Holding

The High Court was justified in exercising its writ jurisdiction because the NCLT lacked jurisdiction over the public law issue of the mining lease, and while the NCLT can investigate fraud under the IBC, it cannot adjudicate disputes arising under the MMDR Act.

Summary

The corporate debtor, holding a mining lease that was about to expire, sought a deemed extension of the lease through its resolution professional during a corporate insolvency resolution process (CIRP). The Karnataka Government rejected the extension, prompting the resolution professional to obtain a direction from the NCLT to execute supplemental lease deeds, which the NCLT granted on the ground of the IBC moratorium. The State challenged this order in the Karnataka High Court, which stayed the NCLT's direction. The Supreme Court examined whether the High Court could entertain a writ under Art.226/227 despite the availability of an appeal to the NCLAT, and whether the NCLT could entertain fraud allegations and disputes under the MMDR Act. It held that the NCLT lacks jurisdiction over public law matters such as the mining lease decision, which can only be reviewed by a superior court, and that the High Court was justified in intervening. The Court also affirmed that the NCLT and NCLAT can inquire into fraud under the IBC but cannot adjudicate on matters governed by the MMDR Act. Consequently, the appeals were dismissed.

Issues considered

Whether a High Court may entertain a writ petition under Art.226/227 against an order of the NCLT in a proceeding under the IBC when a statutory appeal to the NCLAT is available.
Whether the NCLT has jurisdiction to entertain applications concerning the extension of a mining lease governed by the MMDR Act, 1957.
Whether the NCLT/NCLAT can inquire into allegations of fraud, including fraudulent initiation of a CIRP, under the IBC.

Legislation cited

Code of Civil Procedures. 9
Companies Act, 2013s. 408, s. 410, s. 420, s. 424
Debt Recovery Tribunal Act, 1993
Insolvency and Bankruptcy Code, 2016s. 14(1), s. 179, s. 180, s. 18(f)(vi), s. 20(1), s. 25, s. 3(27), s. 5(20), s. 5(21), s. 60(4), s. 60(5), s. 61, s. 63, s. 64, s. 65, s. 66, s. 69
Mines and Minerals (Development and Regulation) Act, 1957s. 19, s. 2, s. 30, s. 4(1), s. 8A

Subjects

Article 226Article 227Insolvency and Bankruptcy CodeNCLT jurisdictionNCLAT jurisdictionMining leaseMoratoriumJudicial reviewFraudPublic lawCorporate insolvency

Judgment

[2019] 17 S.C.R. 559 559

M/S EMBASSY PROPERTY DEVELOPMENTS PVT. LTD. A
v.
STATE OF KARNATAKA & ORS.
(Civil Appeal No. 9170 of 2019)
DECEMBER 03, 2019 B
[R. F. NARIMAN, ANIRUDDHA BOSE
AND V. RAMASUBRAMANIAN, JJ.]
Constitution of India: Arts.226/227 – Scope of interference
– Corporate insolvency resolution process initiated against a
C
corporate debtor – Corporate debtor held a mining lease granted
by Government of Karnataka which was to expire – Resolution
Professional sought benefit of deemed extension of lease – State
Government rejected the proposal for deemed extension of mining
lease – The said order challenged by Resolution Professional –
NCLT set aside the order of State Government on the ground that D
the same was in violation of moratorium declared in terms of s.14(1)
of IBC, 2016 and directed the State Government to execute Lease
Deeds in favour of Corporate Debtor – By impugned order, High
Court granted stay of operation of directions contained in the order
of NCLT – Whether High Court ought to have interfered under
E
Art.226/227 of the Constitution, with an order passed by NCLT in
proceeding under the IBC, 2016, despite the availability of a
statutory alternative remedy of appeal to NCLAT – Held: The
decision of the State Government to refuse the benefit of deemed
extension of lease, is in the public law domain and, therefore, the
correctness of the said decision can be called into question only F
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 such powers – The NCLT
is not even a Civil Court, which has jurisdiction to try all suits of
G
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 – Though NCLT and NCLAT have jurisdiction to enquire
into questions of fraud, they would not have jurisdiction to H
559
560 SUPREME COURT REPORTS [2019] 17 S.C.R.

