TaxTMI 
TaxTMI 
2026 (5) TMI 1035
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....i Mehta, Adv. For the intervener, HNG, Karmachari Union and HNG Mazdoor Union: Mr. Sakya Sen, Sr. Adv., Mr. Jishnu Choudhury, Sr. Adv., Ms. Tapashya Bhattacharya, Adv. For the intervener, HNG: Mr. Abhrajit Mitra, Sr. Adv., Thozilalar Nala Sangam Mr. Shadma Manzar, Adv. JUDGMENT PER SHAMPA SARKAR, J. 1. CAN 1 of 2026 is an application for stay of operation and/or implementation of the order dated February 27, 2026 passed in WPA No. 3755 of 2022. Instead of hearing the said application separately, we proposed to hear out the appeal. 2. CAN 2 of 2026 is an application by H.N.G Karmachari Union for leave to intervene in the appeal or be added as a party to the appeal. 3. CAN 3 of 2026 is an application by H.N.G Industries Thozilalar Nala Sangam, a registered trade union with similar prayers as in CAN 2 of 2026. 4. CAN 4 of 2026 is an application by H.N.G Mazdoor Union (INTUC) also for leave to intervene in the appeal or to be added as a party to the proceeding. 5. These three applications were filed on 16.03.2026 i.e. towards the conclusion of the proceedings before us. 6. The appeal arises out of a judgment and order dated February 27, 2026 passed by a le....
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.... of the respondent No. 5 to Mumbai. The Regional Director informed the respondent No. 4 that the prayer for shifting of the registered office had been kept in abeyance in view of the pending appeals before the NCLAT. Respondent no. 4 sought for clarification from the NCLAT that, pendency of the appeals should not affect the application for change of the registered office from the State of West Bengal to Maharashtra. NCLAT passed an order observing that pendency of the appeals should not be a ground for non-compliance of the statutory provisions by a statutory authority. NCLAT did not grant the clarification prayed for, but observed that the Regional Director should decide the application filed by the respondent No. 4, in accordance with law. By an order dated February 4, 2026, the Regional Director allowed shifting of the registered office without complying with the provisions of law. Mr. Mitra urged that the order passed by the Regional Director was ex facie contrary to the mandate of the second proviso to Rule 30(9) of the said Rules. The proviso clearly stipulated that, shifting of the registered office of a Company after approval of a resolution plan, could be permitted only wh....
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....and the appellant No. 1 was a noticee along with 11 others. The appellants were heard by the Regional Director and their objections were turned down by the order which was impugned in the writ petition. The appellants did not have any other efficacious remedy under the law to challenge the order of the Regional Director. Thus, the writ petition was maintainable at the instance of the appellants. 10. According to Mr. Mitra, the statutory discretion vested in the Regional Director ought to have been exercised within the framework of the said Rules and not in derogation thereof. The Regional Director had acted in colourable exercise of statutory power. The order of the Regional Director suffered from jurisdictional error. The learned Single Judge failed to appreciate the illegality in the order passed by the Regional Director. 11. Mr. Mitra submitted that, the second proviso to Rule 30(9) of the said Rules, was incorporated by way of an amendment in 2023. The proviso was introduced specifically to prevent alienation of corporate jurisdiction during pendency of judicial challenges to resolution plans, thereby preserving the authority of the appellate forum and courts and preventi....
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....icant, during the pendency of the appeals. 15. Reliance was placed on the decision of Solidaire India Ltd. vs Fairgrowth Financial Services Ltd. and Ors. reported in (2001) 3 SCC 71, in support of the contention that when there were two special statutes, the provisions of both should be harmoniously construed. According to Mr. Mitra, the provisions of the IBC were not in conflict with the provisions of the Companies Act, 2013 (hereinafter referred to as the 2013 Act) and Rule 30(9) of the said Rules, including the provisos thereto. There was no inconsistency. Thus, the provision of Section 238 of the IBC was wrongly pressed into service by the Regional Director and the learned Single Judge erroneously upheld such decision which was contrary to law. 16. Reliance was placed on the decision of Hardeep Singh vs. State of Punjab and Ors. reported in (2014) 3 SCC 92, on the proposition that, when the language of the statute was plain and unambiguous, the court should give effect to the same and not go behind the express language, so as to add or subtract any word therefrom. The legislature should be presumed to have used the words deliberately and consciously for carrying out the p....
