Wp/7338/2024 Of M/S. Thalaivar Steels Limited v. The Assistant Director Of Income Tax Cpc

HIGH COURT FOR THE STATE OF (Special Original Jurisdiction) \,VEDNESDAY, THE TWENTIETH DAY OF MARCHTWO THOUSAND AND TWENTY FOUR PRESENT THE HON'BLE SRI JUSTICE P.SAM KOSHYANDTHE HON'BLE SRI JUSTICE N.TUKARAMJI WRIT PETITION No.7338 OF 2024 Between: Ivl/s. Thalaivar Steels Limited, Represenled by its Authorised Signatory, [Mr.]Vemulapalli Naveen Babu, S/o Mr. Aged about 52 [Years, Authorised]-Venkatramaiah, Signatoiy, Sai Shritha fuleadows, 4tn Floor, Plot No.345, Kakateeya [Hills, I\,ladhapur,]Hyderabad, Telangana - 50008'1. CIN: U28120TG1988PLCO08610 ...PETITIONER AND 1The Assistant Director of lncome Tax CPC, CPC, Bengaluru. 2The Deputy Commissioner of lncome Tax, Circle [- ]3(2),7th Floor, SignatureTowers; Opp- Botanical Garden, Kondapur, Hyderabad - 500084.Towers; Opp- Botanical Garden, Kondapur, Hyderabad - 500084. TDS-Centralized Processing Cell, Aaykar Bhawan, Sector-3, Vaishali,Ghaziabad-ZO21O10.Ghaziabad-ZO21O10.4The Union of lndia, Ivlinistry of Finance, lncome Tax Department, New [Delhi.] ...RESPONDENTS Petition under Article 226 of ihe Constitution of lndia praying that in thecircumstances stated in the affidavit filed therewith, the High Court may bepleased to issue a direction, order or writ more particularly one in lhe nature of'WRIT OF CERTIORARI" by calling for the records on the file of the Respondentin DIN: CPC/22231AO1322062435 and DIN CPC/23241A61413634709 and quashthe lmpugned CPC lntimation Order issued u/s 143(.1 ) for AY 2022-23 daled10.01 .2023 CPC lntimation Order in DIN CPC/23241A61413634709 passed u/s143(1)of the Act for AY 2023-24 dated 10.01.2024 passed by the 1't Respondent as arbitrary, illegal and non-est and consequenuy direct the Respondents todeclare the alleged amounts reflected as arrears of taxes including demands fortax deducted at source ("TDS") and all the associated interest and penallies onincome tax demand, TDS demand upto Assessment years 2021-22 as not varidand to refund the amount of Rs.42,70,0071 (Rupees Forty-Two Lakhs sevenlyThousand and Seven onry) and Rs.63,00,991r (Rupees sixty Three Lakhs NineHundred and Ninety one onry) pending for the Assessment year 2022-23 andAssessment Year 2023-24 respectively to the petitioner. lA NO: 2 OF 2024 Petition under section 1 51 cpc praying that in rhe circumstances stated inthe affidavit fired in support of the petition, the High court may be preased to stayall further proceedings, pursuant to the rmpugned cpc rntimation order in DrN:cPCl2223lAGl32206243s urs 143(1) of rhe rncome Tax Act, 1961 dated10-01 .2023 cPC rntimation order in DrN cpc/2 324tA6r4i363470g passed u/s143(1) of the Act for AY 2023-24 dated 10.01.2024 passed by the isr Respondentpending disposal of the writ petition and thus render justice. Counsel for the Petitioner: SRI K. GOVINDA RAO Counsel for the Respondent Nos.1 to 3: SRt VIJHAy K pUNNA, SENIOR S.C. FOR INCOME TAX Counsel forthe Respondent No.4: SRI cADl PRAVEEN KUMAR,DEPUTY SOLICITOR GENERAL OF INDIADEPUTY SOLICITOR GENERAL OF INDIA The Court made the following: ORDER THE HON'BLE SRI JUSTICE P.SAM KOSHY AND THE HON'BLE SRI JUSTICE N.TUKARAMJI TVRIT PETITION No.7338 of2O24 ORDER :@et Hon'ble Sri Justlce p.sAM NOsIt:r) The present writ petition has been filed seeking for issuanceof a Writ of Mandamus challenging the decision to withhold therefund which is issued proposing adjustment of refund towardsoutstanding demand. The petitioner also seeks for setting aside theimpugrred order dated lO.Ot.2O23 (Annexure p7) passed byrespondent No.2 under Section 143(1) of the Income Tax Act, 1961outstanding demand. The petitioner also seeks for setting aside theimpugrred order dated lO.Ot.2O23 (Annexure p7) passed byrespondent No.2 under Section 143(1) of the Income Tax Act, 1961(for short, 'the Act') for the assessment year 2022-2023. AND THE HON'BLE SRI JUSTICE N.TUKARAMJI TVRIT PETITION No.7338 of2O24 ORDER :@et Hon'ble Sri Justlce p.sAM NOsIt:r) The present writ petition has been filed seeking for issuanceof a Writ of Mandamus challenging the decision to withhold therefund which is issued proposing adjustment of refund towardsoutstanding demand. The petitioner also seeks for setting aside theimpugrred order dated lO.Ot.2O23 (Annexure p7) passed byrespondent No.2 under Section 143(1) of the Income Tax Act, 1961outstanding demand. The petitioner also seeks for setting aside theimpugrred order dated lO.Ot.2O23 (Annexure p7) passed byrespondent No.2 under Section 143(1) of the Income Tax Act, 1961(for short, 'the Act') for the assessment year 2022-2023. 2. Heard Mr. Govinda Rao, learned counsel for the petitionerand Mr. Vij hay K.Punna, learned Senior Standing Counsel forIncome Tax appearing for respondents. 