Chattisgarh High Court
M/S Mivaan Steel Limited vs State Of Chhattisgarh And Ors on 21 July, 2026
1
Digitally
signed by
SIDDHANT
SIDDHANT TAMRAKAR
TAMRAKAR Date:
2026.07.24
15:46:58
+0530
CGHC010173152014 2026:CGHC:31056
NAFR
HIGH COURT OF CHHATTISGARH AT BILASPUR
WPC No. 1074 of 2014
ï‚· Jsw Steel Limited, Having Its Registered Office At Jsw Centre, Bandra Kurla
Complex, Bandra East, Mumbai -51 And Work Office At Village Naharpali,
Tehsil Kharsiya, District Raigarh Chhattisgarh.
--- Petitioner
versus
1. State Of Chhattisgarh Through The Secretary, Department Of Energy,
Mantralaya, Mahanadi Bhawan, New Raipur Distt. Raipur C.G.,
Chhattisgarh
2. The Chief Electrical Inspector Government Of Chhattisgarh, Department Of
Energy, Mahanadi Bhawan, Naya Mantralaya, Naya Raipur Raipur C.G. ,
District : Raipur, Chhattisgarh
3. The Special Secretary, Government Of Chhattisgarh, Department Of Energy,
Mahanadi Bhawan, Naya Mantralaya, Naya Raipur Raipur C.G., District :
Raipur, Chhattisgarh
4. Directorate Of Industries Udyog Bhawan, Ravigram Telibandha, Ring Road
No. 1, Raipur C.G. , District : Raipur, Chhattisgarh
5. The Chief General Manager District Industry And Trade Centre Raigarh
C.G. , District : Raigarh, Chhattisgarh
6. Chhattisgarh State Power Distribution Company Ltd. Through Suprintending
Engineer Raigarh C.G. , District : Raigarh, Chhattisgarh
7. The Collector Raigarh Distt. Raigarh C.G., District : Raigarh, Chhattisgarh
--- Respondent(s)
WPC No. 1005 of 2014
ï‚· M/s Mivaan Steel Limited, Having Its Registered Office At Jsw Centre,
Bandra Kurla Complex, Bandra East, Mumbai -51 And Work, Office At
Village Kururd, Chandkhuri Marg, Mandir Hasaud, Raipur, Chhattisgarh.
4920101
—Petitioner
Versus
2
1. State Of Chhattisgarh Through Secretary, Department Of Energy, Mahanadi
Bhawan, Naya Mantralaya, Naya Raipur, Dist Raipur, Cg, Chhattisgarh
2. The Chief Electrical Inspector, Govt. Of C.G., 36/437, Ist Floor, Near
Phawara Chowk, Byron Bazar, Raipur, Dist Raipur, Cg, District : Raipur,
Chhattisgarh
3. Special Secretary Energy Governemnt Of Chhattisgarh, Dks Bhawan,
Mantralaya, Raipur, Distt Raipur, Cg, District : Raipur, Chhattisgarh
4. The Collector, Raipur, Distt Raipur, Cg, District : Raipur, Chhattisgarh
— Respondent(s)
WPC No. 1007 of 2014
ï‚· M/s Mivaan Steel Limited Having Its Registered Office At Jsw Centre,
Bandra Kurla Complex, Bandra East, Mumbai-51 And Work Office At
Village Kurud, Chandkhuri Marg, Mandir Hasaud, Raipur, Chhattisgarh
492101.
—Petitioner
Versus
1. State Of Chhattisgarh Through Secretary, Department Of Energy, Mahanadi
Bhawan, Naya Mantralaya, Naya Raipur, Dist Raipur, Cg, Chhattisgarh
2. The Chief Electrical Inspector, Govt. Of C.G., 36/437, Ist Floor, Near
Phawara Chowk, Byron Bazar, Raipur, Dist Raipur, Cg, District : Raipur,
Chhattisgarh
3. Special Secretary Energy Governemnt Of Chhattisgarh, Dks Bhawan,
Mantralaya, Raipur, Distt Raipur, Cg, District : Raipur, Chhattisgarh
4. The Collector, Raipur, Distt Raipur, Cg, District : Raipur, Chhattisgarh
— Respondent(s)
WPC No. 1008 of 2014
ï‚· M/s Mivaan Steel Limited, Having Its Registered Office At Jsw Centre,
Bandra Kurla Complex, Bandra East, Mumbai-51 And Work Office At
Village- Kurud, Chandkhuri Marg, Mandir Hasaud, Raipur, Chhattisgarh,
492101.
