Orissa High Court
M/S. Sree Metaliks Ltd vs Union Of India And Ors. …. Opposite … on 8 August, 2025
Author: S.K. Panigrahi
Bench: S.K. Panigrahi, G. Satapathy
Signature Not Verified
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Signed by: BHABAGRAHI JHANKAR
Reason: Authentication
Location: ORISSA HIGH COURT, CUTTACK
Date: 11-Aug-2025 19:06:13
IN THE HIGH COURT OF ORISSA AT CUTTACK
RVWPET No.256 of 2020
(In the matter of an application under Order 47 Rule 1 read with
Section 151 of Civil Procedure Code, 1908)
M/s. Sree Metaliks Ltd., .... Petitioner(s)
SML House, Main Road, P.O.
Barbil, District: Keonjhar
-versus-
Union of India and Ors. .... Opposite Party (s)
Advocates appeared in this case through Hybrid Arrangement Mode:
For Petitioner(s) : Mr. Sidhartha Ray, Sr. Adv.
along with associates
For Opposite Party(s) : Smt. Sephali Das, CGC
Mr. Avinash Kedia, Jr.S.C
CORAM:
DR. JUSTICE S.K. PANIGRAHI
MR. JUSTICE G. SATAPATHY
DATE OF HEARING:-08.05.2025
DATE OF JUDGMENT: -08.08.2025
Dr. S.K. Panigrahi, J.
1. The instant Review Petition has been filed under Section 114 read
with Order XLVII Rule 1 of the Code of Civil Procedure, 1908 (“CPC“)
by the petitioner-company seeking review of the judgment dated
02.03.2020 passed in W.P.(C) No. 6890 of 2020. By the said judgment, a
Division Bench of this Court had dismissed the petitioner’s Writ
Petition which challenged an assessment order dated 18.03.2014 and
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accompanying demand notice dated 18.03.2014 issued by the Income
Tax Department in respect of Assessment Year 2011-12. The petitioner
now seeks to recall of that decision on the ground that it was rendered
without considering material provisions of the Insolvency and
Bankruptcy Code, 2016 (“IBC”) and other relevant law, resulting in an
error apparent on the face of the record.
2. For clarity, the operative portion of the Division Bench’s order under
review is reproduced below:
“Heard Mr. Ray, learned counsel for the Petitioner and Mr.
S.S.Mohapatra, learned Standing Counsel for the Income
Tax Department.
In this writ application, the petitioner has prayed to
quash the order of assessment dated 18.03.2024 vide
Annexure-1 as well as the Demand Notice dated 18.03.2014
vide Annexure-2.
Learned counsel for the petitioner submits that similar
question has been considered by the National Company Law
Tribunal, Kolkata passed in C.P. (IB) No.16/KB/2017 dated
07.11.2017 and that too the same has been approved by the
National Company Appellate Tribunal and incidentally the
period of which the benefit the petitioner is asking for is
covered by the appellate authority of NCLT, Kolkata.
Therefore, the assessment made by the authority cannot be
claimed by the petitioner as per the demand raised.
Mr. Mohapatra, learned counsel for the Income Tax
Department contended that the petitioner cannot come
against the order of assessment 2014 before this Court by
filing the present writ application because remedy is
available under law to approach the appellate forum. Instead
of approaching the appellate forum, the petitioner should not
have filed this application before this Court.
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Signed by: BHABAGRAHI JHANKAR
Reason: Authentication
Location: ORISSA HIGH COURT, CUTTACK
Date: 11-Aug-2025 19:06:13Considering the submissions raised by learned counsel
for the parties and the materials available on record, it
appears that the petitioner has filed this application seeking
to quash the assessment order dated 18.05.2014 under
Annexure-1 as well as demand notice under Annexure-2
which are also appealable orders. It is contended that
because of pendency of the cases before the NCLT and
subsequently an approval made by NCLT, the petitioner is
liable to pay such amount. But as such, to a query by this
Court learned counsel for the petitioner fairly submits that
the petitioner has lost any question before the said forum
with regard to such assessment because he is not a person
aggrieved.
In view of such position if the petitioner is not a person
aggrieved then he could not have approached this Court and
make an application against the demand notice and the
assessment order. Therefore, this Court is of the considered
view that adequate remedy is available for the petitioner
under the Income Tax Act read with the Companies Act
before appropriate forum.
