Mr. Ashok Kumar Parija, Sr. Adv. Along with Mr v. Mohapatra
Case Details
Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 24-Jun-2025 16:53:36 IN THE HIGH COURT OF ORISSA AT CUTTACK W.P.(C) No.2551 of 2025 (In the matter of an application under Articles 226 and 227of the Constitution of India, 1950). M/s. JSW Energy (Utkal) Limited, Bhubaneswar …. -versus- Petitioner(s) State of Odisha, Revenue and Disaster Management Department &Ors. …. Opposite Party (s) Advocates appeared in the case through Hybrid Mode: For Petitioner(s) : Mr. Ashok Kumar Parija, Sr. Adv. Along with Mr. V. Mohapatra, Adv. For Opposite Party (s) : Ms. Jyotsnamayee Sahoo, ASC CORAM: DR. JUSTICE S.K. PANIGRAHI DATE OF HEARING:-15.05.2025 DATE OF JUDGMENT:-20.06.2025 Dr. S.K. Panigrahi, J. 1. The Petitioner, in the present Writ Petition, is challenging the actions of the Tahasildar, Lakhanpur, District-Jharsuguda, Odisha, specifically the issuance of a Certificate of Public Demand dated 12.02.2020, PR No.1 dated 25.01.2023, Letter No. 734 dated 17.02.2023, Page 1 of 15 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 24-Jun-2025 16:53:36 Letter No. XXI-11/2023 No. 5855 dated 31.10.2023, PR No. 7 dated 17.11.2023; and Letter No. 4925 dated 11.09.2024. 2. The Petitioner has already deposited the demanded dues under protest and now seeks a refund of the amount deposited. I. FACTUAL MATRIX OF THE CASE:
Legal Reasoning
3. The brief facts of the case are as follows: (i) The Petitioner, formerly Ind-Bharath Energy (Utkal) Limited and now JSW Energy (Utkal) Limited, is a company incorporated under the Companies Act, 2013, with its registered office at Sahajbahal, Jharsuguda, Odisha. (ii) In 2018, Bank of Baroda, as a financial creditor, filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, against the Petitioner, which was registered as CP(IB) No. 276/7/HDB/2018 before the National Company Law Tribunal, Hyderabad Bench.Thereafter, on 29.08.2018, the NCLT admitted CP(IB) No. 276/7/HDB/2018 and initiated the Corporate Insolvency Resolution Process against the Petitioner. (iii) A moratorium was imposed under the Insolvency and Bankruptcy Code, 2016, and an Interim Resolution Professional was appointed to take over the management and affairs of the Petitioner. The NCLT also directed that a public announcement be made under Section 13(1)(b) of the Insolvency and Bankruptcy Code, 2016. (iv) Pursuant to the said order, on 30.08.2018, the Interim Resolution Professional issued a public announcement in Form A under Rule 6 of the IBBI (Insolvency Resolution Process for Corporate Persons) Page 2 of 15 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 24-Jun-2025 16:53:36 Regulations, 2016, inviting all creditors of the Petitioner to submit their claims by 12.09.2018. No claim was received from the Opposite Parties either by the said date or at any time thereafter. (v) The Interim Resolution Professional collated the claims received and was subsequently replaced by a Resolution Professional appointed by the Committee of Creditors. The Resolution Professional thereafter invited Expressions of Interestfrom eligible Resolution Applicants. (vi) During the course of the Corporate Insolvency Resolution Process, M/s JSW Energy Limited submitted its Resolution Plan dated 03.10.2019. The Resolution Plan was approved by the Committee of Creditors with 82.70% voting share in its 15thmeeting held on 09.10.2019. (vii) Notwithstanding the above, on 12.02.2020, the State Government initiated proceedings under the Orissa Public Demands Recovery Act, 1962 in OPDR Case No. 30/2020 against the Petitioner for recovery of arrear rent and cess for the financial years 2015–16 to 2018–19. (viii) Thereafter, on 31.08.2020, the Resolution Professional submitted the final list of creditors of the Petitioner before the NCLT in CP(IB) No. 276/7/HDB/2018. Notably, the claims of the Opposite Parties were not included in the said list. (ix) Subsequently, the NCLT approved the Resolution Plan submitted by the Resolution Applicant vide order dated 25.07.2022 in CP(IB) No. 276/7/HDB/2018. (x) Thereafter, on 28.12.2022, the new Board of Directors of the Petitioner was constituted by the successful Resolution Applicant, M/s JSW Page 3 of 15 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 24-Jun-2025 16:53:36 Energy Limited. Accordingly, 28.12.2022 is treated as the Implementation date under the Resolution Plan. (xi) On 31.12.2022, the Resolution Professional informed M/s JSW Energy Limited that the total resolution amount of ₹10,43,07,24,984.62 had been distributed among the final list of creditors, out of which ₹9,10,22,729.94 was paid towards Operational Creditors, including Government dues. (xii) Despite the above, the Tahasildar, Lakhanpur, vide PR No. 1 dated 25.01.2023, issued a demand notice to the Petitioner in OPDR Case No. 30/2020 for ₹9,81,682/- towards arrear rent and cess for the financial years 2015–16 to 2018–19. (xiii) Further, on 27.01.2023, the Tahasildar, Lakhanpur, vide Letter No. 430, issued a demand notice to the Petitioner for ₹12,14,961/- towards arrear rent and cess for FY 2019–20 to 2021–22, and current rent and cess for FY 2022–23, in respect of land acquired in the villages of Sahajbahal, Kumbharbandh, and Barpali. (xiv) Subsequently, vide Letter No. 734 dated 17.02.2023, the Tahasildar, Lakhanpur informed the Petitioner that, upon verification, the impugned demand had been revised to: (a) ₹12,14,986/- towards arrear and current rent and cess for FY 2019–20 to 2022–23, and (b) ₹9,81,682/- towards the demand raised in OPDR Case No. 30/2020. (xv) On 13.03.2023, the Petitioner, vide Letter No. IBEUL/2022-23/004, informed the Tahasildar, Lakhanpur that it had undergone CIRP under the IBC, 2016, and had been acquired by the Resolution Applicant on 28.12.2022 pursuant to the Resolution Plan approved by Page 4 of 15 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 24-Jun-2025 16:53:36 the NCLT. The Petitioner further clarified that all claims of stakeholders and creditors, including those of the Opposite Parties, for the period prior to the Implementation Date stood extinguished, as they were not included in the approved Resolution Plan. In light of this, the Petitioner requested Opposite Parties to withdraw the demand notice dated 17.02.2023 and issue a revised demand, if any, restricted to dues arising after 28.12.2022. (xvi) Thereafter, on 31.10.2023, the Tahasildar, Lakhanpur, vide Letter No. XXI-11/2023 No. 5855, directed the Petitioner to deposit: (a) arrear rent and cess of ₹10,50,218/- for FY 2019–20 to 2021–22; and (b) arrear and current rent and cess of ₹5,45,703/- for FY 2022–23 and FY 2023–24, in respect of land acquired in the villages of Sahajbahal, Kumbharbandh, and Barpali, within a period of seven days. (xvii) Subsequently, on 17.11.2023, Opposite Party No. 3, vide PR No. 7, once again issued a demand notice to the Petitioner in OPDR Case No. 30/2020 for payment of ₹10,63,488/-. (xviii) On 05.03.2024, the Petitioner, vide Letter No. IBEUL/23-24/273, informed the Tahasildar, Lakhanpur that it had already paid ₹5,45,703/- towards rent and cess for FY 2022–23 and FY 2023–24 via Cheque/DD No. 733821 dated 10.11.2023, it was further stated that the demands of (a) ₹10,63,488/- under OPDR Case No. 30/2020 and (b) ₹10,50,218/- towards arrear rent and cess for FY 2019–20 to 2021–22 were not maintainable and stood extinguished as they were not part of the Resolution Plan approved by the NCLT. Nevertheless, the Petitioner, under protest, made both payments. Page 5 of 15 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 24-Jun-2025 16:53:36 (xix) Subsequently, on 11.09.2024, the Tahasildar, Lakhanpur, vide Letter No. 4925, directed the Petitioner to deposit ₹22,70,568/- towards short realisation of conversion fees, as pointed out by the Office of the Accountant General, Odisha in Para 4 of Inspection Report No. 42 of 2011–12. (xx) In the aforesaid circumstances and despite repeated representations, including a formal request dated 03.01.2025, the State Authorities have failed to take any action on the Petitioner’s claim for refund of amounts deposited under protest. In view of the continued inaction and absence of any efficacious remedy, the Petitioner has been constrained to seek redress before this Court by invoking its writ jurisdiction under Articles 226 and 227 of the Constitution of India. (xxi) On 20.01.2025, the Petitioner, vide Letter No. IBEUL/24-25/, informed the Tahasildar, Lakhanpur that the demand notice dated 11.09.2024 was not legally sustainable and stood extinguished, as it was not provided for in the Resolution Plan approved by the NCLT. Nevertheless, the Petitioner, under protest, deposited a sum of ₹22,70,568/- towards the alleged short realisation of conversion fees. SUBMISSIONS ON BEHALF OF THE PETITIONER: Learned counsel for the Petitioners earnestly made the following submissions in support of his contentions: The Petitioner contended that all liabilities arising prior to the Implementation Date under the approved Resolution Plan