TaxTMI Updates e-Newsletter
Aug 25,2020

Anti-profiteering provisions - deposit of profiteered amount in instalments - stay of interest

Deposit of profiteered amount in instalments - anti-profiteering provisions - Interim direction for payment of the principal profiteered amount and related procedural steps - HELD THAT: - The Court directed the petitioner to deposit the principal profiteered amount found by the Authority, calculated as the total profiteered amount less the GST component already deposited by the petitioner, in six equal monthly instalments commencing 1 September 2020. The direction was issued on an interim basis in aid of the lis pending adjudication, with filing of counter-affidavits and rejoinders ordered and short written submissions limited to five pages to be filed in advance of the next hearing. The order follows the approach adopted by this Court in earlier similar matters, and confines the present mandate to interim compliance with the Authority's determination of profiteering to preserve the rights of the parties during the pendency of the writ petition.

Petitioner ordered to deposit the principal profiteered amount in six equated monthly instalments commencing 01st September, 2020; procedural directions given for filings and submissions.

Stay of interest - anti-profiteering provisions - Interim treatment of interest directed by the Authority - HELD THAT: - While directing interim deposit of the principal amount, the Court stayed the interest component ordered by the Authority until further orders. This creates a provisional bifurcation between payment of the principal amount (to be effected in instalments) and the interest liability (remained stayed), preserving the question of interest for final adjudication.

Interest ordered by the Authority stayed until further orders.

Final Conclusion: Interim order directing payment of the principal profiteered amount in six monthly instalments commencing 01st September, 2020 and staying the interest component; further pleadings and short written submissions directed with the matter listed for hearing.

Provisional release of goods under Section 67(6) - power of inspection, search and seizure - confiscation proceedings - appeal to appellate authority under Section 107

Provisional release of goods under Section 67(6) - power of inspection, search and seizure - Provisional release of seized goods and vehicle pending confiscation proceedings and the procedure for seeking such release. - HELD THAT: - The Court observed that Section 67(6) of the Central Goods and Services Tax Act permits provisional release of goods seized under the inspection, search and seizure provisions, subject to execution of a bond and furnishing of security or payment of applicable tax, interest and penalty. The writ applicants confined their prayer to getting the goods released and were directed to prefer an appropriate application under Section 67(6). Without adjudicating the merits of seizure or confiscation, the Court directed the competent authority to consider any such application and pass an appropriate order on it at the earliest, specifying a timeline for decision. [Paras 3, 4, 6, 7]

If the applicants file an application under Section 67(6) for provisional release of the goods and vehicle, the competent authority shall consider it and pass an appropriate order within fifteen days of receipt.

Confiscation proceedings - appeal to appellate authority under Section 107 - Availability of appellate remedy against the order passed on an application for provisional release. - HELD THAT: - The Court clarified that it has not expressed any opinion on the merits of the underlying confiscation proceedings. It recorded that if the writ applicants are aggrieved or dissatisfied with the order passed by the competent authority on the Section 67(6) application, they remain entitled to prefer an appeal before the appellate authority under Section 107 of the Act. This preserves the statutory appellate remedy without addressing substantive issues of seizure or confiscation. [Paras 7]

Aggrieved applicants may prefer an appeal to the appellate authority under Section 107 against the order passed on the Section 67(6) application.

Final Conclusion: Writ petition disposed of by directing that any application for provisional release under Section 67(6) filed by the petitioners shall be decided by the competent authority within fifteen days; no opinion expressed on merits, and statutory appeal under Section 107 remains available if aggrieved.

Levy of IGST on ocean freight - Ultra vires declaration of notification - Legislative competence - Refund of tax paid pursuant to ultra vires notification

Levy of IGST on ocean freight - Ultra vires declaration of notification - Refund of tax paid pursuant to ultra vires notification - Entitlement to refund of IGST paid pursuant to Entry No.10 of Notification No.10/2017-IGST dated 28.6.2017 following the declaration that the notification was ultra vires. - HELD THAT: - The writ applicant challenged the levy and collection of IGST on ocean freight by reference to Entry No.10 of Notification No.10/2017-IGST dated 28.6.2017. This Court observed that the question is covered by its earlier decision in Mohit Minerals Pvt. Ltd. and allied petitions, where Notification No.8/2017 and Entry No.10 of Notification No.10/2017 were declared ultra vires for want of legislative competence. As the present challenge raises the same legal controversy and the respondents accepted that the matter is covered by Mohit Minerals, the Court allowed the writ. The respondents were directed to undertake the process of refund and to sanction the refund of the IGST already paid by the petitioner pursuant to Entry No.10 of Notification No.10/2017-IGST, and to ensure payment within six weeks from receipt of the writ of this order.

Writ allowed; respondents directed to sanction and pay the refund of IGST paid pursuant to Entry No.10 of Notification No.10/2017-IGST (declared ultra vires) within six weeks.

Final Conclusion: Following the Court's prior declaration that Entry No.10 of Notification No.10/2017-IGST is ultra vires, the petition succeeds and the respondents are directed to refund the IGST paid pursuant to that Entry, with the process to be completed within six weeks of receipt of this order.

Presence of advocate during questioning by departmental/tax officers - right to fair investigation and protection from coercive methods - power of tax/GST officers to summon and examine witnesses - precedential application of Pool Pandi on counsel's presence during interrogation

Presence of advocate during questioning by departmental/tax officers - precedential application of Pool Pandi on counsel's presence during interrogation - Advocate cannot be present at a visible yet inaudible distance during questioning by GST officers in the course of departmental investigation. - HELD THAT: - The Court applied the principle laid down in Pool Pandi vs. Superintendent, Central Excise and Ors. , which holds that the presence of a lawyer cannot be allowed during examination/interrogation by Customs (and similar departmental) officers, since permitting such presence would frustrate the object of departmental enquiries and extend constitutional protections beyond their intended scope. The petitioner's reliance on other Supreme Court authority was examined and distinguished on facts where those decisions arose from special circumstances. The Court observed that GST officers are not police but are vested with power to summon and examine persons, and accordingly the rule prohibiting counsel's presence during questioning applies. On the basis of these authorities and submissions, the prayer to allow the advocate to be present during interrogation was declined. [Paras 5, 6, 7, 9]

Prayer for presence of advocate during questioning by the respondents' officers is rejected and the application in that regard is dismissed.

Right to fair investigation and protection from coercive methods - power of tax/GST officers to summon and examine witnesses - Investigation must be conducted lawfully without use of coercive or illegal means; assurance by respondents sufficed to refuse interim protective directions sought by petitioner. - HELD THAT: - The Court acknowledged the petitioner's allegation of illegal detention and physical coercion and reaffirmed the settled law that no inquiry or investigating officer has the right to employ unlawful methods to extract information; any such conduct would attract consequences. The respondents gave a categorical assurance that the interrogation/investigation would be conducted in accordance with law and without impermissible methods. In view of the precedent barring counsel's presence during departmental questioning and the respondents' assurance, the Court found no grounds to issue the specific interim directions sought for monitoring or permitting counsel's visible presence during questioning. [Paras 7, 8, 9]

No interim directions were issued; the respondents' undertaking was accepted and the application seeking protective directions was dismissed.

Final Conclusion: The application seeking presence of counsel during interrogation and other interim protective measures was dismissed; the Court relied on Pool Pandi's precedent to disallow counsel's presence during departmental questioning and accepted the respondents' assurance that investigation would be conducted lawfully without coercive methods.

Classification of goods under Customs Tariff/HSN - document of title - articles of stationery - evidentiary value of Pattadar Pass Book - fiduciary value - preparation and updating of Record of Rights - principal supply/composite supply

Classification of goods under Customs Tariff/HSN - document of title - articles of stationery - evidentiary value of Pattadar Pass Book - fiduciary value - Classification of the Pattadar Pass Book cum Title Deed as a 'document of title' classifiable under HSN 4907 or as an article of stationery classifiable under HSN 4820. - HELD THAT: - The Advance Authority's classification was examined in light of the Telangana Records of Rights in Land and Pattadar Passbooks Act, 1971 and its Rules. The statutory scheme shows that Pattadar Pass Books are prepared with reference to the Record of Rights maintained and updated by the Mandal Revenue Officer; entries in the Record of Rights are open for inspection and certified extracts are available. The Title Deed and pass book are issued after enquiries and authentication and the pass book contains information derived from the Record of Rights, serving evidentiary purposes to facilitate actions such as grant of loans. The Act contemplates that a registered document or a certificate issued by the Mandal Revenue Officer after payment of prescribed registration fee and stamp duty (or a document registered under the Registration Act) has fiduciary value and operates as a document of title; the updated Record of Rights is then reflected in the Pattadar Pass Book. Consequently, the Pattadar Pass Book cum Title Deed, being a vehicle for recording entries from the Record of Rights and having primarily evidentiary value, does not itself constitute a document of title with independent fiduciary value for purposes of classification under Chapter 4907. Reliance on judicial decisions concerning resolution of title disputes was considered immaterial to tariff classification, which turns on the statutory description of goods and HSN explanatory notes. Applying these legal and factual considerations, the Authority for Advance Ruling's conclusion that the Pattadar Pass Book cum Title Deed is classifiable under Chapter Heading 4820 (articles of stationery) rather than under 4907 (documents of title) is upheld. [Paras 30, 33, 35, 36, 38]

The Pattadar Pass Book cum Title Deed is not a 'document of title' for classification under HSN 4907 but is classifiable under HSN 4820 as an article of stationery; the Authority for Advance Ruling's order is upheld and the appeal is dismissed.

Final Conclusion: The appeal is dismissed; the Advance Ruling holding that the Pattadar Pass Book cum Title Deed is classifiable under HSN 4820 (articles of stationery) and not under HSN 4907 (documents of title) is upheld.

Penalty under section 271(1)(b) for non-appearance/non-compliance - Assessment completed under section 153A r.w.s. 143(3) - Assessment completed under section 143(3) - Cooperation in assessment proceedings and subsequent compliance - Deletion of penalty where assessments are not ex parte

Penalty under section 271(1)(b) for non-appearance/non-compliance - Assessment completed under section 153A r.w.s. 143(3) - Cooperation in assessment proceedings and subsequent compliance - Deletion of penalty where assessments are not ex parte - Validity of levy of penalty under section 271(1)(b) where assessee failed to appear on the scheduled hearing date but subsequently complied and assessments were completed under section 153A r.w.s. 143(3) and section 143(3). - HELD THAT: - The Tribunal found that the assessee, though not present on the initial date of hearing, subsequently complied with notices issued under section 142(1) and furnished replies which were considered by the assessing officer. The assessments for AY 2010-11 to 2015-16 were completed under section 153A r.w.s. 143(3) and for AY 2016-17 under section 143(3), and none of the assessments were framed ex parte. On these facts the Tribunal followed earlier decisions of the Co-ordinate Bench holding that where assessments are finalized under section 143(3) (including under section 153A r.w.s. 143(3))-which demonstrates that the assessee cooperated in the assessment proceedings-the levy of penalty under section 271(1)(b) for initial non-appearance is not leviable. Reliance was placed on multiple earlier Tribunal decisions dealing with identical facts and the Tribunal applied the same principle to delete the penalty. The Tribunal therefore held that subsequent compliance and completion of assessment on merits foreclose imposition of the penalty that was predicated on non-cooperation or non-compliance on the initial date. [Paras 7, 9, 10, 11, 12]

Penalty of Rs. 10,000 levied under section 271(1)(b) for each of AY 2010-11 to 2016-17 is deleted as the assessments were completed on merits after the assessee's subsequent compliance and were not ex parte.

Final Conclusion: All appeals of the three assessees are allowed and the penalty of Rs. 10,000 under section 271(1)(b) imposed for AY 2010-11 to 2016-17 is directed to be deleted, the Tribunal applying the principle that subsequent cooperation leading to assessments under section 143(3)/153A r.w.s. 143(3) precludes the levy of such penalty.

Deduction under section 80p(2)(d) in respect of interest or dividends derived by a co operative society from its investments in another co operative society - distribution of net profits - dividend as distribution of net profits - characterisation of bonus as dividend - bye laws governing allocation of profit between reserve, bonus and dividend

Characterisation of bonus as dividend - deduction under section 80p(2)(d) in respect of interest or dividends derived by a co operative society from its investments in another co operative society - bye laws governing allocation of profit between reserve, bonus and dividend - Bonus paid by KMF to the assessee is to be treated as dividend for the purposes of deduction under section 80p(2)(d) of the Act. - HELD THAT: - The Tribunal examined the Bye Laws of KMF which provide for distribution of net profits: a prescribed transfer to reserve and other funds and thereafter payment of bonus to members (based on business transactions) and payment of dividend to members (based on share investment), each subject to specified caps. Although the computation bases for bonus and dividend differ, both payments are made as distribution of net profits. Given that dividend is legally understood as a distribution of net profits, the Tribunal accepted the assessee's contention that the bonus paid by KMF is in substance a distribution of net profit and hence falls within the category of dividend or income by way of dividend contemplated for deduction under section 80p(2)(d). On that basis the AO was directed to treat the bonus as dividend and allow the deduction under section 80p(2)(d). [Paras 5]

Bonus received from KMF is to be considered as dividend and the deduction under section 80p(2)(d) is to be allowed; appeal allowed.

Final Conclusion: The Tribunal allowed the assessee's appeal for Assessment Year 2014-15 and directed the Assessing Officer to treat the bonus received from KMF as dividend for the purpose of granting deduction under section 80p(2)(d).

