despite being the senior­most in the cadre of District Judges, they have been overlooked and their juniors now recommended for elevation to the High Court as Judges.

despite being the senior­most   in   the   cadre   of   District   Judges,   they   have   been overlooked and their juniors now recommended for elevation to the High Court as Judges. 

REPORTABLE

IN THE SUPREME COURT OF INDIA

ORIGINAL JURISDICTION

WRIT PETITION (CIVIL) NO. 1172 OF 2019

R. POORNIMA AND ORS.                                  … PETITIONER(S)

VERSUS

UNION OF INDIA AND ORS.                            …RESPONDENT(S)

J U D G M E N T

S. A. Bobde, CJI.

1. Persons who were appointed as District Judges (Entry Level) by

way of direct recruitment vide a Government Order G.O. Ms. No.

170, Home Department dated 18.02.2011 in the Tamil Nadu State

Judicial Service have come up with this Writ Petition seeking the

following reliefs: 

“(a) Issue a Writ in the nature of a Writ of Certiorarified

Mandamus or any other appropriate Writ, Order or Orders,

Directions, to call for records relating to the last list of

names recommended by the Hon’ble Chief Justice of High

Court of Madras to the Hon’ble Chief Justice of India for

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appointment as Judges of Madras High Court and quash

the   same   in   so   far   as   it   relates   to   the   names   of

Respondents No. 5 to 23 herein and consequently direct

the   Hon’ble   Collegiums   of   the   Madras   High   Court   to

consider the names of the Petitioners also for appointment

as High Court Judges;

OR

(b) Issue a Writ in the nature of Writ of Mandamus or

any other appropriate Writ, Order or Orders, Directions,

directing the Respondents No. 1 to 4 to return the last list

of   names   for   appointment   as   Judges   of   High   Court,

Madras recommended by the Hon’ble Chief Justice of High

Court of Madras to the Hon’ble Chief Justice of India;

AND

(c) Pass such further or other Order or Orders that this

Hon’ble Court may deem fit and proper in the facts and

circumstances of the case.” 

2. On 06.12.2019, this Court issued notice restricted only to one

question. The order passed on 06.12.2019 is self­explanatory and

hence it is reproduced as follows:

“At   the   request   of   Shri   Rakesh   Dwivedi,   learned

senior   counsel   appearing   on   behalf   of   the   petitioners,

prayer ‘A’ is allowed to be deleted.

Issue   notice   restricted   to   the   question   of   the

entitlement of the petitioners to be considered by virtue of

having put in 18 years, as claimed.

2

Dasti service, in addition, is permitted.”

3. We have heard the learned counsel for the parties. 

4. The Petitioners as well as the Respondent Nos. 24 to 29 were

duly selected and appointed as District Judges (Entry Level) by way

of direct recruitment, vide a Government Order in G.O.Ms.No. 170,

Home   Department,   dated   18.02.2011.   Therefore,   obviously,   they

have not completed 10 years of service as Judicial Officers, as on

date. But at the time of their appointment as District Judges, the

Petitioner Nos. 1 to 6had already practiced for more than 10 years as

advocates, the Petitioner No. 7 had practiced as advocate for 9 years

and 10 months and Petitioner No. 8 had practiced for 8 years and 6

months, after getting enrolled on the rolls of the Bar Council of

Tamil Nadu and Puducherry.

5. In the cadre of District Judges, the Petitioners and Respondent

Nos. 24 to 29 are the senior­most, as seen from the annual list of

officers released by the High Court. The seniority of direct recruits

like the Petitioners herein over the promotees, was also reinforced by

the judgment of the Division Bench of the Madras High Court in Writ

Petition No. 20069 of 2014, by judgment dated 26.02.2015.

3

6. The short grievance of the petitioners is that despite being the

senior­most   in   the   cadre   of   District   Judges,   they   have   been

overlooked and their juniors now recommended for elevation to the

High Court as Judges. This, according to the Petitioners, was done

by the Collegium of the High Court solely on the application of

Explanation (a) under Article 217(2) of the Constitution of India. The

contention of the Petitioners is that to determine the eligibility of a

person, sub­clauses (a) and (b) of clause (2) of Article 217 together

with Explanations (a) and (aa) should be applied simultaneously.

7. In simple terms, the Petitioners want the experience gained by

them as advocates to be clubbed together with the service rendered

by them as Judicial Officers, for determining their eligibility. Once

this clubbing is allowed, the Petitioners would like to take advantage

of their settled seniority position in the cadre of District Judges, over

and above that of Respondent Nos. 5 to 23. In other words, the

Petitioners want the best of both worlds. 

8. Before proceeding further, we must note that the Respondent

Nos. 5 to 23 were appointed as Judicial Officers in the cadre below

that   of   District   Judges.   After   a   long   service,   they   have   gained

promotion   to   the   post   of   District   Judges.   But   their   promotion

happened   after   the   date   on   which   the   petitioners   were   directly

4

recruited as District Judges. This is how and why the petitioners

became seniors to the respondents 5 to 23. 

9. When   vacancies   arose   for   elevation   to   the   High   Court   as

Judges, as against the 1/3rd quota meant to be filled up from among

the State Judicial Officers, the Collegium of the High Court found

that the Petitioners  had not completed  10  years of service  in a

Judicial   Office   as   required   by   Article   217(2)(a).   Therefore,   the

Collegium   recommended   the   names   of   persons   who   fulfilled   the

eligibility   criteria.   Aggrieved   by   this   action   on   the   part   of   the

Collegium of the High Court, the Petitioners have come up with this

Writ Petition. 

10. The contentions raised by the petitioners in the writ petition

are   little   different   from   the   submissions   made   by   Mr.   Rakesh

Dwivedi, learned Senior Counsel for the petitioners. Let us first deal

with the contentions raised in the writ petition. 

11. In their pleadings, the Petitioners have pitched their claim on—

(i) a cumulative reading of sub­clauses (a) and (b) of clause (2)

of Article 217 and Explanation (a) and (aa) thereunder; 

5

(ii) the decision of this Court in  P. Ramakrishnam  Raju  vs.

Union of India1

 wherein this Court directed the number of

years of practice as advocate, to be added to the number of

years of service rendered as a Judge of the High Court for

determining the qualifying service for pensionary benefits,

and

(iii) the reference made by a Division Bench of this Court to a 3­

member bench in Dheeraj Mor  vs. Hon’ble High Court of

Delhi2

 of the question whether for the purposes of Article

233, the number of years of practice as an advocate can be

clubbed together with the number of years of service as a

Judicial   Officer   for   determining   the   eligibility   for   direct

recruitment to the post of District Judge.   

12. At the outset, we shall point out that the ratio laid down in P.

Ramakrishnam Raju has no application to the issue on hand. The

said decision was rendered in the context of advocates elevated to

the   benches   of   the   High   Courts,   not   being   appropriately

compensated in terms of pensionary benefits, when they retire after

less than 7 years/10 years/14 years of service. We cannot apply the

1 (2014) 12 SCC 1

2 (2018) 4 SCC 619

6

same   ratio   while   considering   the   eligibility   of   a   person   for

appointment as a Judge of the High Court. 

13. The reliance placed by the Writ Petitioners in Ground P of the

Writ Petition on the reference made in Dheeraj Mor is of no use to

them anymore. This is for the simple reason that by a judgment

dated 19.02.2020, a 3­member bench of this Court has answered

the   reference,   in   a   way   that   will   negate   the   argument   of   the

Petitioners. 

14. In  Dheeraj  Mor, three categories of persons came up with a

claim for appointment to the post of District Judges by way of direct

recruitment. They were,(i)those who had 7 years of practice as an

advocate,   but   were   serving   in   a   judicial   office   on   the   date   of

application/appointment,  (ii)those  who  had  completed  7  years  of

service as Judicial Officers, but did not have 7 years of practice at

the Bar, and (iii) those who wanted the number of years of practice

as Advocate to be clubbed along with the number of years of service

as a Judicial Officer, for the purpose of arriving at the eligibility

criteria. After taking note of the diverse views expressed by different

benches of this Court in earlier cases, a Division Bench of this Court

passed an order on 23.01.2018 directing the matter to be placed

before a larger bench.

7

15. The   Petitioners   herein   filed   the   present   Writ   Petition   in

September 2019. On the date on which the Petitioners filed the Writ

Petition and on the date on which the Writ Petition came up for

hearing, namely 06.12.2019, the reference in Dheeraj Mor was still

pending. The question was therefore at large on the date when this

court ordered notice in the present writ petition.

