Case Note & Summary
The case involved M/s. Shekhar Resorts Limited, which appealed against a High Court decision dismissing its writ petition seeking relief under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019. The appellant, a hospitality service provider, faced investigations for service tax evasion, leading to proceedings under the Insolvency and Bankruptcy Code, 2016 (IBC). The NCLT admitted the application against the appellant on 11.09.2018, imposing a moratorium that lasted until 24.07.2020. The appellant submitted an application under the Scheme on 27.12.2019, and was issued Form No.3 on 25.02.2020, requiring payment of Rs.1,24,28,500/- by 30.06.2020. However, due to the moratorium, the appellant could not make the payment. The High Court dismissed the writ petition, stating that the Designated Committee under the Scheme no longer existed after 30.06.2020. The appellant contended that it was legally barred from making payments during the moratorium and sought to have its payment accepted post-moratorium. The Supreme Court analyzed whether the appellant could be penalized for not making the payment due to legal restrictions. The court emphasized that no party should be left remediless and that it is unjust to compel a party to perform an impossible act. The court found that the appellant was entitled to relief under the Scheme and directed that the payment be appropriated towards the settlement dues, quashing the High Court's order. The appeal was allowed, and a discharge certificate was to be issued to the appellant.
Headnote
A) Insolvency Law - Moratorium - Legal Impediment to Payment - Insolvency and Bankruptcy Code, 2016, Section 14 - The appellant was unable to make payment under the Sabka Vishwas Scheme due to a legal moratorium imposed by the IBC, which prevented any payments during that period. The court held that the appellant should not be punished for failing to perform an impossible act due to statutory restrictions (Paras 6-10).
Issue of Consideration
Whether the appellant can be penalized for not depositing the settlement amount due to legal impediments under the IBC.
Final Decision
The Supreme Court allowed the appeal, quashed the High Court's order, and directed that the payment of Rs.1,24,28,500/- be appropriated towards settlement dues under the Scheme, with a discharge certificate to be issued to the appellant.
Law Points
- Insolvency and Bankruptcy Code
- 2016
- moratorium
- legal disability
- Sabka Vishwas Scheme
- 2019
- statutory compliance
