M/S Jsw Ispat Special Products Limited vs Pratishtha Thakur Haritwal

2025 INSC 401 REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL ORIGINAL/INHERENT JURISDICTION CONTEMPT PETITION (CIVIL) NO. 629 OF 2023 IN WRIT PETITION (CIVIL) NO.1177 OF 2020

M/S JSW STEEL LIMITED …APPELLANT(S)

VERSUS

PRATISHTHA THAKUR HARITWAL & ORS. …RESPONDENT(S)/ ALLEGED CONTEMNOR(S)

JUDGMENT

B.R. GAVAI, J.

1. For the reasons stated, I.A. No. 21914 of 2024 for

amendment of cause title is allowed. Cause Title is amended

accordingly.

2. This Contempt Petition is filed by the Petitioner Company-

M/s JSW Ispat Special Products Limited (now M/s JSW Steel

Limited) under Article 129 read with Article 142 of the

Constitution of India and Section 2(b) of the Contempt of Courts Signature Not Verified Digitally signed by NARENDRA PRASAD Date: 2025.03.27

Act, 1971 alleging willful disobedience of the judgment dated 15:48:35 IST Reason:

1

13th April 2021 passed by this court in Civil Appeal No. 8129 of

2019 and other connected matters titled as “Ghanshyam

Mishra and Sons Private Limited v. Edelweiss Asset

Reconstruction Company Limited and others” by the alleged

Contemnors/Respondents.

3. Shorn of unnecessary details, the facts which led to the

filing of the present Contempt Petition are:

3.1. Insolvency proceedings were initiated against the erstwhile

Company- M/s Monnet Ispat and Energy Ltd.1 as per the

Insolvency and Bankruptcy Code, 20162. After the Insolvency

process was initiated, the Interim Resolution Professional3 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

1 “erstwhile Company” for short 2 “the Code” for short 3 “IRP” for short

2 Company was declared as the Successful Resolution Applicant4

after voting by the Committee of Creditors5, and the Resolution

Plan was submitted on 12th December 2017. The National

Company Law Tribunal, Mumbai Bench6, approved the

Resolution Plan vide order dated 24th July 2018 and pursuant

to the same, the management of the erstwhile Company was

taken over by the Petitioner Company.

3.2. 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 (Civil) No. 1177 of 2020 was filed before this Court.

3.3. Various similar matters were tagged together by this Court,

including the aforesaid Writ Petition. Vide a common judgment

in the case of Ghanshyam Mishra (supra), it was held that any

and all creditors, including the Central Government, State

4 “SRA” for short 5 “CoC” for short 6 “NCLT” or “Adjudicating Authority” for short

3 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.

3.4. It appears that thereafter the alleged Contemnor No. 3-

Assistant Commissioner, Commercial Taxes, Division-II, Raipur,

Chhattisgarh issued a notice dated 15th September 2021. It was

stated that the Petitioner Company being a nationalized dealer

had not submitted the return or statement for the period from

1st April 2017 to 30th June 2017 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 dated 8th October 2021 to the alleged

Contemnor No. 3 stating that the erstwhile Company has

undergone a Corporate Insolvency Resolution Process7 and in

light of the judgment of this Court in the case of Ghanshyam

7 “CIRP” for short

4 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 dated 15th September

2021.

3.5. The Petitioner Company thereafter filed a Miscellaneous

Application being M.A. No. 259 of 2022 in Writ Petition (Civil)

No. 1177 of 2020 seeking clarification of directions given in

paragraph 95 of the judgment given by this Court in the case of

Ghanshyam Mishra (supra). The same was dismissed as

withdrawn with a liberty to file a Contempt Petition by an order

dated 2nd May 2022.

3.6. On 13th May 2022, the Petitioner Company issued a letter

to the alleged Contemnor No. 1- Assistant Commissioner,

Commercial Tax Department, Raipur-II, Raipur, Chhattisgarh,

informing him about the order of this Court dated 2nd May 2022

and requesting him that the law laid down by this Court in the

case of Ghanshyam Mishra (supra) be adhered to, and any

5 failure to do the same would result in the Petitioner Company

initiating contempt proceedings.

