NCLAT (2024.05.20) in Superintendent of Stamps & Inspector General of Registration Vs. Avil Menezes (RP) [(2024) ibclaw.in 350 NCLAT, Comp. App. (AT) (Ins) No. 1591 of 2023 & I.A. No. 5750 of 2023 ] held that;
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 pop ping up which would throw into uncertainty amounts payable by a prospective resolution applicant who would successfully take over the business of the corporate debtor
After CoC approves the plan, the Adjudicating Authority is required to arrive at a subjective satisfaction, that the plan conforms to the requirements as are provided in subsection (2) of Section 30 of the I&B Code.
The legislative intent behind this is, to freeze all the claims so that the resolution applicant starts on a clean slate and is not flung with any surprise claims.
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.
Hon’ble Supreme Court of India in the matter of Committee of Creditors of Essar Steel India Limited (Supra) that claims after the Resolution Plan has been approved by the CoC should not be accepted.
Similarly, in RPS Infrastructure (Supra) the Hon’ble Supreme Court of India has again held that mere fact that the plan has not been approved by the Adjudicating Authority does not imply that plan can go back and forth thereby making the CIRP an endless process.
Excerpts of the order;
# 1. The present Appeal has been filed by Superintendent of Stamps & Inspector General of Registration (in short Appellant) under Section 61 of the Insolvency & Bankruptcy Code, 2016 (in short ‘Code’) in Company Appeal (AT) (Insolvency) No. 1591 of 2023 against the Impugned Order dated 12.10.2023 passed by the National Company Law Tribunal, Ahmedabad Bench (in short ‘Adjudicating Authority’) in IA No. 692 (AHM) of 2021 in CP (IB) No. 185 (AHM) of 2018. It has been brought out that the Appellant is the statutory body of the Government of Gujarat functioning under the provisions of the Gujarat Stamp Act, 1958.
# 2. Heard the Counsel for the Parties and perused the records made available including the cited judgements.
# 3. It is the claim of the Appellant that the Appellant had filed the claims of Rs. 15,38,79,179/- being in nature of Stamp Duty and Penalty, however only Rs. 2,65,00,000/- has been provided in the Resolution Plan under the caption “Land Payments and Stamps Duty” and did not consider remaining outstanding amount of stamp duty and fees.
# 48. The limited issue to be decided in the present appeal is regarding belated claims of the Appellant which has been filed by the Appellant in form ‘F’ on 23.03.2023 against the public announcement by the Respondent issued on 03.09.2020.
# 49. At first, we take up the objections of the Respondent that the Appellant filed the claims wrongly in Form-F and not Form B, hence, claims would not have been considered. We do not fine substance in this pleadings of the Respondent especially keeping in view the judgement of the Hon’ble Supreme Court of India in the matter of Greater Noida Industrial Development Authority Vs. Prabhjit Singh Soni & Anr. [(2024) INSC 102], where it was held that fling of claims the in wrong form can’t be a ground the reject the claims. Thus, this argument of the Respondent stand rejected.
# 50. We observe that the time is essence for resolution of the Corporate Debtor and if any plan is saddled with huge delays of more than 30 months as in present case, we are afraid that the resolution of the Corporate Debtor will never take off.
3 51. We have noted from the pleadings of the Appellant that he was informed for the first time by the Respondent on 17.02.2021 whereas which was much delayed after the public announcement on 03.09.2020. One query was raised by this Appellate Tribunal to the Appellant that even for argument’s sake the Appellant came to know only on 17.02.2021 why did the Appellant file the claim only on 23.03.2023 i.e., after more than 2 years and not immediately after 17.02.2021, the Appellant could not response properly on this pointed query. Thus, we note that there was no plausible reason for the Appellant to explain his conduct of filing such belated claims after 30 months of the public notice.
# 52. We observe that the demerger claim was approved by Hon’ble Gujarat High Court way back in 2012 and accordingly stamp duty was concluded. We also note that the Corporate Debtor sought an opinion from the relevant stamp duty authority who gave the opinion on 29.07.2013.
# 53. In this regard one more query was raised to the Appellant as to what action they have taken to recover their money since, 2012 and why the Appellant allowed such inordinate delay since 2012 for non collection or non realization of stamp duty. We note that the Appellant stated that his claims are to be treated at par with land revenue dues and the CIRP proceeding was initiated only in 2018. For this query of this Appellate Tribunal, no specific answer could be furnished by the Appellant to elaborate action taken by the Appellant in realising its dues even prior to initiation of the CIRP. We have already noted in previous paragraphs that even the claims were filed by the Appellant after 30 months of the CIRP.
