REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

Civil Appeal No. 9170 of 2019 (@ Special Leave Petition (C) No. 22596 of 2019)

M/s Embassy Property Developments Pvt. Ltd. ...Appellant(s)

Versus

State of Karnataka & Ors.        ...Respondent(s)

WITH

Civil Appeal No. 9171 of 2019 (@ Special Leave Petition (C) No. 22684 of 2019)

and

Civil Appeal No. 9172 of 2019 (@ Special Leave Petition (C) No. 22724 of 2019)

J U D G M E N T

V. Ramasubramanian, J.

1. Leave Granted.

2. Two seminal questions of importance namely:­

i)  Whether the High Court ought to interfere, under

Article 226/227 of the Constitution, with an Order

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passed by the National Company Law Tribunal in a

proceeding under the Insolvency and Bankruptcy Code,

2016, ignoring the availability of a statutory remedy of

appeal to the National Company Law Appellate Tribunal

and if so, under what circumstances; and

ii)  Whether questions of fraud can be inquired into by

the NCLT/NCLAT in the proceedings initiated under the

Insolvency and Bankruptcy Code, 2016,

arise for our consideration in these appeals.

Brief background facts

3. There are three appeals on hand, one filed by the

Resolution Applicant, the second filed by the Corporate Debtor

through the Resolution Professional and the third filed by the

Committee of Creditors, all of which challenge an Interim

Order passed by the Division Bench of High Court of

Karnataka in a writ petition, staying the operation of a

direction contained in the order of the NCLT, on a

Miscellaneous Application filed by the Resolution Professional.

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4.  The background facts leading to the filing of the above

appeals, in brief, are as follows:

i)  A company by name M/s. Udhyaman Investments Pvt.

Ltd. which is the twelfth Respondent in the first of these three

appeals, claiming to be a Financial Creditor, moved an

application before the NCLT Chennai, under Section 7 of the

Insolvency and Bankruptcy Code, 2016 (hereinafter referred to

as the  IBC,  2016),  against  M/s.  Tiffins  Barytes  Asbestos  &

Paints Ltd., the Corporate Debtor (which is the fourth

Respondent in the first of  these three appeals and which is

also the appellant in the next appeal).

ii)  By an Order dated 12.03.2018, NCLT Chennai admitted

the application, ordered the commencement of the Corporate

Insolvency Resolution Process and appointed an Interim

Resolution Professional. Consequently, a Moratorium was also

declared in terms of Section 14 of the IBC, 2016.  

iii)  At that time, the Corporate Debtor held a mining lease

granted by the Government of Karnataka, which was to expire

by 25.05.2018. Though a notice for premature termination of

the lease had already been issued on 09.08.2017, on the

allegation of  violation of  statutory  rules  and  the terms and

conditions of the lease deed, no order of termination had been

passed till  the date of  initiation of the Corporate Insolvency

Resolution Process (hereinafter referred to as CIRP).

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iv)  Therefore, the Interim Resolution Professional appointed

by NCLT addressed a letter dated 14.03.2018 to the Chairman

of the Monitoring Committee as well as the Director of Mines &

Geology informing them of the  commencement  of  CIRP.  He

also wrote a letter dated 21.04.2018 to the Director of Mines &

Geology, seeking the benefit of deemed extension of the lease

beyond 25.05.2018 upto 31.3.2020 in terms of Section 8­A (6)

of the  Mines  & Minerals (Development and Regulation)  Act,

1957 (hereinafter referred to as MMDR Act, 1957).

v)  Finding that there was no response, the Interim

Resolution Professional filed a writ petition in WP No. 23075 of

2018 on the  file of  the High Court of  Karnataka, seeking a

declaration that the mining lease should be deemed to be valid

upto 31.03.2020 in terms of Section 8A(6) of the MMDR Act,

1957.  

vi)  During the pendency of the writ petition, the Government

of Karnataka passed an Order dated 26.09.2018, rejecting the

proposal for deemed extension, on the ground that the

Corporate  Debtor  had contravened  not only the terms  and

conditions of the Lease Deed but also the provisions of Rule 37

of the  Mineral  Concession Rules,  1960 and Rule  24 of the

Minerals (Other than Atomic and Hydro Carbons Energy

Minerals) Rules, 2016.  

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vii)  In view of the Order of rejection passed by the

Government of Karnataka, the Corporate Debtor, represented

by the Interim Resolution Professional, withdrew the Writ

Petition No.23075 of 2018, on 28.09.2018, with liberty to file a

fresh writ petition.  

viii)  However, instead of filing a fresh writ petition (in

accordance with the liberty sought), the Resolution

Professional moved a Miscellaneous Application No.632 of

2018, before the NCLT, Chennai praying for setting aside the

Order of the Government of Karnataka, and seeking a

declaration that the lease should be deemed to be valid upto

31.03.2020 and also a consequential direction to the

Government of Karnataka to execute Supplement Lease Deeds

for the period upto 31.03.2020.

ix)  By an Order dated 11.12.2018, NCLT, Chennai allowed

the Miscellaneous Application setting aside the Order of the

Government of Karnataka on the ground that the same was in

violation of the moratorium declared on 12.03.2018 in terms

of Section 14(1) of IBC, 2016. Consequently the Tribunal

directed the Government of Karnataka to execute Supplement

Lease Deeds in favour of the Corporate Debtor for the period

upto 31.03.2020.

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x)  Aggrieved by the order of the NCLT, Chennai, the

Government of Karnataka moved a writ petition in WP

No.5002 of 2019, before the High Court of Karnataka. When

the writ petition came up for hearing, it was conceded by the

Resolution Professional  before the  High Court  of  Karnataka

that the order of the NCLT could be set aside and the matter

relegated to the Tribunal, for a decision on merits, after giving

an opportunity to the State to respond to the reliefs sought in

the Miscellaneous Application. It is relevant to note here that

the Order of the NCLT dated 11.12.2018, was passed ex­parte,

on the ground that the State did not choose to appear despite

service of notice.

xi)   Therefore, by an Order dated 22.03.2019, the High Court

of Karnataka set aside the Order of the NCLT and remanded

the matter back to NCLT for a fresh consideration of the

Miscellaneous Application No.632 of 2018.

xii) Thereafter, the  State  of  Karnataka filed  a  Statement  of

Objections before the NCLT, primarily raising two objections,

one relating to the jurisdiction of the NCLT to adjudicate upon

disputes arising out of the grant of mining leases under the

MMDR Act,  1957,  between the  State­Lessor  and the Lessee

and another relating to the fraudulent and collusive manner in

which the entire resolution process was initiated by the related

parties of the Corporate Debtor themselves, solely with a view

to corner the benefits of the mining lease.