Reopening of assessment beyond four years - first proviso to section 147 - bar where there is no failure to disclose fully and truly all material facts - change of opinion - limited verification directed by Tribunal

Reopening of assessment beyond four years - first proviso to section 147 - bar where there is no failure to disclose fully and truly all material facts - change of opinion - Validity of reassessment proceedings initiated u/s 147/148 after more than four years where reasons recorded do not allege failure by the assessee to disclose fully and truly all material facts - HELD THAT: - The Tribunal examined the reasons recorded for reopening and the material on record and held that the AO's reasons contained no allegation that the assessee had failed to disclose fully and truly all material facts necessary for assessment. The original assessment under section 143(3) had been completed and the second notice u/s 148 was issued after the four year period. The Tribunal applied the statutory bar in the first proviso to section 147 and the authorities cited (including the recent Supreme Court and High Court decisions) that require the reasons to specify the nature of the alleged failure. The Tribunal further observed that the ITAT's earlier direction in the related individual appeals merely required verification whether the HUF had been assessed and did not direct reopening of the HUF's assessment; instead the AO re-opened on the same set of facts, which amounted to a change of opinion. For these reasons the reassessment was held to be without jurisdiction and void ab initio. [Paras 14, 16, 18]

Reassessment proceedings under section 147/148 quashed as barred by the first proviso to section 147 and amounting to impermissible change of opinion

Final Conclusion: The appeal is allowed: the reassessment proceedings initiated by the AO and sustained by the CIT(A) are quashed as void for being barred by the first proviso to section 147 (no allegation of failure to disclose fully and truly all material facts) and as amounting to a mere change of opinion; consequential or merit grounds were not adjudicated as they became academic.

Arm's length price - international transaction - corporate guarantee - performance guarantee - guarantee commission - benchmarking of interest on intra-group loans - site-of-loan / currency principle for interest benchmarking - TDS credit verification - computation under Minimum Alternate Tax - low tax effect - dismissal of appeal

Corporate guarantee - guarantee commission - arm's length price - Extent and rate of guarantee commission for corporate guarantee and treatment of performance guarantee - HELD THAT: - The Tribunal held that the approach of equating corporate guarantees to commercial bank guarantees and applying those rates was not justified in view of the Bombay High Court's reasoning in Everest Kento Cylinders Ltd. Applying its earlier coordinate-bench decision, the Tribunal directed that corporate guarantee commission be computed at 0.50% as the arm's length rate. As to the performance guarantee, the Tribunal found that factual aspects (the assessee itself performing the contracted work and thereby bearing no default risk) were not examined by the TPO/DRP; accordingly that part was restored to the file of the AO/TPO for fresh examination and decision in accordance with law. [Paras 11, 12, 25]

Corporate guarantee commission limited to 0.50% for computing arm's length income; performance guarantee issue remitted to AO/TPO for fresh consideration.

Benchmarking of interest on intra-group loans - site-of-loan / currency principle for interest benchmarking - arm's length price - Benchmarking of interest on loans advanced to associated enterprises - HELD THAT: - Relying on earlier coordinate-bench reasoning and authorities emphasizing that interest on loans to foreign AEs should be determined with reference to market rates applicable to the currency/location where the loan is consumed (site-of-loan / currency principle), the Tribunal directed the AO/TPO to recompute the adjustment on interest by following the Tribunal's order for prior years and the cited High Court principles. The assessee was directed to furnish necessary details to AO/TPO for recomputation. [Paras 15, 16]

Adjustment on interest upheld only to the extent recomputed by AO/TPO following the site-of-loan / currency benchmarking principle; matter remitted for recomputation.

TDS credit verification - Alleged short credit of TDS claimed by the assessee - HELD THAT: - The Tribunal observed that the AO had allowed a lesser TDS credit without recorded reasons. The departmental representative had no objection to remitting the matter. The Tribunal directed the AO to verify the evidence, grant appropriate TDS credit if established and provide the assessee an opportunity of being heard during verification. [Paras 19]

Issue remitted to AO to verify TDS certificates/records and to grant appropriate credit after affording the assessee an opportunity of hearing.

Computation under Minimum Alternate Tax - section 115JB - Correct rate to be applied for computation of tax under section 115JB (MAT) - HELD THAT: - The Tribunal accepted the assessee's contention that tax under section 115JB ought to be computed at the rate as amended upto date rather than at the earlier 18% rate applied by the AO. Noting a pending rectification application, the Tribunal directed the AO to compute tax liability in terms of section 115JB as amended up to date. [Paras 22]

AO directed to recompute tax under section 115JB applying the rate as per the law amended up to date.

Low tax effect - dismissal of appeal - Maintainability of Revenue's appeal for AY 2010-11 on account of tax-effect threshold - HELD THAT: - The Tribunal noted that the adjustment deleted by the DRP in favour of the assessee was below the monetary limit prescribed by CBDT for filing departmental appeals before the Tribunal. The revenue accepted that the tax effect fell below the threshold. Accordingly, the Tribunal dismissed the revenue's appeal for being below the monetary limit. [Paras 5, 23]

Revenue's appeal for AY 2010-11 dismissed for low tax effect.

Final Conclusion: Appeal of the assessee for AY 2010-11 and AY 2011-12 partly allowed: corporate guarantee commission restricted to 0.50%; performance guarantee and interest-on-loans issues remitted to AO/TPO for recomputation/verification in accordance with the Tribunal's directions; TDS credit and MAT computations remitted to AO for verification and recomputation. Revenue's appeal dismissed for low tax effect.

Transfer of capital asset to firm under Section 45(3) - deeming of consideration under Section 45(3) - deeming of stamp valuation by Stamp Valuation Authority under Section 50C - transfer of development rights vis-a -vis land or building - special provision overriding general provision

Transfer of capital asset to firm under Section 45(3) - deeming of consideration under Section 45(3) - deeming of stamp valuation by Stamp Valuation Authority under Section 50C - transfer of development rights vis-a -vis land or building - special provision overriding general provision - Whether the transfer of development rights as capital contribution to an AOP is to be taxed under the special charging and deeming provisions of section 45(3) or whether section 50C (stamp valuation deeming) applies. - HELD THAT: - The Tribunal found that the assessee contributed development rights as a capital contribution to an AOP and recorded the deemed consideration in the books of the AOP, invoking the charging and deeming fiction contained in section 45(3). Section 45(3) operates as a charging provision with an essential deeming fiction that the amount recorded in the books of the firm/AOP shall be deemed to be the full value of consideration for the purposes of section 48. Section 50C, by contrast, is a deeming provision which substitutes stamp-valuation as the full value of consideration where the transfer concerns land or building or both and the consideration is less than the value adopted by the Stamp Valuation Authority. The Tribunal analysed the nature of the transaction - transfer of development rights (not ownership of land or building) by way of capital contribution - and held that the special machinery of section 45(3) governs such transfers to a firm/AOP. The Tribunal relied on the commercial and legal distinction drawn in the decision of the Supreme Court in Sunil Siddharthbhai Vs. CIT regarding the notional nature of the capital-account credit on contribution to partnership, and on Tribunal decisions referred to in the record including Voltas Ltd Vs. ITO and the discussion in Carlton Hotels Pvt. Ltd. ; applying these authorities the Tribunal concluded that section 50C's stamp-valuation deeming is not attracted to a capital-contribution transfer of development rights to an AOP and that section 45(3) must be applied to compute capital gains. On that basis the Tribunal reversed the conclusions of the Assessing Officer and CIT(A). [Paras 12]

The transfer of development rights as capital contribution to the AOP is taxable under the special charging and deeming provision of section 45(3); section 50C is not applicable and the additions made under section 50C by the lower authorities are reversed.

Final Conclusion: Appeal partly allowed; Tribunal holds that the contribution of development rights to the AOP is governed by section 45(3) and not by section 50C, and the additions made under section 50C are set aside.

Deductibility of education cess and higher education cess for computing business income - disallowance under section 40(a)(ii) - withholding liability characterization - reopening of assessment under sections 147/148 - change of opinion and bona fides of reassessment - precedential reliance on High Court decision and administrative circular

Deductibility of education cess and higher education cess for computing business income - disallowance under section 40(a)(ii) - withholding liability characterization - precedential reliance on High Court decision and administrative circular - Assessee's claim for deduction of education cess and higher and secondary education cess debited to profit and loss account and disallowed by AO under section 40(a)(ii). - HELD THAT: - The Tribunal examined whether education cess and higher and secondary education cess, though collected as part of income-tax, fall within the non-deductibility under section 40(a)(ii). Relying on the Bombay High Court decision in Sesa Goa Ltd., which held that such cesses are eligible for deduction while computing profits and gains of business or profession and that being collected with income-tax does not convert them into a non-deductible charge under section 40(a)(ii), the Tribunal found no contrary binding decision placed by Revenue. The High Court's conclusion, arrived at after considering the relevant CBDT circular, was applied to the facts where the amount was debited to the profit and loss account and claimed as business expenditure. For these reasons the Tribunal held the AO's disallowance to be unjustified and directed deletion of the addition. [Paras 9, 10]

Addition of Rs. 14,21,208 towards cess on income tax disallowed by AO under section 40(a)(ii) is deleted; the assessee's deduction is allowed.

Reopening of assessment under sections 147/148 - change of opinion and bona fides of reassessment - change of opinion - Assessee's challenge to the validity of reassessment proceedings under sections 147/148 (plea that reasons were mere change of opinion and not based on tangible material). - HELD THAT: - The Tribunal observed that the assessee had raised grounds challenging the initiation and validity of the reassessment. However, having decided the substantive addition relating to cess in favour of the assessee, the Tribunal held that the issues challenging the reopening were rendered academic. The Tribunal therefore declined to adjudicate those grounds on merit and dismissed them as academic. [Paras 11]

Grounds challenging reopening under sections 147/148 are rendered academic and require no adjudication; they are dismissed as academic.

Final Conclusion: Appeal is partly allowed: the disallowance of the cess is deleted and the assessee's claim is allowed; challenges to the reassessment proceedings are rendered academic and not adjudicated.

Deduction under section 80P(2)(a)(i) - Interest and dividend from investments with other co-operative banks/societies eligible for deduction - Exclusion under section 80P(4) where assessee carries on banking business for public

Deduction under section 80P(2)(a)(i) - Interest and dividend from investments with other co-operative banks/societies eligible for deduction - Exclusion under section 80P(4) where assessee carries on banking business for public - Assessee entitled to deduction under section 80P(2)(a)(i) in respect of interest and dividend earned from investments with other co-operative banks/societies, as it was not carrying on banking business for the public and therefore not hit by section 80P(4). - HELD THAT: - The Tribunal examined whether interest and dividend received on deposits/investments with other co-operative banks/societies qualify for deduction under section 80P(2)(a)(i). Relying on the decision of the Hon'ble Bombay High Court in Quepem Urban Credit Society Ltd. v. ACIT and the Tribunal's own precedent in Mahapalika Kshetra Madhyamik Shikshak Sahakari Patsanstha Maryadit v. ITO, the Tribunal held that where a co-operative credit society does not carry on banking business for the public but provides credit facilities to its members only, the exclusion in section 80P(4) is not attracted. On the facts recorded, there was no dispute that the assessee did not carry on banking business for the public at large. Applying the cited precedents to these facts, the Tribunal concluded that interest and dividend from investments with other co-operative societies/co-operative banks are eligible for deduction under section 80P(2)(a)(i). The Tribunal therefore directed the assessing officer to allow the deduction accordingly. [Paras 7]

Appeal allowed and assessing officer directed to allow deduction under section 80P(2)(a)(i) in respect of interest and dividend earned from investments with other co-operative banks/societies.

Final Conclusion: The appeal is allowed; the Assessing Officer is directed to grant deduction under section 80P(2)(a)(i) for interest and dividend from investments with other co-operative banks/societies for AY 2014-15, the assessee not being a banking business carried on for the public and thus not covered by section 80P(4).

Effect of Section 153A on finalized assessments - requirement of incriminating material for reopening completed assessments - finality of assessment - scope of assessment under Section 153A limited to seized/incriminating material for completed assessments - second proviso to Section 153A(1) and abatement of pending proceedings

Effect of Section 153A on finalized assessments - requirement of incriminating material for reopening completed assessments - finality of assessment - Whether additions invoking Section 153A read with Section 143(3) could be made in respect of deductions already finally allowed in completed assessments for the assessment years 2005-06 and 2006-07 in absence of any incriminating material seized during the search. - HELD THAT: - The Tribunal affirmed that assessments already completed under Section 143(3) and not abated as on the date of search attain finality and cannot be disturbed by a subsequent assessment under Section 153A except to the extent that incriminating material discovered in the search relates to and contradicts the reliefs granted in the finalized assessments. The second proviso to Section 153A(1) abates only those proceedings that were pending on the date of initiation of the search; completed assessments remain final. The remand report and the assessment order failed to produce any incriminating documents or adverse statements in relation to the claim of deduction under Section 80IA(4). A general direction in an appraisal report to make inquiries, or the fact that further enquiries were sought, does not constitute incriminating material. The Tribunal relied on and applied the principle in the decisions of the Bombay and Delhi High Courts (as discussed by the authorities below) and the position affirmed by the Supreme Court in Meeta Gutgutia (dismissal of SLP), concluding that without seized incriminating material specific to the finalized assessments, the Assessing Officer had no jurisdiction under Section 153A to re-open or disturb the claim of deduction under Section 80IA(4). Consequently, the Commissioner (Appeals) correctly deleted the additions made in the Section 153A assessments. [Paras 10]

Additions made under the assessments framed u/s 153A r.w.s. 143(3) in respect of the deduction claimed u/s 80IA(4) were deleted for lack of any incriminating material; the appellate authority's conclusion was upheld.