dated 28.12.2022 stood extinguished by operation of law. The Plan, being binding on all stakeholders including the Opposite Parties under II. 4. (i) Page 6 of 15 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 24-Jun-2025 16:53:36 Section 31(1) of the Insolvency and Bankruptcy Code, 2016, renders the impugned demands unsustainable. (ii) The petitioner submitted that a conjoint reading of Clauses 1.6, 1.14 and 14.5 of Part B, Financial Proposal of the Resolution Plan, along with Section 238 of the Insolvency and Bankruptcy Code, 2016, makes it clear that all claims, dues or taxes, whether claimed or unclaimed, for any period prior to the Insolvency Commencement Date of 29 August 2018 and up to the Implementation Date of 28 December 2022, stood permanently extinguished upon approval of the Resolution Plan by the NCLT on 25 July 2022. (iii) The petitioner submitted that the Insolvency and Bankruptcy Code, 2016, provides a complete and self-contained mechanism for submission and adjudication of claims during the Corporate Insolvency Resolution Process. Claims not submitted to the Resolution Professional are deemed extinguished, ensuring that the Resolution Applicant acquires the corporate debtor on a clean slate. (iv) The Resolution Plan, having been vetted by the Committee of Creditors and found compliant with the Insolvency and Bankruptcy Code, 2016, by the NCLT, became binding in rem on all creditors including statutory authorities. As certified by the Resolution Professional on 31.12.2022, the entire Total Resolution Amount was disbursed. No residual liability survives. (v) The Petitioner further submitted that Opposite Party No. 3 lacks jurisdiction to initiate proceedings under the Orissa Public Demands Recovery Act, 1962 or the Orissa Cess Act, 1962 in derogation of the Page 7 of 15 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 24-Jun-2025 16:53:36 Insolvency and Bankruptcy Code, 2016. The Insolvency and Bankruptcy Code, 2016, by virtue of Section 238, has overriding effect over any inconsistent laws. Consequently, the impugned recovery actions are without jurisdiction. (vi) The petitioner contended that it cannot be held liable to pay any amount beyond the Total Resolution Amount. Clause 1.1 of Part B of the Resolution Plan expressly stipulates that even if redistribution is mandated, the total amount remains capped. (vii) The Petitioner contended that the Opposite Parties never objected to or challenged the Resolution Plan before the NCLT, nor did they prefer any appeal. Having acquiesced, they are now estopped from
Legal Reasoning
raising any inconsistent claims. (viii) The Petitioner submitted that the demand notices were issued without affording any opportunity of hearing or issuance of show-cause notice, in violation of principles of natural justice. Additionally, the demands are barred by limitation and vitiated by non-application of mind, thus attracting the protection of Article 14 of the Constitution. (ix) The petitioner contended that the Orissa Public Demands Recovery Act, can only be invoked to recover valid, subsisting dues. Once a claim stands extinguished under the Insolvency and Bankruptcy Code, 2016, any proceedings under the OPDR Act are rendered incompetent. (x) The initiation of OPDR Case No. 30/2020 is also violative of the moratorium imposed under Sections 13 and 14 of the Insolvency and Page 8 of 15 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 24-Jun-2025 16:53:36 Bankruptcy Code, 2016 from 29.08.2018, which expressly prohibits institution or continuation of recovery proceedings. (xi) Lastly, the demand dated 11.09.2024 is founded solely on an audit objection of the Accountant General without any independent assessment or application of mind, amounting to abdication of statutory responsibility. III. SUBMISSIONS ON BEHALF OF THE OPPOSITE PARTIES: 5. (i) The Learned Counsel for the Opposite Parties earnestly made the following submissions in support of his contentions: The demand notices were issued lawfully under the Orissa Land Reforms Act, 1960 and the Odisha Public Demands Recovery Act, 1962. The Officer, being the Certificate Officer and Revenue Authority, is legally empowered to recover statutory government dues through certificate proceedings. (ii) The recovery of these dues is in accordance with statutory obligations imposed on all tenants, including the Petitioner, who is required to remit annual rent and cess. Failure to do so warrants action under the Odisha Public Demands Recovery Act, 1962. (iii) A certificate