Friday, 28 May 2021

Bank of India Vs. Aeon Manufacturing Private Limited - Reliefs & Concessions sought by Resolution Applicant and orders of AA thereof.

NCLT Kolkata (11.05.2021) in Bank of India Vs. Aeon Manufacturing Private Limited [IA (IB) No.279/KB/2021 in CP (IB) No. 683/KB/2018]. Resolution Applicant sought certain reliefs & concessions, which are being detailed below.


Excerpts of the order;

Reliefs and Concessions

# 23. The Reliefs, Concessions and Waivers sought by the Resolution Applicant from the Adjudicating Authority are set out below for the successful implementation of the Resolution Plan. The orders thereon are indicated against each.


S. No.

Relief sought

Orders of AA

1.

The approval of the Adjudicating  Authority and the CoC shall constitute adequate approval and cancellation of the existing share capital and accordingly, no approval/ consent shall be necessary from any other person/ governmental authority in relation to either of these actions under any agreement, the constitutional documents or under any Applicable Law. It is also

clarified that the Resolution Applicant shall not be required to deal with the dissenting / abstaining Financial Creditors in any manner other than as provided under the Code.

So far as share capital

is concerned, the company shall file all necessary forms along with applicable fee with the Registrar of Companies. 


So far as dealing with the any kind of creditors is concerned, it shall be strictly as envisaged under the Code.

2.

Approval of this plan shall be deemed approval for waiver from filing of statutory returns (including but not

limited to any filings for registrar of Companies, Direct and indirect tax authorities, plant related annual filings, etc.) for a period prior to the Approval date. Certified copy of the order approving Resolution Plan shall be a direction on such statutory authorities to allow AMPL to do compliance(s) with effect from and after the approval date.

This is upto the authorities concerned to consider.


3.

Approval of this plan shall be deemed approval for removal of directors from the record of the Company as appearing on the MCA portal/ website/ income tax website/ any indirect website. Certified copy of the order approving Resolution Plan shall be a direction on such statutory authorities to do the needful

The company shall file all necessary forms along with applicable fee with the Registrar of Companies.


4.

The change in the shareholding of the Corporate Debtor pursuant to this Resolution Plan approved by the Adjudicating Authority shall not result in lapse of any losses of the Corporate Debtor that are brought forward under the provisions of section 79 read with section 2(18) Income-tax Act,1961

The assessment concerns the corporate debtor and not the individual shareholders. Therefore, no orders are necessary on this score. 

5.

The requirement of obtaining a no objection certificate under section 281 of the Income-tax Act, 1961 and

provisions of taking over its predecessor’s Tax liability under section 170 of the Income-tax Act, 1961 shall not be applicable. Similarly, any requirements to obtain waivers from any Tax authorities including in terms of section 79 and section 115JB of the Income-tax Act, 1961, is deemed to have been granted upon approval of this Resolution Plan and with effect from the Approval Date.

This is upto the authorities concerned to consider.


6.

The Central Board of Excise and Customs to not void the transactions contemplated under the Resolution Plan (including a potential sale of Assets) under section 81 of the Central Goods and Service Tax Act, 2017 and not to impose any successor liability on the Resolution Applicant and/or the Corporate Debtor.

This is upto the authorities concerned to consider.


7(a).

For exemption from the provisions of Income Tax Act, 1961, including but not limiting to the provisions of Minimum Alternate Tax, arising as a result of giving effect to the Resolution Plan, including writeback of liabilities.

This is upto the authorities concerned to consider.


7(b)

For Claim set-off of the entire Minimum Alternate Tax (MAT) credit as available to the Corporate Debtor, against the normal income tax as would be payable by the Corporate Debtor post the Approval Date, i.e., no normal taxation should be applicable until the MAT credit is adjusted/utilised in full.

This is upto the authorities concerned to consider.


8.

