Scheme classification error and director bank account attachment: corrected arrears treatment preserved relief, but personal recovery lacked jurisdiction.

Under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, a declaration mistakenly filed in the litigation category was required to be treated as one in the amount in arrears category because no appeal was pending on 30.06.2019. The discharge certificate was not sustained in the form issued, but the declarant remained entitled to Scheme relief on payment of the correct amount after adjustment of pre-deposit, with the corrected deficit and interest. The Court also held that recovery of a company's dues by attaching the directors' personal bank accounts under Section 87 of the Finance Act, 1994 was without jurisdiction, as the statute did not authorise such personal recovery.

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Issues: (i) Whether the declaration under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 was required to be treated as one under the litigation category or the amount in arrears category, and whether the impugned revocation of the discharge certificate was sustainable; (ii) Whether recovery by attachment of the directors' bank accounts under Section 87 of the Finance Act, 1994 was within jurisdiction.

Issue (i): Whether the declaration under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 was required to be treated as one under the litigation category or the amount in arrears category, and whether the impugned revocation of the discharge certificate was sustainable.

Analysis: The declaration was filed on the footing that an appeal was pending, but the appeal had in fact been filed only after the cut-off date and therefore no appeal was pending on 30.06.2019. The proper category was therefore amount in arrears, not litigation. The discharge certificate under the Scheme is ordinarily conclusive, but the Court held that an incorrect declaration does not prevent correction of the amount payable and that the statutory exception for false material particulars in voluntary disclosure did not apply because the declaration was not made under voluntary disclosure. The petitioner was nevertheless entitled to the benefit of the Scheme on payment of the correct amount, namely the amount payable under the amount in arrears category after adjustment of pre-deposit.

Conclusion: The revocation could not be sustained in the manner adopted, and the petitioner was entitled to relief under the Scheme on payment of the corrected deficit amount with interest.

Issue (ii): Whether recovery by attachment of the directors' bank accounts under Section 87 of the Finance Act, 1994 was within jurisdiction.

Analysis: The recovery proceedings were initiated against individual directors for dues of the company. The Court held that the Finance Act, 1994 did not provide machinery for recovery of the company's dues from the directors' personal bank accounts in the manner attempted, and the attachment was therefore without jurisdiction.

Conclusion: The attachment and recovery proceedings against the directors were held to be without jurisdiction.

Final Conclusion: The writ petitions were disposed of with relief to the extent that the recovery against the directors was quashed and the company was directed to pay the corrected deficit amount with interest, following which the discharge certificate was to be restored by issuance of a fresh certificate.

Ratio Decidendi: Under the Scheme, a mistaken declaration as to category does not defeat substantive entitlement where the declarant is otherwise eligible, but the benefit must be worked out on the legally correct category and amount payable; personal recovery from directors cannot be enforced for company dues absent statutory authority.

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