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TMI Blog2021 (4) TMI 613X X X X Extracts X X X X X X X X Extracts X X X X ..... admission of petition under Section 7, there are various important duties and functions entrusted to RP and CoC. RP is required to issue a publication inviting claims from all the stakeholders. He is required to collate the said information and submit necessary details in the information memorandum. The resolution applicants submit their plans on the basis of the details provided in the information memorandum. The resolution plans undergo deep scrutiny by RP as well as CoC. In the negotiations that may be held between CoC and the resolution applicant, various modifications may be made so as to ensure, that while paying part of the dues of financial creditors as well as operational creditors and other stakeholders, the Corporate Debtor is revived and is made an ongoing concern. After CoC approves the plan, the Adjudicating Authority is required to arrive at a subjective satisfaction, that the plan conforms to the requirements as are provided in subsection (2) of Section 30 of the I B Code. Only thereafter, the Adjudicating Authority can grant its approval to the plan. The word other stakeholders would squarely cover the Central Government, any State Government or any local aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I B Code has come into effect; (iii) Consequently all the dues including the statutory dues owed to the Central Government, any State Government or any local authority, if not part of the resolution plan, shall stand extinguished and no proceedings in respect of such dues for the period prior to the date on which the Adjudicating Authority grants its approval under Section 31 could be continued. - CIVIL APPEAL NO. 8129 OF 2019 - - - Dated:- 13-4-2021 - JUSTICE R. F. NARIMAN, JUSTICE B.R. GAVAI And JUSTICE HRISHIKESH ROY For the Appellant : Mr. E. C. Agrawala, AOR Ms. Anne Mathew, AOR For the Respondent : Mr. Rabin Majumder, AOR Mr. Bhakti Vardhan Singh, AOR Mr. Pankaj Pandey, Adv. Mr. Rajiv Shankar Dvivedi, Adv. Mr. Kumar Anurag Singh, Adv. Mr. Saurabh Jain, Adv Mr. Zain Khan, Adv Mr. Shwetank Singh, Adv Ms. Tulika Mukherjee, AOR Mr. Raj Kumar Mehta, AOR Ms. Himanshi Andley, Adv. Mr. Sandeep Bajaj, Adv. Mr. Soayib Qureshi, AOR Ms. Aditi Pundhir, Adv Mr. Buddy A. Ranganadhan, Adv. Mr. A. V. Rangam, AOR Mr. Amit Kumar Mishra, Adv. Mr. Siddharth Sharma, Adv. Mr. Shashank Gautam, Adv. Mr. Shashank Manish, AOR Mr. Arvind Thapliyal, Adv. Mr. Manik Ahluwalia, Adv. Ms. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m 3.8.2017. The appointment of IRP was confirmed by the Committee of Creditors (hereinafter referred to as CoC ) in their meeting held on 4.9.2017. The Resolution Professional (hereinafter referred to as RP ) continued with the resolution process by inviting Expression of Interest (hereinafter referred to as EOI ) and applications for resolution plan in accordance with the provisions of the I B Code and the Regulations framed thereunder. The initial period of CIRP of 180 days expired on 29.1.2018. At the request of CoC, RP moved an application for extension of CIRP period, which came to be extended by 90 days i.e. till 29.4.2018. 6. In response to the invitation, three Resolution Plans were received by RP each from, Edelweiss Asset Reconstruction Company Limited (hereinafter referred to as EARC ), respondent No.1 herein, Orissa Mining Private Limited (hereinafter referred to as OMPL ) and Ghanashyam Mishra Sons Private Limited (hereinafter referred to as GMSPL ), the appellant herein, respectively. In the 8th meeting of the CoC held on 14.3.2018, EARC was declared as H1 Bidder. However, EARC failed to satisfy CoC in the negotiations and as such, the resolution plan submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntee, RP violated Regulations 13 and 14 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (hereinafter referred to as the Regulations ). It was prayed in the application for a direction to the successful resolution applicant i.e. GMSPL, to undertake to pay the full amount due and payable under the said corporate guarantee and further to issue directions for protecting the rights of the lenders of APNRL as pledgee. One more Application being C.A. (IB) No.509/KB/2018 was filed by the District Mining Officer, Department of Mining and Geology, Jharkhand challenging nonadmission of its claim to the tune of ₹ 93,51,91,724/and ₹ 760.51 crore. 10. NCLT by an elaborate order dated 22.6.2018 approved the Resolution Plan of GMSPL, which was duly approved by CoC by voting share of more than 89.23%. Rest of the applications including the two filed by EARC, the respondent No.1 herein, came to be rejected. 11. Being aggrieved by the order passed by NCLT, EARC preferred Company Appeal being Company Appeal (AT) (Insolvency) Nos. 437/2018 and 444/2018 before the National Company Law Appellate Tribunal, New Delhi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, it was the claim of Deepak Singh, appellant therein, that he had joined APNRL, the holding Company of the Corporate Debtor, as the PresidentGroup Head HR from 2.6.2014 to 9.3.2015. It was his claim, that he had an amount of ₹ 17,03,000/recoverable from the said APNRL and as such, was an Operational Creditor. It was submitted, that though the claim of the said appellant was valid, it was illegally rejected by RP. NCLAT held, that insofar as the said appeal is concerned, no ground as is permissible under subsection (3) of Section 61 of I B Code is made out and as such, relief could not be granted in the appeal. However, it was observed, that the said order passed in the appeal would not come in the way of appellant to move the appropriate forum for appropriate relief. 15. GMSPL, thus, aggrieved by the observations made by NCLAT to the effect, that the claims of the parties, which are not included in the Resolution Plan could be agitated by them before the other forums, has preferred the present appeal. CIVIL APPEAL ARISING OUT OF SPECIAL LEAVE PETITION (CIVIL) NO.11232 OF 2020 [ULTRATECH NATHDWARA CEMENT LIMITED VS. STATE OF UTTAR PRADESH AND OTHERS 16. The app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pproved the Resolution Plan submitted by the present appellant. Pursuant to the approval by CoC, NCLAT granted approval to the Resolution Plan of appellant vide order dated 14.11.2018. The said order came to be challenged before this Court in Civil Appeal No. 10998/2018, which was dismissed by this Court vide order dated 19.11.2018. 