3. The brief facts relevant for adjudication of the present writpetition are that the petitioner establishment narnely M/s.Thalaivar Steels Limited which was earlier known as SplendidMetal Product Limited hled a company petition under Section 7 ofthe Insolvency and Bankruptcy Code, 2O16, before the NationalCompaly Law Tribunal, Hyderabaci Bench, Hyderabad (briefiy W.P.No.7338 ol2 ,24 referred to hereinafter as'NCLT') [which ][u'as registered ][as ][C.P. ][(lB)]No.666/T IHDBl2OlB The said company petition stood admittedand proceedings for Corporate Insolvency Resolution Process(CIRP) u,as initiated. One Mr. T.Sathisan was appointed as theResolution Professional to oversee the Corporate InsolvencyResolution Process. In the process, a Committee of Creditors (CoC)was constituted to inter alia evaluate the resolution plans receivedin respect of the Corporate Insolvency Resolution Process of thepetitioner and pubiic announcements were made and Expression ofInterest (Eol) from entities interested in submitting resolution [plans]were invited. 4. M/s. Antanium Holdings Pvt. Limited and M/s. Invent AssetsSecuritization and Reconstruction Pvt. Ltd. was the. successfulbidder and their resoiution plan was accepted and approved by theCommittee of Creditors vide order dated 08.09.2O20 in I.A.No.98lof 2O2O in C.P. (IB) No. 666/T lHDBl2Ola . By virtue of theresolution plan approved by the NCLT, M/s. Antanium HoldingsPte. Limited and M/s. Invent Assets Securitization andReconstruction Pvt. Ltd. took over the management a:-rd control ofthe a-ffairs of the petitioner establishment and stepped into theshoes of the petitioner in the course of taking over themanagement 5. According to the learned counsel for the petitioner, oncewhen the resolution plan stood approved by the NCLT and thesuccessful resolution applicant i.e. M/s. Antalium Holdings pte.Limited and M/s. Invent Assets Securitization and ReconstructionPvt. Ltd. having taken ove:- the management including itsmanagement and control, the authorities concerned could not haveissued any further notices in respect of any further liability whichtill then was not claimed or raised. M/s. Antanium Holdings pte.Limited and M/s.lnvent Assets Securitization and ReconstructionRrt. Ltd. the successful resolution applicant had taken over thepetitioner establishment on a clean slate basis. Alr earlier riabilitiesother than those which are reflected in the resolution plal standsextinguished. 6. In terms of the resolution plan so far as the liabilities of thecorporate debtor i.e. the petitioner is concerned, it was in the planitself envisaged as under: 6. In terms of the resolution plan so far as the liabilities of thecorporate debtor i.e. the petitioner is concerned, it was in the planitself envisaged as under: (iii) A1l actions by or on behalf of the Financial Creditors, toenforce any rights or claims against *r. Cornpa.ry'o. enlorce third party or invoke (relating anv to Secr11i1y the Outsranding Interest"@Juain! Finaniial b"Og i."."o.r"t"rryo.guarantee, rt, lu3rantees in the manner [arrd ]shall [Su ][b.1:ect ]prescribld. [property) ]ir.*i" [to ][the ],rj1 extent "r' ;;;" available to,rryimmediately, irrerocablv- anaunconditiona.lly stand withdra*",- roa/o.extinguished fuly and frnaly. uowevlr;;;;i;;;;"t""d"U^t"J, ""iili l:fli-*- iiT,ir Ty [rights of ][rh. ][Fi";;iJ-eJiii"." ],"or lFi;"::y^:l.,le rfle Lorporate Debtor.[director/ex-shareholders/ex ]-r-"g._.", (iv) The Financial Creditors shall have no rights or claimsagainst the Company (including but not limited to, inrelation to any past breaches by the Compaly) arrd allclaims of the Financia_l Creditors shall immediately,irrevocably arrd unconditionally stand extingriished vis-a-visthe Finalcial Creditors, and all documentation executed inrelation to any past breaches by the Compaly) arrd allclaims of the Financia_l Creditors shall immediately,irrevocably arrd unconditionally stand extingriished vis-a-visthe Finalcial Creditors, and all documentation executed inrespect of the obligations of the Company towards theFinancial Creditors (and all the outstanding negotiableFinancial Creditors (and all the outstanding negotiableinstru.ments issued by the Compaly in this .egard,in_cluding demand promissory notes, post-dated cheques,ECS arld letters of credit) shall immediately, irrevocably andunconditionally stand assigned / transferred to IARC inaccordance with this Plan, including but not lirnited to thedocuments set out in part 2 of the InformationMemoraldum.documents set out in part 2 of the InformationMemoraldum. 