Accordingly, this Court is not inclined to interfere with
this writ petition, and as such, the same stands dismissed.”
I. FACTUAL MATRIX OF THE CASE:
3. The petitioner-company is engaged in the business of manufacturing
sponge iron and iron billets, with its industrial units situated at
Loidapada and Anar in the district of Keonjhar, Odisha.
4. Due to financial distress, the petitioner-company became a sick
industrial undertaking, and the supply of electricity to its factory was
disconnected with effect from 20.10.2011. Consequently, the
petitioner-company filed an application before the Board for
Industrial and Financial Reconstruction (BIFR), located at Jawahar
Bhawan, seeking revival under the provisions of the Sick Industrial
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Location: ORISSA HIGH COURT, CUTTACK
Date: 11-Aug-2025 19:06:13
Companies (Special Provisions) Act, 1985. Vide order dated 18.11.2014
passed in Appeal No. 31/14, the BIFR registered the petitioner-
company under Section 15(1) of the said Act as a sick industrial
company.
5. Subsequently, SREI Equipment and Finance Ltd. initiated proceedings
under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC)
before the National Company Law Tribunal (NCLT), Kolkata Bench,
against the petitioner-company. The application was admitted, and
Mr. Binit Kothari was appointed as the Interim Resolution
Professional (IRP). Upon admission of the application, the NCLT, by
invoking Section 13(1)(a) read with Section 14 of the IBC, imposed a
moratorium prohibiting the following actions:
“(a) The Institution of suits or continuation of pending
suits or proceedings against the corporate debtor including
execution of any judgment, decree or order in any court of
law, tribunal, arbitration panel or other authority;
(b) Transferring encumbering alienating or disposing of by
the corporate debtor any of its assets or any legal right or
beneficial interest therein;
(c) any action to foreclose, recover or enforce any security
interest created by the corporate debtor in respect of its
property including any action under the Securitization and
Reconstruction of Financial Assets and Enforcement of
Security Interest Act,2002 (54 of 2002);
(d) The recovery of any property by an owner or less or
where such property is occupied by or in the possession of
the corporate debtor.”
6. Pursuant to the initiation of Corporate Insolvency Resolution Process
(CIRP), the IRP issued a public announcement inviting submission of
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claims from all stakeholders, including statutory and government
authorities, in terms of Section 15 read with Regulation 6 of the CIRP
Regulations. In response to such public notice, various government
bodies submitted their claims. Thereafter, a Committee of Creditors
(CoC) was constituted, and a Resolution Plan was submitted. The said
Resolution Plan disclosed that total statutory dues, including those
claimed by the Income Tax Department, amounted to ₹30.71 crores.
7. On 23.10.2017, the IRP submitted the Resolution Plan proposed by
Shree Metaliks Ltd., represented by Mr. Mahesh Kumar Agarwal,
which was approved by the Committee of Creditors with a voting
share of 78.53%. The NCLT, Kolkata Bench, vide order dated
07.11.2017 passed in C.P. (IB) No. 16/KB/2017, approved the said
Resolution Plan under Section 31(1) of the IBC.
8. Aggrieved by the order dated 07.11.2017 passed by the NCLT
approving the Resolution Plan, M/s. SREI Equipment and Finance
Ltd. preferred an appeal before the National Company Law Appellate
Tribunal (NCLAT). The NCLAT, vide its order dated 13.12.2018,
affirmed the order of the NCLT and upheld the approval of the
Resolution Plan.
9. Pursuant to the finality attained by the Resolution Plan upon
affirmation by the NCLAT, the management of the petitioner-
company was transferred to Mr. Mahesh Kumar Agarwal, the
successful resolution applicant, in accordance with the terms of the
approved plan.
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10. The petitioner-company, having remained non-operational from
October 2011 until November 2018 due to its financial condition and
CIRP, had neither access to nor knowledge of the assessment orders
or notices issued by the Income Tax Department during that period. It
was only after the takeover of management by the successful
resolution applicant that the petitioner-company became aware of the
assessment order and demand notice dated 18.03.2014 pertaining to
Assessment Year 2011-12.
