Patanjali Foods Limited vs. Assistant Commissioner CGST Narela Division & Ors.

Held

The Court held that the date of the final approval of the Resolution Plan should be taken as September 4, 2019. The Court noted that the NCLT's order dated July 24, 2019, was conditional, requiring the submission of an additional affidavit for acceptance of modifications and other information before final approval. The order dated September 4, 2019, explicitly stated the approval of the resolution plan. The Court found support for this view in decisions of the Andhra Pradesh High Court and the Bombay High Court, which had dealt with identical issues involving the Petitioner. Consequently, the impugned order, which raised demands for the period prior to September 4, 2019, was set aside. The Respondent was permitted to issue a fresh show cause notice for the period after September 4, 2019, to be decided in accordance with the law. The period during which the writ petition was pending was to be excluded for calculating the limitation for issuing a fresh show cause notice, with a specific deadline of February 15, 2026, for it to be deemed within limitation.

Facts

Patanjali Foods Limited (Petitioner) challenged an order-in-original dated January 21, 2025, and its corrigendum dated February 3, 2025, passed by the Assistant Commissioner CGST Narela Division (Respondent) for the financial year 2017-2018. The Petitioner was formerly Ruchi Soya Industries Ltd., which underwent insolvency proceedings. A resolution plan submitted by Patanjali Ayurved Limited was approved by the National Company Law Tribunal (NCLT), Mumbai Bench, on July 24, 2019, and reiterated on September 4, 2019. The company was taken over as a 'going concern' on a 'clean slate basis'. The Petitioner argued that demands for periods prior to the resolution plan's approval should be extinguished, citing the Supreme Court's decision in Ghanashyam Mishra & Sons (P) Ltd. vs. Edelweiss Asset Reconstruction Co. Ltd. The Respondent contested the date of the resolution plan's final approval.

Key Issues

1. Whether the demands raised by the Respondent for the period prior to the approval of the resolution plan are extinguished, and if so, what is the effective date of the resolution plan's approval, turning on the interpretation of Section 31 of the Insolvency and Bankruptcy Code, 2016? Petitioner's Arguments: The Petitioner contended that all claims, including statutory dues, not part of the resolution plan stand extinguished upon its approval by the adjudicating authority, as per the Supreme Court's ruling in Ghanashyam Mishra & Sons (P) Ltd. They argued that the final approval date of the resolution plan should be considered September 4, 2019, not July 24, 2019, as the latter date's order was conditional. Reliance was placed on the Supreme Court judgment and similar orders from the Bombay High Court and Andhra Pradesh High Court. Respondent's Arguments: The Respondent argued that the order dated July 24, 2019, was passed under Section 31(1) of the Insolvency and Bankruptcy Code, 2016. They relied on the IBBI website, which indicated July 24, 2019, as the date of the resolution plan. They also referred to NCLAT orders where the approval date was taken as July 24, 2019, although acknowledging a subsequent order mentioned September 4, 2019.