Final Conclusion: Revenue appeals for AY 2005-06 and AY 2006-07 dismissed: where assessments had attained finality and no incriminating material was found in the search, the Assessing Officer could not disturb the concluded allowance of deduction under Section 80IA(4) in assessments framed under Section 153A.

Penalty under Section 271(1)(c) - Willful concealment of income - Furnishing of inaccurate particulars of income - Capitalization of interest expenses - Business activity - investment in real estate

Penalty under Section 271(1)(c) - Willful concealment of income - Furnishing of inaccurate particulars of income - Capitalization of interest expenses - Business activity - investment in real estate - Whether penalty under Section 271(1)(c) is leviable for alleged concealment by claiming interest and loan processing fees when the assessee had capitalized part of the interest and the business was investment in real estate. - HELD THAT: - The Assessing Officer disallowed finance cost claimed by the assessee on the basis that the company was not carrying on any business activity and therefore the expenses could not be allowed, and initiated penalty proceedings under Section 271(1)(c) treating the claim as furnishing of inaccurate particulars. The assessee explained that interest paid on loan against property was capitalized up to the date of acquisition and that an inadvertent figure was claimed in the return. The Tribunal accepted that the assessee's activity of investment in real estate constitutes a business activity and held that absence of income in a year does not establish absence of business activity. The Tribunal found that the Assessing Officer and the CIT(A) proceeded on a fallacious premise and that the facts did not demonstrate willful concealment or furnishing of inaccurate particulars as envisaged by Section 271(1)(c). Consequently the penalty was not attracted and was liable to be deleted. [Paras 3, 7, 8]

Penalty under Section 271(1)(c) deleted; appeal allowed.

Final Conclusion: The appeal is allowed: the addition/penalty under Section 271(1)(c) was set aside on the ground that the assessee's explanation regarding capitalization of interest and its activity as an investor in real estate did not amount to willful concealment or furnishing of inaccurate particulars of income.

Penalty under section 271(1)(c) of the Income-tax Act - Effect of deletion of assessment addition on penalty - Finality of appellate order - Applicability of CBDT Circular No.05/2012 to sales promotion expenses - Pending departmental appeal before High Court and its effect on penalty proceedings

Penalty under section 271(1)(c) of the Income-tax Act - Effect of deletion of assessment addition on penalty - Finality of appellate order - Whether the penalty levied under section 271(1)(c) could be sustained where the addition that triggered the penalty was deleted by the appellate authorities. - HELD THAT: - The Tribunal (ITAT) deleted the additions made by the Assessing Officer in respect of sales promotion expenses (freebies to doctors) for the relevant assessment years on the basis that CBDT Circular No.05/2012 (and related MCI regulations) applied and therefore the disallowances could not be sustained. The Commissioner (Appeals) deleted the penalty which had been levied solely on account of those additions. The Appellate Tribunal, after considering the orders of the lower authorities and the fact that the additions which formed the basis for the penalty had been finally deleted by the appellate forum, held that nothing remained to support the levy of penalty under section 271(1)(c). The tribunal accordingly upheld the deletion of the penalty by the CIT(A). [Paras 6, 7]

Penalty levied under section 271(1)(c) is not sustainable once the addition that triggered the penalty has been deleted by the appellate authorities; the CIT(A)'s deletion of the penalty is upheld.

Pending departmental appeal before High Court and its effect on penalty proceedings - Finality of appellate order - Whether the pendency of the department's appeal before the High Court prevents deletion of penalty where the Tribunal has deleted the underlying additions. - HELD THAT: - Revenue contended that because it had not accepted the Tribunal's findings and had filed an appeal before the High Court, the penalty should be sustained and decided on the factual record of the assessment proceedings. The Tribunal noted that the additions which triggered the penalty had been deleted by the appellate authorities. It held that once the appellate authority has deleted the addition, there is nothing left that survives to constitute the basis for the penalty, notwithstanding the pendency of a further appeal by the department. The pendency of the department's challenge did not preclude acceptance of the appellate outcome for purposes of penalty deletion. [Paras 5, 6]

Pendency of the department's appeal before the High Court does not prevent deletion of a penalty when the underlying addition has been deleted by the appellate authorities; penalty deletion stands.

Final Conclusion: The appeals filed by the revenue for AY 2011-12 and 2012-13 are dismissed; the CIT(A)'s orders deleting the penalty under section 271(1)(c) (which was levied in consequence of additions that have been deleted by the appellate authorities) are upheld.

Competence of adjudicating authority - delegation of adjudication powers under Circular dated 31.05.2011 - simple demand of erroneously paid drawback - collusion, willful misstatement or suppression - show cause notice issued by an officer below competent rank - misclassification amounting to willful misstatement

Competence of adjudicating authority - delegation of adjudication powers under Circular dated 31.05.2011 - collusion, willful misstatement or suppression - show cause notice issued by an officer below competent rank - Validity of the show cause notice dated 23.03.2020 issued by the Deputy Commissioner in view of the Circular dated 31.05.2011 prescribing adjudication levels. - HELD THAT: - Paragraph 5 of the Circular distinguishes (i) simple demands of erroneously paid drawback, for which Assistant/Deputy Commissioners may continue to issue show cause notices without limit, and (ii) cases involving collusion, willful misstatement or suppression, for which adjudication powers are vested in higher officers with the Additional/Joint Commissioner competent where the amount exceeds Rs.5 lakhs. The show cause notice on its face alleges that the petitioner knowingly classified goods in a different category to avoid duty, which the Court treated as amounting to a willful misstatement rather than a bonafide error. Consequently clause (ii) of Para-5 is attracted and the authority competent to issue the notice could not be below the rank of Additional/Joint Commissioner where the drawback involved exceeds the prescribed limit. The Deputy Commissioner therefore lacked competence to issue the impugned notice. [Paras 6, 7]

The show cause notice dated 23.03.2020 is quashed for want of competence; respondents may, if so advised, issue a fresh show cause notice signed by the competent authority as prescribed in the 2011 Circular.

Final Conclusion: Petition allowed on the ground that the impugned show cause notice was issued by an officer not competent under the Circular dated 31.05.2011; the notice is quashed but the respondents are at liberty to initiate fresh proceedings through the authority of competent rank.

Provisional release of seized goods under Section 110-A of the Customs Act - indemnity bond as security for differential duty - protection of Revenue interest - inter-authority communication for release of goods

Provisional release of seized goods under Section 110-A of the Customs Act - indemnity bond as security for differential duty - protection of Revenue interest - inter-authority communication for release of goods - Whether the goods seized may be released on the petitioner furnishing an indemnity bond for the balance differential duty and the manner in which the release should be effected to safeguard the revenue interest. - HELD THAT: - The Court noted that the petitioner had already deposited part of the assessed differential duty and offered to furnish an indemnity bond for the balance amount to secure the revenue. Balancing the petitioner's request for release against the need to protect the public revenue, the Court directed the petitioner to furnish an indemnity bond for the outstanding differential duty to the Assistant Commissioner of Customs, Surat, and required that the Assistant Commissioner inform the Commissioner of Customs (Imports), State of Maharashtra. On receipt of that intimation the Commissioner of Customs (Imports) was directed to communicate to the officer in possession of the goods to release them in favour of the petitioner. The Court fixed short timelines for furnishing the bond and for completing the communications and release, thereby protecting the revenue by ensuring security for the unpaid differential duty while enabling the petitioner to obtain release of the seized goods. [Paras 6, 9]

Petitioner directed to furnish an indemnity bond for the balance differential duty to Assistant Commissioner of Customs, Surat within eight days; upon intimation the Commissioner of Customs (Imports), Maharashtra to instruct release by the officer in possession, and the entire exercise to be completed within four weeks.

Final Conclusion: Writ disposed by directing provisional release of the seized goods subject to petitioner furnishing an indemnity bond for the balance differential duty, with mandated inter-authority communication and timelines to protect the revenue interest.

Appreciation of evidence - sole statement as evidentiary basis - confiscation and imposition of penalty - question of fact - no question of law

Appreciation of evidence - sole statement as evidentiary basis - confiscation and imposition of penalty - Whether the Tribunal correctly set aside the orders of confiscation and penalties by the Adjudicating Authority and Appellate Authority on the basis of the material on record. - HELD THAT: - The High Court examined the impugned Tribunal judgment which found that the Department had proceeded principally on the initial statement of the intercepted person without undertaking corroborative investigation. The Tribunal recorded that subsequent statements and purchase documents were treated as afterthoughts and that there was no direct or indirect link established to demonstrate that the jewellery was made from smuggled gold. The High Court observed that these findings arise from appraisal of the evidence on record and amount to resolution of factual disputes. Consequently, the matter was characterised as a pure question of fact arising from the Tribunal's appreciation of evidence rather than a point of law suitable for interference by this Court. No error of law was demonstrated in the Tribunal's approach sufficient to warrant setting aside its conclusions.

The Tribunal's factual conclusion setting aside confiscation and penalties is one of appreciation of evidence and does not raise any question of law; appeal dismissed.

Final Conclusion: The High Court declined to entertain the challenge to the Tribunal's order because the dispute involved factual appreciation of evidence (not a question of law) and dismissed the appeal.

Rejection of transaction value under Rule 3 and Rule 12 of the Customs Valuation Rules, 2007 - Re-determination of assessable value under Rule 4 of the Customs Valuation Rules, 2007 - Application of Section 14 of the Customs Act, 1962 to transaction value - Reliability of laboratory test report and representative sampling - Right to retesting and principles of natural justice - Material variation in declared composition as basis for valuation adjustment

Rejection of transaction value under Rule 3 and Rule 12 of the Customs Valuation Rules, 2007 - Application of Section 14 of the Customs Act, 1962 to transaction value - Whether the adjudicating authority rightly rejected the declared transaction value and re-determined the assessable value on the basis of the CRCL test report. - HELD THAT: - The Tribunal found that the rejection of the declared transaction value and its re-determination by the Adjudicating Authority were arbitrary and in breach of Section 14 of the Customs Act read with the Valuation Rules. The appellate authority had rightly restored the declared transaction value because the Department's enhancement relied solely on the CRCL test report without cogent evidence that the transaction value was not genuine or that the parties were related or that prices alleged in invoices did not represent the actual price paid. The Tribunal treated the enhancement as not legally justified. [Paras 9]

Rejection of the declared transaction value and re-determination of assessable value by the Adjudicating Authority was arbitrary and set aside.

Reliability of laboratory test report and representative sampling - Material variation in declared composition as basis for valuation adjustment - Whether the CRCL test result showing a marginal difference in nickel content justified adverse valuation and whether the sample and test were a reliable basis for re-assessment. - HELD THAT: - The Tribunal held that the variation shown by the CRCL report (about one per cent) was a normal variation and did not warrant an adverse inference or theoretical enhancement of value. It observed that such a small deviation in declared percentage of nickel could not, by itself, justify rejecting transaction value or treating the invoice price as not genuine. The Tribunal also noted concerns about using a small representative sample of the consignment as the sole basis for a wholesale valuation change where no other cogent evidence of mis-declaration was produced. [Paras 9]

Marginal variation in declared composition as shown in the CRCL report did not justify adverse valuation or rejection of transaction value.

Right to retesting and principles of natural justice - Reliability of laboratory test report and representative sampling - Whether denial of the importer's request for retesting of the remnant sample vitiated the adjudication. - HELD THAT: - The Tribunal found that the adjudication was vitiated by the failure to permit retesting despite the importer's prayer for the same, which engaged principles of natural justice. The appellate authority had taken the view that denial of retesting and reliance solely on the CRCL report without accepting the importer's request was improper; the Tribunal agreed that the denial contributed to the arbitrariness of the final assessment. [Paras 9]

Denial of retesting of the remnant sample vitiated the adjudication and contributed to setting aside the enhancement.

Final Conclusion: Appeals filed by the Revenue are dismissed. The assessment restored at the declared transaction value and the penalty set aside by the Commissioner (Appeals) are upheld; the importer is entitled to consequential benefits in accordance with law.

Preliminary eviction under Section 452(2) of the Companies Act, 2013 - wrongfully withholding company's property - Leave & License Agreement - entitlement to company accommodation as part of service - application of precedents permitting possession restoration before conclusion of criminal trial - humanitarian extension of time for vacation of company premises

Preliminary eviction under Section 452(2) of the Companies Act, 2013 - wrongfully withholding company's property - Leave & License Agreement - entitlement to company accommodation as part of service - application of precedents permitting possession restoration before conclusion of criminal trial - Whether the Magistrate erred in rejecting the complainant's application under Section 452(2) to direct delivery of possession of the company quarter at the threshold of proceedings. - HELD THAT: - The High Court found that the quarter occupied by the opposite party was allotted pursuant to his appointment and formed part of his service entitlement; the opposite party retired on 30-9-2016 and did not produce any scheme or legal entitlement subsisting at the date of superannuation that authorised retention. The learned Magistrate had framed and dealt with the question but declined to grant possession at the threshold, relying on authorities to the effect that such matters be decided at trial. Having considered binding and persuasive precedents (including authorities applying former Section 630 of the Companies Act, 1956), the Court held that Sub section (2) of Section 452 permits a criminal Court to direct restoration of company property and that, on the admitted facts and absence of any subsisting scheme in favour of the opposite party at the relevant time, the Magistrate's refusal to grant preliminary possession was inconsistent with settled law. The Court therefore set aside the Magistrate's order and directed possession to be restored to the complainant, while tempering immediate eviction by granting a limited extension on humanitarian grounds owing to the pandemic.