11. Consequently, the petitioner-company filed W.P.(C) No. 6890 of 2020
before this Court seeking quashing of the said assessment order and
demand notice, primarily on the ground that the company, having
undergone CIRP and been revived under a duly approved Resolution
Plan, was entitled to operate free from past liabilities not forming part
of the said plan. However, by judgment dated 02.03.2020, a Division
Bench of this Court dismissed the writ petition. Aggrieved by the said
dismissal and alleging non-consideration of binding provisions and
precedents under the IBC, the petitioner has now approached this
Court by way of the present review petition.
II. PETITIONER’S SUBMISSIONS:
12. Learned counsel for the Petitioner(s) earnestly made the following
submissions in support of his contentions:
(a) The Division Bench of this Court has committed error in dismissing
the Writ Petition as the impugned order has been passed without
taking into consideration the provisions under Sections 14 and 15 of
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Date: 11-Aug-2025 19:06:13the Insolvency and Bankruptcy Code, 2016 and Section 238 of the said
Code. The said Sections of the Code are extracted hereunder:
“14. Moratorium. –
(1) Subject to provisions of sub-sections (2) and (3), on the
insolvency commencement date, the Adjudicating Authority
shall by order declare moratorium for prohibiting all of the
following, namely: –
(a) the institution of suits or continuation of pending
suits or proceedings against the corporate debtor
including execution of any judgment, decree or order
in any court of law, tribunal, arbitration panel or other
authority;
(b)transferring, encumbering, alienating or disposing
off by the corporate debtor any of its assets or any legal
right or beneficial interest therein;
(c) any action to foreclose, recover or enforce any
security interest created by the corporate debtor in
respect of its property including any action under the
Securitisation and Reconstruction of Financial Assets
and Enforcement of Security Interest Act, 2002 (54 of
2002);
(d)the recovery of any property by an owner or lessor
where such property is occupied by or in the possession
of the corporate debtor.
[Explanation.-For the purposes of this sub-section, it is
hereby clarified that notwithstanding anything contained in
any other law for the time being in force, a licence, permit,
registration, quota, concession, clearance or a similar grant
or right given by the Central Government, State
Government, local authority, sectoral regulator or any other
authority constituted under any other law for the time being
in force, shall not be suspended or terminated on the
grounds of insolvency, subject to the condition that there is
no default in payment of current dues arising for the use or
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continuation of the license or a similar grant or right during
moratorium period;]
(2) The supply of essential goods or services to the
corporate debtor as may be specified shall not be terminated
or suspended or interrupted during moratorium period.
[(2A) Where the interim resolution professional or
resolution professional, as the case may be, considers the
supply of goods or services critical to protect and preserve
the value of the corporate debtor and manage the operations
of such corporate debtor as a going concern, then the supply
of such goods or services shall not be terminated, suspended
or interrupted during the period of moratorium, except
where such corporate debtor has not paid dues arising from
such supply during the moratorium period or in such
circumstances as may be specified.]
[(3) The provisions of sub-section (1) shall not apply to
—
[(a) such transactions, agreements or other
arrangement as may be notified by the Central
Government in consultation with any financial sector
regulator or any other authority;]
(b) a surety in a contract of guarantee to a corporate
debtor.]
(4) The order of moratorium shall have effect from the date
of such order till the completion of the corporate
insolvency resolution process:
Provided that where at any time during the corporate
insolvency resolution process period, if the Adjudicating
Authority approves the resolution plan under sub-section
(1) of section 31 or passes an order for liquidation of
corporate debtor under section 33, the moratorium shall
cease to have effect from the date of such approval or
liquidation order, as the case may be.
15. Public announcement of corporate insolvency
resolution process.-
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Date: 11-Aug-2025 19:06:13
(1) The public announcement of the corporate insolvency
resolution process under the order referred to in section 13
shall contain the following information, namely: –
(a) name and address of the corporate debtor under the
corporate insolvency resolution process;
(b) name of the authority with which the corporate
debtor is incorporated or registered;
(c) the last date for submission of [claims, as may be
specified];
(d) details of the interim resolution professional who
shall be vested with the management of the corporate
debtor and be responsible for receiving claims;
(e) penalties for false or misleading claims; and
(f) the date on which the corporate insolvency
resolution process shall close, which shall be the one
hundred and eightieth day from the date of the
admission of the application under sections 7, 9 or
section 10, as the case may be.
