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.

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 Plan, the first respondent issued demand notices dated 26th December 2019 and 28th December 2019 under the IT Act concerning assessment years 2012-13 and 2013-14, respectively, in respect of the CD. However, admittedly, no claim about the demands for the two assessment years was submitted before the Resolution Professional. The second respondent, the Monitoring Professional, addressed a letter to the first respondent, contending that the demands for the two aforesaid assessment years were unsustainable in law. As the first respondent issued a letter dated 2nd June 2020 asserting the said demands, the second respondent applied to the NCLT for declaring that the demands made by the first respondent pertaining to assessment years 2012-13 and 2013-14 were invalid. It was urged that the said demands were invalid as no claim in respect thereof was made before the Resolution Professional until the Resolution Plan was approved by the order dated 21st May 2019. By the order dated 17th September 2020, the NCLT dismissed the application, holding it to be frivolous. The costs of Rs. 1 lakh were made payable by the appellants and the second respondent. Being aggrieved by the said order, an appeal under Section 61 of the IB Code was preferred before the NCLAT. By the impugned judgment and order dated 25th November, 2021, the NCLAT dismissed the said appeal.

SUBMISSIONS

3. The learned senior counsel appearing for the appellants submitted that the NCLT dismissed the application made by the second respondent without assigning any reasons. He pointed out that though no claim was received from the first respondent pertaining to the assessment year 2014-15 till the submission of the Resolution Plan, the Resolution Professional by itself admitted the liability of payment of income tax for the assessment year 2014-15, which was pending as a contingent liability of the CD. He relied upon a decision of this Court in the case of Committee of Creditors of Essar Steel India Ltd. vs. Satish Kumar Gupta and Others, (2020) 8 SCC 531. He submitted that the issue was squarely covered by a decision of a Bench of three Hon’ble Judges of this court in the case of Ghanashyam Mishra and Sons Pvt. Ltd. through the Authorised Signatory vs. Edelweiss Asset Reconstruction Company Ltd. through the Directors and Others, (2021) 9 SCC 657. However, the NCLAT has brushed aside the said binding decision. He, therefore, submitted that the impugned orders of NCLT and NCLAT deserve to be quashed and set aside.

4. Learned ASG appearing for the first respondent supported the impugned orders. He relied upon paragraph 44 of the order dated 21st May 2019 passed by the NCLT, which rejected the request for relief and concession with respect to statutory dues and observed that the issues are left to be decid