21. On 13.12.2018, the name of the Corporate Debtor was changed to UltraTech Nathdwara Cement Limited from Binani Cement Limited and the management of the Corporate Debtor was taken over by Ultratech Cement Limited w.e.f. 20.11.2018. Thereafter, the appellant addressed various communications to the tax authorities, who are respondents herein informing them, that after the Resolution Plan was approved by NCLT, all proceedings instituted against the Corporate Debtor, arising and pending before the transfer date shall stand withdrawn. It was also informed, that all the liabilities towards operational creditors shall be deemed to have been settled by discharge and payment of the resolution amount by the Corporate Debtor. However, it was insisted by the tax authorities, that since there was no specific stay, proceedings could not be dropped. After various ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Corporate Debtor in respect of which CIRP proceedings commenced in July 2017 and ended in July 2018, when NCLT approved the Resolution Plan submitted by a Consortium of Aion Investment Private Limited and JSW Steel Limited ( AionJSW for short). Prior to approval by NCLT, CoC had granted approval to the said Resolution Plan by a voting majority of 98.97%. It is the contention of the petitioner, that in accordance with the provisions of I B Code, RP had made a public announcement thereby, inviting claims from Creditors. Contending, that the demand notices issued by the respondents for recovery of Service Tax towards Royalty, District Mineral Foundation ( DMF for short) and National Mineral Exploration Trust ( NMET for short) against the iron ore purchased by the petitioner Company are contrary to the law laid down by this Court in the case of Committee of Creditors of Essar Steel India Limited Through Authorized Signatory v. Satish Kumar Gupta and Others (2020) 8 SCC 531 , the petitioner has directly approached this Court by filing a writ petition under Article 32 of the Constitution of India. CIVIL APPEALS ARISING OUT OF SPECIAL LEAVE PETITION (CIVIL) NOS.71477150 OF 2020 [E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat once the adjudicating authority approves the Resolution Plan, it shall be binding on everyone including Corporate Debtor and its employees, Members, Creditors including the Central Government, any State Government or any local authority, to whom a debt is owed in respect of the payment of dues arising under any law for the time being in force, guarantors and other stakeholders, involved in the Resolution Plan. He submitted, that once a Resolution Plan is accepted, if any additional liability is thrust upon the Resolution Plan, the entire plan would become unworkable, resulting into the frustration of the very purpose of the enactment i.e. revival of the Corporate Debtor. 28. Dr. Singhvi further submitted, that perusal of the Resolution Plan submitted by EARC and particularly Clause 2.1.3 thereof would reveal, that the said Plan also provides, that all the debts and all dues, liability or obligations other than the one, which are included in Resolution Plan, shall be deemed to have been irrevocably waived and permanently extinguished and written off in full with effect from the effective date. He submitted that a similar provision is also made in the Resolution Plan submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat since the findings recorded by NCLAT are in its favour, there was no occasion for it to prefer an appeal. He submitted, that in any event, it can raise the grounds insofar as the findings in the impugned order, which are adverse to EARC in addition to supporting the final judgment in its favour. 34. Shri Neeraj Kishan Kaul, learned Senior Counsel appearing on behalf of the appellant submitted, that assuming without admitting that EARC could be considered as the financial creditor, it could have had voting right only to the extent of 9% and even in that eventuality, resolution plan of GMSPL would have been approved by CoC with the majority of more than 80%. SUBMISSIONS IN CIVIL APPEAL ARISING OUT OF SPECIAL LEAVE PETITION (CIVIL) NO.11232 OF 2020 [UltraTech Nathdwara Cement Limited v. State of Uttar Pradesh and Others] 35. Dr. Singhvi, learned Senior Counsel appearing on behalf of the appellantUltraTech Nathdwara Cement Limited submitted, that a conjoint reading of subsection (10) of Section 3 and subsections (20) and (21) of Section 5 would show, that even if there was no amendment to Section 31 of I B Code by the 2019 Amendment, still the Central Government and a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... remedy is a rule of selfrestraint and in the appropriate areas carved out by this Court, entertaining a petition under Article 226, despite availability of alternative remedy, would be permissible. He submitted, that applying the said principle, the proceedings before the authority since stand prohibited in view of the provisions of the I B Code, the High Court erred in refusing to entertain the petition. 38. The learned Senior Counsel further submitted, that despite the pendency of the present appeal, the Joint Commissioner, Commercial Tax, Ghaziabad has passed an Assessment Order dated 2.2.2021 for the period prior to admission of Section 7 petition, as such the appellant has filed IA No.26255/2021 challenging the said assessment order. 39. Dr. Singhvi further submitted, that though the respondent authorities were aware of the Resolution Proceedings, they had failed to submit any claim, in response to the public notices issued by RP. 40. Shri V. Shekhar, learned Senior Counsel appearing on behalf of the State Authorities justified the impugned order and prayed for dismissal of the appeal. He submitted, that the order passed by NCLT would not come in the way of adjudicato ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Hon ble Finance Minister in Rajya Sabha on 29.7.2019, to buttress his submissions that the 2019 Amendment of Section 31 of I B Code is clarificatory in nature. SUBMISSIONS IN APPEALS ARISING OUT OF SPECIAL LEAVE PETITION (CIVIL) NOS.71477150 OF 2020 [Electrosteel Steels Limited, Bokaro, Jharkhand vs. State of Jharkhand and Others] 44. Dr. Singhvi submitted, that in the present matter though NCLT had approved the Resolution Plan on 17.4.2018 and NCLAT had dismissed the appeal on 10.8.2018, only thereafter on 17.8.2018, the reassessment order came to be passed for the period 201213. He submitted, that immediately after the appellant discovered about the said order, the same was challenged in a writ petition. However, the High Court has dismissed the petition on erroneous grounds. It is submitted, that one of the grounds on which the petition is dismissed is, that it is the Vedanta Limited, which was an aggrieved party since it was a Resolution Applicant and as such, the petition at the behest of the present appellant, which was a Corporate Debtor was not tenable. He submitted, that the second ground on which the writ petition is dismissed is that the State Authoriti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed the present intervention application. Shri Jaideep Gupta, learned Senior Counsel appearing on behalf of the said intervenor applicant has made submissions on similar lines as are advanced by Dr. Singhvi and Shri Kaul, learned Senior Counsel appearing in the other matters. CONSIDERATION 48. We have extensively heard the learned counsel appearing for the parties in all the matters, perused the written submissions and materials on record. 