IBC

IBC (Amendment), 2026 Series – IV | The Clean Slate Doctrine: Another Attempt at Laying Down the Law 

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The Insolvency and Bankruptcy Code (Amendment) Act, 2026 (‘IBC Act, 2026’) – inter alia – amends the Insolvency and Bankruptcy Code, 2016 (‘IBC’) to underline scope of the clean slate doctrine. IBC Act, 2026 is the second attempt to amend Section 31 of the IBC and ensure that once the National Company Law Tribunal (‘NCLT’) approves the resolution plan, it is final and binding on all stakeholders including all statutory authorities. The clean slate doctrine, as encoded in Section 31 has various aims; the primary one is to provide certainty to the successful resolution applicant that all claims not part of the approved resolution plan are extinguished. And the successful resolution applicant can take over and run the corporate debtor without the worry of discharging extraneous liabilities. However, various creditors – including statutory authorities – frequently file claims arguing that they are not bound by the approved resolution plan. The statutory authorities rely on various arguments: they weren’t issued proper notices by the resolution professional, certain claims such as taxes remain unaffected by Corporate Insolvency Resolution Process (‘CIRP’) of the IBC or that they are not bound by the resolution plan since they weren’t part of CIRP. And these arguments have led to mixed results undermining lofty aims of the clean slate doctrine.   

Section 31 originally stated that a resolution plan was binding on guarantors and all stakeholders. Ideally, the latter term – ‘all stakeholders’ – should have sufficed to bind the statutory authorities. However, persistent claims filed by statutory authorities even after approval of the resolution plan prevented the clean slate doctrine from providing complete certainty to the successful resolution applicant. Thus, in 2019, Section 31 was amended to expressly state that an approved resolution plan was binding on the Central Government, State Government or a local authority to whom statutory dues are owed by the corporate debtor. However, it proved insufficient and the IBC Act, 2026 further amends Section 31 on similar lines to clarify the effect of an approved resolution plan and scope of the clean slate doctrine. 

This article provides a descriptive account of the jurisprudence that has emerged under Section 31, conceptual clarity that the courts have tried to introduce, and the pockets of uncertainty that survived the amendment to Section 31 made in 2019. Specifically, uncertainty about claims under tax laws and pending arbitration proceedings. This article thereafter elaborates on the additions made to Section 31 via the IBC Act, 2026 and claims that while the amendment introduces additional clarity and further demarcates scope of the clean slate doctrine, some pending issues may only be resolved through judicial interpretation. Specifically, issues relating to tax dues owed by the corporate debtor and unjust enrichment.       

I. Preventing a Hydra Head from Popping Up 

In CoC of Essar Steel India Ltd v Satish Kumar Gupta & Ors (‘Essar Steel case’), the Supreme Court inter alia addressed challenge to the approved resolution plan by erstwhile promoters who were personal guarantors of loans to the corporate debtor. The resolution plan – as approved by the NCLT – extinguished the right of subrogation of guarantors in respect of guarantees that had been invoked by financial creditors. The guarantors challenged the said clause and argued that since they were not part of the resolution plan submitted by the successful resolution applicant – ArcelorMittal – they cannot be bound by its terms. And that their right to subrogation survives irrespective of the terms of resolution plan. The Supreme Court cited State Bank of India v V. Ramakrishnan (‘SBI case’), to dismiss the promoters claim. The SBI case was a judgment in the context of moratorium in which the Supreme Court held that under Section 31, a resolution plan also binds the guarantors of corporate debtors. 

The Supreme Court relied on observations in the SBI case to set aside observations of the National Company Law Appellate Tribunal (‘NCLAT’). The NCLAT had observed that claims against corporate debtor that remained undecided, can be decided by appropriate forums even after approval of the resolution plan. The Supreme Court disagreed with the NCLAT’s directions and held that: 

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 successfully take over the business of the corporate debtor. (para 67) (emphasis added) 

The Supreme Court, underlining the importance of certainty and finality of CIRP directed that all claims against the corporate debtor must be submitted to and decided by the resolution professional. Thus, a successful resolution applicant, at the time of approval of the resolution plan, can discharge outstanding liabilities of the corporate debtor and start on a ‘clean slate’. The Supreme Court’s observations were accurate not only in respect of the IBC’s aims but also correctly clarified the import of Section 31. As per Section 31, once the NCLT approves a resolution plan it was binding on the corporate debtor and its employees, members, creditors, ‘guarantors and other stakeholders involved in the resolution plan.’ 

II. Ghanashyam Mishra Case Underlines Effect of Section 31 vis-à-vis the State

The above-mentioned ratio of the Essar Steel case should have, ideally, sufficed to clarify legal effect of approval of a resolution plan vis-à-vis the State, including all statutory authorities. As the statutory authorities could reasonably be termed a ‘stakeholder’ in the resolution plan, even if they were not expressly mentioned in Section 31. However, the IBC was amended in 2019, to expressly clarify that the resolution plan was binding on various authorities of the State. In 2019, the following phrase was added in Section 31:  

… including the Central Government, any State Government 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 … 

Statement of Reasons and Objects of the IBC (Amendment) Bill, 2019 mentioned that tax authorities were also bound by a resolution plan approved by the NCLT. Implying that the tax and other statutory authorities were refusing to accept that statutory dues – for example, outstanding tax payments – were also extinguished or altered as per terms of the resolution plan. The Supreme Court in Ghanashyam Mishra & Sons v Edelweiss Asset Reconstruction Co Ltd (Ghanashyam Mishra case) reiterated the import and rationale of Section 31 and the effect of the amendment made to Section 31 in 2019. Two questions that the Supreme Court had to answer in the Ghanashyam Mishra case were: (i) whether the Central Govt, State Govt or local authority were bound by the resolution plan approved by the NCLT under Section 31?; (ii) whether the Central Govt, State Govt or local authority can initiate proceedings against the corporate debtor in respect of dues not part of the resolution plan approved by the NCLT under Section 31? The Supreme Court answered first question in the affirmative and second question in the negative. 

The Supreme Court elaborated on the various steps in CIRP to underline that a resolution professional prepares an information memorandum to inform the resolution applicants about financials of the corporate debtor. The intent is that the resolution applicants submit resolution plans to satisfy the enlisted financial liabilities and ensure effective running of the corporate debtor. The Supreme Court’s three observations are pertinent: (a) dues arising under any law for the time being in force and payable to the Central Govt, State Govt, or local authority are operational debts, and any entity to whom a statutory dues are owed will be covered by the term ‘creditor’ under Section 31; (b) in the alternative, the Central Govt, State Govt or local authority will be covered by the phrase ‘other stakeholders’ under Section 31; (c) and this observation flowed from the first and second observation: the amendment of 2019 was only clarificatory in nature. The amendment of 2019 to Section 31 only made express what was already implied, i.e., the State and its various statutory authorities were also bound by the resolution plan once it is approved by the NCLT.    

The repeated resistance of statutory authorities such as the Revenue Department to be bound by terms of the resolution plan can – in my view – be attributed to two reasons. Firstly, oversight in submitting the outstanding claims/dues against the corporate debtor during CIRP. Secondly, an erroneous view that the statutory authorities are a distinct and standalone category. Both were understandable in initial few years of the IBC because comprehension about the scope and effect of CIRP was in a nascent stage. But, a continuing insistence, especially by the Revenue Department that outstanding tax dues cannot be reduced or extinguished by resolution plan approved under CIRP even after a decade of the IBC – and several judicial decisions – is inexcusable.  

However, the Essar Steel case and the Ghanashyam Mishra case cumulatively ensured that scope of the clean slate doctrine, interpretation of Section 31, the effect of amendment in 2019 were all clearly established. And these decisions reduced scope for arguments by statutory authorities that they weren’t bound by the resolution plan.          

III. Further Clarifications (and Confusions) 

The Supreme Court’s pronouncement in the Essar Steel case, the Ghanashyam Mishra case, as well as the SBI case – while reduced the scope for statutory authorities to pursue their claims after approval of a resolution plan – were not sufficient to clarify binding nature of an approved resolution plan. Lending finality to the resolution plan proved to be a recurrent difficulty. For example, in Electrosteel Limited v Ispat Carrier Private Limited, the Supreme Court had to clarify that an approved resolution plan extinguishes all previous claims including arbitration proceedings. And an arbitral award passed in respect of pre-CIRP claims but after approval of the resolution plan is null. However, in Ujaas Energy Ltd v West Bengal Power Development Corporation Ltd, the Supreme Court provided a limited relief in respect of pre-CIRP arbitration proceedings against the corporate debtor. The West Bengal Power Development Corporation had filed a counterclaim in respect of arbitration proceedings against the corporate debtor. Subsequently, CIRP was initiated against the corporate debtor. The Supreme Court observed that the resolution plan did not expressly reflect exclusion of the counterclaim and the resolution professional despite being aware of it did not take it into consideration while formulating the resolution plan. Based on facts of the case, the Supreme Court held that while the West Bengal Power Development Corporation cannot pursue its counterclaim as it stands extinguished, it can raise the plea of set-off by way of a defence. While the Supreme Court provided a limited relief based on facts of the case, the Ujaas Energy case exemplified that scope of the clean slate doctrine may require suitable tailoring in some fact situations. And complete clarity may not emerge from statutory provisions alone.  

A crucial site of inconsistency has been tax assessments of the corporate debtor. The Madras High Court in Dishnet Wireless Ltd v Assistant Commission of Income Tax (OSD) (‘Dishnet Wireless case’) observed that proceedings under Section 148, Income Tax Act, 1961 were pending before commencement of CIRP. But appropriate concessions from the Income Tax Department were not included in the final resolution plan. Nor was any notice issued to the Income Tax Department. The Madras High Court held that it was incumbent on the corporate debtor to serve proper notice to the Income Tax Department about CIRP. And thus, permitted continuation of the assessment proceedings even after approval of the resolution plan. But the Delhi High Court in M Tech Developers Pvt Ltd v National Faceless Assessment, Delhi & Anr (‘M Tech Developers case’) in the context of faceless assessment proceedings under Section 144B, Income Tax Act, 1961 held that: 

Any effort to assess, reassess or re-compute could tend to lean towards a re-computation of liabilities which otherwise stands freezed by virtue of the Resolution Plan having been approved. (para 8)

The Delhi High Court expressed its disagreement with the Madras High Court’s view expressed in the Dishnet Wireless case. The Delhi High Court in a few other cases, has taken a view that aligns with the M Tech Developers case, but overall the decisions are inconsistent. Militating against certainty that the clean slate doctrine intends to provide to resolution applicants under Section 31.  

Further, in Tata Steel Limited v State of UP, the Allahabad High Court disallowed assessment proceedings after approval of the resolution plan by relying on the Ghanashyam Mishra case. In appeal, the Supreme Court did not disagree with the Allahabad High Court but left open the issue of unjust enrichment. The issue of unjust enrichment, in this context, involves a determination if the tax collected/deducted by the corporate debtor can be made part of the resolution plan. Or will it have to be necessarily remitted to the Revenue Department. This question is pertinent for any indirect taxes collected or any tax deducted at source under the Income Tax Act, 2025 by the corporate debtor. If resolution plan is approved by the NCLT can such taxes collected by the corporate debtor – yet to be remitted to the State – be made part of the resolution plan? Or do they have to be necessarily set aside. The courts have not pronounced the final word on this issue, but my tentative view is that permitting taxes so collected to be part of the resolution plan may lead to unjust enrichment. And it may be advisable to keep such taxes outside the purview of resolution plan.       

IV. IBC Act, 2026 Lays Down the Law – Again 

The IBC Act, 2026 – partially in recognition of the some of the confusions that survived the 2019 amendment to Section 31 – attempts to again ring fence the approved resolution plan and place a statutory stamp on its finality. Section 31(6) – inserted via the IBC Act, 2026 – is worth extracting:

(6) Where the Adjudicating Authority approves the resolution plan under sub-section (1),––

(a) unless otherwise provided in the resolution plan, any claim, against the corporate debtor and its assets under any other law for the time being in force, prior to the date of approval, shall be extinguished; and

(b) no proceedings shall be continued or instituted against the corporate debtor or its assets on the basis of such claims, including proceedings for assessment of the claims.

The IBC Act, 2026 also inserts three Explanations to the above sub-section. Explanation 1 and Explanation 2 inserted further clarify that proceedings against promoters or a person in control or management shall be unaffected. Further, if a person had joint liability for payment of debt and such a person makes a payment after approval of the resolution plan then right to be indemnified of that person shall be extinguished. 

