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TMI Blog2022 (7) TMI 243X X X X Extracts X X X X X X X X Extracts X X X X ..... Tripathi, learned Special Counsel for StateRespondents, Sri Gopal Verma, learned Central Government Standing Counsel representing the Union of India and Sri Ashok Singh, learned Senior Standing Counsel for Indirect Taxes representing C.G.S.T. Authorities. 2. The reliefs sought in these batch of writ petitions are reproduced below: Writ Petition No. Relief Writ Tax No. 728 of 2021 a. To issue an appropriate writ, order or direction in the nature of CERTIORARI quashing the Impugned Orders (Annexure No. 1) (colly) b. To issue an appropriate writ, order or direction in the nature of MANDAMUS directing the Respondents not to take anyu coercive steps against the Petitioner qua the Impugned Orders and/or qua any subsequent demands in this regard against the petitioner. Writ Tax No. 1085 of 2018 a. To issue an appropriate writ, order or direction in the nature of CERTIORARI by quashing the Notices Dated 17.7.2018 and 18.07.2018 and the impugned order dated 24.07.2018 (Annexure No. 1 (colly) to the writ petition) issued by the Respondent No. 2 and 4; as well as all future/subsequent demands in this regard, if any, raised by Respondents against the Petitioner; b. To ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ANDAMUS directing the Respondents not to take any coercive steps against the Petitioner qua the Show Cause Notice dated 27.03.2012, Statement of Demand dated 01.11.2017, Statement of Demand dated 17.12.2018, Order In Original dated 29.03.2019, Order in Original dated 15.01.2019, the Order In Original dated 25.10.2019 and the Notice dated 31.12.2019 (Annexure No.1 collectively) and/ or qua any subsequent demands in this regard against the Petitioner. Writ Tax No. 609 of 2020 a. To issue an appropriate writ, order or direction in the nature of CERTIORARI quashing the Impugned Notices (Annexure No.1) (colly). b. To issue an appropriate writ, order or direction in the nature of MANDAMUS directing the Respondents not to take any coercive steps against the Petitioner qua the Impugned Notices and/or qua any subsequent demands in this regard against the Petitioner. Writ Tax No. 318 of 2021 a. To issue an appropriate writ, order or direction in the nature of CERTIORARI quashing the Impugned Orders (Annexure No. 1) (colly). b. To issue an appropriate writ, order or direction in the nature of MANDAMUS directing the Respondents not to take any coercive steps against the P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... recovery certificates 17,999.60 + Interest 2,179.81 2. Amount stayed in first appeal 2,103.25 3. Amount stayed in second appeal 7,559.14 4. Amount stayed by High Court in Writ Petition Nos.230, 231 and 232, all of 2017, relating to AY 2005-2006 (U.P. and Central), AY 2006-2007 (U.P. and Central) and AY 2007-2008 (U.P. and Central), 898.61 5. Amount stayed by Hon'ble Supreme Court in SLP (admitted tax of February, March and April, 2,242.94 2008, Rs.368.072 lacs not deposited) Total= 32,983.35 (vi) On 03.02.2018, M/s Tata Steel Ltd. submitted its resolutionplan and was selected as the highest compliant resolution applicant by the Committee of Creditors (CoC) constituted under the IBC. The resolution plan so submitted by M/s Tata Steel Ltd., was approved with addendum thereto on 20.03.2018. On 23.03.2018, the Resolution Professional filed an application for approval of the resolution plan before the Adjudicating Authority/ NCLT. On 15.05.2018, the Adjudicating Authority/ NCLT approved the resolution plan submitted by the Resolution Professional, making binding on all the creditors in terms of Section 31(1) of the IBC, with clarification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We make it clear that we are not expressing any opinion on the claim concerning reliefs and concession nor any part of this order shall be understood in that spirit. (ii) CA No. 186 (PB)/2018 filed by Larsen & Turbo Limited is dismissed with cost of Rs. 1/- lakh. The cost be deposited in the account of Corporate Debtor. (iii) CA No. 217(PB)/2018 filed by Bhushan Employees is also dismissed with cost of Rs. 1/- lakh to be paid by Mr. Rahul Sengupta personally. The cost be deposited in the account of Cooperative Debtor. (iv) The objection raised by the BEL are rejected and it is held that the claim made by BEL is wholly frivolous and cannot be sustained. (v) CA No. 176(PB)/2018- The Ex-Management is directed to cooperate in all respects during the implementation of the resolution plan. Liberty is granted to the Monitoring Agency to apply for any further direction against the Ex-Management, its Directors or any other officers, if such a necessity arises. All other application are also disposed of." (vii) It appears that in some cases M/s Bhushan Steel lost before the Supreme court and some of the writ petitions were also dismissed and even subsequent to the aforesaid ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... od of 6 (six) months thereafter (including but not limited to those set out in Annexure 17, shall be renewed / extended by the relevant Governmental