Gujarat High Court
M/S Technova Plastic Industries Pvt. ... vs State Of Gujarat on 24 January, 2025
Author: Bhargav D. Karia
Bench: Bhargav D. Karia
NEUTRAL CITATION
C/SCA/18368/2023 JUDGMENT DATED: 24/01/2025
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 18368 of 2023
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE BHARGAV D. KARIA
and
HONOURABLE MR.JUSTICE D.N.RAY
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Approved for Reporting Yes No
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M/S TECHNOVA PLASTIC INDUSTRIES PVT. LTD.
Versus
STATE OF GUJARAT & ORS.
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Appearance:
MR HARDIK P MODH(5344) for the Petitioner(s) No. 1
MS. SHRUNJAL SHAH, AGP for the Respondent(s) No. 1
NOTICE SERVED BY DS for the Respondent(s) No. 1,2,3
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CORAM:HONOURABLE MR. JUSTICE BHARGAV D. KARIA
and
HONOURABLE MR.JUSTICE D.N.RAY
Date : 24/01/2025
ORAL JUDGMENT
(PER : HONOURABLE MR.JUSTICE D.N.RAY)
1. Heard learned Advocate Mr. Hardik P. Modh for the Petitioner and learned AGP Ms. Shrunjal Shah for the Respondents.
2. Rule returnable forthwith. Learned Assistant Government Pleader Ms. Shrunjal Shah waives service of notice of rule on behalf of the respondents. With the consent of learned advocates for the respective parties, the matter is taken up for final hearing, as the Page 1 of 16 Uploaded by BINA SHAH(HC00353) on Wed Feb 12 2025 Downloaded on : Fri Feb 14 23:55:47 IST 2025 NEUTRAL CITATION C/SCA/18368/2023 JUDGMENT DATED: 24/01/2025 undefined issue involved is very short.
3. The petition is filed under Article 226 of the Constitution of India with a prayer to quash and set aside the Order dated 21.12.2016, passed by the respondent No.2. Accordingly, the following prayers have been made: -
"(a) That this Hon'ble Court be pleased to issue a Writ of Certiorari, or a Writ in the nature of Certiorari or any other appropriate writ, calling for the records in relation to Order dated 21.12.2016 passed by Respondent No.2 on the basis of which Entry No.13799 was made by the Respondent No.3 and after looking into the same and the legality thereof, this Hon'ble Court be pleased to quash and set aside the Order dated 21.12.2016 passed by Respondent No.2, on the basis of submissions herein above.
(b) That this Hon'ble Court be pleased to issue a Writ of Mandamus, or a Writ in the nature of Mandamus, or any other appropriate Writ, Order or direction, and 1) Quash and set aside the Order dated 21.12.2016 passed by Respondent No.2 on the basis of which Entry No. 13799 was made by the Respondent No.3;
(ii) Direct the Respondents to lift the attachment on land at Survey No. 2293 and 2295, Mauje: Rajpur, Taluka Kadi, District-Mehsana;
(iii) To delete the Entry No.13799 made on Survey No. 2293 and 2295 (earlier Survey No.1256 & 1261) by the Respondent No.3;
(c) That this Hon'ble Court be pleased to direct the Respondents to decide the representation filed by the Petitioner for removal of all attachment on land situated at Survey No. 2293 and 2295, Mauje:
Rajpur, Taluka Kadi, District- Mehsana;
(d) That pending the hearing and final disposal of the present Petition, this Hon'ble Court be pleased to direct the Respondents to Page 2 of 16 Uploaded by BINA SHAH(HC00353) on Wed Feb 12 2025 Downloaded on : Fri Feb 14 23:55:47 IST 2025 NEUTRAL CITATION C/SCA/18368/2023 JUDGMENT DATED: 24/01/2025 undefined remove the attachment on land situated at Survey No. 2293 and 2295, Mauje Rajpur, Taluka Kadi, District-Mehsana;
(e) for ad-interim relief in terms of prayer (d) above;
(f) for costs of the petition be provided; and
(g) for such further and other reliefs, as this Hon'ble Court may deem fit and proper in the facts and circumstances of the case.
4 The brief facts of the case are as under: -
4.1 The Petitioner i.e., M/s Technova Plastic Industries Pvt. Ltd., is inter-alia engaged in the business of manufacturing of flexible packaging materials. M/s Kankriya Enterprise Pvt. Ltd. was the successful Resolution Applicant who had taken over the Petitioner company above named pursuant to the Order dated 04.09.2020 passed by the National Company Law Tribunal, Ahmedabad (NCLT). The Petitioner is being run and managed by the new management.