49. The provisions of I B Code have undergone scrutiny in various judgments of this Court. We would not like to burden the present judgment with the provisions of the statute, which have been duly reproduced and considered in the earlier judgments of this Court. 50. In the case of Innoventive Industries Ltd. vs. ICICI Bank Anr. (2018) 1 SCC 407 after reproducing the Statement of Objects and Reasons of I B Code in paragraph 12, this Court observed thus: 13. One of the important objectives of the Code is to bring the insolvency law in India under a single unified umbrella with the object of speeding up of the insolvency process. As per the data available with the World Bank in 2016, insolvency resolution in India took ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owed to any financial creditor of the corporate debtor - it need not be a debt owed to the applicant financial creditor. Under Section 7(2), an application is to be made under subsection (1) in such form and manner as is prescribed, which takes us to the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. Under Rule 4, the application is made by a fi38 nancial creditor in Form 1 accompanied by documents and records required therein. Form 1 is a detailed form in 5 parts, which requires particulars of the applicant in Part I, particulars of the corporate debtor in Part II, particulars of the proposed interim resolution professional in Part III, particulars of the financial debt in Part IV and documents, records and evidence of default in Part V. Under Rule 4(3), the applicant is to dispatch a copy of the application filed with the adjudicating authority by registered post or speed post to the registered office of the corporate debtor. The speed, within which the adjudicating authority is to ascertain the existence of a default from the records of the information utility or on the basis of evidence furnished by the financial creditor, is important. This it m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cess is also very important. The entire process is to be completed within a period of 180 days from the date of admission of the application under Section 12 and can only be extended beyond 180 days for a further period of not exceeding 90 days if the committee of creditors by a voting of 75% of voting shares so decides. It can be seen that time is of essence in seeing whether the corporate body can be put back on its feet, so as to stave off liquidation. 32. As soon as the application is admitted, a moratorium in terms of Section 14 of the Code is to be declared by the adjudicating authority and a public announcement is made stating, inter alia, the last date for submission of claims and the details of the interim resolution professional who shall be vested with the management of the corporate debtor and be responsible for receiving claims. Under Section 17, the erstwhile management of the corporate debtor is vested in an in41 terim resolution professional who is a trained person registered under Chapter IV of the Code. This interim resolution professional is now to manage the operations of the corporate debtor as a going concern under the directions of a committee of credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd make it a running concern. For that, a resolution applicant has to prepare a resolution plan on the basis of the Information Memorandum. The Information Memorandum, which is required to be prepared in accordance with Section 29 of I B Code along with Regulation 36 of the Regulations, is required to contain various details, which have been gathered by RP after receipt of various claims in response to the statutorily mandated public notice. The resolution plan is required to provide for the payment of insolvency resolution process costs, management of the affairs of the Corporate Debtor after approval of the resolution plan; the implementation and supervision of the resolution plan. It is only after the Adjudicating Authority satisfies itself, that the plan as approved by CoC with the requisite voting share of financial creditors meets the requirement as referred to in subsection (2) of Section 30, grants its approval to it. It is only thereafter, that the said plan is binding on the Corporate Debtor as well as its employees, members, creditors, guarantors and other stakeholders involved in the resolution Plan. The moratorium order passed by the Adjudicating Authority under Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ution must explicitly require the repayment of any interim finance and costs of the insolvency resolution process will be paid in priority to other payments; (ii) that the plan must explicitly include payment to all creditors not on the creditors committee, within a reasonable period after the solution is implemented; and lastly (iii) the plan should comply with existing laws governing the actions of the entity while implementing the solutions. 140. The Committee also expressed the opinion, that there should be freedom permitted to the overall market, to propose solutions on keeping the entity as a going concern. The Committee opined, that the details as to how the insolvency is to be resolved or as to how the entity is to be revived, or the debt is to be restructured will not be provided in the I B Code but such a decision will come from the deliberations of CoC in response to the solutions proposed by the market. 141. This Court in the case of K. Sashidhar (supra) observed thus: 32. Having heard the learned counsel for the parties, the moot question is about the sequel of the approval of the resolution plan by CoC of the respective corporate debtor, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sis of thorough examination of the proposed resolution plan and assessment made by their team of experts. The opinion on the subject matter expressed by them after due deliberations in CoC meetings through voting, as per voting shares, is a collective business decision. The legislature, consciously, has not provided any ground to challenge the commercial wisdom of the individual financial creditors or their collective decision before the adjudicating authority. That is made non justiciable. (emphasis supplied) 143. This Court has held, that it is not open to the Adjudicating Authority or Appellate Authority to reckon any other factor other than specified in Sections 30(2) or 61(3) of the I B Code. It has further been held, that the commercial wisdom of CoC has been given paramount status without any judicial intervention for ensuring completion of the stated processes within the timelines prescribed by the I B Code. This Court thus, in unequivocal terms, held, that there is an intrinsic assumption, that financial creditors are fully informed about the viability of the corporate debtor and feasibility of the proposed resolution plan. They act on the basis of thorough ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the plan, including the manner of distribution of funds among the various classes of creditors. It has further been held, that CoC is entitled to suggest a modification to the prospective resolution applicant, so that carrying on the business of the Corporate Debtor does not become impossible, which suggestion may, in turn, be accepted by the resolution applicant with a consequent modification as to distribution of funds, etc. It has been held, that what is important is, the commercial wisdom of the majority of creditors, which is to determine, through negotiation with the prospective resolution applicant, as to how and in what manner the corporate resolution process is to take place. 