M/S. SHEKHAR RESORTS LIMITED (UNIT OF ORIENT TAJ) versus UNION OF INDIA

Citation: [2023] 1 S.C.R. 1111 · Decided: 05-01-2023 · Supreme Court of India · Bench: M.R. SHAH · Disposal: Appeal(s) allowed

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Judgment (excerpt)

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M/S. SHEKHAR RESORTS LIMITED (UNIT OF ORIENT TAJ)
v.
UNION OF INDIA
(Civil Appeal No.8957 of 2022)
JANUARY 05, 2023
[M. R. SHAH AND B.V. NAGARATHNA, JJ.]
Insolvency and Bankruptcy Code, 2016 : Deposit of settlement
amount under the 2019 Scheme, during moratorium – When
impossible in view of the bar under the IBC – Appellant-corporate
debtor, if can be made to suffer for no fault of its own and rendered
rememediless – On facts, applicationby financial creditor of the
appellant u/s. 7 – Corporate Insolvency Resolution Process against
the appellant – Appellant subjected to moratorium – Thereafter,
Resolution plan approved and the appellant applied for “Sabka
Vishwas (Legacy Dispute Resolution) Scheme 2019 – Appellant
could not pay Rs 1,24,28,500/- as tax dues on the last day due to
moratorium imposed under IBC – Appellant sought extension of
time but the same was rejected – Writ petition by the appellant –
Dismissed by the High Court holding that it cannot issue direction
to the authority to accept the amount due and payable under the
Scheme, 2019; and that the Designated Committee under the scheme
is not existing – On appeal, held: Under the provisions of the IBC,
no payment could have been made during the period of moratorium
– Thus, the appellant was statutorily restrained/debarred from
making any payment – It was impossible for the appellant to make
any payment during the period of moratorium – In view thereof, the
appellant cannot be punished for not doing something which was
impossible for it to do – There was a legal impediment in the way of
the appellant to make any payment during the moratorium –
Appellant was otherwise entitled to the benefit under the Scheme –
Thus, the High Court erred in refusing to grant any relief to the
appellant , and the order passed by the High Court quashed and
set aside – Sabka Vishwas (Legacy Dispute Resolution) Scheme,
2019.
Allowing the appeal, the Court
HELD: 1.1 It would not be fair on the part of the Court to
give a direction to do something which is impossible and if a
   [2023] 1 S.C.R. 1111
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SUPREME COURT REPORTS
[2023] 1 S.C.R.
person has been directed to do something which is impossible,
and if he fails to do so, he cannot be held guilty, the appellant
cannot be punished for not doing something which was impossible
for it to do. There was a legal impediment in the way of the
appellant to make any payment during the moratorium. Even if
the appellant wanted to deposit settlement amount within the
stipulated period, it could not do so in view of the bar under the
IBC as, during the moratorium, no payment could have been
made.  In that view of the matter, the appellant cannot be rendered
remediless and should not be made to suffer due to a legal
impediment which was the reason for it and/or not doing the act
within the prescribed time. [Para 7.3, 8][1120-H; 1121-A-C]
1.2 As regards, the observations made by the High Court
to the effect that the High Court cannot, in exercise of powers
under Article 226 of the Constitution of India extend the period
under the Scheme, 2019, to some extent the High Court is right.
The High Court while exercising the powers under Article 226
of the Constitution of India cannot extend the Scheme. However,
in the instant case it is not a case of extension of the Scheme by
the High Court. It is a case of taking remedial measures. It is
not a case where the appellant did not make any application within
the stipulated time under the Scheme. This is not a case where
the Form No.3 determining the settlement amount was not issued
during the validity of the Scheme. It is not a case where the
appellant deliberately did not deposit the settlement amount and/
or there was any negligence on the part of the appellant in not
depositing the settlement amount within the stipulated time. It
is a case where the appellant was unable to make the payment
due to the legal impediment and the bar to make the payment
during the period of moratorium in view of the provisions of the
IBC.  There may be extra ordinary cases which are required to
be considered on facts of each case. The courts are meant to do
justice and cannot compel a person to do something which was
impossible for him to do. [Para 8.1][1121-D-F; 1122-A]
1.3. As regards, the ground given by the High Court, that
the Designated Committees are not in existence, is concerned,
it is required to be noted that the CBCE has issued a circular
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that in 

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