(2) The public announcement under this section shall be
made in such manner as may be specified.
238. Provisions of this Code to override other laws.-
The provisions of this Code shall have effect,
notwithstanding anything inconsistent therewith contained
in any other law for the time being in force or any
instrument having effect by virtue of any such law.”
(b) The Regulation-6 of the Insolvency Regulation, 2016 having
specifically stipulated that an insolvency professional shall be
appointed and who shall make a public announcement immediately
after his appointment as interim resolute professional, inviting claim
and the claim has to be submitted in the prescribed format i.e. in
Form-B by the Operational Creditor in Schedule-1 of the Insolvency
and Bankruptcy Regulation.
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(c) The Income Tax Department having not submitted its claim pursuant
to the public announcement, therefore, was not entitled to make any
recovery and this Court having not taken into account of this facts, the
judgment/order dated 02.03.2020 passed in W.P.(C)No.6890/2020 may
be reviewed.
(d)Section 238 of the Insolvency and Bankruptcy Code,2016 has an
overriding effect over all other Acts as has been held by the Supreme
Court in the case of Duncans Industries Ltd Vs. A.J. Agrochem1,
wherein it has been held:
“Therefore, the entire “corporate insolvency resolution
process” as such cannot be equated with “winding up
proceedings”. Therefore, considering Section 238 of the IBC,
which is a subsequent Act to the Tea Act, 1953, shall be
applicable and the provisions of the IBC shall have an
over−riding effect over the Tea Act, 1953. Any other view
would frustrate the object and purpose of the IBC. If the
submission on behalf of the appellant that before initiation of
proceedings under Section 9 of the IBC, the consent of the
Central Government as provided under Section 16G(1)(c) of
the Tea Act is to be obtained, in that case, the main object
and purpose of the IBC, namely, to complete the “corporate
insolvency resolution process” in a time−bound manner,
shall be frustrated. The sum and substance of the above
discussion would be that the provisions of the IBC would
have an over−riding effect over the Tea Act, 1953 and that
no prior consent of the Central Government before initiation
of the proceedings under Section 7 or Section 9 of the IBC
would be required and even without such consent of the
Central Government, the insolvency proceedings under1
AIR 2019 SUPREME COURT 5472Page 10 of 22
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Date: 11-Aug-2025 19:06:13Section 7 or Section 9 of the IBC initiated by the operational
creditor shall be maintainable.” (Emphasis Supplied)
(e) The Division Bench of this Court has also failed to take into
consideration of the judgment of the Supreme Court passed in the
case of Committee of Creditors of Essar Steel Ltd. Vs. Satish Kumar
Gupta and Others2 decided on 15.11.2019, wherein the Supreme Court
held as follows:
“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
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.” (Emphasis Supplied)”
(f) The Division Bench has further committed error by giving a finding
that the review petitioner having not raised before the NCLAT which
is an Appellate Forum against the order of NCLT, he is not a person
aggrieved. While arriving at this conclusion, this Court has lost sight
of the Appellate provision as contained under Sections 60 and 61 of
the Insolvency and Bankruptcy Code, 2016 which are extracted below:
“Section-60-
(1) The Adjudicating Authority, in relation to insolvency
resolution and liquidation for corporate persons including
corporate debtors and personal guarantors thereof shall be
the National Company Law Tribunal having territorial
2
AIRONLINE 2019 SC 1494Page 11 of 22
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Date: 11-Aug-2025 19:06:13jurisdiction over the place where the registered office of the
corporate person is located.
Xx xx xx
Section 61-
(1)Notwithstanding anything to the contrary contained
under the Companies Act 2013, any person aggrieved by the
order of the Adjudicating Authority under this part may
prefer an appeal to the National Company Law Appellate
Tribunal.
Xx xx xx”
(g) A bare reading of the aforesaid Sections makes it crystal clear that
only the person who is aggrieved by the order of NCLT can prefer an
appeal against such order and, therefore, since the Petitioner was
successful Resolute Applicant, which was approved by NCLT, there
was no question of preferring appeal before the Appellate Forum. The
appeal which was filed before NCLAT by the SREI Equipments and
Finance Ltd. and the NCLAT had confirmed the order of NCLT under
Annexure-10 of the Writ Petition.