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....or. The proceedings before the NCLAT were independent of the order of the Regional Director and the jurisdiction was reserved to the NCLAT, to proceed with the appeals independently. He further submitted that Section 13(5) of the 2013 Act provided that, the central government must dispose of the application for alteration in the Memorandum relating to the place of the registered office from one state to another, within a period of 60 days, and before passing any order, must satisfy itself that the alteration had the consent of the creditors, debenture holders and other persons concerned with the Company, or that, sufficient provisions had been made by the company either for due discharge of all its debts and obligations or that adequate security had been provided for such discharge. As a general rule, shifting of the registered office should be allowed on certain terms and conditions. 19. In this case, adequate security had been provided for due discharge of debts and obligations of the creditors. Moreover, once the resolution plan was approved, the respondent no. 4 started on a clean slate. Reference was made to Ghyansham Mishra and Sons Pvt. Ltd. vs Edelweiss Asset Reconstruct....
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....at the second proviso could not operate contrary to the substantive provision. Therefore, when Rule 30(9) permitted shifting on certain terms and conditions, the second proviso could not be treated as a bar. The second proviso was permissive in character and was not to be construed in a restrictive manner. Rather, the second proviso gave a discretion to the Regional Director to allow shifting of the registered office and operated as an exception to the first proviso. 21. Referring to the second proviso of sub-rule 9 of Rule 30, Mr. Sarkar submitted that, the same was an exception to the first proviso and a discretion was left to the Regional Director to permit shifting, even if an appeal was pending. The first proviso was a complete bar in view of the use of the expression "shall not". The second proviso must be construed as a permissive provision, inasmuch as, it carved out an exception to the general rule, by use of the expression "may be allowed". The complete bar under the first proviso was relaxed. On this issue reliance was placed on the decision of Satnam Singh and Others vs Punjab & Haryana High Court and Ors. reported in (1997) 3 SCC 353. Prayer was made for dismissal o....
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.... the NCLAT, and the NCLAT always reserved the jurisdiction to dispose of the matter. Such jurisdiction did not change, although the shifting was allowed. No other proceeding had been initiated by the appellants, save and except what was pending before the NCLAT. 23. Rule 30(8) did not give any veto power to any stakeholder to oppose shifting of the registered office. Reference was made to paragraph 17(iii) of the order to urge that, the Regional Director had clearly stipulated that there would be no jurisdictional change in the legal proceedings pending against the company on the date of the order. A purported creditor did not have any locus to raise any objection for alleged contravention of Rule 30(9) inasmuch as, Rule 30(9) was triggered after due compliance of Rule 30 Sub Rules (1) to (8). In this case, the objections were considered and the procedure under Rule 30(8) was followed. Even if the order of approval of the resolution plan was set aside by the NCLAT, it would result in resumption of the original CIRP proceedings before the NCLT Calcutta Bench and such proceedings would remain unaffected by the shifting of the registered office from Kolkata to Mumbai. If the legisl....
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....y have to address the question whether there was a breach of any fundamental or legal right or whether there was any lapse in the performance of the duty of the authority. A high prerogative writ could not be issued on the mere asking. The High Court could not act as a court of appeal over administrative decisions. The High Court could only examine the decision making process and not the decision itself. Unless the decision was vitiated by error apparent on the face of record or the order was passed beyond jurisdiction, the order could not be interfered with by the High Court. The Court would have to see whether a reasonable person could have taken the view that was taken by the Regional Director or whether the decision led to manifest injustice. Thus, the learned Single Judge rightly dismissed the writ petition. Reliance was placed on Ayaaubkhan Noorkhan Pathan (supra) on the proposition that the appellant did not have any locus to raise a grievance whatsoever. Therefore, without a judicially enforceable right available for enforcement, the writ petition could not have been filed. The writ court had the power to enforce the performance of a statutory duty by a public body only upo....
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....uted Board, was a part of the plan, but once the company had been taken over by the reconstituted Board and such act of taking over had been approved, the shifting of the office from the State of West Bengal to the State of Maharashtra was rightly allowed by the Regional Director with certain protective terms and conditions. The Regional Director required the respondent no. 4 to provide an undertaking on the following conditions:- "17. As the company is a going concern and not shifting of the registered office till the management is taken over by the re-constituted board was the part of the plan and how the company has been taken over by the Reconstituted Board and as such taking in consideration of all the submission and in the interest of justice, the shifting of registered office from the State of West Bengal to the State of Maharashtra is allowed which shall be subject to outcome of all the Company appeals pending before Hon'ble NCLAT in respect of the resolution plan in the present matter. Further the company shall be required to give the following undertaking in the office of this Directorate:- (i) Company to place copy of this order and bring it to the noti....