7In clause 3.3.1 it has been envisaged as under "Pursuart to paJ,"rnent of the aforementioned OperationalCreditors under the Resolution plan, the Company shallhave no Liability towards the satd OperationJ Creditorswith regard to any claims (as defined under the IBC) relatingin any _manner to the period prior to the NCLT ApprovJDate. All such liabtlitres shall immediately, irrevocabty aldunconditionally stand fully and frnally discharged andsettled, wit]. there being no further claims whatsoizer, andall forms of security created or suffered to exist, or rights tocreate such a security, to secure any obligations towardsthe said Operational Creditors (whether by way ofguarantee. bank guarantee, letters of credit or otherrr,ese)sha-ll immediately, irrevocably and unconditionally standreleased and discharged, and the said Operational ireditorsshall deem to have waived all rightS to invoke or enforce thesame." 8In clause 3.3.3 it has been envisaged as under: ..fuI"1.., [to ][the ][foregoing, ][any ][and ][all ][legal ][proceedings](including any notice, show cause,- ad.ludicarionproceedings, assessment proceedings, regulatory orders,etc.) rnitiated before aly forum by o. o., b"hrlf of urryOpet'ational Creditor to enforce any rights or claims againstthe Company shail immediately, irrevocably andunconditionally stand wjthdrawn, abated, settled and/orextinguished, ald the Operational Creditors shall deem tohavc taken all necessary steps to ensure thc samc ThcOperational Creditors of the Corrrpany shall have no furtherrights or claims against the Company (including brlt-hot hmited to, in relation to any past breaches by theCompany), in respect of the ieriod p.-. [-i. ]['LJ' ]rvCf,rApproval Date, and a.ll such clarms shall i__"ai"t.ty,irrevocably arrd unconditionaJly stand extlnguisfrea.li.. 9In clause 3.3.6 it has been envisaged as underbeen envisaged as under hmited to, in relation to any past breaches by theCompany), in respect of the ieriod p.-. [-i. ]['LJ' ]rvCf,rApproval Date, and a.ll such clarms shall i__"ai"t.ty,irrevocably arrd unconditionaJly stand extlnguisfrea.li.. 9In clause 3.3.6 it has been envisaged as underbeen envisaged as under {ii) [In ][the ]event any person that has any claim(s} against the!::l:, Lreoltors, Uther li?.,"{"e. Creditors, [Financial cr;drto;s;'-'d;;rational]Governmental Authorities, orotherwise), has not submirted its claim(s) tr"t Lifr".-.1 ."t itwas aware of such claim at such time), or ii the claim(s) frled!y [any ][person ][has ][been rejected ]uraloi [..r-t-itt.aby the Resolution professional, then: (a) all "oi such oblifations,claims and liabiliries of the Company i*fr.iir.. [-E ]rr *:11,,,1q::,,(*hether unolsputed, and whether [crys ][tallized or ]or not [not), ]notified ["whe,r-l ]to or ". [J"p"t"a ]claimed[o.]against, the Company); (b) all outstandl"g ai"prt." i. f"grfproceedrngs in respecr of such claims: aid l"t ,n .iLt" o.:li^T:_"] [such ][persons ][against ][rhe Company; ][in ][eacf, ][case,]I:1lr"S [to,rhe period ][prior to the ] [Approval Date, ]shall1*.Tedt3tely: [irrevocably ][and ][unconditionally ]standexungurshed and waived on the NCLT Approval Date, andthe Company sha.ll have not Liabilities i., .""p..i oi claim(s).=r"f, 10.Dealing with all ongoing a,.d new litigations, i,, clause 3.16 it has been held as under "By appioving virtue of this the Resolution order of the plan, Adjudicating Authority.r"rr - i.rqri.i"",investigations, notices, arbitration or other judicial, suits, regulatory claims, [' ]disputes, o. aamirrlstatir.iiti!.t orr,proceedings will not be iniriated ir adniitted iitfr."J'..r"t"to any period prior to the NCLT Approval o"il o.- Ji". o.,1""?yrrt [of ][the ][acquisition ][of ][conirol ]by rhe nJutionfft-Olicant [. ][over ][the ][Company ][pursuant ][to ][this ]Resolution(ure.ctors :14,. "C-:"t who are [the ]appointed [Compary ]or [or ]who remain [any ][o[ its ]i., [employees ].mptlrmerrtoror.directorship after the acqursruon of the Resolution plan.It is_ hereby clarified that the Company .. ii.' n."*fr,i".Applicants shall at no Doint of time, ai..",fy l"iir""Uy,held responsible or Iiable in relalion thereto.,". 1 1. Dealing [with ][the ][dues ][of ][creditors ][during ][the ][Corporate]Insolvency Resolution [Process, ][it ][has ][been ][held ][as ][under:] "The Resolution Plan has been made on the [assumPtion]that all dues incurred [by ][the ][Resolution Professional ][(on]beha-lf of the Company) [during ][the ] [(i'e ][from]lnsolvency Commencement [Date ][to ] [Approval ][Date)]have been or will be [paid. ][It is ][further ][clarified ][that]Resolution Applicant and / [or Corporate Debtor ][shall not ][be]liable for arry amount / [dues incurred ][by the ][Resolu ][tion]Professional (other than [CIRP Costs) ][during ][the ] Period. Therefore, except for [Costs ][and ][unless]otherwise specifred in [this ][Resolution ][Plan, ][any ][liabilities]and / or claims that arise [between ][the ][Insolvency]Cornmencement Date [and ][the ] [Approval ][Date ][and ][if]the same remains unpaid [as ][on ] [Approval