TaxTMI 
TaxTMI 
2022 (7) TMI 243
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....nal Advocate General assisted by Sri C.B. Tripathi, learned Special Counsel for StateRespondents, Sri Gopal Verma, learned Central Government Standing Counsel representing the Union of India and Sri Ashok Singh, learned Senior Standing Counsel for Indirect Taxes representing C.G.S.T. Authorities. 2. The reliefs sought in these batch of writ petitions are reproduced below: Writ Petition No. Relief Writ Tax No. 728 of 2021 a. To issue an appropriate writ, order or direction in the nature of CERTIORARI quashing the Impugned Orders (Annexure No. 1) (colly) b. To issue an appropriate writ, order or direction in the nature of MANDAMUS directing the Respondents not to take anyu coercive steps against the Petitioner qua the Impugned Orders and/or qua any subsequent demands in this regard against the petitioner. Writ Tax No. 1085 of 2018 a. To issue an appropriate writ, order or direction in the nature of CERTIORARI by quashing the Notices Dated 17.7.2018 and 18.07.2018 and the impugned order dated 24.07.2018 (Annexure No. 1 (colly) to the writ petition) issued by the Respondent No. 2 and 4; as well as all future/subsequent demands in this regard, if any, r....
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....ly). b. To issue an appropriate writ, order or direction in the nature of MANDAMUS directing the Respondents not to take any coercive steps against the Petitioner qua the Show Cause Notice dated 27.03.2012, Statement of Demand dated 01.11.2017, Statement of Demand dated 17.12.2018, Order In Original dated 29.03.2019, Order in Original dated 15.01.2019, the Order In Original dated 25.10.2019 and the Notice dated 31.12.2019 (Annexure No.1 collectively) and/ or qua any subsequent demands in this regard against the Petitioner. Writ Tax No. 609 of 2020 a. To issue an appropriate writ, order or direction in the nature of CERTIORARI quashing the Impugned Notices (Annexure No.1) (colly). b. To issue an appropriate writ, order or direction in the nature of MANDAMUS directing the Respondents not to take any coercive steps against the Petitioner qua the Impugned Notices and/or qua any subsequent demands in this regard against the Petitioner. Writ Tax No. 318 of 2021 a. To issue an appropriate writ, order or direction in the nature of CERTIORARI quashing the Impugned Orders (Annexure No. 1) (colly). b. To issue an appropriate writ, order or di....
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....the stages of the tax dues amount and stages of litigation may be compiled as under: Sl.No. Particulars Amount in Lacs 1. Balance amount of recovery certificates 17,999.60 + Interest 2,179.81 2. Amount stayed in first appeal 2,103.25 3. Amount stayed in second appeal 7,559.14 4. Amount stayed by High Court in Writ Petition Nos.230, 231 and 232, all of 2017, relating to AY 2005-2006 (U.P. and Central), AY 2006-2007 (U.P. and Central) and AY 2007-2008 (U.P. and Central), 898.61 5. Amount stayed by Hon'ble Supreme Court in SLP (admitted tax of February, March and April, 2,242.94 2008, Rs.368.072 lacs not deposited) Total= 32,983.35 (vi) On 03.02.2018, M/s Tata Steel Ltd. submitted its resolutionplan and was selected as the highest compliant resolution applicant by the Committee of Creditors (CoC) constituted under the IBC. The resolution plan so submitted by M/s Tata Steel Ltd., was approved with addendum thereto on 20.03.2018. On 23.03.2018, the Resolution Professional filed an application for approval of the resolution plan before the Adjudicating Authority/ NCLT. On 15.05.20....
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....ng Agency and the Resolution Applicant-TSL may file appropriate applications before the Public Authorities/Government Authorities and it is needless to say that their applications would be duly considered in accordance with law. We make it clear that we are not expressing any opinion on the claim concerning reliefs and concession nor any part of this order shall be understood in that spirit. (ii) CA No. 186 (PB)/2018 filed by Larsen & Turbo Limited is dismissed with cost of Rs. 1/- lakh. The cost be deposited in the account of Corporate Debtor. (iii) CA No. 217(PB)/2018 filed by Bhushan Employees is also dismissed with cost of Rs. 1/- lakh to be paid by Mr. Rahul Sengupta personally. The cost be deposited in the account of Cooperative Debtor. (iv) The objection raised by the BEL are rejected and it is held that the claim made by BEL is wholly frivolous and cannot be sustained. (v) CA No. 176(PB)/2018- The Ex-Management is directed to cooperate in all respects during the implementation of the resolution plan. Liberty is granted to the Monitoring Agency to apply for any further direction against the Ex-Management, its Directors or any other officer....