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....on, protection of employment, preservation of the service conditions of the workmen. The members of the interveners were directly engaged in the activities of HNGIL and were dependent on the resolution plan for their livelihood, job security etc. Any disturbance in the execution of the resolution plan would have serious consequences on industrial peace, workforce stability and continuous functioning of the corporate debtor. Reliance was placed on paragraph 70, 78 and 104 of the order of approval of the plan which are quoted below:- "70. The payment of 'CIRP Costs' will be 'at actual' and the CIRP costs shall be paid out of the cash flow of the corporate debtor and in the event the cash flow of the corporate debtor is insufficient then the outstanding CIRP Costs shall be paid by the resolution applicant from the upfront cash. The upfront cash shall be utilized for the payment of outstanding CIRP costs in priority to the payment of other debts of the corporate debtor. Furthermore, if on the Trigger date, outstanding CIRP cost remains unpaid as on the Trigger Date, the payment to the Financial Creditors shall stand adjusted accordingly. 78. Any additional claim that ....
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....s by, inter alia, holding that precedence should be given to implementation of the resolution plan, for revival of the company for greater public interest and also for the benefit of the workers and stakeholders. Once the Regional Director recorded his satisfaction that the statutory procedure prescribed under the 2013 Act and the Companies (Incorporation) Rules 2014 had been duly complied with before grant of approval to the shifting of the registered office, nothing further remained to be decided. He submitted that in the decision of Ghanshyam Mishra (supra), the Hon'ble Apex Court held that, a successful resolution applicant must be enabled to commence the business of the corporate debtor on a clean slate and the past claims which were not incorporated in the resolution plan, stood extinguished upon its approval. Thus, the Regional Director rightly held that the provisions of the IBC would prevail over any procedural law and the Rules. Prime importance should be given to the revival of the company. He submitted that the writ petition was filed only to obstruct the implementation of a valid and operative resolution plan. 32. Mr. Abhrajit Mitra, learned senior Advocate appeared....
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.... to the contrary contained in any other law, the NCLT would have jurisdiction to entertain and dispose of any application or proceeding by or against the corporate debtor or any claim made by or against the corporate debtor. The appellants could not have filed a writ petition challenging the order of the Regional Director. Moreover, as the appeals were already pending before the NCLAT, the appellants could also approach the NCLAT instead of filing a writ petition. Thus, in either case, the writ petition was not maintainable. Reliance was placed on the following decisions:- i. Tata Power Western Odisha Distribution Limited and Ors. vs. Jagannath Sponge Private Limited, Director reported in (2023) SCC Online SC 1402. ii. Paschimanchal Vidyut Vitran Nigam Ltd. vs. Raman Ispat Private Limited and Ors. reported in 2023:INSC:625. iii. Embassy Property Developments Private Limited vs. State of Karnataka and Ors. reported in (2020) 13 SCC 308. 33. According to learned senior Advocate, Section 238 of the IBC provided that the provisions of the IBC would override any other law for the time being in force. Once the resolution plan was approved by the NCLT, it bec....
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....aid Rules was incorporated by an amendment of 2023. 36. Section 13(4) of the 2013 Act is quoted below:- "13(4) The alteration of the memorandum relating to the place of the registered office from one State to another shall not have any effect unless it is approved by the Central Government on an application in such form and manner as may be prescribed." 37. Section 238 of IBC is quoted below:- "238. Provisions of this code to override other laws:- The provisions of this code shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law." 38. Sub-section 4 of Section 13 of the 2013 Act provides that, alteration in the Memorandum relating to shifting of the registered office from one state to another, shall not have any effect unless it is approved by the central government on an application, in such form and manner as may be prescribed. The central government is required to dispose of the application within a period of 60 days. Before passing such order, the central government may satisfy itself that the alteration had the consent ....
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.... that (i) they have made a full enquiry into the affairs of the company and, having done so, have concluded that the list of creditors are correct, and that the estimated value as given in the list of the debts or claims payable on a contingency or not ascertained are proper estimates of the values of such debts and claims and that there are no other debts of or claims against the company to their knowledge, and (ii) no employee shall be retrenched as a consequence of shifting of the registered office from one state to another state and also there shall be an application filed by the company to the Chief Secretary of the concerned State Government or the Union territory. (3) A duly authenticated copy of the list of creditors shall be kept at the registered office of the company and any person desirous of inspecting the same may, at any time during the ordinary hours of business, inspect and take extracts from the same on payment of a sum not exceeding ten rupees per page to the company. (4) There shall also be attached to the application a copy of the acknowledgment of service of a copy of the application with complete annexures to the [**] Chief....
