Full Judgment Text
2025 INSC 401
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL ORIGINAL/INHERENT JURISDICTION
CONTEMPT PETITION (CIVIL) NO. 629 OF 2023
IN
WRIT PETITION (CIVIL) NO.1177 OF 2020
M/S JSW STEEL LIMITED …APPELLANT(S)
VERSUS
PRATISHTHA THAKUR HARITWAL
& ORS. …RESPONDENT(S)/
ALLEGED CONTEMNOR(S)
J U D G M E N T
B.R. GAVAI, J.
1. For the reasons stated, I.A. No. 21914 of 2024 for
amendment of cause title is allowed. Cause Title is amended
accordingly.
2. This Contempt Petition is filed by the Petitioner Company-
M/s JSW Ispat Special Products Limited (now M/s JSW Steel
Limited) under Article 129 read with Article 142 of the
Constitution of India and Section 2(b) of the Contempt of Courts
Signature Not Verified
Digitally signed by
NARENDRA PRASAD
Date: 2025.03.27
15:48:35 IST
Reason:
Act, 1971 alleging willful disobedience of the judgment dated
1
th
13 April 2021 passed by this court in Civil Appeal No. 8129 of
2019 and other connected matters titled as “ Ghanshyam
Mishra and Sons Private Limited v. Edelweiss Asset
Reconstruction Company Limited and others”
by the alleged
Contemnors/Respondents.
3. Shorn of unnecessary details, the facts which led to the
filing of the present Contempt Petition are:
3.1. Insolvency proceedings were initiated against the erstwhile
1
Company- M/s Monnet Ispat and Energy Ltd. as per the
2
Insolvency and Bankruptcy Code, 2016 . After the Insolvency
3
process was initiated, the Interim Resolution Professional was
appointed as per the Code, and it was determined that the total
debt upon the erstwhile Company was much more than its
liquidation value. As per the regulations, an advertisement
inviting claims against the erstwhile Company, which were to be
th
submitted to the IRP was issued on 27 July 2017 and the last
th
date for submission of the claim was 7 August 2017. After the
claims process was over, the announcement for submission of
Resolution Plans by companies was issued. The Petitioner
1
“erstwhile Company” for short
2
“the Code” for short
3
“IRP” for short
2
4
Company was declared as the Successful Resolution Applicant
5
after voting by the Committee of Creditors , and the Resolution
th
Plan was submitted on 12 December 2017. The National
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Company Law Tribunal, Mumbai Bench , approved the
th
Resolution Plan vide order dated 24 July 2018 and pursuant
to the same, the management of the erstwhile Company was
taken over by the Petitioner Company.
3.2. Thereafter, various demand notices were raised upon the
Petitioner Company by the Odisha Mining Corporation Ltd. for
recovery of Sales Tax against iron ore purchased by the erstwhile
Company. Aggrieved by the demand notices, claiming that the
dues were extinguished as per the Code because they were
raised for a period before the management of the erstwhile
Company was taken over by the Petitioner Company, a Writ
Petition (Civil) No. 1177 of 2020 was filed before this Court.
3.3. Various similar matters were tagged together by this Court,
including the aforesaid Writ Petition. Vide a common judgment
in the case of Ghanshyam Mishra (supra), it was held that any
and all creditors, including the Central Government, State
4
“SRA” for short
5
“CoC” for short
6
“NCLT” or “Adjudicating Authority” for short
3
Government or any local authority are bound by the Resolution
Plan as approved by the Adjudicating Authority and all claims
which are not a part of the Resolution Plan stand extinguished.
3.4.
It appears that thereafter the alleged Contemnor No. 3-
Assistant Commissioner, Commercial Taxes, Division-II, Raipur,
th
Chhattisgarh issued a notice dated 15 September 2021. It was
stated that the Petitioner Company being a nationalized dealer
had not submitted the return or statement for the period from
st th
1 April 2017 to 30 June 2017 and the Petitioner Company was
directed to appear in person or through an authorized
representative for assessment proceedings before the office of the
Divisional Deputy Commissioner, Commercial Taxes, Division-II
and to furnish the books of accounts and documents relating to
the above period and to show cause as to why the Petitioner
Company should not be assessed with a penalty. The Petitioner
th
Company sent a reply dated 8 October 2021 to the alleged
Contemnor No. 3 stating that the erstwhile Company has
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undergone a Corporate Insolvency Resolution Process and in
light of the judgment of this Court in the case of Ghanshyam
7
“CIRP” for short
4
Mishra (supra) , no dues or liabilities of the erstwhile Company
which pertain to the period prior to the taking over of the
erstwhile Company by the Petitioner Company and which are
not part of the Resolution Plan are not required to be paid as the
dues or liabilities stand permanently extinguished. A request
th
was therefore made to withdraw the notice dated 15 September
2021.