146. The view taken in the case of K. Sashidhar (supra) and Committee of Creditors of Essar Steel India Limited through Authorised Signatory (supra) has been reiterated by another three Judges Bench of this Court in the case of Maharashtra Seamless Limited (supra). 147. In all the aforesaid three judgments of this Court, the scope of jurisdiction of the Adjudicating Authority (NCLT) and the Appellate Authority (NCLAT) has also been elaborately considered. It will be relevant to refer to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmitted is, as to whether the resolution plan provides: (i) the payment of insolvency resolution process costs in a specified manner in priority to the repayment of other debts of the corporate debtor, (ii) the repayment of the debts of operational creditors in prescribed manner, (iii) the management of the affairs of the corporate debtor, (iv) the implementation and supervision of the resolution plan, (v) the plan does not contravene any of the provisions of the law for the time being in force, (vi) conforms to such other requirements as may be specified by the Board. 149. It will be further relevant to refer to the following observations of this Court in K. Sashidhar (supra): 57. Indubitably, the remedy of appeal including the width of jurisdiction of the appellate authority and the grounds of appeal, is a creature of statute. The provisions investing jurisdiction and authority in NCLT or NCLAT as noticed earlier, have not made the commercial decision exercised by CoC of not approving the resolution plan or rejecting the same, justiciable. This position is reinforced from the limited grounds specified for instituting an appeal that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the parameters of such review having been clearly laid down in K. Sashidhar 153. It can thus be seen, that this Court has clarified, that the limited judicial review, which is available, can in no circumstance trespass upon a business decision arrived at by the majority of CoC. 154. In the case of Maharashtra Seamless Limited (supra), NCLT had approved the plan of appellant therein with regard to CIRP of United Seamless Tubulaar (P) Ltd. In appeal, NCLAT directed, that the appellant therein should increase upfront payment to ₹ 597.54 crore to the financial creditors , operational creditors and other creditors by paying an additional amount of ₹ 120.54 crore. NCLAT further directed, that in the event the resolution applicant failed to undertake the payment of additional amount of ₹ 120.54 crore in addition to ₹ 477 crore and deposit the said amount in escrow account within 30 days, the order of approval of the resolution plan was to be treated to be set aside. While allowing the appeal and setting aside the directions of NCLAT, this Court observed thus: 30. The appellate authority has, in our opinion, proceeded on equitable percept ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccount for determining whether or not the corporate debtor can be kept running as a going concern have been placed before the Committee of Creditors and CoC has taken a conscious decision to approve the resolution plan, then the adjudicating authority will have to switch over to the hands off mode. It is not the case of the corporate debtor or its promoter/Director or anyone else that some of the factors which are crucial for taking a decision regarding the viability and feasibility, were not placed before CoC or the resolution professional . 57. It could thus be seen, that the legislature has given paramount importance to the commercial wisdom of CoC and the scope of judicial review by Adjudicating Authority is limited to the extent provided under Section 31 of I B Code and of the Appellate Authority is limited to the extent provided under subsection (3) of Section 61 of the I B Code, is no more res integra. 58. Bare reading of Section 31 of the I B Code would also make it abundantly clear, that once the resolution plan is approved by the Adjudicating Authority, after it is satisfied, that the resolution plan as approved by CoC meets the requirements as referred to in sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... btor by other persons. The details with regard to all material litigation and an ongoing investigation or proceeding initiated by Government and statutory authorities are also required to be contained in the information memorandum. So also the details regarding the number of workers and employees and liabilities of the Corporate Debtor towards them are required to be contained in the information memorandum. 61. All these details are required to be contained in the information memorandum so that the resolution applicant is aware, as to what are the liabilities, that he may have to face and provide for a plan, which apart from satisfying a part of such liabilities would also ensure, that the Corporate Debtor is revived and made a running establishment. The legislative intent of making the resolution plan binding on all the stakeholders after it gets the seal of approval from the Adjudicating Authority upon its satisfaction, that the resolution plan approved by CoC meets the requirement as referred to in subsection (2) of Section 30 is, that after the approval of the resolution plan, no surprise claims should be flung on the successful resolution applicant. The dominant purpose is, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Writ Petition (Civil) No.1177 of 2020 and Civil Appeals arising out of Special Leave Petition (Civil) Nos. 7147-7150 of 2020, the issue with regard to the statutory claims of the State Government and the Central Government in respect of the period prior to the approval of resolution plan by NCLT, will have to be considered. 66. Vide Section 7 of Act No.26 of 2019 (vide S.O. 2953(E), dated 16.8.2019 w.e.f. 16.8.2019), the following words have been inserted in Section 31 of the I B Code. including the Central Government, any State Government or any local authority to whom a debt in respect of the payment of dues arising under any law for the time being in force, such as authorities to whom statutory dues are owed 67. As such, with respect to the proceedings, which arise after 16.8.2019, there will be no difficulty. After the amendment, any debt in respect of the payment of dues arising under any law for the time being in force including the ones owed to the Central Government, any State Government or any local authority, which does not form a part of the approved resolution plan, shall stand extinguished. 