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xiii) Overruling the objections of the State, the NCLT Chennai

passed an Order dated 03.05.2019 allowing the Miscellaneous

Application, setting aside the order of rejection and directing

the Government of Karnataka to execute Supplemental Lease

Deeds.

xiv) Challenging the Order of the NCLT, Chennai, the

Government of Karnataka moved a writ petition in WP

No.41029 of 2019 before the High Court of Karnataka. When

the writ petition came up for orders as to admission, the

Corporate Debtor represented by the Resolution Professional

appeared through counsel and took notice and sought time to

get instructions. Therefore, the High Court, by an Order dated

12.09.2019 adjourned the matter to 23.09.2019 and granted a

stay of operation of the direction contained in the impugned

Order of the Tribunal. Interim Stay was necessitated in view of

a Contempt Application moved by the Resolution Professional

before the NCLT against the  Government of  Karnataka for

their failure to execute Supplement Lease deeds.

xv) It is against the said ad Interim Order granted by the High

Court that the Resolution Applicant, the Resolution

Professional  and the  Committee  of  Creditors  have  come up

with the present appeals.

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Rival Contentions

5. Sh. K. V. Viswanathan, learned Senior Counsel appearing

on behalf of the Resolution Applicant assailed the impugned

Order on the ground that when an efficacious alternative

remedy is available under Section 61 of IBC, 2016, the High

Court of Karnataka ought not to have entertained a writ

petition and that too against an Order passed by the Chennai

Bench of NCLT. He drew our attention to a series of

judgments, wherein it was held that when a statutory forum is

created for the redressal of grievances, a writ petition should

not be entertained. Since the essence of IBC, 2016 is the

revival of a Corporate Debtor and the resolution of its

problems to enable it to survive as a going concern, through

the maximization of the value of its assets, the learned Senior

Counsel contended that the Interim Resolution

Professional/Resolution Professional had a right to move the

NCLT for appropriate reliefs for the preservation of the

properties of the Corporate Debtor and therefore the only way

the steps taken by the Resolution Professional could be set at

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naught, is to take recourse to the provisions of the IBC alone.

Relying upon the observations made by this Court in a couple

of decisions that IBC, 2016 is a unified umbrella of code, the

learned Senior Counsel contended that the remedies provided

thereunder are all pervasive and exclusive.

6. Sh. Mukul Rohatgi, learned Senior Counsel appearing for

the Resolution Applicant supplemented the aforesaid

arguments and contended that though he would not go to the

extent of saying that the jurisdiction of the High Court stood

completely ousted, the High Court was obliged to switch over

to the hands off mode, in matters of this nature. The learned

Senior  Counsel also contended that the NCLT  has already

approved the Resolution Plan, by an order dated 12.06.2019

and that therefore the High Court cannot do anything that will

tinker with or destroy the very Resolution Plan approved by

the NCLT.

7. Sh. Kapil Sibal, the learned Senior Counsel appearing for

the Resolution Professional contended that the whole object of

IBC, 2016 will get defeated, if the Orders of NCLT are declared

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amenable to review by the High Court under Article 226/227.

He also contended that the provisions of IBC, 2016 are given

overriding effect under Section 238, over all other statutes. It

is his further contention that after taking a stand in their first

writ petition in WP No.5002 of 2019 that the dispute relating

to the refusal to grant deemed extension of the mining lease

falls  squarely within  the  jurisdiction of the Mining Tribunal

and after raising  a  plea  that the rejection of the  benefit  of

deemed extension, ought to have been challenged by way of a

revision before the Central Government under Section 30 of

the MMDR Act, 1957 the State of Karnataka agreed to go back

to the NCLT for raising all contentions. Therefore, according to

the  learned counsel, it  was not  open to  the Government  to

question  the jurisdiction of the  NCLT  in the  next round of

litigation. Since the expression “Property” as defined in

Section 3 (27) of IBC, 2016 includes every description of

interest including  present  or future  or  vested or  contingent

interest arising out of or incidental to property, and also since

the right to deemed extension of lease would come within the

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purview of the expression “Property”, it was contended by the

learned Senior Counsel that the Resolution Professional has a

duty to preserve the property. The only ground on which the

Government of Karnataka opposed the Miscellaneous

Application  of the  Resolution  Professional, according to the

learned Senior Counsel, was fraud and collusion on the part of

the Corporate Debtor and the creditor who initiated the CIRP.

Therefore, it is contended by him that in view of the sweep of

the jurisdiction conferred upon NCLT under Section 60 (5) (c)

of the IBC, 2016, the Tribunal was entitled to investigate even

into allegations of fraud. Once it is conceded that NCLT will

have jurisdiction even to enquire into allegations of fraud, then

the  question of invoking the jurisdiction  of the  High Court

under Article 226 as against an order passed by NCLT,

according to the learned counsel, does not arise. Any

recognition by this court, of the jurisdiction of the High Court

under  Article  226  to interfere  with  the  Orders  of the  NCLT

under IBC,  2016,  according to the learned  Senior  Counsel,

would completely derail the resolution process which is bound

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to happen within a time frame. Therefore, he appealed that the

Order of the High Court should be set aside on the ground of

lack of jurisdiction.

8. Sh.  Arvind  P.  Datar  and  Sh.  E.  Om Prakash, learned

Senior Counsel appearing for the Committee of Creditors

submitted that IBC, 2016 being a complete code in itself does

not provide any room  for challenging the  Orders of  NCLT,

otherwise than in a manner prescribed by the code itself. What

was sought by the Resolution Professional,  according to the

learned Senior Counsel, was a mere recognition of the

statutory right of deemed extension of lease conferred by

Section 8A of the MMDR Act, 1957 and that therefore NCLT

cannot be taken to have exercised a jurisdiction not vested in

it in law, so as to enable the High Court to invoke the

jurisdiction under Article 226.

9. In response, Sh. K.K. Venugopal, learned Attorney

General submitted that if  a case falls under the category of

inherent lack  of jurisdiction on  the  part  of  a  Tribunal, the

exercise of jurisdiction by the Tribunal would certainly be

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amenable to the jurisdiction of the High Court under Article

226. Since the contours of jurisdiction of NCLT are defined in

Clauses (a),  (b) and (c) of  Sub­section (5) of  Section 60 and

also since the powers of the NCLT are defined in Sub­section

(4) of Section 60, to be akin to those of the Debts Recovery

Tribunal under the Recovery of Debts Due to Banks and

Financial Institutions Act of 1993 (hereinafter referred to as

DRT Act, 1993), it  was contended  by the learned  Attorney

General that the jurisdiction of the NCLT is confined only to

contractual matters inter­parties. An order passed by a

statutory/quasi­judicial authority under certain special

enactments such as the MMDR Act, 1957 falls in the realm of

public law and hence it was contended by the learned Attorney

General that the NCLT would have no power of judicial review

of such orders. The learned Attorney General also drew our

attention to the minutes of the 10th meeting of the Committee

of Creditors held on 27.02.2019, in which a Company other

than the present Resolution Applicant was recorded to have

made a better offer. But the present Resolution Applicant was

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able to have his plan approved, despite the offer being lesser,

only because they were willing to take the risk of the mining

lease not being renewed. Therefore, it was his contention that

a person who was willing to take a chance, cannot now take

shelter  under the approval of the  Resolution  Plan.  On the

contention that the Government of Karnataka had an

efficacious alternative remedy before the NCLAT, the learned

Attorney General  submitted,  on the basis of the decision in

Barnard and Others vs. National Dock Labour Board and

Others1 that when an inferior Tribunal passes an Order which

is a nullity, the superior Court need not drive the party to the

appellate  forum stipulated by the Act.  The  learned Attorney

General  also  relied  upon  the  decision of this  Court in  The

State of Uttar Pradesh vs. Mohammad Nooh.2

Question No. 1

10. In the backdrop of the facts narrated and in the light of

the rival contentions extracted above, the first question that

arises for consideration is as to whether the High Court ought

1 (1953) 2 WLR 995 2 (1958) SCR 595

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to interfere, under Article 226/227 of the Constitution, with

an order passed by NCLT in a proceeding under the IBC, 2016,

despite the  availability of a statutory alternative remedy  of

appeal to NCLAT.

