TMI Blog2021 (12) TMI 1419X X X X Extracts X X X X X X X X Extracts X X X X ..... in the United Kingdom, yet the basic principles and norms apply to the writ must be kept in view. In Thirumala Tirupathi Devasthanam and another vs. Thallappaka Ananthacharyulu and another [ 2003 (9) TMI 784 - SUPREME COURT ], the Supreme Court has cautioned that unless there are some very cogent or strong reasons, the High Court should not prevent the competent Forum from deciding the various questions raised before it including the question of want of jurisdiction . It is also stated that allowing a Court of competent jurisdiction to proceed with the case and decide the same rightly or wrongly, would not result in violation of any Fundamental Rights. The net result of the authorities discussed in this case, is as follows: (a) The writs of mandamus, certiorari and' prohibition, and for the matter of that, all high prerogative writs, are ordinarily not issued where there exists an alternative remedy equally efficient and adequate. (b) But there is no inflexible rule that such writs cannot be issued where the Court thinks it just and convenient to do so. The fact that it ordinarily does not do so is a question not of want of jurisdiction but of expediency. (c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t by adopting the said course, while no prejudice would be caused to the writ applicants, by issuing a writ as asked for, there is likelihood of a serious injustice being caused to the Bank by preventing a statutory forum from exercising the powers conferred on it by law without there being a strong or convincing grounds for issuing such a prohibition. Therefore, it would be wholly inappropriate at this stage to interfere with the Original Applications preferred by the Bank before the Debts Recovery Tribunal by issuing a writ of prohibition. The following conclusions have been arrived at: [a] The writs of mandamus, certiorari and' prohibition, and for the matter of that, all high prerogative writs, are ordinarily not issued where there exists an alternative remedy equally efficient and adequate. [b] But there is no inflexible rule that such writs cannot be issued where the Court thinks it just and convenient to do so. The fact that it ordinarily does not do so is a question not of want of jurisdiction but of expediency. [c] Whether the alternative remedy is equally efficacious or adequate is a question of fact to be decided in each case. [d] Where a complaint is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... VIL APPLICATION (FOR JOINING PARTY) NO. 1 of 2021 In R/SPECIAL CIVIL APPLICATION NO. 11713 of 2019 With R/SPECIAL CIVIL APPLICATION NO. 11985 of 2019 With CIVIL APPLICATION (FOR AMENDMENT) NO. 1 of 2019 In R/SPECIAL CIVIL APPLICATION NO. 11985 of 2019 With CIVIL APPLICATION (FOR JOINING PARTY) NO. 1 of 2021 In R/SPECIAL CIVIL APPLICATION NO. 11985 of 2019 With R/SPECIAL CIVIL APPLICATION NO. 11715 of 2019 With CIVIL APPLICATION (FOR AMENDMENT) NO. 1 of 2019 In R/SPECIAL CIVIL APPLICATION NO. 11715 of 2019 With CIVIL APPLICATION (FOR JOINING PARTY) NO. 1 of 2021 In R/SPECIAL CIVIL APPLICATION NO. 11715 of 2019 With R/SPECIAL CIVIL APPLICATION NO. 19901 of 2019 With CIVIL APPLICATION (FOR AMENDMENT) NO. 1 of 2019 In R/SPECIAL CIVIL APPLICATION NO. 19901 of 2019 With CIVIL APPLICATION (FOR JOINING PARTY) NO. 1 of 2021 In R/SPECIAL CIVIL APPLICATION NO. 19901 of 2019 HONOURABLE MR. JUSTICE J.B.PARDIWALA and HONOURABLE MR. JUSTICE NIRAL R. MEHTA For the Petitioners : MR MIHIR THAKORE SENIOR COUNSEL WITH MR MIHIR JOSHI SENIOR COUNSEL ASSISTED BY MR KEYUR GANDHI WITH MR RAHEEL PATEL ADVOCATES FOR NANAVATI ASSOCIATES(1375) For the Respondent : MR NAVIN PAHWA SENIOR COUNSEL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitted its Claim Form as prescribed in the provisions of the Code before the Insolvency Resolution Professional of the Principal Borrower. 8 It is not in dispute that the Committee of Creditors of the principal borrower (COC) constituted under the provisions of the Code accepted with requisite majority the resolution plan of M/s. ArcelorMittal India Private Limited for the revival and resolution of the principal borrower. The financial package offered by the ArcelorMittal to the lender including the respondent No.1 is to the tune of Rs.42,000 Crore. 9 In accordance with the provisions of the Code, the Resolution Professional (RP) preferred an application under Section 30(6) of the Code being the Interlocutory Application No.431 of 2018 for the approval of the resolution plan of ArcelorMittal by the NCLT. 10 The resolution plan of ArcelorMittal was approved by the NCLT vide its order dated 8th March 2019. The I.A. No.431 of 2018 came to be conditionally allowed. We quote para 28 of the order passed by the NCLT as under: 28. In the light of the above stated discussions, present I.A. No.431 of 2018 is conditionally allowed. The Resolution Plan submitted by ArcelorMittal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... find that the Resolution Plan was considered by the Adjudicating Authority in view of the decision and directions of the Hon ble Supreme Court under Article 142 of the Constitution of India in Arcelormittal India Private Limited (Supra). Hence, at this stage, we are not inclined to re-open the question of eligibility or ineligibility of ArcelorMittal India Pvt. Ltd. , which stands closed in view of the decision and directions of the Hon ble Supreme Court. 30. So far as the Appellant Mr. Prashant Ruia s right of subrogration under Section 140 of the Contract Act and right to be indemnified under Section 145 of the said Act is concerned, the question of exercising such right does not arise in the present case. 31. The Appellant - Mr. Prashant Ruia has executed a Deed of Guarantee between the lenders and the Corporate Debtor . Such guarantee is with regard to clearance of debt. Once the debt payable by the Corporate Debtor stands cleared in view of the approval of the plan by making payment in favour of the lenders ( Financial Creditors), the effect of Deed of Guarantee comes to an end as the debt stands paid. The guarantee having become ineffective in view of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by a side wind by the Appellate Tribunal without any reasons for the same. 64. Shri Prashant Ruia a promoter/director of the corporate debtor in his personal guarantee dated 28.09.2013, specifically stated as follows: 7. The obligations of the Guarantor under this Guarantee shall not be affected by any act, omission, matter or thing that, but for this Guarantee, would reduce, release or prejudice any of its obligations under this Guarantee (without limitation and whether or not known to it or any Secured Party) including : xxx xxx xxx (g) any insolvency or similar proceedings. Also, under the caption terms of settlement , the final resolution plan dated 02.04.2018, as approved on 23.10.2018, specifically provided: Financial Creditors: Pursuant to the approval of this Resolution Plan by the Adjudicating Authority, each of the Financial Creditors shall be deemed to have agreed and acknowledged the following terms: The payment to the Financial creditors in accordance with this Resolution Plan shall be treated as full and final payment of all outstanding dues of the Corporate Debtor to each of the Financial Creditors as of the Effectiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... availed by the Corporate Debtor, which have been invoked prior to the Effective Date, claims of the guarantor on account of subrogation, if any, under any such guarantee shall be deemed to have been abated, released, discharged and extinguished. It is hereby clarified that, the aforementioned clause shall not apply in any manner which may extinguish/affect the rights of the Financial Creditors to enforce the corporate guarantees and personal guarantees issued for and on behalf of the Corporate Debtor by Existing Promoter Group or their respective affiliates, which guarantees shall continue to be retained by the Financial Creditors and shall continue to be enforceable by them. (emphasis supplied) We were also informed by the learned senior counsel that the personal guarantees of the promoter group have been invoked and legal proceedings in respect thereof are pending. It has been pointed out to us that Shri Prashant Ruia and other members of the promoter group, who are guarantors, are not parties to the resolution plan submitted by ArcelorMittal and hence, the resolution plan cannot bind them to take away rights of subrogation, which they may have if they are orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t claims that may exist apart from those decided on merits by the resolution professional and by the Adjudicating Authority/Appellate Tribunal can now be decided by an appropriate forum in terms of Section 60(6) of the Code, also militates against the rationale of Section 31 of the Code. 