—Petitioner
Versus
1. State Of Chhattisgarh Through Secretary, Department Of Energy, Mahanadi
Bhawan, Naya Mantralaya, Naya Raipur, Dist Raipur, Cg, Chhattisgarh
3
2. The Chief Electrical Inspector, Govt. Of C.G., 36/437, Ist Floor, Near
Phawara Chowk, Byron Bazar, Raipur, Dist Raipur, Cg, District : Raipur,
Chhattisgarh
3. Special Secretary Energy Governemnt Of Chhattisgarh, Dks Bhawan,
Mantralaya, Raipur, Distt Raipur, Cg, District : Raipur, Chhattisgarh
4. The Collector, Raipur, Distt Raipur, Cg, District : Raipur, Chhattisgarh
— Respondent
WPC No. 620 of 2015
ï‚· M/s Mivaan Steel Limited Having Its Registered Office Of Jsw Centre,
Bandra Kurla Complex, Bandra East, Mumbai-51 And Work Office At
Village Kurud, Chandkhuri Marg, Mandir Hasaud, Raipur, Chhattisgarh
492001.
—Petitioner
Versus
1. State Of Chhattisgarh Through The Secretary, Department Of Energy,
Mantralaya, Mahanadi Bhawan, Naya Raipur, Chhattisgarh
2. The Collector District Raipur, Chhattisgarh
3. The Chief Electrical Inspector Government Of Chhattisgarh, 36/437, 1st
Floor, Near Phawara Chowk, Byron Bazar, Raipur, 492101 Chhattisgarh
4. Directgorate Of Industries Udyog Bhawan, Ravigram, Telibandha, Ring
Road No.1, Raipur, Chhattisgarh
5. The Chief General Manager District Industries And Trade Centre, Raigarh,
Chhattisgarh
6. Chhattisgarh State Power Distribution Company Limited, Through
Superintending Engineer, Raipur, Chhattisgarh
— Respondent(s)
WPC No. 1103 of 2015
ï‚· Jsw Steel Ltd. Formerly Know As Monnet Ispat Limited A Company
Incorporated Under The Companies Act 1956, Having Its Registered Office
Monnet Marg Mandir Hasaud Raipur 49200101 Chhatisgarh Corporatie
Office At 11, Masjid Moth, Greater Kailash Part – Ii New Delhi, Delhi
—Petitioner
Versus
1. Union Of India Through The Secretary Ministry Of Coal, Government Of
India Shastri Bhawan, New Delhi 1100001 India , Delhi
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2. State Of Chhattisgarh Through Secretary Of Revenue Ministry Of Finance
Government Of Chhattisgarh Mantralaya Mahanadi Bhawan Naya Raipur
Chhattisgarh , District : Raipur, Chhattisgarh
3. State Of Chhattisgarh Secretary Department Of Geology And Mining
Ministry Of Commerce And Industries Government Of Chhattisgarh
Mantralaya Mahanadi Bhawan Naya Raipur Chhattisgarh , District : Raipur,
Chhattisgarh
4. The Collector Mining Division Collectorate Premises, Chakradhar Nagar
Raigarh Chhattisgarh , District : Raigarh, Chhattisgarh
5. District Mining Officer Collectorate Premises Ost Chakradhar Nagar Raigarh
Chhattisgarh , District : Raigarh, Chhattisgarh
— Respondent(s)
(WPC No. 1103/2015, WPC No. 620/2015)
For Petitioners : Mr. Ashish Shrivastva, Senior Advocate
assisted by Mr. Rahul Ambast, and Mr.
Ashutosh Shrivastava, Advocates
For Union of India : Mr. Abhishek Banjare, C.G.C.
For State : Mr. Vinay Pandey, Deputy Advocate General
(WPC No. 1074/2014, WPC No. 1005/2014, WPC No. 1007/2014, WPC No.
1008/2014)
For Petitioners : Mr. Ankit Singhal, Advocate along with Mr.
Ashish Mittal, Advocate
For State : Mr. Vinay Pandey, Deputy Advocate General
For Respondent No. 6 : Mr. Anumeh Shrivatava, Advocate
(WPC No. 1074/2014)
Hon’ble Shri Justice Rakesh Mohan Pandey
Order on Board
21.07.2026
1. Since common question of law and facts are involved in these batch of writ
petitions, therefore, they are heard together and being disposed of by
common order.
