Appeal abates once CIRP is initiated, IRP appointed and Resolution Plan is approved: CESTAT [Read Order]

The Bangalore Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) ruled that the appeal abates once Corporate Insolvency Resolution Process (CIRP) is initiated, Insolvency Resolution Plan (IRP) appointed and resolution plan is approved.

During the pendency of the above Appeals, it is brought on record that one M/s Manjushree Travels, Bangalore vide C.P (IB) No. 315/BB/2019 (IMB Code) have initiated a Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor (Appellant) under Section 9 of the Insolvency and Bankruptcy Code 2016, before the National Company Law Tribunal (NCLT), Bangalore Bench.

The NCLT admitted the petition and appointed qualified Resolution Professional (RP) in respect of the appellants to carry out the CIRP as per IBC. The NCLT has declared moratorium prohibiting various actions against the appellant during this period. The Committee of Creditors agreed with the resolution plan submitted by the Resolution Professional for revival of the appellant company.

The appellant submitted that the NCLT order will be binding on the Corporate Debtor (Appellant) and its employees, members, creditors including the Central Government, any State Government or local authority to whom a debt in respect of payment of dues arising under any law for the time being in force as authorities to whom statutory dues are owed, guarantors, and other stakeholders involved in the resolution plan.

The appellant further submitted that the provisions of IBC, 2016 will have an overriding effect in terms of Section 238 of the IBC, 2016. Therefore, the order passed by the NCLT approving the resolution plan will be final and binding on the Government. Hence the present appeals as well as the demand proceedings do not survive and consequently the same abate.

A Two-Member Bench comprising D. M. Misra, Member (Judicial) and Pullela Nageswara Rao, Member (Technical) observed that “We are in agreement with the view consistently expressed by this Tribunal in a series of cases referred as above that the appeal abates once the CIRP is initiated and IRP appointed and/or Resolution Plan is approved. Consequently, the appeals filed by the Appellant and the Revenue abate as per Rule 22 of CESTAT (Procedure) Rules, 1982.”

To Read the full text of the Order CLICK HERE

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