4.2 Company Petition (IB) No. 189 of 2018 was filed against the Petitioner, before the NCLT, Ahmedabad for initiation of Corporate Insolvency Resolution Process (CIRP), under the Insolvency and Bankruptcy Code, 2016 (IBC). The petition was admitted by the NCLT on 12.11.2018. The Interim Resolution Professional (IRP) issued a public advertisement on 13.11.2018 for creditors to submit their claims under Section 15 of the IBC. Respondent No. 2 filed a claim of Rs. 6,45,42,576 on 12.12.2018, which was duly admitted by Page 3 of 16 Uploaded by BINA SHAH(HC00353) on Wed Feb 12 2025 Downloaded on : Fri Feb 14 23:55:47 IST 2025 NEUTRAL CITATION C/SCA/18368/2023 JUDGMENT DATED: 24/01/2025 undefined the Resolution Professional.
4.3 The Committee of Creditors (CoC) was constituted on 07.12.2018. Subsequently, the CoC replaced the IRP with a new Resolution Professional, as approved by NCLT on 19.06.2019. An Expression of Interest (EOI) was invited on 25.06.2019, and one Kankriya Enterprises Pvt. Ltd. submitted a Resolution Plan, which was approved by the CoC on 19.09.2019. The Resolution Professional filed an application for approval of the Resolution Plan under Section 30(6) of the IBC, which considered all claims, including that of Respondent No. 2.
4.4 The Resolution Plan was approved, and the Petitioner agreed to pay Rs.70,90,87,347/- to its creditors, including Respondent No.
2. Kankriya Enterprises Pvt. Ltd., who implemented the Resolution Plan and paid the stipulated amounts to all stakeholders, including Respondent No. 2.
4.5 During the implementation of the Resolution Plan, it was discovered that Respondent No. 2 had attached the Petitioner's land at Survey No. 2293 and 2295 (Mauje Rajpur, Taluka Kadi, District Mehsana) under the Gujarat Value Added Tax Act for arrears of VAT and penalties amounting to Rs. 4,91,00,000/-
4.6 On 06.05.2021, the Petitioner informed Respondent No. 2 about the successful Resolution Plan and requested the removal of Page 4 of 16 Uploaded by BINA SHAH(HC00353) on Wed Feb 12 2025 Downloaded on : Fri Feb 14 23:55:47 IST 2025 NEUTRAL CITATION C/SCA/18368/2023 JUDGMENT DATED: 24/01/2025 undefined the attachment on the property. A further representation was made on 05.06.2021, citing the Supreme Court's decision in Essar Steel India Ltd. v. Satish Kumar Gupta reported in (2019) 111 taxmann.com 234 (SC) to support the claim for a clean slate for the Resolution Applicant. Respondent No. 2 did not respond to the request and stated that they would take action after the resolution of the appeal before the National Company Law Appellate Tribunal (NCLAT).
4.7 The Petitioner addressed another letter on 20.07.2023 requesting the removal of the attachment, but no response or reasons were provided by Respondent No. 2. The Petitioner also sought a copy of the attachment order dated 21.12.2016 from Respondent No. 2 on 30.09.2023 (sent on 04.10.2023), but did not receive the same.
4.8 Respondent No. 2 filed three additional claims before the Resolution Professional, which were rejected due to substantial delay in submission.
4.9 Respondent No. 2 filed an interlocutory application (IA No. 344 of 2020) before NCLT, which was dismissed on 17.03.2021, as the claims were not filed within the prescribed timelines. Aggrieved by this, Respondent No. 2 filed an appeal before the NCLAT, which was dismissed on 25.01.2023 for non-prosecution.
5. Mr. Hardik P. Modh, learned Counsel appearing for the Page 5 of 16 Uploaded by BINA SHAH(HC00353) on Wed Feb 12 2025 Downloaded on : Fri Feb 14 23:55:47 IST 2025 NEUTRAL CITATION C/SCA/18368/2023 JUDGMENT DATED: 24/01/2025 undefined petitioner submitted that, being the Successful Resolution Applicant (SRA), the petitioner is entitled for the clear title over the land which is being attached by the respondent No.2 5.1 According to Mr.Modh, learned Counsel, the SRA can neither be saddled with the additional claims once the resolution plan has been accepted and approved by NCLT, nor can the attachment over the land be continued and all the claims and dues including the statutory dues, 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 of approval of the resolution plan under Section 31 of the Insolvency & Bankruptcy Code, 2016 (for short "IBC"), would be continued.