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. All claims must be submitted to and decided by the resolution professional so that a prospective resolution applicant knows exactly what has to be paid in order that it may then take over and run the business of the corporate debtor. This the successful resolution applicant does on a fresh slate, as has been pointed out by us hereinabove. For these reasons, the NCLAT judgment must also be set aside on this count. 14 Thus, the Supreme Court, while holding that the NCLT judgement was quite contrary to Section 31(1) of the Code, refrained from saying anyth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be directed to disclose on oath, the properties and assets, both movables and immovables, including intangible properties, belonging to the Defendants within 4 weeks from the date of the order of disclosure by this Hon ble Tribunal or within such period as this Hon ble Tribunal may deem fit and proper; (vi) That upon the relief in terms of prayer (iii) above being granted, this Hon ble Tribunal be pleased to appoint a Receiver to take possession and control of the assets so disclosed, with all powers under the provisions of RDB Act as well as under Order XL Rule 1 of the Civil Procedure Code, 1908 including power to take possession thereof and if required, to take forcible possession of the said properties from the Defendant No.1 and Defendant No.2 by breaking upon the locks, taking physical possession / occupation and if necessary with the help of police, to take inventory thereof and to sell the same by public auctin or by private treaty and the net sale proceeds thereof be ordered to be paid over to the applicant towards satisfaction of its claim in the original application; (vii) that all receivables and realization of such securities be paid over to the Applicant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstant case, public interest is required to be protected and that would only be done by appointing a Receiver/Commissioner of the properties in question. (vi) The applicant submits that there is an overwhelming case for appointment of Receiver / Commissioner in respect of the properties of the Defendants. (vii) There is no dispute regarding the indebtedness of the Defendants and/or its liability to pay to the Applicant. The Applicant has therefore an excellent chance of succeeding in the Original Application. 8 . INTERIM RELIEFS: (i) that pending hearing and final disposal of the application, the Defendant No.1 be directed to forthwith deposit, with the applicant, the following amount that is outstanding under the Personal Guarantees, as applicable to Defendant No.1: Principal Amount as on 2 August, 2017 : Rs.200,00,00,000 (Rupees Two Hundred Crores) Interest amount and other chargers as on 30 June, 2018 : Rs.73,36,49,623.59 (Rupees Seventy Three Crores Thirty Six Lakhs Forty Nine Thousand Six Hundred and Twenty Three and Fifty Nine Paise) (ii) that pending hearing and final disposal of the application, the Defendant No.2 be directed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (vii) That pending the hearing and final disposal of the Original Application, the Defendants be directed to disclose on oath, the properties and assets, both movables and immovables, including intangible assets, belonging to Defendants, within such time as may be fixed by this Hon ble Tribunal and upon such disclosure Defendants, by themselves, their servants or agents be restrained by an order and injunction of this Hon ble Tribunal from in any manner disposing off, selling, transferring, alienating, encumbering, parting with possession, creating third party right, title interest and claim of any nature whatsoever in their immovable and movable properties; (viii) That pending hearing and final disposal of the Original Application, the Defendants be restrained from leaving the country; (ix) That pending hearing and final disposal of the Original Application, each of the Defendants be directed to deposit their passports with this Hon'ble Tribunal; (x) That pending hearing and final disposal of the Original Application, each of the defendants be required to submit their respective taxation, Permanent Account Number, and details related to any or all bank acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould cause grave prejudice, irreparable loss, injury and hardship to the Applicant, its depositors and other stakeholders. The Applicant being the custodian of public money, its interest are required to be protected by this Hon ble Tribunal and any delay in granting the reliefs would adversely impact the interest of the public. Hence, public interest demands that the reliefs as prayed for by the Applicant are granted. (iv) The Applicant submits that, in the present case, where there are no valid disputes in respect of the liability of Defendants to pay to the Applicant, it is just and in the interest of justice that the reliefs as prayed for by the Applicant be granted. (v) The Applicant apprehends that Defendants are likely to attempt to leave the country to evade the jurisdiction of this Hon ble Tribunal, and payment of the amounts claimed by the Applicant. (vi) The Applicant has an excellent chance of succeeding on merits, since Defendants have no tenable defense. (vii) It is just and in the interest of justice that the reliefs as prayed for by the Applicant be granted. (viii) The Applicant submits that if the orders, as prayed for are not granted g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there is a fine distinction between the assignment of debt and discharge or payment of debt . By way of illustration, it was sought to be explained to us that had it been a case of some adjustment of the amount and pursuant to such adjustment, if there would have been some payment, then, it could not be said that the debt stood assigned. According to the learned Senior Counsel, the case on hand is not one of discharge of debt or part payment of the debt, but the same is one of assignment of debt. 21 Mr. Thakore and Mr. Joshi brought to our notice a Full Bench decision rendered by the High Court of Australia in the case of Hutchens v. Deauville Investments Pty Ltd reported in 68 Australian Law Reports 367 and relying on the same, it was argued that it is preposterous to suggest that the liability of the writ applicants as guarantors could be transformed into an independent liability to a different creditor from the creditor to whom the guaranteed debt remained owing. Such suggestion would seem to lie ill with the basic principle that the debt owed by a guarantor, upon default by the principal borrower, is and remains the same debt as that owing by the principal debtor. To put ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the Banks at all, no portion of the Loan Asset can be recovered by the Banks from any one, Essar Steel India Limited and/or its Guarantees. 23 In the aforesaid context, our attention was invited to the decision of the Supreme Court in the case of ICICI Bank Limited vs. Official Liquidator of APS Star Industries Limited reported in (2010) 10 SCC 1, wherein the Supreme Court observed as under: 46. As stated above, an outstanding in the account of a borrower(s) (customer) is a debt due and payable by the borrower(s) to the bank. Secondly, the bank is the owner of such debt. Such debt is an asset in the hands of the bank as a secured creditor or mortgagee or hypothecatee. The bank can always transfer its asset. Such transfer in no manner affects any right or interest of the borrower(s) (customer). Further, there is no prohibition in the BR Act, 1949 in the bank transferring its assets inter se. Even in the matter of assigning debts, it cannot be said that the banks are trading in debts, as held by the High Court(s). The assignor bank has never purchased the debt(s). It has advanced loans against security as part of its banking business. The account of a client in the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to be quoted: The assignment of a debt will not be contrary to public policy solely on the grounds that the assignee has purchased the debt for a considerably discounted price or because that price is only payable after a period of credit. Nor will the assignment be contrary to public policy simply because the assignee may make a profit on the transaction at the end of the day. If there was no prospect of a profit, Hobhouse LJ observed, commercial entities would never purchase debts. 