A adjudicate upon disputes such as those arising under MMDR Act,
1957 and the rules issued thereunder, especially when the disputes
revolve around decisions of statutory or quasi-judicial authorities,
which can be corrected only by way of judicial review of
administrative action – The moratorium provided for in s.14 could
not have any impact upon the right of the Government to refuse
B
the extension of lease – The purpose of moratorium is only to
preserve the status quo and not to create a new right – Therefore,
NCLT did not have jurisdiction to entertain an application against
the State Government for a direction to execute Supplemental Lease
Deeds for the extension of the mining lease – Since NCLT chose
C to exercise a jurisdiction not vested in it in law, the High Court
was justified in entertaining the writ petition, on the basis that NCLT
was coram non judice – Mines and Minerals (Development and
Regulation) Act, 1957 – Insolvency and Bankruptcy Code, 2016
– Judicial review.
D Insolvency and Bankruptcy Code, 2016: Scope of the
jurisdiction and the nature of the powers exercised by NCLT and
NCLAT under the provisions of IBC, 2016 – Discussed.
Insolvency and Bankruptcy Code, 2016: Whether the
questions of fraud can be inquired into by the NCLT/NCLAT in the
E proceedings initiated under the IBC Code – Held: NCLT has
jurisdiction to enquire into allegations of fraud – As a corollary,
NCLAT will also have jurisdiction – Fraudulent initiation of CIRP
cannot be a ground to bypass the alternative remedy of appeal
provided in s.61.

F Constitution of India: Arts.226/227 – Exercise of
jurisdiction, exception – In cases where a statutory alternative
remedy of appeal is available, one of the exceptions to the self
imposed restraint of the High Court is the lack of jurisdiction on
the part of the statutory/quasi-judicial authority, against whose
order a judicial review is sought – Traditionally, English courts
G maintained a distinction between cases where a statutory/quasi-
judicial authority exercised a jurisdiction not vested in it in law
and cases where there was a wrongful exercise of the available
jurisdiction – The distinction between lack of jurisdiction and
wrongful exercise of available jurisdiction, should certainly be
H taken into account by High Courts, when Art.226 is sought to be
M/S EMBASSY PROPERTY DEVELOPMENTS PVT. LTD. v. 561
STATE OF KARNATAKA

invoked bypassing a statutory alternative remedy provided by a A
special statute.
Constitution of India: Arts.226/227 – Scope of jurisdiction
and nature of the powers exercised by High Court under Art.226
of the Constitution – Discussed.
Constitution of India: Arts.226/227 – Scope of jurisdiction B
of High Court over private individuals – Held: In view of the use
of the expression “any person” in Art.226 (1), the jurisdiction of
the High Court extends even over private individuals, provided the
nature of the duties performed by such private individuals, are
public in nature – Therefore, the remedies provided under Art.226 C
are public law remedies, which stand in contrast to the remedies
available in private law.
Mines and Minerals (Development and Regulation) Act,
1957: Object of enactment – Discussed – Constitution of India –
Seventh Schedule – Union List – Entry 54. D
Companies Act, 2013: ss.408, 410 – Jurisdiction and powers
of NCLT – NCLT and NCLAT are constituted, not under the IBC,
2016 but under ss.408 and 410 of the Companies Act, 2013 –
ss.420 and 424 of the Companies Act, 2013 indicate in broad terms,
merely the procedure to be followed by the NCLT and NCLAT E
before passing orders – However, there are no separate provisions
in the Companies Act, exclusively dealing with the jurisdiction and
powers of NCLT – In contrast, Sub-sections (4) and (5) of s.60 of
IBC, 2016 give an indication respectively about the powers and
jurisdiction of the NCLT – Sub-section (4) of s.60 of IBC, 2016
states that the NCLT will have all the powers of the DRT as F
contemplated under Part III of the Code for the purposes of Sub-
section (2) – Insolvency and Bankruptcy Code, 2016 – s.60.
Insolvency and Bankruptcy Code, 2016: ss.60, 179 – Under
s.179 (1), it is the DRT which is the Adjudicating Authority in
relation to insolvency matters of individuals and firms – This is in G
contrast to s.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 object of Sub-section (2) of s.60 is to avoid any
confusion that may arise on account of s.179(1) and to ensure that
H
562 SUPREME COURT REPORTS [2019] 17 S.C.R.

