GHANASHYAM MISHRA AND SONS PRIVATE LIMITED vs. EDELWEISS ASSET RECONSTRUCTION COMPANY LIMITED

1 REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE/ORIGINAL JURISDICTION  CIVIL APPEAL NO.8129 OF 2019 GHANASHYAM MISHRA AND SONS PRIVATE LIMITED THROUGH THE AUTHORIZED SIGNATORY   ...APPELLANT(S) VERSUS EDELWEISS ASSET RECONSTRUCTION COMPANY LIMITED THROUGH THE  DIRECTOR & ORS.      .... RESPONDENT(S) WITH CIVIL APPEAL NO.____1554_______ OF 2021 [Arising out of Special Leave Petition No.11232 of 2020] WRIT PETITION (CIVIL) NO.1177 OF 2020 CIVIL APPEAL NOS.______1550­1553____________ OF 2021 [Arising out of Special Leave Petition Nos.7147­7150 of 2020] J U D G M E N T   B.R. GAVAI, J.  Signature Not Verified Digitally signed by R Natarajan Date: 2021.04.13 17:05:47 IST Reason: 2 1. Leave   granted   in   Special   Leave   Petition   (Civil) Nos. 11232 of 2020 and 7147­7150 of 2020.   2. The short but important questions, that arise for consideration in this batch of matters, are as under:­ (i) As to whether any creditor including the Central Government, State Government or any   local   authority   is   bound   by   the Resolution Plan once it is approved by an adjudicating   authority   under   sub­section (1)   of   Section   31   of   the   Insolvency   and Bankruptcy   Code,   2016   (hereinafter referred to as ‘I&B Code’)? (ii) As to whether the amendment to Section 31   by   Section   7   of   Act   26   of   2019   is clarificatory/declaratory   or   substantive   in nature? (iii) As to whether after approval of resolution plan   by   the  Adjudicating   Authority  a creditor including the Central Government, State Government or any local authority is entitled   to   initiate   any   proceedings   for 3 recovery   of   any   of   the   dues   from   the Corporate Debtor, which are not a part of the   Resolution   Plan   approved   by   the adjudicating authority? 3. We will first refer to the facts in each of these matters.   CIVIL   APPEAL   NO.8129   OF   2019   [  GHANASHYAM MISHRA AND SONS PRIVATE LIMITED Vs. EDELWEISS ASSET   RECONSTRUCTION   COMPANY   LIMITED   & OTHERS] Orissa   Manganese   &   Minerals   Limited 4. (hereinafter referred to as “Corporate Debtor” or “OMML”) was engaged in the business of mining iron ore, graphite, manganese   ore   and   agglomerating   iron   fines   into   pellets through   its   facilities   in   Orissa   and   Jharkhand.     The Corporate   Insolvency   Resolution   Process   (hereinafter referred   to   as   “CIRP”)   was   initiated   in   respect   of   the Corporate Debtor by an application under Section 7 of I&B Code filed by the State Bank of India (hereinafter referred to as   “SBI”)   before   the   National   Company   Law   Tribunal, Kolkata Bench, Kolkata (hereinafter referred to as “NCLT”). 4 5. Vide   order   dated   3.8.2017,   Company   Petition (I.B.) No. 371/KB/2017 filed by SBI was admitted.   Shri Sumit   Binani   was   appointed   as   Interim   Resolution Professional   (hereinafter   referred   to   as   “IRP”).     Upon admission of the said Company Petition, CIRP was initiated with effect  from   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 5 “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. th In the 8  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 th submitted by EARC came to be rejected in the 9  meeting of CoC held on 31.3.2018. CoC   thereafter   proceeded   for   negotiations   with 7. the H2 Bidder i.e. GMSPL. However, the resolution plan of GMSPL   was   also   found   to   be   unacceptable   to   CoC   and th therefore, in its 10  meeting held on 3.4.2018, it decided to annul the existing process and initiate a fresh process for invitation of Resolution Plan only from the applicants, which had   earlier   submitted   their   EOI.   Accordingly,   a communication   was   sent   to   the   applicants,   which   had submitted their EOI.   In response to the said invitation, three   Resolution   Plans   were   received   each   from   GMSPL, EARC and Srei Infrastructure Finance Limited (hereinafter 6 referred to as “SIFL”) respectively.  These Resolution Plans th were   considered   by   CoC   in   its   11   meeting   held   on 13.4.2018.   After evaluation of the Resolution Plans, CoC ranked GMSPL as the H1 bidder. 8. Further   negotiations   were   held   by   CoC   with GMSPL.  After several rounds of negotiations, the Resolution Plan of GMSPL was considered by CoC for its approval.  In th its 12  meeting held on 21.4.2018, CoC unanimously took a decision to convene a meeting of CoC on 25.4.2018 at 6 PM, for voting on the Resolution Plan proposed by GMSPL.  After being   satisfied,   that   the   Resolution   Plan   submitted   by GMSPL meets all the requirements under sub­section (2) of Section 30 of the I&B Code, the same was placed before the Members of CoC for voting, and the Resolution Plan came to be approved by more than 89.23% of the voting share of financial creditors of the Corporate Debtor.   9. Accordingly,   a   Company   Application   being   C.A (IB) No. 402/KB/2018 came to be filed by RP for approval of the Resolution Plan submitted by GMSPL.  One application being C.A. (IB) No. 398/KB/2018 came to be filed by EARC­ 7 respondent   No.1   herein,   challenging   the   approval   of   the Resolution Plan of GMSPL.  One more application came to be   filed   by   EARC   being   C.A.   (IB)   No.   470/KB/2018 challenging the decision of RP in not admitting its claim. The said application was filed, contending, that its claim stood on the strength of corporate guarantee provided by the  Corporate Debtor against the take­out facility   provided to   Adhunik   Power   and   Natural   Resources   Limited (hereinafter referred to as “APNRL”), being sister concern of the  Corporate   Debtor.     It   was   contended,   that   in   not admitting the claim on the strength of corporate guarantee, 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 8 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 Rs.93,51,91,724/­ and Rs.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 (hereinafter referred to as “NCLAT”).  Company Appeal (AT) (Insolvency)   No.   437/2018   was   against   the   rejection   of claims of EARC as Financial Creditor and thereby its non­ inclusion in CoC.   Company Appeal (AT) (Insolvency) No. 444/2018 came to be filed with the grievance, that RP and CoC  had  erroneously held,  that the  plan of  GMSPL  was better than that of EARC.  One more Company Appeal being 9 Company Appeal (AT) (Insolvency) No. 500/2018 came to be filed   by   Sundargarh   Mines   &   Transport   Workers   Union (hereinafter   referred   to   as   “SMTWU”)   on   behalf   of   the workmen of the Corporate Debtor.   One another Company Appeal   being   Company   Appeal   (AT)   (Insolvency) No.438/2018 came to be filed by one Deepak Singh, an employee of APNRL, claiming dues of his salary.   12. By   the   impugned   judgment   and   order   dated 23.4.2019, NCLAT while holding, that RP was justified in not accepting the claim of EARC and that NCLT had rightly rejected the application filed by EARC, however, observed that the rejection of the claim for the purpose of collating and making it part of the Resolution Plan will not affect the right of EARC to invoke the Bank Guarantee against the Corporate Debtor, in case the principal borrower failed to pay   the   debt   amount,   since   the   moratorium   period   had come   to   an   end.     NCLAT   on   comparison   of   the   plans submitted   by   EARC   and   GMSPL   further   held,   that   the resolution plan submitted by GMSPL was a better one than 10 the one submitted by other applicants and there was no illegality in accepting the resolution plan of GMSPL.  Insofar as the Company Appeal (AT) (Insolvency) 13. No. 500/2018 is concerned, the grievance was, that though there were around 1,476 workmen, RP ignored their rightful wages, statutory dues and other benefits.   NCLAT, in the said order, observed, that after the period of moratorium, it was open for the persons to move before a civil court or to move   an   application   before   the   court   of   competent jurisdiction against the Corporate Debtor.  NCLAT therefore observed, that the appellant therein may move before the civil court or a court of competent jurisdiction and may file an   application   before   the   Labour   Court   for   appropriate reliefs in favour of the concerned workmen or against the Corporate Debtor, if they have actually worked and had not been taken care of in the Resolution Plan.  14. Insofar as Company Appeal (AT) (Insolvency) No. 438/2018 is concerned, it was the claim of Deepak Singh, appellant therein, that he had joined  APNRL, the holding Company of the  Corporate Debtor,  as the President­Group 11 Head HR from 2.6.2014 to 9.3.2015.  It was his claim, that he had an amount of Rs.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     LTRATECH   NATHDWARA   CEMENT   LIMITED   VS. [U STATE OF UTTAR PRADESH AND OTHERS 16. The   appellant   is   a   wholly   owned   subsidiary   of UltraTech Cement Limited and is engaged in the business of 12 manufacturing   and   marketing   of   cement   and   allied products. On   19.12.2015,   the   Additional   Commissioner, 17. Commercial Tax, Ghaziabad passed an order in the appeal preferred by M/s Binani Cement Limited, thereby, allowing the appeal filed by Binani Cement and setting aside the order of imposition of fine of Rs.24,71,885/­. Vide another order   dated   22.12.2015,   passed   in   the   appeal   filed   by Binani   Cement,   the   order   of   imposition   of   fine   of Rs.59,61,445/­ also came to be set aside.  Vide order dated 2.8.2017,   the   Deputy   Commissioner,   Commercial   Tax, Division­10, Ghaziabad held, that Binani Cement was liable to pay Entry Tax of Rs.40,47,344/­ for the Assessment Year 2003­2004.   By another order dated 2.8.2017, the Deputy Commissioner,   Commercial   Tax,   Division­10,   Ghaziabad further held, that Binani Cement was liable to pay Entry Tax of Rs.43,06,715/­ for the Assessment Year 2004­2005. Since the said Binani Cement was unable to pay 18. the debt to Bank of Baroda, the Bank of Baroda filed an application being C.A. (IB) No. 359/KB/2017 before NCLT, 13 Kolkata Bench under Section 7 of I&B Code.   Vide order dated 25.7.2017, NCLT admitted the petition for initiating the CIRP process.  Vide the said order, NCLT also declared moratorium for the purposes referred to in   Section 14 of I&B Code.  19. Vide   communication   dated   10.11.2017,   the authorities were informed about the initiation of the CIRP. However,  the   authority  by   an  endorsement  made  on  the application of the appellant herein stated, that there was no stay granted by NCLT on tax assessment process.   It was observed, that if there was any clear order passed by NCLT, the same should be produced or the Binani Cement should appear on the next date i.e. 27.11.2017 for hearing of tax assessment process.  20. On 28.7.2017, RP made a public announcement inviting   claims   from   all   the   creditors   of   the   Corporate Debtor, as is required under Section 15 of I&B Code.  The last date for submission of claims was 8.8.2017.  RP upon receipt of the claims maintained a list of creditors alongside the amount claimed by them and the security interest.  RP 14 also invited EOI.  In response, various entities including the present appellant submitted their EOI as well as resolution plans.   CoC in its meeting dated 28.5.2018, unanimously approved   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 15 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 communications addressed by the appellant   to   the   Joint   Commissioner,   Commercial   Tax (Corporate Circle), Ghaziabad dated 26.4.2019, the following endorsements   came   to   be   made   by   the   authority   on 29.4.2019:­ “After   consideration   on   application presented   by   you,   it   is   found   that,   by Hon’ble NCLT/NCLAT after transfer, neither stay is imposed on tax assessment nor on creation of demand.  So the created demand is payable by you.  If you are not agree with it, preferring appeal before higher authority, present its copy to us.  Disposal is done of application presented by you.” _______ The Commercial Tax Department of the State of 22. Rajasthan filed Civil Appeal No. 5889/2019 challenging the Resolution   Plan.     However,   the   said   appeal   came   to   be dismissed vide order of this Court dated 26.7.2019.   The 16 appeals being Civil Appeal Nos. 630­634/2020 were also preferred by the Commissioner of Central Excise, Goods and Services Tax, Jodhpur challenging the Resolution Plan.  The same also came to be dismissed by this Court vide order dated 24.1.2020. 23. The appellant therefore filed a Civil Miscellaneous Writ   Petition   No.   354/2020   before   the   High   Court   of Allahabad challenging the order passed by the Additional Commissioner   Grade   2   (Appeal)   dated   30.1.2020,   to   the effect,   that   the   proceedings   in   the   State   of   U.P.   would remain   unaffected   irrespective   of   the   approval   of   the Resolution Plan of the appellant by NCLT.   The appellant also   prayed   for   a   declaration,   that   all   the   proceedings pending before different authorities stand abated in terms of the approval of the Resolution Plan by NCLT.  A prayer was also made for refund of Rs.248.92 lakhs deposited by the appellant   under   protest   and   for   return   of   the   Bank Guarantee. 24. The Division Bench of the Allahabad High Court vide order dated 6.7.2020 observed, that the contention of 17 the appellant with regard to the approval of the Resolution Plan   by   NCLT   has   been   dealt   with   by   the   Assessing Authority   as   well   as   by   the   Appellate   Authority   and therefore, it was in the fitness of things that the appellant should  avail  of  the   alternative   remedy  of   filing  a second appeal available under the VAT Act.  