Authorities, and the Company shall be permitted to continue to operate its business and assets in the manner operated prior to submission of this Plan until the renewal / extension of such licenses and approvals. The relevant Governmental Authorities will provide a reasonable period of time after the Closing Date in order for the Resolution Applicant to: (i) assess the status of licenses and approvals required by the Company and to procure that the Company applies for the same; and (ii) regularize any non-compliances under the Applicable Law (including non-registration, inadequate / non-stamping of documents as required under Applicable Law) existing prior to the Closing Date. 10.1.2 The relevant Governmental Authorities shall not initiate any investigations actions or proceedings in relation to any noncompliance with Applicable Law by the Company during the period prior to the Closing Date. Neither shall the Resolution Applicant, nor the Company, nor their respective directors, officers and employees appointed on and as of the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... OR shall grant exemption / waiver from: (a) applicability of section 281 of the Income Tax Act, 1961 including obtaining no-objection certificate from income tax authorities in respect of all the pending proceedings and dues (including interest and penalty) of the Company arising for periods up to the Closing Date (including such proceedings and dues for periods prior to the Closing Date that may crystallize subsequent to the Closing Date). Further, CBDT/ DOR shall restrict/ restrain from treating any transactions contemplated in this Plan as being void or non-compliant with any provisions of the Income- Tax Act, 1961; and (b) all Tax Liabilities (including interest and penally) and tax proceedings arising in respect of periods up to the Closing Date, including such liabilities/ proceedings for periods up to the Closing Date that may crystallize subsequent to the Closing Date in respect of on-going or potential income tax litigations at all levels, including but not limited to for the following issues: (i) Disallowance of capital subsidy received from the State Government by way of exemption/reduction of Sales Tax; (ii) Disallowance of bogus expenses; and (iii) Disallowance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 39 acres situated at Hosur, Tamil Nadu which is granted on lease by SIPCOT to the Company under the lease deed dated August 7, 2012 bearing document no. 10413, SIPCOT; and (iii) properties granted located in Odisha which are granted on lease by IDCO to the Company under the lease deeds set out at serial numbers 1 to 18 in Annexure 19. 10.1.11 The Ministry of Mines shall waive the requirement of obtaining its approval in relation to the iron ore mine awarded to the Company at Kalamang West (Northern Part), over an area of 92.875 hectares in Keonjhar and Sundargarh districts of Odisha, to the extent required, for change of control pursuant to the implementation of this plan. 10.1.12 Notwithstanding the terms of the relevant agreements with the suppliers / customers of the Company, as the case may be, the Adjudicating Authority shall direct that prior approval of the counterparties shall not be required to be separately obtained for change in control/ constitution of the Company pursuant to the terms of this plan and the counterparties shall not terminate or take any adverse actions against the Company on account of such change in control / constitution of the Company. The Adjud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents which termination shall take effect from the later of (I) three months from the Closing Date; or (II) the completion of the corporate insolvency resolution process of Bhushan Energy Limited; and such termination, shall in each case, be without prejudice to the rights of the Company and without any liability towards any claims, demands or liabilities arising out or in relation to the aforesaid agreements (including but not limited to with regard to any previous breaches). Further, until the termination of the Bhushan Energy Power Purchase Agreements, any power if purchased by the Company from Bhushan Energy Limited shall be at the rate prescribed by the expert appointed by the Resolution Professional and provided as a part of the Data Room. Other than for such power purchase, Bhushan Energy Limited shall not have any other claims against the Company, and (B) that all claims of the Company against the aforementioned counterparties shall remain outstanding, due and payable in accordance with the terms of the aforesaid agreements. Upon termination of the aforementioned Agreements, the Resolution Applicant and the Company may enter into discussions with Bhushan Energy Limited and V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies Act, 2013 in respect of removal of the existing auditors of the Company. 