[Cites 16, Cited by 0]

Gujarat High Court

Mahan Energen Limited vs Deputy Commissioner Of Income Tax, Dcit ... on 17 April, 2026

Author: A.S. Supehia

Bench: A.S. Supehia

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                            C/SCA/14368/2024                                  JUDGMENT DATED: 17/04/2026

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                                     IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

                                      R/SPECIAL CIVIL APPLICATION NO. 14368 of 2024


                       FOR APPROVAL AND SIGNATURE:

                       HONOURABLE MR. JUSTICE A.S. SUPEHIA
                                and
                       HONOURABLE MR. JUSTICE PRANAV TRIVEDI
                       =================================================

                                      Approved for Reporting                 Yes
                                                                             No
                                                                             ✔
                       ==================================================
                                            MAHAN ENERGEN LIMITED
                                                         Versus
                          DEPUTY COMMISSIONER OF INCOME TAX, DCIT CIRCLE 16(1), DELHI
                       ==================================================
                       Appearance:
                       MR B S SOPARKAR(6851) for the Petitioner(s) No. 1
                       MS MAITHILI D MEHTA(3206) for the Respondent(s) No. 1
                       ==================================================

                            CORAM:HONOURABLE MR. JUSTICE A.S. SUPEHIA
                                              and
                                  HONOURABLE MR. JUSTICE PRANAV TRIVEDI

                       Date : 17/04/2026

                       ORAL JUDGMENT

(PER : HONOURABLE MR. JUSTICE PRANAV TRIVEDI)

1. Heard learned advocate Mr. B. S. Soparkar for the petitioner and

learned Senior Standing Counsel Ms. Maithili Mehta for the respondent.

2. With the consent of the learned advocates for the respective parties,

the matter is taken up for hearing, as the issue involved is very short.

3. The petition has been filed under Article 226 of the Constitution of

India with the following prayers :-

"(a) Quash and set aside the impugned notice under Section 148A

(b) dated 22.03.2023 at Annexure-A1, Order passed under Section

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148A(d) dated 05.04.2023 at Annexure-A2, and consequential notice under Section 148 dated 05.04.2023 at Annexure-A3 to this petition;

(b) Pending the admission, hearing and final disposal of this petition, to stay the implementation and operation of the impugned notice under Section 148 dated 05.04.2023 at Annexure-A3 to this petition and consequent assessment proceedings;

(c) Any other and further relief deemed just and proper by granted in the interest of justice;

(d) To provide for the cost of petition."

4. The brief facts of the case are as follows:

4.1. The petitioner is a company registered under the Companies Act,

1956. The petitioner had filed the return of income under the provisions of

the Income Tax Act, 1961 (for short "the Act") for the Assessment Year

2016-17 on 16.03.2017 declaring income of Rs.1,73,790/-.

4.2. The case of the petitioner was selected for complete scrutiny and

the assessment was completed on 26.12.2018 accepting the returned

income. The case of the petitioner qua Assessment Year 2016-17 was

proposed to be reopened by the issuance of a notice dated 05.04.2023

under Section 148 of the Act.

4.3. The petitioner was subjected to the insolvency proceedings under

the Insolvency and Bankruptcy Code, 2016 ("IBC"), wherein, a Corporate

Insolvency Resolution Process ("CIRP") was initiated under Section 7 of

the IBC, which was admitted by the Adjudicating Authority vide order

dated 01.11.2021.

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4.4. An Interim Resolution Professional was appointed by the National

Company Law Tribunal (for short "Tribunal"), who made a public

announcement in accordance with Section 13, 15 and other relevant

provisions of the IBC read with the Regulation 6 of the Bankruptcy Board

of India (Insolvency Process of Corporate Persons) Regulations, 2016, (For

short "Regulations, 2016") thereby inviting claims from the various

creditors of the Petitioner.

4.5. Further, under the CIRP, the Resolution Plan of Adani Power

Limited for the revival of the petitioner was approved by the Tribunal vide

order dated 01.11.2021 under Section 30(6) of the IBC. The said

Resolution Plan provided for the waiver and extinguishment of all the

unassessed/assessed tax liabilities for the period prior to the Tribunal

approval date.

4.6. The respondent has issued the impugned notice dated 05.04.2023,

under Section 148 of the Act.

4.7. Challenging the legality of the impugned notice dated 05.04.2023

under Section 148 of the Act and impugned order dated 05.04.2023 passed

under Section 148A(d) of the Act, the petitioner has filed this petition.