Being aggrieved by the same, the appellant has filed the present appeal. WRIT   PETITION   (CIVIL)   NO.   1177   OF   2020   M/S MONNET ISPAT & ENERGY LIMITED AND ANOTHER VS. STATE OF ODISHA AND ANOTHER 25. The petitioner Company is a 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 (“Aion­ JSW”   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 18 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 1 Others ,   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  [ELECTROSTEEL   STEELS   LIMITED,   BOKARO, JHARKHAND VS. STATE OF JHARKHAND AND OTHERS] 26. The appellant is a Corporate Debtor in respect of which the proceedings under Section 7 were initiated by the SBI. Vide order dated 21.7.2017 of NCLT, the application filed   by   SBI   was   admitted   and   Mr.   Dhaivat   Anjaria   was 1 (2020) 8 SCC 531 19 appointed as Interim Resolution Professional (IRP).   In its meeting dated 21.8.2017, CoC approved the appointment of IRP as RP.  In response to the invitation for submission of resolution   plans,   four   applicants   had   submitted   their Resolution Plans.  CoC had approved the Resolution Plan of Vedanta Limited by 100% voting share.   NCLT vide order dated 17.4.2018 approved the Resolution Plan of Vedanta Limited.     The   appeal   being   Company   Appeal   (AT) (Insolvency) No. 175/2018 filed by one Renaissance Steel India Private Limited challenging the order of NCLT came to be   dismissed   by   NCLAT   vide   order   dated   10.8.2018. Challenging   the   notices   issued   by   the   respondent   State Authorities and the order of SBI asking it to pay an amount of Rs.37,41,41,602/­ on account of tax penalty due under the Jharkhand VAT Act for the period 2011­12 and 2012­ 13, the appellant approached the High Court of Jharkhand. The   appellant   had   also   challenged   the   letter   dated 22.11.2019 issued by State Tax Officer, Bokaro to deposit the amount of Rs.75,57,000/­.  As in the other matters, it is contended by the appellant, that in view of Section 31 of 20 I&B Code, since the claim made by the respondent was not a part of the Resolution Plan, it would get extinguished on the Resolution Plan being approved by NCLT.  The said writ petition   came   to   be   rejected   by   the   High   Court   on   the ground,   that   the   petitioner   had   no   locus   and   that   the Resolution Plan was not binding on the State Government since it had not participated in the CIRP proceedings.  SUBMISSIONS   IN   CIVIL   APPEAL   NO.8129   OF   2019 [Ghanashyam   Mishra   and   Sons   Private   Limited   vs . Edelweiss   Asset   Reconstruction   Company   Limited   & Others] Dr.   A.M.   Singhvi,   learned   Senior   Counsel 27. appearing for GMSPL submitted, that as held by this Court in a catena of decisions, the commercial wisdom of CoC in accepting or rejecting the Resolution Plan is paramount.  He submitted, that the interference would be warranted within the limited parameters of judicial review that are available under   the   Statute.     The   learned   Senior   Counsel   further 21 submitted, that 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 22 from   the   effective   date.     He   submitted   that   a   similar provision is also made in the Resolution Plan submitted by GMSPL.   29. The   learned   Senior   Counsel   further   submitted, that   the   Resolution   Plan   submitted   by   GMSPL   is   for   an amount   of   Rs.321.19   crore.     If   additional   liability   of Rs.648.89 crore is saddled upon the resolution applicant, the total resolution plan itself would be unworkable. 30. Dr.   Singhvi   further   submitted   that   NCLT   has found   the   conduct   of   EARC   not   to   be   bona   fide .     He submitted,   that   NCLT   has   categorically   found,   that   the application filed by EARC was a deliberate attempt to stage manage an objection against the approval of Resolution Plan submitted by an entity, other than it.  He submitted, that as a matter of fact, NCLT has imposed costs of Rs. 1 lakh on EARC taking into consideration its conduct. Dr.   Singhvi   relied   upon   the   judgments   of   this 31. Court in the cases of  K. Shashidhar  vs.  Indian Overseas 2 Bank   and   Others ,  Committee   of   Creditors   of   Essar Steel India Limited through Authorised Signatory   vs. 2 (2019) 12 SCC 150 23 Satish   Kumar   Gupta   &   Ors.   (supra)   Maharashtra Seamless   Limited   vs.   Padmanabhan   Venkatesh   and 3 vs. others ,   Karad   Urban   Cooperative   Bank   Ltd.   4 Swwapnil   Bhingardevay   &   Ors.   and   Kalpraj vs. Dharamshi and Another   Kotak Investment Advisors 5 Limited and Another . 32. Mr.   Prashant   Bhushan,   learned   Counsel appearing   on   behalf   of   the   EARC­respondent   No.1 submitted, that by the impugned order, NCLAT has only reserved   the   right   of   EARC   to   invoke   the   Corporate Guarantee in its favour.  He submitted, that on account of the erroneous conduct of the proceedings by RP and CoC, EARC   has   been   put   in   a   precarious   condition.     He submitted, that on one hand RP has not recognized EARC as a financial creditor thereby, depriving its nomination to CoC and participation in finalization of the proceedings.  On the other hand, denying EARC to encash its bank guarantee would leave EARC high and dry.   A substantial claim of 3 (2020) 11 SCC 467 4  (2020) 9 SCC 729 5  2021 SCC OnLine SC 204 24 EARC   would   be   rendered   futile,   in   the   event   the   order passed   by   NCLT   is   to   be   maintained.     He   therefore submitted, that no interference is warranted in the appeal. 33. In reply to the submissions of the appellant that EARC   has   not   preferred   an   appeal   against   the   order   of NCLAT though its appeal was disposed of is concerned, the learned Counsel relying on the judgment of this Court in the 6 case of     submitted, Banarasi and Another v. Ram Phal that 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 6 (2003) 9 SCC 606 25 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] Dr. Singhvi, learned Senior Counsel appearing on 35. 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 any State Government or the local authorities were bound by the same and any statutory dues owed   to   them   by   the  Corporate   Debtor,   which   were   not included in the resolution plan, shall stand extinguished. He submitted, that the 2019 Amendment, which amends Section 31 is clarificatory in nature and only declares and clarifies   the   position   of   law,   which   has   already   been   in existence   i.e.   the   Central   Government,   any   State 26 Government and local authorities are bound by the CIRP. He submitted, that this Court in the cases of  State Bank of 7 vs and India   .   V.   Ramakrishnan   and   Another     B.K. Educational Services Private Limited v. Parag Gupta 8   has   held   the   amendment   to   certain and   Associates provisions of the I&B Code to be clarificatory in nature.  The learned Senior Counsel submitted, that upon perusal of the provisions   of   the   I&B   Code,   it   is   clear,   that   once   NCLT grants   approval   to   the   Resolution   Plan,   all   proceedings pending   insofar   as   the   Corporate   Debtor   is   concerned, which are not included in the Resolution Plan shall stand automatically stayed.   He submitted, that perusal of the chart   pertaining   to   the   dues   of   the   respondents,   clearly reveal that all of the said dues are prior to the admission of the Company Petition filed under Section 7 of I&B Code and therefore, the respondents are not entitled to continue the proceedings in respect thereof since the same do not form part of the approved resolution plan. 7  (2018) 17 SCC 394 8  (2019) 11 SCC 633 27 36. He submitted, that the orders passed by NCLAT were   challenged   before   this   Court   by   the   Revenue Authorities   of   the   Rajasthan   State   as   well   as   the Commissioner of Central Excise (GST), Jodhpur and this Court had  refused  to interfere with the  order  passed by NCLAT.     It   is   submitted,   that   in   this   background,   the authorities   are   totally   unjustified   in   continuing   the proceedings,   which   are   undisputedly   with   respect   to   the dues prior to admission of the application under Section 7 of I&B Code, only on the ground, that there is no specific stay order passed by NCLT. 37. He submitted, that the High Court has erred in refusing to entertain the writ petition of the appellant solely on   the   ground,   that   an   alternative   remedy   by   way   of   a second appeal was available to the appellant.  He submitted, that in catena of judgments, this Court has held, that non­ exercise of jurisdiction under Article 226, despite availability of alternative 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 28 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   adjudicatory   proceedings,   which   were 29 continued by the authorities under the provisions of the relevant   Statutes.     He   submitted,   that   the   assessment orders which were passed in accordance with law were duly approved in appeal by the higher authority and therefore, the High Court was justified in observing that the petition was   not   maintainable,   in   view   of   the   availability   of alternative remedy of filing a second appeal. 41. The learned Senior Counsel submitted, that the adjudicatory authorities acting under the relevant statutes being not a part of CoC are not bound by the decision of CoC, which is approved by NCLT. He further submitted, that   merely   continuation   of   the   adjudicatory   proceedings cannot be a part of coercive action.  42. Shri   V.   Shekhar   submitted,   that   2019 Amendment cannot be said to be clarificatory in nature and as such, the proceedings, which were pending prior to the date of the amendment to Section 31, would not be affected by the 2019 Amendment to Section 31.  He therefore prayed for dismissal of the appeal. 30 SUBMISSIONS IN WRIT PETITION (CIVIL) NO. 1177 OF 2020 [M/s Monnet Ispat & Energy Limited and Another v. State of Odisha and Another] 43. Shri Kaul, learned Senior Counsel appearing on behalf of the writ petitioner submitted, that in spite of clear legal position as enunciated in various judgments of this Court, various authorities in different parts of the country are continuing with the proceedings in respect of statutory dues existing prior to the date of approval of resolution plan by NCLT.   He submitted, that various High Courts have held, relying on the judgments of this Court, that statutory dues prior to the date of admission of Section 7 application and which are not part of the Resolution Plan shall stand extinguished and the proceedings in respect thereof would no more survive.  However, in some States, the authorities of the State are flouting the law and as such, the petitioner has approached this Court in its extraordinary jurisdiction under  Article 32  of  the  Constitution  so that  there  is  an authoritative pronouncement by this Court.  He submitted, that   the   respondent   authorities   in   the   present   case   had 31 failed to file the claims in response to the statutory public notice issued by RP.   The first demand by the authorities raised   is   only   after   the   plan   was   approved   by   CoC   on 9.4.2018.   He also relied on the speech delivered 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 32 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 Authorities had not participated in CIRP and the order passed by NCLT was binding only on the parties, which have participated in the Resolution process.  He submitted, that both the grounds are erroneous inasmuch as, Vedanta Limited   is   a   successful   Resolution   Applicant.     The Resolution process is in respect of the present appellant­ writ petitioner, which is the Corporate Debtor and as such, the petition at the behest of the present appellant was very much tenable in law.  Insofar as the second ground of the High Court is concerned, he submitted, that if such a view is accepted, it will frustrate the entire object of I&B Code and   the   revival   of   the   Debtor   Companies   would   be impossible   if   the   successful   resolution   applicants   are 33 sprung with the surprise debts, which are not part of the Resolution Plan. Shri Gurukrishna Kumar, learned Senior Counsel 45. appearing on behalf of the respondent submitted, that the entire process conducted by RP and CoC is fraudulent.  He submitted,   that   in   accordance   with   Section   29   and specifically,  clause H of Regulation 36, RP was required to furnish the details of the material litigation and an ongoing investigation or proceedings initiated by Government and Statutory   Authorities   in   the   information   memorandum. However, the Resolution Applicant had fraudulently used I&B Code by suppressing the vital information with regard to the same and thereby, denying the legitimate dues of public exchequer. 46. Dr.   Singhvi   in   rejoinder   submitted,   that   it   is respondent’s own admission that they have not participated in the proceedings conducted by RP, CoC, NCLT, NCLAT and even this Court.   He submitted, that when the other Departments/Ministries had participated in the proceedings and   raised   their  claims,   it  does  not  lie   in  the  mouth of 34 respondents to say, that they were not aware about CIRP proceedings.  In   the   said   appeal,   an   intervention   application 47. has also been filed on behalf of Tata Steel BSL Limited. It is contended in the intervention application, that though the resolution process  in respect of  intervener/applicant  was complete, still the Revenue Authorities were continuing with the proceedings with respect to the dues owed prior to the date   of   approval   of   resolution   plan   by   NCLT.     It   is   the submission of the intervener/applicant, that as such, legal position needs to be settled by this Court and therefore the intervener/applicant   has   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 35 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

