The Division Bench of Justice M.R. Shah and Justice B.V. Nagarathna of the Apex Court in the case of M/s. Shekhar Resorts Limited (Unit Hotel Orient Taj) Vs Union of India & Ors observed that as per the settled position of law, no party shall be left remediless and whatever grievance the parties had raised before the court of law the same has to be examined on its own merits.
It was noted that the Appellant cannot be punished for not doing something impossible for him to do. There was a legal impediment in the way of the Appellant to make any payment during the moratorium. Therefore, the Appellant cannot be rendered remediless and should not be made to suffer due to a legal impediment which was the reason for it and/or not doing the act within the prescribed time.
Brief facts:
The factual matrix of the case was that the Corporate Insolvency Resolution Process was commenced against the Appellant. The Appellant was subjected to a moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as “IBC”). A resolution plan which was submitted by NCJ Infrastructure Private Limited on 04.06.2019 was approved by the Committee of Creditors.
Thereafter, the scheme of 2019 was introduced on 01.09.2019 under Section 125 of the Finance Act, 2019 for availing the benefit of “Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019. The Appellant submitted an Application within the prescribed period. According to the declaration for payment of tax dues, the Appellant was obliged to pay Rs.1,24,28,500/-. The Appellant/assessee was obligated by the Scheme to make the payment as per Form No. 3 within 30 days. However, because of the COVID-19 Pandemic, the Government extended the deadline for payment until June 30, 2020.
The moratorium period came to an end with the closure of the insolvency proceedings on 24.07.2020. The Appellant wrote to the Successful Resolution Applicant and the Commissioner, CGST and Central Excise, Agra, informing them that the IBC resolution process had concluded and that the Appellant was ready and willing to pay the full amount of Rs.1,24,28,500/- as determined by the Designated Committee. However, the request of the Appellant got rejected. Aggrieved by this, the Appellant approached the High Court and the High Court dismissed the writ petition. This is why the present appeal has been preferred.
Contentions of the Appellant:
It was contended that the High Court erred in holding that Designated Committee does not exist. It was submitted that at the relevant time, particularly when Form No.3 was issued, and even during the Scheme 2019 period, the Appellant was exposed to the rigours of the IBC by virtue of the moratorium period, which ended on 24.07.2020 when the NCLT approved the Resolution Plan. It was submitted that the Appellant legitimately could not deposit the settlement due on or before June 30, 2020, due to the operation of law. Furthermore, it was submitted that in any case, no person can be left remediless due to the operation of law and the Appellant could not have made any payment during the moratorium period by operation of law, and the inability to make the payment was due to the moratorium imposed under the terms of the IBC.
Contentions of the Union of India:
It was contended that the High Court has no jurisdiction to extend the time limit under the Scheme as the Scheme was closed and even the Designated Committees were also dissolved. It was submitted that the extension of the scheme will further create complications.
Observations of the Court:
The main issue to be ascertained in the present case was when the Appellant couldn’t deposit the said amount because of the restrictions under IBC, can the Appellant be punished for no fault of the Appellant?
It was observed that as per the settled position of law, no party shall be left remediless and whatever grievance the parties had raised before the court of law the same has to be examined on its own merits.
It was noted that the Appellant cannot be punished for not doing something impossible for him to do. There was a legal impediment in the way of the Appellant to make any payment during the moratorium. Even if the Appellant wanted to deposit the settlement amount within the stipulated period, he could not do so given the bar under the IBC as, during the moratorium, no payment could have been made. Therefore, the Appellant cannot be rendered remediless and should not be made to suffer due to a legal impediment which was the reason for it and/or not doing the act within the prescribed time.
The decision of the Court:
The order passed by the High Court was quashed and set aside. It was directed that the payment of Rs.1,24,28,500/- already deposited by the Appellant be appropriated towards settlement dues under “Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019” and the Appellant be issued a discharge certificate. Accordingly, the appeal was allowed.
Case Title: M/s. Shekhar Resorts Limited (Unit Hotel Orient Taj) Vs Union of India & Ors
Coram: Hon’ble Mr. Justice M.R. Shah and Hon’ble Mr. Justice B.V. Nagarathna
Citation: 2023 Latest Caselaw 7 SC
Case No: Civil Appeal No. 8957 OF 2022
Advocate for Appellant: Adv. Charanya Lakshmikumaran
Advocate for Respondents: Adv. Mukesh Kumar Maroria
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