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Judgment
This is an application praying for condonation of 102 days delay in refiling of the appeal.
The appeal has been filed by Surat Municipal Corporation. In paragraphs 5 to 7 of the delay condonation application for refiling, the reasons for delay has been given, which are as follows:
“5.That further, the office of the Advocate remained closed from 01.06.2025 to 30.06.2025 owing to the summer vacation in the Hon’ble Supreme Court of India, and consequently, the process of redrafting and compliance with the Registry's directions was delayed.
6.Thereafter, Appeal was sent to the Appellant on 15.07.2025 after curing the defects marked by the Registry for the perusal of the client and the same was received back by the office of the counsel on 07.08.2025 with certain instructions by the client.
7.That after making the necessary changes as suggested, the appeal was again sent back to the Appellant on 20.08.2025. After the final approval, the accompanying appeal along with necessary applications and fresh affidavit was received back by office of the counsel in September 2025. This led to an inadvertent delay in the preparation, finalization, and re-filing of the appeal in the present matter.”
Learned counsel for the respondent refuting the submissions submits that there are no explanation of delay and the nature of the defect has been noticed in paragraph 4 could have been very well be cured by the appellant within the relevant time.
The appellant being the Surat Municipal Corporation, it is submitted that the approvals were required on different stages and for refiling also necessary approvals were obtained, which has been mentioned in paragraph 7.
We find sufficient cause shown in paragraphs 5 to 7 of the refiling delay condonation application.
Refiling delay condoned.
Heard learned counsel for the appellant as well as learned counsel appearing for the respondent.
This appeal has been filed against an order dated 25.04.2025 passed by the adjudicating authority (National Company Law Tribunal, Division Bench, Court – I, Ahmedabad), by which the application filed by the Successful Resolution Applicant (SRA) has been allowed. SRA has filed the application with the prayers as noted in paragraph 1 of the impugned order which is as follows:
“a)Allow the present Application;
b)Pass appropriate orders directing the Respondent to refund to the Applicant No. 1 an amount of Rs. 39,96,685/- (Rs. Thirty Nine Lakhs, Ninety Thousand and Six Hundred and Eighty Five Only) (along with interest) paid by the Applicant No. 1 under protest towards pre-CIRP dues of Municipal tax which remain unpaid by the Corporate Debtor for removing the seal from the premises of the Corporate Debtor;
c)Pass any other order/relief as this Hon'ble Adjudicating Authority may deem fit in the interest of equity and justice.”
The relevant facts in the present case are as follows:
The Corporate Insolvency Resolution Process (CIRP) commenced on 02.12.2020 by an order of the adjudicating authority.
The Committee of Creditors (CoC) in 7th Meeting approved the resolution plan submitted by the SRA which was approved by the adjudicating authority and appeal against the order approving the plan was also filed in this Tribunal, which was dismissed subject to certain modifications.
Under the resolution plan amount of Rs.27,368/- was proposed to be paid to the appellant to keep the corporate debtor as a going concern, the said amount was paid, however, the appellant did not open the seal which was put on premises due to non-payment of its dues.
The SRA under the protest, made a payment for opening the seal which was accepted and the seal was opened by the appellant. Thereafter, the SRA filed the application praying for refund of the amount.
In the reply to the application, appellant clearly stated that the amount of Rs.39,96,685/- was paid under protest towards pre-CIRP dues which has been noticed in paragraph 3 of the impugned, order which is as follows:
“3.The Respondent, i.e, Surat Municipal Corporation, has filed its reply to the application before this Tribunal on 05.09.2024 vide diary no. D-6856, the relevant paragraphs of the said reply are hereby reproduced:-
5.I submit that the applicants have prayed to this Hon'ble tribunal to direct the present respondent to refund an amount of Rs.39,96,685/- (Thirty Nine Lakhs Ninety Six Thousand & Six Hundred and Eighty Five Only) to applicant no. I, paid by the applicant no. I under protest towards pre-CIRP dues of Municipal Tax which remain unpaid by the corporate debtor for removing seal from premises of corporate debtor.