9 ICICI Bank & Anr.   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   um­ brella 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   4.3 years   on   an   average,   which   was   much higher  when  compared  with  the   United Kingdom   (1   year),   USA   (1.5   years)   and South Africa (2 years). The World Bank's Ease   of   Doing   Business   Index,   2015, ranked India as country number 135 out 9  (2018) 1 SCC 407 36 of 190 countries on the ease of resolving insolvency based on various indicia.” [emphasis supplied] 51. This Court thereafter in paragraph 16 reproduced the   relevant   paragraphs   contained   in   the   report   of   the Bankruptcy   Law   Reforms   Committee   Report   of   2015 . Thereafter, this Court reproduced all the relevant provisions

the various provisions of the I&B Code in paragraphs 27 to 32, which read thus:  The scheme of the Code is to ensure “27. that when a default takes place, in the sense that a debt becomes due and is not paid,   the   insolvency   resolution   process begins. Default is defined in Section 3(12) in very wide terms as meaning non­pay­ ment of a debt once it becomes due and payable, which includes non­payment of even   part   thereof   or   an   instalment amount. For the meaning of “debt”, we have to go to Section 3(11), which in turn tells us that a debt means a liability of obligation in respect of a “claim” and for the   meaning   of   “claim”,   we   have   to   go back to Section 3(6) which defines “claim” 37 to mean a right to payment even if it is disputed. The Code gets triggered the mo­ ment   default   is   of   rupees   one   lakh   or more   (Section   4).   The   corporate   insol­ vency resolution process may be triggered by the corporate debtor itself or a finan­ cial creditor or operational creditor. A dis­ tinction   is   made   by   the   Code   between debts owed to financial creditors and op­ erational   creditors.   A   financial   creditor has been defined under Section 5(7) as a person to whom a financial debt is owed and a financial debt is defined in Section 5(8) to mean a debt which is disbursed against consideration for the time value of money. As opposed to this, an opera­ tional creditor means a person to whom an operational debt is owed and an oper­ ational debt under Section 5(21) means a claim in respect of provision of goods or services. 28.  When it comes to a financial creditor triggering the process, Section 7 becomes relevant. Under the Explanation to Sec­ tion 7(1), a default is in respect of a fi­ nancial debt owed to  any  financial credi­ tor of the corporate debtor — it need not be a debt owed to the applicant financial creditor. Under Section 7(2), an applica­ tion is to be made under sub­section (1) in   such   form   and   manner   as   is   pre­ scribed, which takes us to the Insolvency and   Bankruptcy   (Application   to   Adjudi­ cating   Authority)   Rules,   2016.   Under Rule 4, the application is made by a fi­ 38 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 cor­ porate 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 ad­ judicating authority by registered post or speed post to the registered office of the corporate   debtor.   The   speed,   within which the adjudicating authority is to as­ certain the existence of a default from the records   of  the   information  utility   or  on the basis of evidence furnished by the fi­ nancial   creditor,   is   important.   This   it must do within 14 days of the receipt of the application. It is at the stage of Sec­ tion 7(5), where the adjudicating author­ ity is to be satisfied that a default has oc­ curred, that the corporate debtor is enti­ tled to point out that a default has not occurred   in   the   sense   that   the   “debt”, which may also include a disputed claim, is not due. A debt may not be due if it is not payable in law or in fact.   The mo­ ment the adjudicating authority is sat­ isfied that a default has occurred, the application must be admitted unless it is   incomplete,   in   which   case   it   may give notice to the applicant to rectify the defect within 7 days of receipt of a 39 notice from the adjudicating authority. Under   sub­section   (7),   the   adjudicating authority shall then communicate the or­ der passed to the financial creditor and corporate debtor within 7 days of admis­ sion or rejection of such application, as the case may be.  The   scheme   of   Section   7   stands   in 29. contrast with the scheme under Section 8 where an operational creditor is, on the occurrence of a default, to first deliver a demand notice of the unpaid debt to the operational   debtor   in   the   manner   pro­ vided in Section 8(1) of the Code. Under Section   8(2),   the   corporate   debtor   can, within a period of 10 days of receipt of the demand notice or copy of the invoice mentioned in sub­section (1), bring to the notice of the operational creditor the exis­ tence of a dispute or the record of the pendency of a suit or arbitration proceed­ ings,   which   is   pre­existing—i.e.   before such notice or invoice was received by the corporate   debtor.   The   moment   there   is existence of such a dispute, the opera­ tional creditor gets out of the clutches of the Code. 30.  On the other hand, as we have seen, in   the   case   of   a   corporate   debtor   who commits a default of a financial debt, the adjudicating authority has merely to see the records of the information utility or other evidence produced by the financial creditor to satisfy itself that a default has 40 occurred. It is of no matter that the debt is disputed so long as the debt is “due” i.e.   payable   unless   interdicted   by   some law   or   has   not   yet   become   due   in   the sense that it is payable at some future date. It is only when this is proved to the satisfaction of the adjudicating authority that the adjudicating authority may reject an application and not otherwise. 31.  The rest of the insolvency resolution process 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 liquida­ tion.  As soon as the application is admit­ 32. ted, a moratorium in terms of Section 14 of the Code is to be declared by the adju­ dicating   authority   and   a   public   an­ nouncement is made stating, inter alia, the last date for submission of claims and the details of the interim resolution pro­ fessional   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 in­ 41 terim   resolution   professional   who   is   a trained person registered under Chapter IV  of   the   Code.   This   interim   resolution professional is now to manage the opera­ tions of the corporate debtor as a going concern under the directions of a com­ mittee of creditors appointed under Sec­ tion 21 of the Act. Decisions by this com­ mittee are to be taken by a vote of not less than 75% of the voting share of the financial creditors. Under Section 28, a resolution professional, who is none other than   an   interim   resolution   professional who is appointed to carry out the resolu­ tion process, is then given wide powers to raise finances, create security interests, etc. subject to prior approval of the com­ mittee of creditors.” [emphasis supplied] 53. After   discussing   the   relevant  provisions   of   I&B Code, this Court observed thus:   “33. Under Section 30, any person who is interested in putting the corporate body back on its feet may submit a res­ olution plan to the resolution profes­ sional, which is prepared on the basis of an information memorandum. This plan must provide for payment of in­ solvency   resolution   process   costs, management of the affairs of the cor­ porate   debtor   after   approval   of   the plan, and implementation and supervi­ 42 sion of the plan. It is only when such plan is approved by a vote of not less than 75% of the voting share of the fi­ nancial creditors and the adjudicating authority is satisfied that the plan, as approved, meets the statutory require­ ments mentioned in Section 30, that it ultimately approves such plan, which is   then   binding   on   the   corporate debtor as well as its employees, mem­ bers,   creditors,   guarantors   and   other stakeholders.   Importantly, and this is a major departure from previous legislation on the subject, the moment the adjudi­ cating authority approves the resolution plan, the moratorium order passed by the authority under Section 14 shall cease to have   effect.   The   scheme   of  the   Code, therefore, is to make an attempt, by divesting the erstwhile management of its powers and vesting it in a profes­ sional   agency,   to   continue   the   busi­ ness of the corporate body as a going concern   until   a   resolution   plan   is drawn up, in which event the manage­ ment is handed over under the plan so that the corporate body is able to pay back its debts and get back on its feet. All this is to be done within a period of 6 months with a maximum extension of an­ other 90 days or else the chopper comes down and the liquidation process begins.” [emphasis supplied] 43 54. It could thus be seen, that one of the dominant objects of I&B Code is to see to it, that an attempt has to be made to revive the Corporate Debtor and 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 44 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 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 con­ tinue the business of the Corporate Debtor as a going con­ cern until a resolution plan is drawn up. Once the resolu­ tion plan is approved, the management is handed over un­ der the plan to the successful applicant so that the Corpo­ rate Debtor is able to pay back its debts and get back on its feet.  This   Court   recently   in   the   case   of   55. Kalpraj Dharamshi and another   vs.   Kotak Investment Advisors (supra) has,   in  detail,   considered   the Ltd.  and  another     provisions   of   Sections   30   and   31   of   I&B   Code,   the Bankruptcy Law Reforms Committee (BLRC) Report of 2015 45

