Allowed

In the matter of Sunlight Extrusion Private Limited Ia 318 of 2021 in Cp(Ib) No. 261-7-NCLT-AHM-2018

NCLT3 Nov 2021

Case brief

AI extract

What is this about?

The NCLT Ahmedabad allowed an application under Section 14 and 238 of the Insolvency and Bankruptcy Code. It directed the Income Tax Department to refund Rs. 12 lakh recovered from a corporate debtor during the moratorium period, as the recovery violated the Code's overriding effect.

What did the court decide?

Directed Respondent No. 1 to refund Rs. 12,00,000/- recovered in violation of moratorium and the Resolution Professional to include said amount in the claim submitted by the Respondent.

In the matter of Sunlight Extrusion Private Limited Ia… — Insolvency and Bankruptcy | NCLT (2021)

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IN THE NATIONAL COMPANY LAW TRIBUNAL, AHMEDABAD mu

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ITEM No 104 IA/318(AHM)2021ⁱⁿ CP(IB) 261 of 2018

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Order under Section 14 r.w18(1)(f) & 238 |BC,2016

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IN THE MATTER OF:

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Abhishek Nagori RP For Sunlight Extrusion Pvt Ltd V/s

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Income Tax Department^& Anr

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........^Applicant

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........ Respondent

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Order delivered on ..03/11/2021

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Coram:

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Madan^B. Gosavi, Hon’ble Member(J) Ajai Das Mehrotra, Hon’ble Member(T)

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PRESENTS:

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For the Applicant For the IRP/RP For the Respondent

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ORDER

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The case is fixed for pronouncement of order.

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The order is pronounced in open Court vide separate sheet.

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Ar; (AJAI DAS MEHROTRA ) MEMBER(TECHNICAL) MEMBE (JUDICIAL)

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BEFORE THE^{ADJUDICATINGAUTHORITY} NATIONAL COMPANY^LAWTRIBUNAL AHMEDABAD BENCH At AHMEDABAD

COURT -¹

IA318 of 2021

CP(IB)^No. 261/7/NCLT/²⁰¹⁸

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[An application under^section 14 of the Insolvency and Bankruptcy Code, 2016 (in short^{“IBCode”)read withsection18(t)of1BCode]}

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In the matter^of:

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Abhishek Nagori

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Resolution Professional^of

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Sunlight^{Extrusion PrivateLimited}

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...Applicant

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Versus

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Income Tax Department and^Another

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. . .Respondent

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Memo of Parties

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1. Abhishek Nagori

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RP of M/ s Sunlight Extrusion^Pvt.Ltd.

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Reg.^{No.IBBI/IPA-OO1/IP-POOO20/2016—17/10044} 330/348,^{ThirdFloor,Tower-A, AtlantisK—lO,} Opp.^{VadodaraCentral,SarabhaiMainRoad,} Vadodara—390023, Gujarat Email—[email protected];[email protected]

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........^Applicant

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Versus

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1. Income Tax Department

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Through Principal^Commissioner / Deputy^Commissioner Having address^at: Aayakar Bhawan,^Baroda, Income Tax Officer,^{RaceCourseCircle,} Baroda, Gujarat^—390007

Respondent^{No. 1}

2. RBL Bank Limited

Having address^at:

lll’agc

“W A

Nr. Natubhai Circle Vadodara, Gujarat India

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Respondent^No.2

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Order Pronounced on 03.11.2021

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Coram: Hon’ble Mr. Madan Bhalchandra Gosavi,^MEMBER(J) Hon’ble Mr. Ajai Das Mehrotra,^MEMBER(T)

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Aegearance:

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Mr. Vishal Dave.^Adv. a.w Nipun Singhvi^Adv.forRP.