2. In WPC No. 1074 of 2014, the petitioner has challenged demand of
electricity duty dated 28.05.2014 to the tune of Rs. 41 crores. The facts are
like that on 01.02.1990, the promoters of the petitioners had floated and
incorporated a Public Limited Company under the provisions of the
Companies Act, 1956 for setting up in phases Integrated Steel Plant in
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Raipur District as well as in Naharpalli, Raigarh. On 21.05.2001, a MOU
was executed between the petitioner and the State of Chhattisgarh, wherein,
the petitioner proposed to invest a sum of Rs. 1160 crores, which included
setting-up of sponge iron plant at Raigarh with investment of 590 crore. On
31.12.2001, the State of Chhattisgarh published the Industrial Policy 2001-
2006 and assured the companies to provide incentives/benefits and
exemptions. On 25.06.2002, the State of Chhattisgarh through Department of
Energy issued a notification regarding total exemptions to all new Mega
Projects established with a capital investment in a fixed assets exceeding 100
crores from payment of electricity duty for a period of 15 years. A
notification was issued on 03.11.2005 with regard to Industrial Policy 2004-
2009, it also provided exemption from electricity duty to large industry and
very large industry for 15 years from date of commencement of commercial
production. The petitioner commenced commercial production on
28.03.2006. The Chhattisgarh State Eelctricity Board sanctioned 8500 KVA
for the petitioner’s Sponge Iron Plant at Naharpalli, District Raigarh. Vide
notification dated 09.07.2008 earlier notification dated 03.11.2005 was
superseded. Subsequently, the petitioner approached the respondent
authorities claiming therein exemption. On 20.05.2013, the Chief General
Manager of District Industry and Trade Center Raigarh forwarded the
petitioner’s application along with documents to the Directorate of
Industries. Vide order dated 02.09.2013 and 06.09.2013 respondent No.
4/Directorate of Industries recommended grant of exemption certificate to
the petitioner. Prior to said date, an order of recovery of Rs. 2.6 crores
towards electricity duty was issued by the Collector, Raigarh on 02.07.2013.
On 09.01.2014, electricity demand of Rs. 41.03 cores was issued against the
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petitioner. Representations were made, and thereafter, on 29.05.2014
petitioner received notice dated 28.05.2014 issued by Chhattisgarh State
Power Distribution Company Limited demanding electricity duty, thereafter,
this petition was filed.
3. In WPC No. 1005/2014, WPC No. 1007/2014, WPC No. 1008/2014, the
petitioners establishes Turbine Generator/ Power Plant thermal power plant
at Mandir Hasoud, Raipur and agreements were entered in alike manner, and
subsequently, demand notices were issued to the petitioner to make payment
of electricity duties and those demand notices have been challenged by filing
these petitions.
4. In WPC No. 620 of 2015, the petitioner establishes Diesel Generator Set
and agreements were entered in alike manner, and subsequently, demand
notices were issued to the petitioner to make payment of electricity duties
and those demand notices have been challenged by filing this petition.
5. The facts of WPC No. 1103 of 2015 are that Government of Chhattsigarh
leased out lands for extraction of Coal at Gare Palma and Milupara, District
Raigarh in favour of the petitioner for period of 30 years vide order dated
07.06.2002. A notification was published in the official gazette on
10.05.2012. On 24.09.2014, lease-deed was cancelled. In the year 2015, Coal
Block was again allocated to the petitioner, and subsequently, on 06.04.2015
demand of cess and taxes from the petitioner for sum of Rs. 2.13 cores were
made. The petitioner made a representation before the respondent authorities
on 01.05.2015. An interim order was passed by Writ Court on 27.01.2016 in
favour of the petitioner as under :-
“In the meanwhile, it is directed that the respondents
7shall only recover that amount of cess or royalty which is
payable by the petitioner after adjusting the entire
amount of royalty or cess, which is payable by the
petitioner in accordance with law and in terms of
notification dated 10.05.2012.”
6. Learned Senior Advocate, during course of argument, would submit that
during pendency of these petitions, National Company Law Tribunal
(NCLT), Mumbai Bench passed an order to initiate Corporate Insolvency
Resolution Process(CIRP) under the Insolvency and Bankruptcy Code, 2016
(for short “Code, 2016”) vide order dated 18.07.2017 by admitting Company
Petition No. 1139/I&BP/NCLT/Mah/2017 filed by the State Bank of India
under the provisions of Section 7 of the Code, 2016. On 01.03.2018, a
Resolution Plan was submitted by resolution applicants and as per
Resolution Plan various matters pending pan-India were extinguished.
Objection were invited by the learned NCLT with regard to Resolution Plan.
Notice inviting claim was published in the newspapers, namely, Business
Standard(Both English and Hindi) Delhi Edition, the Pioneer (English,
Raipur Edition), Business Standard (Hindi, Raipur Edition). The public
announcement was also published on the website of the Corporate Debtor,
copies was published in the month of July, 2017 and last date for submission
of proof of claims was 7th August, 2017. It is an admitted fact the objections
were not raised with regard to Resolution Plan and the learned NCLT passed
order dated 24.07.2018, which attained finality as per Code, 2016. The
learned NCLT vide its order dated 24.07.2018 described the petitioners’
litigations have been extinguished in the manner as provided under 1 (e) (iv)
of part I of the Resolution Plan as no claim was made by the respondent
authorities.