5.2 Mr. Modh, learned Counsel, referred to and relied upon the judgment of the Hon'ble Apex Court in the Committee of Creditors of Essar Steel India Ltd. Vs. Satishkumar Gupta and others reported in (2020) 8 SCC 531, as also in the case of Ghanshyam Mishra and Sons Pvt. Ltd. Vs. Edelweiss Asset Reconstruction Company Ltd. and others reported in (2021) 9 SCC 657.
6. Ms. Shrunjal T.Shah, learned Assistant Government Pleader appearing for the respondents-State countering the submissions of Mr. Modh, learned Counsel, submitted that the total claim of the respondent No.2 is amounting to Rs.37,08,13,619/- out of which Page 6 of 16 Uploaded by BINA SHAH(HC00353) on Wed Feb 12 2025 Downloaded on : Fri Feb 14 23:55:47 IST 2025 NEUTRAL CITATION C/SCA/18368/2023 JUDGMENT DATED: 24/01/2025 undefined only an amount of Rs.6,45,42,576/- had been admitted and there too, the resolution plan considered the claim of the respondents -State as that of unsecured creditors. According to Ms. Shah, learned AGP, the subsequent decision of the Hon'ble Apex Court in the case of State Tax Officer Vs. Rainbow Papers Ltd., reported in (2023) 9 SCC 545 was squarely applicable to the facts of the present case where the claim of the State Tax Department should have been classified as a security interest and the State should have been a secured creditor for the purposes of the Corporate Insolvency Resolution Process (CIRP).
6.1 She further submitted that, the approval of the resolution plan is in the teeth of the decision of the Hon'ble Apex Court in the case of Rainbow Papers (Supra), and therefore the present petition should be dismissed.
7. DISCUSSION & FINDINGS :-
The resolution plan has approved by the NCLT on 04.09.2020 categorically contains the following:-
ANNEXURE-4- EXTINGUISHMENT OF CLAIMS
1. Other than Persons receiving settlements under Annexure 1 (Financial Plan), no other payments or settlements (of any kind) shall be made to any other Person in respect of Claims filed under the CIRP and all Claims (including, for the avoidance of doubt, any unverified portion of their Claims) against the Corporate Debtor along with any related legal proceedings, including criminal proceedings, shall stand irrevocably and unconditionally abated, settled and extinguished in perpetuity on the Effective Date and Page 7 of 16 Uploaded by BINA SHAH(HC00353) on Wed Feb 12 2025 Downloaded on : Fri Feb 14 23:55:47 IST 2025 NEUTRAL CITATION C/SCA/18368/2023 JUDGMENT DATED: 24/01/2025 undefined discharge of creditors (including but not limited to Financial Creditors and Operational Creditors) in the manner set out in Annexure 1 (Financial Plan).
2. The payment to Persons contemplated in Annexure 1 (Financial Plan) shall be the Corporate Debtor's and Resolution Applicant's full and final performance and satisfaction of all its obligations to such Persons and all claims (including, for the avoidance of doubt, any Unverified portion of their Claims) of such Persons against the Corporate Debtor shall stand irrevocably and unconditionally settled and extinguished in perpetuity on the Effective Date and discharge of creditors (including but not limited to Financial Creditors and Operational Creditors) in the manner set out in Annexure 1 (Financial Plan).
3. The Interim Resolution Professional / Resolution Professional issued a notice dated November 13, 2018 inviting all potential claimants to submit their proofs of Claim. This was published in newspapers in accordance with Applicable Law. The Resolution Plan is being proposed in order to restructure the assets and liabilities of the Corporate Debtor and for the best interests of stakeholders of the Corporate Debtor to the extent possible. With this objective, the Resolution Applicant assume that all creditors of the Corporate Debtor having any Claims have filed their Claims and the verifiable Claims have been admitted by the Resolution Professional and disclosed in the Information Memorandum.
Accordingly, the Resolution Applicant and the Corporate Debtor shall have no responsibility or liability in respect of any Claims against the Corporate Debtor attributable to the period prior to the Effective Date other than any payments to be made under Annexure 1 Financial Plan) and all Claims along with any related legal proceedings, including criminal proceedings, shall stand irrevocably and unconditionally abated, settled and extinguished in perpetuity.
