Orissa High Court
Sree Metalicks Limited vs Tax Recovery Officer-Cum-Addl on 22 September, 2022
IN THE HIGH COURT OF ORISSA AT CUTTACK
WP(C) No.15537 of 2016
WP(C) No.15538 of 2016
WP(C) No.15681 of 2016
WP(C) No.15682 of 2016
WP(C) No.15683 of 2016
WP(C) No.15684 of 2016
WP(C) No.15685 of 2016
WP(C) No.15686 of 2016
WP(C) No.15687 of 2016
WP(C) No.15688 of 2016
WP(C) No.15707 of 2016
WP(C) No.15708 of 2016
WP(C) No.15709 of 2016
WP(C) No.15710 of 2016
WP(C) No.15765 of 2016
WP(C) No.15766 of 2016
WP(C) No.15767 of 2016
WP(C) No.15768 of 2016
WP(C) No.15824 of 2016
WP(C) No.15825 of 2016
WP(C) No.15826 of 2016
WP(C) No.15827 of 2016
WP(C) No.16012 of 2016
WP(C) No.16015 of 2016
WP(C) No.16017 of 2016
WP(C) No.16019 of 2016
WP(C) No.16020 of 2016
WP(C) No.16072 of 2016
WP(C) No.16074 of 2016
WP(C) No.16075 of 2016
WP(C) No.16076 of 2016
WP(C) No.16077 of 2016
WP(C) No.16078 of 2016
WP(C) No.16079 of 2016
WP(C) No.16318 of 2016
WP(C) No.16319 of 2016
WP(C) No.16321 of 2016
WP(C) No.16323 of 2016
Page 1 of 12
// 2 //
WP(C) No.16775 of 2016
WP(C) No.16776 of 2016
WP(C) No.16778 of 2016
WP(C) No.16779 of 2016
WP(C) No.16780 of 2016
WP(C) No.16781 of 2016
WP(C) No.16782 of 2016
Sree Metalicks Limited .... Petitioner
(In all cases)
Mr. S.S. Das, Sr. Adv
-versus-
Tax Recovery Officer-cum-Addl. .... Opposite Party
Regional Transport Officer of (In all cases)
Barbil
Mr.Pravakar Behera
Standing Counsel
(Transport)
CORAM:
THE JUSTICE S.PUJAHARI
ORDER
Order 22.09.2022
No.
14. 1. Since the aforesaid writ petitions have been filed at the
instance of the same Petitioner challenging the tax and penalty
imposed by the same Opposite Party and similar question of law
and facts being involved in all the cases, they were heard
together and disposed of by this common order.
2. The Petitioner has filed these writ petitions with a prayer
to quash the Vehicle Checking Report and also seizure of the
// 3 //
vehicles and direct the Opposite Party-Tax Recovery Officer-
cum-Addl. Regional Transport Officer of Barbil to release the
vehicles mentioned in the respective writ petitions in favour of
the Petitioner which were seized for non-payment of the tax and
penalty irrespective of the vehicles under the Orissa Motor
Vehicles Taxation Act.
3. I have heard Mr. Sourya Sundar Das, learned Senior
Counsel appearing for the Petitioner and Mr. Pravkar Behera,
learned Standing Counsel appearing for the Opposite Party-
Transport Department in all the cases.
4. The case of the Petitioner is that the Petitioner-Company
owns an integrated steel plant having its factory situated at
Keonjhar District. It started its commercial production on 1st
December, 1988 and was engaged in manufacturing of sponge
iron, steel and power etc. The Petitioner Company has also been
allocated iron ore lease by the Government. The Petitioner-
Company from the date of its launching of its commercial
production was doing extremely well till the recession in the
market. Due to market recession and some changes in the
Government policy, the Petitioner-Company became sick and
was referred to the Board for Industrial and Financial
Reconstruction (BIFR) under the Sick Industrial Companies
(Special Provisions) Act, 1985 (SICA) for rehabilitation. While
the Petitioner-Company was doing well in business, it had
purchased a number of heavy goods vehicles for transportation
// 4 //
of raw materials and finished products. The vehicles of the
Petitioner were registered under the Opposite Party. From the
date of purchase of the vehicles till the recession, the Petitioner-
Company was clearing the tax. Since the Petitioner-Company
could not pay the tax from 01.04.2013 to 30.09.2016, Opposite
Party without giving any opportunity of hearing to the Petitioner
seized the vehicles from the possession of the drivers of the
Petitioner-Company as such the Petitioner-Company has
approached this Court for quashing the Vehicle Checking Report
in all the writ petitions and release the vehicles in favour of the
Petitioner-Company.