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7. Perusal of Annexure 4 part A of the Resolution Plan approved by the learned
NCLT would make it clear that the writ petitions pending in the High Court
of Chhattisgarh were duly considered and numbers of the writ petitions find
place in the said document.
8. Mr. Ashish Shrivastava, Senior Advocate would contend that as no objection
or claim was raised by the respondent authorities before the NCLT afterward
and their claims have already been held to be extinguished by learned NCLT
vide Annexure 4 part A, the demands made by respondent authorities are not
sustainable in the eyes of law. It is also argued that thereafter the respondents
failed to assail the order passed by the learned NCLT by filing an appeal
before the Appellate Tribunal, and thus, the order passed by the NCLT
attained finality. He would submit that the issue involved in the present case
is no more res-integra, even case of one of the petitioners, namely, Monnet
Ispat & Energy Ltd. was considered by the Hon’ble Supreme Court in the
matter of Ghanshyam Mishra and Sons Private Limited through the
Authorised Signatory vs. Edelweiss Asset Reconstruction Company Limited
through the Director and Others reported in (2021) 9 SCC 657.
9. On the other hand, Mr. Vinay Pandey, Dy. Advocate General, Mr. Abhishek
Banjare, Central Government Counsel and Mr. Anumeh Shrivastava,
Advocate appearing for respective respondents would oppose the
submissions. They would contend that the Industrial Policy 2001-2006 was
not applicable in the cases of the petitioners as they started commercial
production after 2006 and the relevant provision for policy of 2004-2009 was
in existence at that point of time. Therefore, the petitioners are not entitled to
9
claim exemption. He would submit that these petitions deserve to be
dismissed.
10. I have heard learned counsel for the parties and perused the documents
placed on record.
11. Admittedly, learned NCLT, Mumbai Bench initiated Corporate Insolvency
Resolution Process(CIRP) vide order dated 18.07.2017, thereafter,
Resolution Plan was submitted. Objections were invited and Notice inviting
claim was widely published in various newspapers in the month of July,
2017. The respondents herein failed to submit their claims before the learned
NCLT within prescribed period though writ petitions were pending before
the High Court of Chhattisgarh. As the claims were not submitted by the
respondent authorities before the learned NCLT, therefore, those claims were
held to be extinguished by the learned NCLT in its Resolution Plan. The final
order was passed by the NCLT on 24th July, 2018. The respondents herein
further failed to assail said order or Resolution Plan by filing an appeal
before the Appellate Tribunal, and thus, the order attained finality.
12. The Hon’ble Supreme Court in the matter of Ghanshyam Mishra (supra)
considered the facts of M/s Monnet Ispat & Energy Ltd. at para 26, which is
one of the petitioners herein and discussed the procedure of I&B Code in
paragraphs 61, 62, 64 & 66 and recorded its conclusion in paragraph No.
102. The Hon’ble Supreme Court held 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 binding
upon the Corporate Debtor and its employees, members, creditors, including
10
the Central Government, any State Government or any local authority,
guarantors and other stakeholders. It is further held that 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 Adjudicating Authority grants its approval under Section 31 could
be continued. Relevant paragraphs are reproduced herein-below :-
“61. It could thus be seen, that one of the dominant
objects of I&B Code is to see to it, that an attempt has
to be made to revive the Corporate Debtor and make
it a running concern. For that, a resolution applicant
has to prepare a resolution plan on the basis of the
Information Memorandum. The Information
Memorandum, which is required to be prepared in
accordance with Section 29 of I&B Code along with
Regulation 36 of the Regulations, is required to
contain various details, which have been gathered by
RP after receipt of various claims in response to the
statutorily mandated public notice. The resolution
plan is required to provide for the payment of
insolvency resolution process costs, management of
the affairs of the Corporate Debtor after approval of
the resolution plan; the implementation and
supervision of the resolution plan. It is only after the
Adjudicating Authority satisfies itself, that the plan as
approved by CoC with the requisite voting share of
financial creditors meets the requirement as referred
to in subsection (2) of Section 30, grants its approval
to it. It is only thereafter, that the said plan is binding
on the Corporate Debtor as well as its employees,
members, creditors, guarantors and other stakeholders
11involved in the resolution Plan. The moratorium order
passed by the Adjudicating Authority under Section
14 shall cease to operate, once the Adjudicating
Authority approves the resolution plan. The scheme
of I&B Code therefore is, to make an attempt, by
divesting the erstwhile management of its powers and
vesting it in a professional agency, to continue the
business of the Corporate Debtor as a going concern
until a resolution plan is drawn up. Once the resolu
tion plan is approved, the management is handed over
under the plan to the successful applicant so that the
Corporate Debtor is able to pay back its debts and get
back on its feet.