Order dated 17-4-2019 of the ACJM, Durgapur is set aside; CRR 2592 of 2019 is allowed and the accused is directed to vacate the quarter by 30th June, 2021, failing which the ACJM is to take steps to give effect to this order.

Final Conclusion: The High Court allowed the revisional application, set aside the Magistrate's refusal to grant preliminary possession under Section 452(2), ruled that the opposite party had no subsisting entitlement to retain the company quarter at the date of superannuation, and directed vacation of the premises by 30 June 2021 (with enforcement steps permitted thereafter).

Oppression and mismanagement - minority shareholder rights - right of a shareholder to transfer shares - validity of appointment of director by majority - commercial decision of the board not amenable to judicial interference - interim injunction restraining board meetings - re-agitation of issues

Right of a shareholder to transfer shares - minority shareholder rights - Whether the transfer and registration of the 2nd respondent's shares as jointly held by the 2nd and 3rd respondents on 28.6.2013 could be restrained or treated as illegal and whether such transfer caused any actionable harm to the appellant. - HELD THAT: - The Tribunal examined the share register entry dated 28.6.2013 and noted that the registration of shares as jointly held by the 2nd and 3rd respondents occurred prior to the filing of the company petition in 2015. It observed that the appellant's shareholding remained unchanged at 17% and that the shares were not transferred to an outsider. The appellant did not demonstrate any illegality in the transfer or any concrete harm resulting from the change in registration. The Tribunal also applied the principle that a shareholder has a right to transfer shares after completing formalities, and mere familial relations do not bar such transfers. [Paras 15]

The challenge to the transfer/registration of shares is rejected; no restraint or relief granted in respect of that transfer.

Validity of appointment of director by majority - oppression and mismanagement - Whether the appointment of the 4th respondent as a director at the board meeting of 6.1.2015 was illegal or vitiated by procedural defects such that relief was warranted. - HELD THAT: - The Tribunal found that the meeting on 6.1.2015 was convened and that the appellant was aware of it, having been present at the venue until 10:20 AM. The appellant did not remain to assert that no meeting occurred nor did she contemporaneously notify the company. Even if she had attended, the resolution would have been passed by majority. The Tribunal found no illegality in the appointment of the 4th respondent and rejected arguments based on a typographical discrepancy in the minutes' time entry as an afterthought. [Paras 18, 20]

The appointment of the 4th respondent was not shown to be illegal; no relief on this ground.

Commercial decision of the board not amenable to judicial interference - oppression and mismanagement - Whether the purchase of the Alagappa Road property by the company and the advances/repayments relating to property transactions constituted actionable oppression or mismanagement requiring judicial intervention. - HELD THAT: - The Tribunal noted the Board Resolution dated 1.2.2013 authorising investment of surplus funds and found that the 2nd respondent acted pursuant to that authorisation in purchasing property in the company's name. It was also recorded that an advance to the 3rd respondent was repaid by liquidation of the 2nd respondent's personal investments. The Tribunal emphasised that commercial decisions which may yield profit or loss do not ordinarily warrant judicial interference and treated belated objections raised after 19 months as afterthoughts formulated to support litigation. [Paras 22, 23]

The property transactions do not amount to oppression or mismanagement warranting interference; the challenge is dismissed.

Oppression and mismanagement - interim injunction restraining board meetings - re-agitation of issues - Whether the alleged misuse of funds relating to the Learning Curve Foundation and the freezing/operation of bank accounts amounted to oppression warranting relief, and whether interlocutory relief granted earlier should continue. - HELD THAT: - The Tribunal found that the Trust (Learning Curve Foundation) had no legal connection with the company and that funds said to be gifted by the 2nd respondent were utilised by the appellant for personal purposes. The Tribunal observed unexplained shifts of funds between banks and concluded that adding an additional signatory to a company bank account is not per se oppression when the appellant remained a signatory. On the interim application filed after reservation, the Tribunal had temporarily restrained the meeting but later concluded that the appeal merely re-agitated matters already considered by the NCLT and that no prima facie case existed to continue restraint. [Paras 24, 25, 26, 27, 28]

No relief on alleged misuse of funds or bank operation; earlier interim order is vacated in the final disposal of the appeal.

Final Conclusion: The appeal is dismissed for lack of merit; the NCLT order of dismissal is upheld, the interim order previously granted is vacated, and there is no order as to costs.

Validity of share transfer by trustee/transfer of trust-held shares - Article 15 - notice of transfer and board as agent for sale - Non-joinder of necessary party (trust) and maintainability - Appointment of directors - board's domain and limited judicial interference - Oppression and mismanagement - Reliefs and interim orders - requirement of substantial evidence to restrain company functioning

Validity of share transfer by trustee/transfer of trust-held shares - Article 15 - notice of transfer and board as agent for sale - Transfer of 117 shares of M/s. Kali Charan Das Trust in the board meeting dated January 24, 2018 - HELD THAT: - The Tribunal examined article 15 and the minutes of the board meeting dated January 24, 2018 and concluded that shares held by the Trust could not be treated as routine transfers. The respondents bore the burden to show that the legal formalities for transfer of trust-held shares were observed. The respondents did not place evidence demonstrating compliance with the procedural safeguards under the articles, and the minutes failed to record any explanation that satisfied the objector. On this basis the Tribunal found the transfer to outsiders to have been effected by taking advantage of board majority and not in accordance with law. The Tribunal also held that non-joinder of the Trust as a party does not preclude the Tribunal from conducting scrutiny of the validity of the transfer in these proceedings. [Paras 61, 62, 66]

The transfer of 117 shares of M/s. Kali Charan Das Trust dated January 24, 2018 is not in accordance with law and is set aside; respondent No.1 is directed to undo the transfer in all registers and notify statutory authorities.

Appointment of directors - board's domain and limited judicial interference - Validity of appointments of Mr. Sunil Agarwal, CA Bal Kishan Bansal, Mr. Anup Kumar Khemani and CA Saloni Bansal as directors - HELD THAT: - The Tribunal stated that appointment of directors is primarily within the Board's domain and the Tribunal will not ordinarily interfere unless serious prejudice to public interest or to the affairs of the company is shown. Consequential to setting aside the transfer of Trust shares, Mr. Anup Kumar Khemani's directorship, which derived solely from those trust shares, stands extinguished unless he holds other valid shares. By contrast, the appointments of Mr. Sunil Agarwal, CA Bal Kishan Bansal and CA Saloni Bansal are confirmed because no material was placed to justify judicial interference with the Board's exercise of its appointment powers. [Paras 64, 66]

Mr. Anup Kumar Khemani ceases to be a director from the date of communication of the order unless he possesses other valid shares; the appointments of Mr. Sunil Agarwal, CA Bal Kishan Bansal and CA Saloni Bansal are confirmed.

Non-joinder of necessary party (trust) and maintainability - Objection to maintainability of the petition on ground of non-joinder of the Trust - HELD THAT: - Respondents contended that the Kalicharan Das Trust and its trustees were necessary parties and that non-joinder rendered the petition not maintainable. The Tribunal rejected this objection, observing that the Tribunal has power to scrutinise the legality of actions affecting company affairs and that provisions of the Code of Civil Procedure apply only to the extent provided under the Companies Act. Consequently non-joinder of the Trust was held not to be a legally sustainable ground for dismissal. [Paras 62]

Objection based on non-joinder of the Trust is rejected and does not bar the petition from being adjudicated.

Reliefs and interim orders - requirement of substantial evidence to restrain company functioning - Entitlement to the wide range of interim and final reliefs claimed by the petitioners - HELD THAT: - The Tribunal observed that the petitioners sought numerous reliefs which, if granted, would substantially impede the company's functioning. The petitioners failed to place substantial evidence to justify such extensive reliefs and did not press most of them in submissions. Absent demonstrable material showing serious prejudice or public interest, the Tribunal declined to grant the sweeping reliefs sought. [Paras 65, 66]

All reliefs claimed by the petitioners, except the setting aside of the 117 Trust share transfers, are rejected.

Final Conclusion: The Tribunal set aside the transfer of 117 shares of M/s. Kali Charan Das Trust dated January 24, 2018 and directed respondent No.1 to undo the transfer in the statutory registers and notify authorities; Mr. Anup Kumar Khemani ceases to be director unless he holds other valid shares; the appointments of Mr. Sunil Agarwal, CA Bal Kishan Bansal and CA Saloni Bansal are confirmed; objections of non-joinder of the Trust were rejected; and the balance of the petitioners' reliefs were refused. Both parties shall bear their own costs.

Existence of a dispute - pre-existing dispute - operational debt and demand notice - plausible contention requiring further investigation - summary nature of insolvency proceedings under the IBC

Existence of a dispute - pre-existing dispute - plausible contention requiring further investigation - Whether the e-mail communications and minutes of meeting prior to the demand notice established a pre-existing dispute rendering the Section 9 application unsustainable. - HELD THAT: - The Tribunal examined the contemporaneous e-mails dated 29.11.2018, 15.12.2018 and 17.12.2018 together with the minutes of the meeting held on 16.11.2018 and noted that these communications complained about the quality, delayed supply and excessive consumption of the Gypsum prior to issuance of the Demand Notice dated 29.03.2019. Applying the tests in Mobilox Innovations and Transmission Corporation of Andhra Pradesh, the adjudicating authority must reject a Section 9 application if a notice or record discloses a dispute which is pre-existing and is a plausible contention requiring further investigation. The Tribunal held that the contemporaneous material established a real dispute which was not a patently feeble or spurious contention and accordingly required further investigation; given the summary nature of IBC admission proceedings, the NCLT was correct to decline admission of CIRP on that basis. [Paras 7, 9, 16]

The contemporaneous communications and minutes establish a pre-existing, plausible dispute; the NCLT rightly rejected the Section 9 application and declined to initiate CIRP.

Final Conclusion: The Appeal is dismissed. There is no infirmity in the NCLT's conclusion that a pre-existing dispute existed and that the Section 9 application could not be admitted; no order as to costs.

Approval of resolution plan under Section 31 - Commercial wisdom of the Committee of Creditors not justiciable - Judicial review limited to compliance with Section 30(2) including Section 30(2)(e) - Proviso to Section 31(4) regarding Competition Commission approval is directory, not mandatory - Voting under Section 12A and rejection of promoter settlement proposal by the Committee of Creditors

Approval of resolution plan under Section 31 - Commercial wisdom of the Committee of Creditors not justiciable - Judicial review limited to compliance with Section 30(2) including Section 30(2)(e) - Whether the Adjudicating Authority erred in approving the resolution plan of APSEZ despite the appellant's objections and whether the approval is amenable to judicial interference. - HELD THAT: - The Tribunal held that the commercial assessment of viability and feasibility is a business decision resting on the commercial wisdom of the Committee of Creditors and is not susceptible to reappraisal by the Adjudicating Authority or this Tribunal. Judicial review is limited to determining whether the approved resolution plan conforms with the statutory requirements of Section 30(2) (including Section 30(2)(e)) and other provisions of law. The record showed the Committee of Creditors considered viability, feasibility, fair value and liquidation value, voted overwhelmingly in favour of APSEZ, and nothing was placed on record to demonstrate that the approved plan contravened any law or statutory requirement. In the absence of any demonstration that the Adjudicating Authority failed to apply the statutory mandate embodied in Section 31(1) read with Section 30, the Tribunal found no ground to interfere with approval of the APSEZ resolution plan. [Paras 11, 12]

Approved resolution plan upheld; no interference with Adjudicating Authority's approval.

Voting under Section 12A and rejection of promoter settlement proposal by the Committee of Creditors - Whether MA 3298 of 2019 (the appellant's challenge to rejection of the promoter's settlement proposal) had been reserved for decision and whether that grievance vitiates the approval of the resolution plan. - HELD THAT: - The Tribunal examined the record and found no support for the appellant's contention that MA 3298 was reserved; the order sheet did not record reservation in respect of MA 3298 and the alleged fact is not borne out by the record. Further, the grievance raised in MA 3298 substantially duplicated matters considered in Company Appeal (AT) No. 139 of 2018 and addressed by this Tribunal's judgment dated 12th March, 2020. The Committee of Creditors had rejected the promoter's settlement offer by an overwhelming majority under the Section 12A process; that rejection and the subsequent approval of the APSEZ plan do not constitute material irregularity warranting setting aside the approval. [Paras 5, 13]

MA 3298 was not reserved as alleged; the grievance does not vitiate the approval of the resolution plan and fails.

Proviso to Section 31(4) regarding Competition Commission approval is directory, not mandatory - Approval of resolution plan under Section 31 - Whether a resolution plan containing a provision for combination requires prior approval of the Competition Commission of India before approval by the Committee of Creditors and whether lack of such approval invalidates the approved plan. - HELD THAT: - The Tribunal analysed sub-section (4) of Section 31 and its proviso and observed that while Section 31 generally permits obtaining statutory approvals within one year of Adjudicating Authority approval, the proviso requires prior CCI approval where the plan contains a provision for combination. Relying on this Tribunal's earlier decision in Arcelormittal India Pvt. Ltd. v. Abhijit Guhathakurta, the proviso was held to be directory and not mandatory. Consequently, a Committee of Creditors may approve a plan subject to requisite statutory approvals being obtained subsequently (or as a condition), and absence of prior CCI approval does not per se invalidate the approval where the plan is otherwise compliant; in the present case the combination was stated to be below threshold and no contravention of law was demonstrated. [Paras 14, 15, 16]

Lack of prior CCI approval did not vitiate the approval; proviso treated as directory and the objection fails.

Final Conclusion: All objections to the resolution process, the Committee of Creditors' rejection of the promoter's settlement and the Adjudicating Authority's approval of the APSEZ resolution plan were repelled; the appeal is dismissed.