11. It is beyond any pale of doubt that IBC, 2016 is a

complete  Code in itself. As observed  by this  Court in  M/s

Innoventive Industries  Limited vs. ICICI  Bank,3  it is an

exhaustive code on the subject matter of insolvency in relation

to corporate entities and others. It is also true that IBC, 2016

is a single Unified Umbrella Code, covering the entire gamut of

the law relating to insolvency resolution of corporate persons

and others in a time  bound  manner. The code  provides a

three­tier mechanism namely  (i)  the NCLT, which is the

Adjudicating Authority  (ii)  the NCLAT which is the appellate

authority and (iii) this court as the final authority, for dealing

with all issues that may arise in relation to the reorganisation

and insolvency resolution of corporate persons.   In so far as

insolvency resolution of corporate debtors and personal

3 AIR 2017 SC 4084

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guarantors are concerned, any order passed by the NCLT is

appealable to NCLAT under Section 61 of the IBC, 2016 and

the orders of the NCLAT are amenable to the appellate

jurisdiction of this court under Section 62. It is in this context

that the action of the State of  Karnataka in by­passing the

remedy of appeal to NCLAT and the act of the High Court in

entertaining the writ petition against the order of the NCLT are

being questioned.

12. For finding an answer to the question on hand, the scope

of the jurisdiction and the nature of the powers exercised by –

(i) the High Court under Article 226 of the Constitution and (ii)

the NCLT and NCLAT under the provisions of IBC, 2016 are to

be seen.  

Jurisdiction and the powers of the High Court under Article 226

13. What is recognized by Article 226 (1) is the power of every

High Court to issue (i) directions, (ii) orders or (iii) writs. They

can be issued to (i) any person or (ii) authority including the

Government. They may be issued (i) for the enforcement of any

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of the rights conferred by Part III and (ii) for any other

purpose. But the exercise of the power recognized by Clause

(1) of Article 226, is restricted by the territorial jurisdiction of

the High Court, determined either by its geographical location

or by the place where the cause of action, in whole or in part,

arose. While the nature of  the power exercised by the High

Court is delineated in Clause (1) of Article 226, the jurisdiction

of the High Court for the exercise of such power, is spelt out in

both Clauses (1) and (2) of Article 226.  

14. Traditionally, the jurisdiction under Article 226 was

considered as limited to ensuring that the judicial or quasi­

judicial tribunals or administrative bodies do not exercise their

powers in excess of their statutory limits. But in view of the

use of the expression  “any person”  in Article 226 (1), courts

recognized  that the jurisdiction of the  High Court  extended

even over private individuals, provided the nature of the duties

performed by such private individuals, are public in nature.

Therefore, the remedies provided under Article 226 are public

law remedies, which stand in contrast to the remedies

17

available in private law. As observed by this Court in Nilabati

Behera @ Babita Behera vs.  State of Orissa,4  public  law

proceedings serve a different purpose than private law

proceedings.   

15. One of the well recognized exceptions to the self­imposed

restraint of the High Courts, in cases where a statutory

alternative remedy of appeal is available, is the lack of

jurisdiction on the part of the statutory/quasi­judicial

authority, against  whose order a judicial review is sought.

Traditionally, English courts maintained a distinction between

cases where a statutory/quasi­judicial  authority  exercised a

jurisdiction not vested in it in law and cases where there was a

wrongful exercise of the available jurisdiction.  An “error of

jurisdiction” was always distinguished from “in excess of

jurisdiction”, until the advent of the decision rendered by the

House of Lords, by a majority of 3:2 in  Anisminic Ltd. vs.

Foreign Compensation Commission.5  After acknowledging

that a confusion had been created by the observations made in

4  (1993) 2 SCC  746 5  (1969) 2 WLR 163

18

Reg. vs. Governor of Brixton Prison, Ex parte Armah6  to

the effect that if a Tribunal has jurisdiction to go right, it

has jurisdiction to go wrong, it was held in Anisminic that

the real question was not whether an authority made a wrong

decision but whether they enquired into and decided a matter

which they had no right to consider.  

16. Anisminic,  hailed as a break­through and a legal

landmark (see In Re Racal Communications Ltd7) abolished

the old distinction between errors of law that went to

jurisdiction  and  errors  of law  that  did  not.  Anisminic  was

hailed in  O’Reilly vs. Mackman8  to have liberated English

public law  from  the fetters that the courts  had theretofore

imposed upon themselves so far as determinations of inferior

courts and  statutory tribunals  were concerned,  by  drawing

esoteric distinctions between errors of law committed by such

tribunals that  went to their jurisdiction, and errors of law

committed by them within their jurisdiction.

6  (1968) AC 192 7  (1981) AC 374 8  (1983) 2 AC 237

19

17. But  In  Re Racal  made a distinction between courts of

law on the one hand and administrative tribunal/

administrative authority on the other and held that in so far

as (inferior) courts of law are concerned, the subtle distinction

between errors of law that went to jurisdiction and errors of

law that did not, would still survive, if the decisions of such

courts are declared by the Statute to be final and conclusive.

Thus one distinction was gone with  Anisminic, but another

was born with  Re Racal.  This could be seen from the after

effects of Anisminic.9

18.  Interestingly just four  days  before the  House  of  Lords

delivered the judgment in  Anisminic  (on 17.12.1968), an

identical view was taken by  a three  member  bench of this

court (delivered on  13.12.1968) in  Official Trustee,  West

9  Anisminic had its own quota of problems. Prof. Wade, as pointed out in R. v. Lord President  of the Privy Council Ex p. Page, [1993] A.C. 682, seems to have opined that the true effect of  Anisminic was still in doubt. People like Sir John Laws, quoted by Prof. Paul Craig, and which  was extracted in the decision in Regina (Privacy International) v. Investigatory Powers Tribunal, [2019] UKSC 22, seems to have opined that once the distinction between jurisdictional and non- jurisdictional errors was discarded, there was no longer any need for the ultra vires principle  and that ultra vires is, in truth, a fig-leaf which has enabled the courts to intervene in decisions without an assertion of judicial power which too nakedly confronts the established authority of  the Executive or other public bodies. According to Sir John Laws, Anisminic has produced the  historical irony that with all its emphasis on nullity, it nevertheless erected the legal milestone  which pointed towards a public law jurisprudence in which the concept of voidness and the  ultra vires doctrine have become redundant. In Regina (Privacy International) the U.K Supreme  court also quoted the editors of De Smith’s Judicial Review to the effect:  “The distinction  between jurisdictional and non-jurisdictional error is ultimately based upon foundations of  sand. Much of the superstructure has already crumbled. What remains is likely quickly to fall  away as the courts rightly insist that all administrative action should be simply, lawful, whether or not jurisdictionally lawful.”

