Vaibhav Goel vs. Deputy Commissioner Of Income Tax

2025 INSC 375
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 49 OF 2022

Vaibhav Goel & Anr. … Appellants

versus

Deputy Commissioner of Income Tax
& Anr. ... Respondents

J U D G M E N T

ABHAY S. OKA, J.
FACTUAL DETAILS
1. This appeal under Section 62 of Insolvency and
Bankruptcy Code, 2016 (for short, ‘the IB Code’) takes an
th
exception to the judgment and order dated 25 November
2021 passed by the National Company Law Appellate
Tribunal (‘the NCLAT’). The Corporate Insolvency
Resolution Process (CIRP) was initiated concerning the
corporate debtor M/s. Tehri Iron and Steel Casting Ltd.
(‘the CD’). The appellants are the Joint Resolution
st
Applicants. They submitted a Resolution Plan dated 21
January 2019. The National Company Law Tribunal (‘the
Signature Not Verified
NCLT’), vide its order dated 21st May 2019, approved the
Digitally signed by
NITIN TALREJA
Date: 2025.03.20
19:05:56 IST
Reason:
Resolution Plan submitted by the appellants.

Civil Appeal No.49 of 2022 Page 1 of 12


2. The Resolution Plan had referred to the liability of
Rs.16,85,79,469/- (Rupees Sixteen-crores, eighty-five
lakhs, seventy-nine thousand, four-hundred and sixty-
nine only) of the first respondent (Income Tax Department)
for the assessment year 2014-15 based on the demand
th
dated 18 December 2017 which was rectified under
section 154 of the Income Tax Act, 1961 (for short, ‘the IT
Act’). The liability was shown in the Resolution Plan under
the heading “Contingent liabilities”. After the approval of
the Resolution Plan, the first respondent issued demand
th th
notices dated 26 December 2019 and 28 December
2019 under the IT Act concerning assessment years 2012-
13 and 2013-14, respectively, in respect of the CD.
However, admittedly, no claim about the demands for the
two assessment years was submitted before the Resolution
Professional. The second respondent, the Monitoring
Professional, addressed a letter to the first respondent,
contending that the demands for the two aforesaid
assessment years were unsustainable in law. As the first
nd
respondent issued a letter dated 2 June 2020 asserting
the said demands, the second respondent applied to the
NCLT for declaring that the demands made by the first
respondent pertaining to assessment years 2012-13 and
2013-14 were invalid. It was urged that the said demands
were invalid as no claim in respect thereof was made before
the Resolution Professional until the Resolution Plan was

Civil Appeal No.49 of 2022 Page 2 of 12


st
approved by the order dated 21 May 2019. By the order
th
dated 17 September 2020, the NCLT dismissed the
application, holding it to be frivolous. The costs of Rs.1
lakh were made payable by the appellants and the second
respondent. Being aggrieved by the said order, an appeal
under Section 61 of the IB Code was preferred before the
th
NCLAT. By the impugned judgment and order dated 25
November, 2021, the NCLAT dismissed the said appeal.
SUBMISSIONS
3. The learned senior counsel appearing for the
appellants submitted that the NCLT dismissed the
application made by the second respondent without
assigning any reasons. He pointed out that though no
claim was received from the first respondent pertaining to
the assessment year 2014-15 till the submission of the
Resolution Plan, the Resolution Professional by itself
admitted the liability of payment of income tax for the
assessment year 2014-15, which was pending as a
contingent liability of the CD. He relied upon a decision of
this Court in the case of Committee of Creditors of Essar
1
Steel India Ltd. vs. Satish Kumar Gupta & Ors . . He
submitted that the issue was squarely covered by a
decision of a Bench of three Hon’ble Judges of this court
in the case of Ghanashyam Mishra and Sons Pvt. Ltd.

