Title: PLATINO CLASSIC MOTORS INDIA PVT.LTD vs. DEPUTY COMMISSIONER OF CENTRAL TAX AND EXCISE AND ORS.
Citation: WP(C) NO. 7997 OF 2023
Coram: JUSTICE DINESH KUMAR SINGH
Decided on: 20-10-23
Introduction:
In this writ petition, the petitioner, a dealer of BMW cars in Kerala, challenges the orders identified as Exhibits P-7, P-8, P-9, and P-10. The legal dispute arises from an application filed by the Federal Bank of India under Section 7(4) of the Insolvency and Bankruptcy Code, 2016 (IBC) for initiating the corporate insolvency resolution process against the petitioner. The National Company Law Tribunal, Cochin, admitted the application on March 8, 2021, as per Exhibit P-1. Following the admission, an Interim Resolution Professional (IRP) was appointed to manage the affairs of the petitioner. However, the resolution plans submitted by the applicants were rejected by the Committee of Creditors. Since no resolution plan was accepted, the Committee of Creditors decided to seek a directive from the National Company Law Tribunal, Cochin, for the liquidation of the petitioner’s company. The present writ petition challenges the orders related to these proceedings.
Facts:
In this case, an order of liquidation was issued on September 30, 2022, pursuant to Section 33 of the Insolvency and Bankruptcy Code (IBC) by the National Company Law Tribunal, Cochin. The Interim Resolution Professional (IRP) was appointed as the Liquidator, initiating a moratorium under Section 33(5) of the IBC. The petitioner’s Liquidator received claims from the first respondent, consisting of five items, in response to a public notice.
The petitioner contends that orders (Exhibits P-7 to P-10) forming the basis of the five claims were issued after the commencement of the moratorium on March 8, 2021, and argues that the petitioner was not given an opportunity to present and contest the case.
The respondent’s counsel argues that notice was indeed issued to the petitioner, a reply was filed, and the authorized representative was heard. The respondent disputes the claim that the petitioner was not heard during the issuance of orders in Exhibits P-7 to P-10. Additionally, the respondent contends that ongoing assessment proceedings and adjudication under Section 14 of the IBC are not barred. The assessment orders (Exhibits P-7 to P-10) were allegedly completed in compliance with statutory requirements, and the Official Liquidator’s absence during the finalization of the assessment should not invalidate these orders. The court considers these arguments in its evaluation of the case.
Judgement analysis:
The judgment in this case clarifies that Section 14 of the Insolvency and Bankruptcy Code (IBC) does not prohibit the finalization of assessment and adjudication proceedings related to taxes during the resolution process. The court refers to both Section 14 of the IBC and various judgments from High Courts and the Supreme Court to support this interpretation.
The court specifically notes that while there is a moratorium on the recovery of tax dues after the admission of the reference, there is no legal barrier to completing assessment and adjudication proceedings. Upon reviewing the impugned orders (Exhibits P-7 to P-10), the court finds that the petitioner was issued a notice, responded to it, and was heard during the finalization of these orders. Therefore, the court dismisses the petitioner’s argument that the absence of the Official Liquidator during the hearing makes the orders invalid.
The judgment concludes by dismissing the writ petition and instructs the Official Liquidator to consider the five claims of the petitioner in accordance with the law.
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Written By: Gauri Joshi