20

Bengal & Others vs. Sachindra Nath Chatterjee &

Another,10 approving the view taken by the Full bench of the

Calcutta High Court in Hirday Nath Roy vs. Ramachandra

Barna Sarma.11 It was held therein that “before a court can

be held to have jurisdiction to decide a particular matter

it must not only have jurisdiction to try the suit brought,

but must also have the authority to pass the orders

sought for.”   This court also pointed out that it is not

sufficient that it has some jurisdiction in relation to the

subject matter of the suit, but its jurisdiction must include (1)

the power to hear and decide the questions at issue and (2) the

power to grant the relief asked for. This decision in  Official

Trustee was followed in a recent decision in Indian Farmers

Fertiliser  Co­operative  Ltd. vs.  Bhadra  Products,12  quite

independent of Anisminic and its followers.  

19. Though the decision in  Official Trustee  preceded

Anisminic  and can proudly be claimed as the Indian

10  (1969) 3 SCR 92 11  ILR LXVIII Calcutta 138 12  (2018) 2 SCC 534

21

precursor to an English  legal landmark, several  subsequent

decisions of this  court  considered  Anisminic  alone  to  have

provided the breakthrough. In Mafatlal Industries & Others

vs. Union of India,13  Paripoornan, J. provided the list of

Indian cases which cited Anisminic with approval. They are:

(1) Union of India vs. Tarachand Gupta & Bros., (1971) 1 SCC

486

(2) A. R. Antulay vs. R. S. Nayak & Another, (1988) 2 SCC 602

(3) R. B. Shreeram Durga Prasad & Fatehchand Nursing

Das  vs.  Settlement  Commission (IT  & WT)  & Another,

(1989) 1 SCC 628

(4) Associated Engineering Co. vs. Govt. of Andhra

Pradesh & Another, (1991) 4 SCC 93 and  

(5) Shiv Kumar Chadha vs. Municipal Corporation of

Delhi & Others, (1993) 3 SCC 161

20. But in  M.L. Sethi vs. R.P. Kapur,14  K. K. Mathew, J.,

made certain interesting observations about  Anisminic.  The

learned Judge observed that the effect of the dicta in

Anisminic  is to reduce the difference between jurisdictional

error and error of law within jurisdiction almost to a vanishing

13  (1997) 5 SCC 536 14  (1972) 2 SCC 427

22

point and that it came perilously close to saying that there is

jurisdiction  if the decision  is  right in  law,  but none  if it is

wrong.  Anisminic, according to him virtually left a court or

tribunal with no margin of legal error.

21. Again in  Hari Prasad Mulshanker Trivedi vs. V.B

Raju,15 K. K. Mathew, J., speaking for the Constitution Bench,

pointed out that though the dividing line between lack of

jurisdiction or power and the erroneous exercise of it has

become thin  with  Anisminic, the  distinction  had  not  been

wiped out completely.  

22.  But it is relevant to note that  Official

Trustee/Anisminic  and what followed both,  were  mostly in

the context of the power of the superior court to interfere with

the decisions of subordinate courts/tribunals or

administrative authorities. Most of these decisions were not in

the context of the exercise of jurisdiction despite the

availability of alternative remedy. That there exists such a

distinction between (i) cases where the jurisdiction of a

15  (1974) 3 SCC 415

23

superior court is questioned on the basis of ouster clauses and

(ii) cases where the exercise of jurisdiction by a superior court

is questioned on the ground of availability of alternative

remedy, was recognized even in  Anisminic,  when Lord Reid

referred to the decision in  Smith vs. East Elloe Rural

District Council16 as posing some difficulty. As a result, the

Court  of  Appeal  held  in  R vs.  Secretary of State for  the

Environment, Ex p. Ostler17  that the availability of a

statutory right to challenge within a specified time limit,

among other points, provided a sufficient basis for

distinguishing  Anisminic. This was taken note of by the UK

Supreme Court in Regina (Privacy International). Therefore

the question whether the error committed by an administrative

authority/tribunal  or  a  court  of law went to jurisdiction or

whether it was within jurisdiction may still be relevant to test

whether a statutory alternative remedy should be allowed to

be bypassed or not.  

16  (1956) AC 736 17  (1977) QB 122

24

23.  In several cases, both in England and India, the ancient

rule stated by Willes, J., in  Wolverhampton New

Waterworks Co. vs. Hawkesford18 to the effect that where a

liability not existing at Common Law is created by a statute,

which also gives a special and particular remedy for enforcing

it, the remedy provided by the statute must be followed, has

been quoted with approval. For instance,  Union Bank of

India vs. Satyawati Tandon19  held that the availability of a

remedy of appeal under the DRT Act, 1993 and SARFAESI Act,

2002 should deter the High Courts from exercising the

jurisdiction under Article 226. Similarly, the availability of

remedy of appeal under Section 173 of the Motor Vehicles Act,

1988 as against an award of the Accidents Claims Tribunal

was held in Sadhana Lodh vs. National Insurance Co.20 as

sufficient for the High Court to refuse to exercise its

supervisory jurisdiction. The same principle was applied in (1)

Nivedita  Sharma vs. Cellular  Operators Association of

18  [1859] 6 CB (NS) 336 19  (2010) 8 SCC 110 20  (2003) 3 SCC 524

25

India21 and (2)  Cicily Kallarackal vs. Vehicle Factory22  in

relation to the awards passed by the special fora constituted

under the Consumer Protection Act, 1986.  

24. Therefore in  so far  as  the question of  exercise  of the

power conferred by Article  226, despite  the availability  of  a

statutory alternative remedy, is concerned, Anisminic cannot

be relied upon. The distinction between the lack of jurisdiction

and the wrongful exercise of the available jurisdiction, should

certainly be taken into account by High Courts, when Article

226 is sought to be invoked bypassing a statutory alternative

remedy provided by a special statute.  

25. On the basis of this principle, let us now see whether the

case of the State of Karnataka fell under the category of (1)

lack of jurisdiction on the part of the NCLT to issue a direction

in relation to a matter covered by MMDR Act, 1957 and the

Statutory Rules issued thereunder or (2) mere wrongful

exercise of a recognised jurisdiction, say for instance, asking

21  (2011) 14 SCC 337 22  (2012) 8 SCC 524

26

a wrong question or applying a wrong test or granting a

wrong relief.  

26.   The MMDR Act, 1957 is a Parliamentary enactment

traceable to Entry 54 of the Union List in Seventh Schedule of

the Constitution. The object of the Act as it stood originally,

was the regulation of mines and development of  minerals.

After the Amendment Act 38 of 1999, the object of the Act is to

provide for the development and regulation of mines and

minerals. Section 2 of the Act declares that it is expedient in

public interest that the Union should take under its control,

the regulation of mines and the development of minerals.

