Read Order: M/S. RUCHI SOYA INDUSTRIES  LTD v. UNION OF INDIA & ORS 

Tulip Kanth

New Delhi, February 25, 2022: While clarifying that the claim made by the Revenue, which was not a part of the Resolution Plan, will not survive, the Apex Court has come to aid of Ruchi Soya Industries by directing that the amount deposited by the Company in compliance of an earlier order ought to be refunded alongwith interest accrued thereon.

The Division Bench of Justice B.R.Gavai and Justice S.Ravindra Bhat said, “…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.”

The factual background of this case is that on June 13, 2002, a Notification was issued by the Department of Revenue, Central Board of Excise and Customs, Union of India imposing a tax on imported goods of M/s Ruchi Soya Industries Ltd., namely, 1647.414 metric tonnes of crude palmolein covered under bill of entry for home consumption.

The Writ Petitions were filed before the Karnataka High Court with a prayer seeking issuance of mandamus directing that this Notification was not applicable to the imported goods consisting of crude palmolein covered under the Bill of Entry for Home Consumption dated 12th June, 2002. The High Court had dismissed these Petitions and hence, the present Appeals were filed.

Later, during the pendency of these proceedings, the Standard Chartered Bank had filed proceedings before the National Company Law Tribunal, Mumbai (NCLT) in respect of the present appellant under the provisions of Insolvency and Bankruptcy Code, 2016. This application came to be admitted by the Adjudicating Authority on December 15, 2017.

Then,  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.

Relying on the judgment of this Court in Ghanashyam Mishra & Sons Pvt. Ltd. vs. Edelweiss Asset Reconstruction Company Ltd. & Ors., (2021) 9 SCC 657, the appellant’s counsel submitted that the office of the Revenue 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 was the subject matter of the present proceedings was 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 of the IBC, the respondents were not entitled to claim any amount, which was not a part of the Resolution Plan.

On the other hand, the respondents (Revenue & Commissioner of Customs) contended that no notice was issued to the Authority at Mangalore and there was certain confusion as to whether the operational debt as defined under Section 5(21) of the IBC would cover the claim of Revenue. It was  therefore submitted that in view of said confusion, there was a possibility that the office of the second respondent might not have lodged the claim with respect to the present proceedings.

The Bench held that the present appeals were squarely covered by the law laid down by this Court in Ghanashyam Mishra’s Case (Supra) wherein it was held that once a resolution plan is duly approved by the adjudicating authority under Section 31(1), 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

It was also observed therein that 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.

According to the Bench, in the present case, the claim in respect of the demand which was the subject matter of the present proceedings was not lodged by the Revenue after public announcements were issued under Sections 13 and 15 of the IBC. So, on the date on which the Resolution Plan was approved by the NCLT, all claims stood frozen, and no claim, which is not a part of the Resolution Plan, would survive.

Thus, allowing the Appeals, the Top Court held that the claim of the respondent, which is not part of the Resolution Plan, does not survive. 

The team of Advocates on behalf of Ruchi Soya Industries Ltd. was led by Mr. Parag P Tripathi, Sr. Advocate assisted by Mr. Rajesh Rawal along with a team of Advocates from Athena Legal represented by Mr. Simranjeet Singh, Mr. Gautam Talukdar, Miss Rhea Dube and external counsels Mr. Kunal Vaishnav and Miss Mishika.

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