Page 83 - GSTL_18th June 2020_Vol 37_Part 3

2020 ] ULTRA TECH NATHDWARA CEMENT LTD. v. UNION OF INDIA 297
Role of the committee of creditors in the corporate resolution process
31. Since it is the commercial wisdom of the Committee of Creditors that
is to decide on whether or not to rehabilitate the corporate debtor by means
of acceptance of a particular resolution plan, the provisions of the Code and
the Regulations outline in detail the importance of setting up of such Com-
mittee, and leaving decisions to be made by the requisite majority of the
members of the aforesaid Committee in its discretion. Thus, Section 21(2) of
the Code mandates that the Committee of Creditors shall comprise all fi-
nancial creditors of the corporate debtor. “Financial creditors” are defined
in Section 5(7) of the Code as meaning persons to whom a financial debt is
owed and includes a person to whom such debt has been legally assigned
or transferred. “Financial debt” is then defined in Section 5(8) of the Code
as meaning a debt along with interest, if any, which is disbursed against the
consideration for the time value of money. “Secured creditor” is separately
defined in Section 3(30) of the Code as meaning a creditor in favour of
whom a security interest is created and “security interest” is defined by
Section 3(31) as follows :
3. Definitions. - In this Code, unless the context otherwise
requires. -
xxx xxx xxx
(31) “security interest” means right, title or interest or a claim to
property, created in favour of, or provided for a secured creditor by a
transaction which secures payment or performance of an obligation
and includes mortgage, charge, hypothecation, assignment and en-
cumbrance or any other agreement or arrangement securing payment
or performance of any obligation of any person :
Provided that security interest should not include a performance
guarantee;”
15. On these submissions, Learned Senior Counsel Shri Vohra vehe-
mently and fervently urged that the writ petition deserves acceptance and the
impugned notices as well as any future demands deserve to be quashed and set
aside and the respondents be restrained from raising any future demands from
the petitioner towards the Goods and Services Tax for the period prior to the res-
olution plan being finalized.
16. Per contra, Shri Rajvendra Saraswat Learned Counsel representing
the respondents vehemently and fervently opposed the submissions advanced
by the petitioner’s counsel and urged that the department was not heard by the
COC before finalizing the resolution plan and as such, it is not bound by the
same. He further contended that the mere summary rejection of the SLP pre-
ferred by the department against the resolution plan would not foreclose the
right of the department to raise its valid demands from the successful resolution
applicant. Nonetheless, Shri Saraswat was not in a position to dispute the fact
that the SLP preferred by the department before Hon’ble the Supreme Court
covered all issues including the issue that the department was not heard by the
COC. Shri Saraswat is also not in a position to dispute the fact that the amended
Section 31 of the Act applies to the situation hand fully because the operational
creditors have pertinently been included in the scope and ambit thereof.
17. We have given our thoughtful consideration to the arguments ad-
vanced at the bar and have gone through the material available on record and
the impugned notices.
18. It cannot be gainsaid that the controversy at hand hours around the
simple issue as to whether the resolution plan approved by the COC is binding
GST LAW TIMES  18th June 2020  83