Section 4 (1) of the Act prohibits the undertaking of mining

operations (and reconnaissance and prospecting operations),

in any area, except under and in accordance with the terms

and conditions of a mining lease granted under the Act and

the Rules made thereunder. After the insertion of Sub­section

(1A)  in Section 4,  by  the Amendment Act  38 of  1999, even

transportation  or storage of any  mineral otherwise than in

accordance with the provisions of the Act and the Rules made

27

thereunder is prohibited. The Act also imposes restrictions on

the grant of mining leases.  Section 8A of the Act, inserted by

the Amendment Act 10 of 2015 provides for deemed grant and

deemed extension of different kinds. Primarily Section 8A

applies only to minerals other than those specified in Parts A

and B of the First Schedule. In so far as minor minerals are

concerned, the State government is empowered to make rules

for regulating the grant of  mining  leases. It is important  to

note that  Section  19  of the  Act  declares any  mining lease

granted, renewed or acquired in contravention of the

provisions of the Act or any rule or order made thereunder to

be void and of  no effect.  The Act confers powers of  search,

entry and inspection upon officers authorised by the Central

or  State governments.  Section  30  of the  Act empowers the

Central government, either of its own motion or on an

application made by the aggrieved party, to revise any order

made by a State government in exercise of the powers

conferred under the Act with respect to any mineral other than

a minor mineral. The procedure for filing a revision is

28

prescribed in  Rule  54  and  the  method  of  disposal  of such

revisions is prescribed in Rule 55 of the Mineral Concession

Rules, 1960.  

27.  Though in Thressiamma Jacob vs. Deptt. of Mining &

Geology,23 this court held that the mineral wealth in the sub­

soil would go along with the ownership of the land, the

question of  entitlement of the government  to charge royalty

was left open, as it was pending reference to the constitution

bench. But in the case on hand, the land which formed the

subject matter of mining lease, belongs to the State of

Karnataka. The liberties and privileges granted to the

Corporate Debtor by the Government of Karnataka under the

mining lease, are delineated in Part IV of the mining lease. The

mining lease was issued in accordance with the statutory rules

namely Mineral Concession Rules, 1960. Therefore the

relationship between the Corporate Debtor and the

Government of Karnataka under the mining lease is not just

contractual but also statutorily governed. As we have indicated

elsewhere, the MMDR Act, 1957 is a Parliamentary enactment

23  (2013) 9 SCC 725

29

traceable to Entry 54 in List I of the Seventh Schedule. This

Entry 54 speaks about regulation of mines and development of

minerals to the extent to which such regulation and

development under the control  of the Union,  is  declared by

Parliament by law to be expedient in public interest. In fact

the expression “public interest” is used only in 3 out of

97 Entries in List I, one of which is Entry 54, the other

two being Entries 52 and 56. Interestingly, Entry 23 in List

II does not use the expression “public interest”, though it also

deals with regulation of mines and mineral development,

subject to the provisions of List I. It is this element of “public

interest” that finds a  place in  Section 2 of the  MMDR Act,

1957, in the form of a declaration. Section 2 of MMDR Act,

1957 reads as follows:

“It is hereby declared that it is expedient in the public interest that  Union  should take  under its control the regulation of mines and the development of minerals to the extent hereinafter provided.”

28. Therefore as rightly contended by the learned Attorney

General, the decision of the Government of Karnataka to

30

refuse the benefit of deemed extension of lease, is in the public

law domain and hence the correctness of the said decision can

be called into question only in a superior court which is vested

with the power of  judicial review over administrative action.

The NCLT, being a creature of a special statute to discharge

certain specific functions, cannot be elevated to the status of a

superior court having the power of judicial review over

administrative action. Judicial review, as observed by this

court in  Sub­Committee on Judicial Accountability vs.

Union  of India,24  flows from  the concept of a  higher law,

namely  the  Constitution.  Paragraph 61 of the  said decision

captures this position as follows:

“But where, as in this country and unlike in England, there is a  written  Constitution which constitutes the fundamental and in that sense a “higher law” and acts as a limitation upon the legislature and other organs of the State as grantees under the Constitution, the usual incidents of parliamentary sovereignty do not obtain and the concept is one of ‘limited government’. Judicial review is, indeed, an  incident  of  and flows from this concept of the fundamental and the higher law being the touchstone of the limits of the powers of the various organs of the State which derive power and authority under the Constitution and that the judicial wing is the interpreter of the Constitution and, therefore, of the limits of authority of the different organs of the State. It

24  (1991) 4 SCC 699

31

is to be noted that the British Parliament with the Crown  is  supreme and  its  powers  are  unlimited and courts have no power of judicial review of legislation.”

29. The NCLT is not even a Civil Court, which has

jurisdiction by virtue of Section 9 of the Code of Civil

Procedure to try all suits of a civil nature excepting suits, of

which their cognizance is either expressly or impliedly barred.

Therefore NCLT can exercise only such powers within the

contours of jurisdiction as prescribed by the statute, the law

in respect of which, it is called upon to administer. Hence, let

us now see the jurisdiction and powers conferred upon NCLT.  

Jurisdiction and powers of NCLT

30. NCLT and  NCLAT are  constituted,  not  under the IBC,

2016 but under Sections 408 and 410 of the Companies Act,

2013. Without specifically defining the powers and functions

of the NCLT, Section 408 of the Companies Act, 2013 simply

states that the Central Government shall constitute a National

Company Law Tribunal, to exercise and discharge such

powers and functions as are or may be, conferred on it by or

under the Companies Act or any other law for the time being

32

in force.  Insofar as NCLAT is concerned, Section 410 of the

Companies Act merely states that the  Central  Government

shall constitute an Appellate Tribunal for hearing appeals

against the Orders of the Tribunal. The matters that fall within

the jurisdiction of the NCLT, under the Companies Act, 2013,

lie scattered all over the Companies Act. Therefore, Sections

420 and 424 of the Companies Act,  2013 indicate  in broad

terms, merely the procedure to be followed by the NCLT and

NCLAT before passing orders. However, there are no separate

provisions in the Companies Act, exclusively dealing with the

jurisdiction and powers of NCLT.   

31. In contrast, Sub­sections (4) and (5) of Section 60 of IBC,

2016  give an indication respectively about the  powers and

jurisdiction of the NCLT. Section 60 in entirety reads as

follows:­

“Adjudicating Authority for corporate persons.­(1) The Adjudicating Authority, in relation to insolvency resolution and liquidation for corporate persons including corporate debtors and personal guarantors thereof  shall  be the  National  Company Law Tribunal having territorial  jurisdiction over the place where the registered office of the corporate person is located. (2) Without prejudice to sub­section (1) and notwithstanding anything to the contrary contained in

33

this Code, where a corporate insolvency resolution process or liquidation proceeding of a corporate debtor is pending before the National Company Law Tribunal, an application relating to  the  insolvency resolution or [liquidation or bankruptcy of a corporate guarantor or personal guarantor, as the case may be, of such corporate debtor] shall be filed before such National Company Law Tribunal. (3)   An insolvency resolution process or [liquidation or bankruptcy of a corporate guarantor or personal guarantor, as the case may be, of the corporate debtor] pending in any court or tribunal shall stand transferred to the  Adjudicating Authority  dealing with  insolvency resolution process or liquidation proceeding of such corporate debtor. (4)   The National Company Law Tribunal shall be vested with all the powers of the Debt Recovery Tribunal as contemplated under Part III in of this Code for the purpose of sub­section (2). (5)  Notwithstanding anything to the contrary contained in any other law for the time being in force, the National Company Law Tribunal shall have jurisdiction to entertain or dispose of – (a) any application or proceeding by or against

the corporate debtor or corporate person; (b) any claim made by or against the corporate

debtor or corporate person, including claims by or against any of its subsidiaries situated in India; and

(c) any question of priorities or any question of law or facts, arising out of or in relation to the insolvency resolution or liquidation proceedings of the corporate debtor or corporate person under this Code.