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....he Plan. The Adjudicating Authority is humbly requested to kindly consider the following reliefs and concessions for the effective implementation of this Plan for the benefit of all stakeholders: 10.1.1 Licenses and approvals held by the Company, which expire prior to the Closing Date or within a period of 6 (six) months thereafter (including but not limited to those set out in Annexure 17, shall be renewed / extended by the relevant Governmental Authorities, and the Company shall be permitted to continue to operate its business and assets in the manner operated prior to submission of this Plan until the renewal / extension of such licenses and approvals. The relevant Governmental Authorities will provide a reasonable period of time after the Closing Date in order for the Resolution Applicant to: (i) assess the status of licenses and approvals required by the Company and to procure that the Company applies for the same; and (ii) regularize any non-compliances under the Applicable Law (including non-registration, inadequate / non-stamping of documents as required under Applicable Law) existing prior to the Closing Date. 10.1.2 The relevan....
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....e Income-tax Act, 1961 for a period of 10 (ten) years from the Closing Date; and (iv) waive all Liabilities in respect of Taxes (including interest and penalty) arising in respect of periods up to the Closing Date, including such Liabilities for period up to the Closing Date that may crystallize subsequent to the Closing Date. 10.1.4 The CBDT/DOR shall grant exemption / waiver from: (a) applicability of section 281 of the Income Tax Act, 1961 including obtaining no-objection certificate from income tax authorities in respect of all the pending proceedings and dues (including interest and penalty) of the Company arising for periods up to the Closing Date (including such proceedings and dues for periods prior to the Closing Date that may crystallize subsequent to the Closing Date). Further, CBDT/ DOR shall restrict/ restrain from treating any transactions contemplated in this Plan as being void or non-compliant with any provisions of the Income- Tax Act, 1961; and (b) all Tax Liabilities (including interest and penally) and tax proceedings arising in respect of periods up to the Closing Date, including such liabilities/ proceedings for periods up to the Closing Date that may....
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....nstitution, modification of charter documents etc.), and waiver of termination related provisions, in respect of the following premises occupied by the Company from the relevant Governmental Authorities (as indicated below): (i) Properties located in Sahibabad which are granted on lease by UPSIDC to the Company under the lease deeds set out at serial numbers 19 to 38 in Annexure 19; (ii) Plot no. 104/3 admeasuring 3.39 acres situated at Hosur, Tamil Nadu which is granted on lease by SIPCOT to the Company under the lease deed dated August 7, 2012 bearing document no. 10413, SIPCOT; and (iii) properties granted located in Odisha which are granted on lease by IDCO to the Company under the lease deeds set out at serial numbers 1 to 18 in Annexure 19. 10.1.11 The Ministry of Mines shall waive the requirement of obtaining its approval in relation to the iron ore mine awarded to the Company at Kalamang West (Northern Part), over an area of 92.875 hectares in Keonjhar and Sundargarh districts of Odisha, to the extent required, for change of control pursuant to the implementation of this plan. 10.1.12 Notwithstanding the terms of the relevant agr....
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....Liabilities of such related parties towards the Company shall remain outstanding, due and payable in accordance with their terms. 10.1.17 The Adjudicating Authority shall direct: (A) termination of the following onerous agreements: (i) the Memorandum of Agreement for Lease dated May 1, 2015 entered into between the Company and Vistrat Real Estates Private limited in respect of the Company's Registered and Corporate Office Premises; and (ii) the Bhushan Energy Power Purchase Agreements which termination shall take effect from the later of (I) three months from the Closing Date; or (II) the completion of the corporate insolvency resolution process of Bhushan Energy Limited; and such termination, shall in each case, be without prejudice to the rights of the Company and without any liability towards any claims, demands or liabilities arising out or in relation to the aforesaid agreements (including but not limited to with regard to any previous breaches). Further, until the termination of the Bhushan Energy Power Purchase Agreements, any power if purchased by the Company from Bhushan Energy Limited shall be at the rate prescribed by the expert appointed by the Resolution Profe....