(h) In such view of the matter, he has submitted that the impugned order
passed by the Division Bench of this Court may be reviewed.
III. SUBMISSIONS OF THE OPPOSITE PARTIES:
13. Learned counsel for the Opposite Parties earnestly made the following
submissions in support of his contentions:
(a) Learned counsel for the Opposite Parties/ Income Tax Department
reiterating his submissions made in the Writ Petition contended that
the petitioner cannot come against the order of assessment passed for
the assessment year 2011-12 dated 18.03.2014 before this Court by
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Date: 11-Aug-2025 19:06:13filing the Writ Petition because remedy is available under law to
approach the appellate forum. Instead of approaching the appellate
forum, the petitioner should not have filed Writ Petition before this
Court. He further submitted that as no error apparent on the face of
the record is found, the RVWPET filed by the Petitioner may not be
entertained by this Court.
IV. COURT’S REASONING AND ANALYSIS:
14. We have carefully considered the rival submissions and perused the
material on record. The petitioner seeks to review of the order dated
02.03.2020 on the ground that this Court, while dismissing the writ
petition, failed to consider certain pertinent provisions of law and
binding judicial pronouncements. It is argued that this omission
amounts to an error apparent on the face of the record, justifying the
invocation of review jurisdiction under Order XLVII Rule 1 CPC.
15. At the outset, it is necessary to reiterate the limited scope of review. A
judgment may be open to review if there is a mistake or error
apparent on the face of the record, or for some analogous reason such
as the discovery of new evidence which could not be produced earlier
despite due diligence. An error to be apparent must be self-evident
and not require a process of elaborate reasoning or re-argument.
However, it is equally true that a glaring omission to apply a relevant
statute or a clear disregard of a binding authority can manifest as an
error apparent, as it strikes at the very basis of the judgment. With
these principles in mind, we proceed to examine whether the
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impugned order suffered from such an error in the context of the facts
of the present case.
16. The factual matrix is undisputed. The petitioner-company (corporate
debtor) went through an insolvency resolution process under the IBC.
The CIRP was initiated upon a Section 7 application by a financial
creditor (SREI Equipment Finance Ltd.), which was admitted by the
NCLT, Kolkata Bench. An Interim Resolution Professional (IRP) was
appointed and a public announcement was made to creditors in
accordance with Section 15 of IBC and the relevant regulations.
During the CIRP, as mandated by Section 14(1)(a) of IBC, a
moratorium was in force prohibiting “the institution of suits or
continuation of pending suits or proceedings” against the corporate
debtor, including execution of any judgment or order. This
moratorium remained effective from the insolvency commencement
date (early 2017) until the approval of the resolution plan by the
NCLT on 07.11.2017. In the present case, the Income Tax Department’s
claim for the tax dues of AY 2011-12 was an existing liability of the
corporate debtor. The Department, being an operational creditor (to
the extent of its tax claim), was expected to file its claim before the IRP
within the time stipulated. The record reveals that various
government dues totaling ₹30.71 crores were acknowledged in the
Resolution Plan, implying that governmental authorities (possibly
including the Income Tax Department) had submitted their claims to
that extent. The Resolution Plan, after consideration by the Committee
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of Creditors, was approved by the Adjudicating Authority (NCLT,
Kolkata) on 07.11.2017 and subsequently attained finality upon
dismissal of an appeal by the NCLAT on 13.12.2018. The successful
resolution applicant took over management of the corporate debtor
thereafter.
17. The IBC is a special law enacted in 2016 with a stated objective of
timely resolution of corporate insolvency, maximizing the value of
assets, and promoting entrepreneurship. It introduced a paradigm
shift in how corporate debts and liabilities are treated upon
reorganization. One of the key provisions is Section 31(1) of the IBC,
which stipulates that once a resolution plan is approved by the
Adjudicating Authority, it is binding on all stakeholders, including
the Central Government, any State Government or local authority to
whom a debt in respect of the corporate debtor may be owed. In 2019,
an explanation was inserted to Section 31(1) to explicitly clarify this
binding effect on governmental authorities. The logical corollary is
that upon the plan’s approval, no creditor (secured or unsecured,
including tax authorities) can assert any claim against the debtor
except as provided for in the plan. Furthermore, Section 238 of the IBC
contains a sweeping non-obstante clause:
“The provisions of this Code shall have effect,
notwithstanding anything inconsistent therewith contained
in any other law for the time being in force..”