50. Similarly, the following proposition in Chitty on Contracts, 27th edn. (1994) at para 19.027 is relevant to be noted. It is also well established that a claim to a simple debt is assignable even if the debtor has refused to pay. The practice of assigning or `selling' debts to debt collecting agencies and credit factors could hardly be carried on if the law were otherwise. 51. In view of the above exposition of law, we find that under the impugned Deed of Assignment only the Account Receivables in the books of ICICI Bank Ltd. has been transferred to Kotak Mahindra Bank Ltd. The obligations of ICICI Bank Ltd. towards its borrower(s) (customer) under the loan agreeme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... application [and includes any liability towards debt securities which remains unpaid in full or part after notice of ninety days served upon the borrower by the debenture trustee or any other authority in whose favour security interest is created for the benefit of holders of debt securities or;] 26 Thereafter, our attention was drawn to Section 17 of the Act, which is with respect to the jurisdiction, powers and authority of the Tribunals. Reading Section 17, it was argued that the Tribunal can exercise jurisdiction only for recovery of debts due to the Banks and financial institutions, but if there is no existing debt, then there is no question of any recovery. Our attention was also drawn to Section 19 of the Act, 1993. It provides for filing of the application to the Tribunal. Again, it was sought to be argued that if any Bank or a financial institution has to recover any debt, it may make an application, but since there is no debt in the present case, as the same came to be assigned to the Arcellor Mittal, the application under Section 19 itself is not maintainable. 27 Both the learned Senior Counsel vehemently argued that this is a fit case in which this Court should ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, the Bank may not be in a position to proceed against the principal borrower i.e. the ESIL, but nothing precludes the Bank from proceeding against the guarantors i.e. the writ applicants herein, more particularly, in view of certain clauses of the resolution plan itself. 32 Mr. Pahwa, in support of his aforesaid submissions, seeks to rely upon a recent pronouncement of the Supreme Court in the case of Lalit Kumar Jain vs. Union of India and others reported in 2021 SCC Online SC 396, wherein the Supreme Court upheld the provisions of the Code 2016 relating to the insolvency of personal guarantees by way of a Notification under 2019. Mr. Parikh would submit that in the said case, the writ applicants, being the personal guarantors of the corporate debtors, argued before the Supreme Court that since the liability of the guarantor is co-extensive with the corporate debtors, once a resolution plain is approved by the Committee of Creditors (COC) of a corporate debtor, the guarantors along with the corporate debtors stand discharged of the liability towards the creditors. It was argued before the Supreme Court that in such circumstances, the Creditors cannot proceed against them sepa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r (d) proceeds to act in contravention of fundamental rights. The principles, which govern exercise of such power, must be strictly observed. A writ of prohibition must be issued only in rarest of rare cases. Judicial disciplines of the highest order has to be exercised whilst issuing such writs. It must be remembered that the writ jurisdiction is original jurisdiction distinct from appellate jurisdiction. An appeal cannot be allowed to be disguised in the form of a writ. In other words, this power cannot be allowed to be used as a cloak of an appeal in disguise . Lax use of such a power would impair the dignity and integrity of the subordinate Court and could also lead to chaotic consequences. It would undermine the confidence of the subordinate Court. It was not even argued that there was total lack of jurisdiction in the civil Court. It could not be denied that the civil Court, before which the suit was pending, had powers to decide on the maintainability of the suit and to decide on questions of its jurisdiction. The civil Court had jurisdiction to decide whether the suit was barred by Section 14 of the said Act or on principles of res judicata/estoppel. Thus unless there was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rocedure. The intention of the legislature in enacting the Act is to provide for expeditious adjudication and recovery of debts due to banks and financial institutions; therefore, if all the provisions of the Code are applied to proceedings before the Debts Recovery Tribunal, it would defeat the very object of the enactment. Nonetheless, while ordinarily the Debts Recovery Tribunal should not decide issues as preliminary issues, in the opinion of this court, if the issue raised is one which goes to the root of the matter and strikes at the very jurisdiction of the Tribunal to decide the application, the court is of the view that the Tribunal is not barred from deciding such issue as a preliminary issue merely because section 22 of the Act does not specifically refer to the power to frame and decide preliminary issues. However, such power should be exercised sparingly, only in cases where the question of the jurisdiction of the Debts Recovery Tribunal to decide the case is involved. 38 Mr. Pahwa also took us through various clauses of the Resolution Plan including the terms of the personal guarantee to make good his submission that mere assignment of debt by the State Bank of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rusted with judicial duties to keep within the limits of their jurisdiction. 45 In M/s. East India Commercial Company Ltd. Calcutta v. Collector of Customs, Calcutta [AIR 1962 SC 1893 at 1898 (paragraph 26), following Mackonochie v. Lord Penzance (1881) 6 Appeal Cases 424 , it was held by the Supreme Court that a writ of prohibition is an order directed to an inferior Tribunal forbidding it from continuing with proceeding therein on the ground that the proceeding is without or in excess of jurisdiction or contrary to the laws of the land, statutory or otherwise. 46 In S. Govindan Menon vs. Union of India reported in AIR 1967 SC 1274 , the Supreme Court held that the jurisdiction for grant of Writ of Prohibition is primarily supervisory and object of the Writ is to restrain courts or inferior Tribunals from exercising jurisdiction which they do not possess at all or else to prevent them from exceeding the limits of their jurisdiction. In other words, the object is to confine the Court or Tribunals of inferior or limited jurisdiction within their bounds. The writ of prohibition lies not only for excess of jurisdiction or for absence of jurisdiction but also in a case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... matter which is thus pre-eminently one of discretion, it is not possible or even if it were, it would not be desirable to lay down inflexible rules which should be applied with rigidity in every case which comes up before the Court. 48 Again in Isha Beevi v. Tax Recovery Officer [1975 AIR 2135], the Supreme Court while dealing with the existence of alternative remedy and the issue of a writ of prohibition held: The existence of an alternate remedy is not generally a bar to the issuance of a writ of prohibition. But in order to substantiate a right to obtain a writ of prohibition from a High Court or the Supreme Court, an applicant has to demonstrate total absence of jurisdiction to proceed on the part of the officer or the authority complained against......................... 