Financial debt - default - admission under Section 7 of the Insolvency and Bankruptcy Code, 2016 - director/shareholder as creditor - commercial effect of borrowing

Financial debt - commercial effect of borrowing - director/shareholder as creditor - The sums advanced by the director to the corporate debtor constitute a 'financial debt' within the meaning of the Code. - HELD THAT: - The Tribunal found sufficient material to classify the amounts as financial debt: bank statements showing payments made by the petitioner to GNIDA on behalf of the corporate debtor, a board resolution authorising unsecured borrowings to meet urgent liabilities, and balance sheet entries reflecting borrowings from directors/shareholders. Reliance was placed on earlier precedent recognizing that monies advanced by a director to improve the company's liquidity may have the commercial effect of borrowing even if interest is not claimed; thus the advances fall within the statutory notion of 'financial debt'. The Tribunal distinguished the line of authority where auditor certificates and balance sheets negated any amount due, noting those facts were not present here. [Paras 7, 11]

The advances made by the director are 'financial debt'.

Default - admission under Section 7 of the Insolvency and Bankruptcy Code, 2016 - There existed default in repayment and the Adjudicating Authority rightly admitted the petition under Section 7. - HELD THAT: - The Tribunal recorded that the amount paid to GNIDA on behalf of the corporate debtor remained unpaid to the petitioner and exceeded the minimum threshold, and that the Section 7 application was complete. Having held the sums to be financial debt and noting the documentary evidence of disbursement and corporate accounts showing borrowings, the Tribunal held that the Adjudicating Authority was satisfied about the existence of a debt and default, and therefore correctly admitted the insolvency petition. [Paras 4, 7, 12]

Default stood established and admission under Section 7 was appropriate.

Final Conclusion: The appeal is dismissed; the adjudicating authority's order admitting the Section 7 petition is upheld.

Simultaneous initiation of Corporate Insolvency Resolution Process against the principal borrower and corporate guarantor for the same claim - application under Section 65 of the Insolvency and Bankruptcy Code alleging fraudulent and malicious initiation / collusion - duty of Adjudicating Authority to reconsider admission in light of pending Section 65 proceedings - stay of further proceedings pending disposal of related Section 65 proceedings

Simultaneous initiation of Corporate Insolvency Resolution Process against the principal borrower and corporate guarantor for the same claim - application of the ratio in Dr. Vishnu Kumar Agarwal - The permissibility of initiating multiple CIRP proceedings for the same set of claim against principal borrower and corporate guarantor by the same financial creditor. - HELD THAT: - The Tribunal held that the ratio in Dr. Vishnu Kumar Agarwal remains binding and clear: while simultaneous filing of Section 7 applications is not per se prohibited, once a Section 7 application by a financial creditor in respect of the same set of claim is admitted against one corporate debtor (whether principal borrower or corporate guarantor), a second application by the same financial creditor for the same claim against the other corporate debtor cannot be admitted. The principle also extends to joint applications against multiple corporate debtors for the same claim unless the corporate debtors together form a joint venture company. This legal position is unambiguous and continues to govern the matter until altered by a higher court. [Paras 9]

The Tribunal reaffirmed that triggering CIRP simultaneously against principal borrower and corporate guarantor for the same claim is impermissible in accordance with the binding ratio in Dr. Vishnu Kumar Agarwal.

Application under Section 65 of the Insolvency and Bankruptcy Code alleging fraudulent and malicious initiation / collusion - duty of Adjudicating Authority to reconsider admission in light of pending Section 65 proceedings - stay of further proceedings pending disposal of related Section 65 proceedings - Whether the impugned admission of the Section 7 application against the corporate guarantor should be finally sustained at this stage or requires fresh consideration in view of pending Section 65 proceedings concerning the principal borrower. - HELD THAT: - The Tribunal examined the effect of the Hon'ble Apex Court's directions in Civil Appeal No. 7641/2019 which remitted allegations of collusion and the Section 65 challenge to the Adjudicating Authority and continued interim protection. Given that the admission of proceedings against the principal borrower is under a cloud pending adjudication of the Section 65 allegations, the Tribunal held that the fate of the admission against the corporate guarantor is linked to the outcome of those proceedings. Disposal of the instant appeal at this stage would risk circumventing the Apex Court's directions and could prejudice the outcome of the sub-judice Section 65 inquiry. Consequently, the Tribunal directed that the Adjudicating Authority should take a fresh look at the admission of the Section 7 application against the corporate guarantor only after the Section 65 application is disposed of; meanwhile further proceedings in the Section 7 matter before the Adjudicating Authority shall remain stayed. [Paras 14, 15]

The Tribunal remanded the matter to the Adjudicating Authority for fresh consideration of the Section 7 admission after disposal of the Section 65 proceedings and stayed further proceedings in the Section 7 matter pending that outcome.

Final Conclusion: The Tribunal reaffirmed the binding principle that a financial creditor cannot secure admission of CIRP proceedings against both principal borrower and corporate guarantor for the same claim (per Dr. Vishnu Kumar Agarwal). Because related allegations under Section 65 concerning the principal borrower are pending remand before the Adjudicating Authority, the Tribunal directed that the admission of the Section 7 application against the corporate guarantor be reconsidered only after disposal of the Section 65 proceedings and ordered a stay of further proceedings in the Section 7 matter until then; the appeal was disposed accordingly.

Reasoned order - determination of claims by Liquidator under Section 40 of the I&B Code - judicial/quasi judicial review of liquidation claims under Section 42 of the I&B Code - admissibility of interest as an actionable claim and equitable relief - remand for fresh consideration where reasons are not recorded

Determination of claims by Liquidator under Section 40 of the I&B Code - reasoned order - judicial/quasi judicial review of liquidation claims under Section 42 of the I&B Code - Whether the Liquidator assigned adequate reasons for rejection of the claim relating to investment in storage facility and interest, and whether the Adjudicating Authority correctly upheld that rejection. - HELD THAT: - The Tribunal found that the Liquidator's e mail and the Adjudicating Authority's order did not furnish detailed reasons for rejecting the two components of the claim. Section 40 requires the Liquidator to determine and record claims in the prescribed manner; a rejection without adequate reasons undermines the appearance and safeguards of quasi judicial decision making and is open to challenge under Section 42. The Tribunal held that the Adjudicating Authority's view that absence of detailed reasons did not amount to absence of reasons was legally untenable. Consequently, the impugned order upholding the Liquidator's rejection was set aside and the matter remitted for fresh consideration with proper reasons and opportunity to the parties. [Paras 16, 17, 19, 20, 21]

The Adjudicating Authority's order was set aside because the Liquidator failed to assign adequate reasons for rejection; the matter is remitted for fresh adjudication with reasons and opportunity to the parties.

Admissibility of interest as an actionable claim and equitable relief - remand for fresh consideration where reasons are not recorded - Whether the claims for interest and investment in storage facility were finally adjudicated on merits or require fresh consideration. - HELD THAT: - The Tribunal observed that interest can qualify as an actionable claim and may be awardable on equitable grounds; the Liquidator had simply recorded 'no contractual provision for interest' without detailed reasoning and rejected the investment claim as 'not admissible' without explanation. Given the absence of reasoned adjudication, the Tribunal did not finally decide the merits of admissibility of these components but directed the Adjudicating Authority to restore the application and pass a fresh order on merits after affording full opportunity to the parties to place material and submissions. [Paras 18, 20, 21]

Merits of the claims for interest and investment are remitted for fresh consideration by the Adjudicating Authority; no final adjudication on admissibility has been made by this Tribunal.

Final Conclusion: Appeal allowed. The impugned order dated 26.08.2019 is set aside; MA/791/2019 in CP/665/IB/2017 is to be restored and decided afresh on merits by the Adjudicating Authority after providing parties opportunity to file evidence and arguments and after the Liquidator records detailed reasons for acceptance or rejection of claims; no order as to costs.

Admission of Section 7 application - assignment of debt and step in rights of assignee - acknowledgement/part payment restarting limitation - time bar under Article 137 of the Limitation Act - rescheduling/letter of acceptance as admission of liability

Admission of Section 7 application - assignment of debt and step in rights of assignee - rescheduling/letter of acceptance as admission of liability - Validity of the Adjudicating Authority's admission of the Section 7 application and whether the assigned debt and the new loan were in dispute. - HELD THAT: - The Tribunal found that the Assigned Debt and the New Loan were not in dispute and that the 1st Respondent, as assignee under the Assignment Agreement, had stepped into the shoes of the Assignor Bank and was entitled to enforce the debts and underlying securities. The Letter of Acceptance dated 09.06.2016 recorded rescheduling and settlement terms which were executed by the Corporate Debtor and guarantors and thereby evidenced the parties' agreement on outstanding liability and repayment schedule. The Corporate Debtor made several part payments after the rescheduling but defaulted after 31.05.2017. Taking these facts together, the Adjudicating Authority correctly held that the Section 7 application disclosed default by the Corporate Debtor and legitimately initiated the CIRP and appointed an interim resolution professional. [Paras 31, 37]

The admission of the Section 7 application was upheld; the assigned debt and the new loan were not disputed and the Adjudicating Authority's admission is free from legal error.

Acknowledgement/part payment restarting limitation - time bar under Article 137 of the Limitation Act - Whether the Section 7 application was barred by limitation and if any acknowledgement or part payment revived or extended the limitation period. - HELD THAT: - The Tribunal applied principles of the Limitation Act and authority on acknowledgement and part payment, observing that an acknowledgement in writing signed by the debtor that unambiguously admits existing liability gives rise to a fresh cause of action. The Letter of Acceptance (rescheduling) and subsequent part payments constituted sufficient acknowledgement to revive the claim and to bring the Section 7 application within time. The Tribunal noted that the Corporate Debtor stopped making payments after 31.05.2017 and held that the application filed on 05.09.2018 was within the relevant limitation period calculated from that last default/acknowledgement. The plea that the application was barred by Article 137 was therefore negatived. [Paras 33, 34, 35, 36, 37]

The limitation defence was rejected; the rescheduling/acknowledgement and part payments extended/restarted limitation and the Section 7 application was filed within time.

Final Conclusion: The appeal is dismissed. The Tribunal upheld the NCLT's admission of the Section 7 application, concluding that the assigned debt and the new loan were undisputed, that the Letter of Acceptance and part payments amounted to acknowledgement reviving limitation, and that the Section 7 application was filed within the permissible period.

Duty of Interim Resolution Professional to place application for withdrawal within three days under Regulation 30A - Withdrawal of Section 9 application prior to constitution of Committee of Creditors - Role of Committee of Creditors and 90% voting requirement for withdrawal under Section 12A - NCLT's power under Rule 11 to permit withdrawal before constitution of CoC - Remand to Adjudicating Authority/CoC for consideration of Form F.A. under Section 12A

Duty of Interim Resolution Professional to place application for withdrawal within three days under Regulation 30A - Whether the IRP was bound to place the application for withdrawal before the Adjudicating Authority within three days as mandated by Regulation 30A and whether failure to do so was a ground of grievance. - HELD THAT: - The Tribunal held that Regulation 30A imposes a duty on the Interim Resolution Professional to place an application for withdrawal before the Adjudicating Authority within three days of its receipt. The bench observed that the appellant's grievance that the IRP failed to place the settlement/application within the prescribed three day period is material. The Tribunal noted that such failures have given rise to practical difficulties for applicants seeking withdrawal and settlement and that the date of filing for withdrawal is relevant in light of the principles in Swiss Ribbons regarding the stage at which CoC is constituted and the rights available prior thereto. [Paras 4]

IRP is duty bound to place the application for withdrawal within three days under Regulation 30A; the appellant's grievance on this score is recognised.

Withdrawal of Section 9 application prior to constitution of Committee of Creditors - NCLT's power under Rule 11 to permit withdrawal before constitution of CoC - Whether an applicant may simultaneously pursue withdrawal before the Adjudicating Authority under Rule 11 of the NCLT Rules and under amended Regulation 30A prior to constitution of the Committee of Creditors, in the light of Swiss Ribbons. - HELD THAT: - Relying on Swiss Ribbons (paras 79-80), the Tribunal accepted that before constitution of the Committee of Creditors an applicant may approach the Adjudicating Authority which, exercising inherent powers under Rule 11, can permit or refuse withdrawal after hearing concerned parties. The Tribunal further held that there is no bar to parties resorting simultaneously to the procedural window provided by the Supreme Court and to the amended Regulation 30A; the Adjudicating Authority may receive such applications and decide them while awaiting response from the IRP. [Paras 5, 6]

Before constitution of CoC, parties can seek withdrawal before the Adjudicating Authority under Rule 11 even while relying on Regulation 30A; the Adjudicating Authority may consider such applications.

Role of Committee of Creditors and 90% voting requirement for withdrawal under Section 12A - Remand to Adjudicating Authority/CoC for consideration of Form F.A. under Section 12A - Whether, having regard to constitution of CoC in this matter, the appellant must proceed under Section 12A and whether the matter should be remitted for consideration by the CoC/Adjudicating Authority of the Form F.A. for withdrawal. - HELD THAT: - The Tribunal observed that once the Committee of Creditors is constituted the procedure changes and withdrawal under Section 12A requires approval of the CoC (90% voting share being the legislative threshold explained in Swiss Ribbons). Given that the CoC has now been constituted in the present matter, the Tribunal did not interfere with the impugned order but remitted the matter to the Adjudicating Authority and permitted the original Operational Creditor to move the CoC under Section 12A. The CoC was directed to urgently consider the Form F.A., hear the appellant, and take a decision; the IRP was directed to cooperate. Meanwhile, the IRP was restrained from taking further steps in the CIRP until the CoC decides, and the Tribunal suggested completion of the process within two weeks subject to extension by the Adjudicating Authority if necessary. [Paras 7, 10]

Matter remitted to Adjudicating Authority/CoC to consider Form F.A. under Section 12A; appellant must follow Section 12A procedure before the constituted CoC; IRP to cooperate and refrain from further CIRP steps until decision.

