Garg Inox Ltd & Anr. vs Union Of India & Ors.

$~12
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ W.P.(C) 6855/2021 & CM APPLs.30293/2024 & 26438/2026
Date of Decision : 22.04.2026

IN THE MATTER OF:
GARG INOX LTD & ANR. .....PETITIONERS
Through: Mr. Samrat Nigam, Sr. Adv. with Mr. Aditya Gauri, Mr. Amar
Vivek, Mrs. Damini Srestha Johri, Mr. Anant Jain, Mr. Aryan
Chhabra, Advs.

versus

UNION OF INDIA & ORS. .....RESPONDENTS
Through: Mr. Siddharth Sangal, Ms. Mrinalini Tandon, Ms. Richa
Mishra and Ms. Kashish Tewatia, Advocates for R-9.
Mr. Anurag Ojha, Mr. V. K. Saksena and Ms. Hemlata Rawat,
Standing Counsels for Income Tax Department /R-4.

CORAM:
HON'BLE MR. JUSTICE PURUSHAINDRA KUMAR KAURAV
J U D G E M E N T

PURUSHAINDRA KUMAR KAURAV, J. (ORAL)

1. The petition has been filed for the grant of the following reliefs:
“i. Issue of a writ, order or direction, especially issuance a writ
Mandamus to declaring the demand notices are illegal and arbitrary and
setting aside each of the following demand notices issued by the
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Signature Not Verified
Signed
By:PURUSHAINDRA
KUMAR KAURAV
Signed By:AMIT KUMAR
SHARMA
Signing Date:30.04.2026
12:47:40
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respondents that pertains to the period much prior to the CIRP date i.e.
25/07/2017.
ii. The each Noticed/Demands/Orders by the Respondents is as
mentioned below:

a. Demand notice dated 24.12.2018 Respondent No. 3 pertaining to
period 2009-10 for a sum of Rs. 50, 00,000/- i.e. prior to the CIRP
date (25.07.2017) and the same shall be waived off or quashed.
b. The notice from the Respondent No.4/Income Tax Department for
the financial year 2009-10, 2013-14, 2015-16 and 2016-17
pertains to period prior CIRP date (25.07.2017) and any other
such notices to be issued, the same shall be waived off or quashed.
c. The Due amount from Respondent No.5 /Regional Provident Fund
Commissioner dated 18.11.2015 pertains to period 2009-10&
05/2010 to 01/2015 i.e. prior to the CIRP date (25.07.2017) and
the same shall be waived off or quashed.
d. Demand cum show cause notice from Respondent
No.6/Commissioner of Customs, Mumbai dated 22.08.2019
pertains to the bill date 27.12.12 i.e. prior to the CIRP date
(25.07.2017) and the same shall be waived off or quashed.
e. The notice from Respondent No.7/DGGSTI Department dated
02.08.2019 pertain to the period 2016-17 i.e. prior to the CIRP
date (25/07/2017) and the same shall be waived off or quashed.
f. Notice from Respondent No.8/Gram Panchayat Karegaon, MIDC,
Pune dated 23.10.20 pertains to period 2015-16, 2016-17 i.e. prior
to the CIRP date (25.07.2017) and the same shall be waived off or
quashed.
i. Direct and Restrain Respondents not at raise any further
Notices/Demands pertaining to the period prior to the CIRP i.e.
25.07.2017.
ii. For the issuance of any other appropriate writ, order or direction, to
which this Hon'ble Court may deem, fit in the facts and circumstances of
the present case.
iii. Any other suitable writ order or direction as this Hon'ble court may
deem fit and proper in the facts of the case.
iv. Filing of certified copies of Annexures be dispensed with and permit
the petitioners to file photocopies of Annexures.
v. Service of advance notice of the Writ Petition (C) on the Respondents
may be dispensed with.
vi. Summon the record of the case.”
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Signed
By:PURUSHAINDRA
KUMAR KAURAV
Signed By:AMIT KUMAR
SHARMA
Signing Date:30.04.2026
12:47:40
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2. It is the case of the Petitioner No. 1 company that Corporate
Insolvency Resolution Process (hereinafter, “ CIRP ”) was initiated against it
under the provisions of the Insolvency and Bankruptcy Code, 2016
(hereinafter, “ IBC ”) vide Order dated 25.07.2017, passed by the National
Company Law Tribunal, New Delhi (hereinafter, “ NCLT ”). Petitioner No. 2
herein is the Successful Resolution Applicant (hereinafter, “ SRA ”) in the
said CIRP. It is further submitted that vide Order dated 04.12.2018, the
Resolution Plan submitted by Petitioner No. 2 was approved by the NCLT
as per Section 31 of the IBC.
3. The petitioner is aggrieved, inter alia , by the issuance of the
following Demand Notices by the Income Tax Department, Respondent No.
4 herein:-

