Writ petitions dismissed: earlier order upheld that appeals abated on CIRP initiation; voluntary CENVAT reversals not s.35F pre-deposits

The HC dismissed the writ petitions, holding there was no jurisdictional error in the CESTAT/Tribunal's common order that the appeals abated on initiation of CIRP and that the Tribunal lacked power to treat voluntary reversal of CENVAT credit as a security/pre-deposit. The Court found the reversals were voluntary (not mandatory pre-deposits under s.35F) and that the operational creditor did not include those claims in its Form B; no illegality or breach of natural justice was shown. Supervisory interference was therefore refused.

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ISSUES PRESENTED AND CONSIDERED

1. Whether a High Court, exercising supervisory jurisdiction under Article 226/227 of the Constitution, may correct jurisdictional errors of a statutory tribunal sitting within its territorial jurisdiction even where the parent adjudication emanates from outside the State.

2. Whether the statutory tribunal erred by treating appeals as abated and becoming functus officio on account of corporate insolvency/resolution of the original corporate debtor, thereby refusing to adjudicate whether amounts reversed by the corporate debtor under protest constituted claims in the insolvency process and whether such amounts stood extinguished on approval of the resolution plan.

3. Whether reversal of CENVAT credit by the corporate debtor under protest constitutes a mandatory pre-deposit or a voluntary payment/security for the purposes of appeal-maintenance and post-resolution entitlement to refund when the corporate debtor is subject to an approved resolution plan under the IBC.

ISSUE-WISE DETAILED ANALYSIS

Issue 1: High Court supervisory jurisdiction to correct tribunal jurisdictional errors within territorial limits

Legal framework: Articles 226 and 227 of the Constitution confer writ and supervisory jurisdiction on High Courts to issue prerogative writs, including certiorari, to correct errors of jurisdiction, excess of jurisdiction, or failure to exercise jurisdiction, and to keep subordinate courts and tribunals within bounds.

Precedent Treatment: The Court relied on established propositions in authorities that certiorari corrects errors of jurisdiction and acts in a supervisory, not appellate, capacity; that a High Court can issue writs in respect of subordinate fora within its territorial jurisdiction; and that exceptional exercise of writ jurisdiction is permissible even where statutory appeals exist, subject to limitations and avoidance of forum-shopping.

Interpretation and reasoning: The Court held that the presence of the tribunal within the territorial limits of the High Court suffices for the exercise of supervisory jurisdiction under Article 227 to correct jurisdictional errors (including failure to exercise jurisdiction). The Court distinguished challenges based solely on appellate remedy under statute from supervisory intervention to ensure the tribunal acts within jurisdictional bounds. The Court noted the supervisory power does not enable reappraisal of factual findings; it is confined to jurisdictional, legal, and natural justice errors.

Ratio vs. Obiter: Ratio - High Courts possess power under Articles 226/227 to supervise and correct jurisdictional errors of tribunals sitting within their territorial domain, even when the original proceedings originate outside the State; subject to the supervisory role being distinct from appellate review. Obiter - observations on forum-shopping and comparative discussion of precedents were illustrative.

Conclusion: The High Court has competence to entertain a writ under Article 227 to correct jurisdictional errors of the tribunal sitting within its territorial jurisdiction; such power is supervisory and not appellate in nature.

Issue 2: Tribunal's treatment of appeals as abated / functus officio on account of corporate insolvency and approved resolution plan

Legal framework: Rule 22 of the CESTAT (Procedure) Rules, 1982 (regarding abatement on death/winding up), the Insolvency and Bankruptcy Code (IBC) (definitions of claim, debt, operational creditor; effect of approved resolution plan under Section 31), and the Supreme Court's exposition that approved resolution plans freeze and extinguish claims not included in the plan.

Precedent Treatment: The Court considered and applied the principle from Ghanashyam Mishra & Sons that once a resolution plan is approved, claims not part of the plan stand extinguished; it also reviewed authorities holding that tribunals, as creatures of statute, cannot grant relief inconsistent with statutory scheme absent explicit provision.

