (Ins.) No. 1022 of 2024 8 of 10 ongoing process. Learned Counsel for the RP has also relied on the Judgment

of the Hon'ble Supreme Court in the matter of `M.K. Rajagopalan' Vs. `Dr.

Periasamy Palani Gounder & Anr.' reported in (2024) 1 SCC 42, decided

on 03.05.2023 to support his submission that Hon'ble Supreme Court has

held in the above case that whatever be the reason, the Plan has to be

presented to the CoC and could have been presented to the Adjudicating

Authority only after final approval of the CoC. Thus, in view of the Order of

the Hon'ble Supreme Court, the CoC has to take a final call with regard to

Resolution Plan or modification therein or to take such steps as has been

directed by the Hon'ble Supreme Court.

14. Learned Counsel for the RP submitted that it intended to place agenda,

but on account of pendency of the Appeal, CoC Meetings could not be

convened.

15. Learned Counsel for the CoC also submits that it is for the CoC to take

a decision for compliance of the directions of the Hon'ble Supreme Court dated

22.01.2024.

16. In view of the facts and Orders passed by the Hon'ble Supreme Court,

as noted above, we are of the view that ends of justice be served in disposing

the Appeal permitting the RP to place an agenda before the CoC with regard

to necessary steps which are required to be taken in the CIRP of the Corporate

Debtor in pursuance of the directions of the Hon'ble Supreme Court dated

22.01.2024 in Civil Appeal No. 7514-7515/2022. It is the CoC which is in

overall control of the entire CIRP Process to take such steps as required by

law.

Comp. App. (AT) (Ins.) No. 1022 of 2024 9 of 10

17. We see no reason to keep this Appeal pending any further and dispose

of the Appeal with liberty to the RP to place appropriate agenda before the

CoC, who may take decision and complete the process of CIRP as directed by

the Hon'ble Supreme Court.

Appeal is disposed of accordingly.

[Justice Ashok Bhushan] Chairperson

[Arun Baroka] Member (Technical)

NEW DELHI

18th November, 2024

himanshu

Comp. App. (AT) (Ins.) No. 1022 of 2024 10 of 10