(6) Notwithstanding anything contained in the Limitation Act, 1963 (36 of 1963) or in any other law for the time being in force, in computing the period of limitation specified for any suit or application by or against a corporate debtor for which an order of moratorium has been made under this Part, the period during which such moratorium is in place shall be excluded.”

34

32.  Sub­section (4) of Section 60 of IBC, 2016 states that the

NCLT will  have  all the  powers of the DRT as  contemplated

under Part III of the Code for the purposes of Sub­section (2).

Sub­section  (2)  deals  with  a  situation where the insolvency

resolution or liquidation or bankruptcy of a corporate

guarantor or personal guarantor of a corporate debtor is taken

up, when CIRP or liquidation proceeding of such a corporate

debtor is already pending before NCLT.   The object of Sub­

section (2) is to  group together (A) the  CIRP  or liquidation

proceeding of a corporate debtor and (B) the insolvency

resolution or liquidation or bankruptcy of a corporate

guarantor or personal guarantor of the very same corporate

debtor, so that a single Forum may deal with both. This is to

ensure that the CIRP of a corporate debtor and the insolvency

resolution of the individual guarantors of the very same

corporate  debtor  do  not  proceed  on  different tracks,  before

different  Fora, leading to conflict of interests, situations or

decisions.

35

33.  If the object of Sub­section (2) of Section 60 is to ensure

that the insolvency resolutions of the corporate debtor and its

guarantors are dealt  with together, then the question that

arises is as to why there should be a reference to the powers of

the DRT in Sub­section (4). The answer to this question is to

be found in Section 179 of IBC, 2016. Under Section 179 (1), it

is the DRT which is the Adjudicating Authority in relation to

insolvency matters of individuals and firms. This is in contrast

to Section 60(1) which names the NCLT as the Adjudicating

Authority in relation to insolvency resolution and liquidation of

corporate  persons including  corporate  debtors  and personal

guarantors. The expression “personal guarantor” is defined in

Section 5(22)  to mean an  individual who  is  the surety  in a

contract of guarantee to a corporate debtor. Therefore the

object of Sub­section (2) of Section 60 is to avoid any

confusion that may arise on account of Section 179(1) and to

ensure that whenever a CIRP is initiated against a corporate

debtor,  NCLT will  be the Adjudicating Authority not only  in

respect  of  such corporate  debtor  but  also in respect  of the

36

individual who stood as surety to such corporate debtor,

notwithstanding the naming of the DRT under Section 179(1)

as the Adjudicating Authority for the insolvency resolution of

individuals. This is also why Sub­section (2) of Section 60 uses

the phrase “notwithstanding anything to the contrary

contained in this Code”.  

34.  Sub­section (2) of Section 179 confers jurisdiction upon

DRT to entertain and dispose of (i) any suit or proceeding by or

against the individual debtor (ii) any claim made by or against

the individual debtor and (iii) any question of priorities or any

other  question whether  of law or facts  arising  out  of  or in

relation to insolvency and bankruptcy of the individual debtor.

Clauses (a), (b) and (c) of Sub­section (2) of Section 179 are

identical to Clauses (a), (b) and (c) of Sub­section (5) of Section

60. Therefore the only reason why Sub­section (4) is

incorporated in Section 60 is to ensure that NCLT will exercise

jurisdiction – (1) not only to entertain and dispose of matters

referred to in  Clauses (a), (b) and (c) of  Sub­section (5) of

Section 60 in relation to the corporate debtor, (2) but also to

37

entertain and dispose of the matters specified in Clauses (a),

(b)  and  (c)  of  Sub­section  (2)  of  Section 179,  whenever the

contingency stated in Section 60(2) arises.  

35.  Interestingly there are separate provisions both in Part II

and Part III of IBC, 2016 ousting the jurisdiction of civil

courts. While Section 63 contained in Part II bars the

jurisdiction of a civil court in respect of any matter on which

NCLT or NCLAT will have jurisdiction, Section 180 contained

in Part III bars the jurisdiction of civil courts in respect of any

matter on which DRT or DRAT has jurisdiction. But curiously

there is something more in Section 180 than what is found in

Section 63, which can be appreciated if both are presented in

a tabular column.  

Section 63 Section 180

No civil court or authority shall have jurisdiction to entertain any suit or proceedings in respect of any matter on which National Company Law Tribunal or the National Company Law Appellate Tribunal has jurisdiction under this Code. Civil court not to have jurisdiction.  

 (1)  No civil  court  or authority shall have jurisdiction to entertain any suit or proceedings in respect  of  any matter on which the Debt Recovery Tribunal or  the Debt Recovery Appellate Tribunal has jurisdiction under this Code.  (2) No injunction shall be granted by any court, tribunal or  authority in  respect  of  any

38

action taken, or to be taken, in pursuance of any power conferred on the Debt Recovery Tribunal or  the Debt Recovery Appellate Tribunal by or under this Code.  

Though what is found in Sub­section (2) of Section 180 is not

found in the corresponding provision in Part II namely, Section

63, a similar provision is incorporated in an unrelated

provision namely Section 64, which primarily deals with

expeditious disposal of applications.   Thus, there appears to

be some mix­up.   However, we are not concerned about the

same in this case and we have made a reference to the same

only because of Sub­section (4) of Section 60, vesting upon the

NCLT, all the powers of the DRT.   

36. From a combined reading of Sub­section (4) and Sub­

section (2) of  Section 60 with Section 179, it is clear that none

of them hold the  key to the  question  as to  whether  NCLT

would have jurisdiction over a decision taken by the

39

government under the provisions of MMDR Act, 1957 and the

Rules issued there­under. The only provision which can

probably throw light on this question would be Sub­section (5)

of Section 60, as it speaks about the jurisdiction of the NCLT.

Clause (c) of Sub­section (5) of Section 60 is very broad in its

sweep,  in  that it  speaks about any question of law or  fact,

arising out of  or in  relation to  insolvency resolution.  But a

decision taken by the government or a statutory authority in

relation to a matter which is in the realm of public law,

cannot, by any stretch of imagination, be brought within the

fold of the  phrase  “arising  out  of or in relation to the

insolvency resolution” appearing in Clause (c) of Sub­section

(5). Let us take for instance a case where a corporate debtor

had suffered an order at the hands of the Income Tax

Appellate Tribunal, at the time of initiation of CIRP. If Section

60(5)(c) of IBC is interpreted to include all questions of law or

facts under the sky, an Interim Resolution

Professional/Resolution Professional will then claim a right to

challenge the order of the Income Tax Appellate Tribunal

40

before the NCLT, instead of moving a statutory appeal under

Section 260A of the Income Tax Act, 1961. Therefore the

jurisdiction of the NCLT delineated in Section 60(5) cannot be

stretched so far as to bring absurd results. (It will be a

different matter, if proceedings under statutes like Income Tax

Act had attained finality, fastening a liability upon the

corporate debtor, since, in such cases, the dues payable to the

Government would come within the meaning of the expression

“operational debt”  under Section 5(21), making the

Government an “operational creditor” in terms of Section 5(20).