68. The only question, which remains is, what happens to such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rk, it has become necessary to amend certain provisions of the Insolvency and Bankruptcy Code.The Insolvency and Bankruptcy Code (Amendment) Bill, 2019, inter alia, provides for the following, namely: (a) ..; (b) ..; (c) ..; (d) ..; (e) ; (f) to amend subsection (1) of section 31 of the Code to clarify that the resolution plan approved by the Adjudicating Authority shall also be binding on the Central Government, any State Government or any local authority to whom a debt in respect of payment of dues arising under any law for the time being in force, such as authorities to whom statutory dues are owed, including tax authorities; (g) .. [emphasis supplied] 71. Perusal of the SOR would reveal, that one of the prime objects of I B Code was to provide for implementation of insolvency resolution process in a time bound manner for maximisation of value of assets in order to balance the interests of all stakeholders. However, it was noticed, that in some cases there was extensive litigation causing undue delays resultantly hampering the value maximisatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... faults of the earlier promoters. No. Once the resolution plan is accepted, the earlier promoters will be dealt with as individuals for their criminality but not the new bidder who is trying to restore the company. So, that is very clear .. (emphasis supplied) 73. It could thus be seen, that in the speech the Hon ble Finance Minister has categorically stated, that Section 238 provides that I B Code will prevail in case of inconsistency between two laws. She also stated, that there was question about indemnity for successful resolution applicant and that the amendment was clearly making it binding on the Government. She stated, that the Government will not make any further claim after resolution plan is approved. So, that is going to be a major sense of assurance for the people who are using the resolution plan. She has categorically stated, that she would want all the Hon ble Members to recognize this message and communicate further that I B Code gives that comfort to all new bidders. They need not be scared that the taxman will come after them for the faults of the earlier promoters. She further states, that once the resolution plan is accepted, the earlier p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his Court in the case of Union of India and others vs. Martin Lottery Agencies Ltd. (2009) 12 SCC 209, in paragraph 38 has relied on the aforesaid observations made in the judgment of K.P. Varghese (supra). 76. It could thus be seen, that the speech made by Hon ble Finance Minister while explaining the amendment could be referred to for ascertaining what was the reason for moving the Bill. The speech can be used for finding out: (1) what were the circumstances in which the amendment was carried out; (2) what was the mischief for which the unamended section did not provide; and (3) what was sought to be remedied by amended enactment. 77. It is clear, that the mischief, which was noticed prior to amendment of Section 31 of I B Code was, that though the legislative intent was to extinguish all such debts owed to the Central Government, any State Government or any local authority, including the tax authorities once an approval was granted to the resolution plan by NCLT; on account of there being some ambiguity, the State/Central Government authorities continued with the proceedings in respect of the debts owed to them. In order to remedy the said mischief, the legislatur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SCR 623. The question whether an explanation added by an amending Act is really explanatory or not would depend on its construction. In S. K. Govindan and Sons v. Commr. Of Incometax, Cochin, AIR 2001 SC 254 p. 260 : (2001) 1 SCC 460 : (2001) 247 ITR 192, Explanation 2 inserted in section 139(8) of the Incometax Act, 1961 was held to be clarificatory. But in Birla Cement Works v. The Central Board of Direct Taxes, JT 2001 (3) SC 256, p. 262 : (2001) 9 SCC 35 : AIR 2001 SC 1080, it was held that mere addition of an explanation by an amending Act in a taxing Act cannot, without more, be held to be clarificatory and retrospective. In Commissioner of Incometax Bhopal v. Shelly Products, (2003) 5 SCC 461, pp. 477, 478 : AIR 2003 SC 2532 provisos (a) and (b) added in section 240 of the Incometax Act, 1961 by amending Act which came into force on 141989 were held to be clarificatory and retrospective . It is well settled that if a statute is curative or merely declaratory of the previous law retrospective operation is generally intended - Channan Singh v. Jai Kuar (Smt.), AIR 1970 SC 349, p. 349, p. 351 : (1969) 2 SCC 429 . The language shall be deemed always to have meant - CIT v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndrasekharan - 1995 (1) Scale 692 : 1995 AIR SCW 1422 : AIR 1996 SC 238 , where the Supreme Court after quoting them (from 5th Edition pp. 315, 316) said : No exception can be taken to the above observations . - Ibid, p. 704 (Scale) : p. 246 (AIR) A proviso added from 1.4.1988 to section 43 B inserted in the Income Tax Act, 1961 from 1.4.1984 came up for consideration in Allied Motors(P.) Ltd. v. Commissioner of Income-tax - AIR 1997 Sc 1361, pp. 1366, 1367 : 1997 (3) SCC 472; Similarly in Commissioner of Income Tax v. Suresh N. Gupta, (2008) 4 SCC 362 paras 38 and 39 : AIR 2008 SC 572, proviso inserted in section 113 of the Incometax Act with effect from 162002 was held to be clarificatory and retrospective. Again in Commissioner of Income Tax v. Alom Extensions Ltd., (2010) 1 SCC 489 : (2009) 14 JT 441 deletion of a second proviso and consequent amendment in second proviso to section 43B of Incometax Act, 1961 by the Finance Act, 2003 was held to be curative and retrospective and it was given retrospective effect from the inception of the section on the reasoning that the proviso was added to remedy unintended consequences and supply an obvious omission so that the sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed] 80. The faulty drafting in the provision was capable of being interpreted, that the legislative embargo imposed on a person from procreating and giving birth to a third child in the context of holding the office of a member of a municipality remained in operation for a period of one year only and thereafter it was lifted. It could be interpreted, that on the date on which Section 13A was brought on the statute book i.e. dated 5.4.1994, even if a person became disqualified, the disqualification ceased to operate and he became qualified once again to contest the election and hold the office of member of a municipality on the expiry of one year from 541994. After realizing the error, Section 13A came to be amended as under: 2. In the proviso to clause (c) of subsection (1) of Section 13A of the Haryana Municipal Act, 1973 (hereinafter called the principal Act), for the word after , the word upto shall be substituted. [emphasis