5. It appears that pursuant to the interim order vehicles have
been released in favour of the Petitioner subject to payment of
admitted tax dues in three monthly instalments payable by the
Petitioner. However, after the proceeding under SICA was
closed due to repeal of the Sick Industrial Companies Act and
the enactment of the Insolvency and Bankruptcy Code, 2016
from 20th May, 2016, an additional affidavit on 26.07.2021 has
been filed by the Petitioner with the plea that on account of
default on the part of the Petitioner in paying the debts, one of
the financial creditors i.e. Srei Equipment Finance Limited
('SREI' in short hereinafter) under Section 7 of the Insolvency
and Bankruptcy Code, 2016 filed an application against the
Petitioner before the NCLT, Kolkata Bench, which was
registered as CP(IB) No.16/KB.2017. The NCLT vide order
dated 30.01.2017 appointed an Interim Resolution Professional
// 5 //
and declared moratorium under Section 13 of the Insolvency and
Bankruptcy Code, 2016. The Interim Resolution Professional on
30.01.2017 made public announcement with regard to the claims
under Section 15 of the Insolvency and Bankruptcy Code, 2016.
Opposite Party did not submit any claim under Regulation 7 of
the Insolvency and Bankruptcy Board of India (Insolvency
Resolution Process for Corporate Persons) Regulations, 2016
and Section 15 of the Insolvency and Bankruptcy Code, 2016. In
the meanwhile the Resolution Plan of the Promoter of the
Petitioner Company was approved by the Committee of
Creditors and the same has also been approved by the NCLT,
Kolkata Bench vide order dated 07.11.2017. A copy of which
has been annexed as Annexure-6. Once a resolution plan is
approved by the Committee of Creditors, it is binding on all the
creditors, guarantors, employees and stake holders under Section
31 of the Insolvency and Bankruptcy Code, 2016. In view of the
approval of the aforesaid Resolution Plan by the adjudicating
authority and no claim having been submitted to the Interim
Resolution Professional, the claim of the Opposite Party got
extinguished in view of the statutory provisions.
6. During the course of hearing on merit of the prayer,
learned counsel for the Petitioner has drawn the notice of the
Court to the judgment of the apex Court in the case of
Ghanashyam Mishra and sons Pvt. Ltd. vrs. Edelweiss Asset
Reconstruction Company Limited & others reported in (2021)
9 SCC 657 wherein it has been held as follows:
// 6 //
"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 of the I&B
Code is clarificatory and declaratory in nature and
therefore will be effective from the date on which
I&B Code 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."
7. The same view has been reiterated in the case of M/s.
Ruchi Soya Industries Ltd. vrs. Union of India & others
reported in 2022- Live Law (SC) 207.
8. Furthermore, it is submitted that if in the writ petition the
nature of relief has become obsolete and in view of the
subsequent development a new form of relief will be more
efficacious, this Court in exercise of the writ jurisdiction under
Article 226 of the Constitution of India can mould the relief.
// 7 //
Reliance in this regard has been placed in the case of Rajesh D.
Darbar and others vrs. Narasingrao Krishnaji Kulkarni and
others reported in (2003) 7 SCC 219 wherein it has been held
that where the nature of the relief, as originally sought, has
become obsolete or unserviceable or a new form of relief will be
more efficacious on account of developments subsequent to the
suit or even during the appellate stage, it is but fair that the relief
is moulded, varied or reshaped in the light of updated facts
provided the party claiming the relief or change of relief must
have the same right from which either the first or the modified
remedy may flow. Further where the relief is discretionary,
courts may exercise this jurisdiction to avoid injustice. Likewise,
where the right to the remedy depends, under the statute itself,
on the presence or absence of certain basic facts at the time the
relief is to be ultimately granted, the Court, even in appeal, can
take note of such supervening facts with fundamental impact.
Also where a cause of action is deficient but later events have
made up the deficiency, the Court may, in order to avoid
multiplicity of the litigation, permit amendment and continue the
proceeding, provided no prejudice is caused to the other side. All
these are done only in exceptional situations and just cannot be
done if the statute, on which the legal proceeding is based,
inhibits, by its scheme or otherwise, such change in cause of
action or relief. The primary concern of the Court is to
implement the justice of the legislation. Rights vested by virtue
of statute cannot be divested by this equitable doctrine.
// 8 //
9. Drawing notice of this Court to the aforesaid position of
law laid down by the apex Court quoted supra, learned counsel
for the Petitioner would submit to declare that the tax and
penalty as claimed being extinguished, the Opposite Party is not
entitled to realize the same from the Petitioner and as such the
Opposite Party to refund the tax paid pursuant to the interim
order of this Court.
