The Supreme Court has disposed of the contempt petition against Chhattisgarh tax department after unconditional apology for raising demand notices against a successful resolution applicant.
The bench of Justice B.R. Gavai and Justice Augustine George Masih has observed that it being one of the first cases arising out of the judgment of the Court in the case of Ghanshyam Mishra, so the court did not propose to take any stern action against the respondent department/contemnors. In any case, the respondents/ contemnors have tendered their unconditional apology.
Insolvency proceedings were initiated against the erstwhile Company- M/s Monnet Ispat and Energy Ltd. as per the Insolvency and Bankruptcy Code, 20162. After the Insolvency 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 submitted to the IRP was issued on 27th July 2017 and the last date for submission of the claim was 7th August 2017. After the claims process was over, the announcement for submission of Resolution Plans by companies was issued.
The Petitioner Company was declared as the Successful Resolution Applicant4 after voting by the Committee of Creditors5, and the Resolution Plan was submitted. The National Company Law Tribunal, Mumbai Bench, approved the Resolution Plan and pursuant to it, the management of the erstwhile Company was taken over by the Petitioner Company.
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 was filed.
In case of Ghanshyam Mishra, it was held that any and all creditors, including the Central Government, State 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.
The alleged Contemnor, Assistant Commissioner, Commercial Taxes, Division-II, Raipur, Chhattisgarh issued a notice. It was stated that the Petitioner Company being a nationalized dealer had not submitted the return or statement 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 Company sent a reply to the alleged Contemnor stating that the erstwhile Company has undergone a Corporate Insolvency Resolution Process and in light of the judgment of this Court in the case of Ghanshyam 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 was therefore made to withdraw the notice.
The department contended 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 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.
The court held that when the law laid down by this Court in the case of Ghanshyam Mishra 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 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.
“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,” the court said.
Case Details
Case Title: M/S Jsw Steel Limited Versus Pratishtha Thakur Haritwal & Ors.
Case No.: Contempt Petition (Civil) No. 629 Of 2023 In Writ Petition (Civil) No.1177 Of 2020
Date: March 27, 2025
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