Case law (SC) - Once the Resolution Plan is approved by the NCLT, All the dues including the statutory dues owed to the Central Government, if not a part of the Resolution Plan, shall stand extinguished and no proceedings could be continued in respect of such dues for the period prior to the date on which the adjudicating authority grants its approval under Section 31 of the IB Code.

Vaibhav Goel & Anr. v. Deputy Commissioner of Income Tax & Anr. [2025 INSC 375] dated 20.03.2024

"8. In view of the declaration of law made by this Court, all the dues including the statutory dues owed to the Central Government, if not a part of the Resolution Plan, shall stand extinguished and no proceedings could be continued in respect of such dues for the period prior to the date on which the adjudicating authority grants its approval under Section 31 of the IB Code. In this case, the income tax dues of the CD for the assessment years 2012-13 and 2013-14 were not part of the approved Resolution Plan. Therefore, in view of sub-section (1) of Section 31, as interpreted by this Court in the above decision, the dues of the first respondent owed by the CD for the assessment years 2012-13 and 2013-14 stand extinguished. 

9. We may note here that the decision of this Court in the case of Ghanashyam Mishra and Sons Pvt. Ltd.[(2021) 9 SCC 657] was specifically relied upon before the NCLAT. The decision of this Court was brushed aside by the NCLAT, firstly on the ground that the said decision was not relied upon before NCLT and, secondly, on the ground that the appellants have not challenged the Resolution Plan. Unfortunately, the NCLAT has ignored the binding precedent and the legal effect of the approval of the Resolution Plan as laid down in paragraphs 102.1 to 102.3 of the aforementioned decision. The reason given by NCLAT that the decision of this Court cannot be considered as it was not cited before the NCLT is perverse. 

10. Before we part with this judgment, we may note that on the application made by the second respondent, the NCLT issued notice to the first respondent by order dated 27th August 2020. However, by the order dated 17th September 2020, which was impugned before the NCLAT, without considering the merits and without recording reasons, the NCLT held that the application was frivolous as the second respondent was seeking relief, which the Bench did not consider at the time of the approval of the Resolution Plan. The NCLT also imposed costs of Rs. one lakh on the appellants and the second respondent. We cannot approve NCLT's approach of not considering the application on merits and dismissing the same without recording any reasons and also by imposing costs. The order of payment of costs was unwarranted. 

11. In view of the above discussion, the Resolution Plan approved on 21st May 2019 is binding on the first respondent. Therefore, the subsequent demand raised by the first respondent for the assessment years 2012-13 and 2013-14 is invalid. Once the Resolution Plan is approved by the NCLT, no belated claim can be included therein that was not made earlier. If such demands are taken into consideration, the appellants will not be in a position to recommence the business of the CD on a clean slate. On this aspect, we may note what is held in paragraph 107 of the decision of this Court in the case of Committee of Creditors of Essar Steel India Ltd[(2020) 8 SCC 531]."