5. Learned advocate Mr B.S. Soparkar appearing on behalf of the

petitioner submitted that on the approval of the Resolution Plan under

Section 31 of the IBC, all dues of the Corporate Debtor except those which

have been specifically provided for in the Resolution Plan would stand

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extinguished in terms of the provisions of the IBC and the decisions of the

Hon'ble Apex Court in the case of Committee of Creditors of Essar Steel

India Ltd. Through Authorised Signatory Vs. Satishkumar Gupta reported

in (2020) 8 SCC 531 and in case of Ghanshyam Mishra and Sons Pvt. Ltd.

Vs. Edelweiss Asset Reconstruction Company Ltd.,through the Directors &

Ors. reported in (2021) 9 SCC 657. Learned advocate Mr. Soparkar

submitted that in the present case, the tax dues stand extinguished in

terms of the Resolution Plan.

5.1. Learned Senior Standing Counsel Ms. Maithili Mehta for the

respondent-Department is not in a position to controvert the position of

law as far as the extinguishment of the tax dues are concerned in terms of

Section 31 of the IBC.

6. DISCUSSION & FINDINGS :-

6.1. A perusal of the Resolution Plan which came to be approved on

01.11.2021 by the Tribunal would reveal the following provisions as

evident from the relevant portion extracted below:-

"EFFECT OF THE RESOLUTION PLAN"

Section 6 : Reliefs and Waivers:

Any reliefs requested to be granted by the NCLT to the Resolution Applicant shall not be construed as conditionalities to the implementation of this Resolution Plan. The Resolution Applicant submits that, at the time of seeking approval from the NCLT, the reliefs provided below shall be included, with such modifications as may be considered necessary by the NCLT:

(i) On and from the NCLT Approval Date, by order of the

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NCLT sanctioning this Resolution Plan, a restraint on, and prohibition of, all Adverse Actions shall be deemed to be declared until the Effective Date;

(ii) On and from the NCLT Approval Date, by order of the NCLT sanctioning this Resolution Plan, all counter-party(ies) to the Company Contracts shall be deemed to have given their approval for change in ownership of the Corporate Debtor (as specified in this Resolution Plan) with effect from the date of the Effective Date.

(iii) The Resolution Applicant considers the uninterrupted supply of water and use of land in terms of the Articles of Arrangement signed with Uttar Pradesh Jal Vidyut Nigam Limited (UPJVNL") on December 23, 2009 ("UPJVNL Agreement") for permission for use of land and water drawl, to be critical to preserve the value of the Corporate Debtor and to maintain its status as a going concern. Accordingly, the UPJYNL Agreement shall renew for a period of 12 months from the Effective Date in terms of this Resolution Plan and continue is full force and effect and shall remain valid and binding against the Corporate Debtor and UPJVNL

(iv) On and from the NCLT Approval Date, by order of the NCLT sanctioning this Resolution Plan, the Township Lease Agreement dated May 16, 2011 entered with Trikaya Township Limited shall be deemed to be terminated, with such termination being effective from the NCLT Approval Date. Any claims or liabilities arsing as a consequence of such termination shall be deemed to be relinquished, cancelled and written-off on the NCLT Approval Date.

(v) On and from the NCLT Approval Date, by order of the NCLT sanctioning this Resolution Plan, all Related Party contractual arrangements entered into by the Corporate Debtor shall be deemed to be terminated, with such termination being effective from the NCLT Approval Date, Any claims or liabilities arising as a consequence of such termination shall be deemed to be relinquished, cancelled and written-off on the NCLT Approval Date.

(vi) As the Resolution Applicant is required to take over the Corporate Debtor's Business on a 'going concern' basis, all consents, licenses, approvals, clearances, rights, entitlements, benefits and privileges whether under law, contract, lease or license, created in favour of the Corporate Debtor or to which the Corporate Debtor is entitled or accustomed to, shall

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continue to remain valid, notwithstanding way provision to the contrary in their terms, and provided that in case of consents, licenses, approvals, rights, entitlements, benefits and privileges that have expired or lapsed, notwithstanding that they may have already lapsed or expired due to hay breach, non-compliance or efflux of time, be deemed to continue without disruption for the benefit of the Corporate Debtor, for a period of 12 (twelve) months from the Effective Daw or such other period no required under Applicable Law, Further, no coercive actions shall be taken against Resolution Applicant or Corporate Debtor post NCLT Approval Date towards lapse of any consents, licenses, approvals, clearances etc, under the Applicable Law during the CIRP Period.

(vii) The Resolution Applicant in the event of being declared successful shall be given an exemption of three (3) years from the Effective Date to correct, amend and remedy for (1) 100% utilization of fly ash; (ii) CSR Expenses, as required under the Environmental Clearance issued by the relevant Government and Statutory Authorities.

