Pre-insolvency Process Demand
Supreme Court junks income tax department's appeal against Patanjali Foods
This story was originally published at 19:48 IST on 18 February 2025
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NEW DELHI – The Supreme Court has dismissed the income tax department's plea to raise pre-insolvency process demand of INR 1.86 billion against Patanjali Foods Ltd. for various assessment years, relating to now-acquired debt-ridden Ruchi Soya Industries Ltd. Informing the BSE, Patanjali Foods said with this verdict, the top court had reaffirmed the position of law that pre-insolvency process liability if not forming part of the claims, stands extinguished and no person will be entitled to initiate or continue any proceedings in respect to a claim, which is not part of the resolution plan.
In 2017, the Mumbai bench of the National Company Law Tribunal had admitted a petition to start insolvency proceedings against Ruchi Soya Industries Ltd. Thereafter, the interim resolution professional had issued a public notice for inviting claims from various stakeholders.
In 2019, the consortium of Patanjali Ayurved Ltd, Divya Yog Mandir Trust (through its business undertaking, Divya Pharmacy), Patanjali Parivahan Pvt. Ltd. and Patanjali Gramudhyog Nyas had submitted its resolution plan for debt-ridden Ruchi Soya Industries. Patanjali Ayurved is the parent company of Patanjali Foods Ltd. The name of the company was changed from Ruchi Soya Industries to Patanjali Foods Ltd. after the acquisition in 2022.
As per the resolution plan, the liquidated value of all operating debt, including the debt, if any, of the Income Tax Department which was also part of operating debt was NIL. The resolution plan further provided that all claims, whether final or contingent, whether disputed or undisputed, and whether notified or claimed against the company of all governmental authorities, relating to the period prior to the closing date, shall stand fully and finally discharged and settled.
After the resolution plan was given effect to, the income tax department initiated reassessment proceedings against petitioner for assessment year 2013-14 by issuing a notice under Section 148 of the Income Tax Act, 1961 in 2021. The petitioner filed objections to the initiation of reassessment proceedings and said that the proceedings for assessment year 2013-14, being a period prior to the closing date are “non-est” and could not have been initiated by the income tax department in view of the resolution plan approved by the tribunal. Last year, the Bombay High Court rejected the tax department’s notices against Patanjali Foods.
On Tuesday, the shares of Patanjali Foods Ltd. closed 1.9% higher at INR 1,815.50 on the National Stock Exchange. End
Reported by Surya Tripathi
Edited by Deepshikha Bhardwaj
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