49 The Supreme Court in M. V. S. Prasada Rao v. State of A. P. [1985 Lab. I. C. 438], while explaining the scope and effect of a writ of prohibition, laid down: Writ of prohibition is an order directing the inferior Tribunal or authority forbidding to continue the proceedings on the premise that it is in excess of the jurisdiction or without authority of law. In other words, it is one of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o act without or in excess of jurisdiction or that it had acted in violation of rules of natural justice or that it had proceeded to act under law which was ultra vires or unconstitutional or proceeded to act in contravention of fundamental rights. The impugned judgment does not indicate as to why the High Court did not consider it expedient to allow the civil Court to decide on questions of maintainability of the suit or its own jurisdiction. The impugned judgment does not indicate why the civil Court be not allowed to decide whether the suit was barred by virtue of Section 14 of the said Act or on principal of res judicata/estoppel. To be remembered that no fundamental right is being violated when a Court of competent jurisdiction is deciding rightly or wrongly matters before it. 51 Thus, the Supreme Court has cautioned that unless there are some very cogent or strong reasons, the High Court should not prevent the competent Forum from deciding the various questions raised before it including the question of want of jurisdiction . It is also stated that allowing a Court of competent jurisdiction to proceed with the case and decide the same rightly or wrongly, would not resu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; (1927) 1 K.B. 491, Lord Atkin said as follows: I think it is quite plain that the fact of there being a remedy by way of, appeal is no answer to a writ of prohibition where the want of jurisdiction complained of is based upon the breach of a fundamental principle of justice............... This view is also supported in two cases of this Court, 'Dorman Long Co. v. Jagadish Chandra', 62 Cal 596 at p. 605 and 'In re Ramjidas Mahaliram', 62 Cal 1011 at p. 1035. See also 'R v. Wandsworth', (1942) 1 All E R 56. But the Court has an undoubted discretion in the matter. If the alternative remedy is an efficient remedy and there is no want of jurisdiction, patent on the face of it, or any breach of natural justice, then the writ may be refused: 'R v. Kindsland Parish etc', (1922) 8 Tax Cas 327 (Halsbury Vol. 9, p. 879 n(s) ). 54 Turning to the English authorities on this point, the most important is the decision of the English Court in - 'Farquharson v. Morgan', (18S4) 1 QB 552 (G). In that case a County Court Judge made an order to enforce an award by execution as on an ordinary County Court judgment under Section 24, Agricul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dicial opinion, as to whether the grant of the writ was discretionary or not, the authorities seem unanimous in deciding that, where the want of jurisdiction is patent, the grant of the writ of prohibition is of course. And at page 559 the learned Lord Justice points out: The reason why, notwithstanding such acquiescence, a prohibition is granted where the want of jurisdiction is apparent on the face of the proceedings, is explained by Lord Denman in - 'Bodenham v. Ricketts', 6 N M 170 (H) to be for the sake of the public, lest 'the case might become a precedent if allowed to stand without impeachment', and, I will add for myself, because it is a want of jurisdiction of which the Court is informed by the proceedings before it, and which, the judge should have observed, and of which he himself should have taken notice. And again at page 563 Lord Justice Davey draws a distinction between the case of a patent and latent want of jurisdiction and the distinction according to this learned Lord Justice is : ......but the distinction does not, I think, depend on the existence of a formal record, butt is one of substance, whether the defect is apparen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essarily to be restrained by prohibition. Such usurpation when it is patent has been judicially characterised as in contempt of the Crown. It is with this background that in England it has been held that In such a case the writ of prohibition is demandable of right. But no such considerations need weigh with this Court In appreciating the broad principle that granting of all writs under article 226 of the Constitution Including the writ of prohibition ts always discretionary though of course different considerations may prevail in case of different writs .. The following propositions though not exhaustive of the subject are sufficient for the purposes of this case and I venture to think that rue measure and scope of the exercise of this jurisdiction and the discretion of this Court to issue a writ of prohibition under our law, in respect of proceedings in excess of jurisdiction, may be thus stated : (i) The High Court has always the power and discretion to grant or refuse to grant this writ which though It is primarily intended for enforcement of fundamental rights must also issue where necessity demands immediate and decisive interposition. (ii) The considerations th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld be proceedings without ;any jurisdiction at all. What is the meaning to be attached to the expression complete absence of jurisdiction apparent on the face of the record? As we shall presently point out, two views are possible. One is that the absence of jurisdiction should be clear beyond any reasonable doubt on the construction of the statute which confers the jurisdiction or confers the power or competence, and that if two views are possible of a construction of a section then it would not be a case of absence of jurisdiction apparent on the face of the record. The other view is that if absence of jurisdiction can be established by reference to statute without more, and no evidence was necessary and no facts had to be proved in order to establish want of jurisdiction, then absence of jurisdiction is one which is apparent on the face of the record, or, as one learned Judge has said, apparent on the face of the statute. 58 In our opinion, the net result of the authorities discussed above is as follows: (a) The writs of mandamus, certiorari and' prohibition, and for the matter of that, all high prerogative writs, are ordinarily not issued where there exists an al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o provide a speedy mode for the Banks and Financial Institutions to recover their Debts . 60 Moreover, when the debt falls under the definition of the Act, in our view, any dispute arising out of the same is to be determined by the Tribunal duly constituted for that purpose. Once a remedy is provided under the RDDBFI Act, 1993 which is a Special enactment, there will be a ouster of jurisdiction by a Debtor or a Guarantor to approach the Civil Court (which was established on 30th November, 1994) (except the Supreme Court, and the High Court exercising jurisdiction under Article 226 and 227 of the Constitution). 61 It is to be pointed out that the term 'Debt' defined under Section 2(g) of the Act means any liability which is alleged as due from any person by a Bank during the course of any business activity undertaking by the Bank, in cash or otherwise, whether secured or unsecured, subsisting on, and legally recoverable on, the date of the application, as per the decision in the case of Tapan Kumar Mukhoty v. Bank of Madura Limited, 2001 D.R.T.C. 91 at page 99 (Cal.) 62 It is to be made mention of Section 17 of the RDDBFI Act, 1993 that a Tribunal shall exercise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al-debtor is released, or by any act or omission of the creditor, the legal consequence of which is the discharge of the principal-debtor. However, certain kinds of discharge of the principal-debtor which may operate by operation of law may not ensure to the benefit of the Surety. Such instances being the bankruptcy of the principal-debtor or liquidation in the case the principal-debtor is a company. 66 Section 134 of the Contract Act reads thus: 134. Discharge of surety by release or discharge of principal debtor.