Act as grant of exemption and relief to the Corporate Debtor from the provisions of ss.41(1), 45, 72(3), 43-B, 56, 79, 80 r/w139, 115JB, 269-SS, 269-T & 281 of Chapter XVII of the Income Tax Act, effective from the Approval Date for implementation of the Resolution Plan.

This is upto the authorities concerned to consider.


9.

All the assets of the Corporate debtor including but not limiting to the current assets, bank balances and fixed deposits will vest to the benefit of the Corporate Debtor and under control of the Resolution Applicant. Any attachment and/or freezing order against the assets of the Corporate Debtor by any authority, including but not limited to IT, GST, ED will stand vacated and the Corporate Debtor will be free to use the assets to it benefits to ensure that the unit continues to be a going concern.

Granted.

10.

On the date of Adjudicating Authority order approving the resolution 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, whether by contract or by applicable law shall be allowed to exist only to the extent of the balance amount as contemplated in the resolution plan due to the creditors and commenced by any person over any assets of the corporate debtor or over any securities of the corporate debtor shall stand irrevocably released and reversed upon full & final settlement of the dues of the secured FCs as contemplated in the resolution plan without the requirement of any further deed or actions on part of the RA.

Granted.

11.

The losses already lapsed/ not lapsed as on the date of approval of the Resolution Plan shall be allowed to be carried forward for a period of eight (8) Assessment Years from the Financial Year relevant to the Assessment Year in which Resolution Plan is approved.

This will be in accordance with the provisions of the Income Tax Act, 1961.


12.

There arising no liability of the Resolution Applicant in respect of any reassessment, reopening, revision, review or other proceedings under the Income-tax Act, 1961, or any other law or statute for any period prior to the Effective Date.

Strictly as envisaged under the Code


13.

There being waiver of interest and penalty on delayed payment of income tax and tax deducted at source, or any other statutory liability, if any, for any period prior to the Effective Date

This is upto the authorities concerned to consider.


14.

There being waiver of the penalty in respect of late filing of TDS returns or returns under any other law for any period prior to the Effective Date.

This is upto the authorities concerned to consider.


15.

There being waiver of the penalty levied under the Income Tax Act, 1961, and all pending penalty proceedings under the Income Tax Act, 1961 to stand closed.

This is upto the authorities concerned to consider.


16.

There being no issue to be raised by the Income Tax Department or any other Statutory body or authority under any law to question any acts, deed/s or thing/s as maybe carried out by the Corporate Debtor and/or any person in control of or acting under instruction of the Corporate Debtor or vice-versa, for which a demand, liability or charge can be framed on the Corporate Debtor; and accordingly, issues raised and/or proceeding outstanding or pending to stand closed and/or dropped, as the case maybe.

Granted.

17.

No claim, demand/ reassessment/ liabilities whether crystallised or otherwise, present or future, unseen or foreseen, by whatever name or under any head whatsoever will be raised by any creditors and/or statutory authorities including but not limiting to the Income Tax department pertaining to the period prior to the effective date after the Effective date. 

Strictly as envisaged under the Code.


18.

The Corporate Debtor and the Resolution Applicant shall not be required to deal with the Dissenting Financial Creditors in any manner other than as provided in the Code.

Since there are no dissenting financial creditors, the question does not arise.

19.

The approval of resolution Plan by Adjudicating Authority shall constitute adequate and final approval of the Adjudicating Authority for:(a) cancellation of the share capital of the Corporate Debtor (as may be agreed upon) in terms of provisions of the Companies Act, 2013 and other Applicable Law without any compliance of any provisions of the Act which shall stand exempted without any further actions on part of any Party; (b) for issuance of new Equity Shares/ preference shares and/or convertible securities as may be considered appropriate to issue in terms of the

Section 42 and Section 62(1)(c) of the Companies Act, 2013 and other Applicable Law and accordingly; and (c) the amount infused by the Resolution Applicant in the Corporate Debtor for payment of dues of financial creditors as per this Resolution Plan shall not be termed as deposits under section 73 to 76 of the Companies Act, 2013 and the rules made thereunder, shall be effective without following the provisions of the Companies Act, 2013, and that no approval/ consent shall be necessary from any otherPerson in relation to any of these actions including under any agreement, the constitution documents of the Corporate Debtor or any Applicable Law.