# 54. At this stage, we would like to take into consideration the relevant portion of the approved Resolution Plan which deals with the Stamp Duty payment which reads as under:-
Section 3.4.4 of the Successful Resolution Plan
“the payment set out in the Financial Plan, shall be deemed to of the liabilities pertaining be in full and final settlement/discharge to the Other Operational Creditors’ Operational Debt and the Statutory Dues of the Statutory Dues Creditors in compliance with the Applicable Law”. (Emphasis Supplied)
Section 8.2 of Approved Resolution Plan
“(ee) Resolution Applicant or the Corporate Debtor shall not be liable to pay any amounts to the stamp authorities (including Stamp Duty Payments) howsoever arising as a result of any action taken by the Corporate Debtor or on behalf of the Corporate Debtor prior to and including the NCLT Approval Date with regard to the AACL Lands or any action in connection with acquisition /transfer of the AACL Lands in the name of the Corporate Debtor including if such past liability pertaining to the aforesaid period arises any time in the future post the NCLT Approval Date. The stamp authorities or other Governmental Authorities, being Operational Creditors shall be paid such amounts as set out in the Resolution Plan. On und from the NCLT Approval Date, the stamp authorities, Governmental Authorities being Operational Creditors (whether they have filed claims as Operational Creditors or not) shall waive and extinguish all claims against the Corporate Debtor and the Resolution Applicant, without any further act, deed or action required on the part of the Corporate Debtor and the Resolution Applicant, in respect of any payments (including the Stamp Duty Payments), defaults or arrangements made under the AMWL Demerger Scheme or any contracts, memorandums of understanding, documents or any agreements pertaining to the AACL Lands and Corporate Debtor Lands
(zz) On and from the NCLT Approval Date, as an integral part of implementation of the Resolution Plan, the AACL Lands shall be transferred to the Corporate Debtor to give effect of the AMWL Demerger Scheme, and the Governmental Authorities shall fully cooperate with the Resolution Applicant/Corporate Debtor for the same. No penalties, levies, fees, non-compliances for delayed filing and registration of the same (including Stamp Duty Payments) shall be levied by the Governmental Authorities and if any such amounts are levied/claimed, the same shall stand waived and extinguished in perpetuity. The Corporate Debtor shall make necessary applications to give effect to the same, if required.” (Emphasis Supplied)
# 55. From above it is clear that issue of the stamp duty was indeed provided in the Resolution Plan in the ambit of the Code and the same was considered by the CoC exercising their commercial wisdom and finally the Resolution Plan was approved by the Adjudicating Authority.
# 56. The Appellant has taken the plea that his claim cannot be barred under Section 14 of the Code as the demerger was sanction in the year 2012. In this regard, we would like to look into the provisions of Section 14 of the Code which reads as under ;- . . . .
# 57. We note from above that as per the Code, no pending proceedings can continue against the Corporate Debtor. As such the issue raised by the Appellant on this ground is not sustainable and stand rejected.
# 58. The point raised by the Appellant regarding is claim being covered under Section 3(6) of the Code definition of ‘Claim’ as well as in Section 3(4) as charged are not relevant, as it is not a question of claims not being considered but claim was considered in the Resolution Plan as feasible and also taking into account the belated claims by the Appellant almost after 30 months of the CIRP.
# 59. We observe that the Appellant cited a judgment of Hindustan Lever (Supra) where it was made clear that payment of Stamp Duty is must. This fact is again not found relevant as no one is disputing that the stamp duty is mandatory requirement but the fact remain how the stamp unpaid duties are to be covered in Resolution Plan and the impact of moratorium. Similarly, the judgement cited by the Appellant in the case of Uttar Pradesh (Supra) is also pronounced on its own facts and not applicable in the present appeal.
# 60. We also note that the Resolution Plan was approved by the Adjudicating Authority by vide Impugned order dated 12.10.2023 and it is seen that the total claims which was filed were of Rs. 1695.85 Crores and the claim of Rs. 1672.08 Crores were admitted. We also note that the CoC with requisite voting rights approved the Resolution Plan and thereafter the Respondent filed an I.A. No. 692 (AHM) 2021 in CP (IB) 185 of 2018 for Plan approved by the Adjudicating Authority. Thereafter the Adjudicating Authority approved the Resolution Plan of M/s Steel Strips Wheels Limited who propose to infuse Rs. 138.15 Crores. Obviously, the intended hair cut is being taken by all the Stakeholders including the Secured Financial Creditors, Operational Creditor and the Government dues. Therefore, the Appellant’s challenge on account of non-payment of full dues is not convincing.