3.7. It appears that, in spite of the aforesaid letter by the

Petitioner Company, the alleged Contemnor No. 1 went ahead

and issued a demand notice dated 17th May 2022 wherein it was

stated that since no one had appeared representing the

Petitioner Company to get the tax assessment done, an ex parte

decision must be taken. The decision resulted in three separate

demands under the relevant provisions of Central Sales Tax Act,

1956, Chhattisgarh Value Added Tax Act, 2005 and Entry Tax

Act, 1976 for the outstanding amount of Central Tax- Rs.

1,08,25,666/, State Tax- Rs. 2,66,42,094/-, and Entry Tax- Rs.

61,51,689/- for the period between 1st April 2017 to 30th June

2017 and the Petitioner Company was directed to pay the

amounts within 30 days of receipt of the demand notice. A reply

dated 10th October 2022 was given by the Petitioner Company

stating that it is not liable to pay any dues as the period for

which the demand is raised is of a period before the approval of

the Resolution Plan by the Adjudicating Authority. It was

therefore requested that the demand notices be withdrawn in

6 view of the judgment of this Court given in Ghanshyam Mishra

(supra).

3.8. It can further be seen from the record that the alleged

Contemnor No. 2- Additional Revenue Collector, Commercial Tax

Office, Circle-7, Raipur, Government of Chhattisgarh, issued

another demand notice to the Petitioner Company dated 9th

December 2022 under Section 146 of the Chhattisgarh Land

Revenue Code, 1959 containing three separate demands of

Central Tax, Sales Tax and Entry Tax for the same amounts as

the demand notice dated 17th May 2022 and the Petitioner

Company was again directed to pay the outstanding dues within

7 days.

3.9. Being aggrieved by the actions of the alleged contemnors

which according to the Petitioner Company were in willful

disobedience of the judgment of this Court given in the case of

Ghanshyam Mishra (supra), the present Contempt Petition

came to be filed.

4. Vide order dated 20th February 2023, we had issued notice

in the present Contempt Petition, returnable in four weeks. By

the said order, we had dispensed with the personal presence of

the alleged contemnors until specific orders were passed.

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5. In response to the notice, the respondents have submitted

their replies.

6. We have heard Mr. Gopal Jain, learned Senior Counsel

appearing for the Petitioner Company and Ms. Pragati Neekhra,

learned Counsel for the alleged Contemnors/Respondents.

7. Mr. Gopal Jain, learned Senior Counsel submitted that the

act of the respondents in initiating proceedings for the dues

which are not part of the Resolution Plan are on the face of it

contemptuous in nature and in violation of the law laid down by

this Court in the case of Ghanshyam Mishra (supra).

8. He submits that once a Resolution Plan is duly approved

by the Adjudicating Authority under sub-section (1) of Section

31 of the Code, all claims not included in the Resolution Plan

are deemed to be frozen and binding on all the stakeholders. It

is submitted that this Court has in unequivocal terms clarified

that the word “other stakeholders” as mentioned in Section 31(1)

of the Code also includes Central, State and any other local

authority.

9. It is further submitted that though the Petitioner Company

had informed the contemnors/respondents about the judgment

of this Court in the case of Ghanshyam Mishra (supra) and

8 specifically informed about the order passed in the aforesaid

judgment specifically with regard to the Petitioner Company, the

contemnors have chosen to proceed further with the recovery

proceedings. It is, therefore, submitted that their act amounts

to willful disobedience of the orders of this Court.

