Ultra Tech Nathdwara Cement LTD. vs. Union Of INDIA

Facts

The CGST Department filed a miscellaneous application seeking modification or clarification of a previous High Court order dated April 7, 2020. This prior order had allowed a writ petition filed by Ultra Tech Nathdwara Cement Ltd. The Department argued that certain demands arose after the cut-off date stipulated in the Insolvency and Bankruptcy Code (IBC), and that the relevant date for absolving the corporate debtor's liability should be the date the resolution plan was submitted (2017), not the date of transfer of the sick unit. The Department sought permission to recover amounts beyond the scope of the resolution plan. The respondent Company contended that the April 7, 2020 order was unambiguous and that all liabilities stand nullified on the date the sick unit is transferred, as per the IBC.

Held

The Court dismissed the miscellaneous application filed by the CGST Department. The Court found the Department's endeavor to fix the date of liability absolution as the date of resolution plan submission to be fallacious. It reiterated the well-settled legal position that the relevant date for this purpose is the date of approval of the resolution plan by the NCLAT, coupled with the date on which the resolution applicant takes possession of the corporate debtor's assets. The Court held that this aspect had already been addressed in its previous order dated April 7, 2020, and that the said order did not suffer from any ambiguity requiring modification. Therefore, the application was dismissed as being devoid of merit.

Key Issues

1. Whether the relevant date for absolving a corporate debtor's liability under the IBC is the date of submission of the resolution plan or the date of approval of the resolution plan coupled with the date of possession of assets by the resolution applicant? Petitioner's Argument (CGST Department): The Department argued that the relevant date for determining the corporate debtor's liability should be the date the resolution plan was submitted, which was in 2017. They contended that liabilities generated after this date should remain alive, and they should be entitled to recover these amounts. They sought clarification of the Court's order dated April 7, 2020, to permit such recovery. Respondent's Argument (Ultra Tech Nathdwara Cement Ltd.): The Company argued that the order dated April 7, 2020, was clear and unambiguous. They asserted that, as per the IBC, all liabilities of the corporate debtor are nullified on the date the sick unit is transferred, not on the date resolution proceedings are initiated. They maintained that the application for modification should be rejected.