case under the Odisha Public Demands Recovery Act, 1962was initiated against the Petitioner for recovery of rent and cess for FYs 2015–16 and 2018–19, whereas no such action was taken for FYs 2016–17 and 2017–18 since the dues for those years were paid. This evidences the Petitioner’s awareness of its statutory liability. (iv) The Petitioner is now attempting to evade its obligations by invoking the insolvency process and claiming that the dues were extinguished Page 9 of 15 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 24-Jun-2025 16:53:36 due to the authorities’ failure to submit claims by 12.09.2018 under Form-A. This contention is misconceived, as statutory government dues cannot be extinguished by procedural lapses or technicalities in the insolvency process. (v) The State, as absolute owner of the land, retains the right to recover unpaid statutory dues, and such claims, being statutory in nature, are not extinguished by the CIRP or any provisions of the IBC. The moratorium under Sections 13 and 14 of the IBC does not invalidate or restrict the State’s authority to recover dues under separate legal frameworks such as the Odisha Public Demands Recovery Act, 1962. (vi) The amount of ₹22,70,568/- was demanded from the Petitioner towards short realization of conversion fees as per the AG Audit Report. The said amount has already been realized, and the Petitioner’s compliance with this demand constitutes acquiescence and acknowledgment of its legality. There is no basis for refund. (vii) The demand and recovery actions undertaken are valid, legal, and in strict conformity with applicable laws. The Petitioner was under a continuing obligation to pay government dues, and the authorities acted well within their jurisdiction under the Odisha Public Demands Recovery Act, 1962. IV. COURT’S REASONING AND ANALYSIS: 6. 7. Heard learned counsel for the parties and perused the materials on record The central issue that arises for consideration in the present writ petition is whether the Opposite Parties were legally entitled to raise Page 10 of 15 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 24-Jun-2025 16:53:36 demands for arrear rent, cess, and conversion fees pertaining to periods prior to the implementation date of the Resolution Plan, particularly when such claims were admittedly not submitted before the Resolution Professional during the Corporate Insolvency Resolution Process, nor included in the Resolution Plan duly approved under Section 31(1) of the Insolvency and Bankruptcy Code, 2016. 8. 9. In order to resolve the said controversy, it is necessary to examine the statutory framework under the Insolvency and Bankruptcy Code, 2016, as interpreted and clarified by authoritative judicial pronouncements. Section 31(1) of the Insolvency and Bankruptcy Code, 2016 reads as follows: “31. (1) If the Adjudicating Authority is satisfied that the resolution plan as approved by the committee of creditors under sub-section (4) of section 30 meets the requirements as referred to in sub-section (2) of section 30, it shall by order approve3 the resolution plan which shall be binding on the corporate debtor and its employees, members, creditors, 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, guarantors and other stakeholders involved in the resolution plan. Provided that the Adjudicating Authority shall, before passing an order for approval of resolution plan under this sub-section, satisfy that the resolution plan has provisions for its effective implementation.” Page 11 of 15 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 24-Jun-2025 16:53:36 10. The object and intent behind Section 31(1) is to secure finality in the resolution process. Once a resolution plan is approved by the Adjudicating Authority, it becomes binding on all stakeholders, including the Central and State Governments and statutory authorities. The rationale is to ensure that the successful resolution applicant is not burdened with claims that were not disclosed or settled during CIRP, thereby enabling a “clean slate” takeover and revival of the corporate debtor. 11. One of the foundational principles of the Insolvency and Bankruptcy Code, 2016, is precisely this "clean slate principle." Permitting statutory authorities to raise fresh demands post-implementation would not only undermine the sanctity of the CIRP but also render the revival process illusory by exposing the resolution applicant to unforeseen liabilities. 