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....sets (whether by way of demand, legal proceedings, alternative determination process (including arbitration or an expert determination process), the levying of distress, execution of judgment or otherwise) in any jurisdiction whatsoever for the purpose of obtaining payment of any Liability, or for the purpose of placing the Company into liquidation or any analogous proceedings. 10.1.22 The Adjudicating Authority shall direct the Ministry of Corporate Affairs to waive the requirements under Section 140 of the Companies Act, 2013 in respect of removal of the existing auditors of the Company. 10.1.23 The Adjudicating Authority shall direct that: (a) there shall be no interruption or stoppage in the supply of' essential goods and services' (as defined under Regulation 32 of the CIRP Regulations) to the Company until the Closing Date; (b) until such time that the redemption process is complete on the Closing Date, the RPS Holders shall not have any rights with respect to such redeemable preference shares, including the right to receive dividend, conversion rights, voting rights, rights covering operation and management of the Company, whether in law, ....
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....provisions of the SEBI Circular No. CFD/CMD/CIR/P/2017/115 dated October 15, 2017, which require every listed company to maintain a minimum public shareholding of at least 25% of the share capital of the Company. In order to improve the capital structure of the Company and fund it with adequate equity, the shareholding of the resolution Applicant may exceed 75%. SEBI to also grant exemptions for compliance with the provisions of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 and the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 in respect of the pricing requirements and shareholder approval requirements; (c) exempt compliance, for a period of 3 (three) years from the Closing Date, with provisions of the SEBI (Delisting of Equity Shares) Regulations, 2009 (as amended from time to time); and (d) allow merger of the Company with the Resolution Applicant during the time that the Resolution Applicant's shareholding in the Company is in excess of 75%. Further, in respect of the reliefs stated in (a) to (d) above, if SEBI issues any circulars, notifications, amendments, etc. relaxing any provision of the afor....
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....tional upon fulfilment of the terms in the manner set out in Section 10. (ix) The aforesaid resolution plan defines certain words. Definitions of the words given in the said resolution which are relevant for the purposes of the present case are "Closing Date", "Contingent Liabilities", "Government Authority", "Insolvency Commencement Date" and "Taxes", are reproduced below: Term Meaning Closing Date Meaning ascribed to the term in Section 4.2.1 of this Plan Contingent Liabilities Meaning ascribed to the term in Section 8.2.5 of this Plan Government Authority Any nation or government or any province, state or any other political subdivision thereof; any entity, authority or body exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, including any government authority, agency, department, board, commission or instrumentality of India as applicable, or any political subdivision thereof or any other applicable jurisdiction, any court, tribunal or arbitrator or other adjudicatory authority, and any securities exchange or body or authority regulating such securities exchange. Insolvency Comme....
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.... fund 14,333.80 Total 357,587.09 Part B | Potential liabilities Any outstanding guarantees issued by the Financial Creditors, counter guarantee by the Company in connection with the letter(s) of credit" (xiv) Annexure-12 as referred in Annexure-10 aforesaid, contains particulars "applicable laws and proceeding against the company". Serial Nos.52, 53, 54, 55, 56, 57 and 58 of it reads as under: "52. The Central Sales Tax Act, 1956 53.Relevant VAT and Trade Tax laws of respective states 54.Relevant Entry Tax laws of respective states 55. The Integrated Goods and Services Tax Act, 2017 56. The Central Goods and Services Tax Act, 2017 57. Goods and Services Tax laws of respective States andUnion Territories 58. GST (Compensation to States) Act, 2017" 5. The facts as mentioned above have not been disputed by learned counsels for the parties. Thus, the facts aforenoted are undisputed facts. 6. It appears that during the course of assessment proceeding for the assessment year 2016-17 in the matter of M/s Bhushan Limited, a show cause notice was issued ....