62. This Court recently in the case of Kalpraj
Dharamshi and another vs. Kotak Investment
Advisors Ltd. and another (2021 10 SCC 401) has, in
detail, considered the provisions of Sections 30 and
31 of I&B Code, the Bankruptcy Law Reforms
Committee (BLRC) Report of 2015 and the
judgments of this Court in the case K. Sashidhar
(2019 12 SCC 150), Committee of Creditors of Essar
Steel India Limited through Authorised Signatory vs.
Satish Kumar Gupta & Ors. (2020 8 SCC 531) and
Maharashtra Seamless Limited vs. Padmanabhan
Venkatesh and others (2020 11 SCC 467) and
observed thus: (Kalpraj Dharamshi case (supra))“153. It is thus clear, that the Committee was of the
view, that for deciding key economic question in the
bankruptcy process, the only one correct forum for
evaluating such possibilities, and making a decision
was, a creditors committee, wherein all financial
creditors have votes in proportion to the magnitude of
12debt that they hold. The BLRC has observed, that
laws in India in the past have brought arms of the
Government (legislature, executive or judiciary) into
the question of bankruptcy process. This has been
strictly avoided by the Committee and it has been
provided, that the decision with regard to appropriate
disposition of a defaulting firm, which is a business
decision, should only be made by the creditors. It has
been observed, that the evaluation of proposals to
keep the entity as a going concern, including
decisions about the sale of business or units,
restructuring of debt, etc., are required to be taken by
the Committee of the Financial Creditors. It has been
provided, that the choice of the solution to keep the
entity as a going concern will be voted upon by CoC
and there are no constraints on the proposals that the
resolution professional can present to CoC.
154. The requirements, that the resolution
professional needs to confirm to the Adjudicator, are:
154.1 that the solution must explicitly require the
repayment of any interim finance and costs of the
insolvency resolution process will be paid in priority
to other payments;
154.2 that the plan must explicitly include payment to
all creditors not on the creditors committee, within a
reasonable period after the solution is implemented;
and lastly
154.3 the plan should comply with existing laws
governing the actions of the entity while
implementing the solutions.
13
155. The Committee also expressed the opinion, that
there should be freedom permitted to the overall
market, to propose solutions on keeping the entity as
a going concern. The Committee opined, that the
details as to how the insolvency is to be resolved or
as to how the entity is to be revived, or the debt is to
be restructured will not be provided in the I&B Code
but such a decision will come from the deliberations
of CoC in response to the solutions proposed by the
market.
156 This Court in the case of K. Sashidhar (supra)
observed thus:
“32. Having heard the learned counsel for the parties,
the moot question is about the sequel of the approval
of the resolution plan by CoC of the respective
corporate debtor, namely, KS&PIPL and IIL, by a
vote of less than seventy-five per cent of voting share
of the financial creditors; and about the correctness of
the view taken by NCLAT that the percentage of
voting share of the financial creditors specified in
Section 30(4) of the I&B Code is mandatory. Further,
is it open to the adjudicating authority/appellate
authority to reckon any other factor other than
specified in Sections 30(2) or 61(3) of the I&B Code
as the case may be which, according to the resolution
applicant and the stakeholders supporting the
resolution plan, may be relevant?” (emphasis
supplied)
157. After considering the judgment of this Court in
the case of Arcelormittal India Private Limited v.