3.5. The Petitioner Company thereafter filed a Miscellaneous
Application being M.A. No. 259 of 2022 in Writ Petition (Civil)
No. 1177 of 2020 seeking clarification of directions given in
paragraph 95 of the judgment given by this Court in the case of
Ghanshyam Mishra (supra). The same was dismissed as
withdrawn with a liberty to file a Contempt Petition by an order
nd
dated 2 May 2022.
th
3.6. On 13 May 2022, the Petitioner Company issued a letter
to the alleged Contemnor No. 1- Assistant Commissioner,
Commercial Tax Department, Raipur-II, Raipur, Chhattisgarh,
nd
informing him about the order of this Court dated 2 May 2022
and requesting him that the law laid down by this Court in the
case of Ghanshyam Mishra (supra) be adhered to, and any
5
failure to do the same would result in the Petitioner Company
initiating contempt proceedings.
3.7. It appears that, in spite of the aforesaid letter by the
Petitioner Company, the alleged Contemnor No. 1 went ahead
th
and issued a demand notice dated 17 May 2022 wherein it was
stated that since no one had appeared representing the
Petitioner Company to get the tax assessment done, an ex parte
decision must be taken. The decision resulted in three separate
demands under the relevant provisions of Central Sales Tax Act,
1956, Chhattisgarh Value Added Tax Act, 2005 and Entry Tax
Act, 1976 for the outstanding amount of Central Tax- Rs.
1,08,25,666/, State Tax- Rs. 2,66,42,094/-, and Entry Tax- Rs.
st th
61,51,689/- for the period between 1 April 2017 to 30 June
2017 and the Petitioner Company was directed to pay the
amounts within 30 days of receipt of the demand notice. A reply
th
dated 10 October 2022 was given by the Petitioner Company
stating that it is not liable to pay any dues as the period for
which the demand is raised is of a period before the approval of
the Resolution Plan by the Adjudicating Authority. It was
therefore requested that the demand notices be withdrawn in
6
view of the judgment of this Court given in Ghanshyam Mishra
(supra).
3.8. It can further be seen from the record that the alleged
Contemnor No. 2- Additional Revenue Collector, Commercial Tax
Office, Circle-7, Raipur, Government of Chhattisgarh, issued
th
another demand notice to the Petitioner Company dated 9
December 2022 under Section 146 of the Chhattisgarh Land
Revenue Code, 1959 containing three separate demands of
Central Tax, Sales Tax and Entry Tax for the same amounts as
th
the demand notice dated 17 May 2022 and the Petitioner
Company was again directed to pay the outstanding dues within
7 days.
3.9. Being aggrieved by the actions of the alleged contemnors
which according to the Petitioner Company were in willful
disobedience of the judgment of this Court given in the case of
Ghanshyam Mishra (supra), the present Contempt Petition
came to be filed.
th
4. Vide order dated 20 February 2023, we had issued notice
in the present Contempt Petition, returnable in four weeks. By
the said order, we had dispensed with the personal presence of
the alleged contemnors until specific orders were passed.
7
5. In response to the notice, the respondents have submitted
their replies.
6. We have heard Mr. Gopal Jain, learned Senior Counsel
appearing for the Petitioner Company and Ms. Pragati Neekhra,
learned Counsel for the alleged Contemnors/Respondents.
7. Mr. Gopal Jain, learned Senior Counsel submitted that the
act of the respondents in initiating proceedings for the dues
which are not part of the Resolution Plan are on the face of it
contemptuous in nature and in violation of the law laid down by
this Court in the case of Ghanshyam Mishra (supra).
8. He submits that once a Resolution Plan is duly approved
by the Adjudicating Authority under sub-section (1) of Section
31 of the Code, all claims not included in the Resolution Plan
are deemed to be frozen and binding on all the stakeholders. It
is submitted that this Court has in unequivocal terms clarified
that the word “other stakeholders” as mentioned in Section 31(1)
of the Code also includes Central, State and any other local
authority.