In view of the above, three additions to the clean slate doctrine – via the IBC Act, 2026 – are: 

(a) to prevent continuation or initiation of assessment proceedings against the corporate debtor after approval of the resolution plan. This restraint is evidently directed at restraining tax authorities. A plain interpretation suggests that the Delhi High Court’s view in M Tech Developers case has been endorsed. Whether the amendment is sufficient to deter the tax authorities, or a further nuance will be added by judicial interpretation remains to be seen. 

(b) a distinction is made between proceedings against promoters or persons in management or control of the corporate debtor and the corporate debtor itself. It is clarified that the clean slate doctrine is only applicable to claims against the corporate debtor and not to persons who managed or controlled the corporate debtor. This again underlines that the corporate debtor’s liabilities are frozen as per the resolution plan. And even the guarantor’s right of indemnification does not survive approval of the resolution plan.  

(c) in part to resolve the controversy that emerged in the Essar Steel case, prevents the guarantor or any person who has a joint liability to repay the corporate debtor’s debts to seek indemnification. 

In summation, one can make a persuasive case that the amendments to Section 31 in 2019 and 2026 – alongside various judicial precedents cited above – are enough to provide certainty and finality to a resolution plan. And claims not included in the resolution plan are extinguished once it is approved by the NCLT. An overwhelming no. of issues have been addressed by both the amendments of 2019 and 2026, but only tenacity of the tax authorities and complexity of fact situations will provide an answer if the IBC Act, 2026 has succeeded in clarifying scope of the clean slate doctrine.  

V. A Hopeful Future 

Section 31 – based on the amendments in 2019 and by the IBC Act, 2026 – provide an insight about the challenge of drafting provisions for the IBC. Until Section 31 was amended to clearly and expressly state that the statutory authorities were bound by the resolution plan, they refused to extinguish their claims against the corporate debtor. The first evidence of this was in 2019, wherein a specific phrase mentioning Central Govt, State Govt and local authorities had to be inserted in Section 31 to clarify that a resolution plan also binds statutory authorities. This was even though the terms ‘creditors’ and ‘other stakeholders’ clearly swept various statutory authorities under their scope and made them bound by the resolution plan. Amendments introduced by the IBC Act, 2026 are a further step in that direction: making express something that was implied in Section 31. For example, preventing the continuation or initiation of assessment proceedings against the corporate debtor. A restraint that should have been evident even after the amendment in 2019 but had to be spelled out expressly. Thus, if something has been implied, or has required judicial interpretation in Section 31, it has not had the desired effect. Legislative interventions have required scope of the clean slate doctrine to be spelled out expressly. 

The IBC Act, 2026 incorporates this lesson and attempts to provide finality to the resolution plan and spells out scope of the clean slate doctrine in express terms. Hopefully, this legislative intervention should provide sufficient deterrence to the statutory authorities to resist binding nature of an approved resolution plan. And get their pending claims incorporated in the resolution plan itself, in a timely and appropriate fashion. Respect for finality and binding nature of the resolution plan will go a long way in serving and achieving the IBC’s objectives.    

IBC (Amendment), 2026 Series – III | Restoring CIRP under the IBC: A New Portal Opens 

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The Insolvency and Bankruptcy Code (Amendment) Act, 2026 (‘IBC Act, 2026’) amends the Insolvency and Bankruptcy Code, 2016 (‘IBC’) and empowers the National Company Law Tribunal (‘NCLT’) to restore Corporate Insolvency Resolution Process (‘CIRP’) before passing an order for liquidation of the corporate debtor. Previously, under Section 31(1) of the IBC, the NCLT could pass an order of liquidation if: (a) it did not receive a resolution plan within the stipulated time; or (b) if the NCLT rejected a resolution plan under Section 31 for failure to meet compliance requirements. Thus, if CIRP failed due to either of two reasons the NCLT’s only option was to order liquidation of the corporate debtor. The IBC Act, 2026 provides for  restoration of CIRP via insertion of sub-section (1A) to Section 33 which states that: 

Notwithstanding anything contained in sub-section (1), where the Adjudicating Authority is satisfied that the grounds mentioned in clause (a) or clause (b) of sub-section (1) of this section exist, it shall, before passing the liquidation order, consider an application made by the committee of creditors, in such manner and subject to such conditions as may be specified, by not less than sixty-six per cent. of the voting share, for restoring the corporate insolvency resolution process… (emphasis added)

The above sub-section substantially alters the IBC’s original design wherein on CIRP’s failure, liquidation of corporate debtor was the sole option. Even though Section 33(1B) states that an order for restoration of CIRP can be passed only once, the option of restoring CIRP accompanies its own set of challenges. Foremost, option of restoring CIRP creates possibility of ‘repeated loops.’ Until now, there is one notable precedent – Chitra Sharma and Ors v Union of India and Ors (‘Chitra Sharma case’) – wherein the Supreme Court restored CIRP in exercise of its powers under Article 142 of the Constitution. While the Chitra Sharma case is not squarely comparable to Section 33(1A), it provides context and reasons as to why in some cases CIRP can be restored.  

Accordingly, this article is divided into two parts: the first part provides relevant details about the Chitra Sharma case and reasons for the Supreme Court’s exceptional order of restoring CIRP; the second part catalogues some of the challenges that accompany introduction of Section 33(1A) and the consequences that may follow from such a legislative choice. This article concludes that while there are some persuasive reasons for restoring CIRP; for example, the corporate debtor retains value or if there is renewed interest from certain investors. However, overall functioning of the IBC – where time limits are frequently breached – does not lend much confidence that restoration of CIRP will meet its intended objectives of rescuing the corporate debtor in a timely fashion. In fact, the option of restoring CIRP may reduce the overall efficacy of CIRP.    

A Notable Instance for Restoring CIRP 

The most notable instance of restoring CIRP was in the Chitra Sharma case. Home buyers, in projects floated by Jaypee Infratech Ltd (‘JIL’), filed a writ petition before the Supreme Court seeking protection of their interests. Home buyers approached the Supreme Court because in CIRP against JIL, they were not allowed to file their claims either as financial or operational creditors. Because the IBC, as it existed then, did not recognize home buyers are stakeholders in CIRP. Home buyers challenged various provisions of the IBC wherein they were not recognized as a stakeholder in CIRP and requested the Supreme Court to protect their interests. 

The Supreme Court encountered a situation wherein no successful resolution applicant was found through CIRP. Thus, as per the IBC only other option was to order liquidation of JIL under Section 33. However, the Supreme Court noted that all stakeholders were of the view that liquidation of JIL will not ‘subserve the interests of the home buyers.’ Thus, the Supreme Court was faced with the task of balancing interests of home buyers and respecting discipline of the IBC. Latter demanded ordering a timely liquidation of JIL since CIRP had not yielded a successful resolution applicant. While serving interests of the home buyers meant opting for a solution which would provide them possession of their intended houses. It was in the backdrop of these facts that the Supreme Court in the Chitra Sharma case ordered that:

… the power under Article 142 should be utilised at the present stage for the limited purpose of recommencing the resolution process afresh from the stage of appointment of IRP by the order dated 9 August 2017 and resultantly renew the period which has been prescribed for the completion of the resolution process. (para 39) 

The Supreme Court’s main reason for restoring CIRP in the Chitra Sharma case was that in initial CIRP, home buyers did not have the status of a financial creditor under the IBC. And were unable to participate in CIRP. While in the intervening period, amendments to the IBC – specifically amendment to Section 5(8) – had accorded home buyers the status of financial creditors. Thus, the Supreme Court ordered restoration of CIRP and reasoned that reconstitution of the Committee of Creditors (CoC) as per amended provisions of the IBC will protect interests of home buyers as they will be able to participate in CIRP in their capacity of financial creditors. Another reason why the Supreme Court chose to restore CIRP was that the other options of providing another opportunity to erstwhile promoters of JIL or the Supreme Court appointing a committee to oversee the resolution process were not found to be viable. Overall, lack of any successful resolution applicant, intent to provide homes to home buyers, and a change in legal position of home buyers under the IBC cumulatively influenced the Supreme Court’s decision to restore CIRP. 

Until now, the Supreme Court’s decision in the Chitra Sharma case remains an exceptional decision because it mandated restoration of CIRP to complete justice. And such a remedy could only be provided by the Supreme Court in exercise of its powers under Article 142 of the Constitution. Neither the NCLT nor the NCLAT possessed the power to order restoration of CIRP under the IBC. Though ironically, the Supreme Court invoked discipline of the IBC to provide this remedy to the home buyers, even though the IBC did not envisage restoration of CIRP. Though this legal position has been altered by the IBC Act, 2026.      

Restoring CIRP: A Catalogue of Challenges and Consequences 

Firstly, Section 33(1A) opens possibility for the NCLT to delve into commercial aspects of CIRP. Under the IBC, the NCLT is expected to perform only a supervisory role while all commercial decisions are the CoC’s remit and non-justiciable. However, Section 33(1A) does not clearly earmark the NCLT’s remit and leaves door ajar for the NCLT to review commercial wisdom of the CoC. Three aspects of Section 33(1A) point towards this possibility: firstly, Section 33(1A) states that the NCLT ‘shall’ consider the CoC’s application for restoration and after its consideration it ‘may’ order restoration of CIRP; secondly, the CoC can only file an application for restoration before the NCLT if it is approved by sixty-six per cent of the votes; thirdly, Section 33(1A) merely states that the NCLT shall order restoration of CIRP in such manner and ‘subject to such conditions as may be specified’. Thus, we currently do not know of the conditions and factors that the NCLT needs to consider before ordering restoration of CIRP. 

The use of both ‘shall’ and ‘may’ at different places in Section 33(1A) indicates that the NCLT is bound to decide the CoC’s application but not obligated to order restoration of CIRP. Thus, if the NCLT rejects the CoC’s application for restoration it can amount to judicial review of commercial wisdom of the CoC. Because the CoC is required to vote in favor of restoration before seeking the NCLT’s approval. The CoC’s decision for restoration of CIRP is likely to be based on commercial considerations such as change in value of the corporate debtor, new market conditions, investor interest and other such similar factors. Even if one accepts that the doctrine of commercial wisdom is applicable to Section 33(1A) it implies that the NCLT shall examine the CoC’s decision of restoration of CIRP on the touchstone of legality. However, no specific parameters are prescribed for judicial review under Section 33(1A). If ‘subject to such conditions as may be prescribed’ implies that substantive parameters will be mentioned in Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (‘CIRP Regulations’), then it is not the ideal way to approach legislative drafting on such crucial issues. And if the CIRP Regulations will only prescribe procedural parameters, then scope for judicial review of commercial wisdom of the CoC remains open. To compare, under Section 31 the NCLT examines the CoC’s approval of a resolution plan, but the touchstone of judicial review is requirements specified in Section 30(2). Not only are those kinds of parameters currently absent from the IBC in relation to Section 33(1A); it is my view that prescribing a list of objective parameters may prove to be difficult in relation to restoration of CIRP. This is because restoration of CIRP is likely to be a fact-based commercial decision with few legalities involved. Perhaps, this is one reason no legal parameters have been included in Section 33(1A) and the Parliament has kicked the onus of identifying the relevant factors into domain of secondary legislation. Thus, once the CoC votes in favor of restoration of CIRP, the NCLT’s review of the CoC’s decision can wade into commercial wisdom and absence of statutory guardrails increases such a possibility.   

Further, Section 33(1A) impliedly endorses the idea that procedural mistakes, failure to meet timelines, and other related omissions during CIRP are curable defects. The mistakes, omissions, and delays are generally attributable to the CoC, resolution professionals, NCLT/NCLAT, and that certain legal aspects of the IBC are unclear. However, permitting restoration of CIRP signals that previous omissions or oversights in following the IBC’s procedures do not lead to the fatal result of liquidation. When there is scope to redo the entire CIRP, it does not incentivize the CoC and/or the resolution professional to adhere to all CIRP procedures and timelines scrupulously. I’ve argued in my previous post that the NCLT sending resolution plans back to the CoC for reconsideration prevents accountability for the latter’s inability to perform its statutory duty. Section 33(1A), in part, reinforces the CoC’s lack of accountability for its failure to meet the statutory obligations in pursuit of the IBC’s aim of rescuing the corporate debtor.  

