Appeal abates once NCLT approves Resolution Plan, says CESTAT in Patanjali Food’s Appeal [Read Order]

The Bangalore Bench of Customs, Excise & Service Tax Appellate Tribunal (CESTAT) held that the appeal would abate once resolution plans are approved by the National Company Law Tribunal. Therefore, the tribunal rejects Patanjali Food’s appeal.

The appellant, Patanjali Foods Limited, filed the appeal under Section 129A of the Customs Act, 1962 against the order of the Commissioner.

During the pendency of the appeal, Standard Chartered Bank filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, as the Financial Creditor for initiation of Corporate Insolvency Resolution Process against the appellant as Corporate Debtor. Necessary orders were passed by the National Company Law Tribunal. Later, the NCLT approved the Resolution Plan under Section 31(1) of the IBC, 2016, and passed the Order.

Consequent to the approval of the Resolution Plan, the appellant filed a miscellaneous application before this Tribunal.

The appellant argued that Rule 22 should be applicable the moment the successor interest with sufficient rights is appointed by NCLT to make an application for the continuation of the proceeding.

K.A. Jatin, appearing for the department, argued that once the Resolution Plan is approved by the NCLT, the appeals stand abated as per Rule 22 of CESTAT (Procedure) Rules, 1982, and the Tribunal becomes functus officio. It was observed by the tribunal that during the pendency of the appeal, necessary orders have been passed by the NCLT approving the Resolution Plan under Section 31(1) of the IBC, 2016.

After analyzing the arguments and submissions of both parties, the two-member bench of Dr. D. M. Misra, Member (Judicial), and R. Bhagya Devi, Member (Technical), observed that the appeal abates once the IRP is appointed and/or Resolution plan approved. As a result, the appeal is dismissed in accordance with CESTAT (Procedure) Rules, 1982, Rule 22, and this is the relief/Order that may be issued in accordance with the aforementioned Rule.

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