The moment the dues to the Government are crystalised and

what remains is only payment, the claim of the Government

will have to be adjudicated and paid only in a manner

prescribed in the resolution plan as approved by the

Adjudicating Authority, namely the NCLT. )    

37. It was argued by all the learned Senior Counsel on the

side of the appellants that an Interim Resolution Professional

is duty bound under Section 20(1) to preserve the value of the

property of the Corporate Debtor and that the word

41

“property” is interpreted in Section 3(27) to include even

actionable claims as well as every description of interest,

present or future or vested or contingent interest arising

out of or incidental to property  and that therefore the

Interim Resolution Professional is entitled to move the NCLT

for appropriate orders, on the basis that lease is a property

right and NCLT has jurisdiction under Section 60(5) to

entertain any claim by the Corporate Debtor.  

38. But the said argument cannot be sustained for the

simple reason that the duties of a resolution professional are

entirely different from the jurisdiction and powers of NCLT. In

fact Section 20(1) cannot be read in isolation, but has to be

read in conjunction  with  Section  18(f)(vi) of the IBC,  2016

together with the Explanation thereunder. Section 18 (f) (vi)

reads as follows:­

“18. Duties of interim resolution professional. ­ The interim resolution professional shall perform the following duties, namely:­ (a) … (b)…  (c) …  (d)…

42

(e)…  (f) take control and custody of any asset over which the corporate debtor has ownership rights as recorded in the balance sheet of the corporate debtor, or with information utility or the depository of securities or any other registry that records the ownership of assets including— (i)… (ii)… (iii)… (iv) … (v)… (vi) assets subject to the determination of ownership by a court or authority; (g) … Explanation. ­ For the purposes of this section, the term ‘assets’ shall not include the following namely:­ (a)  assets owned by a third party in possession of the corporate debtor held under trust or under contractual arrangements including bailment; (b)  assets  of  any Indian or foreign  subsidiary  of the corporate debtor; and  (c) such other assets as may be notified by the Central Government in consultation  with  any financial sector regulator.”  

39.  If NCLT has been conferred with jurisdiction to decide all

types of claims to property, of the corporate debtor, Section

18(f)(vi) would not have made the task of the interim resolution

professional in taking control  and custody of  an asset  over

which the corporate debtor has ownership rights,  subject to

the determination of ownership by a court or other

43

authority.  In fact an asset owned by a third party, but which

is in the possession of the corporate debtor under contractual

arrangements, is specifically kept out of the definition of the

term “assets” under the Explanation to Section 18. This

assumes significance in view of the language used in Sections

18 and 25 in contrast to the language employed in Section 20.

Section 18 speaks about the duties of the interim resolution

professional and Section 25 speaks about the duties of

resolution  professional. These two  provisions  use the  word

“assets”, while Section 20(1) uses the word “property” together

with the  word “value”.  Sections  18  and 25  do  not  use the

expression “property”. Another important aspect is that under

Section 25 (2) (b) of IBC, 2016, the resolution professional is

obliged to represent and act on behalf of the corporate debtor

with  third  parties  and exercise rights for the  benefit  of the

corporate debtor in judicial, quasi­judicial and arbitration

proceedings. Section 25(1) and 25(2)(b) reads as follows:

“25. Duties of resolution professional – (1) It shall be the duty of the resolution professional to preserve and protect the assets of the corporate

44

debtor, including the continued business operations of the corporate debtor.  (2)  For the purposes of  sub­section  (1), the resolution professional shall undertake the following actions:­ (a)…………. (b) represent and act on behalf of the corporate debtor with third parties,  exercise rights for the benefit of the corporate debtor in judicial, quasi judicial and arbitration proceedings.”

This shows that wherever the corporate debtor has to exercise

rights in judicial, quasi­judicial proceedings, the resolution

professional cannot short­circuit the same and bring a claim

before NCLT taking advantage of Section 60(5).  

40.  Therefore in the light of the statutory scheme as culled

out from various provisions of the IBC, 2016 it is clear that

wherever the corporate debtor has to exercise a right that falls

outside the purview of the IBC, 2016 especially in the realm of

the public law, they cannot, through the resolution

professional, take a bypass and go before NCLT for the

enforcement of such a right.   

41. In fact the Resolution Professional in this case appears

to have understood this legal position correctly, in the initial

stages. This is why when the Government of Karnataka did not

45

grant the benefit of deemed extension, even after the expiry of

the  lease on 25.05.2018,  the Resolution Professional  moved

the High Court by way of a writ petition in WP No. 23075 of

2018. The prayer made in WP No. 23075 of 2018 was for a

declaration that the mining lease should be deemed to be valid

upto 31.03.2020. If NCLT was omnipotent, the Resolution

Professional  would  have  moved the  NCLT itself for such a

declaration. But he did not, as he understood the legal

position correctly.  

42.  After the filing of the first writ petition (WP No. 23075 of

2018),  the Government of Karnataka passed an order dated

26.09.2018 rejecting the claim. Therefore the Resolution

Professional, representing the Corporate Debtor filed a memo

before the High Court seeking withdrawal of the writ petition

“with  liberty to file  a fresh writ  petition”.  However the

High Court, while dismissing the writ petition by order dated

28.09.2018 was little considerate and it disposed of the writ

petition as withdrawn with liberty to take recourse to

appropriate remedies in accordance with law. Perhaps taking

46

advantage of this liberty, the Resolution Applicant moved the

NCLT against the order of rejection passed by the Government

of Karnataka. If NCLT was not considered by the Resolution

Professional, in the first instance, to be empowered to issue a

declaration of deemed extension of lease, we fail to understand

how NCLT could be considered to have the power of judicial

review over the order of rejection.  

43.  The fact that the Government of Karnataka agreed in the

second writ petition WP No. 5002 of 2019 to go back to the

NCLT and contest the Miscellaneous Application filed by the

Resolution Professional,  would not tantamount to conceding

the jurisdiction of NCLT. In any case a tribunal which is the

creature of a statute cannot be clothed with a jurisdiction, by

any concession made by a party.  

44.  A lot of stress was made on the effect of Section 14 of

IBC, 2016 on the deemed extension of lease. But we do not

think that the moratorium provided for  in Section 14 could

have any impact upon the right of the Government to refuse

the extension of lease.  The purpose of moratorium is only to

47

preserve the status quo and not to create a new right.

