Delhi High Court - Orders
Patna Highway Projects Limited vs Income Tax Department, Represented ... on 1 May, 2024
Author: Yashwant Varma
Bench: Yashwant Varma, Purushaindra Kumar Kaurav
$~201-205
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ W.P.(C) 6133/2024
PATNA HIGHWAY PROJECTS LIMITED ..... Petitioner
Through: Mr. Gopal Jain, Sr. Adv. with
Mr. Mehul Parti, Ms. Harshita
Malik, Mr. Gyanendra Singh &
Ms. Suvarna Kashyap, Advs.
versus
INCOME TAX DEPARTMENT, REPRESENTED
THROUGH THE JURISDICTIONAL ASSESSING OFFICER
CIRCLE 19 2 DELHI ..... Respondent
Through: Mr. Ruchir Bhatia, SSC with
Mr. Pratyaksh Gupta, JSC, Mr.
Amir Khan, Ms. Meha Gupta &
Mr. Anant Mann, Advs.
202
+ W.P.(C) 6134/2024
PATNA HIGHWAY PROJECTS LIMITED ..... Petitioner
Through: Mr. Gopal Jain, Sr. Adv. with
Mr. Mehul Parti, Ms. Harshita
Malik, Mr. Gyanendra Singh &
Ms. Suvarna Kashyap, Advs.
versus
INCOME TAX DEPARTMENT, REPRESENTED
THROUGH THE JURISDICTIONAL ASSESSING OFFICER
CIRCLE 19 1)DELHI & ANR. ..... Respondents
Through: Mr. Ruchir Bhatia, SSC with
Mr. Pratyaksh Gupta, JSC, Mr.
Amir Khan, Ms. Meha Gupta &
Mr. Anant Mann, Advs.
203
+ W.P.(C) 6135/2024
PATNA HIGHWAY PROJECTS LIMITED ..... Petitioner
W.P.(C) 6133/2024 & Connected matters Page 1 of 8
This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above.
The Order is downloaded from the DHC Server on 06/05/2024 at 22:18:41
Through: Mr. Gopal Jain, Sr. Adv. with
Mr. Mehul Parti, Ms. Harshita
Malik, Mr. Gyanendra Singh &
Ms. Suvarna Kashyap, Advs.
versus
INCOME TAX DEPARTMENT REPRESENTED THROUGH
THE NATIONAL FACELESS ASSESSMENT CENTRE
DELHI ..... Respondent
Through: Mr. Ruchir Bhatia, SSC with
Mr. Pratyaksh Gupta, JSC, Mr.
Amir Khan, Ms. Meha Gupta &
Mr. Anant Mann, Advs.
204
+ W.P.(C) 6136/2024
PATNA HIGHWAY PROJECTS LIMITED ..... Petitioner
Through: Mr. Gopal Jain, Sr. Adv. with
Mr. Mehul Parti, Ms. Harshita
Malik, Mr. Gyanendra Singh &
Ms. Suvarna Kashyap, Advs.
versus
INCOME TAX DEPARTMENT, REPRESENTED
THROUGH THE JURISDICTIONAL ASSESSING OFFICER
CIRCLE 19 2 DELHI & ORS. ..... Respondents
Through: Mr. Ruchir Bhatia, SSC with
Mr. Pratyaksh Gupta, JSC, Mr.
Amir Khan, Ms. Meha Gupta &
Mr. Anant Mann, Advs.
205
+ W.P.(C) 6137/2024
PATNA HIGHWAY PROJECTS LIMITED ..... Petitioner
Through: Mr. Gopal Jain, Sr. Adv. with
Mr. Mehul Parti, Ms. Harshita
Malik, Mr. Gyanendra Singh &
Ms. Suvarna Kashyap, Advs.
versus
INCOME TAX DEPARTMENT REPRESENTED THROUGH
W.P.(C) 6133/2024 & Connected matters Page 2 of 8
This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above.
The Order is downloaded from the DHC Server on 06/05/2024 at 22:18:41
THE JURISDICTIONAL ASSESSING OFFICER CIRCLE 19
2DELHI ..... Respondent
Through: Mr. Ruchir Bhatia, SSC with
Mr. Pratyaksh Gupta, JSC, Mr.
Amir Khan, Ms. Meha Gupta &
Mr. Anant Mann, Advs.