12. The legal position has been authoritatively settled by the Supreme Court in Ghanashyam Mishra and Sons (P) Ltd. v. Edelweiss Asset Reconstruction Co. Ltd.1, where it was held: “95 …(i) That once a resolution plan is duly approved by the Adjudicating Authority under sub› section (1) of Section 31, the claims as provided in the resolution plan shall stand frozen and will be binding on the Corporate Debtor and its employees, members, creditors, including the Central Government, any State Government or any local authority, guarantors and other stakeholders. On the date of approval of resolution plan by the Adjudicating Authority, all such claims, which are not a part of resolution plan, shall stand extinguished and no person will be entitled to initiate 1(2021) 9 SCC 657. Page 12 of 15 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 24-Jun-2025 16:53:36 or continue any proceedings in respect to a claim, which is not part of the resolution plan; (ii) 2019 amendment to Section 31 of the I&B Code is clarificatory and declaratory in nature and therefore will be effective from the date on which I&B Code has come into effect; (iii) Consequently all the dues including the statutory dues owed to the Central Government, any State Government or any local authority, if not part of the resolution plan, shall stand extinguished and no proceedings in respect of such dues for the period prior to the date on which the Adjudicating Authority grants its approval under Section 31 could be continued.” 13. Similarly, in Committee of Creditors of Essar Steel India Ltd. v. Satish Kumar Gupta,2the Supreme Court held that: “66. Section 31(1) of the Code makes it clear that once a resolution plan is approved by the Committee of Creditors it shall be binding on all stakeholders, including guarantors. This is for the reason that this provision ensures that the successful resolution applicant starts running the business of the corporate debtor on a fresh slate as it were…” 14. Applying the above principles to the facts of the present case, it is evident that the Petitioner, originally Ind-Bharath Energy (Utkal) Limited and now JSW Energy (Utkal) Limited, underwent CIRP commencing from 29.08.2018. The Resolution Plan submitted by M/s JSW Energy Limited was approved by the NCLT on 25.07.2022 and implemented with effect from 28.12.2022. 15. The Resolution Professional issued a public notice on 30.08.2018 inviting claims. The final list of creditors, as submitted before the 2(2020) 8 SCC 531. Page 13 of 15 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 24-Jun-2025 16:53:36 NCLT, did not include any claim from the Opposite Parties. Thus, all claims pertaining to the period prior to the Implementation Date i.e., 28.12.2022, which were not part of the approved Resolution Plan, stood extinguished in law. 16. Despite this, the Tahasildar, Lakhanpur, District-Jharsuguda, issued several demand notices, including the Certificate of Public Demand dated 12.02.2020, PR No. 1 dated 25.01.2023, Letter No. 734 dated 17.02.2023, Letter No. XXI-11/2023 No. 5855 dated 31.10.2023, PR No. 7 dated 17.11.2023, and Letter No. 4925 dated 11.09.2024. 17. These demands pertain to periods well before the Implementation Date and were never submitted during the CIRP. In view of the statutory framework and the settled legal position under the Insolvency and Bankruptcy Code, 2016, such post-implementation demands lack legal sanctity and are unenforceable in law. The contention of the Opposite Parties that statutory dues stand on a higher footing and survive beyond CIRP is directly contrary to the settled legal position. The further argument that audit-based demands are permissible also fails the legal test. The mere existence of an audit objection does not amount to adjudication of liability and cannot override the statutory protections afforded under the Insolvency and Bankruptcy Code, 18. 19. 2016. V. CONCLUSION: 20. In view of the above discussion, this Court has no hesitation in holding that the impugned demand notices issued by the Opposite Page 14 of 15 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 24-Jun-2025 16:53:36 Parties are in clear breach of Section 31 of the IBC and are liable to be quashed. The Opposite Parties are directed to refund the amounts deposited by the Petitioner under protest within a period of four weeks from the date of this judgment.
Decision
Accordingly, the Writ Petition is allowed. Interim order, if any, passed earlier stands vacated. 21. 22. 23. (Dr.S.K. Panigrahi) Judge Orissa High Court, Cuttack, Dated the 20th June, 2025 Page 15 of 15