Datc, ][shall]stand waived, extinguished, [abated, ][discharged ][ln]perpetuity as on the NCLT [Approval Date. ][Further, ][except]as provided herein, no interest [shall ][be ][paid ][on ][anv ][claim]against SMPL [(as ]on [the ][Insolvency ][Commencement ][Date)]be it of the Financial Creditor, [Operational Creditor ][or ][any]other claim arising on [account ][of ][any ][I-tnancial Liability,]operationa.l Liability or any [other ][Contingent ][Liability ][or]dues, demands in connection [with ][or ][against ][SMPL."] 12. Dealing with [unspecifred ][liabilities ][and claims, ][in ][clause ][3 ][18]it has been held as under: 12. Dealing with [unspecifred ][liabilities ][and claims, ][in ][clause ][3 ][18]it has been held as under: "All other liabilities of SMPL, including [but ][not ][limited ][to]contingent iiabilities, statutory [liabilities, customer ][claims,]supplier claims, [guarantor ][dues/ claims, ][du ][ties,]responsibilities and all other [obligations ][of ][any ][nature]whatsoever and all dues [payable ]to [the ][other ][credrtors,]including aly claims or demands [or ][liabilities ][in ][conncction]with or against SMPL, whether under [Applicable Law, equity]or contract, whether admitted [or ][not, ][due ][or ][contingent,]crystallized or uncrystallized, [known or unknown, ][secured]or unsecured, disputed [or ][undisputed, present ][or ][future,]whether or not set out in the Information [Memorandum, ][the]balance sheet or the books [of ][accounts ][of ][the ][Corporate]Debtor, in relation to any [period ][prior ][to ][the ][NCLT Approva)]Date shall stand extinguished [on the ][NCLT Approvzrl Da!e, ]- ,pursuant to the NCLT Approval [Order. ][further ][act ][or ][deed]'by thc Resolution Applicant [and/or ][SMPL." ] 13. Learned Senior Standing Counsel for Income Tax appearingfor the respondents on the other hand submits that since thenotice under Section 148 of the Act and the proceedings drawnthere under on in respect of the assessment year 2OI9-2O2O i.e.prior to the approval of the resolution plan, it cannot be said thatthe proceedings drawn by the authorities concerned to be bad inlaw. It was further contended that the order is also an appealableorder and for this reason also the present writ petition deserves tobe rejected. 14. Having hea_rd the learned counsel for the parties, it would berelevant at this juncture to take note of the decision of the HonbleSupreme Court in the case of Ghanshyam Mishra and SonsPrivate Limited vs. Edelweiss Asset Reconstruction CompanyLimited and Orsr where the Honble Supreme Court consideringthe consequences that arises pursuant to the order of the NCLT ina proceeding under Insolvency and Bankruptcy Code, 2O16 inparagraph No.9 held as under: "65, Bare reading of Section 31 of the I&B Code would also makeit abundantly clear, that once-the resolution plan is approved bythe Adjudicaring Authority, after it is 61 satisfied, that that theresolution plan as approved by CoC meets the requirements asreferred to in subsection (2) of Section 30, it shall Le binding onthe Corporate Debtor a:rd its employees, members, creditors, suarantors arld [other ][stakeholders ][Such ][a ][pro\'T ][SIon ][ls]i"**"it"t"a since one of the [dominant ][purposes ][of ][the ][I&B]C.a" i". revival of [the ][Corporate ][Debtor ][and ][to ][rnake ][it ][a]running concern. 66. The resolution [ptan ][submitted ][by ][successful ][resolution] "65, Bare reading of Section 31 of the I&B Code would also makeit abundantly clear, that once-the resolution plan is approved bythe Adjudicaring Authority, after it is 61 satisfied, that that theresolution plan as approved by CoC meets the requirements asreferred to in subsection (2) of Section 30, it shall Le binding onthe Corporate Debtor a:rd its employees, members, creditors, suarantors arld [other ][stakeholders ][Such ][a ][pro\'T ][SIon ][ls]i"**"it"t"a since one of the [dominant ][purposes ][of ][the ][I&B]C.a" i". revival of [the ][Corporate ][Debtor ][and ][to ][rnake ][it ][a]running concern. 66. The resolution [ptan ][submitted ][by ][successful ][resolution] is [required ][to ][contain various ][provtslons' ][vlz ][r]applicant for [payment ][of ][insolvency ][resolution ][process ][costs']pio.rision irovision [for ][payment ][of ][debts ][of ][operational ][creditors' ][which]it .ro, be [less ][than ][the ][amount ][to ][be ][paid ][to ][such ][creditors in]"lt ihe erent of liquidation [of the ][Corporate Debtor ][under ][section]53; or the.