(supra),   Committee   of   Creditors   of   Essar   Steel   India vs.   Limited   through   Authorised   Signatory   Satish Kumar Gupta & Ors.  (supra)   and   Maharashtra Seamless vs.  (supra) Limited  Padmanabhan Venkatesh and others  and observed thus:   “139.  It   is   thus   clear,   that   the Committee   was   of   the   view,   that   for deciding   key   economic   question   in   the bankruptcy process, the only one correct forum   for   evaluating   such   possibilities, and making a decision was, a creditors committee, wherein all financial creditors have votes in proportion to the magnitude of   debt   that   they   hold.   The   BLRC   has observed, that laws in India in the past have   brought   arms   of   the   Government (legislature,   executive   or   judiciary)   into the question of bankruptcy process. This has   been   strictly   avoided   by   the Committee and it has been provided, that the   decision   with   regard   to   appropriate disposition of a defaulting firm, which is a business decision, should only be made by   the   creditors.   It  has   been   observed, that the evaluation of proposals to keep the entity as a going concern, including decisions about the sale of business or units,   restructuring   of   debt,   etc.,   are required to be taken by the Committee of the   Financial   Creditors.   It   has   been 46

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48 obligated to initiate liquidation process under Section 33(1) of the I&B Code. The   legislature   has   not   endowed   the adjudicating authority (NCLT) with the jurisdiction or authority to analyse or evaluate   the   commercial   decision   of CoC   much   less   to   enquire   into   the justness   of   the   rejection   of   the resolution   plan   by   the   dissenting financial creditors. From the legislative history and the background in which the I&B Code has been enacted, it is noticed   that   a   completely   new approach   has   been   adopted   for speeding up the recovery of the debt due from the defaulting companies. In the   new   approach,   there   is   a   calm period   followed   by   a   swift   resolution process   to   be   completed   within   270 days   (outer   limit)   failing   which, initiation   of   liquidation   process   has been made inevitable and mandatory. In   the   earlier   regime,   the   corporate debtor   could   indefinitely   continue   to enjoy   the   protection   given   under Section   22   of   the   Sick   Industrial Companies Act, 1985 or under other such enactments which has now been forsaken.  Besides,   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. There is an intrinsic assumption that financial creditors are   fully   informed   about   the viability   of   the   corporate   debtor 49

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53 Section 30(2), when the resolution plan does   not   conform   to   the   stated requirements.   Reverting   to   Section 30(2),   the   enquiry   to   be   done   is   in respect of 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)   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. The Board referred to is established under Section   188   of   the   I&B   Code.   The powers   and   functions   of   the   Board have been delineated in Section 196 of the   I&B   Code.   None   of   the   specified functions   of   the   Board,   directly   or indirectly,   pertain   to   regulating   the manner   in   which   the   financial creditors   ought   to   or   ought   not   to exercise   their   commercial   wisdom during   the   voting   on   the   resolution plan   under   Section   30(4)   of   the   I&B Code. The subjective satisfaction of the financial creditors at the time of voting is   bound   to   be   a   mixed   baggage   of variety of 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 54

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56. Another three Judges Bench of this Court in the case   of   Karad   Urban   Cooperative   Bank   Ltd.   vs. Swwapnil Bhingardevay & Ors.  (supra), taking a similar view, has observed thus: 60 “14.  The   principles   laid   down   in   the aforesaid decisions, make one thing very clear. If all the factors that need to be taken   into   account   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   con­ scious 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 any­ one else that some of the factors which are crucial for taking a decision regard­ ing the viability and feasibility, were not placed before CoC or the resolution pro­ fessional….” 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 61 satisfied, that the resolution plan as approved by CoC meets the requirements as referred to in sub­section (2) of Section 30,   it  shall  be  binding   on  the   Corporate   Debtor   and   its employees,   members,   creditors,   guarantors   and   other stakeholders.  Such a provision is necessitated since one of the dominant purposes of the I&B Code is, revival of the Corporate Debtor and to make it a running concern.   59. The   resolution   plan   submitted   by   successful resolution   applicant   is   required   to   contain   various provisions,   viz.,   provision   for   payment   of   insolvency resolution process costs, provision for payment of debts of operational   creditors,   which   shall   not   be   less   than   the amount   to   be   paid   to   such   creditors   in   the   event   of liquidation of the Corporate Debtor under section 53; or the amount that would have been paid to such creditors, if the amount  to  be   distributed   under   the   resolution   plan  had been distributed in accordance with the order of priority in sub­section   (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 62 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   sub­ section (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 sub­section (2) of Section 30 of 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.   Perusal of Section 29 of the I&B Code read with 60. Regulation   36   of   the   Regulations   would   reveal,   that   it requires   RP   to   prepare   an   information   memorandum containing various details of the Corporate Debtor so that the resolution applicant submitting a plan is aware of the 63 assets and liabilities of the Corporate Debtor, including the details   about   the   creditors   and   the   amounts   claimed   by them.  It is also required to contain the details of guarantees that have been given in relation to the debts of the corporate debtor   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 64 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,   that   he should start with fresh slate on the basis of the resolution plan approved. This   aspect   has   been   aptly   explained   by   this 62. Court  in  the   case   of   Committee  of   Creditors   of   Essar Steel   India   Limited   through   Authorised   Signatory (supra). “107.  For   the   same   reason,   the   im­ CLAT pugned N  judgment   [ Standard   Char­ tered Bank  v.  Satish Kumar Gupta , 2019 SCC OnLine NCLAT 388] in holding that claims that may exist apart from those decided on merits by the resolution pro­ fessional and by the Adjudicating Author­ ity/Appellate   Tribunal   can   now   be   de­ cided by an appropriate forum in terms of Section 60(6) of the Code, also militates against the rationale of Section 31 of the Code.   A   successful   resolution   applicant cannot   suddenly   be   faced   with   “unde­ cided”   claims   after   the   resolution   plan submitted by him has been accepted as 65 this would amount to a hydra head pop­ ping up which would throw into uncer­ tainty amounts payable by a prospective resolution applicant who would success­ fully take over the business of the corpo­ rate debtor. All claims must be submitted to and decided by the resolution profes­ sional so that a prospective resolution ap­ plicant 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   rea­ CLAT sons, N  judgment   must   also   be   set aside on this count.” 63. 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.  As   held   by   this   Court   in   the   case   of   64. Pr. Commissioner   of   Income   Tax   vs.   Monnet   Ispat   and 10 in view of provisions of Section 238 of I&B Energy Ltd. ,   Code, the provisions thereof will have an overriding effect, if there is any inconsistency with any of the provisions of the law for the time being in force or any instrument having 10  SLP(C) No.6483/2018 (order dated 10.8.2018) 66 effect by virtue of any such law.  As such, the observations made   by   NCLAT   to   the   aforesaid   effect,   if  permitted   to remain, would frustrate the very purpose for which the I&B Code is enacted.    65. However, in Civil  Appeal  arising  out  of Special Leave Petition (Civil) No.11232 of 2020, Writ Petition (Civil) No.1177 of 2020 and Civil Appeals arising out of Special Leave Petition (Civil) Nos. 7147­7150 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 67 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 dues if they pertain to a period wherein Section 7 petitions have been admitted prior to 16.8.2019.   69. To   answer   the   said   question,   we   will   have   to consider,   as   to   whether   the   said   amendment   is clarificatory/declaratory in nature or a substantive one.  If it is held, that it is declaratory or clarificatory in nature, it will have to be held, that such an amendment is retrospective in nature   and   exists   on   the   statute   book   since   inception. However, if the answer is otherwise, the amendment will have to be held to be prospective in nature, having force from the date on which the amendment is effected in the statute.   It will be relevant to refer to the “Statement of 70. Objects and Reasons” (hereafter referred to as “SOR”) of the 68 Insolvency and Bankruptcy Code (Amendment) Bill, 2019, which read thus: “The   Insolvency   and   Bankruptcy   Code, 2016 (the Code) was enacted with a view to   consolidate   and   amend   the   laws relating to reorganisation and insolvency resolution   of   corporate   persons, partnership   firms   and   individuals   in   a time­bound manner for maximisation of value   of   assets   of   such   persons,   to promote entrepreneurship, 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 69 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 critical gaps in the corporate   insolvency   framework,   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 70 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 maximisation.  It was also found necessary to ensure, that all creditors are treated fairly.  It was therefore in view of the various difficulties faced and in order to fill the critical gaps in the corporate insolvency framework, it was necessary to amend certain provisions of the I&B Code.   Clause (f) of para 3 of the SOR of the Insolvency and Bankruptcy Code (Amendment) Bill, 2019 would amply make it clear, that the legislative intent in amending sub­section (1) of Section 31 of I&B Code was 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 is owed 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.  71 72. In the Rajya Sabha debates, on 29.7.2019, when the Bill for amending I&B Code came up for discussion, there were certain issues raised by certain Members. While replying   to   the   issues   raised   by   certain   Members,   the Hon’ble Finance Minister stated thus: “IBC has actually an overriding effect. For instance,   you   asked   whether   IBC   will override SEBI. Section 238 provides that IBC will prevail in case of inconsistency between two laws. Actually, Indian courts will   have   to   decide,   in   specific   cases, depending   upon   the   material   before them, but largely, yes, it is IBC. […] There   is   also   this   question   about indemnity   for   successful   resolution applicant. The amendment now is clearly making it binding on the Government. It is   one   of   the   ways   in   which   we   are providing that. The Government will not raise any further claim. The Government will   not   make   any   further   claim   after resolution plan is approved. So, that is going   to   be   a   major,   major   sense   of assurance for the people who are using the   resolution   plan.   Criminal   matters alone   would   be   proceeded   against individuals and not company. There will be   no   criminal   proceedings   against successful   resolution   applicant.   There will  be   no  criminal  proceedings   against successful resolution applicant for fraud by previous promoters. So, I hope that is 72 absolutely clear. I would want all the hon. Members to recognize this message and communicate   further   that   this   Code, therefore, gives that comfort  to all new bidders. So now, they need not be scared that the taxman will come after them for the   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 73 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 promoters will be dealt with as individuals for their criminality but not the new bidder who is trying to restore the company.   74. This   Court   in   the   case   of   K.P.   Varghese   v. 11   had   an Income Tax Officer, Ernakulam and Another   occasion to consider the question, as to whether the speech made   by  the   Hon’ble   Finance   Minister,  explaining   the reason for the introduction of the Bill could be referred for the   purpose   of   ascertaining   the   mischief   sought   to   be remedied   by the legislation.   This Court observed thus: “ Now it is true that the speeches made by the   Members   of   the   Legislature   on   the floor of the House when a Bill for enact­ ing a statutory provision is being debated are inadmissible for the purpose of inter­ preting   the   statutory   provision   but   the speech made by the Mover of the Bill ex­ plaining the reason for the introduction of the Bill can certainly be referred to for the purpose   of   ascertaining   the   mischief 11  (1981) 4 SCC 173 74 sought to be remedied by the legislation and the object and purpose for which the legislation is enacted. This is in accord with the recent trend in juristic thought not only in western countries but also in India that interpretation of a statute be­ ing an exercise in the ascertainment of meaning, everything which is logically rel­ evant should be admissible. In fact there are at least three decisions of this Court, one   in  Loka   Shikshana Trust  v.  CIT  [(1976)   1   SCC   254   :   1976 SCC (Tax) 14 : 101 ITR 234 : 1976 LR 1] , the   other   in  Indian   Chamber   of   Com­ merce  v.  Commissioner   of   Income Tax  [(1976) 1 SCC 324 : 1976 SCC (Tax) 41 : 101 ITR 796 : 1976 Tax LR 210] and the   third   in  Additional   Commissioner   of Income Tax  v.  Surat Art Silk Cloth Manu­ facturers' Association  [(1980) 2 SCC 31 : 1980 SCC (Tax) 170 : 121 ITR 1] where the speech made by the Finance Minister while introducing the exclusionary clause in Section 2, clause (15) of the Act was relied upon by the Court for the purpose of ascertaining what was the reason for introducing that clause. The speech made by the Finance Minister while moving the amendment   introducing   sub­section   (2) clearly   states   what   were   the   circum­ stances in which sub­section (2) came to be   passed,   what   was   the   mischief   for which Section 52 as it then stood did not provide   and   which   was   sought   to   be remedied by the enactment of sub­section (2) and why the enactment of sub­section (2) was found necessary…..” 75 75. This Court in the case of   Union of India and