While the Supreme Court, in CoC of Essar Steel India Ltd v Satish Kumar Gupta & Ors, has held that timelines under the IBC are directory. However, not adhering to timelines defeats the IBC’s purpose of preserving value of corporate debtor’s assets and the endeavor must be to respect the timelines.             By permitting restoration of CIRP under Section 33(1A), the timelines will undoubtedly get extended and corporate debtor’s assets may lose value. Admittedly, the choice for restoration involves a trade-off: rescuing the corporate debtor instead of liquidating it; but the cost of delayed liquidation if the restored CIRP also fails will be much higher as compared to a timely liquidation. The legislative choice seems to be clear: rescue of corporate debtor is preferred over a delay liquidation and probable loss of asset value.      

Further, most CIRPs under the IBC are besieged with the challenge of timely completion. The NCLT admitting a CIRP, approvals by the CoC, and subsequent approvals by the NCLT of a resolution plan, appeals before the NCLAT and the Supreme Court cumulatively add to delays in CIRP since each step is time consuming. And all the steps of CIRP are rarely completed within the one hundred- and eighty-days’ time prescribed under Section 12 of the IBC. In a scenario where delays are commonplace and CIRP continues for an extended time, creating an option for restoration of CIRP hardly invokes confidence that the restored CIRP will be completed in time. Section 33(1A)(b) states that a restored CIRP shall be completed within one hundred and twenty days. It is not far-fetched to presume that if the time under Section 12 is directory, then the time under Section 33(1A)(b) is also directory. And if the time under Section 12 is not respected in various CIRPs, then a similar scene is likely to be witnessed for a restored CIRP. All material factors that contributed to delay in CIRP will also affect the restored CIRP. 

Section 33(1A) also privileges rescue of the corporate debtor over various other aspects of the IBC such as need to complete CIRP in a timely fashion, preservation of assets of the corporate debtor, as well as preventing undue and prolonged uncertainty. Admittedly, the IBC’s aim – as exemplified in its Preamble – is to rescue the corporate debtor and not liquidate it. However, the attempts at rescue need to be defined by time and underlined by certainty. CIRP-related procedures, in so far as possible, should move in a linear direction and any back and forth should be minimal. The discipline of a linear direction makes the relevant entities more mindful of their roles and responsibilities. Creating statutory basis for restoring CIRP opens the possibility of first attempts in CIRP being sub-par. While it is in the CoC’s collective interest to be mindful of CIRP related processes from the beginning, the option of re-attempting leaves room to be lax about the procedural and substantive legal requirements. And that does not bode well for an efficacious CIRP.

Finally, the Select Committee on the IBC (Amendment) Bill, 2025 (‘Select Committee’) seems to have endorsed the idea that restoration of CIRP is also possible if there is failure in implementation of the resolution plan. Technically speaking, failure in implementation of the resolution plan is a failure of CIRP. However, restoring CIRP due to implementation of the resolution plan going off rails implies smoothening a collective failure of the CoC, implementation committee, and the resolution applicant. In SBI v The Consortium of Mr. Murari Lal Jalan, the Supreme Court ordered liquidation when implementation of a resolution plan faced undue delays instead of trying to make another attempt at rescuing the corporate debtor. Restoring CIRP after failure in implementation of the resolution plan has the potential for efforts to rescue the corporate debtor to continue for a duration much beyond originally envisaged in the IBC. On balance, timely liquidation may still lead to better results in terms of releasing stuck capital, providing certainty, and bringing a closure for various stakeholders as opposed to delaying liquidation due to repeated efforts at rescuing the corporate debtor. 

Conclusion

The Select Committee was optimistic that restoration of CIRP will achieve its objective and noted that: 

The Committee find merit in the Ministry’s submission that this provision serves as a final opportunity to rescue the corporate debtor in genuine cases, subject to the commercial wisdom of the Committee of Creditors (66% voting share) and the discretion of the Adjudicating Authority, with a strict timeline of 120 days. (para 20.6.1) 

The Select Committee’s optimism is on three aspects: (a) restoring CIRP will remain confined to genuine cases, and that such cases are easy to detect and distinguish from non-genuine cases; (b) commercial wisdom of the CoC will work seamlessly with the NCLT’s discretion, though deference to the CoC’s wisdom is better respected by providing the NCLT limited discretion; (c) the timeline of one hundred and twenty days for restored CIRP is ‘strict’ and will be followed scrupulously. To conclude succinctly, I do not share the Select Committee’s optimism on all three counts. Section 33(1A) – even if CIRP Regulations enumerate legal parameters for the NCLT to consider – is likely to be another breeding ground of litigation and uncertainty. And both will militate against the IBC’s core objectives.  

IBC (Amendment), 2026 Series – II | CoC’s Role in the IBC: A Case for Greater Legislative Clarity

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The Insolvency and Bankruptcy Code, 2016 (‘IBC’) provides the Committee of Creditors (‘CoC’) a central role in corporate insolvency resolution proceedings (‘CIRP’). The IBC prescribes the CoC’s role in broad terms and specific boundaries are still being delineated through judicial decisions. For example, while courts have consistently endorsed that commercial wisdom of the CoC is non-justiciable, precise extent of judicial oversight over the CoC’s decisions remains uncertain. This article focuses on two aspects of the CoC’s working that have emerged exclusively by judicial innovation and examines whether The Insolvency and Bankruptcy Code (Amendment) Act, 2026 (‘IBC Act, 2026’) succeeds in its attempt to provide them a statutory basis. 

Firstly, the IBC did not expressly confer authority on the NCLT to refer resolution plans back to the CoC for reconsideration. Previously, Section 31 of the IBC provided a binary option to the NCLT: approve or reject a resolution plan. Equally, neither Section 61 nor Section 62 of the IBC envisaged that the NCLAT or the Supreme Court can mandate the CoC to reconsider resolution plans. And yet resolution plans were often sent to the CoC for re-examination on various grounds enunciated by the Supreme Court. The IBC Act, 2026 amends the IBC to empower the NCLT to return a resolution plan. The IBC Act, 2026 has inserted a proviso to Section 31(2) and empowered the NCLT to give notice to the CoC ‘to rectify any defects in the resolution plan’ before rejecting the resolution plan. Notes on clauses to the IBC Bill, 2025 – which is pari materia to the IBC Act, 2026 – clarified that the NCLT should provide an opportunity to the CoC when defects are ‘procedural, non-material’ and can be rectified by the CoC. But use of ‘any’ in the proviso, prima facie, provides the NCLT broad powers contrary to intent expressed in notes on clauses.  

Secondly, the IBC’s silence ‘as regards the phase of implementation’ of the resolution plan was noted by the Supreme Court in SBI v The Consortium of Mr. Murari Lal Jalan (‘Jet Airways case’). To overcome the IBC’s silence, the Supreme Court in Kalyani Transco v M/S Bhushan Power and Steel Ltd and Others (‘Bhushan Steel case’) held that the CoC is not functus officio after the NCLT approves the resolution plan. The Supreme Court added that since the CoC has a vital interest in implementation of the resolution plan it will continue to exist until the resolution plan is implemented, or an order of liquidation is passed by the NCLT. The IBC Act, 2026 – to correct statutory oversight on implementation of the resolution plan – proposes to replace Section 30(2)(d) to state that every resolution plan must necessarily provide for constitution of a committee to implement and supervise the resolution plan. I suggest that the IBC Act, 2026 should have ideally clarified role of the CoC vis-à-vis implementation committee. And only left other procedural details for the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (‘CIRP Regulations’). Else, implementation phase of the resolution plan may face further uncertainties about role of the CoC. Supreme Court’s judgment in Bhushan Steel case and the IBC Act, 2026 together ensure that the CoC and the implementation committee will co-exist during implementation of the resolution plan. How will the two entities interact? Will the implementation committee operate under supervision of the CoC? Clarity on these procedural aspects may emerge from the CIRP Regulations. But it was vital that the statute provided, in clear terms, the CoC’s role during implementation of the resolution plan. 

The IBC Act, 2026 has missed an opportunity to provide legislative clarity on both the above aspects. And leaves ample room for ad hoc judicial solutions that may hamper timely completion of CIRP.   

Reconsideration of a Resolution Plan by the CoC 

The Supreme Court in CoC of Essar Steel India Ltd v Satish Kumar Gupta & Ors (‘Essar case’) correctly held that while the NCLT cannot interfere with commercial decision of the CoC, it can exercise judicial review if the CoC has not taken into account key features of the IBC. For example, the NCLT is permitted to examine if a resolution plan approved by the CoC maximises the value of corporate debtor’s assets and balances the interests of all stakeholders. However, the Supreme Courts’ conclusion that the NCLT can send back a resolution plan to the CoC if key features of the IBC are amiss in a resolution plan is not supported by a plain reading of Section 31 of the IBC.   

Section 31(1) of the IBC states that the NCLT, ‘shall’ by order approve the resolution plan if it is satisfied that the resolution plan approved by the CoC meets requirements enlisted in Section 30(2). And if the resolution plan does not conform  to above stated requirements, the NCLT under Section 31(2) ‘may’ by an order reject the resolution plan. I suggest that interpreting may as directory in this context defeats the IBC’s objective of completing CIRP in a time bound manner. Under Section 31, the NCLT must determine if the resolution plan approved by the CoC satisfies the requirements enlisted under Section 30(2). If the answer is in affirmative, the NCLT must approve the resolution plan or else reject it. The NCLT directing the CoC to reconsider the resolution plan instead of rejecting it, expands time required for CIRP and defeats the aim of maximising the value of corporate debtor’s assets. One can argue that if the prescribed time limit for CIRP has not expired, the NCLT can send the resolution plan to the CoC for reconsideration. But, silence of Section 31 about grounds on which the NCLT ‘may’ send the resolution plan to the CoC for reconsideration suggests that such a possibility was not contemplated by the legislature. The Supreme Court, instead of paying attention to silence of Section 31 on powers of the NCLT to send back resolution plan has created its own parameters to permit reconsideration by the CoC. A legal position that suffers from multiple frailties.   

The Supreme Court has bifurcated judicial role vis-à-vis the CoC in two spheres: commercial decisions of the CoC and legality of resolution plans under the IBC. In Essar case and later in Jaypee Kensington Boulevard Apartments Welfare Association v NBCC (India) Ltd. the Supreme Court reiterated that the NCLT’s jurisdiction in approving the resolution plan cannot extend to altering commercial terms of the resolution plan. But in both cases, the Supreme Court observed that the NCLT can send the resolution plan back to the CoC for re-submission if key parameters of the IBC were amiss – such as those listed in Section 30(2) of the IBC. In both cases, flaw in the Supreme Court’s approach was in equating the NCLT’s power to review legality of the resolution plan with the power to send back resolution plan to the CoC. Section 31 empowers the NCLT with only the former and envisages a rejection of the resolution plan on failure to meet the parameters of Section 30(2). The Supreme Court by equating scope of the NCLT’s judicial review with power to send back resolution plan committed judicial overreach and introduced an additional step in CIRP which contributes to delay in its timely completion.          

Equally, the Supreme Court has not canalized the grounds on which the NCLT can send back the resolution plan. The NCLAT and the Supreme Court – have sent resolution plans for reconsideration on various grounds. Resolution plans have been returned for not providing that dissenting financial creditors must be paid in cash, the resolution professional wrongly rejecting the claim of financial creditor, and that dissenting financial creditors were paid less than stipulated under Section 30(2)(b).  The various grounds have emerged from fact situations and are not framed within any judicial doctrine on the NCLT’s powers of approval of the resolution plan. The NCLT/NCLAT/Supreme Court while sending back resolution plans have reasoned that only the CoC can amend commercial aspects of the resolution plan but have overlooked if they possess the power to send back the resolution plan. In fact, common link in the above-mentioned decisions is that in none of them any judicial forum has examined the legislative intent or text of Section 31 to determine if it permits the CoC to reconsider an approved resolution plan. The IBC Act, 2026 attempts to alter the legislative intent underlying Section 31 to this end but suffers from shortcomings. 

Notes on clauses to the IBC Bill, 2025 indicate that the NCLT must send back resolution plans only if defects are procedural, non-material and can be rectified by the CoC. To begin with, there is an erroneous presumption that substantive and procedural defects are neatly distinguishable categories in CIRP. None of the judicial decisions that have mandated reconsideration of resolution plan by the CoC have identified factors to distinguish substantive defect from a procedural defect. Even presuming that a clear categorization is possible, identifying the category of defect will require further judicial exercise, and create another layer of uncertainty about scope of the NCLT’s power. Not to mention that despite the legislative intent being to limit the NCLT’s power to only procedural defects, the proposed proviso mentions ‘any’ defect. An example of legislative drafting – prima facie – betraying the stated legislative intent.   

