Bombay High Court
Maha Mineral Mining And Benefication ... vs Gram Panchayat, Gowari, Thr. Its ... on 8 October, 2024
Author: Bharati Dangre
Bench: Bharati Dangre
2024:BHC-NAG:11478-DB
952-WP-1874-2024(J).odt 1
IN THE HIGH COURT OF JUDICATURE AT BOMBAY,
NAGPUR BENCH : NAGPUR.
WRIT PETITION NO. 1874 of 2024
Maha Mineral Mining and Benefication Private
Limited, through its authorised signatory,
having its office at 7th Floor, B-Wing,
Shriram Shyam Tower, Near NIT,
Kingsway, Nagpur-440 001. ... PETITIONER
Versus
Gram Panchayat, Gowari,
through its Secretary, having its office
at Gram Panchayat Gowari, Tehsil-Rajura,
District Chandrapur, Maharashtra. ... RESPONDENT
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Mr. Aniket S. Dabadghao with Mr. Chaitanya J. Dhruv, Advocates for
petitioner.
Mr. Bhupesh W. Patil, Advocate for respondent.
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CORAM :- BHARATI DANGRE AND ABHAY J. MANTRI, JJ.
DATE : 8th OCTOBER, 2024
JUDGMENT (Per BHARATI DANGRE, J.)
1. The petitioner Company, incorporated under the provisions of
the Companies Act, 2013 and in the business of coal beneficiation,
dedicated to the processing and enhancement of coal, has approached
this Court seeking a declaration that the demand notice and the
communication issued to it by Gram Panchayat, Gowari, through its
Secretary, Tahsil Rajura, District Chandrapur, be quashed and set
aside, being arbitrary, as the demand pertain to the dues for the period
prior to 2019 i.e. the period prior to the petitioner's acquisition of the
assets of the corporate debtor under the Insolvency and Bankruptcy
Code, 2016.
A declaration is sought by the petitioner that it is not liable to
pay any outstanding tax dues to the Gram Panchayat pertaining to the
period prior to its acquisition of the assets of the corporate debtor,
Gupta Global Resources Private Limited, under the IBC-2016.
2. We have heard Mr. Aniket Dabadgao along with Mr. Chaitanya
Dhruv learned counsel for the petitioner and Mr. Bhupesh Patil,
learned counsel for the respondent.
By consent of the respective counsel, the writ petition is taken
up for final hearing at the stage of admission and hence we issue
Rule , making it returnable forthwith.
3. We have prepared a distillate of the facts placed before us
through the petition and the arguments of the respective learned
counsel, since the petitioner has disputed the liability to pay the tax
dues sought to be recovered by the respondent Gram Panchayat and
the bare minimum facts are culled out as below:
(a) Gupta Global Resources Private Limited availed various credit
facilities from the banks/financial institutions. However, since it was
unable to repay the credit facilities, an application was filed under
Section 10 of the Insolvency and Bankruptcy Code, 2016 (referred to
as 'IBC' for the sake of convenience and brevity) before the National
Company Law Tribunal, Mumbai (referred to as 'NCLT' for the sake
convenience and brevity) for initiation of Corporate Insolvency
Resolution Process (CIRP). The petition was admitted by the NCLT on
04.10.2017 and an Interim Resolution Professional (IRP) was
appointed on the very same day.
(b) On appointment of the IRP, by publishing the announcement in
two newspapers, commenced the process on 10.10.2017, (i) by
intimating the commencement of CIRP against the corporate debtor
and (ii) calling upon the creditors to submit proof of claims, setting
out the last date of submission of the claims as 21.10.2017.
(c) A copy of the statement of claims submitted by the IRP was
published on the website of the Insolvency and Bankruptcy Board of
India on 09.03.2021, which included the claims of the State
Government Departments like; Sales Tax Department, Income Tax
Department, Commercial Tax Department, which was admitted by the
IRP.
(d) A Committee of Creditors (CoC) was formed comprising of
various financial creditors and the CoC appointed a Resolution
Professional to conduct the Corporate Insolvency Resolution Process in
accordance with the IBC.
(e) Since no resolution plan was approved in the meetings held by
the CoC, the Corporate Insolvency Resolution Process failed and the
NCLT by its order dated 28.08.2018 ordered for liquidation of the
corporate debtor - Gupta Global Resources Private Limited.