supplied] 81. This Court while observing, that the amendment was clarificatory in nature, held thus: 14. The presumption against retrospective operation is not applicable to declaratory statutes . In determining, therefore, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be 9s 4d per cwt., and to remedy this omission another Customs Act (53 Geo. 3, c. 105) was passed later in the same year. Between the passing of these two Acts some hides were exported, and it was contended that they were not liable to pay the duty of 9s 4d per cwt., but Thomson, C.B., in giving judgment for the Attorney General, said: (ER p. 134) The duty in this instance was, in fact, imposed by the first Act; but the gross mistake of the omission of the weight, for which the sum expressed was to have been payable, occasioned the amendment made by the subsequent Act: but that had reference to the former statute as soon as it passed, and they must be taken together as if they were one and the same Act; (Price at p. 392) 17. Maxwell states in his work on Interpretation of Statutes (12th Edn.) that the rule against retrospective operation is a presumption only, and as such it may be overcome, not only by express words in the Act but also by circumstances sufficiently strong to displace it (p. 225). If the dominant intention of the legislature can be clearly and doubtlessly spelt out, the inhibition contained in the rule against perpetuity becomes of doubtful appli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he court finds an Act as declaratory or explanatory, it has to be construed as retrospective. (p. 2487). 20. In Bengal Immunity Co. Ltd. v. State of Bihar [(1955) 2 SCR 603 : AIR 1955 SC 661] , Heydon case [(1584) 3 Co Rep 7a : 76 ER 637] was cited with approval. Their Lordships have said: (SCR pp. 63233) It is a sound rule of construction of a statute firmly established in England as far back as 1584 when Heydon case [(1584) 3 Co Rep 7a : 76 ER 637] was decided that- for the sure and true interpretation of all statutes in general (be they penal or beneficial, restrictive or enlarging of the common law) four things are to be discerned and considered- 1st. What was the common law before the making of the Act. 2nd. What was the mischief and defect for which the common law did not provide. 3rd. What remedy Parliament hath resolved and appointed to cure the disease of the Commonwealth, and 4th. The true reason of the remedy; and then the office of all the judges is always to make such construction as shall suppress the mischief, and advance the remedy, and to suppress subtle inventions and evasions for continuance of the mischief, and pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ission in a former statute or explains a former statute, the subsequent statute has a relation back to the time when the prior Act was passed. 83. The law laid down in Zile Singh (supra) has been subsequently followed in various judgments of this Court, including in the case of Commissioner of Income Tax I, Ahmedabad vs. Gold Coin Health Food Private Limited (2008) 9 SCC 622 (three Judges Bench). 84. This Court recently in the case of State Bank of India vs. V. Ramakrishnan and another -(2018) 17 SCC 394, had an occasion to consider the question, as to whether the amendment to subsection (3) of Section 14 of I B Code by Amendment Act 26 of 2018 was clarificatory in nature or not. By the said amendment, subsection (3) of Section 14 of I B Code was substituted to provide, that the provisions of subsection (1) of Section 14 shall not apply to a surety in a contract of guarantee for Corporate Debtor. Considering the said issue, this Court observed thus: 30. We now come to the argument that the amendment of 2018, which makes it clear that Section 14(3), is now substituted to read that the provisions of subsection (1) of Section 14 shall not apply to a surety in a contract o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y's liabilities are put on hold if a CIRP is going on against the corporate debtor, and such an interpretation may lead to the contracts of guarantee being infructuous, and not serving the purpose for which they have been entered into. 5.8. In SBI v. V. Ramakrishnan [SBI v. V. Ramakrishnan, 2018 SCC OnLine Nclat 384] , NCLAT took a broad interpretation of Section 14 and held that it would bar proceedings or actions against sureties. While doing so, it did not refer to any of the above judgments but instead held that proceedings against guarantors would affect the CIRP and may thus be barred by moratorium. The Committee felt that such a broad interpretation of the moratorium may curtail significant rights of the creditor which are intrinsic to a contract of guarantee. 5.9. A contract of guarantee is between the creditor, the principal debtor and the surety, whereunder the creditor has a remedy in relation to his debt against both the principal debtor and the surety (National Project Construction Corpn. Ltd. v. Sadhu and Co. [National Project Construction Corpn. Ltd. v. Sadhu and Co., 1989 SCC OnLine P H 1069 : AIR 1990 P H 300] ). The surety here may be a corporate o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sets. In the judgments analysed in this relation, many have been filed by the corporate applicant under Section 10 of the Code and this may corroborate the above apprehension of abuse of the moratorium provision. The Committee concluded that Section 14 does not intend to bar actions against assets of guarantors to the debts of the corporate debtor and recommended that an explanation to clarify this may be inserted in Section 14 of the Code. The scope of the moratorium may be restricted to the assets of the corporate debtor only. 33. The Report of the said Committee makes it clear that the object of the amendment was to clarify and set at rest what the Committee thought was an overbroad interpretation of Section 14. That such clarificatory amendment is retrospective in nature, would be clear from the following judgments 85. In the case of B.K. Educational Services Private Limited vs. Parag Gupta and Associates (supra), this Court considered the question, as to whether the 2018 amendment which inserted Section 238A to the I B Code was clarificatory in nature or not. After considering various earlier judgments of this Court, this Court observed thus: 26. In the prese ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so that the resolution applicant starts on a clean slate and is not flung with any surprise claims. If that is permitted, the very calculations on the basis of which the resolution applicant submits its plans, would go haywire and the plan would be unworkable. 87. We have no hesitation to say, that the word other stakeholders would squarely cover the Central Government, any State Government or any local authorities. The legislature, noticing that on account of obvious omission, certain tax authorities were not abiding by the mandate of I B Code and continuing with the proceedings, has brought out the 2019 amendment so as to cure the said mischief. We therefore hold, that the 2019 amendment is declaratory and clarificatory in nature and therefore retrospective in operation. 