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.   It is clear, that the mischief, which was noticed 77. 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, 12  (2009) 12 SCC 209 76 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 legislature thought it appropriate   to   clarify   the   position,   that   once   such   a resolution plan was approved by the Adjudicating Authority, all such claims/dues owed to the State/Central Government or any local authority including tax authorities, which were not part of the resolution plan shall stand extinguished.     In Justice G.P. Singh treatise on “The principles 78. th of Statutory Interpretation”, 14  Edition, Revised by Justice A.K.   Patnaik,   former   Judge   of   this   Court,   it   is   observed thus: “ (i) Declaratory Statutes The presumption against retrospective operation is not applicable to declaratory statutes. As stated in CRAIES and approved by the Supreme Court: “For modern purposes a declaratory Act may be defined as an Act to remove doubts existing as to the common law, or the meaning or effect of any statute. Such Acts are usually held to be retrospective. The usual reason for passing a declaratory Act is to set aside what Parliament deems to have been a judicial error, whether in the statement of the common law or in the interpretation of statutes. Usually, if not invariably, such an Act contains a preamble, and also the word 77 13 ‘declared’ as well as the word ‘enacted’. ” But the use of the words ‘it is declared’ is not conclusive that the Act is declaratory for these words may, at times, be used to introduce new rules of law and the Act in the latter case will only be amending the 14 law and will not necessarily be retrospective . In determining, therefore, the nature of the Act, regard must be had to the substance rather than to 15 the form . If a new Act is ‘to explain’ an earlier Act, it would be without object unless construed 16 retrospective . An explanatory Act is generally passed to supply an obvious omission or to clear 17 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 18 retrospective operation is generally intended . The 19 language ‘shall be deemed always to have meant’ 20 or ‘shall be deemed never to have included’ is declaratory, and is in plain terms retrospective. In th 13  CRAIES : Statute Law, 7  Edition, p. 58,  approved  in Central Bank of India v. Their Workmen, AIR 1960 SC 12, p. 27 : (1960) 1 SCR 200.  See  Jones v. Bennet, (1890) 63 LT 705, p. 708 (LORD COLERIDGE, C.J.); Madras Marine & Co. v. State of Madras, (1986) 3 SCC 552, p. 563 : AIR 1986 SC 1760; Satnam Overseas (Export) v. State of Haryana, AIR 2003 SC 66, p. 84 : (2003) 1 SCC 561. 14  Harding v. Queensland Stamp Commissioners, (1898) AC 769, pp. 775, 776 (PC) 15  Ibid 16  R. V. Dursley (Inhabitants), (1832) 110 ER 168, p. 169 17  Keshavlal Jethalal Shah v. Mohanlal, AIR 1968 SC 1336, p. 1339 : (1968) 3 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,   2 inserted in section 139(8) of the Income­tax Act, 1961 Explanation 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.  18  Channan Singh v. Jai Kuar (Smt.),  AIR 1970 SC 349, p. 349, p. 351 : (1969) 2 SCC 429 19   CIT v. Straw Products , AIR 1966 SC 1113 : 1966 (2) SCR 881 20   Union of India v. S. Muthyam Reddy , JT 1999 (7) SC 596, p. 597 : 1999 (7) SCC  545 : AIR 1994 SC 3881 78 the absence of clear words indicating that the amending Act is declaratory, it would not be so construed when the pre-amended provision was 21 clear and unambiguous . An amending Act may be purely clarificatory 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 and, therefore, if the principal Act was existing law when the constitution came into force, the amending Act 22 also will be part of the existing law . The above statement of the law relating to the nature and effect of a declaratory statute has been quoted with approval by the Supreme Court from 23 earlier editions of this book in a number of cases . 24 “In Mithilesh Kumari v. Prem Bihari Khare , section 4 of the Benami Transactions (Prohibition) Act, 1988 was, it is submitted, wrongly held to be an Act declaratory in nature for it was not passed to clear any doubt existing as to the common law or the meaning or effect of any statute. The conclusion, however, that section 4 applied also to past benami transactions may be supportable on the language used in the section.” These observations and criticism of Mithilesh Kumari’s case also received the approval in R. Rajgopal 25 Reddy v. Padmini Chandrasekharan , where the th Supreme Court after quoting them (from 5 21   Sakuru v. Tanoji,  (1985) 3 SCC 590, p. 594 : AIR 1985 SC 1279 22   Punjab Traders v. State of Punjab , AIR 1990 SC 2300, p. 2304 : 1991 (1) SCC 86 23   R. Rajgopal Reddy v. Padmini Chandrasekharan , 1995 (1) Scale 692, p. 704 : AIR 1996 SC 238, p. 246 : (1995) 2 SCC 630;  , AIR 1997 SC Allied Motors (P. ) Ltd. v. CIT 1361, pp. 1366, 1367 : 1997 (3) SCC 472;  CIT v. Podar Cement Pvt. Ltd ., AIR 1997 SC 2523, pp. 2537, 2538 : 1997 (5) SCC 482;  Shyam Sunder v. Ram Kumar , AIR 2001 SC 2472, p. 2487 : (2001) 8 SCC 24;  Zile Singh v. State of Haryana , (2004) 8 SCC 1, p. 9 : AIR 2004 SC 5100, pp. 5103, 5104;  Commissioner of Income Tax I, Ahmedabad v. Gold Coin Health Food Pvt. Ltd ., (2008) 9 SCC 622 paras 19, 20 : (2009) 9 JT 312.  See further  S. B. Bhattacharjee v. S. D. Majumdar , AIR 2007 SC 2102 (paras 26 to 29) : (2007) 7 JT 381. 24  AIR 1989 SC 1247, p. 1255 : 1989 (2) SCC 95 25  1995 (1) Scale 692 : 1995 AIR SCW 1422 : AIR 1996 SC 238 79 Edition pp. 315, 316) said : “No exception can be 26 taken to the above observations”. 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 27 Motors(P.) Ltd. v. Commissioner of Income-tax 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 section may be given a reasonable interpretation and that in fact the amendment to insert the proviso would not serve its object unless it is construed as retrospective. In Commissioner of Income-Tax, Bombay v. Podar Cement Pvt. Ltd., 28 the Supreme Court held that amendments introduced by the Finance Act, 1987 in so far they related to section 27(iii), (iiia) and (iiib) which redefined the expression ‘owner of house property’, in respect of which there was a sharp divergence of opinion amongst the High Courts, was clarificatory and declaratory in nature and consequently retrospective. Similarly, in Brij Mohan Das Laxman Das v. Commissioner of 29 Income – tax . Explanation 2 added to section 40 of the Income-tax Act, 1961 from 1.4.1985 on a question on which there was a divergence of opinion was held to be declaratory in nature and, therefore, retrospective. And in Zile Singh v. State 26  Ibid, p. 704 (Scale) : p. 246 (AIR) 27  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.  28  AIR 1997 SC 2523, p. 2538 : (1997) 5 SCC 482.  29  AIR 1997 SC 1651, p. 1654 : 1997 (1) SCC 352;  Affirmed  in  Suwalal Anandlal  Jain v. Commr. Of Income­tax,  AIR 1997 SC 1279 : (1997) 4 SCC 89 and  Commissioner of Income­tax Bombay v. Kanji Shivji and co.,  AIR 2000 SC 774 : (2000) 2 SCC 253.  See further   cases in note 42, supra.  80 30 of Haryana, substitution of the word ‘upto’ for the word ‘after’ in the proviso to section 13A (added in 1994) in Haryana Municipal Act, 1973 by the Haryana Municipal (Second Amendment) Act, 1994 was held to be correction of an obvious drafting error to bring about the text in conformity with the legislative intent and, therefore, retrospective. Even without the amendment of the proviso, the court in all probability would have read and interpreted the section as corrected by the 31 amendment .” In the case of  vs. 79. Zile Singh   State of Haryana 32 ,   this Court had an occasion to consider   the and others provisions of Section 13­A of the Haryana Municipal Act,     1973, which, prior to amendment, read thus:

30  (2004) 8 SCC 1 : AIR 2004 SC 5100 31  Ibid, p. 23 (SCC). 32  (2004) 8 SCC 1 81 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:

81. This Court while observing, that the amendment was clarificatory in nature, held thus: 82 “14.   The   presumption   against   retro­ spective operation is not applicable to declaratory   statutes….   In   determin­ ing, 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 ret­ rospectively.   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 cura­ tive or merely declaratory of the previ­ ous law retrospective operation is gen­ erally   intended….   An   amending   Act may be purely declaratory to clear a meaning of a provision of the princi­ pal Act which was already implicit . A clarificatory   amendment   of   this   nature will   have   retrospective   effect   ( ibid .,   pp. 468­69).  Though   retrospectivity   is   not   to   be 15. presumed and rather there is presump­ tion against retrospectivity, according to Craies ( Statute Law , 7th Edn.), it is open for the legislature to enact laws having retrospective   operation.   This   can   be achieved by express enactment or by nec­ essary implication from the language em­ ployed.   If   it   is   a   necessary   implication from the language employed that the leg­ islature intended a particular section to have a retrospective operation, the courts 83 will give it such an operation.  In the ab­ sence of a retrospective operation hav­ ing   been   expressly   given,   the   courts may   be   called   upon   to   construe   the provisions   and   answer   the   question whether   the   legislature   had   suffi­ ciently   expressed   that   intention   giv­ ing   the   statute   retrospectivity.   Four factors are suggested as relevant: (i) general   scope   and   purview   of   the statute; (ii) the remedy sought to be applied;  (iii)  the  former  state  of  the law; and (iv) what it was the legisla­ ture   contemplated.   (p.   388)   The   rule against retrospectivity does not extend to protect from the effect of a repeal, a privi­ lege   which   did   not   amount   to   accrued right. (p. 392) 16.   Where a statute is passed for the purpose of supplying an obvious omis­ sion   in   a   former   statute   or   to   “ex­ plain”   a   former   statute,   the   subse­ quent statute has relation back to the time when the prior Act was passed. The rule against retrospectivity is in­ applicable to such legislations as are explanatory   and   declaratory   in   na­ ture.   A   classic   illustration   is   the   case of  Attorney   General  v.  Pougett  [(1816)   2 Price 381 : 146 ER 130] (Price at p. 392). By a Customs Act of 1873 (53 Geo. 3, c. 33) a duty was imposed upon hides of 9s 4d, but the Act omitted to state that it was to be 9s 4d per cwt., and to remedy 84

85

86

87 case  [(1584) 3 Co Rep 7a : 76 ER 637] was decided that— ‘… for the sure and true interpre­ tation 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 Common­ wealth, and 4th .   The   true   reason   of   the remedy; and then the office of all the   judges   is   always   to   make such  construction as   shall  sup­ press the mischief, and advance the remedy, and to suppress sub­ tle   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 in­ tent of the makers of the Act,  pro bono publico .’ ” 21.  In  Allied Motors (P) Ltd.  v.  CIT  [(1997) 3   SCC   472]   certain   unintended   conse­ quences flowed from a provision enacted by   Parliament.   There   was   an   obvious 88