Granted, however, wherever applicable the company shall file all necessary forms along with applicable fee with the Registrar of Companies.


20.

Post approval of Resolution Plan by CoC, all the penal interest, interest, damages and penalties charged or chargeable for non-compliance of the various clauses of the SEBI (Listing Obligation and Disclosures Requirements) Regulations, 2015 and other SEBI Regulations read with SEBI Circulars issued thereunder (if applicable), including balance of the principal amount shall be treated as waived off/extinguished. All the compliances required to relist the Equity Shares of the company and to relist the new structure of equity shares of the company immediately upon filing of the NCLT approval order shall be exempted by stock exchanges in India.

In terms of the documents placed on record, this clause does not appear to be relevant


21.

All relevant authorities (including RBI) to waive and close matters and not to raise any fresh assessment/ demand pertaining to any and all non-compliances/ defaults/ dues of the Corporate Debtor prior to the Effective Date, including but not limited to those relating to Income Tax, Service Tax, Goods and Service Tax, Customs and Excise Act Foreign Exchange Management Act, Prevention of Money Laundering Act, PMLA, FEMA, CBI, Tax/ Value Added Tax Acts of the relevant State or the Central Government, Real Estate Regulatory Act of the relevant States or the CentralGovernment). All penalties, liabilities and claims by whatever name called, shall in relation to the aforesaid non-compliances/ demand/ defaults/ dues shall stand extinguished permanently. The Resolution Applicant shall be granted a waiver, from all actions, proceedings or penalties under any Applicable Law for any non- compliance, for an additional period of 12 (twelve) months starting from the day following the Effective Date, which is considered necessary and essential for the effective implementation of this Resolution Plan.

Strictly as envisaged under the Code.


22.

The Resolution Applicant is free to re-organise the business of the Corporate Debtor and to adopt suitable measure, including realigning the manpower requirement and changing the use of its land in such manner as is likely to benefit in the turnaround process of AMPL.

This is not in the nature of a waiver, concession or approval requiring approval of this Adjudicating Authority.

23.

All assets (including movable & immovable properties whether freehold, leasehold or license basis and intangible assets including technical knowhow, licenses, patents, copyrights, logo, knowledge, brand, franchise agreement etc.) held by the Corporate Debtor shall be re‐vested with the Corporate Debtor from the Effective Date, free and clear off all Encumbrances and with good and marketable title and

possession with full and unrestricted right to own, hold, possess, use for any purpose and transfer, deal with and dispose of the same or any portion thereof in any manner whatsoever without any interference or hindrance or requirement of any consent or no objection from any Person, except for charge created on Fixed Assets by respective Secured Lenders of the corporate debtor till the Closing Date.

This is not in the nature of a waiver, concession or approval requiring approval of this Adjudicating Authority.


24..

The Resolution Applicant shall not be liable for any advance licenses, EPCG benefit availed by the Corporate Debtor, which remained undischarged as on the Approval Date and there shall be complete waiver of any interest, penalty or prosecution against the Corporate Debtor, Resolution Applicant and its nominees. 

Strictly as envisaged under the Code.


25.

The Resolution Applicant (and its Affiliates) and any future buyers of the Assets of the Corporate Debtor shall not be liable, in any way, for any criminal proceedings or actions that have been initiated against the Corporate Debtor or its existing or former promoters, shareholder or directors, employees, officers, at any point of time, before or after the Approval Date.

This shall be in terms of section 32A of the Code.


26.

The Department of Registration and Stamps, local municipal taxes (if pending) and any other relevant authorities of West Bengal and/or Other State Governments where the Corporate Debtor or the Resolution Applicant carries on its business and operations or where its Assets are located, shall exempt the Resolution Applicant and the Corporate Debtor from the levy of stamp duty and fees,applicable in relation to this Resolution Plan and its implementation, including issuance of Equity Shares as provided in this Resolution Plan.

