Writ jurisdiction despite alternate remedy and municipal tax claims can enter insolvency resolution as operational debt.

Alternative remedy under the Insolvency and Bankruptcy Code did not bar a writ petition where the challenge was framed as an allegation of lack of jurisdiction. The HC held that the distinction between absence of jurisdiction and erroneous exercise of existing jurisdiction was material, and the writ court could be invoked on that basis. It also held that property already attached by the municipal authority for recovery of statutory dues could be brought within the corporate insolvency resolution process, because the municipal claim had crystallised and formed operational debt. The municipal authority's recovery action did not displace the insolvency framework, and the challenge to the NCLT order failed.

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Issues: (i) Whether the writ petition was maintainable under Article 226 of the Constitution of India despite the availability of an appellate remedy under the Insolvency and Bankruptcy Code, 2016; (ii) Whether property distrained by the municipal authority for recovery of statutory dues could form part of the corporate insolvency resolution process under the Insolvency and Bankruptcy Code, 2016.

Issue (i): Whether the writ petition was maintainable under Article 226 of the Constitution of India despite the availability of an appellate remedy under the Insolvency and Bankruptcy Code, 2016.

Analysis: The availability of an alternative remedy does not bar writ jurisdiction where the challenge is to an order or action said to be without jurisdiction. The distinction between absence of jurisdiction and wrongful exercise of existing jurisdiction was treated as material. Since the challenge was framed as one going to the very authority of the Adjudicating Authority and the Resolution Professional to proceed against the attached property, the writ court's jurisdiction could be invoked.

Conclusion: The writ petition was maintainable and the issue was answered in the affirmative.

Issue (ii): Whether property distrained by the municipal authority for recovery of statutory dues could form part of the corporate insolvency resolution process under the Insolvency and Bankruptcy Code, 2016.

Analysis: The property had already been attached under the municipal recovery provisions following non-payment of tax, and no further adjudication on ownership remained to be undertaken by the municipal authority. Once the claim had crystallised and attained finality, it fell within the concept of operational debt. The scope of the Resolution Professional's powers under the Insolvency and Bankruptcy Code, 2016, read with the Adjudicating Authority's jurisdiction, was therefore sufficient to include the asset within the insolvency process. The claim of the municipal authority could not prevail over the statutory scheme of the Code.

Conclusion: The property could be subjected to the corporate insolvency resolution process, and the issue was answered against the writ petitioner.

Final Conclusion: The challenge to the NCLT's order failed, and the municipal authority's attachment did not exclude the property from insolvency proceedings.

Ratio Decidendi: An alternative remedy does not preclude writ jurisdiction where the impugned action is alleged to be wholly without jurisdiction, and a crystallised municipal tax claim attached under statutory recovery proceedings can be dealt with within the insolvency framework as operational debt.

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