10. Mr. Gopal Jain further submitted that despite a public

announcement, the respondents/contemnors failed to file the

claim during the resolution process. The demand raised by the

contemnors were belated and raised after the approval of the

Resolution Plan. It is submitted that the provisions of the Code

are clear inasmuch as, after the public announcement, all the

creditors including the Central Government, State Government

and local authorities are required to come forward and put up

their claims before the Resolution Plan. It is submitted that once

the Resolution Plan is approved by the Adjudicating Authority,

the SRA starts running of the business from a “clean slate”.

11. Per contra, Ms. Pragati Neekhra, learned counsel,

appearing for the respondents/alleged contemnors submits 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

9 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.

12. Ms. Pragati Neekhra further submitted that the judgment

of this Court in the case of Ghanshyam Mishra (supra) was not

applicable in the present case inasmuch as neither the State of

Chhattisgarh nor any of the authorities were made parties in the

insolvency proceedings before the NCLT. She submits that the

judgment of this Court in the case of Ghanshyam Mishra

(supra) would not bind the respondents and as such, a case of

contempt was not made out. It is submitted that the learned

NCLT could not have passed an order which ignored all the

Government dues including the indirect taxes which is billed

and collected by the Debtor Company. It is submitted that the

State was entitled to its dues under the Chhattisgarh Value

Added Tax Act 2005, Central Sales Tax Act, 1956 and Entry Tax

Act, 1976 for the period between 1st April 2017 and 30th June

2017. As such, the alleged contemnor No.2 had rightly raised 3

(three) separate demand notices on 9th December 2022 under

Section 146 of the Chhattisgarh Land Revenue Code, 1959. She

submits that since the erstwhile Company had neither filed their

10 returns nor paid the dues, the alleged contemnors were justified

in raising the demand notices. To buttress her submissions, Ms.

Neekhra has relied on the judgment of this Court in the case of

State Tax Officer v. Rainbow Papers Limited8.

13. She further submits that the Petitioner Company herein

had sought clarification of the judgment of this Court dated 13th

April, 2021 in the case of Ghanshyam Mishra (supra) by filing

a Miscellaneous Application being M.A. No.259 of 2022 in Writ

Petition (Civil) No.1177 of 2022 which is rejected by this Court.

As such, the present Contempt Petition is not at all tenable.

14. The legal position is no more res integra. This Court in the

case of Ghanshyam Mishra (supra) has considered a batch of

petitions. The questions which fell for consideration before the

Court were 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 sub-section (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

8 (2023) 9 SCC 545

11 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?”

15. Though the judgment is titled as “Ghanshyam Mishra

and sons Private Limited through the Authorized Signatory

versus Edelweiss Asset Reconstruction Company Limited

through the Director & Ors.”, this Court was seized of a batch

of cases and the case of the present petitioner was very much up

for consideration in the said batch of cases.

16. The Petitioner Company had filed Writ Petition (Civil)

No.1177 of 2020 (M/s Monnet Ispat & Energy Ltd. & Anr. v.

State of Odisha & Anr.). This Court after considering various

judgments of this Court, at length, on the issue answered the

questions as under:

“95. In the result, we answer the questions framed by us as under:

(i) That once a resolution plan is duly approved by the

12 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;

(ii) 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;

(iii) 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

13 such dues for the period prior to the date on which the Adjudicating Authority grants its approval under Section 31 could be continued.” [Emphasis supplied]

17. It is thus clear that this Court in unequivocal terms held

that all such claims which are not a part of the 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. The Court further held that the

2019 amendment to Section 31 of the Code is clarificatory and

declaratory in nature and therefore will be effective from the date

on which the Code has come into effect. The Court clearly held

that all the dues including the statutory dues owed to the

Central Government, or 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.

18. Insofar as the present Petitioner is concerned, the Court

considered its case in Paragraphs 133 to 140. It will be relevant

to refer to paragraph 140, which reads as under:

14 “140. 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.”