-or.r.tt [that ][would ][have ][been ][pald ][to ][such creditors']if ih" ,-orrt to be distributed [under the resolution plan ][had]been distributed in [accordance ][with ][the order ][of ][priority ][in]subsection [(l) ]of [section ][53, ][whichever ][is ][higher' ][The ][resolution]plan is also required [to ][provide ][for the ][payment ][of ][debts of]hnancia-l cred.itois, [who ][d ][not ][vote ][in ][favour of ][62 the resolution]plan, which also sha-ll [not ][be less ][than ][the ][amount ][to be ][paid ][to]such creditors [in ][accordance ][with ][subsection ][(l) ][of section 53 ][in]the event of a [liquidation ][of the Corporate ][Debtor' ][Explanation ][1]to clause [(b) ]of [subsection (2) ][of ][Section ][3O ][of ][the ][I&'B ][Code]clarifies for the [removal ][of ][doubts, ][that a ][distnbu ][tion ][in]accordance with the [provisions ][of ][the ][said clause ][shall ][be ][fair]and equitable to [suah creditors. ][The ][resolution ][plal is ][also]to [provide ][for the ][management ][of ][the ][affairs ][of ][the]requirei Coipo.ate Debtor [after ][approval of ][the ][resolution ][plan and ][aJso]the implementaLion [and ][supervision ][of ][tJle resolulron ][plan']Ctause l3) of subsection [(2) ][of Section ][30 ][of ][I&B ][Code ][also ][casts]a duty on RP to [examine, ][that ][tJ.e ][resolution ][plan ][does not]contravene any of [the ][provisions of ][the ][law ][for the ][time ][being ][in]force. 67. Pemsal of Section [29 ][of ][the I&B ][Code ][read ][with ][Regulation]36 of the Regulations [would ][reveal, ][that ][it ][requires ] [to prepare]an inlormattn [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]bebtor, including the [details about ][the ][creditors ][and ][the]amounts claimed [by ][them. ][It is ][also required ][to ][contain ][tlte]details of [guarantees ][that ][have ][been ][given ][in ][relation ][to ][the]debts of th! [corporate ][debtor by ][otJrer ][persons' The ][detajls ][with]regard to all material [litigation ][and ][an ][ongoing ][investigation ][or]pr"oceeding initiated [by ][Government ][and ][statutory ][authorities]*" also require to [be ][contained ][in the ][information]memorandum. So [also ][the ][details ][regarding ][the ][number ][of]rvorkers and cmployees [and Iiabilities ][of ][the ][Corporatc ][Debtor]towaJds them are [iequired ][to ][be ][contajned ][in ][the ][information]memorandum. 63. All these [details ][are ][required ][to ][be ][contained ][in ][the]i.,fo.-ntio., [memorandum ][so ][that ][the ][resolution applicant ][is]aware, as to what [are the liabilities, ][that,he ][may ][have to ][face-]and provide lor a [plan, ][which apart from'sstislving ][a ][part ][ol] 63. All these [details ][are ][required ][to ][be ][contained ][in ][the]i.,fo.-ntio., [memorandum ][so ][that ][the ][resolution applicant ][is]aware, as to what [are the liabilities, ][that,he ][may ][have to ][face-]and provide lor a [plan, ][which apart from'sstislving ][a ][part ][ol] such liabilities would also ensure, that the Corporate Debtor isreyived and made a mnning establishment. The iegislatrve intentof making the resolution plan binding on all thJ stakeholdersafter it gets 64 the se^l of approval from the AdjudicatingAuthority upon its satisfaction, that the resolution planapproved by CoC meets the requirement as referred to insubsection (2) of Section 30 is, that after the approval of theresolution. plan, no surprise claims should be flung on thesr-rccessful_ resolution applicant. The dominant purpose is, thatthe should start with fresh slate on the ba.sis of the resotutionplan approved. 69- This aspect has been aptly explained by this Court in thecase of Committee of Creditors of Essar Steel India Limitedthrough Authorised Singatory (supra). "107. For the same reason, the impugned NCLAT judgrnentlstandar [Chartered ]Bank v. Satish kumar Gupta, 2Ot9 SCCOnline NCLAT 3881 IN holding that claims that may exist aparrfrom those decided on merits by the resolution professional andby the Adjudicating Authority/Appellate Tribunal can now bedecided .by an appropriate forum in terms of Section 60(6) of theCode, also militates against the rationale of Section 3l of theCode- A successful resolution applicant cannot suddenly befaced wlth "undecided" claims after the resolution [-plal]submitted by him has been accepted as 65 tllis would amount toa hydra head popping up which would throw into uncertaintyarnourrts payable by a prospective resolution applicant whbwould successfullv take over the business o[ th'e corporatedebtor. All claims must be submitted to and decided by theresolution professional so ttrat a prospective resolution applicantknows exactly what has to be paid in order that it may then takeover arld run tl.e business of the corporate debtoi. Thts thesuccessful resolution applicant does on a fresh slate, as hasbeen pointed by us hereinabove. For these reasons, NCLATjudgment must a.lso be set aside on this count." 