16. But subsequently, the reference has been answered by a threemember bench of this court on 19.02.2020. The principles laid down

by the three member bench, are as follows:

(i) For the purpose of Article 233(2), an advocate has to be

continuing in practice for not less than 7 years as on the

cut­off date and also at the time of appointment as District

Judge.   Members   of   Judicial   Service   having   7   years’

experience of practice before they joined the service or those

having   combined   experience   of   7   years   as   lawyer   and

member of  judiciary,  are  not  eligible  to  apply for direct

recruitment as a District Judge, and

(ii) The decision in Vijay Kumar Mishra   vs.   High Court of

Judicature at Patna3

 upholding the eligibility of a Judicial

Officer to apply for the post of District Judge by way of

3 (2016) 9 SCC 313

8

direct recruitment, does not lay down the law correctly and

hence, overruled.

17. Therefore, for the purpose of Article 233, it is not permissible

anymore,   for   people   to   hop­on   and   hop­off   between   the   two

independent streams of recruitment, in the light of the law laid down

in Dheeraj Mor. Hence the reliance placed by the Petitioners in their

pleadings, on the reference pending at that time in  Dheeraj  Mor,

has become irrelevant. 

18. Though  Dheeraj  Mor  was concerned with Article 233 of the

Constitution, an analogy was drawn by S. Ravindra Bhat, J. in

Paragraph 34 of his separate but concurring opinion in  Dheeraj

Mor, to Article 217 with which we are concerned in the present case.

Paragraph 34 of the said opinion reads as follows:

“34. This view is fortified by Article 217 (2), which

spells out two sources from which appointments can be

resorted to for the position of judge of a High Court: firstly,

member of a judicial service of a State [Article 217 (a)] and

an advocate with ten years’ experience [Article 217 (b)].

For   the   Supreme   Court,   Article   124   (3)   (a)   enables

consideration of a person with five years’ experience as a

High Court judge; Article 124(3)(b) enables consideration of

an advocate with ten years’ experience at the bar in any

High   Court;   Article   124(3)(c)   enables   consideration   of   a

9

distinguished   jurist.   Significantly,   advocates   with

stipulated experience at the bar are entitled, by express

provisions of the Constitution [Articles 233 (2), Article 217

(b)   and   Article   124   (3)   (b)]     to   be   considered   for

appointment to the District Courts, High Courts and the

Supreme   Court,   respectively.   However,   members   of   the

judicial service can be considered only for appointment (by

promotion) as District Judges, and as High Court judges,

respectively.   Members   of   the   judicial   service   cannot   be

considered   for   appointment   to   the   Supreme   Court.

Likewise, academics or distinguished jurists, with neither

practise   at   the   Bar,   nor   any   experience   in   the   judicial

service,   can   be   considered   for   appointment   as   District

Judge, or as High Court judge.”

19. Therefore, the very foundation upon which the Petitioners have

built their case, at least in their pleadings, is now gone. But Mr.

Rakesh Dwivedi, learned Senior Counsel for the petitioners contended

—

(i) that while clause (1) of Article 217 prescribes the method of

appointment and the age up to which an appointee can hold

office,   clause   (2)   merely   stipulates   the   qualification   for

appointment   and   the   method   of   computation   of   such

qualification;

(ii) that the qualifications prescribed in sub­clauses (a) and (b) of

clause (2) of Article 217 are in the alternative, but Article 217 does

10

not create separate streams for appointment, with independent

quotas for such streams;

(iii) that to interpret Explanation (a) in such a manner that only a

person   who   resigned   from   Judicial   service   and   became   an

Advocate will be eligible to club both the periods, will result in

unfair and hostile discrimination of Judicial Officers, offending

Article 14 and hence such an interpretation has to be avoided;

and

(iv) that there are precedents where District Judges who had not

completed 10 years of service, were appointed as Judges of High

courts, by clubbing the number of years of practice they had at

the bar, together with the number of years of service they put in

judicial service.

20. Before we deal with the above submissions, let us take a look at

Article 217(2) of the Constitution, which reads as follows:

“(2) A person shall not be qualified for appointment as

a Judge of a High Court unless he is a citizen of India and

— 

(a) has for at least ten years held a judicial office in the

territory of India; or

(b) has for at least ten years been an advocate of a

High Court or of two or more such Courts in succession; 

Explanation.—For the purposes of this clause— 

11

(a) in computing the period during which a person has

held judicial office in the territory of India, there shall be

included any period, after he has held any judicial office,

during which the person has been an advocate of a High

Court or has held the office of a member of a tribunal or

any post, under the Union or a State, requiring special

knowledge of law;

(aa) in computing the period during which a person has

been an advocate of a High Court, there shall be included

any   period   during   which   the   person   [has   held   judicial

office or the office of a member of a tribunal or any post,

under the Union or a State, requiring special knowledge of

law] after he became an advocate; 

(b) in computing the period during which a person has

held   judicial   office  in  the  territory  of   India  or  been  an

advocate  of  a High Court,  there  shall  be  included  any

period   before   the   commencement   of   this   Constitution

during which he has held judicial office in any area which

was comprised before the fifteenth day of August, 1947,

within India as defined by the Government of India Act,

1935, or has been an advocate of any High Court in any

such area, as the case may be.”

21. It is clear from the language of Article 217 that clause (1) merely

prescribes the method of appointment and the age up to which an

appointee can hold office. Clause (2) does two things. First it stipulates

the qualification for appointment under the 2 sub­clauses (a) and (b).

Then it stipulates the method of reckoning such qualification, under

the 2 limbs of the Explanation. 

12

22. Actually, clause (2) of Article 217 has 2 parts, the first of which

is in sub­clauses (a) and (b) and the second in Explanation (a) and

(aa).   The   first   indicates   in   plain   terms,   that   to   be   qualified   for

appointment, a person (i) must be a citizen of India and (ii) must have

either held a judicial office for 10 years or been an Advocate of a high

court for 10 years. 

23. Suppose there was no ‘Explanation’ under clause (2) of Article

217, then there would have been no scope for any argument, other

than to accept blindly, that the qualification stipulated in clause (2) of

Article 217, can be acquired by an individual from 2 separate sources,

namely (i) from the Bar or (ii) from the ‘judicial service’, as defined in

clause (b) of Article 236. This is for the reason that Sub­clauses (a)

and (b) are actually in the alternative, as can be seen from the use of

the   word  “or”  in   between.   The   word  “or”  in   English   grammar,

according   to   Merriam­webster   dictionary,   is   a  coordinating

conjunction. While the word “and”, which is also a conjunction, will

denote something to be taken cumulatively, the word “or” will denote

something to be taken alternatively. This is so far as the first part of

clause (2) is concerned.  As stated earlier, the first part of clause (2) is

in sub­clauses (a) and (b). 

13

24. The second part of clause (2) of Article 217, which has taken

shape in the form of an ‘Explanation’, merely explains the manner in

which   the   periods   indicated   in   sub­clauses   (a)   and   (b)   are   to   be

construed. Interestingly, the Explanation under clause (2) of Article

217 also has 2 parts, one going with sub­clause (a) and another going

with sub­clause (b). 

25. Explanation (a) goes with sub­clause (a) and Explanation (aa)

goes with sub­clause (b). This is because, Explanation (a) permits the

addition, to the number of years of service of a Judicial Officer, some

other period also, namely (i) the period during which a person has

been an advocate of a High Court, or (ii) the period during which a

person   has   held   the   office   of   a   member   of   a   Tribunal.   Similarly,

Explanation (aa) permits the addition, to the number of years during

which a person has been an advocate of a High court, some other

period, namely the period during which he has held any judicial office

or the office of a member of a Tribunal. 

26. According to Explanation (a), the period of service rendered by a

person in a judicial office has to be computed by taking into account

the period during which he has been an advocate of a high court.

14

27. But the  condition  for such addition of  some  other period,

under   Explanation   (a)   is   that   such   other   period   should   have

followed and not preceded the judicial service. This is made clear

by the use of the words “after he has held any judicial office”. 

28. What is sought by the petitioners herein is  to club with their

judicial   service,   the   experience   that   they   had   at   the   Bar  before

joining   judicial   service. In other words, the petitioners want the

word “after” to be interpreted to mean and include “before”. We do not

know of any rule of interpretation which permits the word “after” to be

interpreted to mean and include “before”. 

29. The telescoping of Explanation (a) and (aa) into sub­clauses (a)

and (b) of clause (2) of Article 217 would show that a person may

acquire the eligibility as indicated in Article 217(2)­

(i) either exclusively from the Bar [as provided in clause (b)] 

(ii) or exclusively from the judicial service [as provided in clause

(a)] 

(iii) or from a cocktail of both [as provided in Explanation (a) and

(aa)]

15

30. But   what   is   important   to   note   is   that   Article   217(2)   merely

prescribes the eligibility criteria and the method of computation of the

same. If a person is found to have satisfied the eligibility criteria, then

he must take his place in one of the queues. There are 2 separate

queues,  one  from judicial  service  and  another from the  Bar.   One

cannot stand in one queue by virtue of his status on the date of

consideration of his name for elevation and at the same time keep a

towel in the other queue, so that he can claim to be within the zone of

consideration from either of the two or from a combination of both.