4. Upon the approval of the Resolution Plan by the NCLT under Section 31 of the Code, all pending proceedings relating to the winding-up of the Corporate Debtor, if any, shall stand irrevocably and unconditionally abated in perpetuity, and all violation or breach of any agreement of the Corporate Debtor shall stand condoned or waived, and such agreements shall be treated as if no Page 8 of 16 Uploaded by BINA SHAH(HC00353) on Wed Feb 12 2025 Downloaded on : Fri Feb 14 23:55:47 IST 2025 NEUTRAL CITATION C/SCA/18368/2023 JUDGMENT DATED: 24/01/2025 undefined violation or breach has ever been committed.
5. On the Effective Date and discharge of creditors (including but not limited to Financial Creditors and Operational Creditors) in the manner set out in Annexure 1 (Financial Plan), all encumbrances, security interest, liens and/or attachments (including pursuant to Applicable Law) created or suffered to exist over the assets of the Corporate Debtor or over the securities of the Corporate Debtor, whether by contract or by Applicable Law, shall stand Unconditionally and irrevocably released and all enforcement commenced by any Person over any of the assets of the Corporate Debtor or over any securities of the Corporate Debtor shall stand released and reversed, without the requirement of any further deed or action on part of the Resolution Applicant or the Corporate Debtor.
6. On the Effective Date, the guarantors that have provided guarantees for and on behalf of and in order to secure the debt availed of by the Corporate Debtor shall not be entitled to exercise any subrogation rights in respect of such guarantees. No settlement amount is payable to them against guarantors' subrogation rights. On the Effective Date, all rights and claims (whether contingent or otherwise) of whatsoever nature of every member of the promoter group of the Corporate Debtor against the Corporate Debtor and its Subsidiaries (existing as well as to be incorporated in terms of this Resolution Plan) shall stand irrevocably and unconditionally extinguished in perpetuity.
7. On the Effective Date, all the outstanding negotiable instruments issued by the Corporate Debtor or by any Person on behalf of the Corporate Debtor including demand promissory notes, post-dated cheques and letters of credit, shall stand terminated and the Corporate Debtor's liability under such instruments shall stand extinguished.
8. On the Effective Date, the rights of any Person (whether exercisable now or in the future and whether contingent or not) to call for the allotment, issue, sale or transfer of shares or loan capital of the Corporate Debtor, whether on a change of control, or otherwise, shall stand unconditionally and irrevocably extinguished.
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9. Any and all other claims (whether contingent or crystallised, known and unknown, disputed or undisputed, asserted or unasserted, present or future and whether or not filed) of Governmental Authorities in relation to all Taxes, duty, penalties, interest, fines, cesses, unpaid TDS/TCS which the Corporate Debtor was or may be liable to pay, the period prior to the Effective Date shall stand extinguished on the Effective Date by virtue of the order of the NCLT approving the Resolution Plan and the Corporate Debtor should not be liable to pay any amount against such demand, but for the provision made in Annexure -2 (Financial Plan). All assessment/appellate or other proceedings pending on the Effective Date relating to period prior to the Effective date, shall stand terminated and all consequential liabilities, if any should be deleted and waived off and should be considered to be not payable by the Corporate Debtor by virtue of the order of the NCLT. All notices proposing to initiate any proceedings against the Corporate Debtor in relation to any period prior to the Effective Date and pending on that date, shall be considered deleted and should not be proceeded against the Corporate Debtor. Post Effective Date, no re-assessment/revision or any other proceedings under the provisions of Income-tax Act, 1961 should be initiated on the Corporate Debtor in relation to the period prior to Effective Date and any consequential demand should be considered non-existing as deleted and waived and not payable by the Corporate Debtor. Any proceedings which were kept in abeyance in view of IB process or otherwise should not be revived post the Effective date.
10. All liabilities arising on account of failure to deduct/withhold taxes on any payment either partially or fully, made by the Corporate Debtor and pay such amount withheld within appropriate time to the Government either partially or fully, and any other non-compliance with respect to withholding Taxes as required under Applicable Law pertaining to the period prior to the Effective Date shall stand extinguished on the Effective Date by virtue of the NCLT order approving Resolution Plan.