89 that the Second Amendment does not expressly give the amendment a retro­ spective operation. The absence of a provision expressly giving a retrospec­ tive operation to the legislation is not determinative   of   its   prospectivity   or retrospectivity. Intrinsic evidence may be available to show that the amend­ ment   was   necessarily   intended   to have   retrospective   effect   and   if   the Court can unhesitatingly conclude in favour   of   retrospectivity,   the   Court would not hesitate in giving the Act that operation unless prevented from doing so by any mandate contained in law or an established principle of in­ terpretation of statutes.” [emphasis supplied] 82. It could thus be seen, that what is material is, to ascertain   the   legislative   intent.     If   legislature   by   an amendment   supplies   an   obvious   omission   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  (supra)   has been Zile Singh  subsequently followed in various judgments of this Court, including in the case of   Commissioner of Income Tax I, 90

34 India   vs.   V.   Ramakrishnan   and   another ,   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:

33 (2008) 9 SCC 622 34  (2018) 17 SCC 394 91

92 While some courts have taken the view that Section 14 may be interpreted liter­ ally to mean that it only restricts actions against   the   assets   of   the   corporate debtor, a few others have taken an in­ terpretation that the stay applies on en­ forcement of guarantee as well, if a CIRP is   going   on   against   the   corporate debtor.” * “5.7. The Allahabad High Court sub­ sequently took a differing view in  San­ jeev Shriya  v.  SBI  [ Sanjeev Shriya  v.  SBI , 2017 SCC OnLine All 2717 : (2018) 2 All LJ 769 : (2017) 9 ADJ 723] , by applying moratorium to enforcement of guarantee against personal guarantor to the debt. The rationale being that if a CIRP is go­ ing   on   against   the   corporate   debtor, then   the   debt   owed   by   the   corporate debtor is not final till the resolution plan is approved, and thus the liability of the surety would also be unclear. The Court took the view that until debt of the cor­ porate debtor is crystallised, the guar­ antor's   liability   may   not   be   triggered. The   Committee   deliberated   and   noted that this would mean that surety's lia­ bilities 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   infructu­ ous,   and   not   serving   the   purpose   for which they have been entered into. 5.8.   In  SBI  v.  V.   Ramakrish­ nan  [ SBI  v.  V. Ramakrishnan , 2018 SCC 93 OnLine Nclat 384] , N CLAT  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 mora­ torium. 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   be­ tween 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 the liability of the principal debtor. As per Section 128 of the Contract Act, 1872, the liability of the surety is co­ex­ tensive 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 Chettiar  v.  Dandayuthapani Chettiar  [ Chokalinga   Chettiar  v.  Dan­ dayuthapani Chettiar , 1928 SCC OnLine Mad   236   :   AIR   1928   Mad   1262]   ). 94

95

96 tive in nature, would be clear from the fol­ lowing judgments” In   the   case   of   85. B.K.   Educational   Services

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: In the present case also, it is clear “26.       that   the   amendment   of   Section   238­A would not serve its object unless it is con­ strued as being retrospective, as  other­ wise,   applications   seeking   to   resurrect time­barred claims would have to be al­ lowed, not being governed by the law of limitation. 27.  We may also refer to a recent decision of   this   Court   in  SBI  v.  V.   Ramakrish­  [  v.  ,   (2018)   17 nan SBI V.   Ramakrishnan SCC 394] , where this Court, after refer­ ring to the selfsame Insolvency Law Com­ mittee Report, held that the amendment made to Section 14 of the Code, in which the moratorium prescribed by Section 14 was held not to apply to guarantors, was held to be clarificatory, and therefore, ret­ rospective in nature, the object being that an overbroad interpretation of Section 14 ought to be set at rest by clarifying that 97 this was never the intention of Section 14 from the very inception. As   discussed   hereinabove,   one   of   the   principal 86. objects of I&B Code is, providing for revival of the Corporate Debtor and to make it a going concern.   I&B Code is a complete Code in itself.  Upon 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 98 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.   It is at this stage, that the plan becomes   binding   on   Corporate   Debtor,   its   employees, members,   creditors,   guarantors   and   other   stakeholders involved   in   the   resolution  Plan.     The   legislative   intent behind this is, to freeze all the claims 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 99 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: 