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By:PURUSHAINDRA
KUMAR KAURAV
Signed By:AMIT KUMAR
SHARMA
Signing Date:30.04.2026
12:47:40
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4. It appears from the record that vide Order dated 22.07.2021, passed
during the pendency of the instant petition, this Court has effectively
captured the main controversy of the matter. The relevant para of the Order
dated 22.07.2021 is extracted below:
“ 2. The primary contention of the petitioners is that once the resolution
plan in respect of petitioner no. 1 stands approved by the NCLT on
04.12.2018, no demands in respect of dues allegedly payable by the
petitioner no.1 for a period prior to the initiation of the Corporation
Insolvency Resolution Process (CIRP) dated 25.07.2017 could be raised
thereafter. ”
5. It is, thus, seen that the sole grievance of the petitioners is that the
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By:PURUSHAINDRA
KUMAR KAURAV
Signed By:AMIT KUMAR
SHARMA
Signing Date:30.04.2026
12:47:40
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respondents herein have issued the impugned demand notices against
Petitioner No. 2, claiming dues that accrued prior to the initiation of the
CIRP. According to the petitioners, all the claims due against Petitioner No.
1 prior to the initiation of the CIRP stood settled in view of the approved
Resolution Plan. The petitioners rely on the judgement of the Supreme Court
in Ghanshyam Mishra & Sons Private Limited Vs. Edelweiss Asset
1
Reconstruction Company Limited . The relevant para has been extracted
below:
“ 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 subsection (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 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.”

6. Further, reliance is also placed on the judgement of the Supreme
Court in Essar Steel India Ltd. Committee of Creditors v. Satish Kumar
2
Gupta , wherein the following observations were made in para 7:
“ 107. For the same reason, the impugned Nclat judgment [Standard
Chartered Bank v. Satish Kumar Gupta, 2019 SCC OnLine NCLAT 388]

1
(2021) 9 SCC 657.
2
(2020) 8 SCC 531.
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By:PURUSHAINDRA
KUMAR KAURAV
Signed By:AMIT KUMAR
SHARMA
Signing Date:30.04.2026
12:47:40
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in holding that claims that may exist apart from those decided on merits by
the resolution professional and by the Adjudicating Authority/Appellate
Tribunal can now be decided 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
“undecided” claims after the resolution plan submitted by him has been
accepted as this would amount to a hydra head popping up which would
throw into uncertainty amounts payable by a prospective resolution
applicant who would successfully take over the business of the corporate
debtor. All claims must be submitted to and decided by the resolution
professional so that a prospective resolution applicant knows exactly what
has to be paid in order that it may then take over and run the business of
the corporate debtor. This the successful resolution applicant does on a
fresh slate, as has been pointed out by us hereinabove. For these
reasons, Nclat judgment must also be set aside on this count.”
7. The Court finds that a Division Bench of this Court, in Ireo
3
Fiverriver Pvt. Ltd. v. Income Tax Department & Anr . , has taken note of
the decisions in Essar Steel ( supra ) and Ghanshyam Mishra ( supra ), and
has held that a successful resolution applicant cannot be foisted with any
liabilities other than those which are specified and factored in the Resolution
Plan and which may pertain to a period prior to the Resolution Plan having
been approved.
8. Similar view has been taken by this Court in another judgement of the
Division Bench in National Sewing Thread Company Limited v. Deputy
4
Commissioner . Para 14 of the said decision is extracted as under:
“ 14. Reading of the aforesaid order, clearly shows that the law is well
settled that once a Resolution Plan is approved by the COC, it shall be
binding on all the stakeholders. Thus, the successful Resolution Applicant
starts running the business of the Corporate Debtor on a fresh slate.
nd
Considering the aforesaid, the impugned Assessment Order dated 22
rd
May, 2024 as well as the Notice dated 23 May, 2024, cannot stand in the
eyes of the law.”
9. A combined reading of the abovementioned judgements would

3
Order dated 05.03.2024 in W.P.(C) 12461/2022.
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By:PURUSHAINDRA
KUMAR KAURAV
Signed By:AMIT KUMAR
SHARMA
Signing Date:30.04.2026
12:47:40
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indicate that once a Resolution Plan has been approved by the Adjudicating
Authority as per the provisions of the IBC, any claim that was not part of
such Resolution Plan, would stand extinguished and cannot be enforced at a
later stage. The rationale behind the “Clean Slate Theory”, as propounded by
the Supreme Court, is to ensure that the resolution applicant gets a fresh
start, free from any prior liabilities of the debtor. It also puts an end to
further litigation by closing the doors for any future claims by the creditors.
10. The Court, thus, taking note of the impugned demand/ payment
notices issued by the Respondents, observes that the claims therein had
arisen prior to 25.07.2017, i.e., before the initiation of the CIRP. The claim
sought to be recovered by way of the Demand Notice dated 30.09.2019,
issued by Respondent No. 4, dates back to the year 2009-10. Similarly, the
Demand Notice dated 18.11.2015, issued by Respondent No. 5, relates to a
claim dating back to the year 2009-10, and May 2010 to January 2015.
11. Therefore, keeping in view the facts and circumstances in the instant
petition, the Court finds that the “Clean Slate Theory” squarely applies to
the case at hand.
12. Accordingly, the petition is allowed. The impugned demand notices
issued by the respondents qua claims arising prior to the approval of the
Resolution Plan are, thus, set aside.

(PURUSHAINDRA KUMAR KAURAV)
JUDGE
APRIL 22, 2026
Ab/sv


4
Order dated 24.06.2024W.P.(C) 8679/2024.
Signature Not Verified
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Signed
By:PURUSHAINDRA
KUMAR KAURAV
Signed By:AMIT KUMAR
SHARMA
Signing Date:30.04.2026
12:47:40
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