CORAM:
HON'BLE MR. JUSTICE YASHWANT VARMA
HON'BLE MR. JUSTICE PURUSHAINDRA KUMAR
KAURAV
ORDER
% 01.05.2024 CM APPL. 25516/2024 (Exemption) in WP(C) 6133/2024 CM APPL. 25519/2024 (Exemption) in WP(C) 6134/2024 CM APPL. 25522/2024 (Exemption) in WP(C) 6135/2024 CM APPL. 25525/2024 (Exemption) in WP(C) 6136/2024 CM APPL. 25528/2024 (Exemption) in WP(C) 6137/2024
1. Allowed, subject to all just exceptions.
2. Applications stand disposed of.
CM APPL. 25517/2024 (ex. to file lengthy list of dates & synopsis) in WP(C) 6133/2024 CM APPL. 25520/2024 (ex. to file lengthy list of dates & synopsis) in WP(C) 6134/2024 CM APPL. 25523/2024 (ex. to file lengthy list of dates & synopsis) in WP(C) 6135/2024 CM APPL. 25526/2024 (ex. to file lengthy list of dates & synopsis) in WP(C) 6136/2024 CM APPL. 25529/2024 (ex. to file lengthy list of dates & synopsis) in WP(C) 6137/2024
3. Allowed, subject to all just exceptions.
4. Applications stand disposed of.
W.P.(C) 6133/2024, CM APPL. 25515/2024 (Stay) W.P.(C) 6134/2024, CM APPL. 25518/2024 (Stay) W.P.(C) 6135/2024, CM APPL. 25521/2024 (Stay) W.P.(C) 6136/2024, CM APPL. 25524/2024 (Stay) W.P.(C) 6137/2024, CM APPL. 25527/2024 (Stay) W.P.(C) 6133/2024 & Connected matters Page 3 of 8 This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 06/05/2024 at 22:18:42
5. Notice. Since the respondents are duly represented by Mr. Bhatia, learned counsel, let a reply be filed within a period of three weeks from today. The petitioner shall have two weeks therefrom to file a rejoinder affidavit.
6. Prima facie, we find ourselves unable to sustain the action initiated by the respondents bearing in mind the undisputed fact that a Resolution Plan has come to be duly approved by the National Company Law Tribunal. In view of the aforesaid, it will be the principles enunciated by the Supreme Court in Committee of Creditors of Essar Steel India Limited v. Satish Kumar Gupta & Ors1 and Ghanashyam Mishra and Sons Private Limited v. Edelweiss Asset Reconstruction Company Limited & Ors2, which would govern.
7. We also take note of the judgment rendered by this Court in M Tech Developers Private Limited v. National Faceless Assessment Centre and Anr3, where dealing with an identical question we had held as follows:
"7. We note that while dealing with an identical issue, we had in Ireo Fiverriver Pvt. Ltd. v. Income Tax Department9 recognized the legal position to be as under:--
"3. It is in the aforesaid backdrop that we take note of the judgment rendered by the Supreme Court in Ghanashyam Mishra & Sons (P) Ltd. v. Edelweiss Asset Reconstruction Co. Ltd. [(2021) 9 SCC 657] wherein the following principles came to be laid down:--
"93. As discussed hereinabove, one of the principal objects of the I&B Code is providing for revival of the corporate debtor and to make it a going concern. The I&B Code is a complete Code in itself. Upon admission of petition under Section 7 there are various important duties and functions entrusted to RP and CoC. RP is 1 [(2020) 8 SCC 531] 2 [(2021) 9 SCC 657] 3 [2024 SCC Online Del 2776] W.P.(C) 6133/2024 & Connected matters Page 4 of 8 This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 06/05/2024 at 22:18:42 required to issue a publication inviting claims from all the stakeholders. He is required to collate the said information and submit necessary details in the information memorandum. The resolution applicants submit their plans on the basis of the details provided in the information memorandum. The resolution plans undergo deep scrutiny by RP as well as CoC. In the negotiations that may be held between CoC and the resolution applicant, various modifications may be made so as to ensure that while paying part of the dues of financial creditors as well as operational creditors and other stakeholders, the corporate debtor is revived and is made an on-going concern. After CoC approves the plan, the adjudicating authority is required to arrive at a subjective satisfaction that the plan conforms to the requirements as are provided in sub-section (2) of Section 30 of the I&B Code. Only thereafter, the adjudicating authority can grant its approval to the plan. It is at this stage that the plan becomes binding on the corporate debtor, its employees, members, creditors, guarantors and other stakeholders involved in the resolution plan. The legislative intent behind this is to freeze all the claims so that the resolution applicant starts on a clean slate and is not flung with any surprise claims. If that is permitted, the very calculations on the basis of which the resolution applicant submits its plans would go haywire and the plan would be unworkable.
