SC Order in the case of Ghanashyam Mishra And Sons Private Limited

Case Covered:

Ghanashyam Mishra And Sons Private Limited

Versus

Edelweiss Asset Reconstruction Company Limited

Facts of the Case:

The short but important questions, that arise for consideration in this batch of matters are 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 sub­section (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 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?

Related Topic:
SC Order in the case of The Chief Election Commissioner of India Versus M.R Vijayabhaskar

Observations of the Hon’ble Court:

In the present case, the appellant challenged the judgment and order passed by the Division Bench of the Jharkhand High Court dated 1.5.2020 vide which the petitions filed by the appellant, challenging the action of the respondent – authorities thereby, seeking to recover the Jharkhand Value Added Tax (JVAT) for the period between 2011-­2012 and 2012-­2013, have been rejected. Both the learned Judges have written separate judgments.

In the judgment authored by H.C. Mishra, J, the petitions filed by the appellant were rejected on two grounds, viz., one, that since the management of the appellant was taken over by M/s Vedanta Limited on 4.6.2018, it was only M/s Vedanta Limited, which had locus to file writ petitions. Secondly, it was debatable whether the amount of JVAT shall be covered by the expressions “debt in respect of the payment of dues arising under any law for the time being in force and payable to the Central Government, any State Government” so as to bring it within the definition of “operational debt”.

The Decision of the Court:

The contention of Shri Guru Krishna Kumar, learned Senior Counsel, that finding with regard to non-compliance of Section 13 is not challenged by the Electrosteel Steels Limited, is also incorrect, inasmuch as, Electrosteel Steels Limited has raised the specific ground in Grounds ‘U’ to ‘ AA’ to that effect in the appeal memo.

As a result, the appeals deserve to be allowed. It is ordered accordingly. The impugned judgment and order of the Jharkhand High Court dated 1.5.2020 is quashed and set aside.

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.

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