Sub­sections (20) and (21) of Section 5 of the I&B 89. Code   define   “operational   creditor”   and   “operational   debt” respectively as such: (20) “operational creditor” means a per­ son   to   whom   an   operational   debt   is owed   and   includes   any   person   to whom such debt has been legally as­ signed or transferred; (21) “operational debt” means a claim in respect of the provision of goods or ser­ vices including employment or a debt in respect of the payment of dues aris­ ing under any law for the time being in force and payable to the Central Gov­ ernment, any State Government or any local authority; 100 90.   “Creditor” therefore has been defined to mean ‘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’.   “Operational creditor” has been defined to mean a person to whom an operational debt is owed and includes any person to whom such debt has been legally assigned or transferred.   “Operational debt” has been defined to mean a claim   in   respect   of   the   provision   of   goods   or   services including employment or a debt in respect of the payment of dues arising under any law for the time being in force and payable to the Central Government, any State Government or any local authority. It is a cardinal principle of law, that a statute has 91. to be read as a whole.   Harmonious construction of sub­ section (10) of Section 3 of the I&B Code read with sub­ sections (20) and (21) of Section 5 thereof would reveal, that even a claim in respect of dues arising under any law for the time being in force and payable to the Central Government, any State Government or any local authority would come 101 within   the   ambit   of   ‘operational   debt’.     The   Central Government, any State Government or any local authority to whom an operational debt is owed would come within the ambit of ‘operational creditor’ as defined under sub­section (20) of Section 5 of the I&B Code.  Consequently, a person to whom a debt is owed would be covered by the definition of ‘creditor’ as defined under sub­section (10) of Section 3 of the I&B Code.  As such, even without the 2019 amendment, the Central Government, any State Government or any local authority to whom a debt is owed, including the statutory dues, would be covered by the term ‘creditor’ and in any case, by the term ‘other stakeholders’ as provided in sub­ section (1) of Section 31 of the I&B Code.   92. The Division Bench of the Rajasthan High Court in D.B. Civil Writ Petition No.9480 of 2019 in the case of Ultra Tech Nathdwara Cement Ltd.  v s.  Union of India & , by judgment and order dated 7.4.2020 has taken a Ors. 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 102 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).  The Calcutta High Court in the case of   93. Akshay Jhunjhunwala & Anr.   vs.   Union of India through the 35 has also taken a Ministry of Corporate Affairs & Ors.   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 was not effected, still   in   light   of   the   view   taken   by   us,   the   Central Government, any State Government or any local authority 35  2018 SCC OnLine Cal. 142 103 would be bound by the resolution plan, once it is approved by the Adjudicating Authority (i.e. NCLT). CONCLUSION 95. In the result, we answer the questions framed by us as under: (i) That once a resolution plan is duly approved by   the   Adjudicating   Authority   under   sub­ section   (1)   of   Section   31,   the   claims   as provided in the resolution plan shall stand frozen and will be binding on the Corporate Debtor   and   its   employees,   members, creditors,   including   the   Central Government, any State Government or any local   authority,   guarantors   and   other stakeholders.    On  the  date  of  approval  of resolution   plan   by   the   Adjudicating Authority, all such claims, which are not a part   of   resolution   plan,   shall   stand extinguished and no person will be entitled to   initiate   or   continue   any   proceedings   in 104 respect to a claim, which is not part of the resolution plan; (ii) 2019 amendment to Section 31 of the I&B Code   is   clarificatory   and   declaratory   in nature and therefore will be effective from the date on which 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.    In   the   light   of   what   has   been   held   by   us 96. hereinabove, we now proceed to decide individual matters.  CIVIL APPEAL NO.8129 OF 2019 97. In   the   said   appeal,   admittedly,   the   Company Petition filed by the SBI under Section 7 of I&B Code in respect of OMML/Corporate Debtor came to be admitted on 105 3.8.2017.     Correspondingly,   order   of   moratorium   and appointment of IRP also came to be passed on the said date. By a public notice, RP invited claims from the creditors. The last date for submission of such claims was 18.8.2017.  RP also invited EOI as well as resolution plans.  In response to the said invitation, both GMSPL and EARC had submitted th their resolution plans.   In the 8   meeting of CoC held on 14.3.2018,   the   resolution   plan   submitted   by   EARC   was found to be most competitive and as such, it was declared as H1 bidder.   However, during negotiation, the resolution plan of EARC was not found to be satisfactory by CoC and th as   such,   in   the   9   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 th and therefore in the 10  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 106 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 th submitted their resolution plans.  In the 11  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 th negotiations, in the 12  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 on 25.4.2018, CoC being satisfied that the resolution plan submitted by GMSPL meets all the requirements under sub­section (2) of Section 30   of   I&B   Code,   placed   the   same   for   voting.   The   said resolution   plan   of   GMSPL   was   approved   by   more   than 89.23%   of   voting   share   of   financial   creditors   of   the Corporate Debtor.  Accordingly, an application being CA (IB) No.402/KB/2018   came   to   be   filed   by   RP   for   grant   of approval to the resolution plan submitted by GMSPL before the   NCLT.     EARC   filed   application   being   CA   (IB) 107 No.398/KB/2018, challenging the approval granted by CoC to the resolution plan submitted by GMSPL.  It also filed CA (IB) No. 470/KB/2018, challenging the decision of RP in not admitting   its   claim.     One   Application   being   CA(IB) No.509/KB/2018 came to be filed by the District Mining Officer,   Department   of   Mining   and   Geology,   Jharkhand challenging the non­admission of its claim to the tune of Rs.93,51,91,724/­ and Rs.760.51 crores.   By common order dated 22.6.2018, application 99. being   CA(IB)   No.402/KB/2018   filed   by   RP,   came   to   be allowed thereby, granting approval under the provisions of Section 31(1) of the I&B Code and declaring that the same will   be   binding   on   the   Corporate   Debtor,   its   employees, members,   creditors,   guarantors   and   other   stakeholders involved in the resolution  Plan.   Application being CA (IB) No.398/KB/2018 filed by EARC challenging the approval granted by CoC to the resolution plan submitted by GMSPL was   dismissed.     Vide   same   order   dated   22.6.2018, application being CA (IB) No.470/KB/2018 filed by EARC challenging the decision of the RP in not admitting its claim 108 and application being CA(IB) No.509/KB/2018 filed by the District Mining Officer, Department of Mining and Geology, Jharkhand challenging the non­admission of its claim were also dismissed with cost of Rs.1,00,000/­ each.   100. While   allowing   the   application   filed   by   RP, granting approval to the resolution plan of GMSPL (i.e. CA No.402/KB/2018)   and   rejecting   the   application   of   EARC challenging the grant of approval to the resolution plan of GMSPL by CoC (i.e. CA No.398/KB/2018), NCLT found, that RP had followed the entire procedure as required under the I&B Code and the Regulations.  It also found, that CoC after applying its mind found, that the resolution plan submitted by GMSPL was in conformity with the requirements under Section 30(2) of the I&B Code.   101. Insofar   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 109 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 Rs.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   could   be   considered   as matured claim of the applicant.  NCLT found, that once the moratorium   was   applied   under   Section   14   of   I&B   Code, EARC was prevented from invoking the corporate guarantee. NCLT further found, that the OMML’s guarantee had not 110 been invoked by EARC till the date of completion of CIRP process and once the moratorium was imposed, it could not invoke the corporate guarantee.  NCLT therefore found, that there   is   no   illegality   or   irregularity   in   not   admitting   the claim of EARC.   103. NCLT   found,   that   the   entire   information   was uploaded   in   the   virtual   data   room   to   which   EARC   had access since it was also one of the resolution applicants. NCLT found, that the information with regard to claim of all financial creditors inclusive of EARC’s claim was available in the virtual data room.   The record also revealed, that the claim of EARC was not admitted for the reason that the corporate guarantee in question was uninvoked as on date.   104. Insofar   as   the   second   objection   of   EARC   with regard   to   the   shares   owned   by   the   Corporate   Debtor   in APNRL, which were pledged with IIFCL to secure the loan given by IIFCL to APNRL and which were assigned to EARC being invoked on 30.4.2018 is concerned, NCLT found the same claim also to be without merit.  NCLT found, that on 30.4.2018,   the   moratorium   was   in   force   and   therefore 111 invocation   of   pledge   by   EARC   on   30.4.2018   was   not permissible in law.  It was further found, that RP had rightly not admitted the said claim.   105. It was sought to be argued on behalf of EARC, that   CIRP   process   was   complete   on   29.4.2018   and therefore, invocation of pledge by EARC on 30.4.2018 was legal   and   valid.     However,   NCLT   found,   that   unless   the application filed by RP under Section 31(1) for approval of the   plan   was   decided   and   an   order   either   approving   or rejecting the resolution plan was passed, the moratorium declared under Section 14 would continue to have force. As such, invocation of pledge on 30.4.2018 was held to be not permissible in law.  It would be relevant to refer to the observations   made   by   NCLT   with   regard   to   conduct   of EARC.     “It appears to us that it is a deliberate attempt   to   stage   mange   an   objection against the approval of a resolution plan other   than   the   plan   submitted   by   the resolution applicant.  We also found that CA 398 of 2018 filed for rejection of the resolution plan is liable to be dismissed since the very same applicant not at all succeeds   in   proving   its   contention   and that the applicant approaches the Bench 112 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   Rs.1,00,000/­.     Awarding cost   of   Rs.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 supplied therein was found to be inadequate.  It was found, that in spite of the said request, the District Mining Officer had failed to place on record any supportive document or affidavit as required under the Regulations. 113 NCLT found no merit in the contentions raised on behalf of the District Mining Officer with regard to the claim on the basis of Section 25 of the Mines and Mineral (Development and Regulation) Amendment Act, 1972.     It was found, that in view of the provisions of Section 238 of I&B Code, the provisions of I&B Code have an overriding effect over any other law.   107. It   was   therefore   found,   that   no   error   was committed by RP in not admitting the claim of the District Mining Officer since it was not supported by any document or affidavit.   NCLT therefore rejected the said application with cost of Rs.1,00,000/­.   108. The order dated 22.6.2018 passed by NCLT was challenged   by   way   of   four   appeals   before   NCLAT;   two appeals  being  Company  Appeal (AT) (Insolvency)  Nos.437 and 444 of 2018 filed by EARC; one appeal being Company Appeal (AT) (Insolvency) No. 438 of 2018 filed by one Deepak Singh   and   one   appeal   being   Company   Appeal   (AT) (Insolvency) No. 500 of 2018 filed by Sundargarh Mines & Transport Workers Union. 114 109. Vide   the   impugned   judgment   and   order   dated 23.4.2019, NCLAT found, that as no ground was made out in terms of Section 61(3) of I&B Code, no relief could be granted in the appeals.   However, while doing so, NCLAT observed thus: “28. However, we make it clear that the rejection of the claim for the purpose of collating the claim and making it part of the   ‘Resolution  Plan’  will  not  affect  the right  of   the   Appellant­  ‘Edelweiss   Asset Reconstruction   Limited’   to   invoke   the Bank   Guarantee   against   the   ‘Corporate Debtor’   in  case   the   ‘Principal  Borrower’ failed   to   pay   the   debt   amount,   the ‘Moratorium’   period   having   come   to   an end. 42. From the aforesaid provisions, it is clear that after period of Moratorium it is open to the person to move before a Civil Court or to move an application before the   Court   of   Competent   Jurisdiction against the ‘Corporate Debtor’. 43. In the present case, since it is not possible   either   for   the   Adjudicating Authority or for this Appellate Tribunal to give any  specific  finding,  we  are  of  the view that the Appellant may move before the   Civil   Court   or   Court   of   Competent Jurisdiction and may file an application before the Labour Court for appropriate relief in favour of the concerned workmen or against the ‘Corporate Debtor’ if they 115 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, in   absence   of   any   appeal   filed   by   the State of Jharkhand, no order is passed.” 110. We   find,   that   the   aforesaid   observations   are beyond the scope of the powers available with NCLAT under 116 sub­section (3) of Section 61 of I&B Code.  We also find, that the said observations run totally contrary to the consistent view taken by this Court in the line of judgments starting from  (supra) to  (supra). K. Sashidhar  Kalpraj Dharamshi  111. NCLAT has categorically found, that no ground as is available under sub­section (3) of Section 61 of I&B Code has been made out and has also categorically found, that the resolution plan submitted by GMSPL was a better offer than the other two resolution applicants, including EARC and that the Adjudicating Authority has rightly approved the resolution plan of GMSPL.  After coming to such finding, the only option available with NCLAT was to dismiss the appeals.     In   our   view,   the   observations   made   in   the aforesaid paragraphs, if permitted to remain, would totally frustrate the object of I&B Code of revival of a Corporate Debtor and to resurrect it as a going concern.  As held by this Court, the successful resolution applicant cannot be flung   with   surprise   claims   which   are   not   part   of   the resolution plan.  117 112. It will also be relevant to refer to the conduct of EARC.   Clause 2.1.3 of the resolution plan submitted by EARC reads as under: “2.1.3     Financial   Creditors   other   than Identified Financial Creditors (i) Liabilities We have been informed by the RP that   other   than   the   Identified Financial Creditors, there are no other   Financial   Creditors   of   the Company,   whether   secured   or unsecured. Other   than   the   Assigned   Debt, any and all dues to, liabilities or obligations   payable   to,   claims, counter claims, demands, actions or penalties made or imposed by (including  but not limited to all interests,   damages,   losses, expenses and third party claims), and   any   right,   title,   interest enjoyed   by,   any   actual   or potential Financial Creditor or in connection   with   any   Financial Debt,   whether,   or   not   claimed, whether or not filed, whether or not   crystallised,   whether   or   not accrued, whether or not admitted, whether or not notional, whether or   not   known,   whether   due   or contingent,   whether   or   not disputed,   present   or   future, 118 whether or not being adjudicated in any proceeding, whether or not decreed, whether or not reflected in the financial 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 119 shall be deemed to be sufficient notice which may be required to be given to any Person for such matter and no further notice shall be required to be given. ” 113. It   will   also   be   relevant   to   refer   to   similar provisions   made   in   the   resolution   plan   submitted   by GMSPL, which read as under: “7. Withdrawal of litigations initiated by the   Financial   Creditors   against OMML, issue no­dues certificate(s) in favour   of   OMML   and   release   their respective charges on the securities in full   and   complete   satisfaction   of   all debts owed to the Financial Creditors by OMML / the respective SPVs as the case may be, including all guarantees which may have been provided to the Financial Creditors, for credit facilities availed by OMML. 8.       Extinguishment   and   waiver   of   all dues   to   the   Incumbent   Promoter Group by OMML. 9.  Directions to ensure that the Proposed Merger   application   shall   stand withdrawn.   