Not granted. The stamp duty and registration charges shall be payable wherever necessary. Local municipal taxes stand as operational debt in relation to the corporate debtor and

so shall be treated accordingly.


27.

The Ministry of Corporate Affairs shall exempt the Resolution Applicant and the Corporate Debtor from the levy of duties and fees applicable in relation to this

Resolution Plan and its implementation, including issuance of Equity Shares as provided in this Resolution Plan.

Not granted. All applicable fee and other charges shall be payable.


28(a).

Upon approval of the Resolution Plan by the Adjudicating Authority: 

moratorium granted to the Corporate Debtor from any actions/ penalties under any Laws for any noncompliance, existing on or prior to the Approval Date will continue from Approval Date to Effective Date and post Effective Date for such time as is considered necessary and essential for effective implementation of this Resolution Plan; and



The Adjudicating Authority is not expected to travel beyond the contours of the Code to accommodate such requests. The moratorium shall come to an end on the date of approval of the Resolution Plan, as envisaged under section 31(3)(a) of the Code.

28(b).

Upon approval of the Resolution Plan by the Adjudicating Authority: 

waiver shall be deemed to have been granted to the Corporate Debtor from all actions, proceedings or penalties under a Law for any non-compliance, post Effective Date, for such term as is considered necessary and effective implementation of this Resolution Plan.


Strictly as envisaged under the Code. Also, this is upto the authorities concerned

to consider. No blanket waivers can be granted at this stage.


29.

All relevant Governmental Authorities to grant relief/ waiver from payment of stamp duty for the successful implementation of the Plan, inter alia, including but not

limited to the increase in authorised share capital, issuance/ transfer of shares or debentures (optionally

convertible debentures/non-convertible debentures) etc.

Not granted.

30.

All Governmental Authorities (including but not limited to Income Tax Authority, Service tax Department, VAT Department and GST Department) to waive the non-compliances of the Corporate Debtor or further claims of the Governmental Authorities on the Corporate Debtor arising out of or in relation to the past claims, and/oractions, deed/s or thing/s prior to the Insolvency Commencement Date.


Strictly as envisaged under the Code. Also, this is upto the authorities concerned

to consider.


31.

All Governmental Authorities (including but not limited to Income Tax Authority, Service tax Department, VAT Department and GST Department) to provide relief to the Corporate Debtor from all past litigations pending and or proposed to be raised at different levels and provide waiver from tax dues, including interest and penalty on such litigations as on insolvency Commencement Date.

Strictly as envisaged under the Code. Also, this is upto the authorities concerned to consider.


32.

All creditors (including but not limited to the Financial Creditors and other Operational Creditors) of the Corporate Debtor shall withdraw all legal proceedings commenced against the Corporate Debtor in relation to claims, including proceedings commenced against the Corporate Debtor under Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and Recovery of Debt Due To Banks Act, 1993 within a period of ninety days of the Approval Date, and in the meanwhile the creditors shall not pursue the legal and other actions taken by any and/or all of them against the Corporate Debtor.

Granted.


33.

The Resolution Applicant seeks a time period of 12 months from the Approval Date to ensure compliances

in relation to the non- compliance of Applicable Laws by the Corporate Debtor pertaining to any period up to

Approval Date, which shall, if otherwise found to be as per information within the possession of the Resolution Applicant, be considered to be final and effective, without any further costs or liabilities or consequences. Further, the relevant Governmental Authorities shall not initiate any investigations, action or proceedings against the Resolution Applicant or the new management to be appointed by the Resolution Applicant (upon acquisition of control and management of the Corporate Debtor by the Resolution Applicant), including the members of the Reconstituted Board of Directors, in relation to any non-compliance with Applicable Laws by the Corporate Debtor pertaining to any period up to Approval Date, including waiver of penalty for any such non-compliance. 