A 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 individual who stood as surety to
such corporate debtor, notwithstanding the naming of the DRT
under s.179(1) as the Adjudicating Authority for the insolvency
resolution of individuals.
B
Dismissing the appeals, the Court
HELD: 1.1 It is beyond any pale of doubt that IBC, 2016
is a complete Code in itself. It is an exhaustive code on the
subject matter of insolvency in relation to corporate entities and
C 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 three-tier mechanism namely (i)
the NCLT, which is the Adjudicating Authority (ii) the NCLAT
D 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 guarantors are concerned, any order passed by the
NCLT is appealable to NCLAT under Section 61 of the IBC,
E
2016 and the orders of the NCLAT are amenable to the
appellate jurisdiction of this court under Section 62. [Para 11]
[578-D-G]
1.2 Article 226 (1) recognizes the power of every High
F 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
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,
G 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)
H and (2) of Article 226. [Para 13] [579-B-D]
M/S EMBASSY PROPERTY DEVELOPMENTS PVT. LTD. v. 563
STATE OF KARNATAKA

M/s Innoventive Industries Limited v. ICICI Bank, AIR A
2017 SC 4084 : [2017] 8 SCR 33 – relied on.
1.3 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 B
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 C
in contrast to the remedies available in private law. One of the
well recognized exceptions to the self-imposed 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/quasi-judicial authority, against whose order a judicial
review is sought. [Paras 14, 15] [579-E-G] D

Nilabati Behera @ Babita Behera v. State of Orissa
(1993) 2 SCC 746 : [1993] 2 SCR 581 – relied on.
2. Whether the case of the State of Karnataka fell under
the category of (1) lack of jurisdiction on the part of the NCLT E
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.
In the case on hand, the land which formed the subject
matter of mining lease, belongs to the State of Karnataka. The F
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
G
Debtor and the Government of Karnataka under the mining lease
is not just contractual but also statutorily governed. The MMDR
Act, 1957 is a Parliamentary enactment 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 H
564 SUPREME COURT REPORTS [2019] 17 S.C.R.

A 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
B
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. Therefore, the decision of the Government
of Karnataka to refuse the benefit of deemed extension of lease,
is in the public law domain and hence the correctness of the said
C 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, flows from the
D
concept of a higher law, namely the Constitution. 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
E powers within the contours of jurisdiction as prescribed by the
statute, the law in respect of which, it is called upon to
administer. [Paras 25, 27, 29] [585-B-G; 586-A-B-F]
Sub-Committee on Judicial Accountability v. Union of
India (1991) 4 SCC 699 – relied on.
F Thressiamma Jacob v. Deptt. of Mining & Geology
(2013) 9 SCC 725 : [2013] 7 SCR 863 – referred to.
3. Jurisdiction and powers of NCLT
3.1 NCLT and NCLAT are constituted, not under the IBC,
G 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
H Companies Act or any other law for the time being in force.
M/S EMBASSY PROPERTY DEVELOPMENTS PVT. LTD. v. 565
STATE OF KARNATAKA

Insofar as NCLAT is concerned, Section 410 of the Companies A
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
B
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. In contrast, Sub-sections (4) and (5) of Section
60 of IBC, 2016 give an indication respectively about powers C
and jurisdiction of the NCLT. [Paras 30, 31] [586-G; 587-A-D]
3.2 Sub-section (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 Sub-section (2).
Sub-section (2) deals with a situation where the insolvency D
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 the CIRP or liquidation proceeding of a E
corporate debtor and 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, F
before different Fora, leading to conflict of interests, situations
or decisions. [Para 32] [588-F-H; 589-A]
3.3 If the object of Sub-section (2) of Section 60 is to
ensure that the insolvency resolutions of the corporate debtor
G
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 Sub-section (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 H
566 SUPREME COURT REPORTS [2019] 17 S.C.R.