10.1.23 The Adjudicating Authority shall direct that: (a) there shall be no interruption or stoppage in the supply of' essential goods and services' (as defined under Regulation 32 of the CIRP Regulations) to the Company until the Closing Date; (b) until such time that the redemption process is complete on the Closing Date, the RPS Holders shall not have any rights with respect to such redeemable preference shares, including the right to receive dividend, conversion rights, voting rights, rights covering operation and management of the Company, whether in law, contractually or otherwise; (c) Any person (including the Existing Promoter Group) that has provided any form of security for and on behalf of, and / or in order to secure any obligations of the Company (whether by way of hypothecation, pledge, mortgage, guarantee or otherwise), shall not be entitled to exercise any 33 subrogation rights, directly or indirectly, in respect of such arrangement, and they shall have no rights or claims against the Company. All obligation, liabilities, claims or proceedings against the Company in this regard shal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espect of the pricing requirements and shareholder approval requirements; (c) exempt compliance, for a period of 3 (three) years from the Closing Date, with provisions of the SEBI (Delisting of Equity Shares) Regulations, 2009 (as amended from time to time); and (d) allow merger of the Company with the Resolution Applicant during the time that the Resolution Applicant's shareholding in the Company is in excess of 75%. Further, in respect of the reliefs stated in (a) to (d) above, if SEBI issues any circulars, notifications, amendments, etc. relaxing any provision of the aforementioned SEBI regulations post the Closing Date, then the benefit of such relaxation should also be available to the Company and the Resolution Applicant. 10.1.27 The Ministry of Corporate Affairs shall relax and waive the procedural requirements under the Companies Act in respect of change in the registered price of the Company either to another premises within New Delhi or any other location outside New Delhi. 10.1.28 The Resolution Applicant be granted such reliefs and concessions as granted by the Adjudicating Authority from time to time in favour of resolution applicants for corporate insolvenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hereof; any entity, authority or body exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, including any government authority, agency, department, board, commission or instrumentality of India as applicable, or any political subdivision thereof or any other applicable jurisdiction, any court, tribunal or arbitrator or other adjudicatory authority, and any securities exchange or body or authority regulating such securities exchange. Insolvency Commencement Date July 26, 2017 Taxes Any tax on income, capital stock, profits, gross receipts, sales, use, value added, transfer, registration, stamp, premium, excise, customs duties, octroi, service taxes, severance, environmental, real property, movable property, ad valorem, occupancy, license, occupation, employment, payroll, disability, workers' compensation, withholding, estimated or other similar tax, duty, fee, assessment or other governmental charge or deficiencies thereof (including all interest and penalties thereon and additions thereto), and customs duties (x) The claims of statutory creditors have been provided in Part-C of Annexure-8 of the resolution plan con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpensation to States) Act, 2017" 5. The facts as mentioned above have not been disputed by learned counsels for the parties. Thus, the facts aforenoted are undisputed facts. 6. It appears that during the course of assessment proceeding for the assessment year 2016-17 in the matter of M/s Bhushan Limited, a show cause notice was issued to the assessee. On behalf of the assessee, the petitioner i.e. M/s Tata Steel B.S.L. Limited appeared in the assessment proceedings. Petitioner submitted a reply dated 16.03.2020. In paragraph no.1 of the reply dated 16.03.2020 submitted before the respondent no.2, the petitioner has stated as under:- "Prior to adverting to the response to the notice, it is pertinent to mention herein that the name of M/s Bhushan Steel Limited has been changed to M/s Tata Steel BSL Limited (herein after called "the Noticee") from November, 27, 2018. Your good office is thus requested that all and any further communication/correspondence may be addresses to Tata Steel BSL Limited". 7. Petitioner submitted a detailed reply and participated in the assessment proceedings. Thereafter, Assessing Authority passed the impugned assessment order dated 29.10.2020 relating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers 2021 SCC OnLine SC 313 (Paragraphs 65, 67, 73, 77, 82, 86, 87, 91, 95, 121, 124, 126, 127, 130, 131, 132, 135, 141 and 149) and submitted that in view of the provisions of the IBC, 2016 and the law laid down by the Supreme Court in the case of Ghanshyam Mishra (supra), the writ petitions deserve to be allowed. It is further submitted that neither there is any allegation of unjust enrichment in the impugned assessment order nor any material has been brought on record by the respondents to establish that there was any unjust enrichment and on account of that the demands created under the impugned assessment orders are liable to be recovered. He further submits that unjust enrichment would not apply once the resolution plan has been sanctioned. He submitted that if the State respondents were aggrieved with the order of NCLT, they could have challenged it in appeal before Appellate Tribunal but they cannot be allowed to raise any objection against the sanctioned Scheme in writ petition filed by the petitioners herein praying to quash the impugned assessment orders and notices. 