Satish Kumar Gupta (supra) and the relevant
provisions of the I&B Code, this court further
14
observed in K. Sashidhar (supra) thus:
“52. As aforesaid, upon receipt of a “rejected”
resolution plan the adjudicating authority (NCLT) is
not expected to do anything more; but is obligated to
initiate liquidation process under Section 33(1) of the
I&B Code. The legislature has not endowed the
adjudicating authority (NCLT) with the jurisdiction or
authority to analyse or evaluate the commercial
decision of CoC much less to enquire into the
justness of the rejection of the resolution plan by the
dissenting financial creditors. From the legislative
history and the background in which the I&B Code
has been enacted, it is noticed that a completely new
approach has been adopted for speeding up the
recovery of the debt due from the defaulting
companies. In the new approach, there is a calm
period followed by a swift resolution process to be
completed within 270 days (outer limit) failing
which, initiation of liquidation process has been made
inevitable and mandatory. In the earlier regime, the
corporate debtor could indefinitely continue to enjoy
the protection given under Section 22 of the Sick
Industrial Companies Act, 1985 or under other such
enactments which has now been forsaken. Besides,
the commercial wisdom of CoC has been given
paramount status without any judicial intervention,
for ensuring completion of the stated processes within
the timelines prescribed by the I&B Code. There is an
intrinsic assumption that financial creditors are fully
informed about the viability of the corporate debtor
and feasibility of the proposed resolution plan. They
act on the basis of thorough examination of the
proposed resolution plan and assessment made by
15
their team of experts. The opinion on the subject
matter expressed by them after due deliberations in
CoC meetings through voting, as per voting shares, is
a collective business decision. The legislature,
consciously, has not provided any ground to
challenge the “commercial wisdom” of the individual
financial creditors or their collective decision before
the adjudicating authority. That is made non-
justiciable.” (emphasis supplied)
158. This Court has held, that it is not open to the
Adjudicating Authority or Appellate Authority to
reckon any other factor other than specified in
Sections 30(2) or 61(3) of the I&B Code. It has
further been held, that the commercial wisdom of
CoC has been given paramount status without any
judicial intervention for ensuring completion of the
stated processes within the timelines prescribed by
the I&B Code. This Court thus, in unequivocal terms,
held, that there is an intrinsic assumption, that
financial creditors are fully informed about the
viability of the corporate debtor and feasibility of the
proposed resolution plan. They act on the basis of
thorough examination of the proposed resolution plan
and assessment made by their team of experts. It has
been held, that the opinion expressed by CoC after
due deliberations in the meetings through voting, as
per voting shares, is a collective business decision. It
has been held, that the legislature has consciously not
provided any ground to challenge the “commercial
wisdom” of the individual financial creditors or their
collective decision before the Adjudicating Authority
and that the decision of CoC’s ‘commercial wisdom’
is made non justiciable.
16
159. This Court in Committee of Creditors of Essar
Steel India Limited through Authorised Signatory
(supra) after referring to the judgment of this Court in
the case of K. Sashidhar (supra) observed thus:
“64. Thus, what is left to the majority decision of the
Committee of Creditors is the “feasibility and
viability” of a resolution plan, which obviously takes
into account all aspects of the plan, including the
manner of distribution of funds among the various
classes of creditors. As an example, take the case of a
resolution plan which does not provide for payment
of electricity dues. It is certainly open to the
Committee of Creditors to suggest a modification to
the prospective resolution applicant to the effect that
such dues ought to be paid in full, so that the carrying
on of the business of the corporate debtor does not
become impossible for want of a most basic and
essential element for the carrying on of such business,
namely, electricity. This may, in turn, be accepted by
the resolution applicant with a consequent
modification as to distribution of funds, payment
being provided to a certain type of operational
creditor, namely, the electricity distribution company,
out of upfront payment offered by the proposed
resolution applicant which may also result in a
consequent reduction of amounts payable to other
financial and operational creditors. What is important
is that it is the commercial wisdom of this majority of
creditors which is to determine, through negotiation
with the prospective resolution applicant, as to how
and in what manner the corporate resolution process
is to take place.” (emphasis supplied)
17
160. This Court held, that what is left to the majority
decision of CoC is the “feasibility and viability” of a
resolution plan, which is required to take into account
all aspects of the plan, including the manner of
distribution of funds among the various classes of
creditors. It has further been held, that CoC is entitled
to suggest a modification to the prospective
resolution applicant, so that carrying on the business
of the Corporate Debtor does not become impossible,
which suggestion may, in turn, be accepted by the
resolution applicant with a consequent modification
as to distribution of funds, etc. It has been held, that
what is important is, the commercial wisdom of the
majority of creditors, which is to determine, through
negotiation with the prospective resolution applicant,
as to how and in what manner the corporate
resolution process is to take place.
161. The view taken in the case of K. Sashidhar
(supra) and Committee of Creditors of Essar Steel
India Limited through Authorised Signatory (supra)
has been reiterated by another three Judges Bench of
this Court in the case of Maharashtra Seamless
Limited (supra).
162. In all the aforesaid three judgments of this
Court, the scope of jurisdiction of the Adjudicating
Authority (NCLT) and the Appellate Authority
(NCLAT) has also been elaborately considered. It
will be relevant to refer to paragraph 55 of the
judgment in the case of K. Sashidhar (supra), which
reads thus:
“55. Whereas, the discretion of the adjudicating
authority (NCLT) is circumscribed by Section 31
18limited to scrutiny of the resolution plan “as
approved” by the requisite per cent of voting share of
financial creditors. Even in that enquiry, the grounds
on which the adjudicating authority can reject the
resolution plan is in reference to matters specified in
Section 30(2), when the resolution plan does not
conform to the stated requirements. Reverting to
Section 30(2), the enquiry to be done is in respect of
whether the resolution plan provides : (i) the payment
of insolvency resolution process costs in a specified
manner in priority to the repayment of other debts of
the corporate debtor, (ii) the repayment of the debts
of operational creditors in prescribed manner, (iii) the
management of the affairs of the corporate debtor,
(iv) the implementation and supervision of the
resolution plan, (v) does not contravene any of the
provisions of the law for the time being in force, (vi)
conforms to such other requirements as may be
specified by the Board. The Board referred to is
established under Section 188 of the I&B Code. The
powers and functions of the Board have been
delineated in Section 196 of the I&B Code. None of
the specified functions of the Board, directly or
indirectly, pertain to regulating the manner in which
the financial creditors ought to or ought not to
exercise their commercial wisdom during the voting
on the resolution plan under Section 30(4) of the I&B
Code. The subjective satisfaction of the financial
creditors at the time of voting is bound to be a mixed
baggage of variety of factors. To wit, the feasibility
and viability of the proposed resolution plan and
including their perceptions about the general
capability of the resolution applicant to translate the
projected plan into a reality. The resolution applicant
19may have given projections backed by normative data
but still in the opinion of the dissenting financial
creditors, it would not be free from being speculative.