Final Conclusion: The Tribunal recognised the IRP's duty under Regulation 30A to place withdrawal applications within three days and affirmed that pre CoC withdrawals may be pursued before the NCLT under Rule 11 alongside Regulation 30A. As the CoC is already constituted in this case, the appeal is disposed by remitting the matter to the Adjudicating Authority/CoC to urgently consider the Form F.A. under Section 12A (with IRP's cooperation and suspension of further CIRP steps pending the CoC's decision).

Fees of the Liquidator proportionate to the liquidation estate assets - Income-tax refund as asset of the liquidation estate - entitlement to remuneration for services rendered converting refund into cash - IBC liquidator's fee determination and entitlement

Fees of the Liquidator proportionate to the liquidation estate assets - Income-tax refund as asset of the liquidation estate - entitlement to remuneration for services rendered converting refund into cash - Whether the Adjudicating Authority erred in excluding the Income Tax refund from the liquidation estate for the purpose of determining the Liquidator's fees and in directing that the Liquidator's fees shall not be recoverable from the pending Income Tax refund while permitting only out of pocket expenses. - HELD THAT: - The Tribunal examined the impugned observation that the Income Tax Department had determined the quantum of refund and that the Liquidator need only pursue conversion to cash, therefore fees should not be recoverable from that refund. Having regard to the scheme that the Liquidator's fees are to be proportionate to the value of liquidation assets and determined in conformity with the Code and the IBBI (Liquidation Process) Regulations, the Tribunal held that the Adjudicating Authority's exclusion of the refund from the liquidation estate for the purpose of charging fees was untenable. The Tribunal noted that even if the effort to obtain the refund may be minimal, services rendered in realizing that asset - including converting the refund into cash - attract entitlement to remuneration under the Code and applicable regulations. The Court therefore modified the interim order to ensure the Liquidator could claim remuneration in conformity with the I&B Code and the IBBI Regulations rather than being limited to reimbursement of out of pocket expenses alone. [Paras 17]

The impugned order was modified: the Liquidator is entitled to claim remuneration in respect of realizing the Income Tax refund as part of the liquidation estate, in conformity with the I&B Code and IBBI (Liquidation Process) Regulations, and the appeal was disposed of without costs.

Final Conclusion: The Appellate Tribunal found the Adjudicating Authority's exclusion of the Income Tax refund from the liquidation estate for the purpose of Liquidator's fees to be incorrect, held that the Liquidator is entitled to remuneration for realizing the refund in accordance with the I&B Code and the IBBI Regulations, modified the impugned order accordingly and disposed of the appeal without costs; I.A.2427/2019 is closed.

Corporate Insolvency Resolution Process - admission under Section 7 of the Insolvency and Bankruptcy Code, 2016 - Financial Creditor - Financial Debt - default - limited scope of Adjudicating Authority at admission stage - set-off and counterclaim to be considered during claims/ resolution process - primacy of the Code over other laws (Section 238)

Financial Creditor - Financial Debt - default - admission under Section 7 of the Insolvency and Bankruptcy Code, 2016 - Whether the Application under Section 7 was maintainable because the petitioner was a Financial Creditor and there was an admitted debt and default. - HELD THAT: - The Tribunal examined Form-1 and accompanying material and recorded that the petitioner had shown the amounts disbursed and particulars of security; the corporate debtor did not deny the loans or the default and had, in correspondence, admitted financial difficulty rather than denial of liability. The Adjudicating Authority correctly applied the statutory test for admission under Section 7 - establishment of a financial debt and default - and found both present. The Appellants' contention that the debt stood extinguished by alleged higher-value stock or that the petitioner was not a Financial Creditor was unsupported by actionable material. The Tribunal accepted the Adjudicating Authority's reasoning that the documents corroborated existence of debt and default and that the petitioner met the criteria to maintain the Section 7 petition. [Paras 13, 14, 15, 16, 24]

Application under Section 7 was maintainable; Respondent No.1 is a Financial Creditor, a Financial Debt and default were established, and admission was justified.

Set-off and counterclaim to be considered during claims/ resolution process - limited scope of Adjudicating Authority at admission stage - Corporate Insolvency Resolution Process - Whether the counterclaim and set-off pleaded by the corporate debtor could be adjudicated at the admission stage of the Section 7 petition. - HELD THAT: - The Tribunal reproduced and endorsed the Adjudicating Authority's conclusion that counterclaims and set-offs, including alleged misappropriation or higher valuation of seized stock, are not to be decided at the admission stage of a Section 7 proceeding. Reliance was placed on the principles in Swiss Ribbons (as treated by the Adjudicating Authority) that legitimate set-offs and counterclaims are to be considered during the claims admission process in the CIRP and not while deciding admission under Section 7. Accordingly, the Adjudicating Authority and the Tribunal declined to adjudicate the disputed counterclaims or set-off allegations in the admission proceedings. [Paras 12, 17, 18]

Counterclaim and set-off cannot be decided at the admission stage and are to be considered in the claims/ resolution process; no interference with admission on those grounds.

Primacy of the Code over other laws (Section 238) - pendency of DRT proceedings - admission under Section 7 of the Insolvency and Bankruptcy Code, 2016 - Whether pendency of proceedings before the Debt Recovery Tribunal barred initiation of CIRP under Section 7. - HELD THAT: - The Adjudicating Authority noted, and the Tribunal agreed, that pendency of DRT proceedings is not a bar to initiation of CIRP under the Code by virtue of the Code's overriding effect. The petitioner's claim of debt and default was corroborated despite concurrent DRT proceedings, and the statutory scheme permits admission of a Section 7 petition notwithstanding parallel proceedings elsewhere. [Paras 14, 21]

Pendency of DRT proceedings does not bar admission of a Section 7 petition; admission could properly proceed despite concurrent DRT matter.

Final Conclusion: The appeal is dismissed. The Tribunal upheld the Adjudicating Authority's admission of the Section 7 petition, holding that the petitioner established a financial debt and default and was a Financial Creditor; allegations of set-off, counterclaim and valuation discrepancies are not to be determined at the admission stage and are to be dealt with during the claims/ resolution process.

Exclusion of period from corporate insolvency resolution process (CIRP) - extension of corporate insolvency resolution process beyond 180 days - communication of adjudicating authority's order to the Insolvency Resolution Professional - inadvertent non-communication by registry - application by Insolvency Resolution Professional for extension of CIRP - jurisdiction of the Adjudicating Authority under Section 60(5) - maximum period for CIRP including extensions - Actus Curiae Neminem Gravabit

Exclusion of period from corporate insolvency resolution process (CIRP) - inadvertent non-communication by registry - Actus Curiae Neminem Gravabit - Whether the Adjudicating Authority correctly excluded the intervening period and extended the CIRP on the ground that its original order was not communicated to the IRP and corporate debtor due to an inadvertent omission by the registry. - HELD THAT: - The Tribunal found on the material placed that the order dated 05.12.2018 was not communicated to the IRP or the corporate debtor by the registry due to inadvertence. In those circumstances the Adjudicating Authority was justified in treating the intervening period as not having been effectively available to the IRP for conducting the CIRP and in excluding that period from computation. The Tribunal invoked the maxim that an act of the court shall harm no person (Actus Curiae Neminem Gravabit) and relied on earlier decisions recognising that, in unforeseen circumstances, intervening periods may be excluded so that the resolution process can proceed. On these facts the Adjudicating Authority's order dated 10.12.2019 allowing exclusion and directing steps to commence the CIRP was held to be free from legal infirmity. [Paras 20, 21]

The Adjudicating Authority rightly excluded the intervening period and extended time for the CIRP because the order had not been communicated due to registry inadvertence; the exclusion and extension were upheld.

Application by Insolvency Resolution Professional for extension of CIRP - extension of corporate insolvency resolution process beyond 180 days - Whether the Insolvency Resolution Professional, though not having functioned earlier, was entitled to file an application for exclusion/extension of the CIRP period. - HELD THAT: - The Tribunal observed that an Insolvency Resolution Professional, being a creature of the Code, is entitled to project an application before the Adjudicating Authority in relation to difficulties faced in the resolution process. The decision notes authorities and provisions permitting the resolution professional (or Committee of Creditors) to seek exclusion or extension where justified. Given that the IRP stated he had not been informed of his appointment and only learned of it later, his application seeking directions to commence functioning and for exclusion/extension was admissible and properly considered by the Adjudicating Authority. [Paras 14, 16, 17, 19]

The IRP was entitled to apply for directions and for exclusion/extension despite not having commenced functioning earlier, and his application was properly entertained.

Extension of corporate insolvency resolution process beyond 180 days - maximum period for CIRP including extensions - Whether the Adjudicating Authority could lawfully extend or exclude periods in the face of contentions about the statutory maximum period for CIRP (including the 330-day ceiling). - HELD THAT: - The Tribunal acknowledged the statutory scheme prescribing time-limits and the amendments introducing the 330-day ceiling, but reiterated that in extraordinary or unforeseen circumstances the Adjudicating Authority has power to exclude certain intervening periods from computation so long as the total permissible period under the Code is respected. The Tribunal relied upon earlier decisions where intervening periods (e.g., where RP was unable to function or orders stayed) were excluded and additional time allowed to preserve the object of resolution rather than liquidation. Applying those principles to the present facts, the Adjudicating Authority's action in excluding the period and granting time to enable the RP to carry out the CIRP was sustainable. [Paras 10, 11, 17, 21]

Challenges based on the statutory maximum did not vitiate the Adjudicating Authority's order; exclusion and extension in the extraordinary facts of the case were lawful.

Communication of adjudicating authority's order to the Insolvency Resolution Professional - jurisdiction of the Adjudicating Authority under Section 60(5) - Whether the impugned order was invalid for lack of hearing to the corporate debtor (3rd respondent). - HELD THAT: - The Appellate Tribunal noted the appellant's contention that the 3rd respondent was not given an opportunity of hearing before the Adjudicating Authority passed the order dated 10.12.2019. Having examined the facts, the Tribunal concluded that the decisive circumstance was the registry's failure to communicate the earlier order and the consequent necessity to enable the IRP to commence the CIRP. The Tribunal held that the Adjudicating Authority acted within its jurisdiction (including powers under Section 60(5) to decide questions arising in relation to the insolvency resolution process) and that the impugned order was not rendered invalid on account of the procedural complaint. [Paras 7, 21]

The absence of a prior hearing to the corporate debtor did not invalidate the Adjudicating Authority's order in the facts of this case and the order was held to be valid.

Final Conclusion: The appeal is dismissed; the Appellate Tribunal upheld the Adjudicating Authority's order excluding the intervening period and permitting continuation of the CIRP on the grounds of registry non-communication and the IRP's consequent inability to function, and found no legal infirmity in entertaining the IRP's application or in the extension/exclusion granted.

Service of demand notice under Section 8 of the Insolvency and Bankruptcy Code - admission of Section 9 application and initiation of CIRP - application of Article 137 of the Limitation Act to Section 9 proceedings - effect of filing and dismissal of section 34 challenge on commencement of limitation - status of a decree-holder as creditor under the IBC

Service of demand notice under Section 8 of the Insolvency and Bankruptcy Code - Sufficiency of service of the demand notice and application documents on the corporate debtor despite change of registered office and initial return of postal notice. - HELD THAT: - The Tribunal held that the Operational Creditor had filed documentary proof (courier receipts, delivery/track reports and postal records) establishing service of the demand notice on the Corporate Debtor at its registered office prior to the change of registered office. After the registered office was changed, the Adjudicating Authority directed fresh service to the new address and on directors and recorded steps taken. The Adjudicating Authority's satisfaction with the evidence of service and its consequent treatment of the Corporate Debtor as absent when it did not appear was upheld. Reliance was placed on the principle that service on the registered or corporate office is valid for the purpose of Section 8 notice, and the record showed adequate action taken under the Adjudicating Authority's directions to effect fresh service when earlier attempts were returned. [Paras 15, 16]

The service of the demand notice and of the Section 9 application was held to be sufficient and properly proved; the Adjudicating Authority rightly proceeded on the basis that the Corporate Debtor was served but did not contest.

Application of Article 137 of the Limitation Act to Section 9 proceedings - effect of filing and dismissal of section 34 challenge on commencement of limitation - Whether the Section 9 application was barred by limitation or was filed within the period prescribed by Article 137 having regard to the arbitration challenge and its dismissal. - HELD THAT: - The Tribunal applied the Supreme Court's exposition that Article 137 governs limitation for Sections 7 and 9 and that the right to sue accrues on default. It held that the arbitration award crystallised the debt, but the pendency of proceedings under Section 34 postponed the effective accrual for limitation purposes until the stage for filing an appeal under Section 37 became relevant. The dismissal of the Section 34 petition on 27.01.2016 meant that the 90 day period for filing an appeal under Section 37 (Article 116) would run and, following the Supreme Court's guidance in K. Kishan, the period for computing the three year limitation under Article 137 is to be taken from the date exclusion of the 90 days. Applying that chronology, the three year period expired on 27.04.2019, whereas the Section 9 application was filed on 03.04.2019. Thus the Tribunal concluded the Section 9 petition was within the limitation period. [Paras 17, 18, 21, 23]

The Section 9 application was not time barred and was filed within the period of limitation.