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....oted in the order dated 18.12.2020, 18.8.2021, 27.8.2021, 3.9.2021, 6.9.2021, 7.9.2021, 18.9.2021, 9.9.2021, 30.9.2021 and 28.3.2022. 11. Shri Rakesh Dwivedi, learned Senior Advocate made exhaustive submissions explaining the various provisions of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as the IBC, 2016) including the preamble, various definition clauses in section 3 (4),(6), (8), (10), (11), (12), (30), Section 4, Section 5, Section 6, Section 13, Section 14, Section 17, Section 21, Section 30, Section 31, Section 32, Section 53, Section 60, Section 61, Section 62, Section 63 and Section 238 of the IBC, 2016 and relied upon the judgment of the Hon'ble Supreme Court in the case of Ghanshyam Mishra and Sons Private Limited through the Authorized Signatory Vs. Edelweiss Asset Reconstruction Company Limited Through The Director and others 2021 SCC OnLine SC 313 (Paragraphs 65, 67, 73, 77, 82, 86, 87, 91, 95, 121, 124, 126, 127, 130, 131, 132, 135, 141 and 149) and submitted that in view of the provisions of the IBC, 2016 and the law laid down by the Supreme Court in the case of Ghanshyam Mishra (supra), the writ petitions deserve to be allowed. It is f....
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....made to revive the corporate debtor and make it a running concern. For that, a resolution applicant has to prepare a resolution plan on the basis of the information memorandum. The information memorandum, which is required to be prepared in accordance with Section 29 of the I&B Code along with Regulation 36 of the Regulations, is required to contain various details, which have been gathered by RP after receipt of various claims in response to the statutorily mandated public notice. The resolution plan is required to provide for the payment of insolvency resolution process costs, management of the affairs of the corporate debtor after approval of the resolution plan; the implementation and supervision of the resolution plan. It is only after the adjudicating authority satisfies itself that the plan as approved by CoC with the requisite voting share of financial creditors meets the requirement as referred to in sub-section (2) of Section 30, grants its approval to it. It is only thereafter that the said plan is binding on the corporate debtor as well as its employees, members, creditors, guarantors and other stakeholders involved in the resolution plan. The moratorium order passed by....
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....cturing of debt, etc. are required to be taken by the Committee of the financial creditors. It has been provided, that the choice of the solution to keep the entity as a going concern will be voted upon by CoC and there are no constraints on the proposals that the resolution professional can present to CoC. 154. The requirements, that the resolution professional needs to confirm tothe adjudicator, are: 154.1. That the solution must explicitly require the repayment of any interimfinance and costs of the insolvency resolution process will be paid in priority to other payments. 154.2. That the plan must explicitly include payment to all creditors not onthe creditors committee, within a reasonable period after the solution is implemented; and lastly 154.3. The plan should comply with existing laws governing the actions ofthe entity while implementing the solutions. 155. The Committee also expressed the opinion, that there should befreedom permitted to the overall market, to propose solutions on keeping the entity as a going concern. The Committee opined, that the details as to how the insolvency is to be resolved or as to how the entity is t....
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....due from the defaulting companies. In the new approach, there is a calm period followed by a swift resolution process to be completed within 270 days (outer limit) failing which, initiation of liquidation process has been made inevitable and mandatory. In the earlier regime, the corporate debtor could indefinitely continue to enjoy the protection given under Section 22 of the Sick Industrial Companies Act, 1985 or under other such enactments which has now been forsaken. Besides, the commercial wisdom of CoC has been given paramount status without any judicial intervention, for ensuring completion of the stated processes within the timelines prescribed by the I&B Code. There is an intrinsic assumption that financial creditors are fully informed about the viability of the corporate debtor and feasibility of the proposed resolution plan. They act on the basis of thorough examination of the proposed resolution plan and assessment made by their team of experts. The opinion on the subject-matter expressed by them after due deliberations in CoC meetings through voting, as per voting shares, is a collective business decision. The legislature, consciously, has not provided any ground to cha....