31. The queue to which a person is assigned, depends upon his

status on the date of consideration. If a person is an advocate on the

date of consideration, he can take his place only in the queue meant

for members of the Bar. Similarly, if a person is a judicial officer on

the date of consideration, he shall take his chance only in the queue

meant for service candidates.

32. Hopping on and hopping off from one queue to the other, is not

permissible.   Today,   if   any   of   the   petitioners   cease   to   be   Judicial

Officers and become Advocates, they may be eligible to be considered

against   the   quota   intended   for   the   Bar.   But   while   continuing   as

Judicial Officers, they cannot seek to invoke Explanation (a) as it

16

applies only to those who have become advocates after having held

a judicial office.

33. The   issue   can   be   looked   at   from   another   angle   also.   The

petitioners successfully claimed and gained seniority over and above

the contesting respondents, on the ground that they were directly

recruited   to   the   post   of   District   Judges,   before   the   contesting

respondents got promoted as District Judges. In other words, for the

purpose   of   seniority,   the   petitioners   went   solely   by   the   date   of

recruitment to the cadre of District Judges and not (i) by the total

length of service in a judicial office or (ii) by a combination of the

number of years of practice at the bar and the number of years of

judicial service. But for the purpose of determining the eligibility, they

want to go by the total period of practice as an Advocate and the

period of service in a judicial office. If clubbing is permitted, it should

be   permitted   even   for   the   contesting   respondents,   which   if   done,

would upset even the seniority of the petitioners. 

34. Though Mr. Rakesh Dwivedi, learned Senior Counsel submitted

that his clients cannot have any objection to the benefit of clubbing

being granted even to the contesting respondents, we think it is an

argument   of   convenience.   For   filling   up   the   vacancies   under   the

service quota, the collegiums of the High courts consider the ACRs

17

and the judgments of the judicial officers, in the ratio of 1:3 or 1:5 or

so. To undertake this exercise, the High courts maintain seniority lists

of judicial officers. If there are 3 vacancies to be filled up, the profile of

9 or 15 senior­most officers are considered. If the argument of the

petitioners   is   accepted   and   the   contesting   respondents   are   also

granted   the   benefit   of   clubbing,   they   will   be   far   seniors   to   the

petitioners in terms of the total number of years of service both at the

bar and in service. In such an event, the petitioners will not come

anywhere near the zone of consideration (within the first 9 or 15). In

every State, hundreds of judicial officers will satisfy the qualifying

criteria,   if   the   argument   of   the   petitioners   is   accepted.   Take   for

instance a case where a person is appointed as a District Judge after

10 years of practice at the Bar. If the contention of the petitioners is

accepted, even such a person will be eligible from day one of his

appointment  as   District  Judge.   Since   all   such   persons   cannot   be

considered for the limited number of vacancies, a seniority list is

maintained and a particular number of officers are taken in the zone

of consideration, depending upon the number of vacancies sought to

be   filled   up   under   the   quota.   The   cache   in   the   argument   of   the

petitioners is that for the purpose of seniority, they do not want any

two services to be clubbed, but for the purpose of eligibility, they want

18

even the practice at the Bar to be clubbed. This is nothing but a selfserving argument. 

35. As   pointed   out   earlier,   the   petitioners   were   appointed   in

February   2011.   They   will   be   completing   10   years   of   service   in   a

judicial office by February 2021. This is why, when this court ordered

notice in this writ petition on 06.12.2019, they have agreed to delete

prayer   A   and   confine   themselves   to   prayer   B,   which   is   just   for

returning the list of names recommended by the collegium of the

Madras High court. Perhaps the petitioners have gained an impression

that if the list of names already recommended is returned and the

matter is taken up afresh after February 2021, they would have by

then become eligible in terms of sub­clause (a) of clause (2) of Article

217 and at that time they can claim the benefit of seniority over and

above the contesting respondents.

36. Referring   to   the   discussions   that   took   place   in   the   Drafting

Committee of the Constitution, on the amendments proposed to the

Draft of Article 193(2)(b) of the Constitution, which corresponds to the

present Article 217(2)(b), for the insertion of the words “and is”  and

the rejection of the said suggestion by the Drafting Committee, it is

contended by the learned Senior Counsel for the petitioners that in

19

the light of the same, this Court cannot interpret Article 217(2)(b) in a

manner restricting it to “practising advocates”.  The relevant portion of

the   “Comments   and   Suggestions   on   the   Draft   Constitution”,   from

Volume 4 of the “Framing of the Indian Constitution”, relied upon by

the learned counsel for the petitioners reads as follows:­

“The   Editor   of   the   Indian   Law   Review  and some

other members of the Calcutta Bar have suggested that in

sub­clause (b) of clause (2) of article 193, after the word

“years” the words “and is” should be inserted.

Note : This amendment seeks to restrict the recruitment

of High Court judges under sub­clause (b) of clause (2) of

article 193 only to practising lawyers.  If this amendment

is accepted then a person who has served as a district

judge for seven or eight years and has also practised as

an advocate of a High Court for seven or eight years before

being a district judge will not be eligible to be appointed as

a High Court judge whereas a member of the Provincial

Judicial Service who has served as a ‘munsif’ for only ten

years will be eligible to be so appointed, which is certainly

anomalous.   This   amendment   cannot   therefore   be

accepted.”

37. On the basis of the above it is contended that Article 217(2)(b)

cannot be restricted to mean only those practising as advocates on

the date of consideration.

20

38. But  the   above   argument   loses   sight  of   the   fact   that   Article

217(2)(b) relates to the stream of advocates. When it comes to such a

stream, Explanation (aa) comes into play. Therefore, the reference to

the discussions in the Drafting Committee is of no relevance.

39. As a matter of fact, the present Explanation (a) was inserted

only by the Constitution (44th Amendment) Act, 1978 with effect from

20.06.1979. What was Explanation (a) till then, became Explanation

(aa) by the same Amendment. Therefore, the benefit of the present

Explanation   (a)   was   not   even   available   to   judicial   officers   until

20.06.1979.

40. Reliance is placed by the learned counsel for the petitioners

upon   the   decision   of  this   Court  in  Mahesh   Chandra   Gupta  vs.

Union  of   India4

, and the decision of the Delhi High court in  D.K.

Sharma  vs  Union  of   India5

  in support of his contention that the

entitlement to practise as an advocate was sufficient to satisfy the

criteria   under   Article   217(2)   and   that   the   provision   does   not

contemplate actual practice.

41. But   both   those   decisions   arose   out   of   a   challenge   to   the

appointment of members of the Income Tax Appellate Tribunal as

4 (2009) 8 SCC 273

5 2011 SCC Online Del 1773

21

Judges of the High courts. These decisions cannot apply to the case

of a person holding a judicial office. Mahesh Chandra Gupta (supra)

was a case where the appointment of a Member of the Income Tax

Appellate Tribunal  as an Additional  Judge of the Allahabad  High

Court was under challenge. As seen from Para 38 of the Report, what

fell for consideration of this Court in the said case was “whether

actual   practise   as   against  the   right   to   practise   is   a  pre­requisite

constitutional   requirement   of   the   eligibility   criteria   under   Article

217(2)(b)”.  Sub­clause (b) of Clause (2) of Article 217 prescribes the

number of years a person should have been an Advocate to become

eligible   for   consideration.   Therefore,   if   the   petitioners   want   to   be

considered   from   the   category   as   advocates,   irrespective   of   their

present status as judicial officers, they can always do so, provided

they do not stand in the queue intended for judicial officers. The case

of the petitioners, as on date falls under Article 217(2)(a) and not

Article 217(2)(b). Hence,  Mahesh   Chandra   Gupta  (supra) will not

come to their rescue. The judgment of the Delhi High court in D.K.

Sharma followed the ratio in Mahesh Chandra Gupta.

42. It   is   relevant   to   note   that   the   expression   “judicial   office”

appearing in Article 217(2)(a) was interpreted in Shri Kumar Padma

22

Prasad  vs.  Union of India6

only to mean a judicial office belonging

to the judicial service defined in Article 236(b).  Therefore, the case of

a Member of Income Tax Appellate Tribunal could not have fallen

within the ambit of Article 217(2)(a). This is why the decision in

Mahesh   Chandra   Gupta  (supra)   was   rendered   in  the   context  of

Article 217(2)(b) and not Article 217(2)(a).

