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SC expounds: Claims made by the Govts that are not part of the resolution plan have no legs to stand in the eyes of law,

 Physical hearing resumes in Delhi High Court, district courts

Supreme Court in a recent order has held that, "the claim of the respondent, which is not part of the Resolution Plan, does not survive. The amount deposited by the appellant at the time of admission of the appeals along with interest accrued thereon is directed to be refunded to the appellant."

The present Appeal arose out of a notification dated 13.06.2002 issued by the Department of Revenue, Central Board of Excise and Customs, Union of India imposing a tax on imported goods of M/s Ruchi Soya Industries Ltd., namely, 1647.414 metric tonnes of crude palmolein covered under bill of entry for home consumption.
M/s Ruchi Soya Industries Ltd. challenged the said notification before the Hon’ble High Court of Karnataka vide Writ Petition No.25290 of 2002 (TAR) and Writ Petition No.25291 of 2002 (TAR). The Hon’ble High Court was please to dismiss the said Petitions vide an order dated 20.01.2012.

Assailing the said order dated 20.01.2012, M/s Ruchi Soya Industries Ltd. filed Special Leave Petition (Civil) CC No. 8977-8978 of 2012 before the Hon’ble Supreme Court of India. Vide order dated 11.05.2012, the Hon’ble Court was please to issue notice and passed an interim order that subject to M/s Ruchi Soya Industries Ltd. depositing the recovery amount as sought by notice dated 25.04.2012 with the concerned commissioner, the operation of the action in terms of recovery notice dated 25.04.2012 remain stayed. In compliance of the said order, the amount was deposited by M/s Ruchi Soya Industries Ltd. which was also reflected in the order dated 14.01.2013 passed by the Hon’ble Court and leave was granted in the matter. 

With regard to the Appellant, Standard Chartered Bank had filed proceedings before the National Company Law Tribunal, Mumbai (NCLT) under Section 7 of Insolvency and Bankruptcy Code, 2016 (IBC) for initiation of Corporate Insolvency Resolution Process (CIRP) and NCLT granted approval of the resolution plan of successful resolution applicant and same was allowed vide their order dated 24.07.2019 read with 04.09.2019.

On 17.02.2022, the said matter came up before the Hon’ble Court for final disposal and both the parties have argued at length. The issue before the Hon’ble Court in the present matter was with regard to the claim not lodged before the resolution professional after public notices were issued under Section 13 & 15 of the IBC.

 The Hon’ble Court after hearing both the parties and relying upon the judgment of Ghanshyam Mishra & Sons Pvt. Ltd. Vs. Edelweiss Asset Reconstruction Company & Ors. (2021) 9 SCC 657 held that the claim which was made by Union of India was not a part of the resolution plan and hence, does not survive and directed that the amount deposited by M/s Ruchi Soya Industries Ltd. in compliance of order dated 11.05.2021 ought to refunded alongwith interest accrued thereon.

 

This judgment is significant as the Hon’ble Court made it clear that any authority which have made any claim against the Company concerned but failed to bring it to the notice of the resolution professional cannot be allowed to raise such demand at a later stage. It is pertinent to note that during the course of argument, M/s Ruchi Soya Industries Ltd. relied upon paras 62, 66, 77, 86, 87, 95, 102 & 130 in particular to contend that a successful resolution applicant cannot be suddenly faced with “undecided” claims after the resolution plan is submitted so that the resolution applicant knows exactly what has to be paid in order that it may take over and run the business of the corporate debtor. It was also argued that the legislature clarified that once a resolution plan was approved by NCLT, all claims/dues owed to the State /Central Government or any local authority including tax authorities, which were not part of the resolution plan shall stands extinguished. It was also noted that the legislative intent behind this is to freeze all the claims so that the resolution applicant can start on a clean slate and is not flung with any surprise claims. Further, it was also clarified that the word “other stakeholders” would squarely cover State/Central Government or any local authority. Further, it was also held that the 2019 amendment is declaratory and clarificatory in nature and therefore retrospective in operation.

Therefore, this judgment holds significant importance qua all claims made by one or any State /Central Government or any local authority so far which was not a part of the resolution plan has no legs to stand in the eyes of law. Thus, we advise you to kindly peruse the order dated 17.02.2022 in the said perspective for the existing claims, if any, in any pending proceedings against M/s Ruchi Soya Industries Ltd. Further, if any amount is deposited by M/s Ruchi Soya Industries Ltd. in the similar manner in such claims which were not part of the resolution plan, M/s Ruchi Soya Industries Ltd. is entitled to claim such deposit alongwith interest from the date of the deposit provided such claim were not part of the resolution plan.

 The team of Advocates on behalf of Ruchi Soya Ind Ltd was led by Mr. Parag P Tripathi, Sr Advocate assisted by Mr. Rajesh Rawal along with team of Advocates from Athena Legal represented by Mr. Simranjeet Singh, Mr. Gautam Talukdar, Miss Rhea Dube and external counsels Mr. Kunal Vaishnav and Miss Mishika

 

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(With input from news agency language)

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