11. All liabilities (whether contingent or crystallised) in relation to any corporate guarantees, indemnities and all other forms of credit support provided by the Corporate Debtor prior to the Effective Page 10 of 16 Uploaded by BINA SHAH(HC00353) on Wed Feb 12 2025 Downloaded on : Fri Feb 14 23:55:47 IST 2025 NEUTRAL CITATION C/SCA/18368/2023 JUDGMENT DATED: 24/01/2025 undefined Date shall stand extinguished and discharged on the Effective Date and discharge of creditors (including but not limited to Financial Creditors and Operational Creditors) in the manner set out in Annexure 1 (Financial Plan)
12. On the Effective Date and discharge of creditors (including but not limited to Financial Creditors and Operational Creditors) in the manner set out in Annexure 1 (Financial Plan), any and all rights and entitlements (including right to convert debt into equity, right of recompense under any restructuring/financing agreement or any remedy available pursuant to any default (whether financial or otherwise) by the Corporate Debtor or the existing promoters or any third party in relation to any loans or other financial debt availed by the Corporate Debtor, under any loan documents, restructuring agreements, guarantees, undertaking, or other financing agreements/ arrangements (including any side letter, letter of comfort, letter of undertaking etc)) of any actual or potential Financial creditors of the corporate Debtors not addressed in Annexure 1 (Financial Plan), whether admitted or not, due or contingent, asserted or unasserted, crystallized or uncrystallised, known or unknown disputed or undisputed, present or future, in relation to any period prior to the Effective Date or arising on account of the acquisition of control by the Resolution Applicant over the Corporate Debtor, shall be deemed to be permanently extinguished by virtue of the order o the NCLT and the Corporate Debtor or Resolution Applicant shall at no point of time, directly or indirectly, have any obligation, liability or duty in relation thereto.
8. In the Financial Plan, the following is noted :-
"3.8 Outstanding Government dues, Taxes (Statutory Dues) and Operational Creditors As per the Information Memorandum, claims received and admitted from various Government Authorities towards dues and taxes and Operational Creditors is Rs. 52,92,34,782/-
Resolution Applicant shall pay total amount of Maximum of Rs. 1,02,30,000 (Indian Rupees One Crore Two Lakhs Thirty Thousand Only) or the liquidation value allocable towards the statutory dues, whichever is higher on pro-rata basis, is proposed to Page 11 of 16 Uploaded by BINA SHAH(HC00353) on Wed Feb 12 2025 Downloaded on : Fri Feb 14 23:55:47 IST 2025 NEUTRAL CITATION C/SCA/18368/2023 JUDGMENT DATED: 24/01/2025 undefined made towards claims as mentioned above in full and final settlement of the Statutory Dues, Claims and operational Creditors in relation thereto stated in the admitted claims by above statutory authorities and operational creditors.
Amount due to Operational Creditors and statutory dues proposed to be made in priority to be financial creditors.
9. Thus, it is clear that on the approval of the resolution plan, out of the total admitted dues of Rs.52,92,34,782/- due to the Government Authorities and Operational Creditors, a sum of Rs.1,02,30,000/- has only been set aside for payment on pro-rata basis towards such creditors.
10. The Hon'ble Apex Court in the case of Essar Steel India Ltd. Committee of Creditors vs. Satish Kumar Gupta, (2020) 8 SCC 531, has held as under:-
"105. Section 31(1) of the Code makes it clear that once a resolution plan is approved by the Committee of Creditors it shall be binding on all stakeholders, including guarantors. This is for the reason that this provision ensures that the successful resolution applicant starts running the business of the corporate debtor on a fresh slate as it were. In SBI v. V. Ramakrishnan, this Court relying upon Section 31 of the Code has held: (SCC p. 411, para
25) "25. Section 31 of the Act was also strongly relied upon by the respondents. This section only states that once a resolution plan, as approved by the Committee of Creditors, takes effect, it shall be binding on the corporate debtor as well as the guarantor. This is for the reason that otherwise, under Section 133 of the Contract Act, 1872, any change made to the debt owed by the corporate debtor, without the surety's consent, would relieve the guarantor Page 12 of 16 Uploaded by BINA SHAH(HC00353) on Wed Feb 12 2025 Downloaded on : Fri Feb 14 23:55:47 IST 2025 NEUTRAL CITATION C/SCA/18368/2023 JUDGMENT DATED: 24/01/2025 undefined from payment. Section 31(1), in fact, makes it clear that the guarantor cannot escape payment as the resolution plan, which has been approved, may well include provisions as to payments to be made by such guarantor. This is perhaps the reason that Annexure VI(e) to Form 6 contained in the Rules and Regulation 36(2) referred to above, require information as to personal guarantees that have been given in relation to the debts of the corporate debtor. Far from supporting the stand of the respondents, it is clear that in point of fact, Section 31 is one more factor in favour of a personal guarantor having to pay for debts due without any moratorium applying to save him."