12. Shri Manish Goyal, learned Addl. Advocate General has vehemently opposed the submissions advanced by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... requirement as referred to in sub-section (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 Section 14 shall cease to operate once the adjudicating authority approves the resolution plan. The scheme of the I&B Code therefore is, to make an attempt, by divesting the erstwhile management of its powers and vesting it in a professional agency to continue the business of the corporate debtor as a going concern until a resolution plan is drawn up. Once the resolution plan is approved, the management is handed over under the plan to the successful applicant so that the corporate debtor is able to pay back its debts and get back on its feet. 62. This Court recently in Kalpraj Dharamshi v. Kotak Investment Advisors Ltd.[Kalpraj Dharamshi v. Kotak Investment Advisors Ltd., (2021) 10 SCC 401 : 2021 SCC OnLine SC 204] has, in detail, considered the provisions of Sections 30 and 31 of the I&B Code, the Bankruptcy Law Reforms Committee (BLRC) Repor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o expressed the opinion, that there should befreedom 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. 156. This Court in K. Sashidhar [K. Sashidhar v. Indian Overseas Bank, (2019) 12 SCC 150 : (2019) 4 SCC (Civ) 222] observed thus : (SCC pp. 17374, para 32) '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, namely, KS&PIPL and IIL, by a vote of less than seventy-five per cent of voting share of the financial creditors; and about the correctness of the view [Kamineni Steel & Power (India) (P) Ltd. v. Indian Bank, 2018 SCC OnLine NCLAT 654] taken by NCLAT that the percentage of voting share of the financial creditors specified in Section 30(4) of the I&B Code is mandatory. Further, is it open to the adjudicati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 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.' 158. This Court has held, that it is not open to the adjudicating authority orappellate 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 examination of the proposed resolution plan and assessment made by their team of experts. It has been held, that the opinion expressed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iv) 443] , that what is left to the majority decision of CoC is the "feasibility and viability" of a resolution plan, which is required to take into account all aspects 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. 161. The view taken in K. Sashidhar [K. Sashidhar v. Indian Overseas Bank, (2019) 12 SCC 150 : (2019) 4 SCC (Civ) 222] and Essar Steel (India) Ltd. (CoC)[Essar Steel (India) Ltd. (CoC) v. Satish Kumar Gupta, (2020) 8 SCC 531 : (2021) 2 SCC (Civ) 443] has been reiterated by another three-Judge Bench of this Court in Maharashtra Sea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... factors. To wit, the feasibility and viability of the proposed resolution plan and including their perceptions about the general capability of the resolution applicant to translate the projected plan into a reality. The resolution applicant may have given projections backed by normative data but still in the opinion of the dissenting financial creditors, it would not be free from being speculative. These aspects are completely within the domain of the financial creditors who are called upon to vote on the resolution plan under Section 30(4) of the I&B Code.' 163. It has been held, that in an enquiry under Section 31, the limited enquiry that the adjudicating authority is permitted is, as to whether the resolution plan provides: 163.1. The payment of insolvency resolution process costs in a specified manner in priority to the repayment of other debts of the corporate debtor. 163.2. The repayment of the debts of operational creditors in prescribed manner. 163.3. The management of the affairs of the corporate debtor. 163.4. The implementation and supervision of the resolution plan. 163.5. The plan does not contravene any of the provisions of the law for the time being in f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... NCLAT) has been endowed with the jurisdiction to reverse the commercial wisdom of the dissenting financial creditors and that too on the specious ground that it is only an opinion of the minority financial creditors.' 