In the recent Order dated 04.09.2017 given by the Coordinated Division Bench of the Hon'ble Delhi High Court, namely Justice S. Murlidhar and Justice Prathiba M. Singh, in the PR. Commissioner of Income Tax-6, New Delhi v. Monnet Ispat & Energy limited, the Hon'ble Court has observed that the Moratorium period under Section 14 of the Insolvency and Bankruptcy Code ("the Code") announced by the National Company Law Tribunal ("NCLT") would be applicable to the order of the Income Tax Appellate Tribunal ("ITAT")in respect of the tax liability of the Assess.
In the instant case, the NCLT has admitted the application of State Bank of India, financial creditor by its order dated 18th July 2017 against the Monnet Ispat Energy Ltd ("Corporate Debtor") under section 7 of the Code. The question to decide before Hon'ble Delhi High Court was whether the order given by the ITAT against the Corporate Debtor will be stayed by the moratorium applicable under section 14 of the Code. While answering the question in affirmative, the Hon'ble High Court has quoted the judgment of the Hon'ble Supreme Court i.e. M/s Innoventive Industries Ltd. v. ICICI Bank wherein the Hon'ble Apex Court has observed that Section 238 of the Code unambiguously provide that the Code will apply, notwithstanding anything inconsistent therewith contained in any other law for the time being in force. Section 14(1)(a) of the Code states, inter alia, that on the 'Insolvency Commencement Date' the Adjudicatory Authority (AA) shall by order declare moratorium for prohibiting "the institution of suits or continuation of pending suits or proceeding against the corporate debtor including execution of any judgment, degree or order in any court of law, tribunal, arbitration panel or other authority".
Following the above ratio of the Innoventive Industries Ltd vs. ICICI Bank Case, the Hon'ble Delhi High Court held that the execution of the Order given by the ITAT in respect of the tax liability will be stayed until the approval of the Resolution Plan. The Hon'ble Delhi High Court adjudged the similar question in CCT South Delhi vs. Monnet Ispat & energy Ltd., wherein relying on the order of the above mentioned case, held that the moratorium period will be applicable to the execution of Order passed by the ITAT.
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