A 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
B
of Sub-section (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 individual who stood
C 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 Sub-
section (2) of Section 60 uses the phrase “notwithstanding
anything to the contrary contained in this Code”. [Para 33] [589-
B-E]
D
3.4 Sub-section (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
E to insolvency and bankruptcy of the individual debtor. Clauses
(a), (b) and (c) of Sub-section (2) of Section 179 are identical to
Clauses (a), (b) and (c) of Sub-section (5) of Section 60.
Therefore the only reason why Sub-section (4) is incorporated
in Section 60 is to ensure that NCLT will exercise jurisdiction
F – (1) not only to entertain and dispose of matters referred to in
Clauses (a), (b) and (c) of Sub-section (5) of Section 60 in relation
to the corporate debtor, (2) but also to entertain and dispose of
the matters specified in Clauses (a), (b) and (c) of Sub-section
(2) of Section 179, whenever the contingency stated in Section
60(2) arises. [Para 34] [589-F-H]
G
3.5 A combined reading of Sub-section (4) and Sub-section
(2) of Section 60 with Section 179 shows that none of them hold
the key to the question as to whether NCLT would have
jurisdiction over a decision taken by the government under the
provisions of MMDR Act, 1957 and the Rules issued there-
H under. The only provision which can probably throw light on this
M/S EMBASSY PROPERTY DEVELOPMENTS PVT. LTD. v. 567
STATE OF KARNATAKA

question would be Sub-section (5) of Section 60, as it speaks A
about the jurisdiction of the NCLT. Clause (c) of Sub-section (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
B
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 Sub-
section (5). [Para 36] [590-G-H; 591-A-B]
3.6 If NCLT has been conferred with jurisdiction to decide
all types of claims to property, of the corporate debtor, Section C
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 authority. In fact
an asset owned by a third party, but which is in the possession D
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 E
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 F
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, quasi-judicial
and arbitration proceedings. Wherever the corporate debtor has
to exercise rights in judicial, quasi-judicial proceedings, the
resolution professional cannot short-circuit the same and bring G
a claim before NCLT taking advantage of Section 60(5).
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 H
568 SUPREME COURT REPORTS [2019] 17 S.C.R.

A law, they cannot, through the resolution professional, take a
bypass and go before NCLT for the enforcement of such a right.
[Paras 39-40] [593-B-E-H; 594-A-B]
4. The moratorium provided for in Section 14 could not
have any impact upon the right of the Government to refuse the
B extension of lease. The purpose of moratorium is only to
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
C 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
D conferred by a mining lease especially on a government land.
What is granted under the deed of mining lease 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. Part-I of the
E Schedule describes the location and area of the lease. Part-II
indicates the liberties and privileges of the lessee. The
restrictions and conditions subject to which the grant can be
enjoyed are found in Part-III of the Schedule. The liberties,
powers and privileges reserved to the Government, despite the
F grant, are indicated in Part-IV. This Part-IV 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).
G Section 14 (1) (d) may have no application to situations of this
nature. Therefore, 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
H jurisdiction not vested in it in law, the High Court of Karnataka
M/S EMBASSY PROPERTY DEVELOPMENTS PVT. LTD. v. 569
STATE OF KARNATAKA