9. It is further submitted that though the Petitioner Company
had informed the contemnors/respondents about the judgment
of this Court in the case of Ghanshyam Mishra (supra) and
8
specifically informed about the order passed in the aforesaid
judgment specifically with regard to the Petitioner Company, the
contemnors have chosen to proceed further with the recovery
proceedings. It is, therefore, submitted that their act amounts
to willful disobedience of the orders of this Court.
10. Mr. Gopal Jain further submitted that despite a public
announcement, the respondents/contemnors failed to file the
claim during the resolution process. The demand raised by the
contemnors were belated and raised after the approval of the
Resolution Plan. It is submitted that the provisions of the Code
are clear inasmuch as, after the public announcement, all the
creditors including the Central Government, State Government
and local authorities are required to come forward and put up
their claims before the Resolution Plan. It is submitted that once
the Resolution Plan is approved by the Adjudicating Authority,
the SRA starts running of the business from a “clean slate”.
11. Per contra , Ms. Pragati Neekhra, learned counsel,
appearing for the respondents/alleged contemnors submits that
the alleged contemnors are the responsible Government Officers
and law-abiding citizens. She submits that the demand notices
were issued in good faith and not to undermine the dignity of
9
this Court in any manner. She submits that there has been no
intention on the part of the alleged contemnors to disobey or
disregard the orders passed by this Court.
12.
Ms. Pragati Neekhra further submitted that the judgment
of this Court in the case of Ghanshyam Mishra (supra) was not
applicable in the present case inasmuch as neither the State of
Chhattisgarh nor any of the authorities were made parties in the
insolvency proceedings before the NCLT. She submits that the
judgment of this Court in the case of Ghanshyam Mishra
(supra) would not bind the respondents and as such, a case of
contempt was not made out. It is submitted that the learned
NCLT could not have passed an order which ignored all the
Government dues including the indirect taxes which is billed
and collected by the Debtor Company. It is submitted that the
State was entitled to its dues under the Chhattisgarh Value
Added Tax Act 2005, Central Sales Tax Act, 1956 and Entry Tax
st th
Act, 1976 for the period between 1 April 2017 and 30 June
2017. As such, the alleged contemnor No.2 had rightly raised 3
th
(three) separate demand notices on 9 December 2022 under
Section 146 of the Chhattisgarh Land Revenue Code, 1959. She
submits that since the erstwhile Company had neither filed their
10
returns nor paid the dues, the alleged contemnors were justified
in raising the demand notices. To buttress her submissions, Ms.
Neekhra has relied on the judgment of this Court in the case of
8
State Tax Officer v. Rainbow Papers Limited
.
13. She further submits that the Petitioner Company herein
th
had sought clarification of the judgment of this Court dated 13
April, 2021 in the case of Ghanshyam Mishra (supra) by filing
a Miscellaneous Application being M.A. No.259 of 2022 in Writ
Petition (Civil) No.1177 of 2022 which is rejected by this Court.
As such, the present Contempt Petition is not at all tenable.
14. The legal position is no more res integra . This Court in the
case of Ghanshyam Mishra (supra) has considered a batch of
petitions. The questions which fell for consideration before the
Court were 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 sub-section
(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
8
(2023) 9 SCC 545
11
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 recovery of any of the dues
from the Corporate Debtor, which are not
a part of the Resolution Plan approved by
the adjudicating authority?”
15. Though the judgment is titled as “ Ghanshyam Mishra
and sons Private Limited through the Authorized Signatory
versus Edelweiss Asset Reconstruction Company Limited
through the Director & Ors. ”, this Court was seized of a batch
of cases and the case of the present petitioner was very much up
for consideration in the said batch of cases.
16. The Petitioner Company had filed Writ Petition (Civil)
No.1177 of 2020 ( M/s Monnet Ispat & Energy Ltd. & Anr. v.
State of Odisha & Anr. ). This Court after considering various
judgments of this Court, at length, on the issue answered the
questions as under:
“95. In the result, we answer the
questions framed by us as under:
(i) That once a resolution plan is
duly approved by the
12
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
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
13
such dues for the period prior
to the date on which the
Adjudicating Authority
grants its approval under
Section 31 could be
continued .”