106. Following this judgment in V. Ramakrishnan case, it is difficult to 9 accept Shri Rohatgi's argument that that part of the resolution plan which states that the claims of the guarantor on account of subrogation shall be extinguished, cannot be applied to the guarantees furnished by the erstwhile Directors of the corporate debtor. So far as the present case is concerned, we hasten to add that we are saying nothing which may affect the pending litigation on account of invocation of these guarantees. However, NCLAT judgment being contrary to Section 31(1) of the Code and this Court's judgment in V. Ramakrishnan case27. is set aside.
107. For the same reason, the impugned NCLAT judgment in holding that claims that may exist apart from those decided on merits by the resolution professional and by the Adjudicating Authority/Appellate Tribunal can now be decided by an appropriate forum in terms of Section 60(6) of the Code, also militates against the rationale of Section 31 of the Code. A successful resolution applicant cannot suddenly be faced with "undecided" claims after the resolution plan submitted by him has been accepted as this would amount to a hydra head popping up which would throw into uncertainty amounts payable by a prospective resolution applicant who would successfully take over the business of the corporate debtor. All claims must be submitted to and decided by the resolution professional so that a prospective resolution applicant knows exactly what has to be paid in order that it may then take over and run the business of the corporate debtor. This the successful resolution applicant does on a fresh slate, as has been pointed out by us hereinabove.
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(Emphasis added)
11. In Edelweiss (Supra) the Hon'ble Apex Court has held as under :-
"102. In the result, we answer the questions framed by us as under:-
102.1 That, once a resolution plan is duly approved by the Adjudicating Authority under subsection (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 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:
102.2 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 I&B Code has come into effect;
102.3 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.Page 14 of 16 Uploaded by BINA SHAH(HC00353) on Wed Feb 12 2025 Downloaded on : Fri Feb 14 23:55:47 IST 2025
NEUTRAL CITATION C/SCA/18368/2023 JUDGMENT DATED: 24/01/2025 undefined 103 In the light of what has been held by us hereinabove, we now proceed to decide individual matters."
(Emphasis added)
12. The Hon'ble Apex Court in Rainbow Papers (Supra) has held as under:
"48. A resolution plan which does not meet the requirements of sub-section (2) of Section 30 IBC, would be invalid and not binding on the Central Government, any State Government, any statutory or other authority, any financial creditor, or other creditor to whom a debt in respect of dues arising under any law for the time being in force is owed. Such a resolution plan would not bind the State when there are outstanding statutory dues of a corporate debtor."
13. The decision in the case of Rainbow Papers (Supra) in no way upsets the scheme of CIRP, as laid down in the case of Essar and Edelweiss (Supra). Rainbow Papers (Supra) rather is a decision which may be applied at the stage of admission of claims by the Resolution Professional and the treatment of such claim by the Committee of Creditors. However, once the resolution plan is approved, then the liabilities of the creditors are frozen, and debts which are not taken care of in the resolution plan are extinguished in terms of the resolution plan. There is nothing on record to show that the learned NCLAT or the Hon'ble Supreme Court has interfered with the approval of the Resolution Plan, approved by the learned NCLT.
14. In view of the aforesaid position in facts and law, the submission of Ms. Shah, learned AGP, cannot be accepted and the Page 15 of 16 Uploaded by BINA SHAH(HC00353) on Wed Feb 12 2025 Downloaded on : Fri Feb 14 23:55:47 IST 2025 NEUTRAL CITATION C/SCA/18368/2023 JUDGMENT DATED: 24/01/2025 undefined petition must succeed and is accordingly allowed. The impugned order dated 21.12.2016 passed by the Respondent No.2 is hereby quashed and set aside. Rule is made absolute to the aforesaid extent. No order as to costs.
(BHARGAV D. KARIA, J) (D.N.RAY,J) BINA SHAH Page 16 of 16 Uploaded by BINA SHAH(HC00353) on Wed Feb 12 2025 Downloaded on : Fri Feb 14 23:55:47 IST 2025