43. The   words   “has   held”   and   the   words   “has   been”   appear

repeatedly in sub­clauses (a) and (b) as well as Explanation (a) and

(aa) under Article 217(2). In relation to a person from the category of

judicial service, sub­clause (a) uses the words “has held”. But in

relation to a person from the category of advocate, sub­clause (b) uses

the words “has been”. This is quite relevant for the reason that even

in Explanation (a) and (aa) the words “has held” always preceded the

words “judicial office” and the words “has been” always preceded the

word “advocate”.

44. In   common   parlance,   the   words   “has   held”   stand   in   contra

distinction to the words “is holding” or “has been holding”.

45. On the other hand the words “has been” do not have any such

connotation. The Cambridge Dictionary states that the words “has

been” are in present perfect continuous form. The Dictionary says

6 (1992) 2 SCC 428)

23

that we may use the present perfect continuous, either to talk

about a finished activity in the recent past or to talk about a

single  activity   that   began  at  a  point   in   the  past  and   is   still

continuing. Keeping this in mind, Explanation (a) confers the benefit

of clubbing to a limited extent, to a person who has held a Judicial

Office. To be eligible for the limited benefit so conferred, a person

should have been an Advocate “after   he   has   held   any   judicial

office”.  There is no confusion either in the language of Article 217(2)

or in our mind.

46. The argument that it will be discriminatory to allow the benefit

of clubbing only to a person who held a judicial office and later

became an advocate, does not appeal to us. In fact, Article 217(2)

does not guarantee any one with the right to be appointed as a judge

of the High Court. In a way, a person holding a judicial office is better

placed, as he is assured of a career progression (though in a limited

sense) after being placed in something like a conveyor belt. There is

no such assurance for an advocate. Therefore, the argument based

upon Article 14 does not impress us.

47. It was also contended that a few persons whose names are

mentioned in Paragraph 16 of the Writ Petition, got appointed to the

24

High Court without completing 10 years of service as District Judges.

But we do not know whether they got so appointed by clubbing the

number of years of practise at the Bar. The factual situation that

prevailed in those cases is not available. In any case a majority of

those whose names are mentioned in Para 16 of the Writ Petition, got

appointed to the High Court before Constitution (44th  Amendment)

Act, 1978.  Therefore, we do know what was done in those cases.

48. Therefore, in fine, we are of the considered view that the claim of

the   writ   petitioners   is   wholly   untenable   and   the   writ   petition   is

misconceived. Hence, the writ petition is dismissed. There will be no

order as to costs.

………………………..CJI.

(S.A. Bobde)

…………………………...J.

(A.S. Bopanna)

……………………………J.

(V. Ramasubramanian)

New Delhi

September 04, 2020

25

When the Regulation 36A, as it stood during the period from 06.02.2018 to 04.07.2018, did not mandate the publication of the invitation of Resolution Plans, either in Form G or otherwise, in newspapers. It is only the amended Regulation 36A, which came into effect from 04.07.2018, that requires the publication of Form G in newspapers. Therefore, the publication in newspapers made by the Resolution Professional, in the case on hand, on 30.03.2018, was something that was statutorily not required of him and hence the Promoter/Director of the corporate debtor cannot take advantage of the amendment that came later, to attack the advertisement.

When the Regulation 36A, as it stood during the period from 06.02.2018 to 04.07.2018, did not mandate the publication of the invitation of Resolution Plans, either in Form G or otherwise, in newspapers. It is only the amended Regulation 36A, which came into effect from 04.07.2018, that requires the publication of   Form   G   in   newspapers.   Therefore,   the   publication   in newspapers made by the Resolution Professional, in the case on hand, on 30.03.2018, was something that was statutorily not required   of   him   and   hence   the   Promoter/Director   of   the corporate debtor cannot take advantage of the amendment that came later, to attack the advertisement.

1

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.2955 OF 2020

THE KARAD URBAN COOPERATIVE 

BANK LTD. ….APPELLANT(S)

VERSUS

SWWAPNIL BHINGARDEVAY & ORS.             ….RESPONDENT(S)

WITH

CIVIL APPEAL NO. 2902 OF 2020

J U D G M E N T

V. RAMASUBRAMANIAN, J.

1. Challenging an order passed by the National Company Law

Appellate Tribunal (hereinafter referred to as ‘NCLAT’) (i) setting

aside   the   approval   granted   by   the   National   Company   Law

Tribunal (hereinafter referred to as ‘NCLT’) to a Resolution Plan

and (ii) remanding the matter back to the NCLT with a direction

to have the Resolution Plan re­submitted before the Committee of

Creditors, the financial creditor and the Resolution Professional

have come up with these appeals.

2

2. We have heard learned counsel appearing on both sides.  

3. The   Karad   Urban   Cooperative   Bank   Ltd.,   which   is   the

financial   creditor,   filed   an   application   on   04.09.2017   under

Section 7 of the IBC before the NCLT against M/s. Khandoba

Prasanna   Sakhar   Karkhana   Limited,   which   is   the   corporate

debtor. NCLT admitted the application on 01.01.2018 and an

Interim Resolution Professional was appointed.  The first meeting

of the Committee of Creditors (hereinafter referred to as ‘CoC’)

took place on 02.03.2018. As per the decision taken therein, one

Mr. Jitendra Palande was appointed by the NCLT, by an order

dated 06.03.2018, as Resolution Professional.

4. Pursuant   to   the   second   meeting   of   the   Committee   of

Creditors held on 27.03.2018, the Resolution Professional issued

an advertisement on 30.03.2018 inviting Expression of Interest.

In the meantime, a Director/Promoter of the corporate debtor

moved the High Court of Judicature at Bombay by way of a writ

petition in Writ Petition No.4746 of 2018, challenging the orders

of the NCLT dated 01.01.2018 and 06.03.2018. Initially, the High

Court granted stay of further proceedings before the NCLT on

3

18.04.2018.  However, the writ petition was eventually dismissed

on 23.08.2018.

5. Several meetings of the Committee of Creditors were held

thereafter and eventually the Committee of Creditors, in its 8th

Meeting held on 09.02.2019 resolved to approve the Resolution

Plan submitted by one M/s. Sai Agro (India) Chemicals. On the

basis of the approval of the Resolution Plan by the Committee of

Creditors, the Resolution Professional moved an application on

15.02.2019   before   the   NCLT,   Mumbai.     At   this   stage,   the

Director/Promoter of the corporate debtor also came up with an

application seeking permission to file a resolution plan. But by a

common order dated 01.08.2019, NCLT, Mumbai Bench, rejected

the application filed by the Director/Promoter of the corporate

debtor and approved the Resolution Plan submitted by M/s. Sai

Agro (India) Chemicals. Thus, M/s. Sai Agro (India) Chemicals,

have   become   the   Successful   Resolution   Applicant   (hereinafter

referred to as the ‘SRA’).

6. The   Director/Promoter   of   the   corporate   debtor   (who

unsuccessfully  approached   the  High   Court   of   Bombay   at   the

earliest   point   of   time),   filed   an   appeal   before   the   NCLAT   in

4

Company Appeal (AT) (Ins) No.943 of 2019, as against the order

of   the   NCLT   dated   01.08.2019,   granting   approval   of   the

Resolution Plan of the SRA.

7. By an order dated 02.06.2020, NCLAT allowed the appeal

and remanded the matter back to the adjudicating authority,

with   a   direction   to   send   back   the   Resolution   Plan   to   the

Committee of Creditors. The operative portion of the order of

NCLAT dated 02.06.2020 reads as follows:­

“The Appeal is allowed.  For the above reasons,

we set aside the Impugned Order and remit the matter

back to the Adjudicating Authority with a direction to

send   back   the   Resolution   Plan   to   the   Committee   of

Creditors to resubmit the Plan taking into consideration

observations   made   above   and   after   satisfying   the

parameters as laid down by the Hon’ble Supreme Court

in the Judgment in the matter of “Essar Steel” referred

(supra) and IBC.   The Adjudicating Authority may give

specific   time   period   to   the   Resolution   Professional   to

place   matter   before   Committee   of   Creditors   for

resubmitting   the   Resolution   Plan   taking   into

consideration   observations   made   above   and   after

satisfying   the   parameters   laid   down   by   the   Hon’ble

Supreme Court and IBC.  Further incidental Orders may

also be passed.

On   resubmission   of   the   Resolution   Plan,   the

Adjudicating   Authority   will   deal   with   the   same   in

accordance with law.

The Appeal is disposed accordingly.  No costs.”

8. It   is   against   the   aforesaid   order   of   remand   passed   by

NCLAT that the financial creditor has come up with one appeal

5

and   the   Resolution   Professional   has   come   up   with   another

appeal.