[Emphasis supplied]
17. It is thus clear that this Court in unequivocal terms held
that all such claims which are not a part of the 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. The Court further held that the
2019 amendment to Section 31 of the Code is clarificatory and
declaratory in nature and therefore will be effective from the date
on which the Code has come into effect. The Court clearly held
that all the dues including the statutory dues owed to the
Central Government, or 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.
18. Insofar as the present Petitioner is concerned, the Court
considered its case in Paragraphs 133 to 140. It will be relevant
to refer to paragraph 140, which reads as under:
14
“140. 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.”
19. In the said Writ Petition (No.1177 of 2020), after the
th
completion of CIRP on 5 January 2019, the respondent No.2
therein had sent a reminder to the Petitioner Company calling
upon it to pay an amount of Rs.4,49,34,917.00 towards the
st th
service tax, etc. for the period between 1 April 2016 to 30
June 2017. In spite of the provisions of the Code pointed out by
the Petitioner Company in reply to the notice of the
respondents/authorities, the demand was pursued and as such,
the present Petitioner was required to approach this Court.
20. It will be relevant to note that this Court had also referred
th
to an order dated 10 August 2018 passed in Special Leave
Petition (Civil) No.6483 of 2018. In that matter, the Income Tax
Authorities had challenged the judgment and order of the Delhi
High Court vide which the Delhi High Court had held that in
view of the provisions of Section 238 of the Code, the income tax
dues after the acceptance of Resolution Plan by the RP stood
extinguished.
15
th
21. It will be relevant to refer to the order dated 10 August
2018 passed by this Court in Special Leave Petition (Civil)
No.6483 of 2018, which reads thus:
“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 Income-Tax 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 income-tax 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.”
22. It can thus be seen that in view of clear pronouncement of
law by this Court, all the dues of any of the stakeholders
including the statutory dues owed to the Central Government,
any State Government or any local authority, which were not
16
part of the Resolution Plan, stood extinguished from the date on
which the Resolution Plan stood approved.
23. It is to be noted that even much prior to the judgment of
Ghanshyam Mishra
this Court in the case of (supra), a 3 Judge
Bench of this Court in the case of Committee of Creditors of
Essar Steel India Limited through Authorised Signatory v.
9
Satish Kumar Gupta and others has observed thus:
“ 107. For the same reason, the
impugned NCLAT judgment [ Standard
Chartered 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
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
9
(2020) 8 SCC 531
17
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.”
[Emphasis supplied]
24. It can thus clearly be seen that this Court has held that 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. It
has also been held that all claims must be submitted to and
decided by the RP 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.
25. In Ghanshyam Mishra (supra), this Court has referred to
the judgments on the issue in the following cases:
18
(i) Innoventive Industries Ltd. vs. ICICI Bank &
10
Anr. ;
(ii) K. Shashidhar v. Indian Overseas Bank and
11
Others
;
(iii) Committee of Creditors of Essar Steel India
Limited Through Authorized Signatory v. Satish
12
Kumar Gupta and Others ;
(iv) Maharashtra Seamless Limited v. Padmanabhan
13
Venkatesh and others ;
(v) Karad Urban Cooperative Bank Ltd. vs. Swwapnil
14
Bhingardevay & Ors. ; and
(vi) Kalpraj Dharamshi and Another vs. Kotak
15
Investment Advisors Limited and Another .
26. The law laid down by this Court in the case of Ghanshyam
Mishra (supra) has been followed by various subsequent
judgments of this Court in the following cases:
16
(i) K.N. Rajakumar v. V. Nagarajan and others ;
10
(2018) 1 SCC 407
11
(2019) 12 SCC 150
12
(2020) 8 SCC 531
13
(2020) 11 SCC 467
14
(2020) 9 SCC 729
15
2021 SCC OnLine SC 204
16
(2022) 4 SCC 617
19
(ii) Ruchi Soya Industries Limited and others v.
17
Union of India and others ;
(iii) Ajay Kumar Radheyshyam Goenka v. Tourism
18
Finance Corporation of India Limited
.
27. In that view of the matter, we have no hesitation in holding
that the demands raised by the respondents/authorities for a
period prior to the date on which the learned NCLT has approved
the Resolution Plan were totally contemptuous in nature. The
respondents could not have raised the said demands inasmuch
as they are not part of the Resolution Plan.