Granted, but only in terms of section 31(4) of the Code, nothing more and nothing less.

34.

Neither the Resolution Applicant nor the Corporate Debtor nor their respective directors, officers, and employees to be appointed after the Approval Date, be liable for any violations, liabilities, penalties or fines with respect to or pursuant to the Corporate Debtor, amongst others to be extent they pertain to or relate to

requisite licenses and approvals required to undertake its business as per Applicable laws and the Resolution Applicant will have a time period of 12 months from the Approval Date, to ensure renewal of such consents/ licenses and approvals.

Granted.

35.

Licenses and approvals held by the Corporate Debtor which expired prior to the Approval Date or which will expire within a period of 12 (twelve) months thereafter shall be renewed/ extended by the relevant Governmental Authorities and the corporate Debtor shall continue its  business and assets in the manner as operated up to the Approval Date.

All such licences, permits and things of such nature shall be applied for afresh with the competent authority. The Code does not envisage automatic renewal.

36.

The Resolution Applicant assumes that, in compliance of its duties under Regulation 35A of the CIRP Regulations, the Interim Resolution Professional had determined whether the Corporate Debtor has been subjected to any transactions covered under sections 43, 45, 50 or 66 of the Code or not and applied to the Adjudicating Authority for seeking appropriate relief. Accordingly, though the Resolution Applicant reserve its right to institute any investigation pertaining to any transaction(s) carried out by the ex management of the Corporate Debtor or to file appropriate applications

before the court/ tribunal of competent jurisdiction as may be considered necessary for the purposes. The Resolution Applicant and its officers, directors, employees and the new management of the Corporate Debtor, shall not be considered liable or responsible for any such transactions carried out by the ex- management of the Corporate Debtor.

This is not in the nature of a waiver, concession or approval requiring the attention of this Adjudicating Authority at this stage


37.

With respect to any alleged transfer of property of the Corporate Debtor by the Corporate Debtor to third parties without any proper agreement/sublease deeds and where the consideration amount has not been paid to the Corporate Debtor, the Resolution Applicant reserves right to cancel such instruments/ agreements/ term sheets and upon cancellation the title in such land parcels will continue to be legally vested in the Corporate Debtor without any liability/ obligation to the counterparty or a claim of the latter or legal or other proceeding to be initiated by the latter, and the expression counter party and latter to mean and include any person acting through one or more of such person/s.

Any such transactions ought to have been identified by the resolution professional in the course of the CIRP. A carte blanche cannot be given in this regard.


38.

For the purpose of consolidation of the books of the Corporate Debtor with Resolution Applicant, the Effective Date shall be treated as the date on which Corporate Debtor shall issue its equity shares to the Resolution Applicant against upfront amount paid to the Financial Creditors in terms of this Resolution Plan, which eventually results in takeover of the Corporate Debtor by the Resolution Applicant on that day. 

Granted.

39.

For a period of three (3) years from the Approval Date the Resolution Applicant shall not in any manner be held to be ineligible in terms of Section 29-A of the Code on account of the implementation of this Resolution Plan.

Whatever is granted by the Code does not need specific approval of the adjudicating authority.

40.

The Adjudicating Authority be pleased to direct all relevant government authorities to provide/ extend to the Corporate Debtor all licenses, permits and approvals required by the Resolution Applicants for implementation of the terms of this Resolution Plan and for an efficient functioning of the business of the Corporate Debtor. Further, all licenses and permits required by the Corporate Debtor shall be continued to be made available to the Corporate Debtor.

The RA shall apply to the concerned authorities who shall then consider the application keeping in mind the objectives of the Code.


41.