- The surety is discharged by any contract between the creditor and the principal debtor, by which the principal debtor is released, or by any act or omission of the creditor, the legal consequence of which is the discharge of the principal debtor. -The surety is discharged by any contract between the creditor and the principal debtor, by which the principal debtor is released, or by any act or omission of the creditor, the legal consequence of which is the discharge of the principal debtor. Illustrations: (a) A gives a guarantee to C for goods to be supplied by C to B. C supplies goods to B, and afterwards B becomes embarrassed and contracts with his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the ESIL. There has been no act or any omission on the part of the Bank, the legal consequence of which is discharged of the principal debtor. In the instance case, prima facie, it could be said that the principal debtor (ESIL) stood exonerated by the assignment of debt i.e. by operation of law and the discharge of a principal debtor by operation of law may not operate in all cases as a discharge of the sureties. LALIT KUMAR JAIN vs. UNION OF INDIA AND OTHERS (SUPRA): 68 The aforesaid takes us now to look into the recent pronouncement of the Supreme Court in the case of Lalit Kumar Jain vs. Union of India and others [2021 SCC Online SC 396]. The common question that fell for the consideration of the Supreme Court was one relating to the vires and validity of a Notification dated 15th November 2019 issued by the Central Government. The other reliefs claimed were one relating to the validity of the Insolvency and Bankruptcy (Application to adjudicating authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019 issued on 15th November 2019. The validity of regulations challenged by the Insolvency and Bankruptcy Board of Ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... argued that a discharge which a principal borrower may secure by operation of law (for instance on account of winding or the process under the Code) would not absolve the surety from its liability. It was argued by the learned Solicitor General that neither the guarantor s obligations are absolved nor discharged in terms of Sections 133 to 136 of the Contract Act on account of release / discharge / composition of variance of contract which a principal borrower may secure by way of operation of law for instance as under the Code. 73 The learned Solicitor General invited the attention of the Supreme Court to the decision in the case of the State Electricity Board vs. Official Liquidator, High Court of Ernakulum [1982 (3) SCC 358] and Punjab National Bank vs. State of U.P. [(2002) 5 SCC 80]. 74 The Supreme Court also took notice of the Calcutta High Court judgement in the case of Gouri Shankar Jain vs. Punjab National Bank [2019 SCC Online CAL 7288]. 75 The Supreme Court also took notice of its earlier decision in the case of State Bank of India vs. V. Ramakrishnan [(2018) 17 SCC 394]. 76 The Supreme Court, while upholding all the submissions canvassed on behalf of the Un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty is discharged by any contract between the creditor and the principal debtor, by which the principal debtor is released, or by any act or omission of the creditor, the legal consequence of which is the discharge of the principal debtor. ****************** 140.Rights of surety on payment or performance.-Where a guaranteed debt has become due, or default of the principal debtor to perform a guaranteed duty has taken place, the surety upon payment or performance of all that he is liable for, is invested with all the rights which the creditor had against the principal debtor. 141.Surety s right to benefit of creditor s securities.-A surety is entitled to the benefit of every security which the creditor has against the principal debtor at the time when the contract of suretyship is entered into, whether the surety knows of the existence of such security or not; and if the creditor loses, or, without the consent of the surety, parts with such security, the surety is discharged to the extent of the value of the security. 128. All creditors and other classes of claimants, including financial and operational creditors, those entitled to statutory dues, workers, et ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clude provisions as to payments to be made by such guarantor.... 131. And further that: 26.1 Section 14 refers only to debts due by corporate debtors, who are limited liability companies, and it is clear that in the vast majority of cases, personal guarantees are given by Directors who are in management of the companies. The object of the Code is not to allow such guarantors to escape from an independent and co-extensive liability to pay off the entire outstanding debt, which is why Section 14 is not applied to them. However, insofar as firms and individuals are concerned, guarantees are given in respect of individual debts by persons who have unlimited liability to pay them. And such guarantors may be complete strangers to the debtor - often it could be a personal friend. It is for this reason that the moratorium mentioned in Section 101 would cover such persons, as such moratorium is in relation to the debt and not the debtor. 132. In Committee of Creditors of Essar Steel (I) Ltd. v. Satish Kumar Gupta [(2020) 8 SCC 531] (the Essar Steel case ) this court refused to interfere with proceedings initiated to enforce personal guarantees by financial creditors; i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation. The liability is absolute and unconditional. The fact that the Company in liquidation i.e. the principal debtor has gone into liquidation also would not have any effect on the liability of the Bank i.e. the guarantor. Under Section 128 of the Indian Contract Act, the liability of the surety is coextensive with that of the principal debtor unless it is otherwise provided by the contract. A surety is no doubt discharged under Section 134 of the Indian Contract Act by any contract between the creditor and the principal debtor by which the principal debtor is released or by any act or omission of the creditor, the legal consequence of which is the discharge of the principal debtor. But a discharge which the principal debtor may secure by operation of law in bankruptcy (or in liquidation proceedings in the case of a company) does not absolve the surety of his liability (see Jagannath Ganeshram Agarwala v. Shivnarayan Bhagirath [AIR 1940 Bom 247; see also In re Fitzgeorge Exparte Robson [(1905) 1 KB 462] ). 134. This legal position was noticed and approved later in Industrial Finance Corpn. of India Ltd. v. Cannanore Spg. Wvg. Mills Ltd. [(2002) 5 SCC 54] An earlier decis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arantor in view of the language of Section 128 of the Contract Act as there is no discharge under Section 134 of that Act. In our opinion, the principle of the aforesaid decision of this Court is equally applicable in the present case. The right of the appellant to recover money from Respondents 1, 2 and 3 who stood guarantors arises out of the terms of the deed of guarantee which are not in any way superseded or brought to a naught merely because the appellant may not be able to recover money from the principal borrower. It may here be added that even as a result of the Nationalisation Act the liability of the principal borrower does not come to an end. It is only the mode of recovery which is referred to in the said Act. 135. In Kaupthing Singer and Friedlander Ltd. (supra) the UK Supreme Court reviewed a large number of previous authorities on the concept of double proof, i.e. recovery from guarantors in the context of insolvency proceedings. The court held that: The function of the rule is not to prevent a double proof of the same debt against two separate estates (that is what insolvency practitioners call double dip ). The rule prevents a double proof of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Company Law Tribunal, Kolkata. The Code of 2016 was enacted to consolidate and amend the laws relating to reorganisation and Insolvency Resolution of corporate persons, partnership firms and individuals in a time bound manner. The Code of 2016 was amended in 2018. Prior to the enactment of the Code of 2016, there were various statutes relating to insolvency and bankruptcy of corporate entities, partnership firms and individuals. The Code of 2016 brought the law governing insolvency of corporate persons, partnerships and individuals under one statute. The Code of 2016 is divided into five parts with each part containing a number of chapters. Section 7 of the Code of 2016 is under Part II which deals with Insolvency Resolution and liquidation for corporate persons, and Chapter II of Part II deals with Corporate Insolvency Resolution process. 24. Right to apply for insolvency does not arise out of a contract between the parties. It is a statutory right. Section 6 of the Code of 2016 specifies the persons who may initiate Corporate Insolvency Resolution process in respect of a corporate debtor. It stipulates that, where a corporate debtor commits default, a financial creditor, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Corporate Insolvency Resolution process. In such a situation, no compromise takes place. In a given situation, the financial creditor applying for initiation of the Corporate Insolvency Resolution process may receive a portion of the claim as full and final settlement as against the corporate debtor, in accordance with the Resolution Plan approved under the Code of 2016. In neither of the two situations, can it be said that, the financial creditor entered into a voluntary compromise with the corporate debtor with regard to the quantum of the claim. 