28. Coming next to the submission of learned counsel for the
respondents/alleged contemnors, insofar as reliance placed by
her on the judgment of this Court in the case of Rainbow Papers
Limited (supra) is concerned, in the said case, this Court was
considering the question as to whether the provisions of the
Code and in particular Section 53 thereof override Section 48 of
the Gujarat Value Added Tax Act, 2003. We find that, on facts,
the said judgment is not applicable to the present case.
17
(2022) 6 SCC 343
18
(2023) 10 SCC 545 = 2023 SCC OnLine SC 266
20
29. In the said case, in response to the advertisement issued
by the RP, the State Tax Officer raised its claim before the RP.
The claim of the State Tax Officer was rejected by the Committee
19
of Creditors . The learned NCLT also rejected the claim of the
State Tax Officer and an appeal thereagainst also came to be
20
dismissed by the National Company Law Appellate Tribunal .
Aggrieved thereby the State Tax Officer approached this Court.
30. This Court held that when a grievance was made before the
Adjudicating Authority with regard to the Resolution Plan, the
Adjudicating Authority was required to examine if the Resolution
Plan met the requirements of Section 30(2) of the Code. This
Court also held that under Section 31 of the Code, while
approving the Resolution Plan as approved by the CoC, the
Adjudicating Authority must come to a satisfaction that the
Resolution Plan meets the requirements as referred to in sub-
section (2) of Section 30 of the Code. It has further been held by
this Court that the condition precedent for approval of a
Resolution Plan was that it should meet the requirements of sub-
section (2) of Section 30 of the Code.
19
“CoC” for short
20
“NCLAT” for short
21
31. In that view of the matter, we are of the considered opinion
that the facts in the case of Rainbow Papers Limited (supra)
are totally distinguishable to the facts of the present case.
32. Rainbow Papers Limited
In (supra), the State Tax Officer
had raised the claim before the CoC, which was not taken into
consideration by the CoC. As such, this Court came to a finding
that the satisfaction arrived at by the Adjudicating Authority
under Section 31 of the Code was vitiated.
33. Undoubtedly, in the present case, in spite of public notice,
neither the State of Chhattisgarh nor its authorities raised any
claim before the CoC. In that view of the matter, we are of the
considered view that the case of the present Petitioner is
specifically covered by the judgment of this Court in the case of
Ghanshyam Mishra (supra), which judgment was brought to
the notice of the respondents/authorities, the
respondents/authorities could not have proceeded with the
recovery proceedings.
34. When the law laid down by this Court in the case of
Ghanshyam Mishra (supra) is clear and unambiguous and
specifically when the Petitioner’s own case was part of the batch
which is specifically dealt with by this Court, the
22
respondents/alleged contemnors ought not to have proceeded
further with the recovery proceedings and ought to have dropped
them forthwith. The continuation of such proceedings despite
the judgment and order of this Court being pointed out to their
notice is nothing but contemptuous in nature.
35. We have, therefore, no hesitation in holding that the
continuation of the proceedings by the respondents/authorities
even after the judgment of this Court in Ghanshyam Mishra
(supra) was specifically brought to their notice is contemptuous
in nature. However, we do not propose to proceed against the
respondents/contemnors inasmuch as they are entitled to
benefit of doubt.
36. It is the contention of the alleged contemnors that the State
of Chhattisgarh was not a party to the Writ Petition or to the
proceedings before the learned NCLT. No doubt that even if any
stakeholder is not a party to the proceedings before the NCLT
and if such stakeholder does not raise his claim before the
Interim Resolution Professional/Resolution Professional, the
Resolution Plan as approved by the NCLT would still be binding
on him. However, this being one of the first cases arising out of
the judgment of this Court in the case of Ghanshyam Mishra
23
(supra), we do not propose to take any stern action against the
respondents/contemnors. In any case, the respondents/
contemnors have tendered their unconditional apology.
37.
In this view of the matter, though we hold that the act of
the alleged contemnors is contemptuous in nature, we do not
propose to take any action against them. The demand notices
issued by the contemnors on the Petitioner Company and all
proceedings pursuant thereto are held to be illegal and the same
are quashed and set aside. We dispose of the contempt petition
accepting unconditional apology of the contemnors.
..............................J
(B.R. GAVAI)
…………................................J
(AUGUSTINE GEORGE MASIH)
NEW DELHI;
MARCH 27, 2025
24