(f) By the order of liquidation passed by the NCLT, a Liquidator was
appointed, who as directed, issued a public announcement calling
upon proof of claims for various stakeholders of the corporate debtors,
on or before 27.09.2018 and this included the claims to be submitted
by operational creditors also. Admittedly, no claim was submitted by
the respondent-authority before the Liquidator for the alleged
recovery of the tax in terms of Maharashtra Village Panchayat Act,
1959, though the departments of the State Government including the
Sales Tax, the Income Tax staked their claims before the Liquidator
which came to be admitted.
The claims received were once again published on the website
of the Insolvency and Bankruptcy Board of India on 29.03.2022.
(g) In terms of Section 36 of the IBC, a Liquidator took the
possession of the assets of the company Gupta Global Resources
Private Limited, including the washery in question for sale through
e-auction on as is where is basis and the Liquidator called for sale of
set of assets collectively on slump sale basis through public
announcement on 15.05.2019.
(h) During the auction held on 03.06.2019, the petitioner placed
the highest bid and emerged as the successful bidder.
The Liquidator issued a letter of intent in favour of the
petitioner and called upon it to deposit amount towards sale
consideration and pursuant thereto, the sale certificate was issued in
favour of the petitioner on 31.08.2019.
[
4. It is in the above facts, the petitioner has pleaded that the
property in question upon which the respondent has sought to impose
and recover purported tax, more particularly described in Schedule 6
of the Sale Certificate executed by the Liquidator in favour of the
petitioner, it was specifically expressed in Clause 6, that the sale and
transfer of the assets of Gupta Global Resources Private Limited,
including the washery, shall remain free from all encumbrances and
shall be free from payment of any levies, taxes or dues levied on the
assets of Gupta Global Resources Private Limited.
It is the case of the petitioner that after execution of the Sale
Certificate, it acquired the property and the act of the respondent in
levying tax upon it, is unsustainable as during the entire Corporate
Insolvency Resolution Process (CIRP) and the subsequent liquidation
proceedings of Gupta Global Resources Private Limited, the
respondent though a creditor, failed to submit its claim for recovery of
taxes, under the provisions of the Maharashtra Village Panchayat Act,
1959.
5. The learned counsel for the petitioner has taken us
through the scheme of the IBC and highlighted the position of the
respondent in the context of an operational creditor of Gupta Global
Resources Private Limited and in the legal framework, by inviting our
attention to the actions of the respondent for recovery of the alleged
dues, he would invite our attention to Section 124 of the Maharashtra
Village Panchayat Act, 1959, which is a power of a Gram Panchayat
to levy taxes on buildings & lands and in terms whereof the tax can be
collected by issuing demand notice.
According to the petitioner, the Gram Panchayat, Gowari,
exercising this power had assessed and revised the tax levied on Gupta
Global Resources Private Limited, the erstwhile owner of the washery
in question, and determined the tax due and payable to be
Rs.1,46,954.42 (Rs.One Lakh Forty Six Thousand Nine Hundred and
Fifty Four) and issued a demand notice on 15.06.2012 calling upon
the Company to pay an amount of Rs.4,40,863.26 (Rs. Four Lakhs
Forty Thousand Eight Hundred Twenty Three and Twenty Six Paise)
towards the tax dues for the period from 2010-11 to 2012-13,
spanning over three financial years. However, the Company failed to
discharge its burden and in fact, the respondent did not take any step
to recover its dues by initiating any procedure against it nor did it
stand in queue when the notification was issued under the IBC,
initially by inviting claims from the creditors as per public
announcement dated 10.10.2017 and subsequently even when the
liquidation proceedings progressed.
6. The learned counsel in this background would submit that
when Gupta Global Resources Private Limited underwent liquidation
proceedings, pursuant to the order passed by the NCLT, and the assets
of the Company were put up for sale through e-auction on, 'as is
where is basis', the process being conducted by the Liquidator
appointed by the NCLT, the petitioner acquired the washery and the
assets of the Company vide the Sale Certificate dated 31.08.2019.
During the entire acquisition process, no claim or liability pertaining
to the purported tax dues owed to the respondent under the
Maharashtra Village Panchayat Act 1959 as indicated in the demand
notice or any other dues were brought in the approved resolution plan
or liquidation proceedings by sale of assets and the petitioner was
completely unaware of such dues.
However, only after the sale and acquisition of the assets on
25.09.2021, the petitioner received a notice from the respondent
seeking to recover an amount of Rs.36,25,400/- (Rs.Thirty Six Lakhs
Twenty Five Thousand and Four Hundred) towards tax dues under the
Maharashtra Village Panchayat Act, 1959 for the period from 2013-14
to 2021-22.
It is the specific case of the petitioner that this demand is
affecting the rights of the petitioner which it had acquired during the
liquidation process undertaken under the IBC-2016 and when the
respondent has failed to lodge its claim before the Liquidator, the
petitioner is not duty bound to satisfy the demand as regards the tax
payable before acquisition of the assets by the petitioner.