167. This Court in Essar Steel (India) Ltd. (CoC) [Essar Steel (India) Ltd. (CoC)v. Satish Kumar Gupta, (2020) 8 SCC 531 : (2021) 2 SCC (Civ) 443] after reproducing certain paragraphs in K. Sashidhar [K. Sashidhar v. Indian Overseas Bank, (2019) 12 SCC 150 : (2019) 4 SCC (Civ) 222] observed thus : (Essar Steel case [Essar Steel (India) Ltd. (CoC) v. Satish Kumar Gupta, (2020) 8 SCC 531 : (2021) 2 SCC (Civ) 443] , SCC p. 589, para 67) '67. ... Thus, it is clear that the limited judicial review available, which can in no circumstance trespass upon a business decision of the majority of the Committee of Creditors, has to be within the four corners of Section 30(2) of the Code, insofar as the adjudicating authority is concerned, and Section 32 read with Section 61(3) of the Code, insofar as the Appellate Tribunal is concerned, the parameters of such review having been clearly laid down in K. Sashidhar [K. Sashidhar v. Indian Overseas Bank, (2019) 12 SCC 150 : (2019) 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... down in Essar Steel [Essar Steel (India) Ltd. (CoC) v. Satish Kumar Gupta, (2020) 8 SCC 531 : (2021) 2 SCC (Civ) 443] , the relevant passage (para 54) of which we have reproduced in earlier part of this judgment. The case of MSL in their appeal is that they want to run the company and infuse more funds. In such circumstances, we do not think the appellate authority ought to have interfered with the order of the adjudicating authority in directing the successful resolution applicant to enhance their fund inflow upfront.' 170. This Court observed, that the Court ought to cede ground to the commercial wisdom of the creditors rather than assess the resolution plan on the basis of quantitative analysis. This Court clearly held, that the appellate authority ought not to have interfered with the order of the adjudicating authority by directing the successful resolution applicant to enhance their fund inflow upfront. 171. It would thus be clear, that the legislative scheme, as interpreted by various decisions of this Court, is unambiguous. The commercial wisdom of CoC is not to be interfered with, excepting the limited scope as provided under Sections 30 and 31 of the I&B Code." (emph ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e resolution plan had been distributed in accordance with the order of priority in sub-section (1) of Section 53, whichever is higher. The resolution plan is also required to provide for the payment of debts of financial creditors, who do not vote in favour of the resolution plan, which also shall not be less than the amount to be paid to such creditors in accordance with sub-section (1) of Section 53 in the event of a liquidation of the corporate debtor. Explanation 1 to clause (b) of subsection (2) of Section 30 of the I&B Code clarifies for the removal of doubts that a distribution in accordance with the provisions of the said clause shall be fair and equitable to such creditors. The resolution plan is also required to provide for the management of the affairs of the corporate debtor after approval of the resolution plan and also the implementation and supervision of the resolution plan. Clause (e) of sub-section (2) of Section 30 of the I&B Code also casts a duty on RP to examine that the resolution plan does not contravene any of the provisions of the law for the time being in force. 67. Perusal of Section 29 of the I&B Code read with Regulation 36 of the Regulations would r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Code. A successful resolution applicant cannot suddenly be faced with "undecided" claims after the resolution plan submitted by him has been accepted as this would amount to a hydra head popping up which would throw into uncertainty amounts payable by a prospective resolution applicant who would successfully take over the business of the corporate debtor. All claims must be submitted to and decided by the resolution professional so that a prospective resolution applicant knows exactly what has to be paid in order that it may then take over and run the business of the corporate debtor. This the successful resolution applicant does on a fresh slate, as has been pointed out by us hereinabove. For these reasons, NCLAT judgment [Standard Chartered Bank v. Satish Kumar Gupta, 2019 SCC OnLine NCLAT 388] must also be set aside on this count." 70. In view of this legal position, we could have very well stopped here and held that the observation made by NCLAT in the appeal filed by EARC to the effect that EARC was entitled to take recourse to such remedies as are available to it in law, is impermissible in law. 71. As held by this Court in CIT v. Monnet Ispat & Energy Ltd. [CIT v. Mon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... availability of credit and balance the interests of all the stakeholders including alteration in the order or priority of payment of government dues and to establish an Insolvency and Bankruptcy Board of India. 2.The Preamble to the Code lays down the objects of the Code to include "the insolvency resolution" in a time-bound manner for maximisation of value of assets in order to balance the interests of all the stakeholders. Concerns have been raised that in some cases extensive litigation is causing undue delays, which may hamper the value maximisation. There is a need to ensure that all creditors are treated fairly, without unduly burdening the adjudicating authority whose role is to ensure that the resolution plan complies with the provisions of the Code. Various stakeholders have suggested that if the creditors were treated on an equal footing, when they have different pre-insolvency entitlements, it would adversely impact the cost and availability of credit. Further, views have also been obtained so as to bring clarity on the voting pattern of financial creditors represented by the authorised representative. 