Further, the change to Section 31 proposed by the IBC Act, 2026 also prevents accountability of the CoC for its decisions. The commercial aspects of a resolution plan are beyond judicial purview because the IBC presumes that it is the CoC that possesses business expertise and not judicial forums. But the CoC, is obligated to make commercial decisions as per the IBC’s mandate. For example, the CoC must vote on the resolution plan after considering the parameters enlisted in Section 30(2) and obey the mandate of Section 30(4). Thus, if the CoC approves the resolution plan that contravenes clearly enlisted parameters in Section 30(2) or Section 30(4); prima facie, the CoC has committed a dereliction of its duty. And if the NCLT simply sends back a resolution plan – previously approved by the CoC – for reconsideration without any penalty or meaningful legal consequence for the CoC, it avoids accountability for its failure to discharge a statutory duty. The Supreme Court, in Jet Airways case, suggested that the Insolvency and Bankruptcy Board of India should explore the enforcement of standards in Guidelines for the CoC instead of making them self-regulatory to ‘prevent any significant lapse in decision making on the part of the CoC.’ The legal mandate must move towards greater accountability for the CoC instead of the opposite direction.  

Finally, the IBC Act, 2026 suffers from a contradiction in so far as it imagines role of the NCLT in CIRP. While the IBC Act, 2026 amends Section 7 to circumscribe the NCLT’s jurisdiction and expedite CIRP, it does the opposite as regards Section 31. The IBC Act, 2026 proposes to add Explanation 1 to Section 7 wherein if the NCLT is satisfied as to the existence of a default, is sure that the application is complete and no disciplinary proceedings are pending against the proposed resolution professional, it shall admit the CIRP application. Else reject it. The NCLT is not required to inquire into any other factor. Narrowing the NCLT’s jurisdiction under Section 7 is to expedite admission of the CIRP application if default by corporate debtor is proved. On the other hand, the NCLT is being permitted to send back the resolution plan by inserting a proviso in Section 31(2) to that effect. Thereby providing statutory basis to a judicial practice that is already contributing to delays in CIRP. The amendment to Section 31 may negate the amendment to Section 7 in so far as expediting CIRP is concerned.    

The CoC’s Uncertain Role in Implementation of the Resolution Plan

The IBC is silent on the CoC’s role in implementation of the resolution plan. This is evident in the IBC not providing any specific role and functions for the CoC once the resolution plan is approved by the NCLT. For example, if the NCLT has approved a resolution plan, then under Section 33(3) of the IBC any person – other than the corporate debtor – aggrieved by contravention of the approved resolution plan may make an application to the NCLT for liquidation. And Section 33(4) states that if the NCLT determines that a corporate debtor has contravened provisions of the resolution plan it may pass an order of liquidation. There is no express requirement of seeking the permission or even opinion of the CoC before passing the liquidation order. The CoC’s approval for liquidation by sixty-six per cent voting share is needed only if the resolution plan has not been confirmed by the NCLT, i.e., before its implementation begins. Section 33(3) read with 33(4) reveal the CoC’s minimal role during implementation of the resolution plan. 

The lack of any specific role for the CoC during implementation of the resolution plan came to fore in Jet Airways case and Bhushan Steel case. In Jet Airways case, the Supreme Court suggested a monitoring committee for implementation of an approved resolution plan. And that it should consist of resolution professional, nominees from the CoC as well as the resolution applicant. In Bhushan Steel case, the Supreme Court identified the CoC as a vital stakeholder in the implementation of the resolution plan and thus held that it continues to exist until the resolution plan is implemented, or an order of liquidation is passed. In Jet Airways the Supreme Court’s suggestion was motivated by a need to ensure that implementation of the resolution plan is overseen by a specific body consisting of all stakeholders. And the NCLT/NCLAT do not approve changes to timelines or conditions in the resolution plan that de facto amends and affects the viability/feasibility of the resolution plan. While in Bhushan Steel case, the Supreme Court extended lifespan of the CoC to prevent an ‘anomalous situation’ wherein if there is failure to implement the resolution plan, creditors will not be able to take any steps for realization of their dues from the corporate debtor.   

The IBC Act, 2026 – taking a cue from the Supreme Court’s recommendation in Jet Airways case – proposes that every resolution plan must mandatorily provide for constitution of an implementation committee. Section 30(2)(d) amended by the IBC Act, 2026 now mentions that a resolution plan must provide for implementation and supervision of the resolution plan and constitution of a committee for this purpose. Section 30(2)(d) envisages that the committee – an implementation committee – shall comprise of a resolution professional or any other insolvency professional, representatives of a class or classes of creditors and the resolution applicant. However, the IBC Act, 2026 should have gone further and also clarified the CoC’s role during implementation of the resolution plan.  This is because while the IBC Act, 2026 mandates the constitution of an implementation committee it does not detract from the Supreme Court’s observation in Bhushan Steel, i.e., the CoC’s continues to exist until the resolution plan is implemented. If the implementation committee and the CoC are to co-exist during implementation phase, the IBC Act, 2026 should ideally and expressly provide specific roles and functions of the CoC during implementation phase. For example, it is unclear if the implementation committee will be a sub-set of the CoC. And if all requests for time extensions or other amendments need to be necessarily pre-approved by the CoC. Will implementation of the resolution plan be supervised by the implementation committee and the CoC will only approve any requests for amendments in the plan? There is no clarity that emerges from the IBC Act, 2026.    

The CIRP Regulations already provide for constitution of an implementation committee. The IBC Act, 2026 aims to provide a statutory basis to the implementation committee and mandates that every resolution plan must necessarily provide for composition of the implementation committee. But the IBC Act, 2026 leaves the issue of overlapping existence of both entities unaddressed. The CoC should certainly be involved in implementation of the resolution plan. And the rationale for its involvement in implementation of the resolution plan is strengthened by the need to preserve viability and feasibility of the resolution plan. Else, NCLT approving changes to the resolution plan without the CoC’s involvement may alter it to such an extent that it dilutes or defeats commercial wisdom of the CoC. Finally, continued role of the CoC during implementation phase is also relevant because the IBC Act, 2026 proposes that it shall ‘supervise the conduct of the liquidation process by the liquidator’. Notes on clauses state that the CoC should supervise liquidation so that it can apply learnings from CIRP to liquidation. I suggest the same reason is equally relevant to keep the CoC involved in implementation of the resolution plan. Not only will the CoC’s role in implementation of the resolution plan ensure continuity, prevent unwarranted changes, but also – if need arises – keep it abreast of developments that may be helpful during liquidation of the corporate debtor. But clarity about nature and extent of the CoC’s involvement in implementation will be welcome. Specifically, its role vis-à-vis the implementation committee which will now exist under each resolution plan.           

Conclusion

To conclude, it is worth mentioning two related but separate judicial observations about the CoC’s tenure: (a) that the CoC does not become functus officio after the NCLT approves a resolution plan; (b) judicial review of the CoC’s commercial wisdom does not preclude sending the resolution plan back for its reconsideration. Ensuring that the CoC continues beyond approval of the resolution plan is defensible for it ensures a smooth implementation. But the CoC’s continued existence also creates an incentive or at least provides an option to the NCLT/NCLAT/Supreme Court to refer resolution plans back to the CoC. Even though the IBC does not expressly contemplate such a reconsideration. And, in fact, the reconsideration proves counterproductive to timely completion of CIRP without attaching any penalties to the CoC for its failure to perform its statutory duties. The proposed proviso to Section 31(2) has the potential to provide sanctity to an unsatisfactory legal situation instead of streamlining the CIRP-related judicial process. At the same time, the IBC Act, 2026 does not clearly delineate the CoC’s role in implementation of the resolution plan leaving room for uncertainty on that aspect. The CoC and the implementation should have, ideally, clearly defined roles via provisions in the IBC itself and only procedural details should have been left for CIRP Regulations.     

IBC (Amendment), 2026 Series – I | Streamlining Admission and Withdrawal of a CIRP Application: The IBC Ignites Hope

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The Insolvency and Bankruptcy Code (Amendment) Act, 2026 (‘IBC Act, 2026’) – inter alia – amends the Insolvency and Bankruptcy Code, 2016 (‘IBC’) in relation to admission and withdrawal of a Corporate Insolvency Resolution Process (‘CIRP’) application. Both changes have the potential to streamline CIRP hampered by sub-par legislative drafting and judicial innovation. 

In Vidarbha Industries Power Ltd v Axis Bank Ltd (‘Vidarbha Industries case’), the Supreme Court expanded scope of the National Company Law Tribunal’s (‘NCLT’) powers under Section 7 of the IBC. The Supreme Court held that the NCLT can consider viability and overall financial health of the corporate debtor before admitting a CIRP application. This interpretation permitted the NCLT to not admit a CIRP application even if the corporate debtor’s default of debt was established. And detracted from the legislative intent of establishing a ‘default regime’ under the IBC wherein proof of debtor’s default was envisaged to be sufficient for admitting a CIRP application. The IBC Act, 2026 adds an Explanation to Section 7 which clarifies that apart from default of debt and specified procedural requirements, the NCLT cannot take any other factor into consideration before admitting a CIRP application. Clearly, the aim is to expedite the admission of a CIRP application. 

Simultaneously, the process for withdrawal of a CIRP application was unduly complex. Section 12A- until the IBC Act, 2026 amended it – provided that:

The Adjudicating Authority may allow the withdrawal of application admitted under section 7 or section 9 or section 10, on an application made by the applicant with the approval of ninety per cent voting share of the committee of creditors, in such manner as may be specified.       

A plain reading of Section 12A suggested that withdrawal of a CIRP application is not permissible before constitution of the Committee of Creditors (‘CoC’). But the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (‘CIRP Regulations’) envisaged that it is permissible to withdraw a CIRP application prior to the CoC’s formation subject to the NCLT’s approval. The divergence between Section 12A and the CIRP Regulations resulted in separate procedures for withdrawal depending on the stage of CIRP.  The Supreme Court elaborated the procedures for each stage in Glas Trust Company LLC v Byju Raveendran (‘Glas Trust case’). To simplify the law on withdrawal of a CIRP application, the IBC Act, 2026 amends Section 12A and introduces Section 12A (2) which states that withdrawal of a CIRP application shall not be permitted: (a) before constitution of the CoC; and (b) after invitation for submission of a resolution plan has been issued by the resolution professional. By creating a definite time window within which a CIRP application can be withdrawn, the IBC Act, 2026 intends to create uniform legal conditions for withdrawal of a CIRP application, irrespective of its stage. And hopefully, expedite exit after admission of a CIRP application.    

This article elaborates on the need for above changes as introduced by the IBC Act, 2026 and suggests that – independently and cumulatively – they have the potential to streamline CIRP. And undo some unwarranted judicial interpretation and legal complexities that currently surround admission and withdrawal of a CIRP application.   

I. Admission of a CIRP Application  

(a) Admitting, Rejecting, and Keeping a CIRP Application in ‘Abeyance’  

The Supreme Court in Vidarbha Industries case reasoned that the NCLT had discretion to not admit a CIRP application even if default of debt was established. In Vidarbha Industries, the corporate debtor – an electricity generating company under the Electricity Act, 2003 – had won a case against the Maharashtra Electricity Regulatory Commission (‘MERC’). The corporate debtor claimed that since it had won the case, the MERC owed it Rs 1,730 crores; but the MERC had filed an appeal against the decision. Before the appeal could be decided, Axis Bank filed a CIRP application against the corporate debtor under Section 7 of the IBC. Both, the NCLT and the NCLAT refused to stay the CIRP application by reasoning that once default is established, no other extraneous factor should hinder an expeditious decision on a CIRP application. Both, the NCLT and the NCLAT reasoned that timely resolution of a corporate debtor is crucial to advance the IBC’s aims. 

The Supreme Court, though, observed that under Section 7, the NCLT possesses discretion to not admit a CIRP application even if default is proved. The Supreme Court’s observations were based on three pillars: 

Firstly, the Supreme Court agreed with observations of the NCLT/NCLAT that a struggling corporate debtor should be rescued expeditiously without considering an extraneous factor. But the Supreme Court added that overall financial health of a corporate debtor was not an extraneous factor. And thus, neither was the corporate debtor’s dispute with the MERC an extraneous factor. Especially, when the amount of Rs 1,730 crores awarded to the corporate debtor far exceeded the financial creditor’s claim. In stating so, the Supreme Court ignored that the corporate debtor receiving the said amount was contingent upon it winning against the MERC in the appellate forum. And a corporate debtor could potentially use a pending appeal to delay or even defeat admission of a CIRP application.      

