- Bookmark
- Share
- CaseIQ
Ruchi Soya Industries Ltd. Etc. (S) v. Union Of India And Others (S).
Factual and Procedural Background
The appeals arose from a Division Bench judgment of the High Court of Karnataka dated 20-1-2012, which had dismissed writ petitions filed by the present appellant, Ruchi Soya Industries Ltd. The writ petitions sought a mandamus declaring that Customs Notification No. 38/2002-Cus (N.T.) dated 13-6-2002 did not apply to 1,647.414 metric tonnes of imported crude palmolein covered under a bill of entry dated 12-6-2002. After the High Court rejected this relief, the company appealed to the Supreme Court.
While the Supreme Court appeals were pending, Standard Chartered Bank initiated a corporate insolvency resolution process (CIRP) against the appellant before the National Company Law Tribunal, Mumbai, under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC). The NCLT admitted the application on 15-12-2017. Following completion of the statutory CIRP steps, the NCLT approved the successful resolution applicant’s plan on 24-7-2019 (read with order dated 4-9-2019). Control of the appellant was consequently transferred to the successful resolution applicant. The Revenue (Respondent 2) had not lodged the specific customs duty claim now in dispute with the Resolution Professional during the CIRP.
Legal Issues Presented
- Whether a statutory customs duty claim that was not submitted to the Resolution Professional during the CIRP can be pursued by the Revenue after the NCLT has approved the resolution plan under Section 31 of the IBC.
Arguments of the Parties
Appellant's Arguments
- Relied on the Supreme Court decision in Ghanashyam Mishra & Sons (P) Ltd. v. Edelweiss Asset Reconstruction Co. Ltd. (2021) 9 SCC 657 to contend that all claims not incorporated in an approved resolution plan stand extinguished under Section 31 of the IBC.
- Pointed out that one office of the Revenue had filed another claim during the CIRP, demonstrating the opportunity to lodge claims existed; however, the customs duty demand at issue was never submitted.
- Submitted that, in light of Ghanashyam Mishra, the Revenue cannot now recover amounts outside the resolution plan.
Respondent's Arguments
- Asserted that no notice of the CIRP was received by the relevant customs authority at Mangalore.
- Suggested there was ambiguity over whether their demand constituted an “operational debt” under Section 5(21) of the IBC, which may have contributed to the non-filing of the claim.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Ghanashyam Mishra & Sons (P) Ltd. v. Edelweiss Asset Reconstruction Co. Ltd. (2021) 9 SCC 657 | Once a resolution plan is approved under Section 31 IBC: (a) all claims included in the plan are frozen and binding; (b) claims not in the plan are extinguished; (c) statutory dues owed to governmental authorities are similarly barred. | The Court found the present appeals “squarely covered” by this precedent and held that the Revenue’s unlodged claim was extinguished. |
Court's Reasoning and Analysis
The Supreme Court observed that the Revenue had not filed its customs duty claim after the public announcements under Sections 13 and 15 of the IBC. Quoting paragraph 102 of Ghanashyam Mishra, the Court reiterated that:
- Approval of a resolution plan under Section 31 freezes all included claims and extinguishes those not included.
- Statutory dues owed to government authorities fall within this rule.
Because the disputed customs duty demand was absent from the approved resolution plan, it could not survive. Accordingly, the High Court’s dismissal of the writ petitions lost significance, and the appeals were allowed on this single ground.
Holding and Implications
Appeals ALLOWED. The Court declared that the Revenue’s unlodged customs duty claim does not survive and directed refund of the amount deposited by the appellant, together with accrued interest. No costs or further directions were issued.
Implication: The decision reinforces the finality of an NCLT-approved resolution plan under Section 31 of the IBC, confirming that even governmental statutory dues are extinguished if not incorporated in the plan, thereby providing certainty to resolution applicants and all stakeholders.
1. These appeals challenge the judgment and order dated 20-1-2012 passed by the Division Bench of the High Court of Karnataka in Ruchi Soya Industries Ltd. v. Union of India 2012 SCC OnLine Kar 1721, thereby dismissing the writ petitions filed by the present appellant.
2. The writ petitions were basically filed with a prayer seeking issuance of mandamus directing that, Notification No. 38 of 2002-Cus (N.T.) dated 13-6-2002 was not applicable to the imported goods consisting of 1647.414 metric tonnes of crude palmolein covered under the bill of entry for home consumption dated 12-6-2002. The aforesaid writ petitions were rejected. Being aggrieved, the present appeals are filed.