26. The Code of 2016 stipulates that, a Resolution Plan in respect of a corporate debt is required to be approved by a vote of not less than 66% of the voting share of the financial creditors. In a given case, the financial creditor applying for initiation of Corporate Insolvency Resolution process in respect of a corporate debtor may be holding more than 66% of the voting share of the financial creditors in respect of such corporate debtor. In such case, the best available Resolution Plan in respect of the corporate debtor may contemplate payment of a portion of the claim of the financial creditors in full and final settle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on'ble Court in Modern Stores (India) Ltd. (supra) has considered the interplay of sections 134 and 137 of the Act of 1872. It has applied the ratio laid down in Maharashtra State Electricity Board, Bombay (supra). It has held as follows: - 18. Section 134 consists of two parts, The first part of the section speaks that the sureties are discharged by any contract between the creditor and the principal-debtor, by which the principal debtor is released. This part has no application to the present case as in this case there has not been any contract between the plaintiff being the creditor and the defendant No. 1 being the principal-debtor whereby the principal debtor was released. 19. The second part of Section 134 is to this effect. The sureties are discharged by any act or omissions of the creditor, legal consequence of which is the discharge of the principal-debtor. In this appeal we are to consider whether there has been any act or omission on the part of the appellant being the creditor and the consequence of such act or omission is the discharge of the defendant No. 1, the principal-debtor. In this case, as it appears that the suit is instituted by the appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es not discharge the other Surety. 20. It will appear from Section 137 of the Contract Act that mere forbearance on the part of the creditor to sue the principal debtor or to enforce any other remedy against him does not discharge the surety. Therefore, it appears that mere forbearance on the part of the creditor to sue the principal debtor will not discharge the surety. It has been held by certain decisions that mere forbearance to sue may spring from a contract or there may be simple forbearance. If such forbearance springs from a contract that will be a case under Section 135 of the Contract Act but if the plaintiff forbears to sue the principal debtor within the period of limitation that itself would not discharge the surety. 21. Therefore, in our view, mere omission to sue the principal debtor or to proceed against the principal debtor in the suit will not operate as a discharge of the sureties. 30. The Supreme Court in Canonnore Spinning and Weaving Mills Ltd (supra) has considered discharge of liability of a guarantee under the provisions of section 141 of the Act of 1872. It has held that, a definite volition on the part of the creditor is required to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... compounds with the principal debtor, discharges the surety. 34. In the facts of the present case, most respectfully, I am unable to accept and apply the ratio of Kundanmal Dabriwala (supra). Firstly, Kundanmal Dabriwala (supra) is not binding precedent upon me. Canonnore Spinning and Weaving Mills Ltd (supra), Maharashtra State Electricity Board, Bombay (supra) and Modern Stores (India) Ltd. (supra) are binding precedents on me. Secondly, the proposition that, as a binding arrangement sanctioned by Court under Section 391 of the Companies Act, 1956 being a deemed and binding contract through operation of law and if it extinguishes the liability of the principal debtor, the same has the effect of preventing the surety from recovering the amount of debt from the debtor and therefore, the creditor cannot recover from the surety, as observed by Kundanmal Dabriwala (supra), requires consideration. Theoretically, as the liability of the surety is coextensive as that of the principal debtor, the creditor can proceed solely against the surety and recover the liability of the debtor from the surety. In such a situation, the subsequent reduction of liability of the debtor to the surety ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot also be construed to be a discharge of the surety in terms of Section 139 of the Act of 1872. The implied promise recognised under Section 145 of the Act of 1872 is not impaired by any order that may be passed under the Code of 2016. As noted above, when, a financial creditor approaches the National Company Law Tribunal under the provisions of the Code of 2016, it does so, in exercise of statutory rights. Contractual obligations between the financial creditor and the surety are not obliterated or modified or suspended by the eventual outcome of such proceeding. 36. The Supreme Court in V. Ramakrishnan Anr. (supra) has considered the issue as to whether Section 14 of the Code of 2016 would apply to a personal guarantor of a corporate debtor. It has held that, Section 14 of the Code of 2016 does not apply to a personal guarantor. It has noted that, the object of the Code of 2016 is not to allow personal guarantors to escape from an independent and coextensive liability. It has held as follows:- ............. 20. It is for this reason that sub-section (2) of Section 60 speaks of an application relating to the bankruptcy of a personal guarantor of a corpor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed purpose contained in Section 60(2) and (3), as stated hereinabove. This is what is meant by strengthening the Corporate Insolvency Resolution Process in the Statement of Objects of the Amendment Act, 2018. 22. Section 31 of the Act was also strongly relied upon by the Respondents. This Section only states that once a Resolution Plan, as approved by the Committee of Creditors, takes effect, it shall be binding on the corporate debtor as well as the guarantor. This is for the reason that otherwise, under Section 133 of the Indian Contract Act, 1872, any change made to the debt owed by the corporate debtor, without the surety's consent, would relieve the guarantor from payment. Section 31(1), in fact, makes it clear that the guarantor cannot escape payment as the Resolution Plan, which has been approved, may well include provisions as to payments to be made by such guarantor. This is perhaps the reason that Annexure VI(e) to Form 6 contained in the Rules and Regulation 36(2) referred to above, require information as to personal guarantees that have been given in relation to the debts of the corporate 23 debtor. Far from supporting the stand of the Respondents, it is clear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law with respect to the same matter including a law adding to, amending, varying or repealing the law so made by a State Legislature. Thus, Parliament need not wait for the law made by the State Legislature with the President's assent to be brought into force as it can repeal, amend, vary or add to the assented State law no sooner it is made or enacted. We see no justification for inhibiting Parliament from repealing, amending or varying any State legislation, which has received the President's 25 assent, overriding within the State's territory, an earlier parliamentary enactment in the concurrent sphere, before it is brought into force. Parliament can repeal, amend, or vary such State law no sooner it is assented to by the President and that it need not wait till such assented-to State law is brought into force. This view finds support in the judgment of this Court in Tulloch [AIR 1964 SC 1284 : (1964) 4 SCR 461] . 