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ABHAY S. OKA, UJJAL BHUYAN
Vaibhav Goel – Appellant
Versus
Deputy Commissioner of Income Tax – Respondent
JUDGMENT :
ABHAY S. OKA, J.
FACTUAL DETAILS
1. This appeal under Section 62 of Insolvency and Bankruptcy Code, 2016 (for short ‘the IB Code’) takes an exception to the judgment and order dated 25th November 2021 passed by the National Company Law Appellate Tribunal (‘the NCLAT’). The Corporate Insolvency Resolution Process (CIRP) was initiated concerning the corporate debtor M/s. Tehri Iron and Steel Casting Ltd. (‘the CD’). The appellants are the Joint Resolution Applicants. They submitted a Resolution Plan dated 21st January 2019. The National Company Law Tribunal (‘the NCLT’), vide its order dated 21st May 2019, approved the Resolution Plan submitted by the appellants.
2. The Resolution Plan had referred to the liability of Rs. 16,85,79,469/- (Rupees Sixteen-crores, eighty-five lakhs, seventy-nine thousand, four-hundred and sixty-nine only) of the first respondent (Income Tax Department) for the assessment year 2014-15 based on the demand dated 18th December 2017 which was rectified under section 154 of the Income Tax Act, 1961 (for short, ‘the IT Act’). The liability was shown in the Resolution Plan under the heading “Contingent liabilities”. After the approval of the Resolution
Once a resolution plan is approved under the Insolvency and Bankruptcy Code, claims not included therein are extinguished and cannot be enforced, ensuring clarity for the resolution applicant.
The approval of a resolution plan under the IBC extinguishes all claims not included in the plan, including tax liabilities.
The approval of a resolution plan under the IBC extinguishes all claims not included in the plan, including tax liabilities, ensuring a fresh start for the corporate debtor.
Once a resolution plan is approved under the Insolvency and Bankruptcy Code, no claims can be pursued for dues prior to that approval, rendering subsequent assessment orders and notices invalid.
The Insolvency and Bankruptcy Code's provisions override tax claims from pre-insolvency periods, barring enforcement of assessments not included in a Resolution Plan.
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