3. The appellant has filed IA No. 85939 of 2021 for pointing out the subsequent developments and the disposal of the appeal in terms thereof.
4. It is not in dispute that during the pendency of the present proceedings, Standard Chartered Bank had filed proceedings before the National Company Law Tribunal, Mumbai (hereinafter referred to as “NCLT”) in respect of the present appellant under the provisions of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as “IBC”). The application of Standard Chartered Bank under Section 7 IBC for initiation of corporate insolvency resolution process (hereinafter referred to as “CIRP”) came to be admitted by the learned adjudicating authority on 15-12-2017.
5. After the procedure, as required under the various provisions of IBC was completed, an application under Section 30(6) IBC came to be filed by the resolution professional for the grant of approval of the resolution plan of the successful resolution applicant. Vide order dated 24-7-2019 2019 SCC OnLine NCLT 24865 read with order dated 4-9-2019 2019 SCC OnLine NCLT 34900, the application of the resolution professional for the grant of approval of the resolution plan of the successful resolution applicant came to be allowed. As such, the management of the appellant came to be vested in the successful resolution applicant.
6. The short point that is involved is as to whether the claim of the present respondent which was admittedly not lodged before the resolution professional after public notices were issued under Sections 13 and 15 IBC could be considered at this stage.
7. We have heard Mr Parag P. Tripathi, learned Senior Counsel appearing for the appellant and Ms Nisha Bagchi, learned counsel appearing for Respondent 2, the Revenue.
8. Mr Tripathi, learned Senior Counsel appearing for the appellant, has submitted that the present case is squarely covered by the law laid down by this Court in Ghanashyam Mishra & Sons (P) Ltd. v. Edelweiss Asset Reconstruction Co. Ltd. (2021) 9 SCC 657 He submits that as a matter of fact, the office of Respondent 2 at Mangalore itself had lodged a claim before the resolution professional in respect of one of their demands. However, so far as the demand, which is the subject-matter of the present proceedings is concerned, no claim was lodged in respect thereof, and as such, in view of the law laid down by this Court while interpreting Section 31 IBC, the respondents are now not entitled to claim any amount, which is not a part of the resolution plan.
9. Ms Bagchi, learned counsel appearing for Respondent 2, the Revenue, on the contrary submits that no notice was issued to the Authority at Mangalore. She further submits that there was certain confusion as to whether the operational debt as defined under Section 5(21) IBC would cover the claim of Respondent 2, the Revenue. It is, therefore, submitted that in view of said confusion, there is a possibility that the office of Respondent 2 might not have lodged the claim with respect to the present proceedings.
10. We find that the present appeals are squarely covered by the law laid down by this Court in Ghanashyam Mishra & Sons (P) Ltd. (2021) 9 SCC 657 It will be relevant to refer to para 102 of the said judgment which reads as under :
“102. In the result, we answer the questions framed by us as under:
102.1. That once a resolution plan is duly approved by the adjudicating authority under sub-section (1) of Section 31, the claims as provided in the resolution plan shall stand frozen and will be binding on the corporate debtor and its employees, members, creditors, including the Central Government, any State Government or any local authority, guarantors and other stakeholders. On the date of approval of resolution plan by the adjudicating authority, all such claims, which are not a part of resolution plan, shall stand extinguished and no person will be entitled to initiate or continue any proceedings in respect to a claim, which is not part of the resolution plan.
102.2. The 2019 Amendment to Section 31 of the I&B Code is clarificatory and declaratory in nature and therefore will be effective from the date on which the I&B Code has come into effect.
102.3. Consequently all the dues including the statutory dues owed to the Central Government, any State Government or any local authority, if not part of the resolution plan, shall stand extinguished and no proceedings in respect of such dues for the period prior to the date on which the adjudicating authority grants its approval under Section 31 could be continued.”
11. Admittedly, the claim in respect of the demand which is the subject-matter of the present proceedings was not lodged by Respondent 2 after public announcements were issued under Sections 13 and 15 IBC. As such, on the date on which the resolution plan was approved by the learned NCLT, all claims stood frozen, and no claim, which is not a part of the resolution plan, would survive.
12. In that view of the matter, the appeals deserve to be allowed only on this ground. It is held that the claim of the respondent, which is not part of the resolution plan, does not survive. The amount deposited by the appellant at the time of admission of the appeals along with interest accrued thereon is directed to be refunded to the appellant.
13. The appeals are allowed, accordingly. Pending IA(s), if any, shall stand disposed of.
Alert