An issue plaguing successful resolution applicants under the Insolvency and Bankruptcy Code, 2016 ("IBC") is with respect to government claims pertaining to the period prior to approval of the Resolution Plan. Government claims, such as those raised by the
It was the case of UNCL that the Resolution Plan and its provisions are binding on all the stakeholders of the Corporate Debtor. The Resolution Plan provided for payment of INR
a. The SLP filed by the Department challenging the order of the
b. A Resolution Plan approved by the
c. Section 31 of the IBC, as amended, also provides for the Resolution Plan to be binding on all stakeholders including the Central Government, any State Government or any local authority to whom a debt in respect of the payment of dues arising under any law for the time being in force, such as authorities to whom statutory dues are owed;
d. The Hon'ble Finance Minister also clarified the legislative intent behind the amendment to Section 31 of the IBC;
e. The resolution plan is final and binding on all parties whether or not they had been heard by the resolution professional or the COC, has been laid to rest by Hon'ble The
Mr.
The counsel for the Respondents opposed the Writ Petition on the following grounds:
a. The Department was not heard by the COC before finalising the Resolution Plan;
b. A summary rejection of the SLP preferred by the department against the resolution plan would not foreclose the right of the department to raise its valid demands from the successful resolution applicant.
The Bench comprising of Hon'ble Mr.
The Hon'ble HC, while relying heavily on the stance of the Hon'ble Finance Minister in the Rajya Sabha, and on the judgment of the Hon'ble Supreme Court in
"... the Respondents would be acting in a totally illegal and arbitrary manner while pressing for demands raised vide the notices which are impugned in this writ petition and any other demands which they may contemplate for the period prior to the resolution plan being finalized. The demand notices are ex-facie illegal, arbitrary and per-se and cannot be sustained."
The demand notices and orders were accordingly struck down. Also, the Hon'ble HC made the following observation:
"Before parting, we would like to express our serious reservation on the approach of the concerned Officers of the GST in persisting with the demands raised from the petitioner in gross ignorance of the pertinent statement made by Hon'ble the Finance Minister before the
Vaish Associates Advocates previously represented
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Mr.
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