9. It is seen from the order of the NCLAT that the Appellate

Tribunal   was   convinced   to   interfere   with   the   order   of   NCLT

granting approval of the Resolution Plan, on four grounds.  They

are:­

(i) That the Resolution Plan suffers from issues of

viability and feasibility;

(ii) That   in   as   much   as   the   liquidation   value

mentioned by the Successful Resolution Applicant in its

Resolution Plan tallied exactly with the liquidation value

obtained by the Resolution Professional, there appears

to   have   been   a   breach   of   confidentiality,   violating

Regulation 35(2);

(iii) That the Resolution Plan does not take note of

one important fact namely, that the ethanol plant and

machinery shown as part of the assets of the corporate

debtor, actually belonged to another company by name,

Sarvadnya Industries Private Limited, and that a bank

6

by name, Janata Sahkari Bank Limited, Pune had taken

possession of the same under the SARFAESI Act; and

(iv) That   even   the   advertisement   issued   by   the

Resolution   Professional   on   30.03.2018   inviting

Expression of Interest, was vitiated in as much as the

invitation contained therein was for outright sale of the

Company as a going concern, and was in   violation of

Regulation 36A.

10. The order of the NCLAT is assailed by the appellants on the

ground, inter alia, (i) that the question of viability and feasibility,

is to be left to the commercial wisdom of the CoC and the same

cannot be lightly interfered with by the Tribunal, in view of the

law laid down by this court in Essar Steel India Ltd.1 and K.

Sashidhar;

2

 (ii) that a mere suspicion that there was breach of

confidentiality cannot take the place of proof; (iii) that once the

Successful  Resolution   Applicant   has  taken   note  of   the   issue

relating to the ethanol plant and machinery and submitted a

resolution plan, the Director/Promoter of the corporate debtor

cannot make an issue out of it, and (iv) that the advertisement

1

 Committee of Creditors of Essar Steel India Limited vs. Satish Kumar Gupta and others, (2019) SCC OnLine SC 1478

2

K. Sashidhar vs. Indian Overseas Bank, (2019) 12 SCC 150

7

issued   was   actually   in   tune   with   the   regulations,   including

Regulation 36A. 

11. Supporting the order of the NCLAT, it is contended by Mr.

Jayant Bhushan, learned Senior Counsel, (i) that the Resolution

Plan proceeds on the basis as though the ethanol plant, owned

by a third party, is part and parcel of the assets of the corporate

debtor and hence, the examination of the viability and feasibility

on the basis of such wrong notion stands vitiated; (ii) that the

very self­declaration accompanying the Resolution Plan bears

the   date   09.02.2019,   but   the   email   exchanged   between   the

Resolution Professional and the Successful Resolution Applicant,

on   the   question   of   leakage   of   information   relating   to   the

liquidation   value   is   dated   07.02.2019,   showing   thereby   that

there was collusion between the Resolution Professional and the

Successful Resolution Applicant; (iii) that the issue relating to

legal possession of the ethanol plant and machinery had already

been left open by NCLAT in a collateral proceeding between its

legal   owner   namely,   Sarvadnya   Industries   Pvt.   Ltd.   and   its

banker, Janata Sahkari Bank Ltd. and hence, this machinery

could not have formed part of the assets of the corporate debtor

8

to enable the Successful Resolution Applicant to take over the

corporate debtor as a going concern and run it; and (iv) that the

very fact that the Successful Resolution Applicant was the only

person who submitted a bid in response to the advertisement

and the fact that the Resolution Plan was approved within 2­3

hours in the 8th meeting of the CoC in a hasty manner, would

show that the Resolution Plan was tainted, and that therefore,

NCLAT was justified in setting aside the approval granted by the

NCLT to the Resolution Plan. 

12. We have carefully considered the rival submissions. On the

first   question   regarding   the   viability   and   feasibility   of   a

resolution plan, the law is now well­settled. In  K.  Sashidhar

(supra), it was held as follows:

(i) “There is an intrinsic assumption that financial

creditors   are   fully   informed   about   the   viability   of   the

corporate   debtor   and   feasibility   of   the   proposed

resolution   plan…The   opinion   on   the   subject   matter

expressed by them after due deliberations in the CoC

meetings   through   voting,   as   per   voting   shares,   is   a

collective business decision. The legislature, consciously,

has   not   provided   any   ground   to   challenge   the

“commercial wisdom” of the individual financial creditors

or   their   collective   decision   before   the   adjudicating

authority. That is made nonjusticiable.”(paragraph 52)

(ii)  “The   provisions   investing   jurisdiction   and

authority in NCLT or NCLAT as noticed earlier, have not

made the commercial decision exercised by CoC of not

approving   the   resolution   plan   or   rejecting   the   same,

9

justiciable. This position is reinforced from the limited

grounds   specified   for   instituting   an   appeal   that   too

against   an   order   “approving   a   resolution   plan”   under

Section 31.” (paragraph 57)

(iii) “Further, the jurisdiction bestowed upon the

appellate   authority   (NCLAT)   is   also   expressly

circumscribed.   It   can   examine   the   challenge   only   in

relation to the grounds specified in Section 61(3) of the

I&B   Code,   which   is   limited   to   matters   “other   than”

enquiry into the autonomy or commercial wisdom of the

dissenting financial creditors.” (paragraph 58)

(iv) “At best, the adjudicating authority (NCLT) may

cause an enquiry into the “approved” resolution plan on

limited grounds referred to in Section 30(2) read with

Section 31(1) of the I&B Code. It cannot make any other

inquiry nor is competent to issue any direction in relation

to the exercise of commercial wisdom of the financial

creditors — be it for approving, rejecting or abstaining, as

the case may be. Even the inquiry before the appellate

authority (NCLAT) is limited to the grounds under Section

61(3) of the I&B Code. It does not postulate jurisdiction

to   undertake   scrutiny   of   the   justness   of   the   opinion

expressed by financial creditors at the time of voting.”

(paragraph 64)

Thereafter, in Essar Steel India Ltd. (supra), this Court held:

(i)  “Thus, it is clear that the limited judicial review

available, which can in no circumstance trespass upon a

business decision of the majority of the Committee of

Creditors, has to be within the four corners of Section

30(2) of the Code, insofar as the Adjudicating Authority is

concerned, and Section 32 read with Section 61(3) of the

Code, insofar as the Appellate Tribunal is concerned.”

(paragraph 48)

(iv) “Thus, while the Adjudicating Authority cannot

interfere on merits with the commercial decision taken by

the Committee of Creditors, the limited judicial review

available is to see that the Committee of Creditors has

taken into account  the fact  that  the corporate debtor

needs   to   keep   going   as   a   going   concern   during   the

insolvency resolution process; that it needs to maximise

the   value   of   its   assets;   and   that   the   interests   of   all

stakeholders   including   operational   creditors   has   been

taken care of.” (paragraph 54)

10

13. The principles laid down in the aforesaid decisions, make

one thing very clear. If all the factors that need to be taken into

account for determining whether or not the corporate debtor can

be kept running as a going concern have been placed before the

Committee  of  Creditors  and  the   CoC  has  taken  a  conscious

decision to approve the resolution plan, then the adjudicating

authority will have to switch over to the hands off mode. It is not

the  case of  the corporate  debtor  or its promoter/Director or

anyone else that some of the factors which are crucial for taking

a decision regarding the viability and feasibility, were not placed

before the CoC or the Resolution Professional. The only basis for

the corporate debtor to raise the issue of viability and feasibility

is that the ownership and possession of the ethanol plant and

machinery is the subject matter of another dispute and that the

resolution plan does not take care of the contingency where the

said plant and machinery may not eventually be available to the

Successful Resolution Applicant. 

14. But the aforesaid argument, coming as it does from the

Promoter/Director   of   the   corporate   debtor   is   like   the   wolf

shedding   tears   for   the   lamb   getting   drenched   in   rain.   The

11

records   very   clearly   show   that   the   Successful   Resolution

Applicant, the Resolution Professional and the financial creditor

were fully aware of the said issue. The order passed by the

NCLAT in Company Appeal (AT) (Insolvency) No.897 of 2019 on

16.12.2019 shows that the possession of the ethanol plant and

machinery was restored to Sarvadnya Industries Pvt. Ltd., in the

appeal to which the Successful Resolution Applicant was also a

party. The Successful Resolution Applicant also appears to have

offered to Janata Sahkari Bank to purchase the said plant and

machinery. In the appeal before the NCLAT out of which the

present Civil Appeals arise, Sarvadnya Industries Pvt. Ltd. which

claims ownership of the ethanol plant and machinery, were also

a party. 