3. In view of the aforesaid difficulties and in order to fill the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Haryana Municipal Act, 1973 (hereinafter called the principal Act), for the word 'after', the word 'up to' shall be substituted." (emphasis supplied) 88. This Court while observing, that the amendment was clarificatory in nature, held thus : (Zile Singh case [Zile Singh v. State of Haryana, (2004) 8 SCC 1] , SCC pp. 9-12, paras 14-22) "14. The presumption against retrospective operation is not applicable to declaratory statutes.... In determining, therefore, the nature of the Act, regard must be had to the substance rather than to the form. If a new Act is "to explain" an earlier Act, it would be without object unless construed retrospectively. An explanatory Act is generally passed to supply an obvious omission or to clear up doubts as to the meaning of the previous Act. It is well settled that if a statute is curative or merely declaratory of the previous law retrospective operation is generally intended.... An amending Act may be purely declaratory to clear a meaning of a provision of the principal Act which was already implicit. A clarificatory amendment of this nature will have retrospective effect (ibid., pp. 468-69). 15. Though retrospectivity is not to be presumed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 applicability as the "inhibition of the rule" is a matter of degree which would "vary secundum materiam" (p. 226). Sometimes, where the sense of the statute demands it or where there has been an obvious mistake in drafting, a court will be prepared to substitute another word or phrase for that which actually appears in the text of the Act (p. 231). 18. In a recent decision of this Court in National Agricultural Coop. Mktg. Federation of India Ltd. v. Union of India [National Agricultural Coop. Mktg. Federation of India Ltd. v. Union of India, (2003) 5 SCC 23] it has been held that there is no fixed formula for the expression of legislative intent to give retrospectivity to an enactment. Every legislat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , (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 privato commodo, and to add force and life to the cure and remedy, according to the true intent of the makers of the Act, pro bono publico." ' 21. In Allied Motors (P) Ltd. v. CIT [Allied Motors (P) Ltd. v. CIT, (1997) 3 SCC 472] certain unintended consequences flowed from a provision enacted by Parliament. There was an obvious omission. In order to cure the defect, a proviso was sought to be introduced through an amendment. The Court held that li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ealth Food (P) Ltd., (2008) 9 SCC 622] (three-Judge Bench). 91. This Court recently in SBI v. V. Ramakrishnan [SBI v. V. Ramakrishnan, (2018) 17 SCC 394 : (2019) 2 SCC (Civ) 458] had an occasion to consider the question as to whether the amendment to sub-section (3) of Section 14 of the I&B Code by Amendment Act 26 of 2018 was clarificatory in nature or not. By the said amendment, sub-section (3) of Section 14 of the I&B Code was substituted to provide that the provisions of sub-section (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 : (SCC pp. 417-19, paras 30-33) "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 sub-section (1) of Section 14 shall not apply to a surety in a contract of guarantee for corporate debtor. The amended section reads as follows: '14. Moratorium.-(1)-(2) * * * (3) The provisions of sub-section (1) shall not apply to- (a) such transactions as may be notified by the Central Government in consultation with any financial sector regulator; (b) a sure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 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 or a natural person and the liability of such person goes as far as the liability of the principal debtor. As per Section 128 of the Contract Act, 1872, the liability of the surety is coextensive with that of the principal debtor and the creditor may go against either the principal debtor, or the surety, or both, in no particular sequence (Chokalinga Chettiarv. Dandayutha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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:" (emphasis in original) 94. We have no hesitation to say that the words "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 the 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. 95. There is another reason which persuades us to take the said view. Clause (10) of Section 3 of the I&B Code defines "creditor" thus: "3. (10) "creditor" means any person to whom a debt is o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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