Status of a decree-holder as creditor under the IBC - admission of Section 9 application and initiation of CIRP - Whether an operational creditor holding a decree/award can invoke Section 9 of the IBC to initiate CIRP in respect of the decree debt. - HELD THAT: - The Tribunal noted the statutory definition of 'creditor' in the IBC to include a decree holder and observed that an award which has attained finality crystallises the debt. Given that the award was upheld and the Section 34 petition was dismissed with no appeal pursued, the Operational Creditor became a decree holder for the purposes of the Code. The Tribunal rejected the submission that IBC cannot be invoked for execution of an award, holding that where a creditor holds a decree/award and default in payment persists, the creditor may proceed under Section 9 after issuance of the Section 8 demand notice and satisfaction of other requirements for admission. [Paras 17, 18]

The Operational Creditor, as a decree holder, was competent to invoke Section 9 and the Adjudicating Authority correctly admitted the petition.

Final Conclusion: The appeal is dismissed; the Tribunal found no infirmity in the Adjudicating Authority's conclusion on service, limitation or the Operational Creditor's standing as a decree holder, and upheld admission of the Section 9 petition to initiate CIRP.

Limitation under the Limitation Act and its application to Section 7 of the I&B Code - Commencement of limitation from date of default / account being declared NPA - Acknowledgement of liability and fresh period under Section 18 of the Limitation Act - Effect of borrower correspondence as acknowledgment of debt - Maintainability of multiple insolvency proceedings against different guarantors for the same claim

Limitation under the Limitation Act and its application to Section 7 of the I&B Code - Commencement of limitation from date of default / account being declared NPA - Acknowledgement of liability and fresh period under Section 18 of the Limitation Act - Effect of borrower correspondence as acknowledgment of debt - Whether the Section 7 application filed in 2019 was barred by limitation or whether limitation was extended by an acknowledgment of debt in 2016. - HELD THAT: - The Tribunal applied the settled principle that for Section 7 applications the Limitation Act applies and the right to sue accrues on the date of default / when the account is declared NPA. The Term Loan account was declared NPA on 31-12-2014, which would ordinarily make a Section 7 application filed in 2019 time-barred under the residuary Article 137. However, the Corporate Debtor sent a letter dated 18/20 March 2016 in which it acknowledged the outstanding dues, stated its intention and efforts to repay, and proposed repayment measures. The Tribunal held that such written acknowledgment falls within the ambit of Section 18 of the Limitation Act and restarts the limitation period from the date of that acknowledgment. On that basis the application under Section 7 was not barred by limitation. [Paras 11, 12, 13]

Acknowledgement in the Corporate Debtor's March 2016 letter extended/shifted the limitation period; the Section 7 application was not time-barred.

Maintainability of multiple insolvency proceedings against different guarantors for the same claim - Whether the Section 7 initiation against the present guarantor was not maintainable because a prior CIRP had been initiated against another guarantor for the same claim. - HELD THAT: - The Appellant relied on the pendency of a CIRP against M/s Chamber Constructions Pvt. Ltd. for the same debt. The Tribunal examined the record and found nothing to show that Chamber Constructions Pvt. Ltd. had issued the guarantee for the same debt; the alleged bank guarantees on record were issued by certain individuals. In the absence of material establishing that the earlier CIRP related to the same guarantor obligation, the plea of non-maintainability failed. The Tribunal noted that the appellant did not make out a case under the authority relied upon to obtain relief. [Paras 14]

No bar to maintainability: initiation of CIRP against the present guarantor was not rendered non-maintainable by the separate proceeding against another entity in respect of the asserted debt.

Final Conclusion: The appeal was dismissed: the Section 7 application was held not to be time barred because the Corporate Debtor's March 2016 written acknowledgment revived the limitation, and the challenge based on a prior insolvency proceeding against a different guarantor failed for lack of proof that the same guarantee was involved.

Acknowledgment in writing under Section 18 of the Limitation Act, 1963 - computation of fresh period of limitation from acknowledgement - effect of "without prejudice" recital on acknowledgment - One Time Settlement (OTS) proposal as acknowledgment of debt - time barred defence to a Section 7 IBC application

Acknowledgment in writing under Section 18 of the Limitation Act, 1963 - computation of fresh period of limitation from acknowledgement - effect of "without prejudice" recital on acknowledgment - One Time Settlement (OTS) proposal as acknowledgment of debt - Whether the letters dated 24.04.2012, 12.03.2014 and 09.06.2016 from the corporate debtor constituted acknowledgments which revived/extended the period of limitation for filing the Section 7 IBC application. - HELD THAT: - The Tribunal examined the contents of the three letters relied upon by the financial creditor and applied Section 18 of the Limitation Act. It held that the letter dated 09.06.2016, which referred to an OTS and proposed steps by the banks and a prospective buyer, amounted to an acknowledgment of liability in writing. The Tribunal further held that the recital that the proposal was made "without prejudice to the rights and contentions" in pending proceedings did not negate the legal effect of the acknowledgment, having regard to precedents treating similar communications as operative acknowledgments. Reading the three letters together and computing fresh periods of limitation from those acknowledgments (in light of the NPA date), the Section 7 application filed on 11.07.2018 fell within the revived period and was therefore not time barred. [Paras 10, 11]

The letters of 24.04.2012, 12.03.2014 and 09.06.2016 are to be treated as acknowledgments under Section 18 and operate to revive/compute fresh limitation, so the Section 7 application was not barred by limitation.

Time barred defence to a Section 7 IBC application - admission of Section 7 application and remand for further orders - Whether the Adjudicating Authority erred in dismissing the Section 7 application as barred by limitation and what relief should follow. - HELD THAT: - Having found that the communications constituted operative acknowledgments and that the Section 7 application was within the revived limitation period, the Tribunal concluded that the Adjudicating Authority's order dismissing the petition on limitation grounds was erroneous. In consequence, the Tribunal set aside the impugned order and remitted the matter to the Adjudicating Authority with directions to admit the Section 7 application and to pass such further orders as are required on admission under the IBC. [Paras 11, 12]

Impugned order quashed and set aside; matter remitted to the Adjudicating Authority to admit the Section 7 application and pass further orders on admission.

Final Conclusion: The Tribunal held that the letters relied upon by the financial creditor constituted acknowledgments in writing under Section 18 of the Limitation Act, thereby reviving the period of limitation; the Adjudicating Authority's dismissal of the Section 7 application as time barred was set aside and the matter remitted for admission of the application and further proceedings.

Application under Section 7 barred by limitation under Article 137 of the Limitation Act - Existence of an undisputed debt as a condition precedent for initiation of CIRP - Statement of account is not an acknowledgment in writing under Section 18 of the Limitation Act - Insolvency and Bankruptcy Code is not a substitute for a debt recovery forum - Adjudicating Authority (NCLT) vested with powers of Debt Recovery Tribunal for purposes of the Code - Benefit under Section 14 of the Limitation Act requires initial want of jurisdiction - Prima facie satisfaction and opportunity of hearing required before invoking Section 65 for fraudulent or malicious proceedings

Application under Section 7 barred by limitation under Article 137 of the Limitation Act - Section 7 application filed on 27.07.2018 is barred by limitation under Article 137 because the default (NPA) occurred on 01.04.1993, well over three years prior to filing. - HELD THAT: - The Tribunal applied the principle that applications under Section 7 are governed by the residuary Article 137 (applications) of the Limitation Act. Time for instituting an application accrues when the right to sue accrues, and where the default occurred on 01.04.1993 the right to initiate proceedings arose then. Having regard to the sequence of events (sanction in 1986, NPA in 1993, DRT proceedings culminating in a recovery certificate in 2003, assignment in 2011, amendment of recovery certificate in 2012, and Section 7 application in 2018), the Tribunal concluded that the Section 7 application was filed long after the limitation period had run and is therefore time-barred. The Tribunal rejected contentions seeking to treat the Code as creating a new accrual date that would revive otherwise time-barred debts. [Paras 40, 41]

Section 7 application dismissed as barred by limitation under Article 137.

Existence of an undisputed debt as a condition precedent for initiation of CIRP - Statement of account is not an acknowledgment in writing under Section 18 of the Limitation Act - The appellant failed to establish an undisputed debt and any written acknowledgment by the corporate debtor; a statement of account cannot be treated as the requisite acknowledgment in writing. - HELD THAT: - The Tribunal reiterated that initiation of CIRP under Section 7 requires proof of an existence of debt and an undisturbed default. An acknowledgement in writing by the debtor or its authorised signatory is necessary to extend limitation under Section 18 of the Limitation Act. The appellant's reliance on the statement of account and books of the assignor/creditor does not constitute an unqualified written acknowledgment by the corporate debtor sufficient to revive or extend limitation or to show an undisputed debt for the purposes of admission under the Code. [Paras 29, 34, 39]

Claim rejected for want of an undisputed debt and absence of written acknowledgment by the corporate debtor.

Insolvency and Bankruptcy Code is not a substitute for a debt recovery forum - Adjudicating Authority (NCLT) vested with powers of Debt Recovery Tribunal for purposes of the Code - Although the NCLT has specified powers of the DRT under the Code, pending recovery proceedings and the limited role of the Code as not being a substitute for recovery were taken into account; this did not permit admission of a time-barred Section 7 application. - HELD THAT: - The Tribunal noted the admitted pendency/history of DRT proceedings including the recovery certificate (and its amendment) and that Section 60(4) vests certain DRT powers in the NCLT for Code purposes. However, the Tribunal emphasised the settled proposition that the IBC is not intended to be used as a substitute recovery mechanism and that the existence of a legitimate, discernible dispute or procedural impediment in parallel recovery proceedings bears on admissibility. In any event, where limitation has run, those considerations cannot validate a time barred Section 7 filing. [Paras 24, 25, 26, 27, 41]

Pending DRT proceedings and the role of NCLT under Section 60(4) do not salvage a Section 7 application barred by limitation; the application was not maintainable.

Benefit under Section 14 of the Limitation Act requires initial want of jurisdiction - Prima facie satisfaction and opportunity of hearing required before invoking Section 65 for fraudulent or malicious proceedings - The appellant cannot claim exclusion of time under Section 14 of the Limitation Act merely for prosecuting proceedings that were not shown to be vitiated by want of jurisdiction; and penal consequences under Section 65 require prima facie satisfaction and an opportunity of hearing. - HELD THAT: - The Tribunal reviewed authorities holding that time spent in proceedings which are not vitiated by lack of jurisdiction cannot be excluded under Section 14 when computing limitation. The judgments cited establish that insolvency or other proceedings prosecuted without jurisdictional defect do not suspend or exclude limitation for recovery suits or applications. Further, the Tribunal observed that invoking Section 65 for fraudulent or malicious initiation requires formation of a prima facie view and the affected person must be given an opportunity of hearing before any penal consequences are imposed. [Paras 31, 32, 38]

No exclusion of limitation under Section 14 on the facts; Section 65 relief cannot be imposed without prima facie satisfaction and hearing.

Final Conclusion: The appeal is dismissed as devoid of merit. The Section 7 application was held to be barred by limitation under Article 137 and the appellant failed to establish an undisputed debt or requisite written acknowledgment; dismissal is without costs and without prejudice to the appellant pursuing other remedies in accordance with law.

Applicability of the explanation to Section 18(1) - return of third party goods in possession of the resolution professional - perishable stock and urgency of release - pre CIRP expenditure and adjustment/set off against returned goods - right of retention / lien for unpaid dues under Section 170, Indian Contract Act, 1872 - impact of moratorium on pre and post CIRP deliveries - role of committee of creditors in authorising stock audit and protecting corporate debtor's interest

Return of third party goods in possession of the resolution professional - perishable stock and urgency of release - applicability of the explanation to Section 18(1) - Whether the raw materials/stocks owned by the appellant and lying at the corporate debtor's plant should be released to the appellant despite CIRP. - HELD THAT: - The Adjudicating Authority applied the explanation to Section 18(1) and held that goods owned by a third party but in possession of the resolution professional under a contractual arrangement are not to be treated as property of the corporate debtor and should be returned. The Tribunal found no error in that approach and accepted that the stock was undisputedly perishable and therefore its return was proper. The appellate court observed that the Adjudicating Authority balanced the interests of the appellant and the corporate debtor by directing return of the goods while safeguarding the corporate debtor's interests; this exercise was appropriate in the CIRP context and required no interference. [Paras 11, 21]

Return of the appellant's perishable raw materials/stocks to the appellant upheld, subject to the conditions imposed by the Adjudicating Authority.

Pre CIRP expenditure and adjustment/set off against returned goods - impact of moratorium on pre and post CIRP deliveries - role of committee of creditors in authorising stock audit and protecting corporate debtor's interest - Whether the resolution professional / CoC could require reimbursement or set off of pre CIRP expenses before permitting release of the goods. - HELD THAT: - The Adjudicating Authority directed that the intervener must reimburse the resolution professional for pre CIRP costs related to the stock (as per Clause 11.2 of the agreement) and that the RP should, insofar as possible, segregate pre and post moratorium expenditure, excluding expenditure not connected with pre moratorium stock from CIRP costs. The Tribunal found this approach justified: the record showed disputed dues owed by the appellant for running expenses under the agreement, the CoC had authorised a stock audit and resolution that outstanding dues be cleared before release, and the RP's actions were placed before and accepted by the CoC. The appellate court therefore declined to disturb the condition that dues related to the pre CIRP period be adjusted/paid prior to or contemporaneously with return of goods. [Paras 11, 21]

Directions requiring reimbursement/adjustment of pre CIRP expenditure and segregation of pre and post moratorium costs upheld; CoC/RP entitlement to protect corporate debtor's interests affirmed.