Under the provisions of the Code, namely Section 31(4), a resolution applicant, pursuant to the resolution plan approved under sub-section (1) of section 31 of the Code, is required to obtain the necessary approval required under any law for the time being in force within a period of one year from the date of approval of the resolution plan by the adjudicating authority under sub-section (1) of section 31 of the Code or within such period as provided for in such law, whichever is later. Pursuant to the above, all concerned Governmental Authorities shall provide to the Corporate Debtor a period of one year after the approval of the Resolution Plan, to obtain all necessary approvals under the relevant Applicable Laws required for the purpose of implementation of this Resolution Plan, including continuing with the business of the Corporate Debtor. 

The RA shall apply to

the concerned

authorities who shall

then consider the

application keeping in

mind the objectives of

the Code.


42.

The local district administration of the respective States where the assets and/ or business activity of the Corporate Debtor are situated shall provide and extend assistance to the Resolution Applicant for the

implementation of the Resolution Plan.


In case any assistance is needed from any authority, the RA shall apply to the concerned authorities who shall then consider the application keeping in mind the objectives of the Code.

43.

The Resolution Applicant, their respective connected persons and related parties shall not be deemed to be ineligible under the provisions of the Code, namely section 29A, from proposing and/or implementing a resolution plan for any other entity/entities under the provisions of the Code and/ or any other Applicable Law based on the fact that they are Resolution Applicant and/ or connected person(s) and/or related party/ parties in respect of Resolution Plan of the Corporate Debtor.

Granted.

44.

That the concerned Registrar of Companies do waive off the fees as may be payable in course of implementation of the Resolution Plan including but not limiting to Fees and charges payable for increase in the Authorised Capital of the Corporate debtor in course of allotment of shares to Financial Creditors for the unsustainable Debts and also increase in authorised capital as maybe required in course of equity infusion by the Resolution Applicant.

No waiver of fee is granted. All applicable fee payable in this regard shall be paid to the Registrar of Companies


45.

That the concerned Registrar of Companies to associate the Directors Identification Numbers (DIN) of the Directors who would be taking charge collectively as Reconstituted Board of Directors of the Corporate Debtor pursuant to the approval of the Resolution Plan.


No approval from this adjudicating authority is required for this purpose. The RoC is expected to act in accordance with the statute, just as the applicants are expected to comply with all necessary formalities prescribed under the law.

46.

That the West Bengal State Electricity Distribution Company Limited be directed to approve the application for fresh power connection in the form as may be mandated forthwith to ensure that the units of the corporate debtor are functional

The RA shall apply to the concerned authorities who shall then consider the application keeping in mind the objectives of the Code.

47.

The change in ownership of the Corporate Debtor shall not be construed as a breach of legal obligation or as an event of default by any government/ statutory authority and the same shall not be used as a reason for non-grant/denial of extension of any no objection/ permission/ license as was granted to or is required to be granted to the Corporate Debtor, as the case maybe.

Granted. However, the RA shall apply to the concerned authorities who shall then consider the application keeping in mind the objectives of the Code.



# 28. Any relief sought in the Resolution Plan, in respect of any contract, agreement, understanding, proceeding, action, notice etc. not specifically identified, or is for a future contingency, is, at this point of time, rejected.


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Blogger’s Comments; As far as taxation & other liabilities of the CD of the period, prior to the date of commencement of CIRP are concerned, I am of the opinion that following relief could have been sought.

  • "All liabilities in respect of claims of FC, OC & other creditors, for the period prior to DOC, whether submitted or not submitted before IRP/RP, other than the claims taken into consideration in the Resolution PLan,  shall stand extinguished with the approval of resolution plan."


As far as "carry forward of losses" are concerned, following are the extracts from the Tutorial available at the website of “Income Tax Department".

  • SET OFF AND CARRY FORWARD OF LOSS UNDER THE INCOME-TAX ACT Special provisions relating to carry forward and set-off of losses in case of change in shareholding of certain companies

  • Section 79 of the Income-tax Act, 1961 provides for carry forward and set-off of losses where a change in shareholding has taken place in a previous year in case of following companies:- . .