80. Lastly, the definitions of the expressions laws in force in Article 13(3)(b) and Article 372(3) Explanation I and existing law in Article 366(10) show that the laws in force include laws passed or made by a legislature before the commencement o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 31 of the IBC would not per se operate as a discharge of the guarantor s liability, the nature and extent of which would depend on the terms of the guarantees itself. However, according to Mr. Thakore and Mr. Joshi, in Lalit Kumar Jain (supra), the Supreme Court had no occasion to consider the effect of assignment of debt. HUTCHENS v. DEAUVILLE INVESTMENTS PTY LTD (SUPRA): 79 In the earlier part of our judgement, we have referred to the case of Hutchens (supra). This decision is of the Full Bench of the High Court of Australia. The facts, as noted in the judgement, read thus: In July 1977, a proprietary company called The Kenbrite Corporation Pty. Ltd. ( Kenbrite ), of which Hutchens was a director, agreed to borrow money from General Credits Limited ( General Credits ). As security for the repayment of the loan and payment of interest, Kenbrite executed in favour of General Credits a first mortgage debenture ( the first mortgage debenture ) containing a floating charge over its assets while Hutchens executed a deed of guarantee and indemnity whereby, among other things, he guaranteed the payment of any moneys then, or thereafter to become, owing by Ken ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the first mortgage debenture and would, on those figures, have obtained full reimbursement of the amount which he had been required to pay as guarantor. In that regard, it is relevant to note that there would seem to be no suggestion that Hutchens was or is under any relevant liability otherwise than such as flows from his guarantee of moneys owed by Kenbrite to General Credits. On 12 March 1982, Helvetic appointed Mr. Dulhunty as receiver and manager of the assets and business of Kenbrite under the second mortgage debenture. By a demand dated 16 March 1982, General Credits demanded of Hutchens payment of all sums of money which are in the definition of 'the principal sum' of the (real property) Mortgage . The demand did not specify the amount alleged to be owing by Hutchens. On 6 April 1982, General Credits assigned to Helvetic, for a stated consideration of $927,580.35, the moneys owing to it by Kenbrite and all its right title and interest in and to the first mortgage debenture. As part of the one overall transaction, General Credits, for the same consideration but by a separate (and subsequently registered) instrument of Transfer of Mortgage , transferr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tor's security, a creditor could effectively divorce the guarantor's liability from that of the principal debtor and effectively deprive the guarantor of the rights which flowed from his position as such including (where available) his rights of subrogation. In that regard, the case of a purported assignment of the debt of a guarantor while retaining the benefit of the guaranteed debt is, subject to one qualification, analogous to that to which Jacobs J.A. referred in International Leasing Corp. Ltd. v. Aiken (1967) 2 NSWR 427, at p 439: If the debt is assigned but the guarantee is not assigned then the right in the original creditor to recover under the guarantee must at least be suspended so long as the debt is assigned. There cannot be two persons entitled to recover the amount of the same debt, one from the principal debtor, and so long as the principal debtor was in default, another from the surety. Let it be assumed otherwise and suppose that the original creditor, the assignor of the principal debt, could show that it was overdue and thereupon sued the surety. Let it be assumed that the surety paid. Then, the assignee sues the principal debtor. He must be enti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be grounds for inferring, as Hutchens asserts, that Helvetic and the receiver have so acted for the purpose of enhancing Helvetic's position under the second mortgage debenture by subverting and rendering valueless Hutchens' rights of subrogation to the benefit of the first mortgage debenture. If such an inference were found to be warranted and subject to possible intervening questions (e.g. notice, estoppel or the effect of particular contractual terms), a serious issue would arise about whether there had been active connivance of a kind which would entitle Hutchens to be discharged from his obligations as guarantor or, at the least, to have his liability under the guarantee, and hence under the mortgage, reduced by the amount which would ordinarily have been, but which was not in fact, appropriated by the receiver to the discharge of the debt owing by Kenbrite under the first mortgage security (cf., e.g., O'Day v. Commercial Bank of Australia Ltd. (1933) 50 CLR 200, at pp 223-224). 81 As noted above in para 21 of this judgement, the submission canvassed on behalf of the writ applicants relying on the decision of Hutchens (supra) is that the liability as a gu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 days from the Plan Approval Date. 2. Unsecured Financial Creditors A. Payment of INR 17.4 crores to the unsecured financial creditors to be paid on the Effective Date as an upfront amount by the Resolution Applicant which shall be divided proportionately to the unsecured financial creditors. B. Payment of INR 3,055,738 to be paid to the unsecured financial creditors (whose Admitted Claim is less than INR 10 lakhs) to be paid on the effective date as an upfront amount by the Resolution applicant. Such amount shall be paid over and above the amount offered to the Secured Financial Creditors. 4. Acquisition of Debt Simultaneously with acquiring 100% equity ownership of the Corporate Debtor, the Resolution Applicant shall acquire the debt, along with all the underlying securities, owed by the Corporate Debtor to the Financial Creditors, other than corporate guarantees and personal guarantees issued for or on behalf of the Corporate Debtor to the members of the Committee of Creditors; and the Financial Creditors shall assign, and cause all the obligors to, acknowledge and accept such assignment of rights under the loan and security documents i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nated with effect from the Effective Date, with no rights accruing or subsisting to the Financial Creditors for the period prior to termination. In relation to the loans and financial assistance provided to the Corporate Debtor; each of the Financial Creditors, as the case may be, shall: - Assign / novate all security given (including but not limited to Encumbrance over assets of the Corporate Debtor, pledge of shares of the Corporate Debtor (other than corporate guarantees and personal guarantees) related in any manner to the Corporate Debtor) to the Resolution Applicant and/or its Connected Persons, and/or banks or financial institutions designated by the Resolution Applicant in this regard, pursuant to the Acquisition Structure, with effect from the Effective Date: - Issue such letters and communications, and take such other actions, as may be required or deemed necessary for the release, assignment or novation of (i) the Encumbrance over the assets of the Corporate Debtor; and (ii) the pledge over the shares of the Corporate Debtor within 5 (five) Business Days from the Effective Date: and - Be deemed to have waived all claims and dues (including inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion Process and all Claims (including, for the avoidance of doubt, Rejected Claims Amount and Verification Pending Amounts) against the Corporate Debtor as of insolvency Commencement Date along with any related Proceedings, including Proceedings for enforcement of any security interest, shall stand irrevocably and unconditionally abated, discharged, settled and extinguished in perpetuity on the Plan Approval Date. b. The payments contemplated in this Resolution Plan shall be the Corporate Debtor's full and final performance, and satisfaction of all Claims (including Rejected Claims Amount and Verification Pending Amounts) against the Corporate Debtor as of the Insolvency Commencement Date and Proceedings for enforcement of any security interest, shall stand irrevocably and unconditionally settled and extinguished in perpetuity on the Plan Approval Date. c. Subject to Clause (g) below, all contingent liabilities of the Corporate Debtor up to the Plan Approval Date arising out of any Proceedings to which the Corporate Debtor is a party shall, unless otherwise stated in this Resolution Plan and irrespective of the final outcome of such Proceedings, stand irrevocably a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hall be deemed to have waived all termination rights on account of payment defaults, and rights to payment of penalty, default payment or any