88. There is another reason, which persuades us to take the said view. Subsection (10) of Section 3 of the I B Code defines creditor thus: (10) creditor means any person to whom a debt is owed and includes a financial creditor, an operational creditor, a secured creditor, an unsecured creditor and a decreeholder; 89. Subsections (20) and (21) of Section 5 of the I B Code define operationa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an High Court in D.B. Civil Writ Petition No.9480 of 2019 in the case of Ultra Tech Nathdwara Cement Ltd. vs. Union of India Ors., by judgment and order dated 7.4.2020 has taken a view, that the demand notices, issued by the Central Goods and Service Tax Department, for a period prior to the date on which NCLT has granted its approval to the resolution plan, are not permissible in law. While doing so, the Rajasthan High Court has relied on the judgment of this Court in the case of Committee of Creditors of Essar Steel India Limited through Authorised Signatory (supra). 93. The Calcutta High Court in the case of Akshay Jhunjhunwala Anr. vs. Union of India through the Ministry of Corporate Affairs Ors. 2018 SCC OnLine Cal. 142 has also taken a view, that the claim of operational creditor will also include a claim of a statutory authority on account of money receivable pursuant to an imposition by a statute. We are in agreement with the views taken by these Courts. 94. Therefore, in our considered view, the aforesaid provisions leave no manner of doubt to hold, that the 2019 amendment is declaratory and clarificatory in nature. We also hold, that even if 2019 amendment wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g negotiation, the resolution plan of EARC was not found to be satisfactory by CoC and as such, in the 9th meeting of CoC held on 31.3.2018, resolution plan of EARC came to be rejected. 98. Thereafter, since GMSPL was H2 bidder, negotiations were held with it. However, the resolution plan submitted by GMSPL was also not found to be satisfactory and therefore in the 10th meeting of CoC held on 3.4.2018, it was decided to annul the existing proceedings and initiate a fresh process for invitation for submission of resolution plan. This was restricted only to such entities, which had submitted their EOI for submission of resolution plan. In response to the fresh invitation for submission of resolution plan, three bidders, namely, GMSPL, EARC and SIFL submitted their resolution plans. In the 11th meeting of CoC held on 13.4.2018, the resolution plan submitted by GMSPL was found to be most competitive and as such, CoC declared it as H1 bidder. After holding several rounds of negotiations, in the 12th meeting of CoC held on 21.4.2018, CoC unanimously decided to convene a meeting of the CoC on 25.4.2018 for voting on the resolution plan proposed by GMSPL. In the meeting of the CoC held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as the application filed by EARC with regard to nonadmission of its claim submitted to RP is concerned, NCLT found, that the Corporate Debtor had executed guarantee securing loan received by APNRL, which had been given by India Infrastructure Finance Company Limited ( IIFCL for short). The corporate guarantee executed by the Corporate Debtor was in favour of IIFCL. The Corporate Debtor also owned share in APNRL, which was pledged with IIFCL to secure the loan given by IIFCL to APNRL. IIFCL assigned its rights to EARC. EARC being the assignee of the aforesaid submitted its claims to the RP. 102. NCLT found, that by email dated 6.1.2018, EARC had submitted its claim in Form C for an amount of ₹ 648,89,62,395/. In response to the said email, RP sought a clarification, as to whether the corporate guarantee had been invoked by the applicant. RP had not received any response till 21.2.2018 from EARC. Despite repeated requests made by RP, EARC did not respond to the query made by RP. From the record placed before NCLT, it was clear, that EARC had not invoked the corporate guarantee. NCLT therefore posed a question to itself, as to whether an uninvoked corporate guarantee coul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plicant not at all succeeds in proving its contention and that the applicant approaches the Bench without any clean hand. Instances of challenging resolution plan by unsuccessful resolution applicant is at the increase. Filing like petition is also one among the reason for the delay in approving the resolution plan passed by the CoC in compliance of the provisions of the Code. This is a unique case in which the applicant herein filed the application without any valid grounds. Dismissing like petition without cost may encourage the applicant like the applicant to file like petition. It would also amount to allowing the applicant to abuse the process of the Tribunal as well as deliberately delaying the completion of CIRP process. Accordingly, we hold that this application is liable to be dismissed with costs of ₹ 1,00,000/. Awarding cost of ₹ 1,00,000/in the peculiar nature and circumstances of the case in hand is found reasonable. 106. Insofar as application being CA No.509/KB/2018 filed by the District Mining Officer is concerned, NCLT found, that RP had sought clarification from the said applicant with regard to its claim made in Form B since the information su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... application before the Labour Court for appropriate relief in favour of the concerned workmen or against the Corporate Debtor if they have actually worked and have not been taken care in the Resolution Plan due to lack of knowledge and nonfiling of the claim within time. 51. In the present case, as no ground has been made out in terms of subsection (3) of Section 61 of the I B Code and the decision of the Resolution Professional was not challenged by the Appellant, no relief can be granted. However, this order will not come in the way of the Appellant to move before appropriate forum for appropriate relief if the claim is not barred by limitation. 