It is the specific case of the petitioner that the respondent has
continued to persist with its unlawful action by disregarding sanctity
of the process adopted under the Insolvency and Bankruptcy Code
2016 and once again on 31.12.2023 raised a demand of
Rs.47,05,868/- (Rs.Forty Seven Lakhs Five thousand Eight Hundred
Sixty Eight) by the demand notice dated 31.12.2023 demanding tax
from 2019 to 2024, despite the fact that the amount never formed a
part of the claim submitted in the Corporate Insolvency Resolution
Process or the subsequent liquidation proceedings of Gupta Global
Resources Private Limited.
7. We have perused the writ petition which is accompanied
with the orders passed by the NCLT, Mumbai Bench, from time to
time, when the Gupta Global Resources Private Limited approached
NCLT for initiation of the Corporate Insolvency Resolution Process,
and when it disclosed that a sum of Rs. 401.92 Crores was raised as
loan from various financial institutions and a sum of Rs.342.11 Crores
is in default as on 15.07.2017, the amount payable to different
operational creditors.
While admitting the petition filed by the corporate debtor, the
interim resolution professional was appointed to carry out the process
under the IBC.
Pursuant to the entire process being carried out, which included
the formation of CoC and the steps taken thereof under the IBC, our
attention is invited to the Sale Certificate issued in favour of the
petitioner, Clause 6 of which specifically contain the following
stipulation:
"6. That in accordance with the provision of the Insolvency
& Bankruptcy Code, 2016 and the Rules made thereunder
r/w Insolvency and Bankruptcy Board of India (Liquidation
Process) Regulation, 2016, the sale/transfer shall remain
free from encumbrances and also free from payment of
Non-Agricultural Assessment, Corporation Taxes, Cesses,
Electricity and Water Charges, Society's Dues duties, levies
levied on assets of Gupta Global Resources Private Limited
(in Liquidation)."
8. It is not in dispute that the respondent as an operational
creditor of Gupta Global Resources Private Limited, had a statutory
obligation under the IBC to submit its claim, if any, during the
Corporate Insolvency Resolution Process and the liquidation
proceedings.
The respondent do not deny that no such claim was ever
submitted. The respondent having failed to fulfill this obligation
mandated by the IBC, thus resulted in extinguishing of its claim, even
if it existed.
In the Scheme of the IBC-2016, Section 18 stipulates that the
interim resolution professional shall receive and collate all claims
submitted by the creditors pursuant to the public announcement.
Section 15 contemplates that the public announcement shall require
submission of claim before the IRP within a period of 14 days and in
the present case, though the IRP issued public notice on 10.10.2017,
despite being an operational creditor, to whom taxes were due and
payable under the Maharashtra Village Panchayat Act, 1959, the
respondent-Gram Panchyat failed to submit any claim, regarding such
outstanding dues within the stipulated period. Thereafter when the
corporate debtor went into liquidation, Section 38 made it imperative
for the Liquidator to consolidate the claims and issue public
announcement for submission of the claim within 30 days. The
Liquidator also gave/issued public notice on 30.08.2018 requiring the
claims to be submitted but the respondent failed to raise any claim
even at this time before the Liquidator.
The liquidation process moved ahead and the petitioner
acquired the assets, in due process and now the respondent want to
stake its claim for recovery of the amount of tax outstanding and
payable to it by the corporate debtor but once the petitioner has
acquired the assets of the corporate debtor, the claims, if any, which
were not raised, stand extinguished and the respondent cannot now
seek to recover those claims from the petitioner, who acquired the
assets of the corporate debtor through auction process under the IBC.
We have also noted that the Clause 6 of the sale certificate has
conferred the property upon the petitioner free of encumbrances and
free from payment of any tax, cess, charges, duty levied on the assets
and we find substance in the argument of the learned counsel for the
petitioner that the action of the respondent in seeking to recover the
outstanding tax due to it under the Maharashtra Village Panchayat
Act, 1959 payable before the initiation of CIRP cannot be sustained.
The petitioner who acquired the assets of Gupta Global Resources
Private Limited through the liquidation process in the year 2019 has
received the sale certificate on 31.08.2019 and therefore, it is
unflappable that the respondent can recover its outstanding dues
payable before this date.
The Scheme under the IBC, definitely do not permit such an
action.