These aspects are completely within the domain of
the financial creditors who are called upon to vote on
the resolution plan under Section 30(4) of the I&B
Code.”
163. It has been held, that in an enquiry under Section
31, the limited enquiry that the Adjudicating
Authority is permitted is, as to whether the resolution
plan provides:
163.1 the payment of insolvency resolution process
costs in a specified manner in priority to the
repayment of other debts of the corporate debtor,163.2 the repayment of the debts of operational
creditors in prescribed manner,163.3 the management of the affairs of the corporate
debtor,163.4 the implementation and supervision of the
resolution plan,163.5 the plan does not contravene any of the
provisions of the law for the time being in force,163.6 conforms to such other requirements as may be
specified by the Board.
164. It will be further relevant to refer to the
following observations of this Court in K. Sashidhar
(supra):
20
57. …Indubitably, the remedy of appeal including the
width of jurisdiction of the appellate authority and the
grounds of appeal, is a creature of statute. The
provisions investing jurisdiction and authority in
NCLT or NCLAT as noticed earlier, have not made
the commercial decision exercised by CoC of not
approving the resolution plan or rejecting the same,
justiciable. This position is reinforced from the
limited grounds specified for instituting an appeal
that too against an order “approving a resolution
plan” under Section 31. First, that the approved
resolution plan is in contravention of the provisions
of any law for the time being in force. Second, there
has been material irregularity in exercise of powers
“by the resolution professional” during the corporate
insolvency resolution period. Third, the debts owed to
operational creditors have not been provided for in
the resolution plan in the prescribed manner. Fourth,
the insolvency resolution plan costs have not been
provided for repayment in priority to all other debts.
Fifth, the resolution plan does not comply with any
other criteria specified by the Board. Significantly,
the matters or grounds– be it under Section 30(2) or
under Section 61(3) of the I&B Code –are regarding
testing the validity of the “approved” resolution plan
by CoC; and not for approving the resolution plan
which has been disapproved or deemed to have been
rejected by CoC in exercise of its business decision.”
[emphasis supplied]
165. It will therefore be clear, that this Court, in
unequivocal terms, held, that the appeal is a creature
of statute and that the statute has not invested
jurisdiction and authority either with NCLT or
21
NCLAT, to review the commercial decision exercised
by CoC of approving the resolution plan or rejecting
the same.
166.. The position is clarified by the following
observations in paragraph 59 of the judgment in the
case of K. Sashidhar (supra), which reads thus:
“59. In our view, neither the adjudicating authority
(NCLT) nor the appellate authority (NCLAT) has
been endowed with the jurisdiction to reverse the
commercial wisdom of the dissenting financial
creditors and that too on the specious ground that it is
only an opinion of the minority financial
creditors…..”
167. This Court in Committee of Creditors of Essar
Steel India Limited through Authorised Signatory
(supra) after reproducing certain paragraphs in K.
Sashidhar (supra) observed thus:
“67…….Thus, it is clear that the limited judicial
review available, which can in no circumstance
trespass upon a business decision of the majority of
the Committee of Creditors, has to be within the four
corners of Section 30(2) of the Code, insofar as the
Adjudicating Authority is concerned, and Section 32
read with Section 61(3) of the Code, insofar as the
Appellate Tribunal is concerned, the parameters of
such review having been clearly laid down in K.
Sashidhar”
168. It can thus be seen, that this Court has clarified,
that the limited judicial review, which is available,
can in no circumstance trespass upon a business
22
decision arrived at by the majority of CoC.