15. In   any   case,   the   Resolution   Professional   has   taken   a

specific plea in his grounds of appeal before this Court, that the

Successful   Resolution   Applicant   is   itself   into   the   ethanol

manufacturing business and that they have sufficient ethanol

production capacity required to fulfil their Resolution Plan. In

paragraph   4.P   of  the   Civil   Appeal   filed   by   the   Resolution

Professional, he has stated as follows:

12

    “Further, the said Ethanol Plant was functional only

between April 2016 and August 2016. That Respondent

No.   3/SRA   is   itself   into   the   ethanol   manufacturing

business and has sufficient ethanol production capacity

required to fulfil its resolution plan. Additionally, there is

a provision for capital expenditure in the approved plan

of SRA which includes the cost of a new ethanol facility, if

required. Additionally, Janata Bank Pune, which holds

symbolic   possession   of   the   ethanol   plant,   had

approached   Respondent   No.   3/   Successful   Resolution

Applicant for the sale of the said ethanol plant to the said

SRA.   That   further   the   Respondent   No.   3/   successful

resolution   applicant   was   planning   to   expand   and

integrate other facilities with the distillery plant of the

Corporate Debtor which was functional since 2007;”

16. Therefore, the fact that there was an issue with regard to

the ethanol plant and machinery, had been taken note of by the

Resolution   Professional,   the   Committee   of   Creditors   and   the

Successful Resolution Applicant. Once all these three parties

have taken note of the said fact and taken a conscious decision

to go ahead with the Resolution Plan, it cannot be stated that

the question of viability and feasibility was not examined in the

proper perspective.  

17. Therefore, the first ground and actually the main ground on

which NCLAT interfered with the decision of the NCLT to approve

the   Resolution   Plan,   is   wholly   untenable,   misconceived   and

unjustified. 

13

18. In fact, our discussion could have ended here without going

into   the   other   grounds,   for   one   simple   reason.   Though   the

Director/Promoter   of   the   corporate   debtor,   who   was   the

appellant before the NCLAT, raised other grounds apart from

viability   and   feasibility,   NCLAT   issued   limited   notice   in   the

appeal,   on   12.09.2019,   only   with   regard   to   viability   and

feasibility. Even in the impugned order dated 02.06.2020, it is

made clear in the last sentence of paragraph 1 that “this appeal

on   12.09.2019   was   admitted   to   limited   extent   of   examining

viability and feasibility of the Plan”. 

19. It is true that in the last paragraph of the impugned order,

namely   paragraph   14,   the   Appellate   Tribunal   holds   that   the

CIRP suffered from material irregularities and the Resolution

Plan approved suffers from feasibility and viability. But then the

operative   portion   of   the   impugned   order   does   not   take   the

findings on other issues to their logical end. For instance, the

Tribunal   holds   that   the   advertisement   inviting   Expression   of

Interest   itself   was   defective   and   that   there   was   breach   of

confidentiality in as much as the liquidation value appears to

have been leaked out. These findings should have taken the

14

Appellate Tribunal to the point of setting aside the entire process

and directing the Resolution Professional to start the process all

over again from the stage of issue of a fresh advertisement. The

NCLAT did not do so. In the operative portion, NCLAT merely

remanded the matter back to the Adjudicating Authority with a

direction to send back the Resolution Plan to the Committee of

Creditors to  resubmit  the plan after taking into consideration

the law laid down by this Court. 

20. In other words, the reliefs that would normally flow in the

light of the findings with regard to breach of confidentiality and

defective Invitation to Offer, were not granted by NCLAT. The

Director/Promoter of the corporate debtor has not come up with

any appeal against the failure of NCLAT to grant appropriate

reliefs,   connectable   to   the   aforesaid   findings.   The

Director/Promoter of the corporate debtor is obviously happy

with the limited relief, if at all it is one, granted to him for the

resubmission of the Resolution Plan. 

21. It must be pointed out at this stage that the order of the

NCLT,   Mumbai   Bench   dated   01.08.2019   became   the   subject

matter of a single appeal before NCLAT. But it was actually a

15

common   order   passed   in   three   applications   namely,   MA

Nos.1509/2019, 2104/2019 and 662/2019. The details of these

applications are as follows:

(i) MA No.1509/2019 was filed by an operational

creditor, by name Sarvadnya Industries Pvt. Ltd. (whose

ethanol plant and machinery also became a matter of

dispute).   Their   claim   was   that   they   had   a   rental

agreement with the corporate debtor with regard to the

plant   and   machinery   and   that   there   was   default   in

payment of the rent. 

(ii)   MA   No.2104/2019   was   filed   by   the

Director/Promoter   of   the   corporate   debtor   seeking   to

submit a resolution plan. But it was obviously filed after

270 days and also after the approval of the Resolution

Plan by the CoC. 

(iii)  The third application, MA No.662/2019, was by

the   Resolution   Professional   for   the   approval   of   the

Resolution Plan which was accepted by the CoC.

16

22. By   its   common   order   dated   01.08.2019,   the   NCLT

dismissed MA Nos.1509 and 2104 of 2019, filed respectively by

the operational creditor (lessor of the ethanol plant) and the

Promoter/Director of the corporate debtor. But the application

filed by the Resolution Professional was allowed. 

23. But the Director/Promoter of the corporate debtor filed only

one appeal and the Memorandum of Appeal suggests that the

Director/Promoter of the corporate debtor prayed for two reliefs,

namely (i) to set aside the approval of the Resolution Plan, and

(ii) to consider his own resolution plan. 

24. By the order impugned in the present Civil Appeals, the

NCLAT granted only a limited relief, as can be seen from the

operative portion of the order of NCLAT which we have extracted

earlier. 

25. Therefore, in the light of the above facts, the consideration

of   all   other   issues,   such   as   breach   of   confidentiality   and

defective Invitation to Offer would only be academic, as NCLAT

did not grant any relief to the Promoter/Director of the corporate

debtor, which could logically flow out of those other grounds. 

17

26. But be that as it may, we will still deal with the other three

grounds   also,   as   the   same   would   put   things   in   the   right

perspective and clear any air of suspicion. 

27. The second ground on which NCLAT interfered with the

decision of the NCLT is the alleged breach of confidentiality.  The

contention of the Promoter/Director of the corporate debtor is

that   the   liquidation   value   mentioned   in   the   Resolution   Plan

submitted by the SRA exactly tallied with the liquidation value

obtained   by   the   Resolution   Professional   and   that   the   whole

sequence of events would show clearly that there was an attempt

to cover up.

28. According to the Director/Promoter of the corporate debtor,

the   self­declaration   signed   by   the   Resolution   Applicant,   and

which   forms   part   of   the   Resolution   Plan,   bears   the   date   9th

February 2019. This document mentions the liquidation value as

Rs. 13.53 crores. It was the same value as obtained by the

Resolution   Professional.   It  is  the   contention  of   the   Director/

Promoter of the corporate debtor that the Resolution Professional

wrote   an   email   on   07.02.2019   itself   (2   days   before   the

submission   of   the   Resolution   Plan   by   the   SRA),   asking   for

18

clarification   as   to   how   the   liquidation   value   matched.   This,

according  to  the  Director  of  the  corporate  debtor,  was  proof

enough   to   show   that   there   was   not   merely   a   leakage   of

information, but also an attempt to cover­up. 

29. But we are unable to accept the above contention. The

Resolution Plan actually runs to 31 pages. Pages 30 and 31

contain Annexure A, which provides the business plan. Page 29

contains a self­declaration certificate signed by the partners of

the SRA. Just below the signatures of the partners at page 29,

the date “09th February 2019” is type­written. 

30. But the cover page of the entire document contains the

date   “7th   February   2019”   as   the   date   of   submission   of   the

Resolution Plan. The last date for submission of the resolution

plan was 08.02.2019. 

31. Nowhere   in   the   Memorandum   of   Appeal   filed   by   the

Promoter/Director of the corporate debtor before the NCLAT, has

he claimed that the Resolution Plan was submitted by the SRA

after the last date. We have perused the Memorandum of Appeal

filed by the Promoter/Director of the corporate debtor before the

NCLAT. It was not his case at all that the Resolution Plan was

19

submitted by the SRA after the last date, but the same was

predated by the Resolution Professional acting in collusion. 

32. It appears from the impugned order of NCLAT that only in

the course of hearing of the appeal, the date “09th February

2019” type­written at the bottom of the self­declaration (page 29

of the Resolution Plan) was sought to be taken advantage of.

Since   this   was   not   raised   as   one   of   the   grounds   in   the

Memorandum of Appeal but raised in the course of arguments,

the Resolution Professional could do no more than to file the

print­out of the email correspondence between him and the SRA

dated   07.02.2019.   In   the   first   email   dated   07.02.2019,   the

Resolution Professional had sought a clarification from the SRA

as to how they discovered the liquidation value and the source

for the same. In response to this mail, the SRA sent a reply email

contending that they undertook a due diligence to know the

current market value and liquidation value and that what was

quoted by them in the Resolution Plan, was something that an

independent agency provided to them. 

