Setback to Platino Classic Motors: Kerala HC rules no bar u/s 14 of IBC for Finalisation of Assessment and Adjudication Proceedings [Read Order]

In a setback to Platino Classic Motors India Private Ltd, the Kerala High Court ruled that no bar under Section 14 of the Insolvency and Bankruptcy Code, 2016 (IBC) for Finalisation of Assessment and Adjudication Proceedings. The petitioner is a dealer of BMW cars in Kerala. The Federal Bank of India filed an application under Section 7(4) of the Insolvency and Bankruptcy Code, 2016 (“IBC”) for initiation of corporate insolvency resolution process against the petitioner before the National Company Law Tribunal. The said application was admitted by the adjudicating authority by the order dated 08.03.2021. Vide order an Interim Resolution Professional (IRP) was appointed to maintain the affairs of the petitioner. The resolution plans submitted by the applicants were rejected by the Committee of Creditors. As no resolution plan was accepted, the Committee of Creditors resolved to seek a direction from the National Company Law Tribunal, Cochin for liquidation of the petitioner Company. An order of liquidation in terms of Section 33 of the Insolvency and Bankruptcy Code came to be passed by the National Company Law Tribunal, Cochin appointing the Interim Resolution Professional (IRP) as the Liquidator. Once the Official Liquidator was appointed, the moratorium under Section 33 (5) of the IBC commenced. In response to the public notice, the Liquidator of the petitioner has received claim in Schedule II, Form C from the 1st respondent presenting five items of claims before the Official Liquidator. The Counsel for the petitioner submitted that orders on the basis of which five claims were submitted has been issued after the commencement of the moratorium under Section 14 of the IBC on 08.03.2021. His next submission is that the petitioner was not afforded with an opportunity by the competent authority to present the case and contesting the matter. The Counsel for the respondent submits that notice was issued to the petitioner to which the reply was filed on behalf of the petitioner and authorised representative was also heard. Therefore, the contention of the Counsel for the petitioner that the petitioner was not heard when the orders came to be passed is not correct. It is further submitted that there is no bar in respect of conclusion of the ongoing assessment proceedings and adjudication under Section 14 of the IBC. The assessment were completed in accordance with law in compliance of the statutory prescription. It is therefore submitted that the assessment orders cannot be set aside on the ground that the Official Liquidator was not heard while finalising the assessment. A Singe Bench comprising of Justice Dinesh Kumar Singh “From perusal of Section 14 of the IBC and several Judgments of the other High Courts as well as the Supreme Court, it is well settled that Section 14 of the IBC does not create a bar for finalisation of the assessment and adjudication proceedings in respect of the taxes. On the resolution once the reference has been admitted, there is moratorium for recovery of the tax dues but, there is no bar for finalisation of the assessment and adjudication proceedings.” “It is the petitioner who was issued notice. The representative of the petitioner remained present during the hearing. His reply was also filed in the show cause notice and thereafter the orders in has been passed. Thus, I find no substance in the writ petition and the same is hereby dismissed. The Official Liquidator should consider the five claims of the petitioner in accordance with the law” the Court noted. Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates

Setback to Platino Classic Motors: Kerala HC rules no bar u/s 14 of IBC for Finalisation of Assessment and Adjudication Proceedings [Read Order]

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