Secondly, the Supreme Court clarified that the NCLT should not confine itself to merely determining if there was default of debt. The default of debt, as per the Supreme Court only provided the financial creditor a right to initiate CIRP. The NCLT was required to:

… apply its mind to relevant factors including the feasibility of initiation of CIRP, against an electricity generating company operated under statutory control, the impact of MERC’s appeal, pending in this Court, … and the over all financial health and viability of the Corporate debtor under its existing management. (para 61)

It is difficult to understand the relevance of a corporate debtor operating under a statutory control to admission of a CIRP application. Technically, all companies operate under one form of regulatory or statutory control. Further, the Supreme Court stating that the NCLT can examine ‘overall financial health’ of a corporate debtor amounts to providing the NCLT discretion to scrutinize business viability of corporates. A commercial decision that the NCLT is not equipped for or can be expected to perform. Neither does the IBC’s design intend that the NCLT wade into commercial aspects.   

Thirdly, the Supreme Court relied on distinction in statutory language under Section 7 vis-à-vis Section 9. The Supreme Court noted that Section 7(5) states that the NCLT ‘may’ admit a CIRP application filed by a financial creditor. While Section 9(5) states that the NCLT ‘shall’ admit a CIRP application filed by an operational creditor. The use of ‘may’ and ‘shall’ in two identical provisions was interpreted by the Supreme Court to mean that the former conferred discretion to the NCLT to admit a CIRP application. Thus, the NCLT may in its discretion choose not to admit a CIRP application of a financial creditor by considering all relevant facts and circumstances. While under Section 9(5) it was mandatory for the NCLT to admit a CIRP application of operational creditors if it complied with all pre-requisites of the IBC. The Supreme Court’s reliance on difference in statutory language of two comparable provisions was defensible; and inadvertently pointed towards a differential treatment in CIRP applications of the financial creditors vis-à-vis operational creditors. Though whether this differential treatment was intended, or a result of legislative oversight is tough to establish one way or the other.    

Supreme Court’s observations in Vidarbha Industries case had the effect of changing a crucial understanding regarding the NCLT’s powers under Section 7. For example, the observations detracted from a notable precedent – E.S. Krishnamurthy & Ors v Bharath Hi-Tech Builders Pvt Ltd – wherein the Supreme Court had noted that under Section 7(5)(a), the NCLT had only two options: admit or reject a CIRP application. The Supreme Court in the review petition of Vidarbha Industrieshowever noted that its observations in Vidarbha Industries were only confined to facts of that case. The Supreme Court’s clarification in the review petition was used in M. Suresh Kumar Reddy v Canara Bank (‘M. Suresh Kumar Reddy case’) to hold that the ratio of Vidarbha Industries case cannot be used as a precedent for all cases. And, thus, in M. Suresh Kumar Redddy case the Supreme Court held that the NCLT under Section 7(5)(a) has only two options of accepting or rejecting a CIRP application. The result was a less-than-ideal legal position wherein Vidarbha Industries case was simultaneously relevant and irrelevant to understand scope of the NCLT’s powers under Section 7.  

(b) The IBC Act, 2026 Clarifies: Admit or Reject a CIRP Application 

The IBC Act, 2026 seeks to resolve the position caused by differing views about the NCLT’s powers under Section 7(5)(a). To begin with, the IBC Act, 2026 amends Section 7 to reiterate two existing mandates for the NCLT: (a) the NCLT shall record reasons for delay, in writing, if it has not passed an order within fourteen days of receipt of a CIRP application; (b) a renewed emphasis on accessing records of financial debt as recorded with the information utility. And to overcome the effect of Vidarbha Industries case, adds Explanation 1 to Section 7. Explanation I states that: 

For the purposes of this sub-section, it is hereby clarified that where the requirements under clause (a) have been complied with, no other ground shall be considered to reject an application filed under this section. 

The requirements under clause (a) are that a default has occurred, a CIRP application is complete, and no disciplinary proceedings are pending against the proposed resolution professional. Clearly, if the procedural requirements of clause (a) are met, the NCLT possesses no discretion to delay admission of a CIRP application. To further expedite the admission of a CIRP application, Explanation II added by the IBC Act, 2026 states that if default in respect of a financial debt recorded with an information utility is provided with a CIRP application, it shall be sufficient to ascertain the existence of a default. 

Finally, Section 7(5) has now been amended to state that the NCLT ‘shall’ admit a CIRP application within fourteen days of receipt, if it is satisfied that a default has occurred. Removing the distinction between Section 7(5) and Section 9(5) underlined in Vidarbha Industries case wherein the Supreme Court said that use of ‘may’ in the former implied that the NCLT had discretion to not admit a CIRP application even if a default was established. While use of ‘shall’ in Section 9(5) did not afford the NCLT such a discretion. With both provisions now deploying ‘shall’, the IBC Act, 2026 – alongside other changes to Section 7 – has effectively made reasoning of Vidarbha Industries case redundant.       

II. Withdrawal of a CIRP Application 

Originally, the IBC did not contain a provision for withdrawal of a CIRP application. Filing a withdrawal application was only permitted under Rule 8 of The Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 (‘Adjudicating Authority Rules’) which provided that the NCLT may permit withdrawal of a CIRP application if the applicant made a request for withdrawal before it was admitted by the NCLT. There was no statutory provision or a rule for permitting withdrawal of a CIRP application after its admission by the NCLT. 

As a result, if the corporate debtor and creditors arrived at a settlement after the NCLT’s admission of a CIRP application, the withdrawal application was typically allowed by the Supreme Court in exercise of its powers under Article 142 of the Constitution. The Supreme Court in Uttara Foods and Feeds Pvt Ltd v Mona Pharmachem suggested that the relevant rules may be suitably amended to address the above lacuna. And subsequently, the Insolvency Committee examined the issue and recommended that Rule 8, Adjudicating Authority Rules be amended to empower the NCLT to allow withdrawal applications even after admission of a CIRP application provided the CoC pre-approves filing of the withdrawal application.  In 2018, the IBC was amended with insertion of Section 12A, IBC. Alongside, Regulation 30A was inserted in the CIRP Regulations which provided a detailed procedure for the withdrawal of a CIRP application after its admission by the NCLT. 

(a) Interpretation of Section 12A: Swiss Ribbons Plugs a ‘Lacuna’  

Section 12A – even before amendment by the IBC Act, 2026 – stated that the NCLT shall allow withdrawal of a CIRP application if it is approved by ninety per cent voting share of the CoC. However, Section 12A was silent on the phase between admission of a CIRP application and constitution of the CoC. One way to interpret the silence of Section 12A on this interim phase was that the legislature did not intend to allow withdrawal of a CIRP application until the CoC was constituted. And this would have been a reasonable interpretation of Section 12A. Interpreting Section 12A to mean that once a CIRP application has been admitted, its withdrawal can only be permitted with approval of ninety per cent voting share of the CoC and thus obviously only after the constitution of the CoC was a defensible interpretation. The Supreme Court in Swiss Ribbons & Anr v Union of India & Ors (‘Swiss Ribbons case’), though had a different view on the issue. 

In Swiss Ribbons case, one of the petitioner’s challenge was to the constitutionality of Section 12A of the IBC. The Supreme Court upheld the constitutionality of Section 12A and added its observations on the applicable procedure for a withdrawal application in the interim between admission of a CIRP application and constitution of the CoC. In the Supreme Court’s own words:

We make it clear that at any stage where the committee of creditors is not yet constituted, a party can approach the NCLT directly, which Tribunal may, in exercise of its inherent powers Under Rule 11 of the NCLT Rules, 2016 allow or disallow an application for withdrawal or settlement. This will be decided after hearing all the concerned parties and considering all relevant factors on the facts of each case.        

The Supreme Court also pertinently clarified that the interim resolution professional has 30 days from the date of its appointment to constitute a CoC. The above prescribed procedure was only relevant if the corporate debtor and the financial creditors arrived at a settlement in this narrow time window.

(b) Reconciling Section 12A with Regulation 30A

Regulation 30A, as originally introduced alongside Section 12A, inserted an outer time limit for the withdrawal application by stating that it should be filed ‘before issue of invitation of expression of interest’, a limitation that was not mentioned in Section 12A. The secondary legislation prescribing a restriction not provided in the statutory provision was partially reconciled by the Supreme Court in Brilliant Alloys Pvt Ltd v Mr. S. Rajagopal (‘Brilliant Alloys case’). The Supreme Court was hearing an appeal against an order of the NCLT which disallowed the withdrawal application because the invitation of expression of interest had already been issued. The Supreme Court observed that Regulation 30A needed to be read with the main provision – Section 12A of the IBC – and the latter contained no stipulation regarding the invitation of an interest. Thus, the stipulation regarding invitation of an expression of interest ‘can only be considered as directory depending on the facts of each case.’  Accordingly, the Supreme Court correctly allowed withdrawal of a CIRP application even after issuance of the expression of interest. There was one issue: the Supreme Court’s caveat that withdrawal of the CIRP application at such a stage should be justified by facts of the case. The caveat ensured that the condition prescribed in Regulation 30A regarding expression of interest wasn’t completely irrelevant.   

After Brilliant Alloys case, the legal position was that withdrawal application could be filed even after issuance of an invitation for expression of interest, if the NCLT was satisfied about the need for withdrawal at such a late stage in CIRP. But, in some cases such as Abhishek Singh v Huhtamaki PPL Ltd, the Supreme Court held that a CIRP application should be allowed to be withdrawn immediately if the CoC was not constituted. And did not perceive any inconsistency between Section 12A and Regulation 30A.  

Regulation 30A was amended after – and partially because of – the Supreme Court’s decision in Swiss Ribbons case and in Brilliant Alloys case. Two elements were added in Regulation 30A that were previously missing: first, it expressly provided for withdrawal of a CIRP application before constitution of the CoC through an application to be submitted by the interim resolution professional; second, Regulation 30A expressly permitted withdrawal of a CIRP application after issuance of the invitation for expression of interest if the applicant states ‘the reasons justifying withdrawal after issue of such invitation.’ The first element provided legislative foundation to the Supreme Court’s observations in Swiss Ribbons case, the latter element to the observations made in the Brilliant Alloys case. The divergence between Section 12A and Regulation 30A still persisted because the former had not been amended.       

(c) Amendment to Section 12A via the IBC Act, 2026

The IBC Act, 2026 amends Section 12A by introducing sub-section (2) which provides for the time window for withdrawal of a CIRP application. Section 12A(2)(a) states that notwithstanding anything contained in any law for the time being in force, a CIRP application admitted by the NCLT ‘shall not be withdrawn’ before constitution of the CoC. Section 12A(2)(b) adds a CIRP application shall not be withdrawn after the first invitation for submission of a resolution plan has been issued by the resolution professional. 

Not allowing withdrawal of a CIRP application before constitution of the CoC makes sense since Section 12A(1) states an application for withdrawal of a CIRP application can only be made by a resolution professional with the approval of ninety-nine per cent voting share of the CoC. One can argue that submitting a withdrawal application is impossible until the CoC is constituted. Section 12A(2) though also provides statutory basis to the outer time limit previously contained only in Regulation 30A. Previously, Section 12A permitted the CoC to agree to withdrawal of a CIRP application without an outer time limit. Insistence on an outer time limit seems to be a balancing act between respecting the commercial wisdom of the CoC and preventing derailment of the CIRP at an advanced stage. The curious part is that previously the statutory provision did not encapsulate this policy dilemma, neither did the Insolvency Committee examine this issue in any meaningful detail. But the Insolvency and Bankruptcy Board of India (‘IBBI’) – which primarily drafts the rules and regulations – recognized the need for an outer time limit by introducing it in Regulation 30A. The IBBI’s intent was laudable, but it created a divergence in Section 12A and Regulation 30A. And, the IBC Act, 2026 seems to have resolved the divergence.    

Conclusion   

The IBC Act, 2026 suitably amends provisions relating to admission of a CIRP application and its withdrawal. The bottlenecks caused by sub-par drafting and judicial innovation have been suitably removed to streamline CIRP. And to that extent, if the NCLT adheres to the letter of law we are likely to see a more disciplined CIRP process. The only note of caution that I would like to state here is something that is often said about the IBC: merely improving the letter of law is insufficient if the infrastructure remains inadequate. The NCLTs – across India – need a massive overhaul in terms of personnel and infrastructure. Hopefully, the necessary improvements will be prioritised and will follow the improved letter of law. 