33. Unfortunately, NCLAT rejected the print­out of the email

correspondence dated 07.02.2019 on the sole ground that the

20

same was not supported by affidavit and that it was filed after

the conclusion of the oral arguments. 

34. But   NCLAT   failed   to   take   note   of   the   fact   that   the

Resolution Professional did not have any alternative except to

respond in the manner that he did, to a point raised only in the

course of arguments, but not raised in the Memorandum of

Appeal. If the Promoter/Director of the corporate debtor had

raised the issue of collusion or the submission of the Resolution

Plan after the expiry of the last date, even in the Memorandum

of Appeal, a duty would have been cast upon the Resolution

Professional to respond in an appropriate manner. But that was

not the case. Therefore, we do not approve the manner in which

NCLAT rejected the contents of the email correspondence. 

35. The fact that there was an email correspondence between

the   Resolution   Professional   and   the   SRA   on   07.02.2019,

touching upon one of the contents of the Resolution Plan, would

show (i) that the SRA had submitted the Resolution Plan before

the   last   date   and   (ii)   that   the   Resolution   Professional   had

obviously scrutinised it, as otherwise he could not have found

21

out   the   liquidation   value   mentioned   therein   matching   the

confidential information that he had.

36. In any case, the proof of the pudding is in the eating. The

liquidation value mentioned in the Resolution Plan of the SRA is

Rs.   13.53   crores.   But   the   actual   total   pay­out   as   per   the

Resolution Plan is Rs. 29.74 crores.

37. This   meant   that   the   workers   and   employees   of   the

corporate debtor were to be paid 100% of their dues; that all

statutory dues would be cleared 100% and that the financial

creditors who constituted the CoC were to be paid 60% of their

dues.

38. It   offends   common   sense   to   think   that   a   resolution

applicant who had the benefit of leakage of information relating

to liquidation value would quote a figure of Rs. 29.74 crores as

the total pay­out, as against a liquidation value of Rs. 13.53

crores. The question of breach of confidentiality and leakage of

confidential information can easily be tested on the touchstone

of the benefit that accrued to the party who got the information.

In the case on hand, no benefit accrued to the SRA. 

22

39. It   is   obvious   from   the   material   on   record   that   the

Promoter/Director   of   the   Corporate   Debtor   has   tried   to   take

advantage of two small mistakes on the part of the SRA, one of

which   was   a   typographical   error   mentioning   the   date   “09th

February 2019” at the bottom of the self­declaration and the

other, which happened as a matter of coincidence. The NCLAT

appears to have made a mountain out of a molehill and has

recorded   a   finding   even   beyond   the   pleadings   in   the

Memorandum of Appeal. Hence, the second ground on which the

NCLAT was convinced to pass the impugned order, is legally and

factually untenable. 

40. The third ground on which NCLAT proceeded, related to the

ethanol plant and machinery. We have already dealt with this

issue   in   detail,   while   dealing   with   the   first   issue.   As   stated

therein, the SRA admittedly did not make his Resolution Plan on

the strength of the ethanol plant and machinery in question. The

threat looming large over the availability of the ethanol plant and

machinery has admittedly been taken note of by the SRA and

the   CoC.   The   Resolution   Plan   does   not   give   an   indication

anywhere   that   without   this   plant   and   machinery   the   whole

23

resolution plan will fail. In paragraph 8.04 of the Resolution

Plan, the SRA has undertaken to continue the operations in the

normal course of business. It is a commercial decision that they

have taken. The corporate debtor cannot cry wolf over the said

decision. Therefore, the third ground on which NCLAT chose to

interfere, is also bound to be rejected. 

41. The last ground revolves around the advertisement issued

by the Resolution Professional on 30.03.2018. NCLAT holds that

the advertisement was not in conformity with Regulation 36A of

The   Insolvency   and   Bankruptcy   Board   of   India   (Insolvency

Resolution Process for Corporate Persons) Regulations, 2016 and

as per Form G of the Schedule. 

42. But   the   conclusions   reached   by   NCLAT   in   this   regard

cannot hold water for two reasons. If NCLAT was convinced that

the very process of inviting Expression of Interest was vitiated,

NCLAT should have issued a direction to start the process afresh

all over again by issuing a fresh advertisement. NCLAT did not

do this and the person who raised this point is not on appeal. 

43. In   any   case,   it   does   not   lie   in   the   mouth   of   the

Promoter/Director of the corporate debtor to raise any issue in

24

this regard. It is seen from the Minutes of the 2nd Meeting of the

Committee   of   Creditors   that   the   Promoter/Director   of   the

corporate debtor attended the meeting held on 27.03.2018. In

Item No. 3 of the Agenda for the said meeting, the draft of the

Invitation   for   Expression   of   Interest   was   approved.   The

Promoter/Director   did   not   raise   any   objections   either   on

27.03.2018 in the meeting in which the draft was approved or at

any time thereafter, until the approval of the Resolution Plan. 

44. The Promoter/Director of the corporate debtor who was the

appellant before NCLAT attended the 3rd meeting of the CoC on

15.09.2018, the 4th meeting of the CoC held on 12.10.2018 and

the 5th meeting of the CoC held on 26.11.2018. He did not raise

any whisper about the contents of the advertisement. Even when

the very same Promoter/Director of the corporate debtor went

before the High Court of Judicature at Bombay by way of a writ

petition challenging the orders of NCLT dated 01.01.2018 and

06.03.2018, his focus was on his own application under Section

10 of the Insolvency and Bankruptcy Code. His grievance before

the High Court was that his own application under Section 10

was dumped by the NCLT and the application of the financial

25

creditor   was   admitted   thereafter.   In   fact   the   conduct   of   the

Promoter/Director   of   the   corporate   debtor   came   to   adverse

notice before the Bombay High Court. 

45. Regulation   36A   was   inserted   only   with   effect   from

06.02.2018 under Notification No. IBBI/2017­18/GN/REG024

dated 06.02.2018. It underwent a change under Notification No.

IBBI/2018­19/GN/REG031 dated 03.07.2018, with effect from

04.07.2018. Regulation 36A, as it stood during the period from

06.02.2018 to 04.07.2018, did not mandate the publication of

the invitation of Resolution Plans, either in Form G or otherwise,

in newspapers. It is only the amended Regulation 36A, which

came into effect from 04.07.2018, that requires the publication

of   Form   G   in   newspapers.   Therefore,   the   publication   in

newspapers made by the Resolution Professional, in the case on

hand, on 30.03.2018, was something that was statutorily not

required   of   him   and   hence   the   Promoter/Director   of   the

corporate debtor cannot take advantage of the amendment that

came later, to attack the advertisement. The unamended and

amended Regulation 36A are provided in a tabular column for

easy comparison and appreciation.

26

Regulation   36­A   before

amendment

Regulation 36­A after amendment

36A.  Invitation   of   Resolution

Plans.  –  (1)  The   resolution

professional   shall   issue   an

invitation,   including   evaluation

matrix, to the prospective resolution

applicants in accordance with clause

(h) of sub­section (2) of section 25, to

submit   resolution   plans   at   least

thirty  days  before  the   last   date  of

submission of resolution plans.

(2)   Where the invitation does not

contain   the   evaluation   matrix,   the

resolution   professional   shall   issue,

with the approval of the committee,

the   evaluation   matrix   to   the

prospective resolution applicants at

least fifteen days before the last date

for submission of resolution plans. 

(3)  The resolution professional may

modify the invitation, the evaluation

matrix or both with the approval of

the committee within the timelines

given   under   sub­regulation   (1)   or

sub­regulation (2), as the case may

be.

(4)  The   timelines   specified   under

this regulation shall not apply to an

ongoing   corporate   insolvency

resolution process­

(a) where a period of less than thirtyseven days is left for submission of

resolution   plans   under   subregulation (1);

(b)   where   a   period   of   less   than

eighteen days is left for submission

of   resolution   plans   under   subregulation (2).

(5) The resolution professional shall

36A.   Invitation   for   expression   of

interest   –   (1)  The   resolution

professional   shall   publish   brief

particulars   of   the   invitation   for

expression of interest in Form G of

the   Schedule   at   the   earliest,   not

later than seventy­fifth day from the

insolvency   commencement   date,

from   interested   and   eligible

prospective resolution applicants to

submit resolution plans. 

(2) The resolution professional shall

publish Form G­

(i) in one English and one regional

language   newspaper   with   wide

circulation   at   the   location   of   the

registered office and principal office,

if any, of the corporate debtor and

any   other   location   where   in   the

opinion   of   the   resolution

professional,   the   corporate   debtor

conducts   material   business

operations;

(ii)   on   the   website,   if   any,   of   the

corporate debtor;

(iii)   on   the   website,   if   any,

designated   by   the   Board   for   the

purpose; and

(iv) in any other manner as may be

decided by the committee.