Relinquishment   of corporate guarantee issued by OMML in favour of or on behalf of any of its subsidiaries,   associates,   group companies   or   any   third   party. Directions   to   the   effect   that   the guarantees provided by any and  all 120 members   of   Incumbent   Promoter Group or their respective promoters or   any   person   associated   with   the Incumbent   Promoter   Group,   may continue with the Financial Creditors. However, the same shall not result in any   liability   towards   OMML   or   the Resolution Applicants.” It is thus clear, that according to the resolution 114. plan submitted by EARC itself, had it been a successful applicant, then in that event, the claims made by it would have been irrevocably waived and permanently extinguished and written off in full with effect from the Effective Date. Had the resolution plan of EARC been approved, then all such   debts   would   have   stood   extinguished   without   any further act or deed and approval of the said plan by NCLT would have been a sufficient notice required to be given to any person for such matter.   Undisputedly, the resolution plan   submitted   by   EARC   was   on   the   basis   of   the information memorandum submitted by RP wherein, it was specifically   clarified,   that   the   claims   of   EARC   were   not admitted by RP.  It is thus clear, that EARC is trying to blow hot and cold at the same time.   According to it, had its 121 resolution plan been approved by CoC and NCLT, then the claims, which are now insisted by EARC would have stood extinguished.       However,   on   its   failure   to   become   a successful   resolution   applicant   and   approval   of   other applicant   as   a   successful   resolution   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 36 vs.   Resolution   Professional   JEKPL   Private   Limited , 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. 36  Company Appeal (AT) (Insolvency) No.304 of 2017 and connected matters. 122 116. 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 direct RP/CoC to treat EARC as a ‘financial creditor’ and give   it   representation   on   CoC   and   take   a   decision   in accordance with law. 117. We find, that the said case, on facts, would not be applicable to the case at hand.  No doubt, that the appeal filed   against   the   judgment   and   order   of   NCLAT   dated 14.8.2018 has been dismissed by this Court on 23.1.2019. However, it is a settled law, that dismissal of a Special Leave Petition/Appeal does not amount to affirmation of the view taken   in   the   judgment   impugned   in   the   Special   Leave Petition/Appeal. It will also be relevant to refer to the order passed by this Court dated 23.1.2019 while dismissing the appeal, which reads thus: “Civil Appeal No.10134/2018 123 We have heard learned counsel for the   parties   and   perused   the   relevant material on record.  The Civil Appeal is dismissed.  It will be open for the appellant to urge all points as may be available to it in law   before   the   appropriate   forum,   if   so advised.” 118. It will thus be clearly seen, that this Court while dismissing   the   appeal   has   reserved   the   liberty   to   the appellant to urge all points as may be available to it in law before the appropriate forum.   119. It is to be noted, that in the appeal before NCLAT, the   EXIM   Bank   as   well   as   Axis   Bank   had   taken   steps immediately after the claim of said Banks on the basis of corporate guarantee came to be rejected by RP/CoC.  After rejection of the claim, said Banks had filed an application under Section 60(5) before NCLT.   On NCLT rejecting the said claim, those Banks had approached NCLAT in appeals, which were allowed and the order, as stated hereinabove, was passed.   124 120. In   the   present   case,   the   claim   of   EARC   was rejected   on   22.1.2018.     Instead   of   challenging   the   said rejection, EARC participated in the proceedings and was one of  the   resolution   applicants.     Not   only   that,   in   the   first round, it was a successful bidder being ranked H1 bidder. However, since in the negotiations it failed to satisfy CoC, fresh   bids   were   invited   from   the   resolution   applicants, th which had submitted their EOI.  In the 12  meeting of CoC held   on   25.4.2018,   the   resolution   plan   of   GMSPL   was approved by 89.23% of the voting shares.  Only thereafter, EARC filed two applications; one challenging the approval of resolution plan of GMSPL by CoC and another challenging rejection of its claims by RP/CoC.   It   could   thus   be   clearly   seen,   that   EARC   was 121. 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. 125 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.   We are therefore of the considered view, that the 123. 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 Government is concerned, it is to be noted, that the State of Jharkhand has not even appealed against the order passed by NCLT.  Insofar as, the claims of Labour  and   Workmen are  concerned,  RP  has  specifically stated before NCLAT, that whatever claims were received from the workmen were duly considered in the resolution 126 plan.   Despite that, observing that a liberty is available to the workmen to raise their claims before a Civil Court or Labour Court, in our view, is totally in conflict with the provisions of I&B Code.   The same would equally apply to the observation made in the appeal of  Mr. Deepak Singh, claiming to be ‘operational creditor’.   125. We are therefore of the considered view, that the appeal deserves to be allowed by expunging the paragraphs nos. 28, 42, 43, 51 and 52 from the judgment of NCLAT dated 23.4.2019.  It is ordered accordingly.  The judgment and order passed by NCLT dated 22.6.2018 is upheld.  No costs.  CIVIL   APPEAL   ARISING   OUT   OF   SPECIAL   LEAVE PETITION (CIVIL) NO.11232 OF 2020 126. The present appeal arises out of the judgment and order passed by the Division Bench of the Allahabad High Court dated 6.7.2020 thereby, dismissing the petition filed   by   the   appellant   on   the   ground   of   availability   of alternate   remedy.     The   petition   being   Civil   Misc.   Writ Petition   (Tax)   No.354   of   2020   came   to   be   filed   seeking following reliefs: 127   “i.       Issue a writ, order or direction in the   nature   of   certiorari   quashing   the order   dated   30.01.2020   passed   by   the Additional   Commissioner   Grade   –   2 (Appeal) rejecting the appeal preferred by the   petitioner   in   respect   of   Assessment Year 2015­16 (U.P. V A T) and affirming a demand of Rs. 232.60 Lacs raised on the petitioner; ii.   Issue a writ, order or direction in the nature   of   certiorari   quashing   the Communications/orders   of   the   Joint Commissioner   (Corporate),   Ghaziabad holding that the proceedings in the State of   U.P.   would   remain   unaffected irrespective of the Resolution Plan of the petitioner   being   approved   by   the   NCLT under   the   Insolvency   and   Bankruptcy Code   as   the   NCLT   order   does   not specifically prohibit these proceedings; iii. Issue a writ, order or direction in the nature of mandamus directing refund of the   amount   which   the   petitioner   is entitled to as a result of orders passed by the respondents; iv.       Issue   a   declaration   that   all proceedings   pending   before   different authorities   (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   Rs. 769.73 Lacs stand abated in terms of the Resolution   Plan   approved   by   the   NCLT 128 under   the   Insolvency   and   Bankruptcy Code, 2016; v.    Issue a writ, order or direction in the nature   of   mandamus   directing   the Respondents to refund Rs. 248.92 Lacs/­ deposited by the petitioner under protest in these proceedings and also to return the   bank   guarantee   submitted   for   Rs. 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.” The High Court found, that the appellant has an 127. 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 the writ petition   was,   that   after   the   resolution   application   was approved   by   the   Adjudicating   Authority   and   the management of the Corporate Debtor was transferred to the 129 resolution applicant, all the claims stood extinguished and the proceedings in respect thereof could not continue.   The   main   ground   raised   on   behalf   of   the 128. respondent   is,   with   regard   to   availability   of   alternate remedy.   The second ground raised is, since the transfer date is prior to 2019 amendment to Section 31 of I&B Code, the said amendment would not be applicable to the debts owed to the State Government or Central Government. 129. As held by this Court in catena of cases including in the cases of  Babu Ram Prakash Chandra Maheshwari 37 vs.  Antarim Zilla Parishad Muzaffar Nagar , Whirlpool vs.   Corporation   Registrar of Trade Marks, Mumbai & 38 Ors. ,   Nivedita   Sharma   vs.   Cellular   Operators 39 . ,   Association   of   India   &   Ors Embassy   Property Developments   Pvt.   Ltd.   vs.   State   of   Karnataka   and 40 and recently in the case of   Others   Kalpraj Dharamshi (supra), that non­exercise of jurisdiction under Article 226 is a rule of self­restraint. It has been consistently held, that 37  (1969) 1 SCR 518 38  (1998) 8 SCC 1 39  (2011) 14 SCC 337 40  (2020) 13 SCC 308 130 the alternate remedy would not operate as a bar in at least three contingencies, namely, (1) where the writ petition has been filed for the enforcement of any of the Fundamental Rights; (2) where there has been a violation of the principle of natural justice; and (3) where the order or proceedings are   wholly   without   jurisdiction   or   the   vires   of   an   Act   is challenged.   130. In the foregoing paragraphs, we have held, that 2019 amendment to Section 31 of I&B Code is clarificatory and   declaratory   in   nature   and   therefore   will   have   a retrospective operation.  As such, when the resolution plan is approved by NCLT, the claims, which are not part of the resolution   plan,   shall   stand   extinguished   and   the proceedings related thereto shall stand terminated.   Since the subject matter of the petition are the proceedings, which relate to the claims of the respondents prior to the approval of the plan, in the light of the view taken by us, the same cannot be continued.   Equally the claims, which are not part of the resolution plan, shall stand extinguished.    131 131. In this view of the matter, we find, that relegating the   appellant   to   the   alternative   remedy   would   serve   no purpose.  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 132 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 reminder to the petitioner to pay an   amount   of   Rs.4,49,34,917.00   towards   the   service   tax deposited  by  it towards  royalty,  DMF and   NMET  for  the period   between   1.4.2016   and   30.6.2017.     The   petitioner replied to the said notice pointing out to the authorities the provisions of I&B Code and stating therein, that the demand made by the respondent were not permissible in view of I&B Code.  The petitioners had also requested for refund of an amount of Rs.5,25,15,880/­ deposited as advance against supply of iron ore.  136. In   this   background,   the   petitioners   have approached this Court challenging the demand notice dated 20.7.2018 and 28.4.2020. 137. The present case would also be covered by the view taken by us hereinabove.   133 138. It is  further  to be  noted,  that the  Income  Tax Authorities   had   approached   this   Court   with   respect   to income tax dues concerning the present petitioner by way of Special Leave Petition (Civil) No.6483 of 2018.   This Court passed the following order in the said Special Leave Petition on 10.8.2018: “Heard.  Delay, if any, is condoned.  Given Section 238 of the Insolvency and Bankruptcy Code, 2016, it is obvious that the   Code   will   override   anything inconsistent   contained   in   any   other enactment, including the Income­Tax Act. We may also refer in this Connection to Dena   Bank  vs.  Bhikhabhai   Prabhudas Parekh and Co. & Ors. (2000) 5 SCC 694 and   its   progeny,   making   it   clear   that income­tax dues, being in the nature of Crown   debts,   do   not   take   precedence even   over   secured   creditors,   who   are private persons.  We are of the view that the High Court of Delhi, is, therefore, correct in law.  Accordingly,   the   Special   Leave   Petitions are dismissed.  Pending   applications,   if   any,   stand disposed of.” 134 In   ordinary   course,   we   would   not   have 139. entertained such a petition directly under Article 32 of the Constitution.  However, a question of law, which arises for consideration in the present petition has been considered by us in this batch of matters. In that view of the matter, we find, that it would not be in the interest of justice to non­ suit   the   present   petitioner,   when   we   have   specifically decided question of law, which would govern the present case also.  As such, the present petition is allowed.   We hold and declare, that the respondents are 140. 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. CIVIL   APPEALS   ARISING   OUT   OF   SPECIAL   LEAVE PETITION (CIVIL) NOS.7147­7150 OF 2020 For the reasons stated, I.A. for intervention on 141. behalf of the applicant – TATA Steel BSL Limited is allowed.  In the present case, the appellant challenges the 142. judgment and order passed by the Division Bench of the Jharkhand   High   Court   dated   1.5.2020   vide   which   the 135 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 arising under any law for the time being in force and payable to the Central Government, any State Government” so as to bring it within the definition of “operational debt”.   144. Insofar   as,   the   judgment   authored   by   Deepak Roshan, J. is concerned, the learned Judge has observed, that since the resolution plan was approved by NCLT on 17.4.2018, 2019 amendment to Section 31(1) of I&B Code 136 would not apply to the said plan.  We find, that the finding of   the   High   Court,   that   the   dues   owed   to   the   State Government   and   Central   Government   would   not   come within the definition of ‘operational debt’, is incorrect in law in the light of the view that is taken by us.   So also the finding, that since the order of NCLT is prior to the date on which   Section   31(1)   of   I&B   Code   was   amended,   the provisions   of   Section   31   would   not   be   applicable,   also cannot stand in view of the foregoing observations made by us hereinabove.  145. We also find, that the High Court has erred in holding, that the Appellant – Company does not have locus to file the writ petitions inasmuch as, the management has been taken over by M/s Vedanta Limited.   The resolution plan   is   in   respect   of   the   Corporate   Debtor   and   the successful   resolution   applicant   only   takes   over   the management of the Corporate Debtor in accordance with the resolution  plan.     The   resolution  applicant   steps   into  the 137 shoes of the Corporate Debtor.  As such, the finding in this respect would also not be sustainable in law.   146. Shri   Gurukrishna   Kumar,   learned   Senior Counsel, strenuously argued, that RP/CoC had acted in a fraudulent manner.   It is submitted, that though a notice inviting   claim   was   required   to   be   published   in   local newspapers   where   the   registered   office   of   the   Corporate Debtor   was   situated,   the   notice   was   published   in   the newspaper of Kolkata edition.  As per Regulation 6(2)(b) of the   2016   Regulations,   the   said   notice   is   required   to   be published   in   one   English   and   one   regional   language newspaper   with   wide   circulation   at   the   location   of   the registered   office   and   corporate   office   of   the   Corporate Debtor.  Perusal of the record would reveal, that the notice was   published   in   Business   Standard   and   Ananda   Bazar Patrika newspapers of the Kolkata edition, which have wide circulation in Ranchi.  The corporate office   of the Corporate Debtor   is   at   Kolkata   whereas   its   registered   office   is   at 138 Ranchi.   In any case, it is to be noticed, that the Forest Department of the State Government had filed intervention application before NCLT as well as NCLAT.  When one of the wings of the State Government has approached NCLT and NCLAT, it is difficult to believe, that other organ of the State was not aware about the said proceedings.   147. The   contention   of   Shri   Gurukrishna   Kumar, learned Senior Counsel, that finding with regard to non­ compliance   of   Section   13   is   not   challenged   by   the Electrosteel Steels Limited, is also incorrect, inasmuch as, Electrosteel Steels Limited has raised the specific ground in Grounds ‘U’ to ‘ AA’ to that effect in the appeal memo.  148. In the result, the appeals deserve to be allowed. It is ordered accordingly.  The impugned judgment and order of the Jharkhand High Court dated 1.5.2020 is quashed and set aside.   139 We hold and declare, that the respondents are 149. 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. …….…....................., J.                              [R.F. NARIMAN] ….…....................., J.                                                  [B.R. GAVAI] …….…....................., J.                                        [HRISHIKESH ROY] NEW DELHI; APRIL 13, 2021