Therefore  nothing turns  on  Section  14  of IBC,  2016.  Even

Section 14 (1) (d), of IBC, 2016, which prohibits, during the

period of moratorium, the recovery of any property by an

owner or lessor where such property is occupied by or in the

possession of the corporate debtor, will not go to the rescue of

the corporate debtor, since what is prohibited therein, is only

the  right  not to be dispossessed,  but not the  right to  have

renewal of the lease of such property. In fact the right not to

be dispossessed, found in Section 14 (1) (d), will have nothing

to do with the rights conferred by a mining lease especially on

a government land. What is granted under the deed of mining

lease in  ML 2293 dated 04.01.2001,  by the  Government  of

Karnataka, to the Corporate Debtor,  was the right  to mine,

excavate  and recover iron ore and red oxide for  a specified

period of time. The Deed of Lease contains a Schedule divided

into several parts. Part­I of the Schedule describes the location

and area of the lease. Part­II indicates the liberties and

privileges of the lessee. The restrictions and conditions subject

48

to which the grant can be enjoyed are found in Part­III of the

Schedule. The liberties, powers and privileges reserved to the

Government, despite the grant, are indicated in Part­IV. This

Part­IV entitles the  Government to  work  on  other  minerals

(other than iron ore and red oxide) on the same land, even

during the subsistence of the lease. Therefore, what was

granted to the Corporate Debtor was not an exclusive

possession of the area in question, so as to enable the

Resolution Professional to invoke Section 14 (1) (d). Section 14

(1) (d) may have no application to situations of this nature.    

45.  Therefore, in fine, our answer to the first question would

be that NCLT did not have jurisdiction to entertain an

application against the Government of Karnataka for a

direction to execute Supplemental Lease Deeds for the

extension of the mining lease. Since NCLT chose to exercise a

jurisdiction not vested in it in law, the High Court of

Karnataka was justified in entertaining the writ petition, on

the basis that NCLT was coram non judice.

49

Question No. 2

46.  The second question that arises for our consideration is

as to whether NCLT is competent to enquire into allegations of

fraud, especially in the matter of the very initiation of CIRP.  

47.  This question has arisen, in view of the stand taken by

the Government of Karnataka before the High Court that they

chose to challenge the order of the  NCLT  before the High

Court, instead  of  before  NCLAT,  due  to the fraudulent  and

collusive manner in which the CIRP was initiated by one of the

related parties of the Corporate Debtor themselves. In the writ

petition filed by the Government of Karnataka before the High

Court, it was specifically pleaded (i) that the Managing

Director of the Corporate Debtor entered into an agreement on

06.02.2011 with one M/s. D. P. Exports, for carrying out

mining operations on behalf of the Corporate Debtor and also

for managing its affairs and selling 100% of the extracted iron

ore;  (ii) that the said M/s. D. P. Exports was a partnership

firm of which one Mr. M. Poobalan and his wife were partners;

(iii) that another agreement dated 11.12.2012 was entered into

50

between the Corporate Debtor and a proprietary concern by

name M/s. P. & D. Enterprises, of which the very same person

namely, Mr. M. Poobalan was the sole proprietor; (iv) that the

said agreement was for hiring of machinery and equipment; (v)

that a finance agreement was also entered into on 12.12.2012

between the Corporate Debtor and a company by name M/s.

Udhyaman Investments Pvt. Ltd., represented by its

authorized signatory Mr. M. Poobalan; (vi) that there were a

few communications sent by the said Mr. Poobalan to various

authorities, claiming himself to be the authorized signatory of

the Corporate Debtor; (vii) that an MOU was entered into on

16.04.2016 between the Corporate Debtor and M/s.

Udhyaman Investments Pvt. Ltd., represented by the said Mr.

Poobalan,  whereby the  Corporate  Debtor  agreed to  pay  Rs.

11.5 crores; (viii) that the said agreement  was  purportedly

executed at Florida, but witnessed at Chennai; (ix)  that Mr.

Poobalan even communicated to the Director, Department of

Mines & Geology as well as the Monitoring Committee, taking

up the cause of the Corporate Debtor as its authorized

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signatory; (x) that the CIRP was initiated by M/s. Udhyaman

Investments Pvt. Ltd. represented by its authorized signatory,

Mr. Poobalan; (xi) that the Resolution Applicant namely, M/s.

Embassy Property Development Pvt. Ltd. as well as the

Financial Creditor who initiated CIRP namely, M/s. Udhyaman

Investments Pvt. Ltd. are all related parties and (xii) that Mr.

Poobalan had not only acted on behalf of the Corporate Debtor

before the statutory authorities, but also happened to be the

authorized  signatory  of the  Financial  Creditor  who  initiated

the CIRP, eventually for the benefit of the Resolution Applicant

which is a related party of the Financial Creditor.  

48. In the light of the above averments, the Government of

Karnataka thought  fit to  invoke the jurisdiction of  the High

Court under Article 226 without taking recourse to the

statutory alternative remedy of appeal before the NCLAT. But

the contention of the appellants herein is that allegations of

fraud and collusion can also be  inquired into by NCLT and

NCLAT  and that therefore the  Government could  not have

bypassed the statutory remedy.

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49. The objection of the appellants in this regard is well

founded. Section 65 specifically deals with fraudulent or

malicious initiation of proceedings.  It reads as follows:

“65.  Fraudulent or malicious initiation   of proceedings. – (1) If,  any  person initiates the insolvency resolution process or liquidation proceedings fraudulently or with malicious intent for any purpose other than for the resolution of insolvency or liquidation, as the case may be, the adjudicating authority may impose upon such person a penalty which shall  not be less than one lakh rupees, but may extend to one crore rupees. (2)   If, any person initiates voluntary liquidation proceedings with the intent to defraud any person the adjudicating authority   may impose upon such   person a penalty which shall not be less than one lakh rupees but may extend to one crore rupees.”

50. Even fraudulent tradings carried on  by the  Corporate

Debtor during the insolvency resolution, can be inquired into

by the Adjudicating Authority under Section 66. Section 69

makes an officer  of the  corporate  debtor  and  the  corporate

debtor liable for punishment, for carrying on transactions with

a view to defraud creditors. Therefore, NCLT is vested with the

power to inquire into (i) fraudulent initiation of proceedings as

well  as  (ii) fraudulent transactions.   It is significant to note

that Section 65(1) deals with a situation where CIRP is

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initiated fraudulently  “for any purpose other than for the

resolution of insolvency or liquidation”.

51. Therefore, if, as contended by the Government of

Karnataka, the CIRP had been initiated by one and the same

person taking different avatars, not for the genuine purpose of

resolution of insolvency or  liquidation,  but for  the collateral

purpose of cornering the mine and the mining lease, the same

would fall squarely within the mischief addressed by Section

65(1).   Therefore, it is clear that  NCLT  has jurisdiction to

enquire  into allegations of fraud. As a corollary, NCLAT will

also  have jurisdiction.  Hence, fraudulent initiation of  CIRP

cannot be a ground to bypass the alternative remedy of appeal

provided in Section 61.   

Conclusion

52.  The upshot of the above discussion is that though

NCLT and NCLAT would have jurisdiction to enquire into

questions of fraud, they would not have jurisdiction to

adjudicate upon disputes such as those arising under MMDR

Act,  1957 and the rules  issued thereunder, especially when

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the disputes revolve around decisions of  statutory or quasi­

judicial  authorities,  which can be  corrected only  by  way  of

judicial review of administrative action.  Hence, the High Court

was justified in entertaining the writ petition and we see no

reason to interfere with the decision of the High Court.

Therefore, the appeals are dismissed. There will be no order as

to costs.

…..…………....................J      (Rohinton Fali Nariman)

…..…………....................J   (Aniruddha Bose)

.…..………......................J    (V. Ramasubramanian)

New Delhi December  03, 2019.

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