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.... be paid in full, so that the carrying on of the business of the corporate debtor does not become impossible for want of a most basic and essential element for the carrying on of such business, namely, electricity. This may, in turn, be accepted by the resolution applicant with a consequent modification as to distribution of funds, payment being provided to a certain type of operational creditor, namely, the electricity distribution company, out of upfront payment offered by the proposed resolution applicant which may also result in a consequent reduction of amounts payable to other financial and operational creditors. What is important is that it is the commercial wisdom of this majority of creditors which is to determine, through negotiation with the prospective resolution applicant, as to how and in what manner the corporate resolution process is to take place.' 160. This Court held [Essar Steel (India) Ltd. (CoC) v. Satish Kumar Gupta, (2020) 8 SCC 531 : (2021) 2 SCC (Civ) 443] , that what is left to the majority decision of CoC is the "feasibility and viability" of a resolution plan, which is required to take into account all aspects of the plan, including the manner ....
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....osts in a specified manner in priority to the repayment of other debts of the corporate debtor, (ii) the repayment of the debts of operational creditors in prescribed manner, (iii) the management of the affairs of the corporate debtor, (iv) the implementation and supervision of the resolution plan, (v) does not contravene any of the provisions of the law for the time being in force, (vi) conforms to such other requirements as may be specified by the Board. The Board referred to is established under Section 188 of the I&B Code. The powers and functions of the Board have been delineated in Section 196 of the I&B Code. None of the specified functions of the Board, directly or indirectly, pertain to regulating the manner in which the financial creditors ought to or ought not to exercise their commercial wisdom during the voting on the resolution plan under Section 30(4) of the I&B Code. The subjective satisfaction of the financial creditors at the time of voting is bound to be a mixed baggage of variety of factors. To wit, the feasibility and viability of the proposed resolution plan and including their perceptions about the general capability of the resolution applicant to translate t....
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....priority to all other debts. Fifth, the resolution plan does not comply with any other criteria specified by the Board. Significantly, the matters or grounds-be it under Section 30(2) or under Section 61(3) of the I&B Code-are regarding testing the validity of the "approved" resolution plan by CoC; and not for approving the resolution plan which has been disapproved or deemed to have been rejected by CoC in exercise of its business decision.' 165. It will therefore be clear, that this Court, in unequivocal terms, held, that the appeal is a creature of statute and that the statute has not invested jurisdiction and authority either with NCLT or NCLAT, to review the commercial decision exercised by CoC of approving the resolution plan or rejecting the same. 166. The position is clarified by the following observations in para 59 of the judgment in K. Sashidhar [K. Sashidhar v. Indian Overseas Bank, (2019) 12 SCC 150 : (2019) 4 SCC (Civ) 222] , which reads thus : (SCC p. 187) '59. In our view, neither the adjudicating authority (NCLT) nor the appellate authority (NCLAT) has been endowed with the jurisdiction to reverse the commercial wisdom of the dissenting f....
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....ed thus : (Maharashtra Seamless case [Maharashtra Seamless Ltd. v. Padmanabhan Venkatesh, (2020) 11 SCC 467 : (2021) 1 SCC (Civ) 799] , SCC p. 487, para 30) '30. The appellate authority has, in our opinion, proceeded on equitable perception rather than commercial wisdom. On the face of it, release of assets at a value 20% below its liquidation value arrived at by the valuers seems inequitable. Here, we feel the Court ought to cede ground to the commercial wisdom of the creditors rather than assess the resolution plan on the basis of quantitative analysis. Such is the scheme of the Code. Section 31(1) of the Code lays down in clear terms that for final approval of a resolution plan, the adjudicating authority has to be satisfied that the requirement of sub-section (2) of Section 30 of the Code has been complied with. The proviso to Section 31(1) of the Code stipulates the other point on which an adjudicating authority has to be satisfied. That factor is that the resolution plan has provisions for its implementation. The scope of interference by the adjudicating authority in limited judicial review has been laid down in Essar Steel [Essar Steel (India) Ltd. (CoC) v. Satish K....
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....llate authority is limited to the extent provided under sub-section (3) of Section 61 of the I&B Code, is no more res integra. 65. Bare reading of Section 31 of the I&B Code would also make it abundantly clear that once the resolution plan is approved by the adjudicating authority, after it is satisfied, that the resolution plan as approved by CoC meets the requirements as referred to in sub-section (2) of Section 30, it shall be binding on the corporate debtor and its employees, members, creditors, guarantors and other stakeholders. Such a provision is necessitated since one of the dominant purposes of the I&B Code is revival of the corporate debtor and to make it a running concern. 66. The resolution plan submitted by the successful resolution applicant is required to contain various provisions viz. provision for payment of insolvency resolution process costs, provision for payment of debts of operational creditors, which shall not be less than the amount to be paid to such creditors in the event of liquidation of the corporate debtor under Section 53; or the amount that would have been paid to such creditors, if the amount to be distributed under the resolution....