payment of like nature under any agreement or arrangement against the Corporate Debtor, including but not limited to any rights arising from any breach, default, act or omission, under any such agreement or arrangement executed by the Corporate Debtor and/ or the Resolution Professional for and on behalf of the Corporate Debtor, till the Plan Approval Date. g. Upon the approval of the Resolution Plan by the Adjudicating Authority, in relation to guarantees provided for and on behalf of, and in order to secure the financial assistance availed of by the Corporate Debtor, which have been invoked prior to the Effective Date, claims of the guarantor on account of subrogation, if any, under any such guarantee shall be deemed to have been abated, released, discharged and extinguished. h. On the Plan Approval Date, all the outstanding negotiable instruments issued by the Corporate Debtor including demand promissory notes, post-dated cheques and letters of credit, shall stand terminated and the Corporate Debtor's liability under such i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect to the matters stated in paragraph 1 above, any liabilities and/or Claims that arise till the Effective Date shall stand waived, extinguished, abated, discharged in perpetuity and provisions of paragraph 1 above shall mutatis mutandis apply. 3. Nothing in this Resolution Plan shall affect the rights of the Corporate Debtor to recover any amounts due to the Corporate Debtor from the Third Party (including any Related Party) except in the case of personal and corporate guarantees provided for and on behalf of the Corporate Debtor to the Financial Creditors and there shall be no set off of any such amounts recoverable by the Corporate Debtor or any liability extinguished pursuant to this Resolution Plan. If any person receives any payments pursuant to this Resolution Plan recovers any additional amount from any Third Party including but not limited to recovery on account of any guarantees or other securities issued by any Third Parties, then such person shall be liable to pay such additional amounts to the Corporate Debtor. 83 Few relevant clauses of the Personal Guarantee furnished by one of the writ applicants herein in favour of the State Bank of India read thu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operty movable or immovable and the Guarantor has not given this Guarantee upon the understanding faith or belief that the Bank has taken and/or may hereafter take any or other such security and that notwithstanding the provisions of Section 140 and Section 141 of the Indian Contract Act, 1872, or other section of that Act or any other law, the Guarantor will not claim to be discharged to any extent because of the Bank s failure to take any or other such security or in requiring or obtaining any or other such security or losing for any reason whatsoever including reasons attributable to its defaults and negligence benefit of any or other such security or any of rights to any or other such security that have been or could have been taken. 84 Thus, from the aforesaid, it appears that upon acquiring 100% equity ownership of the corporate debtor, the Resolution Applicant acquired the debt, along with all the underlying securities, owed by the corporate debtor to the financial creditor, other than the corporate guarantees issued for and on behalf of the corporate debtor to the members of the Committee of Creditors. The Resolution Applicant acquired the entire debt along with all t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y requires him to do; and (2) by the action or inaction of the creditor referred to in ground (one), the eventual remedy of the surety himself against the principal debtor is impaired. Whether the said two conditions are fulfilled in the present case or not will have to be closely examined by the Tribunal keeping in mind the terms of the Resolution Plan, the terms of the guarantee and the legal effect of the assignment of debt vis-a-vis the liability of the guarantors. This aspect shall be examined by the Tribunal bearing in mind the dictum laid in decision of HUTCHENS (supra). 89 As per the scheme of IBC, once the resolution plan is accepted by the Committee of Creditors (CoC) and the same is approved by the Adjudicating Authority, the CIRP comes to an end. Once the CIRP is concluded and the plan gets approved by the Adjudicating Authority as per Section 31 of the IBC, the debt which was owed by the Corporate Debtor is settled. No proceedings against the Corporate Debtor can be initiated in relation to the debt that has been settled. The resolution plan so approved is binding on the corporate debtor, its employees, members, creditors, guarantors and other stakeholders involved ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... signment of debt. 90 A writ of prohibition is issued only when patent lack of jurisdiction is made out. It is true that a High Court acting under Article 226 is not bound by the technical rules applying to the issuance of prerogative writs like certiorari, prohibition and mandamus in United Kingdom, yet the basic principles and norms applying to the said writs must be kept in view, as observed by this Court in T. C. Basappa (supra). It was observed by Mukherjea, J. speaking for the Constitution Bench : The language used in Articles 32 and 226 of our Constitution is very wide and the powers of the Supreme Court as well as of all the High Courts in India extend to issuing of orders, writs or directions including writs in the nature of habeas corpus, mandamus, quo warrant, prohibition and certiorari as may be considered necessary for enforcement of the fundamental rights and in the case of the High Courts, for other purposes as well. In view of the express provisions in our Constitution we need not now look back to the early history or the procedural technicalities of these writs in English law, nor feel oppressed by any difference or change of opinion expressed in particula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rantees deed. The pivotal point raised by the writ applicants is one for which detailed analysis has to be made by the Tribunal itself even to find out as to whether the facts on record would clothe the Tribunal with the necessary jurisdiction to decide the issues raised before it on merits. When we pose a question to ourselves as to instead of issuing a writ of prohibition, as prayed for, by the writ applicants, if by permitting the Tribunal to proceed further, whether any serious prejudice would be caused? We find that by adopting the said course, while no prejudice would be caused to the writ applicants, by issuing a writ as asked for, there is likelihood of a serious injustice being caused to the Bank by preventing a statutory forum from exercising the powers conferred on it by law without there being a strong or convincing grounds for issuing such a prohibition. Therefore, it would be wholly inappropriate at this stage to interfere with the Original Applications preferred by the Bank before the Debts Recovery Tribunal by issuing a writ of prohibition. 94 Our final conclusions may be summarized as under: [a] The writs of mandamus, certiorari and' prohibition, and for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the writ applications fail and are hereby rejected. We leave it open to the Tribunal to decide the pivotal issue on its own and if the Tribunal fits appropriate or upon request of the parties may frame a preliminary issue as regards the jurisdiction and decide the same [see : Shirpur Power Pvt Ltd (supra)]. 97 We clarify that any observation on merits direct or indirect shall be construed as absolutely prima facie in nature and those shall not be construed as an expression of any final opinion on the issue as regards the jurisdiction of the Tribunal or the pivotal issue of assignment of debt and its effects. 98 The Tribunal shall now proceed further expeditiously with the adjudication of the Original Applications. The interim relief earlier granted stands vacated forthwith. 99 All the Civil Applications seeking impleadment as party respondent in the main matters also stand disposed of. We leave it open to the applicant to file an appropriate application before the Debts Recovery Tribunal for being impleaded as a party in the main proceedings. If such applications are filed, those be decided in accordance with law on its own merits. 100 All other Civil Applications also ..... X X X X Extracts X X X X X X X X Extracts X X X X
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