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.... Central Government shall pass an order approving the shifting, within sixty days of filing the application. (ii) where no consensus is reached at the hearings the company shall file an affidavit specifying the manner in which objection is to be resolved within a definite time frame, duly reserving the original jurisdiction to the objector for pursuing its legal remedies, even after the registered office is shifted, upon execution of which the Central Government shall pass an order confirming or rejecting the alteration within sixty days of the filing of application. (9) The order passed by the Central Government confirming the alteration may be on such terms and conditions, if any, as it thinks fit,[***]: Provided that the shifting of registered office shall not be allowed if any inquiry, inspection or investigation has been initiated against the company or any prosecution is pending against the company under the Act. [Provided further that where the management of the company has been taken over by new management under a resolution plan approved under section 31 of the Insolvency Bankruptcy Code, 2016 (31 of 2016) and no appeal against the resol....
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....al against a resolution plan is pending in any court or tribunal and no inquiry, inspection, investigation is pending or had been initiated after the approval of the said resolution plan, the shifting of the registered office may be allowed. Thus, in a case where a successful resolution applicant takes over the management of the corporate debtor, the Regional Director may exercise his discretion and allow shifting, provided no appeal is pending from the order of approval of the resolution plan or no inquiry, inspection, investigation is pending or has been initiated after approval of the plan. In this case 'and' has to be read as 'or'. 'And' is disjunction. Two different situations have been contemplated under the said proviso and even if one of the two exists, the application of the successful resolution applicant for shifting of the registered office of the corporate debtor should not be permitted. The proviso should be strictly construed. The proviso cannot be diluted by giving it an interpretation which is not in alignment with the legislative intent. 43. The application has to be approved by the central government in the form and manner as may be prescribed. In this context....
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.... respondents that the appeal before the NCLAT is frivolous, no stay was granted to the resolution plan, and refusal to shift the registered office will defeat the entire purpose of the CIRP implementation, run contrary to the plain and simple interpretation of the proviso and the legislative intent behind it. Reading 'and' as conjunctively, to mean that both the situations should cumulatively exist, i.e., an appeal should be pending and an inquiry or investigation should also be pending against the corporate debtor, in order to prevent shifting of the registered office, would make the proviso extremely harsh and inoperative. Thus, a purposive reading should be given to the actual intention of the legislature as disclosed from the context of the amendment in 2023. In either of the two situations, shifting shall not be allowed. The expression 'shifting may be allowed' is qualified by the above two conditions. When either of the two situations does not exist, the shifting may be allowed. 45. The first proviso is a complete bar to shifting of the registered office in case inquiry, inspection and investigation or any prosecution is pending against a company which wants to shift its r....
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....confirming the alteration of the registered office under Rule 30 (8), may be subject to terms and conditions. Thus in all other cases, except those covered under the two provisos under Rule 30(9), the shifting can be confirmed upon certain terms and conditions. The two provisos create restrictions on Rule 30(9) i.e. if these two situations exist, in that event, shifting cannot be allowed even on certain terms and conditions. It carves out an exception to the main provision i.e., Rule 30(9) and limits the power/jurisdiction of the Regional Director to permit shifting of the registered office of the corporate debtor even by imposing terms and conditions. The Regional Director was not deciding whether the resolution plan should be given primacy or not. 48. With regard to the locus standi of the appellants, it is an admitted fact that the proceedings before the NCLT and NCLAT are proceedings in rem. 49. The specific case of the appellants was that the appellant No. 1 was a stakeholder in the CIRP of the respondent No. 5. The appellants claimed to have supplied transportation services to ensure that the respondent no. 5 was a going concern during the CIRP. Several invoices were ra....
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....shifting. The appellants had been asked to participate in the proceedings by the Regional Director. They are the appellants before the NCLAT, who challenged the resolution plan. The question of them not having locus to approach the writ court, in spite of being aggrieved and dissatisfied with the decision of the Regional Director, does not arise. They are the aggrieved party in a proceeding under Section 13(4) of the 2013 Act and they have challenged the said order before the writ court, in the absence of any alternative efficacious remedy. 52. The grounds of appeal of the appellants before the NCLAT challenging the order of approval of the resolution plan are set out from the application for interim order filed before the NCLAT :- "Grounds for challenge 5. The resolution plan has been approved despite INSCO having specifically admitted before the Adjudicating Authority that feasibility of the plan has been 'jeopardized' on account of the onerous conditions imposed with respect to the insurance claim of the Sinnar plant. Despite all such documents having been furnished before the Adjudicating Authority the plan has been approved without even adverting t....