94. We have no hesitation to say that the words "other stakeholders" would squarely cover the Central Government, any State Government or any local authorities. The legislature noticing that on account of obvious omission certain tax authorities were not abiding by the mandate of the I&B Code and continuing with the proceedings, has brought out the 2019 Amendment so as to cure the said mischief. We therefore hold that the 2019 Amendment is declaratory and clarificatory in nature and therefore retrospective in operation."
4. We also take note of the identical position which was expressed by the Supreme Court in Essar Steel India Ltd. Committee of Creditors v. Satish Kumar Gupta, [(2020) 8 SCC 531] where the following pertinent observations came to be made:--
"105. Section 31(1) of the Code makes it clear that once a resolution plan is approved by the Committee of Creditors it shall be binding on all stakeholders, including guarantors. This is for the reason that this W.P.(C) 6133/2024 & Connected matters Page 5 of 8 This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 06/05/2024 at 22:18:42 provision ensures that the successful resolution applicant starts running the business of the corporate debtor on a fresh slate as it were. In SBI v. V. Ramakrishnan, (2018) 17 SCC 394, this Court relying upon Section 31 of the Code has held:
"25. Section 31 of the Act was also strongly relied upon by the respondents. This section only states that once a resolution plan, as approved by the Committee of Creditors, takes effect, it shall be binding on the corporate debtor as well as the guarantor. This is for the reason that otherwise, under Section 133 of the Contract Act, 1872, any change made to the debt owed by the corporate debtor, without the surety's consent, would relieve the guarantor from payment. Section 31(1), in fact, makes it clear that the guarantor cannot escape payment as the resolution plan, which has been approved, may well include provisions as to payments to be made by such guarantor. This is perhaps the reason that Annexure VI(e) to Form 6 contained in the Rules and Regulation 36(2) referred to above, require information as to personal guarantees that have been given in relation to the debts of the corporate debtor. Far from supporting the stand of the respondents, it is clear that in point of fact, Section 31 is one more factor in favour of a personal guarantor having to pay for debts due without any moratorium applying to save him.
106. Following this judgment in SBI v. V. Ramakrishnan, (2018) 17 SCC 394, it is difficult to accept Shri Rohatgi's argument that that part of the resolution plan which states that the claims of the guarantor on account of subrogation shall be extinguished, cannot be applied to the guarantees furnished by the erstwhile Directors of the corporate debtor. So far as the present case is concerned, we hasten to add that we are saying nothing which may affect the pending litigation on account of invocation of these guarantees. However, Nclat judgment being contrary to Section 31(1) of the Code and this Court's judgment in SBI v. V. Ramakrishnan, (2018) 17 SCC 394, is set aside.
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 W.P.(C) 6133/2024 & Connected matters Page 6 of 8 This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 06/05/2024 at 22:18:42 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.
5. In view of the aforesaid principles, the 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 itself having been approved."
8. The Section 144B power entails proceedings for assessment, reassessment or re-computation being initiated in terms of the faceless procedure of assessment as prescribed therein. Any effort to assess, reassess or re-compute could tend to lean towards a re- computation of liabilities which otherwise stands freezed by virtue of the Resolution Plan having been approved.
9. Such an action or recourse would clearly be barred by Section 31 of the IBC which binds all creditors of the corporate debtor, including the Central and State Governments or any other local authority to whom a debt is owed. A Section 144B action is what the Supreme Court frowned upon and chose to describe as the "hydra head" and thus being contrary to the clean slate principle which the IBC advocates. We, consequently, find ourselves unable to sustain the impugned action."
Matters require consideration.
8. In view of the above, till the next date of listing, the respondents shall stand restrained from taking any coercive steps against the petitioner pursuant to the impugned demand notices dated 03 December 2019 [WP(C) 6133/2024], 11 June 2020 [WP(C) 6137/2024], 13 January 2021 [WP(C) 6134/2024], 22 April 2021 W.P.(C) 6133/2024 & Connected matters Page 7 of 8 This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 06/05/2024 at 22:18:42 [WP(C) 6136/2024] and 07 September 2021 [WP(C) 6135/2024].
9. Let the matters be called again on 29.08.2024.
YASHWANT VARMA, J.
PURUSHAINDRA KUMAR KAURAV, J.
MAY 01, 2024/kk W.P.(C) 6133/2024 & Connected matters Page 8 of 8 This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 06/05/2024 at 22:18:42