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ORDER (Per Bench)

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of 1. The instant application^isfiled by^{ResolutionProfessional} Corporate^Debtori.e., M/s^{SunlightExtrusionPvt.Ltd.under} Section 14 of Insolvency and Bankruptcy^{Code,2016(hereinafter} referred to as the^“IB Code”)^{readwithSection18(1)andSection} 238 of the Code, seeking^{directiontotheRespondentNo.} 1 to refund a sum^ofRs. 12 lakh which was recovered^fromthe in violation of moratorium passed by this corporate^debtor Adjudicating Authority.

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The applicantsubmitted that^the Corporate^{Debtorwasadmitted} into CIRP^{videOrderdated25—02—2020passedbythisAuthority} at the instance of Central Bank in CP(IB) No. 261/7/NCLT/AHM/20l8, and Mr. Abhishek Nagori was appointed as an^{IRP.TheIRP haspublishedForm—AinRegulation} 6(1) of the IBBI (Insolvency^{ResolutionProcessforCorporate} Persons) Regulation,^{2016(hereinafterreferredtoas“CIRP} Regulation”) on^{19—03—2020,andthelastdateofsubmissionof} claim by the^creditors was^{31—03-2020.However,duetothe}

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leagp

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kfi/

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Lockdown, the^claim was^{submittedbythecreditorstill09—06—} ' 2020.

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to the publication^{ofForm—A,theclaimswere}

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In pursuance submitted to the RP, by one^{FinancialCreditor,twoOperational} Creditors, and Statutory^Authority (5). It is submitted by the applicant^that on^{17—04—2020,theinformationhasbeensentto} no. 1 about the initiation^ofCIRP against^the

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respondent Corporate^{DebtorandthereminderwasalsosentbyIRPon} 20.05.2020^for the same.

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The Applicant has further^{submittedthatafterperusingthe} Books and Accounts^ofthe Corporate^{Debtor,itwasfoundthat} Rs. 12 lakh was recovered by^IncomeTax Department^i.e., Respondent^{No.lon16—03-2020,fromthebankaccountofthe} corporate^{debtorwhichwasmaintainedwithRespondentNo.2.} Thereafter,^IRP sent an^{e—mailtoRespondent No.} 1 on 13—06—2020 to remit the amount^recovered as^{saidamountwasrecoveredin} violation of provisions^{ofsection14oftheIB‘Code,butnoreply} was given by^{theRespondent no.1.}

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The name of^IRP was^{confirmedbyCDCinthefirstmeetingheld} on 16—06—2020 with 100% voting. Respondent No. 2 also submitted its^{claimtothetuneofRs.3,51,26,547/—on19-06-} 2020. Apart from the^{submissionof thisclaim,RespondentNo.} 1 sent various^{assessmentand penalty orders against theCorporate} Debtor to the^{ResolutionProfessional.EOIwaspublishedbythe} Resolution^{Profesionalin} pursuance^{oftheresolutionpassedin} of the COC meeting dated 21.07.2021,^{andthelastdate} submission^of the^{claim was} 10.08.2020.

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It is further submitted by the Applicant that on 28—07—2020, Respondent^No. 1 sent an e—mail to the Resolution Professional and requested not to take legal action and also stated that legal opinion^is being sought by the Department in respect to the refund of recovered amount during the moratorium and issue shall be resolved very soon. The Resolution Applicant has also stated that till date, neither the reply has been received from the Income Tax Department nor the amount was remitted to the account of Corporate Debtor, even after sending number of reminders and requests to Respondent No. 1.

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It is noted that even after giving sufficient opportunity to

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respondent no.^1, no reply was^made to this present application.