9. Perusal of the scheme under the IBC and in particular Section
31, clearly prescribe that the resolution plan shall be binding on the
Central Government, State Government or any local authority
to whom a debt in respect of payment of dues arise under any law for
the time being in force and the retrospective applicability of 2019
amendment to Section 31 is upheld by the Apex Court in the case of
Ghanshyam Mishra & Sons Pvt Ltd vs. Edelweiss Asset Reconstruction
Company Ltd [(2021) 9 SCC 657]. The Apex Court has categorically
held that the amendment is clarificatory and declaratory in nature and
it would apply retrospectively even in relation to pending proceedings
and to the dues owed prior to the amendment.
Failure of the respondent to submit its claim during the
corporate insolvency resolution process of Gupta Global Resources
Private Limited, stands extinguished and so is the right to recover the
claim. It is not permissible for anyone to by-pass the Code by trying to
recover the amount as the respondent never stood in the queue before
the IBC proceedings as a creditor.
10. In Ghanshyam Mishra (supra), the provisions of the IBC-2016
received a thread bare interpretation and in particular Section 31
before and after its amendment by Act No.26 of 2019, by categorically
concluding that once the 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, State Government or any
local authority, guarantors and other stakeholders.
In clear terms the verdict record that on the date of approval of
the resolution plan by the adjudicating authority, all such claims,
which are not part of resolution plan, shall stand extinguished and no
person will be entitled to initiate or continue any proceedings in
respect of a claim, which is not part of the resolution plan.
[
11. One of the dominant object of the IBC is to see to it that an
attempt is made to revive the corporate debtor and make it a running
concern and since it contemplate that the resolution applicant has to
prepare a resolution plan on the basis of the information,
memorandum and which is expected to provide for the payment of
insolvency resolution process costs, implementation and supervision
resolution plan, once such a plan is approved, it shall bind to one and
all.
The conclusion derived by the Lordships of the Apex Court in
para 102.1 of the decision debars the respondent from opening up the
process, since it never staked its claim during the proceedings under
IBC-2016 and therefore, the claim stands extinguished, since it never
formed part of resolution plan and therefore, the respondent is not
entitled to recover any dues for the period prior to the date on which
the adjudicating authority granted its approval and permission to the
liquidation process and the sale certificate was issued to the petitioner.
12. Though we are convinced to quash and set aside the demand
notices, as regards the liability to be discharged by the corporate
debtor prior to the acquisition of its assets by the petitioner, by
following due process under the IBC-2016, we must clarify that, if the
petitioner has operated its unit within the jurisdiction of the
respondent, pursuant to its acquisition, and if any tax is due and
payable subsequent thereto, the petitioner shall discharge its liability
to that effect.
Our attention is invited to the order dated 18.03.2024 when the
petitioner made a statement that he is willing to deposit sum of
Rs.7,00,000/- (Rs. Seven Lakhs) towards discharge of liability of local
tax body for the period subsequent to the purchase of the property
from the Liquidator.
We are informed that in accordance with the said statement, the
petitioner has deposited an amount of Rs.7,00,000/-(Rs. Seven Lakhs)
with the respondent-Gram Panchayat, Gowari. We permit the Gram
Panchayat to adjust the said amount deposited, towards the tax due
and payable subsequent to the acquisition of the property and the
petitioner has in particular expressed no objection for the same.
13. With the aforesaid observations the rule is made absolute in
terms of prayer clause (a), (b) and (c) which reads below:
(a) Hold and declare that the demand notice dated
31.12.2023(Annexure-M) and communication dated
12.01.2024 (Annexure-N) issued by respondent to the petitioner
is bad in law, arbitrary and violative of Article 14 of the
Constitution of India in so far as demand for dues pertaining to
the period prior to 2019 i.e. period prior to the petitioner's
acquisition of the assets of corporate debtor under the
Insolvency and Bankruptcy Code, 2016;
(b) Hold and Declare that the petitioner is not liable to pay
any outstanding tax dues to the respondent pertaining to the
period prior to the petitioner's acquisition of the assets of
corporate debtor under the Insolvency and Bankruptcy Code,
2016;
(c) Issue a writ of mandamus or any other appropriate writ,
order or direction quashing and setting aside the impugned
demand notices dated 31.12.2023(Annexure-M) and
communication dated 12.01.2024 (Annexure-N) issued by the
respondent seeking to illegally recover tax dues pertaining to
period prior to 2019 i.e. period prior to the petitioner's
acquisition of the assets under the Insolvency and Bankruptcy
Code, 2016.
(ABHAY J. MANTRI, J.) (BHARATI DANGRE , J.)
Andurkar.
Signed by: Jayant S. Andurkar
Designation: PA To Honourable Judge
Date: 18/10/2024 11:19:23