52. In so far dues of State of Jharkhand is concerned, we hold that the statutory dues shall be payable to the State of Jharkhand in terms of existing law which comes within the meaning of operational debt as defined in Section 5(20) read with Section 5(21) and held in Pr. Director Company Appeal (AT) (Insolvency) Nos. 437, 438, 444 500 of 2018 General of Income Tax (Admn. TPS) Vs. M/s. Spartek Ceramics India Ltd. Anr.Company Appeal (AT) (Insolvency) No. 160 of 2017 . Except the aforesaid observations, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ancial statements of the Company, or whether or not reflected in any record, document, statement, statutory or otherwise, arising prior to or after the Effective Date, but pertaining to a period prior to the Effective Date, or arising in connection with the Assignment or acquisition of shares of the Company by the Investors or conversion of the Conversion Debt into equity or restructuring of the Assigned Debt or in any other manner as a result of or in connection with this Plan, shall be deemed to have been irrevocably waived and permanently extinguished and written off in full with effect from the Effective Date. To give effect to such waiver and extinguishment, any contract, agreement, deed or document; whether oral or written, express or implied, statutory or otherwise, pursuant to which any such dues, liabilities, obligations, claims, counter claims, demands, actions, penalties, right, title or interest is claimed (other than as specifically mentioned herein) shall stand modified with effect from the Effective Date without any further act or deed, and approval of this Plan by NCLT shall be deemed to be sufficient notice which may be required to be given to any Person for such m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olution applicant, its claim would survive. A party cannot be permitted to apply two different yardsticks. 115. Shri Bhushan, learned counsel appearing on behalf of EARC, strongly relying on the judgment of NCLAT dated 14.8.2018 passed in Export Import Bank of India vs. Resolution Professional JEKPL Private Limited Company Appeal (AT) (Insolvency) No.304 of 2017 and connected matters, submits, that NCLAT itself in the said case had held, that invocation of corporate guarantee has no nexus with filing of the claim pursuant to public announcement made under Section 13(1)(b) read with Section 15(1)(c) of the I B Code and also for collating the claim under Section 18(1)(b) or for updating claim under Section 25(2)(e). He submits, that Civil Appeal challenging the said judgment and order has been dismissed by this Court vide order dated 23.1.2019. 116. He submits, that NCLAT itself in the said case had directed EXIM Bank and Axis Bank to be treated as financial creditors and had further directed them to be given representation on CoC. He submits, that, however, in the present case, NCLAT has taken a contrary view. He therefore submits, that in the alternative this Court should d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thus be clearly seen, that EARC was taking chances. After rejection of its claim, it did not choose to challenge the same by an application under Section 60(5) but waited till the decision of CoC. During this period, it was actually pursuing its resolution plan. Only after its resolution plan was not approved and the resolution plan of GMSPL was approved, it filed the aforesaid two applications. Apart from that, as already observed hereinabove, in the resolution plan of EARC itself, it has provided for extinguishment of all claims not forming part of resolution plan. 122. Even otherwise, if for the sake of argument, it is held, that EARC was entitled to be treated as a financial creditor and entitled for a participation in CoC, still its share was about 9% and as such, the resolution plan of GMSPL would have been passed by a majority of 80%, which is much above the statutory requirement. 123. We are therefore of the considered view, that the observation made by NCLAT giving liberty to EARC to take recourse to such proceedings as available in law for raising its claims is totally unsustainable. 124. Insofar as, the observation made with regard to claim of the Jharkhand Go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessing authority, first appellate authority or Commercial Tax Tribunal, Ghaziabad Bench) in respect of transactions entered into by the petitioner prior to the Transfer Date involving a consolidated amount of ₹ 769.73 Lacs stand abated in terms of the Resolution Plan approved by the NCLT under the Insolvency and Bankruptcy Code, 2016; v. Issue a writ, order or direction in the nature of mandamus directing the Respondents to refund ₹ 248.92 Lacs/deposited by the petitioner under protest in these proceedings and also to return the bank guarantee submitted for ₹ 16.31 Lacs/. vi. Issue a writ, order or direction in the nature of mandamus restraining the Respondents from passing any orders including penalty orders, raising any further demands, imposing any liability or taking any coercive steps including continuing with pending assessments / proceedings / litigation / appeals / revisions in respect of period prior to Transfer Date. 127. The High Court found, that the appellant has an alternative efficacious remedy of filing the Second Appeal and as such, deemed it fit to not to entertain the said petition. The basic grievance of the appellant in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A party cannot be made to run from one forum to another forum in respect of the proceedings and the claims, which are not permissible in law. 132. The appeal therefore is allowed. The impugned judgment and order dated 6.7.2020 passed by the Allahabad High Court is quashed and set aside. We hold and declare, that the respondents are not entitled to recover any claims or claim any debts owed to them from the Corporate Debtor accruing prior to the transfer date. Needless to state, that the consequences thereof shall follow. WRIT PETITION (CIVIL) NO.1177 OF 2020 133. For the reasons stated, I.A. for change of name of the petitioner No.1. is allowed. Cause title be amended accordingly. 134. The present writ petition has been filed by the petitioners under Article 32 of the Constitution. In this case also, the resolution plan in respect of the Corporate Debtor (petitioner Company) has been approved by the Adjudicating Authority on 24.7.2018. Pursuant thereto, the management of the Corporate Debtor (petitioner Company) was transferred to the successful resolution applicant i.e. AionJSW. 135. After the completion of CIRP on 5.1.2019, the respondent No.2 issued a rem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the Corporate Debtor accruing prior to the transfer date. Needless to state, that the consequences thereof shall follow. CIVIL APPEALS ARISING OUT OF SPECIAL LEAVE PETITION (CIVIL) NOS.7147-7150 OF 2020 141. For the reasons stated, I.A. for intervention on behalf of the applicant TATA Steel BSL Limited is allowed. 142. In the present case, the appellant challenges the judgment and order passed by the Division Bench of the Jharkhand High Court dated 1.5.2020 vide which the petitions filed by the appellant, challenging the action of the respondent authorities thereby, seeking to recover the Jharkhand Value Added Tax (JVAT) for the period between 20112012 and 20122013, have been rejected. Both the learned Judges have written separate judgments. 143. In the judgment authored by H.C. Mishra, J, the petitions filed by the appellant were rejected on two grounds, viz., one, that since the management of the appellant was taken over by M/s Vedanta Limited on 4.6.2018, it was only M/s Vedanta Limited, which had locus to file writ petitions. Secondly, it was debatable whether the amount of JVAT shall be covered by the expressions debt in respect of the payment of dues ..... X X X X Extracts X X X X X X X X Extracts X X X X
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