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The Binani Cements was acquired by the Aditya Birla Group-owned cement company through Corporate Insolvency Resolution Process (CIRP) in 2018 for Rs 7,900 crore. Later, it was renamed as UltraTech Nathdwara Cement.
On Tuesday, a division bench of Rajasthan High Court comprising Justice Sandeep Mehta and Justice Vijay Bishnoi, while allowing the plea filed by UltraTech, observed that the demand notices are ex-facie illegal, arbitrary and per se cannot be sustained since that was already accounted for at the time of the revival plan approved by the lenders.
“We are of the firm view that the authorities should have adopted a pragmatic approach and immediately withdrawn the demands rather than indulging in totally frivolous litigation, thereby unnecessarily adding to the overflowing dockets of cases in the courts,” said the Jodhpur division bench in its 26-page order.
The genesis of the dispute lies in several tax notices issued by the GST department of Rajasthan for the dues of around Rs 72 crore between February to June 2019 for the unpaid dues of Binani Cement.
The lawyers for the GST department had argued in the court that it was not heard by the committee of creditors (CoC) before finalising the resolution plan and as such, it is not bound by it.
Countering this, counsels for the UltraTech argued in their petition that the IBC is a special law, which has been ordained for the purpose of bringing out an industry from distress and to ensure that its assets do not go to waste through liquidation.
Allowing the petition of UltraTech, the court ruled that the purpose of the statute is very clear that it intends to revive dying industry by providing an opportunity for a resolution applicant to take over the same and begin the operation on a clean slate.
“This judgment re-emphasises the amendment in the code and will impact the revenue departments of both state and centre,” said Ashish Pyasi, associate partner at law firm Dhir & Dhir Associates. “Now they will not be able to push for their dues as a priority over other payments under the resolution plan.”
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