6.I submit that respondent Surat Municipal Corporation ("SMC") is a public body constituted under the provisions of the Gujarat Provincial Municipal Corporation Act 1949, rendering its service for the betterment of the citizens of Surat. I submit that the property tax is the main source of revenue for Respondent Corporation, from which the respondent provides basic amenities to citizens of Surat.
7.I submit that the Tenement No. 030B-07-0831 -0-001 & Tenement No. 030B-07-0831-0-002 (herein after "Subject property") are situated at Plot No.40313, GIDC Pandesara Surat. I submit that said property running in the name of M/s., Gupta Silk Mils, as owner, in the record of the present respondent, i.e. Surat Municipal Corporation. I submit that as on 28.08.2024, the subject property is running in the name of M/s Gupta Silk Mills. The Copy of the party status (assessment record) is annexed herewith as Annexure: R/1.
8.I submit that since M/s., Gupta Silk Mills failed to pay · · the amount of property tax, respondent corporation had, after following due procedure of law and under the provisions of the Taxation Rules and provisions of the Gujarat Provincial Municipal Corporation Act, 1949, applied a seal on the subject property. Therefore, the averment made in the application that pre-CIRP dues of Municipal Tax remain unpaid by the "corporate debtor" is not correct.
9.I submit that the applicant has paid the dues of Municipal Tax remain unpaid by M/s. Gupta Silk Mills, in the name of and on behalf of M/s. Gupta Silk Mills and to that effect, the respondent has issued the receipt of payment in the name of M/s Gupta Silk Mills; therefore, the present application may deserve to be dismissed as payment not made for the Corporate debtor or on behalf of the corporate debtor. The Copy of the receipt issued by the Respondent Corporation is annexed herewith as Annexure: R/2.
10.I submit that respondent did not aware about the facts mentioned in the para 1 to 9 of the application as no point of time applicants or the predecessor have informed the respondent corporation about the change of owner of company or change of company's name, therefore, respondent corporation has not raised any claim at appropriate stage of Corporate Insolvency Resolution Process (CIRP) initiated under the Insolvency and Bankruptcy Code, 2016.
11.I submit that as per the provisions of the GPMC ACT, 1949 & Taxation Rules framed under the Gujarat Provincial Municipal Corporation Act, 1949, M/s Gupta Silk Mills is primarily liable for payment of property tax since its name is entered in to assessment book. I submit that on behalf of M/s Gupta Silk Mills, the present applicant has made payment of outstanding property taxes Rs. 39,90,685/ - (to avail the benefit of interest waiver plan) on 19.02.2024 and the Respondent corporation has removed the seal applied by it.
12.I submit that first time on 08.08.2023, when Resolution professional Mr. Ravindra Kumar Goyal had submitted a letter dtd. 05. 08.2023 to Surat Municipal Corporation, the present respondent came to know that the resolution plan submitted by M/s Akashganga Processors Private Limited in the matter of Polycoat India Private Limited has been approved by the Hon'ble National Company Law Appellate Tribunal.
13.I submit that on receipt of the letter dtd. 05.08.2023 The respondent had started to collect the information regarding the proceedings, and after approval of the competent authority of the respondent corporation, appointed the lawyer at the Supreme Court of India to challenge the order dtd. 13. 07.2 023 passed in Company Appeal (AT) (Insolvency) No.1148 of 2022. I submit that since the respondent is aggrieved by the order passed by the Hon'ble appellate tribunal dtd.13. 07.2 023 and proposed to challenge the same before the Hon'ble Supreme Court of India, the Demand Draft of Rs. 27,368/- submitted by the resolution professional Mr. Goyal had not been encashed.
14.I submit that the Civil Appeal had been registered with Diary no.9047 of 2024 (Surat Municipal Corporation VS Ravindra Kumar Goyal& others). I submit that the civil appeal listed for hearing on 18. 03.2024 before the Hon'ble Supreme court of India. I submit that pending Civil appeal on 19. 02.2024 the applicant no. I had paid (under protest) outstanding amount Rs.39) 90,685/- of M/ s Gupta Sillc Mils. Therefore, Civil Appeal not pressed by the present respondent to raise grievance before the adjudicating authority. I submit that after recording the submission of respondent corporation Hon'ble Supreme Court was pleased to dismiss the Appeal vide order dtd. 18. 03.2024. The Copy of the order dtd. 18. 03.2024 passed by the Hon'ble Supreme Court Of India Annexed herewith as Annexure: RI 3. The Memo of Civil appeal produced by applicants at page no.1 50-188, I crave leave to refer at the time of hearing.