19. In the said Writ Petition (No.1177 of 2020), after the

completion of CIRP on 5th January 2019, the respondent No.2

therein had sent a reminder to the Petitioner Company calling

upon it to pay an amount of Rs.4,49,34,917.00 towards the

service tax, etc. for the period between 1st April 2016 to 30th

June 2017. In spite of the provisions of the Code pointed out by

the Petitioner Company in reply to the notice of the

respondents/authorities, the demand was pursued and as such,

the present Petitioner was required to approach this Court.

20. It will be relevant to note that this Court had also referred

to an order dated 10th August 2018 passed in Special Leave

Petition (Civil) No.6483 of 2018. In that matter, the Income Tax

Authorities had challenged the judgment and order of the Delhi

High Court vide which the Delhi High Court had held that in

view of the provisions of Section 238 of the Code, the income tax

dues after the acceptance of Resolution Plan by the RP stood

extinguished.

15

21. It will be relevant to refer to the order dated 10th August

2018 passed by this Court in Special Leave Petition (Civil)

No.6483 of 2018, which reads thus:

“Heard.

Delay, if any, is condoned.

Given Section 238 of the Insolvency and Bankruptcy Code, 2016, it is obvious that the Code will override anything inconsistent contained in any other enactment, including the Income-Tax Act.

We may also refer in this Connection to Dena Bank vs. Bhikhabhai Prabhudas Parekh and Co. & Ors. (2000) 5 SCC 694 and its progeny, making it clear that income-tax dues, being in the nature of Crown debts, do not take precedence even over secured creditors, who are private persons.

We are of the view that the High Court of Delhi, is, therefore, correct in law.

Accordingly, the Special Leave Petitions are dismissed.

Pending applications, if any, stand disposed of.”

22. It can thus be seen that in view of clear pronouncement of

law by this Court, all the dues of any of the stakeholders

including the statutory dues owed to the Central Government,

any State Government or any local authority, which were not

16 part of the Resolution Plan, stood extinguished from the date on

which the Resolution Plan stood approved.

23. It is to be noted that even much prior to the judgment of

this Court in the case of Ghanshyam Mishra (supra), a 3 Judge

Bench of this Court in the case of Committee of Creditors of

Essar Steel India Limited through Authorised Signatory v.

Satish Kumar Gupta and others9 has observed thus:

“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 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

9 (2020) 8 SCC 531

17 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.” [Emphasis supplied]

24. It can thus clearly be seen that this Court has held that 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. It

has also been held that all claims must be submitted to and

decided by the RP 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.

25. In Ghanshyam Mishra (supra), this Court has referred to

the judgments on the issue in the following cases: 18

(i) Innoventive Industries Ltd. vs. ICICI Bank &

Anr.10;

(ii) K. Shashidhar v. Indian Overseas Bank and

Others11;

(iii) Committee of Creditors of Essar Steel India

Limited Through Authorized Signatory v. Satish

Kumar Gupta and Others12;

(iv) Maharashtra Seamless Limited v. Padmanabhan

Venkatesh and others13;

(v) Karad Urban Cooperative Bank Ltd. vs. Swwapnil

Bhingardevay & Ors.14; and

(vi) Kalpraj Dharamshi and Another vs. Kotak

Investment Advisors Limited and Another15.

26. The law laid down by this Court in the case of Ghanshyam

Mishra (supra) has been followed by various subsequent

judgments of this Court in the following cases:

(i) K.N. Rajakumar v. V. Nagarajan and others16;

10 (2018) 1 SCC 407 11 (2019) 12 SCC 150 12 (2020) 8 SCC 531 13 (2020) 11 SCC 467 14 (2020) 9 SCC 729 15 2021 SCC OnLine SC 204 16 (2022) 4 SCC 617

19

(ii) Ruchi Soya Industries Limited and others v.

Union of India and others17;

(iii) Ajay Kumar Radheyshyam Goenka v. Tourism

Finance Corporation of India Limited18.

27. In that view of the matter, we have no hesitation in holding

that the demands raised by the respondents/authorities for a

period prior to the date on which the learned NCLT has approved

the Resolution Plan were totally contemptuous in nature. The

respondents could not have raised the said demands inasmuch

as they are not part of the Resolution Plan.