(3) The Form G in the Schedule shall

­

(a) state where the detailed invitation

for   expression   of   interest   can   be

downloaded or obtained from, as the

case may be; and

(b)   provide   the   last   date   for

27

publish   brief   particulars   of   the

invitation   in   Form   G   of   the

Schedule:

(a)   on   the   website,   if   any,   of   the

corporate debtor; and

(b) on the website, if any, designated

by the Board for the purpose.

submission of expression of interest

which shall not be less than fifteen

days   from   the   date   of   issue   of

detailed invitation.

(4) The detailed invitation referred to

in sub­regulation (3) shall­

(a) specify the criteria for prospective

resolution   applicants,   as   approved

by the committee in accordance with

clause   (h)   of   sub­section   (2)   of

section 25; 

(b)   state   the   ineligibility   norms

under   section   29A   to   the   extent

applicable for prospective resolution

applicants; 

(c)   provide   such   basic   information

about the corporate debtor as may

be   required   by   a   prospective

resolution   applicant   for   expression

of interest; and

(d) not require payment of any fee or

any   non­refundable   deposit   for

submission of expression of interest.

(5)  A   prospective   resolution

applicant,   who   meet   the

requirements   of   the   invitation   for

expression of interest, may submit

expression   of   interest   within   the

time specified in the invitation under

clause (b) of sub­regulation (3).

(6)  The   expression   of   interest

received after the time specified in

the   invitation   under   clause   (b)   of

sub­regulation (3) shall be rejected.

(7) An expression of interest shall be

unconditional  and   be  accompanied

by­

(a)   an   undertaking   by   the

prospective resolution applicant that

28

it meets the criteria specified by the

committee under clause (h) of subsection (2) of section 25; 

(b)   relevant   records   in   evidence   of

meeting the criteria under clause (a);

(c)   an   undertaking   by   the

prospective resolution applicant that

it   does   not   suffer   from   any

ineligibility under section 29A to the

extent applicable;

(d) relevant information and records

to   enable   an   assessment   of

ineligibility under clause (c);

(e)   an   undertaking   by   the

prospective resolution applicant that

it   shall   intimate   the   resolution

professional forthwith if it becomes

ineligible   at   any   time   during   the

corporate   insolvency   resolution

process;

(f) an undertaking by the prospective

resolution   applicant   that   every

information and records provided in

expression   of   interest   is   true   and

correct   and   discovery   of   any   false

information   or   record   at   any   time

will render the applicant ineligible to

submit   resolution plan, forfeit any

refundable   deposit,   and   attract

penal action under the Code; and

(g)   an   undertaking   by   the

prospective   resolution   applicant   to

the   effect   that   it   shall   maintain

confidentiality   of   the   information

and shall not use such information

to cause an undue gain or undue

loss to itself or any other person and

comply with the requirements under

sub­section (2) of section 29. 

(8) The resolution professional shall

conduct due diligence based on the

29

material on record in order to satisfy

that   the   prospective   resolution

applicant complies with­

(a)   the   provisions   of   clause   (h)   of

sub­section (2) of section 25;

(b)   the   applicable   provisions   of

section 29A, and 

(c) other requirements, as specified

in   the   invitation   for   expression   of

interest.

(9)  The resolution professional may

seek any clarification or additional

information   or   document   from   the

prospective resolution applicant for

conducting due diligence under subregulation (8).

(10)  The   resolution   professional

shall   issue   a   provisional   list   of

eligible   prospective   resolution

applicants within ten days of the last

date for submission of expression of

interest to the committee and to all

prospective   resolution   applicants

who   submitted   the   expression   of

interest.

(11)  Any   objection   to   inclusion   or

exclusion of a prospective resolution

applicant   in   the   provisional   list

referred   to   in   sub­regulation   (10)

may   be   made   with   supporting

documents within five days from the

date of issue of the provisional list.

(12)  On  considering  the  objections

received  under  sub­regulation (11),

the   resolution   professional   shall

issue   the   final   list   of   prospective

resolution   applicants   within   ten

days of the last date for receipt of

objections, to the committee.

30

46. The second meeting of the Committee of Creditors was held

on  27.03.2018.  The  advertisement   was  approved  in  the  said

meeting. It was the unamended Regulation 36A that was in force

at that time. This has not been appreciated by NCLAT. Therefore,

the NCLAT was wrong in its approach even in this regard.

47.  Therefore, in fine, the impugned order of NCLAT is flawed

and hence, liable to be set aside. Accordingly, the Civil Appeals

are allowed, the impugned order of the NCLAT is set aside and

the order of the National Company Law Tribunal, Mumbai Bench

dated 01.08.2019 is restored. There will be no order as to costs.

…………....................CJI.

(S. A. Bobde)

...…………....................J.

(A. S. Bopanna)

…..………......................J.

(V. Ramasubramanian)

NEW DELHI

SEPTEMBER 04, 2020

The report of the Public Analyst dated 30.05.2011, held that the sample confirmed to standards but was misbranded being in violation of Rule 32(e), lacking in necessary declaration of lot/batch numbers. - When the necessary information as required under Rule 32(e) was available in the barcode which could all be revealed by a barcode scanner - it can not be said the accused committed an offence .

 The report of the Public Analyst dated 30.05.2011, held that the sample confirmed to standards but was misbranded being in violation of Rule 32(e), lacking   in   necessary   declaration   of   lot/batch   numbers. - When the necessary information as required under Rule 32(e) was available in the barcode which could all be revealed by a barcode scanner - it can not be said the accused committed an offence .

NON­REPORTABLE

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NO.     562            OF 2020

(Arising out of S.L.P.(Crl.) No. 2942 of 2020)

RAGHAV GUPTA             ...APPELLANT(S)

VERSUS

STATE (NCT OF DELHI) AND ANOTHER ...RESPONDENT(S)

JUDGMENT

NAVIN SINHA, J.

Leave granted.

2. The appellant questions his prosecution under Rule 32(e) of

the   Prevention   of   Food   Adulteration   Rules,   1955   (hereinafter

called   as   “the   Rules”)   framed   under   the   Prevention   of   Food

Adulteration Act, 1954 (in short “the Act”).

3. We have heard learned counsel for the parties at length.

Though   several   grounds   have   been   urged   to   challenge   the

prosecution, we are satisfied that the appeal can be disposed of

on a single undisputed ground.   The facts shall therefore be

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stated with brevity only to the extent necessary for purposes of

the present order.

4. The Food Inspector purchased sealed samples of Snapple

Juice Drink on 03.05.2011 for analysis.  The report of the Public

Analyst dated 30.05.2011, held that the sample confirmed to

standards but was misbranded being in violation of Rule 32(e),

lacking   in   necessary   declaration   of   lot/batch   numbers.     The

appellant was stated to be one of the Directors of M/s. V & V

Beverages   Pvt.   Ltd.   which   imported   the   drink   from   foreign

manufacturer Schweppes International Rye Brook duly cleared

by the Customs department.

5. A complaint case no. 4 of 2012 was lodged by the Food

Inspector on basis of the report dated 30.05.2011. Notices were

issued   to   the   appellant   under   Section   251   of   the   Criminal

Procedure   Code   (hereinafter   referred   to   as   ‘the   Code’).   The

appellant preferred an application for discharge under Section

294 of the Code read with Section 192 of the Act inter alia on the

ground that the product had the necessary barcode on it and

which contained all the relevant information as required by Rule

2

32(e) such as batch no./code no./lot no. The application having

been rejected, the appellant raised the same ground before the

High Court which also failed to consider the same. 

6. Ms. Geeta Luthra, learned senior counsel appearing for the

appellant, submitted before us and which could not be countered

by Shri Jayant K. Sud, learned Addl. Solicitor General appearing

for the respondent, that the necessary information as required

under Rule 32(e) was available in the barcode which could all be

revealed by a barcode scanner.

7. That the barcode was available on the sample is not in

dispute. In view of the fact that the relevant information under

Rule  32(e)  with  regard  to   the  lot/code/batch   identification   to

facilitate it being traced to the manufacturer are available in the

barcode and which can be decoded by a barcode scanner, we are

of the considered opinion that no useful purpose is going to be

served by allowing the present prosecution to continue and it will

be an abuse of the process of law, causing sheer waste of time,

causing   unnecessary   harassment   to   the   appellant,   if   the

prosecution is allowed to continue. 

3

8. We therefore allow the appeal and quash the prosecution of

the appellant in CC No. 04 of 2012 pending before the ACMM­2,

Patiala House Court, New Delhi.  The appeal is allowed.  

…………...................J.

[R.F. NARIMAN]

…………...................J.

[NAVIN SINHA]

…………...................J.

[INDIRA BANERJEE]

NEW DELHI

SEPTEMBER 04, 2020

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