1
(2020) 8 SCC 531

Civil Appeal No.49 of 2022 Page 3 of 12


through the authorised signatory v. Edelweiss Asset
Reconstruction Company Ltd. through the Directors &
2
Ors. . However, the NCLAT has brushed aside the said
binding decision. He, therefore, submitted that the
impugned orders of NCLT and NCLAT deserve to be
quashed and set aside.
4. Learned ASG appearing for the first respondent
supported the impugned orders. He relied upon paragraph
st
44 of the order dated 21 May 2019 passed by the NCLT,
which rejected the request for relief and concession with
respect to statutory dues and observed that the issues are
left to be decided by respective government departments.
He, therefore, submitted that the NCLAT had rightly
dismissed the appeal.
CONSIDERATION OF SUBMISSIONS
5. It is an admitted position that the first respondent
did not make any claim regarding income tax dues of the
CD for the assessment years 2012-13 and 2013-14. In
sub-clause (e) of Clause 2 of the approved Resolution Plan,
under the heading ‘Settlement of Outstanding Liabilities’,
it was provided thus:
“.. .. .. .. .. .. ..

The Resolution Applicant however
understands from the information made

2
(2021) 9 SCC 657

Civil Appeal No.49 of 2022 Page 4 of 12


available, all does ( sic dues ) pertaining to
the Statutory Liabilities being paid on
time. Therefore, the Resolution
Applicant proposes to pay all Statutory
Liabilities as appearing in the balance
sheet of CIRP commencement date i.e.
31.05.2018 in the normal course of
business.

Post payment as stated above, the
entire Statutory due shall stand
satisfied, settled and extinguished, and
no claims whatsoever, of any nature,
shall subsist .”
(emphasis added)
In sub-clause (g) of Clause 2 of the Resolution Plan,
contingent liabilities have been mentioned. One of the
contingent liabilities mentioned is Income-tax liability as
regards the assessment year 2014-15 in the sum of
Rs.16,85,79,165/- (Rupees Sixteen-crores, eighty-five
lakhs, seventy-nine thousand, one-hundred and sixty-five
only). The Resolution Plan provides for the manner of
resolution regarding the said contingent liabilities.
st
6. We have perused NCLT's order dated 21 May 2019,
which approved the Resolution Plan. Paragraph 46 of the
said order reads thus:
“It is hereby declared that the
Resolution Plan is binding on the
corporate debtor, members, employees
of the corporate debtor, creditors of the
corporate debtor and other stakeholders
involved in the Resolution Plan.”

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The first respondent has relied upon paragraph 44 of the
said order, which read thus:
“In the resolution plan, relief and
concession has been sought in respect
of statutory dues for making payment
in instalments, no coercive action,
waiver of requirement of pre-deposit
for filing appeals, waiver of interest,
penal interest or damages. These are
issues to be decided by the respective
government department and
appropriate application may be moved
before them.”

Now, the question is whether paragraph 44 has any
relevance to the demands for income tax that were raised
after the date of approval of the Resolution Plan. Sub-
clause (g) of clause 2 of the Resolution Plan seeks relief and
concessions referred to in paragraph 44 referred above.
The sub-clause (g) relates to the contingent liabilities
mentioned in clause 2. The income-tax liabilities for the
assessment years 2012-13 and 2013-14 have not been
shown as contingent liabilities under the Resolution Plan.
Hence, what is observed in paragraph 44 is not relevant at
all.

7. Section 31(1) of the IB Code provides for the legal
effect of approval of the Resolution Plan. Section 31(1)
reads thus:

Civil Appeal No.49 of 2022 Page 6 of 12


“(1) If the Adjudicating Authority is
satisfied that the resolution plan as
approved by the committee of creditors
under sub-section (4) of section 30 meets
the requirements as referred to in sub-
section (2) of section 30, it shall by order
approve the resolution plan which shall
be binding on the corporate debtor and
its employees, members, creditors,
[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] guarantors and other
stakeholders involved in the resolution
plan.
Provided that the Adjudicating Authority
shall, before passing an order for approval
of resolution plan under this sub-section,
satisfy that the resolution plan has
provisions for its effective
implementation.”
(emphasis added)
The words starting from ‘including’ and ending with ‘owed’
th
were incorporated in the IB Code with effect from 16
August 2019. Section 31(1), as it stood before the
amendment mentioned above and after the amendment,
came for consideration in the decision of this Court in the
2
case of Ghanashyam Mishra and Sons Pvt. Ltd.
Paragraph 102 of the said decision reads thus:

Civil Appeal No.49 of 2022 Page 7 of 12


“102. In the result, we answer the
questions framed by us as under:
102.1. 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 respect to a claim,
which is not part of the resolution plan.
102.2. The 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 the I&B
Code has come into effect.
102.3. 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

Civil Appeal No.49 of 2022 Page 8 of 12


adjudicating authority grants its
approval under Section 31 could be
continued .”
(emphasis added)
8. In view of the declaration of law made by this Court,
all the dues including the statutory dues owed to the
Central Government, if not a part of the Resolution Plan,
shall stand extinguished and no proceedings could be
continued in respect of such dues for the period prior to
the date on which the adjudicating authority grants its
approval under Section 31 of the IB Code. In this case,
the income tax dues of the CD for the assessment years
2012-13 and 2013-14 were not part of the approved
Resolution Plan. Therefore, in view of sub-section (1) of
Section 31, as interpreted by this Court in the above
decision, the dues of the first respondent owed by the CD
for the assessment years 2012-13 and 2013-14 stand
extinguished.
9. We may note here that the decision of this Court in
2
the case of Ghanashyam Mishra and Sons Pvt. Ltd.
was specifically relied upon before the NCLAT. The
decision of this Court was brushed aside by the NCLAT,
firstly on the ground that the said decision was not relied
upon before NCLT and, secondly, on the ground that the
appellants have not challenged the Resolution Plan.
Unfortunately, the NCLAT has ignored the binding

Civil Appeal No.49 of 2022 Page 9 of 12


precedent and the legal effect of the approval of the
Resolution Plan as laid down in paragraphs 102.1 to
102.3 of the aforementioned decision. The reason given
by NCLAT that the decision of this Court cannot be
considered as it was not cited before the NCLT is perverse.

10. Before we part with this judgment, we may note that
on the application made by the second respondent, the
NCLT issued notice to the first respondent by order dated
th th
27 August 2020. However, by the order dated 17
September 2020, which was impugned before the NCLAT,
without considering the merits and without recording
reasons, the NCLT held that the application was frivolous
as the second respondent was seeking relief, which the
Bench did not consider at the time of the approval of the
Resolution Plan. The NCLT also imposed costs of Rs. one
lakh on the appellants and the second respondent. We
cannot approve NCLT's approach of not considering the
application on merits and dismissing the same without
recording any reasons and also by imposing costs. The
order of payment of costs was unwarranted.
11. In view of the above discussion, the Resolution Plan
st
approved on 21 May 2019 is binding on the first
respondent. Therefore, the subsequent demand raised by
the first respondent for the assessment years 2012-13
and 2013-14 is invalid.

Civil Appeal No.49 of 2022 Page 10 of 12


12. Once the Resolution Plan is approved by the NCLT,
no belated claim can be included therein that was not
made earlier. If such demands are taken into
consideration, the appellants will not be in a position to
recommence the business of the CD on a clean slate. On
this aspect, we may note what is held in paragraph 107 of
the decision of this Court in the case of Committee of
1
Creditors of Essar Steel India Ltd . Paragraph 107
reads 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

Civil Appeal No.49 of 2022 Page 11 of 12

13. The additional demands made by the first respondent
in respect of the assessment years 2012-13 and 2013-14
will operate as roadblocks in implementing the approved
Resolution Plan, and appellants will not be able to restart
the operations of the CD on a clean slate.
14. We, therefore, hold that the demands raised by the
first respondent against the CD in respect of assessment
years 2012-13 and 2013-14 are invalid and cannot be
enforced. We set aside the impugned orders of NCLT and
NCLAT and allow the appeal accordingly.

………………………….J.
(Abhay S Oka)



………………………….J.
(Ujjal Bhuyan)
New Delhi;
March 20, 2025.

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