169. In the case of Maharashtra Seamless Limited
(supra), NCLT had approved the plan of appellant
therein with regard to CIRP of United Seamless
Tubulaar (P) Ltd. In appeal, NCLAT directed, that the
appellant therein should increase upfront payment to
Rs. 597.54 crore to the “financial creditors”,
“operational creditors” and other creditors by paying
an additional amount of Rs. 120.54 crore. NCLAT
further directed, that in the event the “resolution
applicant” failed to undertake the payment of
additional amount of Rs. 120.54 crore in addition to
Rs. 477 crore and deposit the said amount in escrow
account within 30 days, the order of approval of the
‘resolution plan’ was to be treated to be set aside.
While allowing the appeal and setting aside the
directions of NCLAT, this Court observed thus:
“30. The appellate authority has, in our opinion,
proceeded on equitable perception rather than
commercial wisdom. On the face of it, release of
assets at a value 20% below its liquidation value
arrived at by the valuers seems inequitable. Here, we
feel the Court ought to cede ground to the
commercial wisdom of the creditors rather than
assess the resolution plan on the basis of quantitative
analysis. Such is the scheme of the Code. Section
31(1) of the Code lays down in clear terms that for
final approval of a resolution plan, the adjudicating
authority has to be satisfied that the requirement of
subsection (2) of Section 30 of the Code has been
complied with. The proviso to Section 31(1) of the
Code stipulates the other point on which an
23adjudicating authority has to be satisfied. That factor
is that the resolution plan has provisions for its
implementation. The scope of interference by the
adjudicating authority in limited judicial review has
been laid down in Essar Steel [Essar Steel India Ltd.
Committee of Creditors v. Satish Kumar Gupta,
(2020) 8 SCC 531], the relevant passage (para 54) of
which we have reproduced in earlier part of this
judgment. The case of MSL in their appeal is that
they want to run the company and infuse more funds.
In such circumstances, we do not think the appellate
authority ought to have interfered with the order of
the adjudicating authority in directing the successful
resolution applicant to enhance their fund inflow
upfront.”
170. This Court observed, that the Court ought to
cede ground to the commercial wisdom of the
creditors rather than assess the resolution plan on the
basis of quantitative analysis. This Court clearly held,
that the appellate authority ought not to have
interfered with the order of the adjudicating authority
by directing the successful resolution applicant to
enhance their fund inflow upfront.
171 It would thus be clear, that the legislative
scheme, as interpreted by various decisions of this
Court, is unambiguous. The commercial wisdom of
CoC is not to be interfered with, excepting the limited
scope as provided under Sections 30 and 31 of the
I&B Code.”
64. It could thus be seen, that the legislature has
given paramount importance to the commercial
wisdom of CoC and the scope of judicial review by
24
Adjudicating Authority is limited to the extent
provided under Section 31 of I&B Code and of the
Appellate Authority is limited to the extent provided
under subsection (3) of Section 61 of the I&B Code,
is no more res integra.
66. The resolution plan submitted by successful
resolution applicant is required to contain various
provisions, viz., provision for payment of insolvency
resolution process costs, provision for payment of
debts of operational creditors, which shall not be less
than the amount to be paid to such creditors in the
event of liquidation of the Corporate Debtor under
section 53; or the amount that would have been paid
to such creditors, if the amount to be distributed
under the resolution plan had been distributed in
accordance with the order of priority in subsection (1)
of section 53, whichever is higher. The resolution
plan is also required to provide for the payment of
debts of financial creditors, who do not vote in favour
of the resolution plan, which also shall not be less
than the amount to be paid to such creditors in
accordance with sub section (1) of section 53 in the
event of a liquidation of the Corporate Debtor.
Explanation 1 to clause (b) of sub section (2) of
Section 30 of the I&B Code clarifies for the removal
of doubts, that a distribution in accordance with the
provisions of the said clause shall be fair and
equitable to such creditors. The resolution plan is also
required to provide for the management of the affairs
of the Corporate Debtor after approval of the
resolution plan and also the implementation and
supervision of the resolution plan. Clause (e) of sub-
section (2) of Section 30 of I&B Code also casts a
25
duty on RP to examine, that the resolution plan does
not contravene any of the provisions of the law for
the time being in force.
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
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 Adjudicating Authority
grants its approval under Section 31 could be
continued.
26
13. In these batch of cases, respondents failed to submit their claims before the
learned NCLT within given time. The learned NCLT adjudicated the matter
and approved resolution plan vide order dated 24.07.2018, and therefore, in
light of the observations made by the Hon’ble Supreme Court in the matter
of Ghanshyam Mishra (supra), the claims of the respondents stood
extinguished. Accordingly, all the demand notices issued against the
petitioners are hereby quashed.
14. Accordingly, these petitions are hereby allowed. Pending Interlocutory
Applications stand disposed of.
15. Interim relief granted earlier in these petitions are hereby vacated.
Sd/-
(Rakesh Mohan Pandey)
JUDGE
$iddhant