70. In view- of this legal posiLion, we could have very well stoppedhere and held, that, the observation made by Mf_at i., tfr.appeal filed by EARC to the effect, that EARi was entirled totake recourse to such remedies as are available to it ln law, isimpermissible in law. 7 I . As held by this Court in the case of pr. Commissioner ofIncome Tax vs. Monnet Ispat arrd Energr Ltd.l.O, in view ofhl": provisions of Section 238 of I&B code, thelrovisions thereof wilrhl": provisions of Section 238 of I&B code, thelrovisions thereof wilrun overriding effect, in there is ,lry iri.o""i"i"rcy wlth anyof the provisions of the law for the ti."e Uei"g ir, [-ioi.. ]o. .rryt-lstru m.9nt having effect by virtue of rrry i"*. e" sucfr, tfr.of the provisions of the law for the ti."e Uei"g ir, [-ioi.. ]o. .rryt-lstru m.9nt having effect by virtue of rrry i"*. e" sucfr, tfr.observabons made by NCLAT to t]:e aforesaid effect, "r"f. if permittedto remain, would frustrate tJ-e very purpose for which the I&Bto remain, would frustrate tJ-e very purpose for which the I&BCode is enacted. 72. However, in Civil [Appeai arising ][out ][of ][Special ][lrave ][Petition](Civif) No. i 1232 ot [2O2O, ][Writ ][Petition ][(Civil) ][No' ][1 ][177 ][of ][2O2O]and Civil Appeals arising [out ][of ][Special ][Leave ][Petition ][(Civil)]Nos.7l477i50 of [2O2O, ][the ][issue ][with ][regard ][to the ][statutory]claims of t}te State Government [ald ][the ][Central ][Government ][in]respect of the [period ][prior to ][the ][approval ][o[ resolution ][plan ][by]NCLT, will have to [be ]considered. 72. However, in Civil [Appeai arising ][out ][of ][Special ][lrave ][Petition](Civif) No. i 1232 ot [2O2O, ][Writ ][Petition ][(Civil) ][No' ][1 ][177 ][of ][2O2O]and Civil Appeals arising [out ][of ][Special ][Leave ][Petition ][(Civil)]Nos.7l477i50 of [2O2O, ][the ][issue ][with ][regard ][to the ][statutory]claims of t}te State Government [ald ][the ][Central ][Government ][in]respect of the [period ][prior to ][the ][approval ][o[ resolution ][plan ][by]NCLT, will have to [be ]considered. 73. Vide Section 7 of Act [No.26 of ][2Ol9 ][(vide ][S-O.2953 ][(E), ][dated]rc.A.2olg w.e.f 16-8.2019), [the ][follciwing ][words have ][been]inserted in Section [3 ]i 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 ][authoriLies ][to ][whom]statutory dues are owed" 74. As such, with respect to the [proceedings, ][which ][arise ajter]),6.8.2019, there will be no difficulty. [After ][the ][67 ][amendment,]arry debt in respect of the [payment ][of ][dues ][arising under ][any]law for the time being [in ][force ][including ][tlte ][ones ][owed ][to ][the]Centra-l Government, arry [State ][Govemment ][or any ][local]authority, which does not form [a ][part ][of the approved ][resolution]plan, shall stand extinguished. 79. In the Rajya Sabha debates, [on 29.7.2019, when the ][Bill ][for]amending I&B Code [czune ]up [for ][discussion, ][tltere ][were certain]issues raised by certain Members, [the Hontrle ][Finance ][Minister]stated thus: 'lBC has actually an overriding effect. For [instance, ][you ][asked]whether IBC will override SEBI. Section [238 ][provides ][that ] wili preva,rl in case of inconsistency between [two laws. ][ActuaJly,]Indian courts will have to decide, in [specific ][cases, depending]upon the material belore [them, ][but ][largely, ][yes, ][it ][is ][IBC.] There is also this question about [indemnity ][for ][successful]resolution applica-nt. The amendment [now ][is ][clearly making ][it]binding on the Government. It [is ][one o[ t]re ][ways in ][which ][we ][are]providing that. The Government will not raise [any ][further ][claim.]The Government will not make [any ][further ][ciairn ][aJter ][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.]Crimina-l matters alone [would ][be ][proceeded ][against individuals]and not company. There [will ][be ][no criminal ][proceedings against]successful resolution applicart. [There ][will ][be ][not ][criminal]proceedings against successful resolution applicant [for ][fraud ][by]previous promoters. So, I hope that is absolutely clear. I [would]want all the hon. Members to recogniz€ this message andcommunicate further that this Code, therefore, [gives ]thatcomfort to all new bidders. So now, they need [not ]be [scared ][that]the ta-xman wil.