28. Coming next to the submission of learned counsel for the

respondents/alleged contemnors, insofar as reliance placed by

her on the judgment of this Court in the case of Rainbow Papers

Limited (supra) is concerned, in the said case, this Court was

considering the question as to whether the provisions of the

Code and in particular Section 53 thereof override Section 48 of

the Gujarat Value Added Tax Act, 2003. We find that, on facts,

the said judgment is not applicable to the present case.

17 (2022) 6 SCC 343 18 (2023) 10 SCC 545 = 2023 SCC OnLine SC 266 20

29. In the said case, in response to the advertisement issued

by the RP, the State Tax Officer raised its claim before the RP.

The claim of the State Tax Officer was rejected by the Committee

of Creditors19. The learned NCLT also rejected the claim of the

State Tax Officer and an appeal thereagainst also came to be

dismissed by the National Company Law Appellate Tribunal20.

Aggrieved thereby the State Tax Officer approached this Court.

30. This Court held that when a grievance was made before the

Adjudicating Authority with regard to the Resolution Plan, the

Adjudicating Authority was required to examine if the Resolution

Plan met the requirements of Section 30(2) of the Code. This

Court also held that under Section 31 of the Code, while

approving the Resolution Plan as approved by the CoC, the

Adjudicating Authority must come to a satisfaction that the

Resolution Plan meets the requirements as referred to in sub-

section (2) of Section 30 of the Code. It has further been held by

this Court that the condition precedent for approval of a

Resolution Plan was that it should meet the requirements of sub-

section (2) of Section 30 of the Code.

19 “CoC” for short 20 “NCLAT” for short

21

31. In that view of the matter, we are of the considered opinion

that the facts in the case of Rainbow Papers Limited (supra)

are totally distinguishable to the facts of the present case.

32. In Rainbow Papers Limited (supra), the State Tax Officer

had raised the claim before the CoC, which was not taken into

consideration by the CoC. As such, this Court came to a finding

that the satisfaction arrived at by the Adjudicating Authority

under Section 31 of the Code was vitiated.

33. Undoubtedly, in the present case, in spite of public notice,

neither the State of Chhattisgarh nor its authorities raised any

claim before the CoC. In that view of the matter, we are of the

considered view that the case of the present Petitioner is

specifically covered by the judgment of this Court in the case of

Ghanshyam Mishra (supra), which judgment was brought to

the notice of the respondents/authorities, the

respondents/authorities could not have proceeded with the

recovery proceedings.

34. When the law laid down by this Court in the case of

Ghanshyam Mishra (supra) 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

22 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.

35. We have, therefore, no hesitation in holding that the

continuation of the proceedings by the respondents/authorities

even after the judgment of this Court in Ghanshyam Mishra

(supra) was specifically brought to their notice is contemptuous

in nature. However, we do not propose to proceed against the

respondents/contemnors inasmuch as they are entitled to

benefit of doubt.

36. It is the contention of the alleged contemnors that the State

of Chhattisgarh was not a party to the Writ Petition or to the

proceedings before the learned NCLT. No doubt that even if any

stakeholder is not a party to the proceedings before the NCLT

and if such stakeholder does not raise his claim before the

Interim Resolution Professional/Resolution Professional, the

Resolution Plan as approved by the NCLT would still be binding

on him. However, this being one of the first cases arising out of

the judgment of this Court in the case of Ghanshyam Mishra 23 (supra), we do not propose to take any stern action against the

respondents/contemnors. In any case, the respondents/

contemnors have tendered their unconditional apology.

37. In this view of the matter, though we hold that the act of

the alleged contemnors is contemptuous in nature, we do not

propose to take any action against them. 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.

..............................J (B.R. GAVAI)

…………................................J (AUGUSTINE GEORGE MASIH)

NEW DELHI;

MARCH 27, 2025

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