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....islative intent of making the resolution plan binding on all the stakeholders after it gets the seal of approval from the adjudicating authority upon its satisfaction, that the resolution plan approved by CoC meets the requirement as referred to in sub-section (2) of Section 30 is that after the approval of the resolution plan, no surprise claims should be flung on the successful resolution applicant. The dominant purpose is that he should start with fresh slate on the basis of the resolution plan approved. 69. This aspect has been aptly explained by this Court in Essar Steel (India) Ltd. (CoC) [Essar Steel (India) Ltd. (CoC) v. Satish Kumar Gupta, (2020) 8 SCC 531 : (2021) 2 SCC (Civ) 443] : (SCC p. 616, para 107) "107. For the same reason, the impugned NCLAT judgment in Standard Chartered Bank v. Satish Kumar Gupta [Standard Chartered Bank v. Satish Kumar Gupta, 2019 SCC OnLine NCLAT 388] in holding that claims that may exist apart from those decided on merits by the resolution professional and by the adjudicating authority/Appellate Tribunal can now be decided by an appropriate forum in terms of Section 60(6) of the Code, also militates against the rationale of....
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.... or any local authority to whom a debt in respect of the payment of dues arising under any law for the time being in force, such as authorities to whom statutory dues are owed,". 76. To answer the said question, we will have to consider, as to whether the said amendment is clarificatory/declaratory in nature or a substantive one. If it is held that it is declaratory or clarificatory in nature, it will have to be held that such an amendment is retrospective in nature and exists on the statute book since inception. However, if the answer is otherwise, the amendment will have to be held to be prospective in nature, having force from the date on which the amendment is effected in the statute. 77. It will be relevant to refer to the "Statement of Objects and Reasons" (hereafter referred to as "SOR") of the Insolvency and Bankruptcy Code (Amendment) Bill, 2019, which read thus: "Statement of Objects and Reasons.-The Insolvency and Bankruptcy Code, 2016 (the Code) was enacted with a view to consolidate and amend the laws relating to re-organisation and insolvency resolution of corporate persons, partnership firms and individuals in a time-bound manner for maximi....
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....had an occasion to consider the provisions of Section 13-A of the Haryana Municipal Act, 1973 which, prior to amendment, read thus: "13-A. Disqualification for membership.-(1) A person shall be disqualified for being chosen as and for being a member of a municipality- *** (c) if he has more than two living children: Provided that a person having more than two children on or after the expiry of one year of the commencement of this Act, shall not be deemed to be disqualified." (emphasis supplied) 87. The faulty drafting in the provision was capable of being interpreted that the legislative embargo imposed on a person from procreating and giving birth to a third child in the context of holding the office of a member of a municipality remained in operation for a period of one year only and thereafter it was lifted. It could be interpreted that on the date on which Section 13-A was brought on the statute book i.e. dated 5-4-1994, even if a person became disqualified, the disqualification ceased to operate and he became qualified once again to contest the election and hold the office of member of a municipality on the expiry of one year from 5-4-199....
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....repeal, a privilege which did not amount to accrued right. (p. 392) 16. Where a statute is passed for the purpose of supplying an obviousomission in a former statute or to "explain" a former statute, the subsequent statute has relation back to the time when the prior Act was passed. The rule against retrospectivity is inapplicable to such legislations as are explanatory and declaratory in nature. A classic illustration is the case of Attorney General v. Pougett [Attorney General v. Pougett, (1816) 2 Price 381 : 146 ER 130] (Price at p. 392). By a Customs Act of 1873 (53 Geo. 3, c. 33) a duty was imposed upon hides of 9s 4d, but the Act omitted to state that it was to be 9s 4d per cwt., and to remedy this omission another Customs Act (53 Geo. 3, c. 105) was passed later in the same year. Between the passing of these two Acts some hides were exported, and it was contended that they were not liable to pay the duty of 9s 4d per cwt., but Thomson, C.B., in giving judgment for the Attorney General, said : (ER p. 134) 'The duty in this instance was, in fact, imposed by the first Act; but the gross mistake of the omission of the weight, for which the sum expressed was to ....