Competition Law and the IBC: An Alternate Perspective on the Supreme Court’s Balancing Act

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Introduction

Recently, the Supreme Court (‘Court’) in Independent Sugar Corporation Ltd v Girish Sriram Juneja & Ors resolved an interpretive uncertainty involving the interface of the Insolvency and Bankruptcy Code, 2016 (‘IBC’) with the Competition Act, 2002. The narrow question before the Court was whether the approval of a resolution plan by the Competition Commission of India (‘CCI’) must mandatorily precede the approval of the Committee of Creditors (‘CoC’) under the proviso to Section 31(4), IBC. The proviso states that:

 Provided that where the resolution plan contains a provision for combination as referred to in section 5 of the Competition Act, 2002 (12 of 2003), the resolution applicant shall obtain the approval of the Competition Commission of India under that Act prior to the approval of such resolution plan by the committee of creditors.

The majority opinion, relying on a plain and literal interpretation, held that prior approval by the CCI was mandatory and not directory. The interpretive disagreement did not arise due to any ambiguity in the provision per se, but due to anxiety about delays in the resolution process. It was argued that mandating the prior approval of the CCI for all resolution applicants, instead of only the successful resolution applicant, would delay the completion of the resolution process under the IBC, and time is of the essence in a resolution process to protect and maximise the value of the corporate debtor’s assets. The issue – before, and even after the Court’s judgment – has been largely looked at from the prism of efficacy of the resolution process under the IBC and the need to respect timelines. Even the resolution professional in the impugned case seems to have interpreted the requirement of prior approval as directory to preserve time.  

I suggest that there are alternative ways to examine the issue. First, the prior approval of the CCI ensures respect for the commercial wisdom of the CoC as it prevents an ex-post alteration of the latter’s decision. The above sequence will help preserve the design of the IBC, which entrusts the CoC with the final say on commercial decisions in the resolution process. Second, I propose that insistence on prior approval of the CCI should be viewed as an eligibility requirement for resolution applicants instead of a procedural hurdle. The requirement of the prior approval of the CCI may dissuade insincere resolution applicants, and prevent submission of resolution plans that may crumble at the implementation stage. Cumulatively, both arguments cohere with the framework of the IBC and provide us a better understanding of its aims and procedures.  

Respect For Commercial Wisdom Of The CoC 

In most cases where petitioners have challenged the CoC’s approval of a resolution plan, courts have invoked the supremacy of the commercial wisdom of the CoC. The policy design of the IBC confers powers on the CoC to take commercial decisions, and courts can only intervene in limited and specific instances. The narrow window for judicial interference with decisions of the CoC has been rightly justified by courts by invoking limited grounds for appeal under the IBC. Courts have, thus, termed decisions of the CoC as being of paramount importance. How does the CoC’s supremacy translate into, and become relevant, in the context of the interface of the IBC and the Competition Act, 2002?

The Court in the impugned case relied on the commercial wisdom of the CoC to observe that the lack of prior approval will dilute the aforesaid design of the IBC. For example, if the CoC approves a resolution plan before it receives approval by the CCI, it would leave open the possibility of the latter suggesting modifications to the resolution plan. Permitting ex-post changes by the CCI would also strike at the finality of the CoC’s decision, and, more pertinently, alter the CoC’s position as the final arbiter of corporate debtors’ destiny. The Court underlined the paramount importance of the commercial wisdom of the CoC and reasoned that it can only be exercised assiduously if the CCI’s approval precedes the CoC’s approval. Otherwise, the CoC would be forced to exercise its commercial wisdom without complete information.   

Providing the CoC with the final say on commercial aspects of the resolution plan has remained a core idea since the initial stages of discussion on the IBC. The Bankruptcy Law Reforms Committee (‘BLRC’) had noted that one of the flaws of the pre-IBC regime was to have entrusted business and financial decisions to judicial forums. The BLRC opined that it was not ideal to let adjudicatory bodies take commercial decisions as they may not possess the relevant expertise. To overcome the flaws of the pre-IBC regime, the IBC was designed to empower only the CoC to take business decisions, as it comprises of financial creditors who may bear the loss in the resolution process. The bifurcation of roles was clear, the legislature and courts were to control and supervise the resolution process, however, all business decisions were the remit of the CoC, though it would arrive at the decision after consultation and negotiations with the corporate debtor. In a similar vein, the Court in Swiss Ribbons v Union of India noted that the financial creditors, comprising mainly of banks and financial institutions, are from the beginning involved in assessing the viability of the corporate debtor, and are best positioned to take decisions on restructuring the loan and reorganisation of the corporate debtor’s business when there is financial stress.         

The resolution applicant also suggested that the CCI’s approval could be sought by the successful applicant after the CoC’s approval but before the NCLT’s approval. First, the suggestion contravenes the plain language of the proviso. Second, the suggestion, if accepted, would still leave open the window of the CCI suggesting amendments to the CoC-approved resolution plan and strike at the IBC’s aim to give the CoC the final say on commercial aspects of the resolution plan.

In fact, the CoC approving a resolution plan which has not received the CCI’s approval would also be in contravention of other provisions of the IBC. The Court specifically mentioned that a resolution plan which contains a provision for combination is incapable of being enforced if it has not secured prior approval of the CCI. Such a plan cannot be approved by the Court as it would violate Sections 30(2)(e), 30(3), and 34(4)(a) of the IBC on grounds of being in contravention of the laws in force. Apart from the above provisions, it may be worth mentioning Section 30(4), which obligates the CoC to approve a resolution plan after considering its feasibility and viability. Clearly, evaluation of the feasibility and viability of a resolution plan must precede the CoC’s approval. The CoC should not be put in a position where it approves a resolution plan and only subsequently considers its feasibility and viability based on the CCI’s opinion, as that would disregard the IBC’s mandate.   

 Proviso To Section 31(4) As An ‘Eligibility Requirement’

 I suggest that the proviso to Section 31(4) should be viewed as an eligibility requirement for the resolution applicant. My suggestion is predicated on an analogy with Section 29A(c). Briefly put, Section 29A(c) declares that a person is ineligible to submit a resolution plan if such person or any other person acting jointly, or in concert with, it has an account classified as a non-performing asset for one year. The proviso removes the ineligibility if the person makes payment of all overdue amounts before the submission of the resolution plan. One of the resolution applicants in Arcelor Mittal India Pvt Ltd v Satish Kumar Gupta & Ors had argued that insistence on the prior payment of overdue amounts would reduce the pool of resolution applicants as their plan may not be eventually approved by the CoC, and that the proviso should be interpreted in a ‘commercially sensible’ manner wherein overdue amounts should be allowed to be paid as part of the resolution plan and not before the submission of the resolution plan.

Justice S.V.M Bhatti, in his dissenting opinion in the impugned case, has attempted to interpret proviso to Section 31(4) in a similar fashion. He has observed that insistence on prior approval by the CCI would limit the number of eligible resolution applicants. Further, he noted that the requirement of prior approval by the CCI raises a question of prudence since the resolution applicant would seek approval of its plan, which may eventually not be acceptable to the CoC.    

 In Arcelor Mittal, the Court dismissed the above line of arguments and held that the plain language of the proviso to Section 29A(c) makes it clear that the ineligibility is removed if overdue payments are made before the submission of the resolution plan. Making the overdue payments may be worth the while of the applicant as the dues may be insignificant compared to the possibility of gaining control of the corporate debtor. The Court added that it would not disregard the plain language of the proviso to avoid hardship to the resolution applicant. The above reasoning squarely applies to the proviso to Section 31(4) and is more persuasive than the dissenting opinion in the impugned case.  

 In fact, one could further engage with the argument about the proviso limiting the number of eligible resolution applicants by stating that the mandate of prior approval of the CCI may act as a filtering mechanism and attract only sincere applicants with concrete resolution plans. The receipt of the CCI approval may diminish the possibility of the resolution plan crumbling at the implementation stage due to the inability or disinclination of the resolution applicants to comply with the subsequent conditions that the CCI may impose. Knowledge of the CCI’s stance prior to the approval of the resolution plan will help in setting realistic timelines and conditions for the successful resolution applicant. 

 Section 31(4) permits the successful resolution applicant to obtain the necessary approvals required under any law for the time being in force, within one year from the date of approval by the adjudicating authority.  The proviso to Section 31(4) carves out one exception and states that if the resolution plan contains a provision for combination, the resolution applicant shall obtain the approval of the CCI prior to the approval of such resolution plan by the CoC. The language of the proviso is clear, unambiguous, and the legislative intent is unmistakable. As the Court noted in its majority opinion, courts must respect the ordinary and plain meaning of the language instead of wandering into the realm of speculation. An exception has been made in the proviso wherein resolution applicants need the prior approval of the CCI. To interpret ‘prior’ to mean ‘after’ would amount to the judicial reconstruction of a statutory provision. There is also no room to interpret the requirement of prior approval as being directory and not mandatory. Analogous to the proviso to Section 29A(c), obtaining the prior approval of the CCI may be ‘worth the while’ of the resolution applicants and this would be a  minor hardship compared to the possibility of controlling the corporate debtor.  

 Prior approval by the CCI should be viewed as an eligibility requirement for resolution applicants instead of a procedural burden. Typically, resolution professionals prescribe requirements of net worth, expertise, etc. for resolution applicants. If compliance with such conditions is not viewed as a hurdle, why view a regulatory approval only through the lens of time, as a procedural hurdle? Instead, it is better viewed as a safeguard to prevent future legal hurdles, smoothen the implementation of approved resolution plan, and to preserve the IBC’s design.  

Understanding The Anxiety About Delay

The Court, in the impugned case, has cited statistics to blunt the argument on delay. The statistics about the speed of decision-making by the CCI reveal that delays may not be significant. The Court cited the Annual General Report of the CCI for 2022-23, as per which, the average time taken by the CCI to dispose of combination applications was 21 days, and there was no recorded instance of the CCI taking more than 120 days to approve a combination application. The track record of the CCI partly convinced the Court that arguments about delays were exaggerated.

While there is merit in arguing that the insistence on prior approval by the CCI may delay the resolution process, it is important to add two caveats: first, even in cases not requiring the approval of the CCI, timelines of the IBC are not frequently respected for various reasons. This is not to suggest that additional delays would do no harm, but that delays are par for the course even when the CCI’s approval is not required. So, it is not accurate to ascribe the possible delay only to the requirement of the CCI’s prior approval. Second, prior approval by the CCI will be needed in relatively few instances, and thus there is good reason to adopt a relaxed view of timelines in such cases to avoid competition law issues after the CoC has approved the resolution plan. The additional time consumed in seeking the CCI’s approval will be for a valid reason, i.e., to address the interface of the IBC with competition law. The IBC cannot be implemented in a sealed bubble. where no extraneous factor  ever influences the speed and progress of the resolution process.  

Conclusion

I have tried to establish that once we take a step back from the time-centric arguments, we can cast a different lens on the issue of the interface of competition law and the IBC.  We can understand that the decision-making of the CoC, and other procedural requirements also need to be respected to maintain the integrity of the resolution process. Time, despite being vital, cannot solely dictate the entire resolution process. When the resolution process implicates other areas of law, such as competition law, adopting a relatively relaxed approach to the time limits of the IBC may ensure smooth approval and implementation of the resolution plan. In fact, the prior approval of the CCI aligns with the key design of the IBC, which strives to reserve final decisions on the resolution process to the CoC, subject to minimal judicial supervision. If the CCI unpacks and modifies the CoC-approved resolution plans ex-post, it will in fact, undermine the sanctity of the resolution process.

[This post was first published at NLSIR Online in May 2025.]

Rainbow Papers Case and the Art of Misinterpretation

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On September 6, 2022, the Supreme Court pronounced its judgment in Rainbow Papers case that unsettled prevailing understanding of the waterfall mechanism under Section 53, Insolvency and Bankruptcy Code, 2016 (‘IBC’). And equally unconvincingly defended the merits of the decision in the review petition further entrenching a position of law that is not aligned with the text of Section 53 of IBC and other provisions of IBC. In this post, I look at the case, its dissatisfactory interpretive approach, and the implications. 

Interpretive Question 

In the impugned case, the corporate debtor owed VAT and Central Sales Tax to the State tax authorities. When the insolvency proceedings were initiated, the tax claims were filed before the Resolution Professional, but the Resolution Professional informed the tax authorities that their claims had been waived off under the final Resolution Plan. The tax authorities challenged the Resolution Plan on the ground that tax claims cannot be waived as the State was a secured creditor. The claim of tax authorities was not accepted inter alia on the ground that tax authorities were not secured creditors as per Section 53, IBC. The appeal against the decision reached the Supreme Court.   