[ come after them for the faults ol the. [earlier]promoters. No- Once the resolution plan is accepted, [the ][earlier]promoters will be dealt wlth as individuals for [their ][criminality] that but not is very clear.the new bidder who is trying to restore the company. So, (emphasis supplied),, 15. Likewise, the Division Bench of this High Court in the case of Sirpur Paper Mills Limited and Another vs. Union of India andOthersz under somewhat similar circumstances relying uponvarious decisions on the subject matter in paragraph No.56 to 6Ohas hel<i as under: that but not is very clear.the new bidder who is trying to restore the company. So, (emphasis supplied),, 15. Likewise, the Division Bench of this High Court in the case of Sirpur Paper Mills Limited and Another vs. Union of India andOthersz under somewhat similar circumstances relying uponvarious decisions on the subject matter in paragraph No.56 to 6Ohas hel<i as under: "56. In Dena Bank Vs. ?hikhalhai prabhudas parekh & Co:,nature Supreme of Court crown debts has held do that not i.";*;1"* ;;;s take p.a"aa."". tetng o*r.. ...r."din thec,reditors who are private persons. It ias been eJflained thatcreditors the.Crown's is contrned preferential to orlinary nght to recovery ". "";";;J'.;;ditors. of debts over otherThecon-scrence ::T_T_"" [law ](as [of ]applicable [England ][or ]to Indi;) [the ][principl* ]do not accori "f "q"irv ii" and c.o*., good.preferential right for recovery of iis debts orr.. . doctrine pledgee of of goods prionty or a of secured Crown creditor. a"Ut" d;;, ;; *."ja-..i _o.,g"g"" .orn_o., extend tu*too,providing preference to Crown debts over ".".r..Apir.," a.f ,".57. Following the above, Delhi High Court in principalLimited, Commissioner (2017) SCC of Income online Tax Vs. Delhi M#net i"p", DEr,';t"iled ['"ra ]A.r..g,of theIncome rax Appeals fired by the R";;i;;.;Jiiirni"",on orthat pending asse-ssee 11"^:t_"_"".y, the above suits or which prohibited rnshtution [resolu ]prohibitiorr.*orii proceedings [rion ][apptication ]against the [bt,h" ]of suits [-i;;;; ]assessee. or continuation Tganst lt was hcldr heofRevenue against orders of the Income """".4;;;;;;: i,r.o uy trreT; A;iln;; tritunar in;.""Sj: dppcixs as ["jli:.|1x ]such, [liabilig ][of ][the ][assessee. ][wili" ][ai.io,,.,g or,h.]of tle the .ape!ai: subject Delhi High Court has hberty was granted to fir rther orders of been Jd;;;;;.'"ro."_"to the the Tribunal. This Revenue to re\rveorderCourt in _ [Principal ][Commissroner ][of ]Income Tax Vs. Monnetthat J3nat.ana in view [Enersr Limited (1 ]of Section zss or [supra). ]S"p;;;.';;";t has heldisi, tt-i";;;;;at it wiloverride anlrhins inconsisrent ;;i;;";;" ;, orrer enactment [including the ][lncome ][Tax ][Act ][Reference ][was ][made]IIi," in Dena [Bank ][case ][(4 ][supra)']"*t"t"a;cisioi [[C-reditors ][of ][Essar ][Steel]][[of ][Essar ][Steel]][[Essar ][Steel]][[Steel]] "*t"t"a;cisioi 58. Supreme [Court ][in ][Committee ][of ][[C-reditors ][of ][Essar ][Steel]][[of ][Essar ][Steel]][[Essar ][Steel]][[Steel]]India Limited [Vs. Sabsh ][xumar ][Gupta ][(3 supra) was ][exalnlnlng]n s [a ]jXl'' J.:il:';'#J.i"'- [o, ][" ][=uo ]s'", *;,,1::""i:."::::[':] 'iheli1*i'JJJ::til:i [",*:l;l' ][I; ][;: ][;;; ][i ][; ][;"'i ][ion ][ii ][( ] [) ][o ][f ];;c, ;, ;;;;"" [nira'111.;;': ]I *l;';: [" ];'ff' ,}'5l'ff ',i:n g lhe [rati ][ona're]ti"Tfr#:'i":":,t" [fiT' ][;l:;,,,- ]"*'".pr'ni behind [this, ][it ][is stated ][tn"tlfr"'i" i" ][ensure ][tnal ][the'successful];;i;;;-;, or"" [t ]1'"";,1'n ;; : m mi:; ?,X1, :::ti'fj:debtor [on ][a ][fresh ][slate ][al]been held [that a ][succle""fttl- ]'"tolu [tion ][applicant ][cannot]Jarms [a{ter ][the ][resolution]suddenlv [be ][faced ][*tn ]"itl"lial olan submitted [r,y ][r-r,rn ][n,. i"*_u.."p'"a ][as ][this ][would amount]ij^. [n ]ra"','n. "o [i ][o p ][pi'' ][g,-; ][p" ][;' ][o*' ]l-"' ["j ]; J,:H ["ii"nfl ][tJ"t;]payabte [bY ][a ]ProsPectlvexplained [as ][under:] Forthesalrlereason'theimpugnedNCLATjudgmentmtho""holding [tft^t ][tt"i-t' ][th"t ][t"'y" ]"*itt 1g-T:,^ftorn decided [on ments ][t']v ][int ][t""oi"tion ][professional ]can [and ]now[by]the Adjudicatit'g [a"tttotitvT ][Rppellate ][tib:::' ]be decided [o, ]" [tppt*#te'forum ][in.terms ][of ][Section]6o(6) [of ][tnt ][coa"'"i'=' ][rnilit'tt" ][against ]resolution ['*re ][rationale ][Applicant][of]Section 31 [of the ][C;; ] ""t"t"f'll undecided" [claims ][after]cannot [suddenrv ][iJ?La"*"i' ]the resolution [pf-'"=ti"-"tt:a ][by ][trim'has ][be-en ][accepted]r''arl [h"ad ][popping ][up ][which]as this [would ]'-"""iit'" amounts [payable ][by ][a]u'ould [throw ][i"to* ]'r'(]t"zll"ty prospectivc [tt"ottltiJt ][Applicant who ][successfully ][takes]over [the business ][cli ][in" JJ*clt"te ][debtor' ] [claims ][must]be submitted [tJ' ]['"i" i"tlagd ][by ]- [the ][resolution]professional "o [t'i" l' ][p'o"pttri"" ][resolution ][Applicant]knows [exactly ][*n"i'n"'to ][be paid ][in ][order ][that ][it ][may]then take [ot'"t ][aia ][^'t' tt't ][busines's ][of the ][corporate]resolution [Applicant ][does ][on ][a]clebtor' [Thisthe ]""<:<:t""i"f freshslate,^"r,."'"u""""pointed-outbyus.trereinabove.For these [.",=o.''] ][.i""-tuc.I-nT ][judgment ][must ][also be ][Set]aside on [this ][count'] 59. Finally [in ][Ghanashvam ][Mishra ];" [case ]to [(5- ][whether ][supra) ][anv ][the ][question][creditor]before [the ][Supreme ][tffi;i ';; ]-'tt"ott'riot including [the ][Central ][Cottrn*""t ][' ][State Govemment ]once [or ]it [any][is]iocal authoritv [it b"';;";;'-'ii" ]Sub ^plan Section [('l ]) [of]aoproved [uv ][tr'" ]"ndcr 'a,1'a'Jlii#"ihttliv s"ttlon st [of ][IBC? ][Th;.i;lh.' ][q,"stion.before,thc ][Sopreln.]of.the [resolution plan ][by]'u court [was ][as ][to ][*h"thei ][xi". ]"pp.