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We have heard the counsel of the applicant and have gone through the^record.It appears that the moratorium was triggered against the corporate debtor^videorder dated 25.02.2020 as per section 14 of the IB Code, and Respondent No. 1 had recovered the amount of Rs. 12,00,000/- from the Corporate Debtor on 1

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16.03.2020, which was paid to respondent no. by respondent no. 2 from the account of the corporate debtor, which was in

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violation of Section 14 of the^1B Code. For benevolent reference, section 14 of 18 code is reproduced below:

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(1) Subject^to provisions of^{sub—sections(2)} and (3), on the insolvency commencement date, the Adjudicating Authority shall by order declare moratorium for prohibiting all of the .'——

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following, namel

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(a) the institution of suits or continuation ofpending suits or proceedings against^the corporate^debtor including^execution of any judgment,^decree or^orderin any^court of^{law,tribunal,} arbitration panel or other authority;

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(b) transferring, encumbering, alienating or disposing of by the corporate debtor any of its assets or any legal right or beneficial interest therein;

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(0) any action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of its property including any^{actionundertheSecuritisationand} Reconstruction of^Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002); (d) the recovery of any property by an owner or lessor where such property is occupied by or in the possession of the corporate^debtor.

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£[Explanation.--For^the purposes of^this sub-Section,^itis hereby clarified that notwithstanding anything^containedin any^{otherlawforthetimebeingin force,alicense,permit,} registration, quota, concession, clearances or a^similar grant or right given by^theCentral Government,^State Government, local authority, sectoral regulator or any other authority constituted under any other law for the time being in force, shall not be suspended or terminated on the grounds of insolvency, subject^{tothecondition} that^thereis no defaultⁱⁿ payment of^currentdues arising for^the use or^continuation of the license, permit, registration, quota, concession, clearances or a similar grant or right during^{themoratorium} period,']

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(2) The supply of essential goods or services to the corporate debtor as may^be specified^{shallnotbeterminatedor} suspended^or interrupted during^moratorium period.

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§[(2A) Where the interim resolution professional or resolution professional, as^the case may^{be,considersthe} supply of goods or services critical to protect and preserve the value of^the corporate debtor and manage the operations of such corporate^debtor as a going concern, then^the supply of^such goods^{orservicesshallnot} be terminated, suspended or interrupted during^the period of moratorium, except^where such corporate^{debtor hasnot} paid^dues arising from such supply during^{themoratorium periodorinsuch} circumstances as may^be specified.]

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2[(3) The provisions of^{sub-section(1)shallnot} apply^to-—

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’ WM / SlPage

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3[(a) such transactions, agreements or other arrangements as may^be notified by^the Central Government in consultation with anyfinancial sector regulator or any other authority;]

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(b) a surety in a contract ofguarantee to a corporate debtor.]

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(4) The order of moratorium shall have eflect from the date of such order till the completion of the corporate insolvency resolution process:

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Provided that where at any time during the corporate insolvency resolution process period, if^the Adjudicating Authority approves the resolution plan under sub—section (1) of^section31 or passes an order for liquidation of corporate debtor under section 33, the moratorium shall cease to have effect from the date of such approval or liquidation order, as the case may be.]

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Moreover, if any amount remains due from corporate debtor, it shall fall under the head of operational debt after the initiation of CIRP as per section 5 (21) of 1B code and the respondent has a right^to submit his claim before the resolution professional. It is an admitted^fact that said^Claim has already been submitted by respondent no. 1 for a sum of Rs. 3,51,26,547/— excluding the amount recovered from the corporate debtor after imposition of moratorium i.e. l2,00,000./—. However, exclusion of recovered amount in the claim, by respondent no. 1 can not absolve the Violation of moratorium. Moreover, the IB code has an overriding effect, as envisaged under section 238 of^1B Code, which is reproduced^below:

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The provisions of this Code shall have efiect, notwithstanding anything^{inconsistenttherewith containedin} any^otherlaw for^the time being in force or any instrument having effect by virtue of any such law.

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In PCIT Versus Monnet [spat and Energy Limited, the Hon’ble Supreme Court has held that the IB Code will override anything inconsistent contained in any other enactment, including Income Tax Act.

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In View of section 14 of IE code, read with section 238, we are of the considered View that the amount recovered by the Income Tax Department under the Income Tax Act, 1961 is not justified even if the respondent no. 1 was not aware about the intiation of CIRP proceedings and imposition of Moratorium at the time of recovery. Hence, this present application is allowed and we hereby direct:

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