One of the issues before the Supreme Court was about the interplay between Section 48, Gujarat VAT Act, 2003 and Section 53, IBC. The former provided that:

Notwithstanding anything to the contrary contained in any law for the time being in force, any amount payable by a dealer or any other person on account of tax, interest or penalty for which he is liable to pay to the Government shall be a first charge on the property of such dealer, or as the case maybe, such person.

Two things worth pointing out: first, the non-obstante clause in the provision which ensures the provision overrides every other law; second, that tax shall be the first charge on the property of the taxpayer who owes money to the State. Section 48, Gujarat VAT Act, 2003 ran into conflict with Section 53, IBC which provides for the waterfall mechanism or the priority in which proceeds from sale of liquidation assets shall be distributed. Section 53 accords priority to secured creditors while any amount due to the Union or State is lower in priority. Which means in case there is not sufficient money after payment to secured creditors, the State may not get paid its taxes owed by the corporate debtor. To prevent such a situation, tax authorities – at the Union and State level – have repeatedly argued that they are akin to secured creditors, without much success except in the impugned case. 

Section 30(2), IBC

Before the Supreme Court, the State clarified that that its case is not that Section 48, Gujarat VAT Act, 2003 prevails over Section 53, IBC. Instead, its argument was that the view of lower judicial authorities that State was not a secured creditor was an erroneous view and contrary to definition of a secured creditor. Section 3(30), IBC, 2016 defines secured creditor to mean a person in whose favor a security interest is created. And, Section 3(31) further defines security interest in wide terms to include within its scope right, title, interest, or claim to a property created in favor of or provided for a secured creditor by a transaction which secures payment or performance of an obligation and includes mortgage, charge, hypothecation, etc. Relying on the aforesaid provisions, the State claimed that the statutory charge created by Section 48, Gujarat VAT Act, 2003 was a security interest under Section 3(31) and State was a secured creditor under Section 3(30) of IBC. 

The State further argued that the approved resolution plan waived the tax claims and was not in accordance with Section 30(2), IBC which inter alia enjoins a resolution professional to examine each resolution plan received by him and ensure that liquidation costs are met and payments to operational creditors are not less than they would be received in event of liquidation. The Supreme Court accepted this argument and observed that a resolution plan that does not meet the requirements of Section 30(2) would be invalid and would not be binding on the State or Union to whom a debt in respect of dues arising under any law for the time being in force is due. (para 48)

The Supreme Court’s understanding of the scope and mandate of Section 30(2) is fair and reasonable until it applied its understanding to the facts of impugned case. As per Supreme Court, a resolution plan must be rejected by an adjudicating authority if the plan ignores statutory demands payable to State government or a legal authority altogether. (para 52) And that a Committee of Creditors cannot secure its dues at the cost of statutory dues owed to the Government. (para 54) Thus, if a company cannot repay its debts – including statutory dues – and there is no contemplation of dissipation of its debts in a phased manner, then the company should be liquidated, its assets sold, and proceeds distributed as per Section 53, IBC, 2016.   

The above observations mean that a resolution plan of corporate debtor is contrary to Section 30(2), IBC, 2016 if it waives statutory dues. This observation casts too wide a tax net, and would possibly mean that tax waivers for corporate debtors would inevitably make the resolution plan violative of IBC, 2016 defeating the purpose of reviving distressed companies. If the tax burden of a corporate debtor – significant or otherwise – cannot be waived to ensure its revival, and every tax outstanding tax demand must be necessarily or in some proportion to be satisfied, that places an onerous burden on a distressed company. Some elbow room needs to be available to final a resolution plan that may waive some outstanding tax dues to revive the company in question.  

State as a Secured Creditor 

The other issue that the Supreme Court had to navigate was whether the non-obstante clause of Section 48, Gujarat VAT Act, 2003 would prevail over the non-obstante clause contained in Section 53, IBC. The Supreme Court held that the two provisions are not in conflict with each other as the latter cannot override the former since the State is a secured creditor. It noted: 

Section 3(30) of the IBC defines secured creditor to mean a creditor in favour of whom security interest is credited. Such security interest could be created by operation of law. The definition of secured creditor in the IBC does not exclude any Government or Governmental Authority. (para 57)

The above cited conclusion of the Supreme Court is clearly contradictory to the understanding that prevailed before this decision and the text of Section 53, IBC. Secured creditors are a separate category under Section 53, IBC while dues owed to the Union or State – that are to be credited either to the Consolidated Fund of India or the State – are a separate category. Since, the latter have been clearly demarcated as a separate category it is evidence that the legislators did not intend to club them with secured creditors. The only reasonable explanation for including State as a secured creditor was if the taxes due to the State were not mentioned as a separate category in Section 53, IBC. However, when dues payable to State have clearly been mentioned as a separate category, there is little justification to include State in secured creditor category. Merely by observing that the definition of secured creditor does not expressly exclude State from its definition, does not necessarily lead to the conclusion that State is included. Provisions of IBC need to be interpreted harmoniously, and Court should have taken cognizance of the definition of secured creditor alongside the waterfall mechanism under Section 53, IBC to arrive at a more reasonable conclusion. 

Review of Rainbow Case 

An application to review the decision in Rainbow case was filed, inter alia, on the ground that the Supreme Court in a subsequent decision had cast suspicion on the Rainbow case. The Supreme Court in PVVN Ltdcase noted that the judgment in Rainbow case ‘has to be confined to the facts of that case alone.’ (para 53) It clearly doubted the correctness of the judgment and observed that Parliament’s intent to accord to lower priority to State’s dues was clear from Section 53, IBC. Relying on the observations of the PVVN Ltd, a review was filed against the Rainbow decision. The Supreme Court dismissed the review and held that in Rainbow case all the relevant provisions were correctly and categorically reproduced, and the ‘well- considered judgment’ should not be reviewed. (para 27)    

Conclusion 

The decision in Rainbow case is an apt example of the misinterpretation and the error is blatant because there is no ambiguity in Section 53, IBC and the ‘silence’ in the definition of secured creditor was unjustifiably interpreted in favor of the State. By interpreting the definition of secured creditor and security interest in an unjustifiably wide manner, the Supreme Court completely upturned the priority of payments prescribed under Section 53, IBC. And while some of us make take solace in the fact that the decision in Rainbow case will be confined only to the facts of that case, it is just polite speak for a decision that goes against the plain text and intent of IBC. And what does ‘confined to facts of the case’ really mean? If any statute creates a charge in favor of State, Rainbow case is applicable? Or anytime taxes due are waived from a resolution plan, Rainbow case is applicable? The answers aren’t clear.  

In my view, Rainbow case is an example of misinterpretation of IBC, and no less. The suggestion that its applicability is confined only to the facts of the case cannot hide the misinterpretation of relevant provisions of IBC, specifically the scope and meaning of secured creditor.    

NCLT Cannot Declare an Assessment Order as Void: Kerala HC

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The Kerala High Court in a recent judgment used strong words against an order of NCLT, Kochi Bench for declaring an assessment order passed under KVAT Act as void ab initio. The High Court observed that NCLT did not have the power to declare an assessment as void ab initio and quashed its order. I describe the case below and state whether there was a need for Kerala High Court to use harsh words against NCLT. 

Before I describe the case, it is important to reiterate, for context, that Section 14, IBC, 2016 imposes a moratorium on initiation of any coercive legal action against the corporate debtor. Section 14(1)(a) empowers the adjudicating authority to declare a moratorium for prohibiting the institution of suits or continuation of suits against the corporate debtor including any judgment, decree, or order in any court of law. While Section 33(5), IBC, 2016 states that where a liquidation order has been passed, no suit or other legal proceeding shall be initiated by or against the corporate debtor except with prior approval of the adjudicating authority.   

Facts 

The petitioner, Deputy Commissioner (Works Contract) approached the Kerala High Court impugning an order of NCLT, Kochi passed on 26.10.2022 under Section 33(5), IBC, 2016. 

The company, the corporate debtor, against whom an assessment order was passed was under the liquidation process under IBC, 2016 and was admitted into the Corporate Insolvency Resolution Process (‘CIRP’) on 25.10.2019. The CIRP effected public announcement on 03.11.2019 and a moratorium was declared under Section 14, IBC, 2016 which was to be effective on 02.12.2021, the day on which liquidation order was passed.

For the year 2015-16, the GST Department found certain discrepancies relating to VAT payments by the corporate debtor. For the year 2015-16, the corporate debtor was issued a notice under Section 25, KVAT. The assessment against the corporate debtor was completed via order dated 25.02.2021 and total VAT liability was determined as 11,76,35,626.70/- On a Form-C dated 04.01.2022 the Department claimed the said tax amount before the resolution professional appointed for the corporate debtor under IBC, 2016. 

Against the Form-C application, the corporate debtor filed an application before NCLT, Kochi under Section 33(5), IBC, 2016 seeking permission to prefer an appeal against the order of assessment dated 25.02.2021. 

While the petitioner had filed an application seeking permission to file an appeal against the order of assessment, NCLT, Kochi declared the assessment order as void ab initio. NCLT stated that the assessment order had been passed in violation of the prohibition contained in Section 14(1)(a), IBC, 2016 and directed that the tax claim be considered independently without considering the assessment order passed on 25.02.2021. Against the NCLT’s order, the State approached the Kerala High Court.  

Kerala High Court Expounds on the Law 

The issue before the Kerala High Court was: whether the NCLT is empowered to declare an assessment order as void ab initio under Section 33(5) of IBC? The straightforward answer is no, and the High Court arrived at the same conclusion, but not before it had a few harsh words to say about NCLT, Kochi. 

The law on the interface of tax claims and IBC has been expounded by various judgments, with the Courts on various occasions clarifying the overriding effect of IBC over all other legislations including tax laws. The Kerala High Court relied on two judgments, VM Deshpande case and the Sundaresh Bhatt case. The latter case was decided in the context of interplay of IBC, 2016 and Customs Act where the Supreme Court had clarified that the custom authorities can only determine the tax, interest, fine or any penalties that are due but cannot enforce their claims during the period of moratorium. This was the ratio of VM Deshpande case too, though decided in the pre-IBC period. 

The Kerala High Court relied on the above two precedents to enunciate that the law was that the tax authorities have the limited power to determine the quantum of tax and make assessments, but not enforce its demands. Accordingly, it rightly held that: 

Thus, after declaring the moratorium, there is an embargo on enforcing the demand, but there is no embargo under Section 14, read with Section 33(5) of the IBC, for determining the quantum of tax and other levies, if any, against the Corporate Debtor. (para 5.3) 

Applying the said dictums to the impugned case meant that during the moratorium the VAT assessments could have been finalized against the corporate debtor, but the said tax assessments could not be enforced. And in enforcing the said tax demands, there was a violation of Section 14, IBC, 2016. In seeking permission of NCLT to appeal against the enforcement of the tax demands, the corporate debtor was trying to enforce the law as laid down by Supreme Court in previous decisions. The NCLT went a few steps ahead and declared the tax assessment as void ab initio and non-est in law. A power that it certainly does not possess under any of the relevant provisions of IBC, 2016. NCLT should have merely provided the corporate debtor a permission to appeal, while not commenting on the assessment order per se. The Kerala High Court correctly quashed NCLT’s order and in doing so termed it as preposterous, untenable, and showing a lack of basic understanding of law. (para 6)

Conclusion 

The Kerala High Court correctly interpreted and applied the relevant precedents to the facts of the case. Equally, it was right in terming the NCLT’s order as untenable in law. The High Court in striking down the NCLT’s order also commented on the quality of persons in NCLT and their competence. I’m sure there are more suitable and appropriate channels to address the quality of personnel in NCLT instead of commenting on their legal aptitude in a judgment. I do not agree with NCLT striking down the assessment order and NCLT should have approached the issue in a more considered manner, but the Kerala High Court’s comments on NCLT personnel in the judgment could have been avoided as well.         

Delhi High Court Reiterates the Law on Interface of IBC and Tax

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The Delhi High Court in a recent case[1] reiterated the legal position relating to outstanding tax of an entity which has or is undergoing the insolvency process under IBC, 2016. In the impugned case, the Revenue Department claimed that the petitioner owed it taxes despite such the Revenue Department’s claims not being part of the approved resolution plan. The High Court relying on relevant precedents stated that tax claims that were not part of the approved resolution plan stand extinguished and the Revenue Department is also bound by the resolution plan approved under IBC, 2016. 