  • However, the provisions of section 79 shall not apply in following cases. In other words, there shall be no restriction on carry forward and set-off of losses if;

  • a) the change in shareholding takes place consequent upon the death of a shareholder or on account of transfer of shares by way of gift to any relative of the shareholder making such gift;

  • b) the assessee is a subsidiary of a foreign company and the foreign holding company is amalgamated or merged with another foreign company subject to condition that 51% shareholders of the amalgamating or demerged foreign company continue to be the shareholders of the amalgamated or the resulting foreign company,

  • c) the change in shareholding take place in the previous year pursuant to approved resolution plan under the Insolvency and Bankruptcy Code, 2016 after affording a reasonable opportunity of being heard to the jurisdictional Principal CIT or CIT.

  • d) A company, and its subsidiary and the subsidiary of such subsidiary, where:

  • i. National Company Law Tribunal (NCLT), on a petition moved by the Central Govt., has suspended the board of directors of such company and has appointed new directors.

  • ii. Change in shareholding has taken place in a previous year pursuant to a resolution plan approved by the NCLT.

  • Change in the shareholding has taken place during the previous year on account of relocation referred to in the Explanation to clauses (viiac) and (viiad) of section 47.

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Case Law;

i). Hon’ble SCI (13.04.2021) in Ghanashyam Mishra and Sons Private Limited Vs. Edelweiss Asset Reconstruction Company Limited (Civil Appeal No. 8129 of 2019) held that; 

  • # 130. …………….. As such, when the resolution plan is approved by NCLT, the claims, which are not part of the resolution plan, shall stand extinguished and the proceedings related thereto shall stand terminated. Since the subject matter of the petition are the proceedings, which relate to the claims of the respondents prior to the approval of the plan, in the light of the view taken by us, the same cannot be continued. Equally the claims, which are not part of the resolution plan, shall stand extinguished.


ii). NCLT Mumbai-1 (19.05.2021) in Kamla Industrial Park Limited Vs, Monitoring Committee of Corporate Debtor & Registrar of Companies, [IA No. 1077 of 2020 in C.P. (IB) No. 1329/MB/2017] permitted following reliefs;

  • i. The present management of the Corporate Debtor shall be permitted to approve the Accounts and Returns of the Corporate Debtor for the period prior to 16.10.2019 in its next meeting. The Applicant shall file the relevant Returns and Statements for the period within three months hence. The action shall not invite any penalty whatsoever from the Respondent No. 2.

  • ii. The Corporate Debtor is permitted to file Accounts and Returns subsequent to 16.10.2019, within a period of three months hence and the same shall be accepted without any penalty.

  • iii. It is made clear that the present management of the Corporate Debtor shall not in any manner be held accountable for the default committed by the Corporate Debtor or its promoters / directors prior to 16.10.2019.

  • iv. The RoC (Respondent No. 2) or the appropriate authority shall consider accepting Returns and Statements in physical form in case of incompatibility in online submission / e-filing.


Observing that;

  • It is settled that when the technical considerations are pitted against the substantial justice, cause of substantial justice would be preferred. Therefore, interest of justice requires that the Applicant shall have to be provided with all the support for getting the statutory compliances done. 

  • The new management of the Corporate Debtor could not be held liable and responsible for the malfeasance and misfeasance committed by the former promoters / directors of the Corporate Debtor. It could not be saddled with the repercussions of reprehensible actions of the erstwhile management.

  • The new management of the Corporate Debtor could not be held liable and responsible for the malfeasance and misfeasance committed by the former promoters / directors of the Corporate Debtor. It could not be saddled with the repercussions of reprehensible actions of the erstwhile management.

  • The Hon’ble Court in Collector, Land Acquisition v. Mst. Katiji: AIR 1987 SC 1353 ruled that when substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred.


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The sole purpose of this post is to create awareness on the "IBC - Case Law" and to provide synopsis of the concerned case law, must not be used as a guide for taking or recommending any action or decision. A reader must refer to the full citation of the order & do one's own research and seek professional advice if he intends to take any action or decision in the matters covered in this post.