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JSW Steel Limited v. Pratishtha Thakur Haritwal & Ors.

Contempt Petition · 2025 INSC 401Decided 27 Mar 2025
CONMT.PET.(C) No.-000629 - 2023

Background

JSW Steel (successor to the insolvent Monnet Ispat and Energy Ltd. after a Corporate Insolvency Resolution Process) had its resolution plan approved by the NCLT in 2018. The Supreme Court's earlier judgment in Ghanshyam Mishra & Sons v. Edelweiss ARC (2021) held that once a resolution plan is approved, all claims not included in it, including government tax dues, stand permanently extinguished. Despite this, Chhattisgarh commercial tax officials issued fresh demand notices on JSW Steel in 2021-22 for sales tax, entry tax and Central tax dating to a period before the plan's approval, even after being shown the Ghanshyam Mishra ruling. JSW Steel filed this contempt petition alleging wilful disobedience of the Supreme Court's judgment.

Decision Breakdown

The Court held that the tax officials' continued recovery proceedings, pursued even after the Ghanshyam Mishra judgment was specifically brought to their notice, were contemptuous in nature. It distinguished the facts from State Tax Officer v. Rainbow Papers Ltd. (where a claim had actually been raised before the Committee of Creditors and ignored): here, the State of Chhattisgarh had not raised any claim during the resolution process at all, so JSW Steel's case fell squarely within Ghanshyam Mishra. However, since this was among the first cases testing the Ghanshyam Mishra ruling and the officials had tendered an unconditional apology, the Court chose not to proceed against them personally. It quashed and set aside the demand notices and all consequent proceedings, and closed the contempt petition on acceptance of the apology.

Lesson Learnt

A Supreme Court ruling that extinguishes dues under an approved insolvency resolution plan binds all creditors, including government tax departments, even those who never participated in the resolution process, continuing to pursue such dues after being shown the ruling risks contempt, though courts may show leniency for early, good-faith missteps following a landmark judgment.

Official source (sci.gov.in)View Judgment (PDF)

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