10. Learned Standing Counsel appearing for the Opposite
Party-Transport does not dispute the aforesaid position of law on
which reliance has been placed by the learned counsel for the
Petitioner. However, he submitted that in the writ petitions no
such prayer was made. It is true that when the writ petitions were
filed, the aforesaid fact was not in existence. But later on the
proceeding having been initiated in the year 2017, the Petitioner
could have very well amended his prayer that the claim of one of
the financial creditors is subject to NCLT proceeding and as
such the claim of the Opposite Party if any is required to be
adjudicated in the NCLT proceeding there. Furthermore, even
after approval of the Resolution Plan the Petitioner has also not
amended the writ petition simply he has brought to the notice of
the Court the subsequent development. From the Resolution Plan
at Annexure-7 at Page 7 to 215 approved by the adjudicating
authority it has also been clearly mentioned in Clause-E2/2,
E/2/3, Clause 7.1.1 and 7.1.2 that the SML has outstanding
statutory liabilities of around Rs.37.86 crores as on 31.3.2017
and it has also various litigation initiated by the
// 9 //
financial/operational creditors as detailed in the plan. In addition
to the regular operation creditors the SML has also certain old
operational creditors whose outstanding amount payable as on
31.3.2017 stood at 36.49 crores. So also as per the Resolution
Plan, the liquidation value payable to the operational credit is
Nil. The total old operational credits are coming around Rs.36.49
crores. SML proposes to settle the same at an average level of
around 30% in a gradual manner although the liquidation value
payable to operational creditor is Nil. As per the Resolution
Plan, the liquidation value payable in respect of the statutory
liabilities is Nil. However, SML proposes to settle the entire
statutory liabilities gradually matching with the cash flow over a
period covering from financial year 2018 to financial year 2025.
As per the payment plan under the Resolution Plan, it is seen that
except for Clause-A secured creditors, other financial creditors
as well as operational creditors are not getting any amount at all.
As against that as per the debt resolution plan, different classes
of creditors would get a significantly higher amount as under. In
the table it has been mentioned in Item-C in Serial No.1 and 2
that the operational creditors would get statutory liability of
Rs.3071.00 lakhs and other operational creditors of Rs.15552.74
lakhs. The management and control of SML will continue in the
hands of the existing management who have the required Techno
Commercial as well as the financial liabilities to manage the
affairs of the company during implementation period. SML is
opened to accept any reasonable monitoring arrangement as
might be imposed by the COC in this behalf.
// 10 //
11. Drawing the notice of this Court to the aforesaid, it is
submitted by the learned Standing Counsel appearing for the
Opposite Party-Transport that since in the Resolution Plan
approved by the adjudicating authority, it has been admitted by
the SML, the Petitioner, to settle the statutory liabilities and
operational debt at an average level matching with the cash flow
over a period from the financial year 2018 to financial year
2025. SML has admitted to settle the said dues even though the
claims have not been submitted by the statutory
authority/operational creditors. Hence, it is fallacious to say that
since no claim was raised with regard to the statutory dues the
same got extinguished in view of the law laid down as aforesaid.
It is further submitted by him that the Petitioner having not
amended the writ petitions and making a prayer by way of
additional affidavit, the Petitioner is not entitled to the relief
sought for as that would amount to denial of natural justice to the
Opposite Party. Since the Opposite Party has not been given any
opportunity to counter the factual aspect by filing a counter as
pleaded in the additional affidavit, this Court, therefore, should
be loath in granting such relief to the Petitioner in these writ
petitions, submits the learned Standing Counsel for the Opposite
Party-Transport.
12. After hearing the learned counsel for the parties and
going through the materials on record particularly the pleading,
admittedly the Petitioner has not amended the prayer in the writ
petitions nor incorporated the aforesaid facts by way of an
// 11 //
amendment. But by fling an additional affidavit, drawing the
notice of the Court to the subsequent development in the NCLT
i.e. the finalization of the Resolution Plan approved by the
NCLT and also the law laid down as quoted supra, he has sought
for the relief. Since the Petitioner has not incorporated the
aforesaid plea in the writ petitions nor he has amended the
prayer, allowing such prayer of the Petitioner would amount to
take the Opposite Party by surprise that too without giving any
opportunity to rebut such factual aspect that the Petitioner had
not raised any claim when the Interim Resolution Professional
made an advertisement to raise such claims under Section 15 of
the Insolvency and Bankruptcy Code, 2016. The same would
amount to violation of the principle of natural justice. Therefore,
notwithstanding the law down by the apex Court in the case of
Ghanashyam Mishra (supra) and M/s. Ruchi Soya Industries
Ltd (supra) and Rajesh D. Darbar (supra), this Court is unable
to accept the submission of the learned counsel for the Petitioner.
But the Petitioner having a prima facie case, this Court disposes
of all the writ petitions giving liberty to the Petitioner to
approach this Court within two months hence, if so advised, by
fling the appropriate petitions incorporating the aforesaid plea
and prayer and till then, no coercive steps shall be taken against
the Petitioner and/or the vehicles for realization of the penalty
dues by the Opposite Party. If the Petitioner approaches this
Court within the time stipulated, the deposit made with regard to
the tax pursuant to the interim order of this Court and the penalty
stated to be payable shall be subject to the order passed in the
// 12 //
said writ petitions. However, if the Petitioner does not approach
this Court within the time stipulated, there is no impediment on
the part of the Opposite Party to realize the statutory dues, if any,
pending against him in the manner known to law.
13. Urgent certified copy of this order be granted on proper
application.
(S. Pujahari)
Judge
PKS/DA
