Income Tax Dues before Approval of Resolution Plan By NCLT: Delhi HC Dismisses Appeal [Read Order]

The Delhi High Court closed the appeal as the Income Tax dues were before the approval of the resolution plan by the National Company Law Tribunal(NCLT).

 The appellant/revenue challenged the order passed by the Income Tax Appellate Tribunal [“Tribunal”] which was in favour of Jubilant Energy Kharsang (P) Ltd, the respondent. The appeal was listed before the court for a hearing for the first time on 20.11.2017.  Since the matter could not be taken up on that date, it was listed on 23.01.2018.  

On 23.01.2018, notice was issued in the appeal, which was made returnable on 24.04.2018.  Since service was not effected fresh notice was issued on 07.09.2018, which was returnable on 19.12.2018.   Service was ultimately completed on 13.03.2019. This is reflected in the order passed by the concerned Registrar on the said date.  

A substantive hearing in the matter was held on 25.07.2023 before this bench when the counsel for the respondent/assessee informed the court that a modified resolution plan was passed by the National Company Law Tribunal [“NCLT”] on 04.02.2020. Furthermore, the court was also informed that in the resolution plan, as approved by the NCLT, there was no provision made vis-à-vis statutory dues. 

Mr Shailendera Singh, senior standing counsel, who appears on behalf of the appellant/revenue, sought accommodation to obtain instructions as to whether the appellant/revenue would want to press the appeal.   

Mr Rohit Jain, the counsel, who appeared on behalf of the respondent/assessee, contended that under the direction, a compendium of documents was filed, which includes the “public announcement notice” dated 19.03.2017, issued by the RP. 

A perusal of the said notice discloses that the RP called upon various categories of creditors, which included operational creditors, financial creditors as well as workmen and employees to file their respective proof of claim on or before 31.03.2017.  

The appellant/revenue did not lodge its claim before the RP.  The record shows that insofar as the respondent/assessee is concerned, the Corporate Insolvency Resolution Process [“CRIP”] commenced on 19.03.2017.  

The propounder of the resolution plan i.e., an entity going by the name Atyant Capital India Fund-1 presented a plan.  This plan in the first instance was approved by the NCLT on 15.12.2017. The plan was, however, modified on 13.06.2019.  The result was that the amount that the secured creditors were to receive under the original plan, which was Rs.81 crores, was enhanced to Rs.123.1 crores.  

It would be evident from the above extract that there was no provision made, inter alia, for statutory claims.   The Tribunal has ruled in favour of the respondent/assessee.

A division bench of Justice Rajiv Shakdher and Justice Girish Kathpalia observed that the period before the approval of the resolution plan by the NCLT, in which no provision has been made for statutory dues, the continuation of this appeal would serve no purpose.  

The court in these matters adopted a “clean slate” approach and closed the appeal.

To Read the full text of the Order CLICK HERE

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