15.I respectfully submit that in view of above facts and circumstances the applicants are not entitle for refund of amount as prayed for in the present applicant on the main ground that the dues has been paid for or on behalf of M/s Gupta Silk Mills and respondent has also issued receipts in the name of M/s Gupta Silk Mills.
16.I submit that applicant had filed IA/ 313/2024 in CP (IB) No.295 of 2019 to direct the present respondent to remove the seal applied on subject property. I submit that pending application on 19. 02.2024 the applicant had paid the amount therefore) the seal had been removed) in view of said facts the IA/ 313/ (AHM)2024 has been dismissed as infructuous by this Hon'ble tribunal vide order dtd. 10. 04.2024. The copy of the order dtd.10. 04.2024 passed by this Hon'ble tribunal annexed herewith as Annexure: R/4.
17.I submit that as per the provisions of the GPMC ACT 194 9 the Respondent Corporation has powers to attached movable and immovable property of defaulter to recover the property tax. I submit that under the Taxation Rules whenever the title of any person primarily liable for the payment of property taxes on any premises to or over such premises is transferred) the person whose title is so transferred and the person to whom the same shall be transferred shall) within three months after execution of the instrument of transfer) or after its registration, if it be registered or after the transfer is effected) if no instrument be executed) give notice of such transfer) in writing to the commissioner. I submit that in present case no such notice given to commissioner of Respondent Corporation.
18.I further submit that under the Taxation Rules if, any person primarily liable for the payment of a property tax whose title to or over such premises is transferred fails to give notice of such transfer to the commissioner, he shall in addition to any other liability which he incurs through such neglect, continue liable for the payment of all property taxes from time to time payable in respect of the said premises until he gives such notice, or until the transfer shall have been recorded in the assessment books. Therefore, under the Taxation Rules the M/s. Gupta Silk Mills liable to pay outstanding amount of property taxes even if name has been changed.
19.I submit that in view of what is submitted herein above and in the facts of the case, the applicants are not entitled to any relief and the interim relief, if any, granted earlier may be vacated and the application deserve to be dismissed.”
Adjudicating authority after considering the application and the reply has by the impugned order allowed the application and directed for refund of the amount, aggrieved by which order, the appellant has come up in this appeal.
Learned counsel for the appellant contended that the corporate debtor including the SRA was liable to pay the amount due to the appellant and even if no claim was filed by the appellant, appellant was clearly entitled for the amount which was due against the property taxes. Learned counsel for the appellant has relied on the judgment of the Madras High Court in ‘Empee Distilleries Limited, Rep. by its Chief Executive Officer Mr. P.K. Das’ Vs.
‘Superintending Engineer, Pudukottai Electricity Distribution Circle, Pudukottai & Ors.’ reported in [2025 SCC OnLine MAD 13522], where in paragraphs 28, 29 & 34 following has been held:
“28.Admittedly, the notices of demand impugned in the writ petition are in respect of due payable to TANGEDCO by Empee Distilleries Ltd. A substantial portion of the due is in respect of revised rate of start up tariff. The substantial due payable to TANGEDCO under this head is Rs. 1,14,80,039/-, which is the subject matter of W.P. No. 26553 of 2013 before the High Court and later transferred to TNERA. The said litigation was pending, when CIRP commenced in the matter of Empee Distilleries Ltd. Hence, the pendency of litigation over the statutory due was well within the knowledge of the promoters of the company and subsequently to the IRP who took charge of the Company. They are under a responsibility to collect information about the assets and liabilities from sources and place it before the Committee of creditors (CoC).
29.We find only a paper publication in a daily about the initiation of CIRP. Except this, there is no other material available to satisfy that the RP was finalised after disclosing the sub judiced statutory debt payable to TANDGEDO.