18. The Supreme Court has consistently interpreted Section 238 to mean
that IBC will prevail in case of any conflict with other statutes. For
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instance, in Duncan Industries (Supra) the Court held that the IBC,
being a later enactment with a non-obstante clause, overrides even a
special statute like the Tea Act, 1953. The relevant excerpt is produced
below:
“If the submission on behalf of the appellant that before
initiation of proceedings under Section 9 of the IBC, the
consent of the Central Government as provided under
Section 16G(1)(c) of the Tea Act is to be obtained, in that
case, the main object and purpose of the IBC, namely, to
complete the ‘corporate insolvency resolution process’ in a
time bound manner, shall be frustrated. The sum and
substance of the above discussion would be that the
provisions of the IBC would have an overriding effect over
the Tea Act, 1953 and that no prior consent of the Central
Government before initiation of the proceedings under
Section 7 or Section 9 of the IBC would be required and
even without such consent of the Central Government, the
insolvency proceedings under Section 7 or Section 9 of the
IBC initiated by the operational creditor shall be
maintainable.”
19. This judgment reinforces the well-settled position that the IBC, by
virtue of its non-obstante clause under Section 238, overrides any
inconsistent provisions in other enactments, including special statutes.
Thus, any statutory preconditions or recovery proceedings under
other laws, including the Income Tax Act, stand subordinated to the
scheme and timeline of the IBC.
20. A crucial aspect of the IBC is the concept of a “fresh start” or “clean
slate” for the corporate debtor emerging from insolvency. The
Supreme Court’s judgment in Essar Steel (Supra) is the locus classicus
on this point. The Court in that case emphasized that all claims
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against the corporate debtor must be submitted to and decided within
the framework of the CIRP, so that the successful resolution applicant
knows the exact liabilities he is taking on. It was categorically held
that after approval of the resolution plan, a successful resolution
applicant cannot suddenly be faced with undecided claims and that
allowing such claims would amount to a hydra headed popping up to
derail the revival effort. The relevant excerpts are produced below:
“For the same reason, the impugned NCLAT judgment 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 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, the NCLAT judgment must
also be set aside on this count.”
21. The resolution applicant is entitled to rely on the finality and
comprehensiveness of the resolution plan and proceed to revive the
company on that basis. In other words, any claim which is not part of
the resolution plan stands extinguished and cannot be enforced
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against the debtor henceforth. This “clean slate” doctrine,
propounded in Essar Steel (Supra), has since been reinforced by
subsequent decisions.
22. In the case of Ghanshyam Mishra and Sons Pvt. Ltd. v. Edelweiss
Asset Reconstruction Co. Ltd.3, the Supreme Court, after reviewing
the law, affirmed in unequivocal terms that “all the dues including the
statutory dues owed to the Central Government, if not part of the resolution
plan, shall stand extinguished and no proceedings could be continued in
respect of such dues” for the period prior to the approval of the plan. It
was further observed that by virtue of Section 31(1) of IBC, once a
plan is approved, the authorities are barred from pursuing such
claims and the debtor’s past liabilities, to the extent not taken up in
the plan, are discharged.
23. Very recently, in the case of Vaibhav Goel and Anr. v. Deputy
Commissioner of Income Tax and Anr.4 the Supreme Court reiterated
the same principle in the context of income tax demands raised after
the plan approval for earlier years. The Court set aside the orders of
NCLT and NCLAT which had allowed such post-plan tax demands,
holding that income tax dues not included in an approved resolution
plan are invalid and cannot be enforced later. It was underlined that
permitting a tax authority to raise fresh demands for pre-CIRP
periods would frustrate the revival by creating uncertainty and
undermining the “clean slate” intended for the new management.
3
AIRONLINE 2021 SC 196.
4
2025 INSC 375
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24. These pronouncements leave no room for doubt that any pre-
insolvency liability of the corporate debtor, which was not claimed
during CIRP or left unresolved by the resolution plan, is no longer
recoverable from the debtor.
