NCLT lacks jurisdiction to direct TDS refund on liquidation fixed deposit interest; liquidator must submit income/expenditure accounts to tax authorities first. Appeal against procedural NCLT directions is premature absent adverse tax decision.

JUDGMENT

(Hybrid Mode)

[Per: Justice Sharad Kumar Sharma, Member (Judicial)]

The Appellant, Liquidator, having been thus appointed in pursuance to the order dated 24.04.2018 as passed by Ld. NCLT, Chennai Bench, in CA/152/IB/2018, which was preferred in CP/514/IB/2017, was to act as a Liquidator in the liquidation process of M/s. Servalakshmi Paper Limited, which was undergoing with the liquidation process, on the basis of the proceedings that were being held under Section 9 of I & B Code, 2016, at the behest of the Operational Creditor, M/s. Shakti Energy Private Limited.

2. In the proceedings thus carried, owing to the fact that, after the admission of the CIRP process by an order of 21.06.2017, as there was no acceptable plan, which was received thereafter, the Corporate Debtor was directed to face the liquidation process by an order dated 24.04.2018. In pursuance to the orders that has been passed by the Ld. Adjudicating Authority, the assets of the Corporate Debtor, M/s. Servalakshmi Paper Limited, were said to have been sold as a going concern basis, by way of an e-auction, that was held on 05.10.2022, showing the realisation of the sale consideration of Rs. 105 Crores.

3. The amount thus realised under the e-auction process, as it stood concluded on 05.10.2022, the sale consideration amount, pending distribution to the stakeholders, was directed to be kept in a fixed deposit with Respondent No.2, the State Bank of India. Obviously, the amount thus deposited in the shape of a fixed deposit with the State Bank of India, was bound to accrue interest upon it as per admissible rates. The Respondent No. 2, before remittance of the amount of interest accruing on the fixed deposit into the liquidation account, had deducted TDS on the same. It is contended by the Appellant, that the said deduction of the TDS amount from the interest accruing on the fixed deposit by Respondent No. 2 on the fixed deposit kept with it, was unlawful.

4. For the purposes of airing his grievances, the Appellant contended that in fact no TDS could have been deducted on the interest accruing on the fixed deposit by Respondent No. 2 and that, he has written a letter on 13.04.2023 to Respondent No. 2, to refund the amount of TDS which has been thus deducted and further, not to deduct the said amount in future from and out of the interest, which was accruing on the said fixed deposits.

5. The grievance of the Appellant is that, despite the said correspondence of 13.04.2023, seeking a restraint from deduction of the TDS from the interest earned on fixed deposit, they contended that Respondent No. 2 thereafter still persisted with the deduction of the TDS amount at source, on the interest accruing on the fixed deposit, ignoring the request made by the Appellant. The Appellant contends that, for the purposes of seeking a restraint, as against Respondent No. 2, from deducting the TDS on the interest, they have also written a letter to the Respondent No. 1, pointing the above grievance.

6. In response to the said letter written by the Appellant to the Income Tax Department, the Respondent No. 1, in turn, has requested the Liquidator to file the return of income tax for all the assessment years for clai