# 61. We also note that in para 7 of the Impugned Order, the Adjudicating Authority had discussed the issue regarding claims of the Stamp Authority. This reads as under :-
“7. It is further noted that an affidavit as regards to the eligibility of the resolution applicant under Section 29A of the IB Code along with the undertaking of the resolution applicant to this effect has been filed. We have also perused the contents of the resolution plan, we are of the view that Regulations 36 to 39 of CIRP Regulations, 2016 have been complied with. We further noted that the resolution plan complies with all requirements under Section 30(2)(b) of the IB Code. The Resolution Plan has addressed the issue related to Paschim Gujarat Vij Company Ltd (IA – 10) on which orders of the Tribunal are pending and the claim of the Stamp Authority of Gujarat. It seems that interest of all stakeholders are taken care of. We also find that the resolution plan addresses the cause for failure and also contains measures to run the Corporate Debtor in future and that the resolution plan is both feasible and viable as held by CoC and it also contains provisions for its effective implementation. There is no reason to reject the resolution plan. Accordingly, we being satisfied, approve the Resolution Plan and pass the following order:*****
j) Exemption granted from levy of stamp duty and fees applicable in relation to Successful Resolution Plan and its implementation, including any stamp duty, registration costs and any fees payable to the Registrar of Companies other than that provided in the Resolution Plan;****
x) All unpaid liabilities and claims that are not filed with the RP before the approval of the resolution plan and those which are not included in the said resolution plan would stand extinguished. ***” (Emphasis Supplied)
# 62. Both the Appellant and the Respondent admitted that the I.A. No. 1092 of 2023 filed by the Appellant in CP (IB)/185/2018 is pending adjudication on similar grounds as raised by the Appellant in the present appeal. Although the aspect of pending I.A. No. 1092 of 2023 was pleaded by the Appellant, however, we note that the same has not been attached in the present Appeal and therefore, based on the submission made both the Appellant and the Respondent, we only note that I.A. No. 1092 of 2023 filed by the Appellant is still pending and we find note the pleadings of the Respondent that this appeal is premature.
# 63. We note that the claim was filed by the Appellant much beyond the date when the Resolution Plan was approved by the CoC. We also note that the Respondent, however disclosure the contingent liability to the perspective Resolution Applicants through financial statement that the Respondent is seeking a waiver of Stamp Duty Payments through the provisions of its Resolution Plan. The Respondent explained that though he sought exemption time the stamp duty however it was not a condition precedent for the implementation of the Resolution Plan and made clear that the denial of waiver by the Adjudicating Authority would only result in that the Stamp Duty Payments to be made by the SRA in accordance to the Resolution Plan.
# 64. We also note that in catena of Judgment of Hon’ble Supreme Court of India has held that SRA cannot be burdened with related undisputed claims after the Resolution Plan submitted by him has been approved by the CoC. Two of such judgment so the Hon’ble Supreme Court of India are as under :-
# 65. We take note that the Hon’ble Supreme Court of India in CoC of Essar Steel India Limited (Supra), held that:
“…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 pop ping up which would throw into uncertainty amounts payable by a prospective resolution applicant who would successfully take over the business of the corporate debtor…”. (Emphasis Supplied)
# 66. Similarly, in Ghanshyam Mishra (Supra), the Hon’ble Supreme Court of India held that:
“93….. After CoC approves the plan, the Adjudicating Authority is required to arrive at a subjective satisfaction, that the plan conforms to the requirements as are provided in subsection (2) of Section 30 of the I&B Code. Only thereafter, the Adjudicating Authority can grant its approval to the plan. It is at this stage, that the plan becomes binding on Corporate Debtor, its employees, members, creditors, guarantors, and other stakeholders involved in the resolution Plan. The legislative intent behind this is, to freeze all the claims so that the resolution applicant starts on a clean slate and is not flung with any surprise claims. If that is permitted, the very calculations on the basis of which the resolution applicant submits its plans, would go haywire and the plan would be unworkable
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.” (Emphasis Supplied)
# 67. It is the fact that the Resolution Plan was approved by the CoC much earlier then the claim submitted by the Appellant. The Resolution Plan is stated to have been implemented by the SRA.
$ 68. We have already noted that as per ratio decided by the Hon’ble Supreme Court of India in the matter of Committee of Creditors of Essar Steel India Limited (Supra) that claims after the Resolution Plan has been approved by the CoC should not be accepted. Similarly, in RPS Infrastructure (Supra) the Hon’ble Supreme Court of India has again held that mere fact that the plan has not been approved by the Adjudicating Authority does not imply that plan can go back and forth thereby making the CIRP an endless process.
$ 69. In view of above detailed discussions, we find no merit in the appeal. The appeal deserved to be dismissed and stand dismissed. No Costs. Interlocutory Application(s), if any, are Closed.
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