Right of retention / lien for unpaid dues under Section 170, Indian Contract Act, 1872 - verification of claim against books of the corporate debtor - Whether the resolution professional was justified in not admitting the appellant's entire claim and in asserting a right to retain goods pending clearance of outstanding dues. - HELD THAT: - The Tribunal noted that the RP verified and admitted only that portion of the appellant's claim which was supported by the corporate debtor's books and documents. The appellate court observed that the appellant could not fault the RP where the claim lacked documentary support in the corporate debtor's books; given outstanding amounts shown as payable by the appellant for operational expenses, the corporate debtor's asserted lien/retention under the contract (invoking principles in Section 170 of the Indian Contract Act) was a legitimate basis for conditioning release. The Tribunal found no perversity or illegality in the RP's and CoC's approach. [Paras 11]

RP's verification and partial admission of the claim, and conditioning release of goods on clearance/adjustment of outstanding dues, sustained; no interference warranted.

Final Conclusion: The appeal is dismissed. The Adjudicating Authority's directions to return the appellant's perishable stock while requiring reimbursement/adjustment of pre CIRP expenses and protecting the corporate debtor's interests are affirmed; the actions of the resolution professional and the committee of creditors in verifying claims and directing a stock audit are not interfered with. No order as to costs.

Violation of principles of natural justice - denial of opportunity to prove genuineness of transactions - non-supply of assessment orders and orders of cancellation of registration - disallowance of input tax credit - quashing and remand for fresh consideration - exercise of writ jurisdiction despite availability of alternative statutory remedy

Non-supply of assessment orders and orders of cancellation of registration - denial of opportunity to prove genuineness of transactions - disallowance of input tax credit - violation of principles of natural justice - quashing and remand for fresh consideration - Impugned assessment order disallowing Input Tax Credit and the demand notice were quashed and the matter remitted for fresh consideration because the purchasers were not furnished with the assessment/cancellation orders and were not afforded an effective opportunity to prove genuineness of transactions. - HELD THAT: - The Court found procedural lapses going to the root of the matter: the assessing authority proceeded to pass the assessment and impose penalty without furnishing to the writ applicants the assessment orders and the orders cancelling registration of the vendors and without providing a meaningful hearing. Prior decisions of this Court require that where ITC is disallowed on account of cancellation of a seller's registration, the purchaser must be served with the order cancelling the seller's registration and be given an opportunity to prove the genuineness of the transactions. In view of non-supply of those records and the manner in which the hearing proceeded, the impugned order could not be sustained. The Court therefore quashed the impugned order and demand notice and remitted the matter to the assessing authority for fresh adjudication on merits, directing that the assessment orders and orders of cancellation of registration of the vendors be provided to the writ applicants and that they be given an opportunity to produce any additional evidence within the timeframe ordered. [Paras 16, 17, 19, 20, 21]

Impugned order dated 18.03.2020 and demand notice dated 18.03.2020 quashed and set aside; matter remitted to respondent No.2 for fresh consideration of the ITC claim after supplying the relevant assessment and cancellation orders and affording opportunity of hearing; two weeks allowed to produce further evidence and three months to complete exercise.

Exercise of writ jurisdiction despite availability of alternative statutory remedy - violation of principles of natural justice - Writ jurisdiction was appropriately exercised notwithstanding the availability of an alternative remedy of appeal, because the matter involved a breach of principles of natural justice and procedural irregularities. - HELD THAT: - Although a statutory appeal under the VAT Act exists, the Court reiterated that writ jurisdiction is discretionary and may be exercised when the alternative remedy is illusory or where there is a demonstrable breach of natural justice, arbitrariness, or lack of jurisdiction. Given the denial of basic documents and the procedural conduct of the assessment and penalty proceedings, the Court was satisfied that exercising writ jurisdiction was warranted to prevent manifest injustice. [Paras 14, 17]

Writ petition entertained despite alternative remedy of appeal in view of breach of natural justice and procedural irregularities; relief granted accordingly.

Final Conclusion: The writ petition succeeds in part: the assessment order and demand notice dated 18.03.2020 are quashed and set aside. The matter is remitted to the assessing authority for fresh consideration of the Input Tax Credit claim after supplying the relevant assessment and cancellation orders to the writ applicants, affording them an opportunity of hearing, permitting two weeks for submission of additional evidence and directing completion of the exercise preferably within three months.

Writ jurisdiction under Article 226 - Availability of alternative statutory remedy by way of appeal - Principle of self-imposed restraint in exercising writ jurisdiction - Violation of principles of natural justice as exception to alternative remedy rule - Hierarchy of appellate and revisionary remedies under the GVAT Act

Availability of alternative statutory remedy by way of appeal - Hierarchy of appellate and revisionary remedies under the GVAT Act - Whether the writ petition should be entertained notwithstanding the existence of the appellate machinery under the GVAT Act - HELD THAT: - The Court examined the scheme of the GVAT Act and found a complete hierarchy of remedies - appeal to the Joint Commissioner against an order of the Deputy Commissioner, further appellate and revisionary remedies, and ultimately a limited appeal to the High Court on substantial questions of law. Having regard to that statutory machinery and the settled principle that where a statute creates rights or liabilities and prescribes special remedies those remedies must ordinarily be availed of, the High Court should as a matter of self imposed restraint decline to exercise its writ jurisdiction when an efficacious alternative remedy is available. The Court applied the principle that Article 226 is discretionary and not to be used to bypass the statutory appeal route save in exceptional circumstances. [Paras 6, 7, 9, 15, 16]

Writ jurisdiction under Article 226 is not to be exercised in this case; the petitioner is relegated to the appellate remedy under Section 73 of the GVAT Act.

Violation of principles of natural justice as exception to alternative remedy rule - Writ jurisdiction under Article 226 - Whether the impugned assessment order was passed in total violation of principles of natural justice so as to justify entertaining the writ despite the alternative remedy - HELD THAT: - The petitioner alleged non consideration of documents and non application of mind by the Assessing Officer, contending a breach of principles of natural justice. The Court considered the allegations against the standard exceptions that permit bypassing the statutory remedy - total violation of natural justice or action not in accordance with the enactment - but, on the materials before it, was not persuaded that the assessment order was in total violation of principles of natural justice. Absent a demonstrable and complete breach justifying exceptional interference, the existence of the statutory appellate process precluded exercise of writ jurisdiction in this instance. [Paras 3, 14, 15, 16]

Petitioner's contention of total violation of natural justice not established; exception to the rule of alternative remedy not attracted.

Final Conclusion: The writ petition is declined and rejected; the petitioner is relegated to file an appeal under Section 73 of the GVAT Act, 2003, and, if preferred, the appellate authority shall decide the appeal on its merits uninfluenced by observations in this order.

Arbitrability of disputes tainted by fraud - fraud exception to arbitration - prima facie existence of arbitration agreement under section 8 post amendment - scope of cancellation under Section 31 of the Specific Relief Act - in personam or in rem - power of arbitrator to grant specific performance and ancillary reliefs

Arbitrability of disputes tainted by fraud - fraud exception to arbitration - Whether allegations of fraud in the plaint oust the jurisdiction of the arbitral forum and preclude reference to arbitration under the arbitration clause in the assignment agreement dated 20.05.2006. - HELD THAT: - The Court followed and adopted the reasoning in Avitel Post Studioz (as applied in this appeal) and held that mere allegations of fraud relevant to the performance of the contract do not render the dispute non arbitrable. The "fraud exception" applies narrowly where it can be shown that the contract itself was never entered into - in which circumstance the arbitration clause would not exist. Here there was no pleading that the agreement and deed of confirmation were never executed; at best the plea was that the agreements were voidable for fraud. Civil allegations of deceit or fraud in performance therefore do not oust arbitrability, and the courts below were correct in referring the dispute to arbitration. [Paras 4, 5]

Allegations of fraud in the suit do not per se oust arbitrability; the dispute was rightly referred to arbitration.

Prima facie existence of arbitration agreement under section 8 post amendment - How section 8 of the Arbitration and Conciliation Act (as amended in 2015) should be applied when a party moves to refer proceedings to arbitration and fraud is alleged. - HELD THAT: - The Court noted the change effected by the 2015 amendment: a judicial authority must refer the parties to arbitration if the other conditions of section 8 are met unless it finds that prima facie no valid arbitration agreement exists. Recent precedents post amendment were cited to emphasize that the court's role in an application under section 8 is to determine whether a prima facie valid arbitration agreement exists, not to conduct a full merits inquiry. On the facts, the existence of the arbitration clause and the executed agreements was admitted in pleadings and the amended section 8 therefore required reference to arbitration. [Paras 6]

Under section 8 as amended, the court must refer the parties to arbitration unless prima facie no arbitration agreement exists; on these facts a prima facie arbitration agreement existed and referral was correct.

Scope of cancellation under Section 31 of the Specific Relief Act - in personam or in rem - power of arbitrator to grant specific performance and ancillary reliefs - Whether a suit under Section 31 of the Specific Relief Act (for cancellation of a written instrument) is an action in rem (and therefore non arbitrable), and whether the High Court's reliance on Aliens Developers to hold such actions outside arbitral jurisdiction is correct. - HELD THAT: - The Court undertook a statutory and precedential analysis of provisions of the Specific Relief Act (Sections 4, 26, 27, 29, 30, 31, 32, 33, 34, 35) and authorities (including Olympus and earlier Full Bench and Privy Council rulings) to conclude that proceedings under Section 31 are essentially inter partes in nature. The legislative scheme, historical decisions and the practical operation of cancellation (delivery up of the instrument to the plaintiff, restitution/compensation provisions) show that cancellation operates between the parties and their privies and does not produce a judgment binding the world at large. The Court held that the reasoning in Aliens Developers - treating Section 31 cancellation as inherently in rem and therefore non arbitrable - was incorrect and must be overruled. It further observed that arbitrators can deal with specific performance and attendant reliefs where the parties have agreed to arbitration (Olympus). Consequently, the High Court's conclusion based on Aliens Developers was set aside. [Paras 21, 22, 23, 24, 25]

Section 31 proceedings are not in rem so as to exclude arbitration; Aliens Developers to the contrary is overruled and arbitrators can adjudicate cancellation/rescission/ancillary reliefs when parties have agreed to arbitrate.

Final Conclusion: The appeals are dismissed. The courts below were correct to refer the dispute to arbitration: the fraud allegations did not render the dispute non arbitrable; section 8 (as amended) required a prima facie finding of a valid arbitration agreement which existed on the pleadings; and Section 31 of the Specific Relief Act does not create an in rem bar to arbitration (the contrary decision in Aliens Developers is overruled).

Exemption under Section 8(1)(d) of the RTI Act - exemption under Section 8(1)(j) of the RTI Act - larger public interest - severance of exempt information - role of the Information Commission in examining claimed exemptions - misuse or abuse of the RTI Act by indiscriminate demands

Exemption under Section 8(1)(d) of the RTI Act - severance of exempt information - role of the Information Commission in examining claimed exemptions - Validity of the Information Commission's direction to furnish board minutes and resolutions after severance of exempt material without adjudicating the petitioner's claim of commercial confidentiality under Section 8(1)(d). - HELD THAT: - The Commission directed production of minutes and resolutions for the period after severance of information exempt under the RTI Act, but did not adjudicate the petitioner's contention that the minutes contain commercial confidence, trade secrets or intellectual property whose disclosure would harm competitive position and therefore attract Section 8(1)(d). Leaving the task of identifying exempt portions entirely to the petitioner would improperly delegate the Commission's duty and be tantamount to permitting the petitioner to unilaterally determine what is disclosable. The impugned direction was also vague because, if the petitioner's claim is accepted, virtually the entire record might be severed. The correct approach is for the Commission to examine the minutes (including the parts claimed to be exempt, without disclosing them to the applicant) and decide whether those portions attract Section 8(1)(d), and if so whether a finding of larger public interest justifies disclosure. The Commission must give reasons when rejecting or accepting claims of commercial confidentiality rather than merely directing severance by the public authority. [Paras 16, 17, 19, 20, 21]

Impugned direction set aside; Commission must examine the minutes and determine, with reasons, which portions (if any) are exempt under Section 8(1)(d) and only then direct disclosure after appropriate severance.

Misuse or abuse of the RTI Act by indiscriminate demands - larger public interest - Whether the request for entire minutes and resolutions constitutes an indiscriminate or impractical demand that the Commission should treat as potential misuse of the RTI Act and assess against larger public interest considerations. - HELD THAT: - The Supreme Court's guidance in Aditya Bandhopadhyay was held applicable: indiscriminate and impractical demands for disclosure unrelated to transparency and accountability can be counterproductive and a misuse of the RTI framework. The Commission did not consider whether the applicant's request for all board minutes and resolutions for the stated period fell into that category, nor did it assess whether larger public interest warranted disclosure of information claimed as commercially confidential. On remand, the Commission should consider whether the scope and quantity of the information sought is counterproductive or an abuse of the Act, and whether any disclosure is justified by larger public interest before ordering production (even after severance). [Paras 18, 21]

Matter remanded to the Commission to determine afresh whether the request is an indiscriminate demand or misuse of the RTI Act and to assess larger public interest before ordering any disclosure.

Final Conclusion: The impugned order of the Information Commission dated 13.10.2016 is set aside and the matter is remanded to the Commission to examine the minutes and resolutions for the period 01.04.2013 to 31.12.2015, determine with reasons which portions (if any) are exempt under Section 8(1)(d) and Section 8(1)(j), assess whether larger public interest warrants disclosure or whether the request is an indiscriminate misuse of the RTI Act, and proceed afresh accordingly.