(viii) The time period provided to Corporate Debtor to install flue gas desulfurization system (FGD) for Unit 1 and Unit 2 shall be extended to 31 March 2023 and no coercive action be taken against the Corporate Debtor or Resolution Applicant for non- compliance during such period.

(ix) The Resolution Applicant and the Corporate shall be deemed to have received a waiver from all actions, Proceedings or penalties under any applicable Law for any Non- Compliance, including in connection with any prior transfer of assets, contracts of business by the Corporate Debtor.

(x) All Assets whether leased or owned by the erstwhile Promoters, other individuals, Related Parties or affiliates of the erstwhile Promoters, which are integral to the operations of the Project shall vest with the Corporate Debtor.

(xi) The implementation of the Resolution Plan by the Resolution Applicant and any change in control occurring pursuant thereto shall not impact or breach the validity of any such agreements, contracts (including but not limited to PPAs and FSAs) etc, to which the Corporate Debtor is a party in.

(xii) The Ministry of Environment and Forest to waive all past non-compliances of the Corporate Debtor and an additional

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period of 36 months from the Effective Date to be provided for complying with all the emission norms for installation of FGD.

(xiii) All permits, clearances and necessary approvals for transportation of coal by road which have been obtained by the Corporate Debtor shall be extended for 36 months from the Effective Date,

(xiv) Any stamp duty liabilities or Tax liability arising pursuant to the transactions contemplated under this Resolution Plan shall be exempted or waived off.

It is hereby clarified that the non-grant of any of the aforementioned reliefs shall not be considered at modification of any of the other terms contained in this Resolution Plan, which shall continuo to have the binding effect in terms of this Resolution Plan."

7. From the perusal of the above, it is evident that all tax liabilities,

assessed and unassessed under the Income Tax Act, 1961 "shall stand

waived and extinguished".

8. In case of Committee of Creditors of Essar Steel India Ltd.

(Supra),the Hon'ble Apex Court has held as under:-

"107. For the same reason, the impugned NCLAT judgment 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 Section 31 of the Code. A successful resolution applicant cannot suddenly be faced with "undecided" claims after the resolution plan submitted by him has been accepted as this would amount to a hydra head popping up which would throw into uncertainty amounts payable by a prospective resolution applicant who would successfully take over the business of the corporate debtor. All claims must be submitted to and decided by the resolution professional so that a prospective resolution applicant knows exactly what has to be paid in order that it may then take over and run the business of the corporate debtor. This the successful resolution applicant does on a fresh slate, as has been pointed out by us hereinabove. For these reasons, NCLAT judgment

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must also be set aside on this count."

9. In the case of Edelweiss Asset Reconstruction Company Ltd.,

(Supra), the Hon'ble Apex Court has categorically held as under:-

"102.1 That once a resolution plan is duly approved by the adjudicating authority under sub-section (1) of Section 31, the claims as provided in the resolution plan shall stand frozen and will be binding on the corporate debtor and its employees, members, creditors, including the Central Government, any State Government or any local authority, guarantors and other stakeholders. On the date of approval of resolution plan by the adjudicating authority, all such claims, which are not a part of resolution plan, shall stand extinguished and no person will be entitled to initiate or continue any proceedings in respect to a claim, which is not part of the resolution plan.

102.2 The 2019 Amendment to Section 31 IBC is clarificatory and declaratory in nature and therefore will be effective from the date on which IBC has come into effect.

102.3 Consequently all the dues including the statutory dues owed to the Central Government, any State Government or any local authority, if not part of the resolution plan, shall stand extinguished and no proceedings in respect of such dues for the period prior to the date on which the adjudicating authority grants its approval under Section 31 could be continued.

138 In the forgoing paragraph, we have held that the 2019 Amendment to Section 31 IBC is clarificatory and declaratory in nature and therefore will have a retrospective operation. As such, when the resolution plan is approved by NCLT, the claims, which are not part of the resolution plan, shall stand extinguished and the proceedings related thereto shall stand terminated. Since the subject-matter of the petition are the proceedings which relate to the claims of the respondents prior to the approval of the plan, the same cannot be continued. Equally the claims, which are not part of the resolution plan, shall stand extinguished."

10. Therefore, applying the decisions of the Hon'ble Apex Court to the

facts of the present case, it is clear that on the complete extinguishment of

all tax liabilities of the Corporate Debtor upon the approval of the

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Resolution Plan on 01.11.2021, there could be no occasion whatsoever for

the respondents to issue the order under clause (d) of Section 148A of the

Act on 05.04.2023 as well as notice under Section 148 of the Act on

05.04.2023. In such view of the matter, the merits of the impugned notice

under Section 148 of the Act have become academic and need not be

ventured into by this Court.