Facts 

The petitioner, TUF Metallurgical Pvt Ltd, took over the management of the erstwhile corporate debtor in accordance with the terms of the resolution plan which was approved by the NCLT under Section 31(1), IBC, 2016 via order dated 05.11.2019. The public advertisement regarding commencement of the Corporate Insolvency Resolution Process (CIRP) was issued under Section 15, IBC, 2016 stating that the last date for filing of claims was 21.01.2019. But until the said date the Revenue Department did not submit any claim. It was on 12.12.2019 that the Revenue Department passed an order against the petitioner qua Assessment Year 2017-18. The petitioner’s claim was that the tax demand was barred after the approval of resolution plan was rejected by the Revenue Department which issued a Demand Notice and levied a penalty on the petitioner. Against the said order, the petitioner filed a writ petition before the Delhi High Court. 

Arguments 

The arguments of the petitioner and the Revenue Department were straightforward. The petitioners argued that the Revenue Department ignored the legal and factual ramifications which ensued on conclusion of any insolvency process. The petitioner stated that once the resolution plan was approved by the concerned authority, it was not open to the Revenue Department to open stale claims which were settled upon conclusion of the insolvency proceedings. The Revenue Department, on the other hand, argued that it stood on a ‘different footing’ from other creditors and that the tax claims of the Revenue Department would not be affected by the provisions of IBC, 2016. (para 4)

Decision 

Given that the argument of the Revenue Department did not have a legal leg to stand on, the decision of the Delhi High Court did not involve unravelling a complex legal web. The High Court’s conclusion rested on Supreme Court’s observations in Ghanshyam Mishra’s case[2], where the Supreme Court categorically observed that once the resolution plan has been approved by the adjudicating authority under Section 31(1), IBC, 2016, the claims as provided in the resolution plan shall stand frozen and shall be binding on the corporate debtor, its employees, members, Central Government, State Government, guarantors and other stakeholders. It was clarified by the Supreme Court that claims that are not part of the resolution plan shall stand extinguished and no person shall be entitled to initiate or continue proceedings in respect of claims which were not part of the resolution plan. It was further clarified that the said bar also applies to tax due to the Central or State Government. 

The conclusion, based on the findings in Ghanshyam Mishra case is that if the Revenue Department fails to respond to the public advertisement in time, its claims will not be part of the resolution plan. And subsequently, the Revenue Department cannot initiate proceedings in respect of taxes due prior to initiation of insolvency proceedings on the ground that it stands on a different footing than other creditors. Courts and IBC, 2016 do not acknowledge, and rightly so, that the Revenue Department is not bound by terms of the resolution plan. Accordingly, the Delhi High Court in the impugned case allowed the petitioner’s writ petition and set aside the demand and orders by the Revenue Department.     

Conclusion It is indeed a case of unending mystery that why does the Revenue Department does not respond to the public notices relating to commencement of insolvency process on time. And if it for some reason fails to respond to the notices on time, why does it initiate proceedings against the assessees, when the law clearly states that the provisions of IBC, 2016 shall override all other laws,[3] which of course also includes tax legislations. And more specifically, if the Revenue Department’s claim was not part of the approved resolution plan, the claim stands extinguished. The Revenue Department does not stand on a ‘different’ footing from other creditors. The IBC, 2016 certainly does not state so. It is a self-image that the Revenue Department has conjured with no legal basis.    

[1] TUF Metallurgical Pvt Ltd v Union of India & Anr 2023:DHC:8856-DB.

[2] Ghanshyam Mishra & Sons Pvt Ltd v Edelweiss Asset Reconstruction Co Ltd (2021) 9 SCC 657. 

[3] Section 238, IBC, 2016. 

Sanctity of IBC Prevails Over Tax Claims: NCLT Mumbai

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In a recent order[1], NLCT Mumbai has ruled that the time bound process of Insolvency and Bankruptcy Code, 2016 (‘IBC’) will prevail over payment of belated Government dues, i.e., taxes. NCLT in the impugned case only reiterated an opinion expressed earlier, but the Revenue Department tends to need frequent reminders about certain elemental aspects of law. 

Facts 

In the impugned case, the Department of State (Tax) (‘Revenue Department’) filed an application under Section 60(5), IBC against the Resolution Professional of M/s Calchem Industries Pvt Ltd seeking directions that the Resolution Professional should deal with their claims and process them as per IBC. The Revenue Department had filed their claim with the Resolution Professional via letter/email on 08.10.2021 and the same was rejected by the latter on the ground that the Committee of Creditors had already approved the Resolution Plan on 13.10.2020. 

The Revenue Department assailed the rejection of their application as illegal and relied on Regulation 14 of IBBI (Insolvency Resolution Process for Corporate Person) Regulations, 2016. As per Regulation 14 the Resolution Professional shall make best estimate of the amount of claim based on information available to him. The Revenue Department argued that since their claims are statutory dues, the Resolution Professional should have incorporated the same in his estimate. The Revenue Department cited certain precedents to support its claim and also argued, rather strangely, that the delay in their application was caused since they were following the due procedure of law. (para 14)

The Resolution Professional, on the other hand, largely defended its rejection of the Revenue Department’s application on the ground of delay. The Resolution Professional informed NCLT that the public announcement dated 1.10.2019 had clearly stated that the last date for filing of claims was 14.10.2019 while the Revenue Department filed its initial claim on 8.10.2021.  

NCLT Decides 

NCLT cited the RPS Infrastructure case[2] to reiterate that undecided claims cannot make the CRP process endless. And it concluded that: 

Therefore, any interruption in the CIR process at this belated stage by allowing the application might open the floodgate for the similar claims, causing unnecessary delays in the CIRP process. (para 22)

NCLT, engaged with the various precedents cited by the Revenue Department in some detail and observed that one of the arguments made in previous cases was that since government dues would always be reflected in the books of account of the corporate debtor, the Resolution Professional should take them into account in its estimate. NCLT distinguished facts of the impugned case from the precedents and observed that out of the total amount claimed by the Revenue Department only some amount was reflected in the books of account on the date of initiation of CIRP. And that the assessment orders for other amounts were passed after initiation of CIRP. Thus, the latter could not have been reflected in the books of account of the corporate debtor at the time of initiation of CIRP. 

NCLT emphasised on the objective of IBC which aimed for insolvency resolution of the corporate debtor in a time bound manner and that priority accorded to Government dues was different as compared to the Companies Act. In other words, government dues were not in top hierarchy under the waterfall mechanism of IBC. While the latter was not germane to the issue at hand, NCLT did well to remind the Revenue Department that is claims did not supersede ever other claim against the corporate debtor. NCLT, thus, disallowed the application of the Revenue Department except to the extent tax dues were reflected in the books of account of the corporate debtor on the date of preparation of the Memorandum of Information by the Resolution Professional. (para 27)

Conclusion 

NCLT’s judgment in the impugned case, is another in a series of decisions where the Revenue Department has been informed that its dues are not sacrosanct and need to be secured only as per the timelines, processes and waterfall mechanism provided in the IBC. While in the impugned case, the Revenue Department secured a partial victory, and rightly so, it is another in a disconcerting trend where the Revenue Department tends to think, almost incorrigibly, that its tax dues should be paid irrespective of what the letter of law says.  

[1] Department of State Tax v Resolution Professional of M/s. Calchem Industries (India Limited), IA/282/2022 & IA426/2022, available at https://nclt.gov.in/gen_pdf.php?filepath=/Efile_Document/ncltdoc/casedoc/2709138000222022/04/Order-Challenge/04_order-Challange_004_1696595733706984618651fff15f3463.pdf (Accessed on 13.10.2023). 

[2] RPS Infrastructure Ltd v Mukul Kumar & Anr (2023) ibclaws.in 102 SC. 

Supreme Court Reiterates Non-Obstante Clause of Section 529A, Companies Act, 1956

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In a recent judgment[1], the Supreme Court opined on the priority to be accorded to custom authorities vis-à-vis secured creditors under the Companies Act, 1956. It accorded due deference to the overriding nature of Section 529A under which tax due by a company under winding up is not to be the foremost payment. While the judgment is under the erstwhile Companies Act, 1956 it is important to highlight how a seemingly straightforward issue – ranking of tax dues from a company under the winding up or insolvency process – has a unduly long legacy that continues to simmer under the IBC as well. 

Introduction 

The appeal before the Supreme Court was against an order of the Andhra Pradesh High Court where it held that notwithstanding the winding up order against the impugned company – M/s Sri Vishnupriya Industries Limited – and Sections 529A and 530 of the Companies Act, 1956, the custom authorities have the first right to sell the imported goods and adjust the sale proceeds towards payment of customs duty. The appeal was filed by Industrial Development Bank of India from which the company had sought financial assistance and to which the company had hypothecated movable properties, namely machinery and its components.

The company had imported the machinery and components and on failure to pay the customs duty, an order was passed to detain and sell the said property for satisfaction of the outstanding customs duty. In the meanwhile, an order for winding up of company was passed and the Official Liquidator so appointed requested the custom authorities to hand over the properties of the company which the latter planned to auction for payment of customs duty. The Andhra Pradesh High Court faced with the question as to whether the rights of a secured creditor should have precedence over custom authorities, decided in favor of the latter.    

Interplay of Provisions of Companies Act, 1956

Supreme Court was categorical, and rightly so, in its examination of Section 529A of Companies Act, 1956. It noted that Section 529A enlisted that workmen’s dues and debts of secured creditors shall be paid in preference to all other payments, and the non-obstante clause in the provision made it clear that these payments were to be made in preference to all other payments in the winding up of a company. And all other payments enlisted in Section 530 were to be made subject to the prescription of Section 529A. Supreme Court concluded that it is ‘beyond debate’ that provisions of Section 529A shall prevail of Section 530 of the Companies Act, 1956. (para 11)

The result of this clear and unambiguous position and effect of both provisions, was, in Supreme Court’s own words: 

… IDBI is an overriding preferential creditor under Section 529A of the Companies Act and at best, if the requirements of clause (a) to Section 530(1) of the Companies Act are satisfied, the customs dues would fall under Section 530 of the Companies Act and will be categorized as preferential payment. (para 19) 

The Supreme Court, out of abundant caution, went into the meaning and interpretation of certain phrases used in Section 529A and Section 530, Companies Act, 1956. It went into detail and cited precedents as to what the terms ‘due’ and ‘due and payable’ mean under the provisions. 

The Supreme Court then clarified that as per the law laid down in relevant precedents, such as the Dena Bankcase[2], government dues do not have priority over secured creditors. The principle so enunciated in the Dena Bank case aligned with the Supreme Court’s interpretation and interplay of Section 529A and Section 530 in the impugned case. However, the Supreme Court clarified that the principle laid down in the Dena Bank case must give way to a statutory charge that may be created by an enactment. In the context of impugned case, it meant that the Supreme Court had to examine if Customs Act, 1962 created a first charge for payment of customs duty and if there was a conflict between the Companies Act, 1956 and Customs Act, 1962. Supreme Court’s conclusion on this point was: 

The provisions in the Customs Act do not, in any manner, negate or override the statutory preference in terms of Section 529A of the Companies Act, which treats the secured creditors and the workmen’s dues as overriding preferential creditors; and the government dues limited to debts ‘due and payable’ in the twelve months next before the relevant date, which are to be treated as preferential payments under Section 530 of the Companies Act, but are ranked below overriding preferential payments and have to be paid after the payment has been made in terms of Section 529 and 529A of the Companies Act. Therefore, the prior secured creditors are entitled to enforce their charge, notwithstanding the government dues payable under the Customs Act. (para 24)

The Supreme Court further clarified that the charge created under Section 142A, Customs Act, 1962 protects the rights of third parties under Section 529A, Companies Act, 1956 inter alia of those under Insolvency and Bankruptcy Code, 2016. And that Section 142A, Customs Act, 1962 does not create a first charge on the dues payable under the said legislation.         

Conclusion

While the Supreme Court’s judgment focuses on the interplay of provisions of Companies Act, 1956, its observations in the latter half of the judgment clarify, to some extent, the position of law after the implementation of IBC. The fact that Customs Act, 1962 does not create a statutory charge is an important and correct position of law as it clarifies that tax authorities – at least, customs authorities – are not placed above the preferential creditors. This may prove useful in unfortunate but frequent disputes between tax authorities seeking priority payment of outstanding dues over secured creditors of the company under insolvency, despite that the waterfall mechanism under IBC does not place the tax authorities above the secured creditors.  

[1] Industrial Development Bank of India v Superintendent of Central Excise and Customs and Others, available at https://main.sci.gov.in/supremecourt/2009/114/114_2009_3_1501_46202_Judgement_18-Aug-2023.pdf (Last accessed on 21 August 2023). 

[2] Dena Bank v Bhikhabhai Prabhudas Parekh & Co and Others (2000) 5 SCC 694. 

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