Upon the approval of a Resolution Plan under Section 31 of the IBC, all claims not specifically provided for in the plan, including statutory tax dues, are extinguished; therefore, tax refunds cannot be adjusted against such extinguished liabilities.

ORAL JUDGMENT

(PER : HONOURABLE MR. JUSTICE PRANAV TRIVEDI)

1. Heard learned advocate Ms. Manvi Damle for the petitioner and learned Senior Standing Counsel Ms. Maithili Mehta for the respondent.

2. Rule returnable forthwith. Learned Senior Standing Counsel Ms. Maithili Mehta waives service of notice on behalf of the respondent.

3. With the consent of the learned advocates for the respective parties, the matter is taken up for hearing, as the issue involved is very short.

4. The petition has been filed under Article 226 of the Constitution of India with the following prayers :-

“8( a) To quash and set-aside action of Respondent in adjusting Income Tax Refund to the tune of Rs. 26,86,580/- for Assessment Year 2019-20 to 2023-24 as provided in intimations at Annexure - "E" to the Petition;

(AA) To quash and set aside communication dated 22.01.2026 passed by Respondent at Annexure-H to the petition.

(b) Direct Respondent to process the refund aggregating Rs. 26,86,580/- without any adjustment against extinguished income tax demands pursuant to the approval of resolution plan vide order dated 31.12.2021 passed in I.A. No. 901 of 2020 as per Section 30(6) read with Section 31 of the Insolvency and Bankruptcy Code, 2016 along with statutory interest;

(c) Any other and further relief, which is just and proper, may kindly be granted as may be deemed expedient by this Hon'ble Court in the facts and circumstances of the case.

d) Award cost of the present Petition.”

5. The brief facts of the case are as follows:

5.1. The petitioner is a company registered under the Companies Act, 1956. The petitioner was subjected to the insolvency proceedings under the Insolvency and Bankruptcy Code, 2016 (“IBC”), wherein, a Corporate Insolvency Resolution Process (“CIRP”) was initiated under Section 9 of the IBC, which was admitted by the Adjudicating Authority vide order dated 17.12.2019.

5.2. An Interim Resolution Professional was appointed by the National Company Law Tribunal (for short “Tribunal”), who made a public announcement in accordance with Section 13, 15 and other relevant provisions of the IBC read with the Regulation 6 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, (For short “Regulations, 2016”) thereby inviting claims from the various creditors of the petitioner.

5.3. Further, under the CIRP, the Resolution Plan of M/s. Caxchem Chemical Corporation came to be approved by the Tribunal vide order dated 13.12.2021 under Section 30(6) of the IBC. The said Resolution Plan provided for the waiver and extinguishment of all the unassessed/assessed tax liabilities for the period prior to the Tribunal approval date.

5.4. The respondent has adjusted the income tax refunds for the Assessment Years 2018-19 to 2023-24 after the approval of the Resolution Plan for the dues towards income tax. It is the case of the petitioner that the respondent has illegally adjusted the refund amount towards income tax dues by way of impugned communication dated 22.01.2026 during the CIRP which is contravention to the provisions of IBC. It is the case of the petitioner that at the time of processing of the return of income for the subsequent Assessment Year i.e. 2024-25, the respondent has processed the income tax refund amount of Rs.9,34,830/- without adjusting the same against the past dues.

5.5. Challenging the legality of the action of the respondent in adjudicating the inc