34.Therefore, we find that due to the lapse on the part of IRP and the promoter not furnishing/collecting the informations regarding debts properly, the RP in so far as the claim of TANGEDCO which is subjudice before a statutory Appellant Body not extinguished. The appellant cannot as a matter of right seek for re connection without clearing the arrears, of course subject to the out come of the litigation pending.”
Learned counsel for the appellant relying on the said judgment submitted that in the above case, it was held that SRA cannot be exempted from paying the electricity dues and the judgment of the Hon’ble Supreme Court in ‘Ghanshyam Mishra & Sons Pvt. Ltd., through the Authorised Signatory’ Vs. ‘Edelweiss Asset Reconstruction Company Limited, Through the Director & Ors.’ in [Civil Appeal No. 8129/2019] shall not come to its aid.
When we look into the aforesaid case, from the facts it is clear that the disputes pertaining to tariff rate relief was already pending in the High Court in the writ petition, which has been noticed in paragraphs 7 & 8. The question has been noticed in paragraph 1. When we look into the judgment of the Madras High Court in paragraphs 28 & 34 which is relied by the appellant, it is clear that High Court has noticed that the dispute regarding tariff was already engaging pending litigation when CIRP commenced. It was held that Interim Resolution Professional (IRP) was under responsibility to collect information and liabilities from sources and place it before the CoC.
Learned counsel for the appellant has also relied on paragraph 24 of the judgment, which is as follows:
“24.In view of the subsequent march of law through judicial pronouncements, Gnanashyam case and Rainbow papers case has to read in harmony. These two judgments if read together, make it clear that after approval of the resolution plan and its effective implementation, the new management will have the benefit of starting its business with ‘clean slate’. Provided, the Statutory creditors are treated par with secured creditors and the terms in the special statute of the service provider like EB, Telcom etc. if specifically create first charge on the assets of the corporate debtor, it will not suffer the mischief of repugnance with IBC.”
The judgment of the Madras High Court relied by the appellant cannot come to any aid to the appellant in the facts of the present case, since there are several distinguishing features in the present case. Firstly, the writ appeal arose before the Division Bench of Madras High Court out of a Single Judges order passed in a writ petition. Secondly, Madras High Court has held that there was no proper publication about the initiation of the CIRP. RP has not inquired about the statutory dues payable to TANGEDCO. In the present case despite the appellant having not filed the claim, the resolution plan reflected payment to the appellant, in the case before the Madras High Court, neither any claim was admitted nor any payment was proposed in the resolution plan. High Court in the above judgment had further noted that [Writ Petition No.26553/2023] was pending before the High Court and transferred to Tamil Nadu Electricity Regulatory Authority, where dues payable by the corporate debtor were subject matter of litigation. We thus are of the view that judgment of Division Bench of Madras High Court relied by the appellant is clearly distinguishable in the facts of the present case.
Reverting to the facts of the present case, in the present case the appellant who was operational creditor of the corporate debtor having his dues of property tax, admittedly not filed any claim. But despite the appellant having not filed the claim, the resolution plan proposed an amount of Rs.27,368/- which plan was approved and the said amount was paid to the appellant.
Learned counsel for the appellant submitted that he has not encashed the said amount.
Be that as it may, when resolution plan make payment and the approval of the resolution plan is not under challenge before any Court and the amount which was pre-CIRP dues was deposited by SRA under protest, the adjudicating authority in facts of the present case did not commit any error in allowing the application permitting refund of the amount deposited under the protest.
With regard to pre-CIRP dues when a claim is not filed any claim to the extent is not filed shall extinguished in view of the judgment of Hon’ble Supreme Court in ‘Ghanshyam Mishra & Sons Pvt. Ltd.’ (supra).
We are of the view that issues raised in this appeal is fully covered by the Judgment of the Hon’ble Supreme Court in ‘Ghanshyam Mishra & Sons Pvt. Ltd.’ (supra), which has also been relied by the adjudicating authority in the impugned order.
We thus are of the view that no grounds have been made out to interfere with the impugned order.
The appeal is dismissed.