Interpretation and reasoning: The Court analysed the resolution plan clauses (notably 8.2.6 and 8.6.10) which treat pre-Effective Date claims (including taxes/claims under Applicable Laws) as operational debts with liquidation value NIL and declare all such liabilities extinguished on approval. The Court found that the tribunal, applying Rule 22 and Ghanashyam, held the appeals abated and declined to examine whether the amounts reversed under protest constituted claims in the CIRP. The Court examined whether that refusal amounted to failure to exercise jurisdiction: it concluded the tribunal did not act irregularly because, being a statutory creature without express power to give effect to NCLT proceedings or to adjudicate the extinguishment question in the absence of statutory provision, it was constrained from finally resolving whether the voluntary reversal constituted a claim extinguished by the resolution plan.

Ratio vs. Obiter: Ratio - where a resolution plan approved under the IBC expressly extinguishes pre-plan claims and the tribunal lacks an express statutory mechanism to give effect in its proceedings, the tribunal may be justified in treating appeals as abated and in refraining from adjudicating the extinguishment issue; supervisory jurisdiction cannot be used to substitute merits adjudication where no jurisdictional error, illegality or breach of natural justice is pointed out. Obiter - comparative citations and discussion of analogous contexts (e.g., liquidation, death) serve illustrative value.

Conclusion: The tribunal's approach in treating the appeals as abated and declining to adjudicate the extinguishment question was not a jurisdictional failure; the tribunal was not shown to have acted irregularly, nor to have violated principles of natural justice in so declining, given the interplay of Rule 22, the statutory scope of the tribunal, and the effect of the approved resolution plan under IBC.

Issue 3: Nature of reversal of CENVAT credit - pre-deposit versus voluntary payment/security and entitlement to refund post-resolution

Legal framework: Section 35F (pre-amendment and post-amendment) of the Central Excise Act (requirements of pre-deposit for appeals), jurisprudence on deposits paid under protest and their treatment in appellate/pre-deposit contexts, and IBC provisions defining claim, debt, and default.

Precedent Treatment: The Court considered authorities (including decisions treating payments under protest as relevant for pre-deposit calculations under statute-specific provisions) and Supreme Court rulings establishing that approved resolution plans extinguish claims not part of the plan.

Interpretation and reasoning: The Court observed that pre-amendment Section 35F did not mandatorily require the specific pre-deposit that would render the reversal of CENVAT credit a statutory pre-condition for maintaining appeal; the tribunal had waived pre-deposit requirements on application. Thus, the reversal of CENVAT credit by the corporate debtor was voluntary and not a statutory pre-deposit within the meaning of the pre-amendment provisions. The Court further analysed IBC definitions and resolution-plan clauses to conclude that amounts not claimed in the CIRP (Form B) and not included in the approved plan stand extinguished; therefore, absent a claim forming part of the plan, there was no surviving debt as on approval date, and no default. The Court found no legal basis to treat the voluntary reversal as an enforceable claim against the corporate debtor post-approval, and that the tribunal was not empowered to order the refund where appeals had abated and statutory scheme constrained its action.

Ratio vs. Obiter: Ratio - reversal of CENVAT credit under protest, where pre-deposit was waived and statutory provisions do not treat such reversal as mandatory pre-deposit, is a voluntary payment/security and does not automatically survive or become an enforceable claim post-approval of a resolution plan unless included as a claim in the CIRP and as part of the approved plan. Obiter - discussion of analogous authorities on pre-deposit in differing statutory contexts and equitable considerations in taxation were explanatory.

Conclusion: The reversal of CENVAT credit in the facts was voluntary and not a statutory pre-deposit; amounts not presented as claims in the CIRP and not included in the approved resolution plan stand extinguished under the IBC. The tribunal did not commit jurisdictional error in treating appeals as abated and refraining from adjudicating refund entitlement; the writ petitions did not disclose illegality or breach of natural justice warranting supervisory intervention.

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