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....trospectivity is otherwise apparent. 19. The Constitution Bench in Shyam Sunder v. Ram Kumar [Shyam Sunderv. Ram Kumar, (2001) 8 SCC 24] has held : (SCC p. 49, para 39) '39. ... Ordinarily when an enactment declares the previous law, it requires to be given retroactive effect. The function of a declaratory statute is to supply an omission or to explain a previous statute and when such an Act is passed, it comes into effect when the previous enactment was passed. The legislative power to enact law includes the power to declare what was the previous law and when such a declaratory Act is passed, invariably it has been held to be retrospective. Mere absence of use of the word "declaration" in an Act explaining what was the law before may not appear to be a declaratory Act but if the court finds an Act as declaratory or explanatory, it has to be construed as retrospective.' (p. 2487). 20. In Bengal Immunity Co. Ltd. v. State of Bihar [Bengal Immunity Co. Ltd. v. State of Bihar, (1955) 2 SCR 603 : AIR 1955 SC 661] , Heydon case [Heydon case, (1584) 3 Co Rep 7a : 76 ER 637] was cited with approval. Their Lordships have said : (Bengal Immunity case [Bengal Immun....
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....ng a proviso by way of an exception carving out a fact situation from the operation of the newly introduced disqualification the draftsman's folly caused the creation of trouble. A simplistic reading of the text of the proviso spelled out a consequence which the legislature had never intended and could not have intended. It is true that the Second Amendment does not expressly give the amendment a retrospective operation. The absence of a provision expressly giving a retrospective operation to the legislation is not determinative of its prospectivity or retrospectivity. Intrinsic evidence may be available to show that the amendment was necessarily intended to have retrospective effect and if the Court can unhesitatingly conclude in favour of retrospectivity, the Court would not hesitate in giving the Act that operation unless prevented from doing so by any mandate contained in law or an established principle of interpretation of statutes." (emphasis supplied) 89. It could thus be seen that what is material is to ascertain the legislative intent. If legislature by an amendment supplies an obvious omission in a former statute or explains a former statute, the subsequen....
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....ere have been contradicting views on the scope of moratorium regarding its application to third parties affected by the debt of the corporate debtor, like guarantors or sureties. While some courts have taken the view that Section 14 may be interpreted literally to mean that it only restricts actions against the assets of the corporate debtor, a few others have taken an interpretation that the stay applies on enforcement of guarantee as well, if a CIRP is going on against the corporate debtor. *** 5.7. The Allahabad High Court subsequently took a differing view in Sanjeev Shriya v. SBI [Sanjeev Shriya v. SBI, 2017 SCC OnLine All 2717 : (2018) 2 All LJ 769 : (2017) 9 ADJ 723] , by applying moratorium to enforcement of guarantee against personal guarantor to the debt. The rationale being that if a CIRP is going on against the corporate debtor, then the debt owed by the corporate debtor is not final till the resolution plan is approved, and thus the liability of the surety would also be unclear. The Court took the view that until debt of the corporate debtor is crystallised, the guarantor's liability may not be triggered. The Committee deliberated and noted that this would....
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....e basis on which the loan may have been extended. 5.10. The Committee further noted that a literal interpretation of Section 14 is prudent, and a broader interpretation may not be necessary in the above context. The assets of the surety are separate from those of the corporate debtor, and proceedings against the corporate debtor may not be seriously impacted by the actions against assets of third parties like sureties. Additionally, enforcement of guarantee may not have a significant impact on the debt of the corporate debtor as the right of the creditor against the principal debtor is merely shifted to the surety, to the extent of payment by the surety. Thus, contractual principles of guarantee require being respected even during a moratorium and an alternate interpretation may not have been the intention of the Code, as is clear from a plain reading of Section 14. 5.11. Further, since many guarantees for loans of corporates are given by its promoters in the form of personal guarantees, if there is a stay on actions against their assets during a CIRP, such promoters (who are also corporate applicants) may file frivolous applications to merely take advantage of th....