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....to even provide any reasons of dismissal of the said application. 11. The plan has been approved as a consequence of material irregularity in exercise of powers by the Respondent No. 1, throughout the CIRP period. Throughout the CIRP period, various illegal actions have been committed by the Respondent No. 1. In fact, the Respondent No. 1 has placed INSCO's resolution plan before the CoC, in complete contravention of S. 30(2)(e) of the Code. This is despite specific findings having been delivered by the Hon'ble Supreme Court in its Judgment dated 29.01.2025, for not complying with provisions of S. 30(2) (e). 12. The plan has been approved despite the fact that a substantial portion of the resolution plan amount is being paid from the cash accruals of the Corporate Debtor, as is impermissible as per the scheme of the Code and specific clauses of the RFRP. The RFRP specifically restrains the SRA from using the cash accruals of the Corporate Debtor for making payments to the creditors. However, no objections have been raised by the RP or the CoC in this regard. In fact, despite the same having been pointed out in the 40th CoC, meeting, the plan has been found....
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.... the CIRP Regulations in as much as, it does not provide for the mandatory particulars are specified in Regs. 37 and 38. The plan does not specify a term, a cause of default or any necessary measures for insolvency resolution and maximization of assets of the Corporate Debtor." 53. The learned Single Judge only considered that an appeal from the order denying interest to the appellants by the NCLT was pending and as such, pendency of the appeal should not be treated as a bar. The pendency of the appeal from the resolution plan was not considered. The records were overlooked by the learned Single Judge. The NCLAT had also observed that appeal was pending. 54. The Single Judge considered the issue of prejudice, without considering the prohibition in the second proviso to Rule 30(9) of the 2014 Act. Illegal exercise of jurisdiction by the Regional Director was not considered by the learned court. The order of the Regional Director was in excess of jurisdiction and violative of the second proviso to sub-rule 9 of Rule 30. Moreover, both the Regional Director and the learned Single Judge erred in holding that the NCLAT, by the order dated December 23, 2025, had directed the Region....
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.... after the approval of the said resolution plan, the shifting of the registered office may be allowed. 5. The application filed by the Applicant for shifting of the Registered Office is admittedly pending for consideration before the Regional Director. In the present application, we need not enter into rival contentions raised by the parties regarding Rule 30, sub-rule (9) as noted above. We only observe and clarify that the pending application for shifting of Registered Office of the CD, can be considered by the Regional Director in accordance with law. We make no observations on merits of contentions raised by both the parties, and it is for the Regional Director, who is a Statutory Authority to examine the application to consider the submissions of the parties and take appropriate decision in accordance with law. We further clarify that there is no order passed in this Appeal affecting the Statutory Authority's exercise of its jurisdiction in deciding the application filed by the Applicant for shifting the Office of the CD. The fact remains that the present Appeal is pending." 55. The order was not adverse to the interest of the appellants and the same was not requir....
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.... registered office, if an appeal is pending, which is intended to prevent the company from jurisdiction shopping or evading creditors while the case is sub-judice. The resolution plan is a binding document and if the plan or commercial necessity requires the company to streamline operation, the IBC aims to facilitate the transition and therefore the provision of Section 238 of IBC, 2016 comes to rescue. 13. There have been many cases wherein Section 238 of IBC, 2016 has superseded other previous laws and subsequent laws as well. The Hon'ble Supreme Court from time to time has recognized the clean slate theory emphasizing that a successful Resolution Applicant should start on a fresh slate. Accordingly, the shifting of registered office is part of the new life of the company and invoking a technical rule to frustrate the mandate of IBC, 2016 may go against public interest as the company is a going concern as per the submissions of the applicant." 59. While being conscious of the fact that the Companies (Incorporation) Rules, 2014 essentially would freeze the registered office when an appeal is pending, and the proviso was intended to prevent the company from jurisdiction....
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....e respondents and the reasoning of the Regional Director on the supremacy of the resolution plan in the instant situation and a pressing need for implementation thereof, are misplaced. 62. With regard to the plea of alternative remedy, Section 60(5) of the IBC is quoted below:- 60 (5) Notwithstanding anything to the contrary contained in any other law for the time being in force, the National Company Law Tribunal shall have jurisdiction to entertain or dispose of- (a) any application or proceeding by or against the corporate debtor or corporate person; (b) any claim made by or against the corporate debtor or corporate person, including claims by or against any of its subsidiaries situated in India; and (c) any question of priorities or any question of law or facts, arising out of or in relation to the insolvency resolution or liquidation proceedings of the corporate debtor or corporate person under this Code. 63. The NCLT does not have the jurisdiction to adjudicate on the legality of the order of the Regional Director passed under the provision of Section 13(4) of the said Act. The decisions of Tata Power Western Odisha (supra) and Paschimanchal....