25. In light of the above legal position, the petitioner’s case has substantial
merit. The demand in question arises from an assessment order dated
18.03.2014 for the period FY 2011-12 (AY 2012-13). This is a liability
that crystalized well before the initiation of CIRP in 2017. Once the
CIRP commenced and the moratorium was imposed, the Income Tax
Department was legally bound to assert its rights through the
insolvency process by filing a claim before the IRP. If it did so, its
claim would have been dealt with as per the resolution plan (either
paid out in a certain proportion or otherwise addressed). If it failed to
lodge a claim, it ran the risk of having that claim extinguished. The
approved Resolution Plan (07.11.2017) is now final and binding on the
Department by virtue of Section 31(1) of IBC.
26. Notably, the Resolution Plan treated the corporate debtor’s statutory
tax liabilities in aggregate (₹30.71 crores) and the new management’s
takeover was predicated on the settlement and extinguishment of all
prior claims as provided in the plan. Therefore, any demand or notice
issued by the tax authorities outside the plan for a pre-CIRP period is
ipso jure unenforceable. In our view, the Income Tax Department
cannot resurrect the impugned assessment order and demand notice
against the corporate debtor after the approval of the plan. In order to
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allow such action would directly contravene the IBC’s mandate and
the authoritative pronouncements of the Supreme Court discussed
above. In sum, the continuance of the 18.03.2014 assessment order and
demand notice is barred by law, the debt underlying these stands
extinguished by operation of the IBC.
27. We also find merit in the petitioner’s submission that the existence of
an alternative remedy under the Income Tax Act did not preclude it
from invoking writ jurisdiction in this peculiar situation. Generally,
yes, if a statutory appeal mechanism is available, a writ court would
be slow to intervene at the first instance. However, this rule of
restraint is one of discretion and self-imposed limitation, not a bar of
jurisdiction. Where, for example, an order is attacked as being wholly
without jurisdiction or where an important question of law or
constitutional interpretation arises, the writ Court can justifiably
intervene despite alternate remedies.
28. In the present case, the petitioner was not merely challenging an error
in the assessment of income or calculation of tax (which would
typically be amenable to correction in the appellate hierarchy under
the tax statute). Instead, the petitioner’s challenge was that, in view of
the IBC proceedings and the approved plan, the Department lacked
the authority to enforce the impugned assessment/demand
altogether. This is fundamentally a jurisdictional issue and a pure
question of law. Any appeal before the tax appellate forums would
not be equipped to adjudicate the overriding effect of the IBC or to
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quash the demand on that basis; those authorities are creatures of the
Income Tax Act and bound by its confines. Thus, the petitioner
appropriately invoked the writ jurisdiction of this Court to seek
quashing of a patently unlawful demand. In our considered view, the
writ petition was maintainable in such circumstances, and the
Division Bench’s reliance on the alternative remedy rule, without
examining the exceptional facts, amounted to a legal oversight.
V. CONCLUSION:
29. From the foregoing analysis, it is evident that the Division Bench in its
order dated 02.03.2020 did not address, or was not apprised of, the
clear impact of the IBC on the impugned tax demand. The omission to
consider these, and the consequent dismissal of the petition on
technical grounds, in our view, constitute a manifest error or at least
an oversight that is apparent from the record. It resulted in upholding
a tax demand that, by virtue of law, was unenforceable. This is the
kind of patent error and resultant injustice which falls within the
ambit of “any other sufficient reason” akin to an error apparent,
warranting exercise of our review power under Order XLVII Rule 1
CPC.
30. For the reasons discussed above, the Review Petition is allowed. In
exercise of our jurisdiction under Article 226 of the Constitution, we
hold that the assessment order dated 18.03.2014 and the demand
notice dated 18.03.2014 (impugned in the Writ Petition) cannot be
enforced against the petitioner-company in view of the corporate
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insolvency resolution process and the Resolution Plan approved for
the petitioner-company. Those impugned proceedings are hereby
quashed, as the underlying tax claim stands extinguished by
operation of Section 31(1) of the IBC read with Section 238 thereof.
The Petitioner, having acquired the corporate debtor on a fresh slate,
shall not be saddled with the aforesaid tax liability.
31. There shall be no orders as to costs.
(Dr.S.K. Panigrahi)
Judge
G. Satapathy, J.I agree.
(G. Satapathy)
Judge
Orissa High Court, Cuttack,
Dated the 8th August, 2025/
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