*"r "JJitot including the Centralthe adjudicating [ttt'r'o'itv' ]local authority [is ][entitlcd]Government, [State ][Co'ern'm"t" ot ]"tty o[ dues [from ][-thc]to initiate oto<;t"iit'f-iot [tt-"tr ]"l, i corporate debtor which are not partapproved by the adjudicating authoritv?[of ][the ][resolution ][plan] 6O. After elaborate discussion, Supreme Court held that anydebt in respect of pa].ment of dues irising under arlv law for thetime being in force including the ones owed to'til c..rt.utGovernment or aly State G-overnment, o, ,ry io.J- authoritywhich cioes not form a pafi of the approved resotution ptan strattstand extingui.shed. Clarifying further it has been heidir,at o.rcea resolution .plan is approved by the adjudicating authority, allsuch clarms/dues owed to the Siate/Ce"trrf Cor.-."-"nt or zrny1",..1^t11",-:.,y or rne resolutron [including ].the [tax ][authorities who ][were ][nor ][part]plan shall stand exLinguished. it has been heldas [o]lows: 95. In the result,we answer the questions framed by us asunder: (i).That once a resolution plal is duly approved by the19J:9,"rt]nC [Authority ][under ][Sub_section ][(I) ][of ][Secrion]rr, rne-ctalms as provided in the resolution plan shallstand frozen and will be binding o" th. 'C";;;;r"Debtor and its employees, membersl creditors, irr.it, J irrgthe Central Government, any State Gor...r-..rt oi ,rryIocal authority, gua_rantors a-nd other stakeholders. Onthe date of approva.l of resolution pl; ;; ;"Adjudicating Authority, a_ll such claims, *irich *J.,oi-,part of resolution plan, shall stand extingui"nea arrJ.roperson will be entitled to initiate or continue anyproceedings in respect to a claim, which is not part ofthe resolution plar; (ii) xxxx (iii) Consequently all the dues including the statutorydues owed to the Central Governme"nt, ;y [-a;;i.]Government or any local authority, if p;i oi;;"resolution plan, shall .t"rrd .*tirrgri"t,"i "oi ,roproceedings in respect of such dues fo-r the period "rJ priorits to the approval Under date on which Section the Adjudicating 3l could bJ.o.rtirr.i.""euth".lty S.';is In view of the aforesaid facts and circumstances of the case, 16. (ii) xxxx (iii) Consequently all the dues including the statutorydues owed to the Central Governme"nt, ;y [-a;;i.]Government or any local authority, if p;i oi;;"resolution plan, shall .t"rrd .*tirrgri"t,"i "oi ,roproceedings in respect of such dues fo-r the period "rJ priorits to the approval Under date on which Section the Adjudicating 3l could bJ.o.rtirr.i.""euth".lty S.';is In view of the aforesaid facts and circumstances of the case, 16. we are of the considered opinion that in the light of theauthoritative judicial pronouncements referred to in the precedingparagraphs by the Hon,ble Supreme Court in the case ofGhanshyam Mishra and Sons private Limited (supra) and also W.P.No.?33a [of ][20'-] this High [Court ][in ][the ][case ][of ][Sirpur ][Paper ][Mills Limited ][and]Another [(supra), read $rith ][the ][order ][passed ][by ][the ] [in ][I'A'No']981 of [2O2Oin ][C'P ][(lB) ][No' ][666 ][17 ][|HDBl2OIS ][datedOB'O4'2O21 ][']the impugned [order ][dated ][10'O ][1 ][2023 ][for the ][assessment ][year]2O22-2O2g [deserves ][to ][be ][and ][is ][accordingly ][set ][aside/quashed'] 17. In [the ][result, the ][writ ][petition ][stands allowed ][and respondent]authorities [are ][directed ][to ][take ][necessary ][steps ][to ][refund ][the]excess [tax ][of the petitioner ][within ][a ][period ][of forty ][frve ][(45) days']The [petitioner ][is ][a-iso ][entitled ][for ][interest ][on ][the ][excess ][amount']However, [there ][shail ][be ][no ][order ][as ][to ][costs' ][As ][a ][sequel']miscellaneous [petitions ][pending ][if any' ][shall stand ][closed'] 'Ri':'?[$Y'.'J"i:lHi[ //rRUE coPY/, ,ecrr#;cen One fair [copy ][to ][the ][HON'BLE ] [JUSTICE^P'SAM KOSHY](For His [LordshiP s ][Kind Perusal)] To, onerair""*l.r:?"ri:?:;f Xr',.,1*:'":XEr{'TUKARAMJT "l*r,I"' l:: :"ffi T::l1 "i':ffi l[i:;ffi:;jffi[],il:, . ?ill.lt^1ti',!XiB1'*""t' [.]:ilt"?Tlif Eiltl,itTi'ijtrf, '+;ifrqi11#tr{'}"':',f:Y'.,;ilglffi [l!*-:t-*s$$^{,il*$,tf;:fL''ffi ][;iff ][':"]toPUClt 1.Two [CoPtes]1 "i':ffi l[i:;ffi:;jffi[],il:, . ?ill.lt^1ti',!XiB1'*""t' [.]:ilt"?Tlif Eiltl,itTi'ijtrf, '+;ifrqi11#tr{'}"':',f:Y'.,;ilglffi [l!*-:t-*s$$^{,il*$,tf;:fL''ffi ][;iff ][':"]toPUClt 1.Two [CoPtes] $ IVIP BS qi,'{$@) HIGH COURT DATED:2010312024 l'.- 2,,'o[a][ 1HE ] [ 14:]/-i0 5 iutr 2ult.\. l}t \."[-,.].'{'t\i:t=,11.9.+Ei)-:==-2ORDER WP.No.7338 of 2024 ALLOWING THE WRIT PETITION WITHOUT COSTS