was justified in entertaining the writ petition, on the basis that A
NCLT was coram non judice. [Paras 44, 45] [595-A-H]
5. Whether NCLT is competent to enquire into allegations
of fraud, especially in the matter of the very initiation of CIRP.
Section 65 specifically deals with fraudulent or malicious
initiation of proceedings. Even fraudulent tradings carried on by B
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, f or carrying on
transactions with a view to defraud creditors. Therefore, NCLT C
is vested with the power to inquire into (i) fraudulent initiation
of proceedings as well as (ii) fraudulent transactions. Section
65(1) deals with a situation where CIRP is initiated fraudulently
“for any purpose other than for the resolution of insolvency or
liquidation”. It is clear that NCLT has jurisdiction to enquire
D
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. [Paras 49-51] [597-C-G-H; 598-B]
The State of Uttar Pradesh v. Mohammad Nooh. [1958]
SCR 595 ; Official Trustee, West Bengal & Others v. E
Sachindra Nath Chatterjee & Another [1969] 3 SCR
92 ; Hirday Nath Roy v. Ramachandra Barna Sarma.
ILR LXVIII Calcutta 138 ; Indian Farmers Fertiliser
Co-operative Ltd. v. Bhadra Products (2018) 2 SCC
534 : [2018] 1 SCR 848 ; Mafatlal Industries & Others F
v. Union of India (1997) 5 SCC 536 : [1996] 10 Suppl.
SCR 585 ; M.L. Sethi v. R.P. Kapur (1972) 2 SCC
427 : [1973] 1 SCR 697 ; Hari Prasad Mulshanker
Trivedi v. V.B Raju (1974) 3 SCC 415 : [1974] 1 SCR
548 ; Union Bank of India v. Satyawati Tandon (2010)
G
8 SCC 110 : [2010] 9 SCR 1 ; Sadhana Lodh v.
National Insurance Co. (2003) 3 SCC 524 : [2003] 1
SCR 567 ; Nivedita Sharma v. Cellular Operators
Association of India (2011) 14 SCC 337 ; Cicily
Kallarackal v. Vehicle Factory (2012) 8 SCC 524 :
[2012] 8 SCR 95 – referred to. H
570 SUPREME COURT REPORTS [2019] 17 S.C.R.

A Anisminic Ltd. v. Foreign Compensation Commission
(1969) 2 WLR 163 ; Barnard and Others v. National
Dock Labour Board and Others (1953) 2 WLR 995 ;
Reg. v. Governor of Brixton Prison, Ex parte Armah
(1968) AC 192 ; Re Racal Communications Ltd (1981)
AC 374 ; O’Reilly v. Mackman (1983) 2 AC 237 ; R.
B
v. Lord President [1993] A.C. 682 ; Regina (Privacy
International) v. Investigatory Powers Tribunal, [2019]
UKSC 22 ; Smith v. East Elloe Rural District Council
(1956) AC 736 ; R v. Secretary of State for the
Environment, Ex p. Ostler (1977) QB 122 ;
C Wolverhampton New Waterworks Co. v. Hawkesford
[1859] 6 CB (NS) 336 – referred to.
Case Law Reference
[1958] SCR 595 referred to Para 9
D [2017] 8 SCR 33 relied on Para 11
[1993] 2 SCR 581 relied on Para 14
[1969] 3 SCR 92 referred to Para 18
[2018] 1 SCR 848 referred to Para 18
E [1996] 10 Suppl. SCR 585 referred to Para 19
[1973] 1 SCR 697 referred to Para 20
[1974] 1 SCR 548 referred to Para 21
[2010] 9 SCR 1 referred to Para 23
F [2003] 1 SCR 567 referred to Para 23
(2011) 14 SCC 337 referred to Para 23
[2012] 8 SCR 95 referred to Para 23
[2013] 7 SCR 863 referred to Para 27
G
(1991) 4 SCC 699 relied on Para 28
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 9170
of 2019.
From the Judgment and Order dated 12.09.2019 of the High
H Court of Karnataka at Bengaluru in W.P. No. 41029 of 2019.
M/S EMBASSY PROPERTY DEVELOPMENTS PVT. LTD. v. 571
STATE OF KARNATAKA

With A
Civil Appeal Nos. 9171, 9172 of 2019.
E. Om Prakash, Kapil Sibal, Arvind P. Datar, Mukul Rohatgi, Sr.
Advs., R. Murali, Charudatta Vijayrao Mahindrakar, Ms. Pinky Behera,
Ms. Madhusmita Bora, Pawan Kishore Singh, Dipankar Singh, Riju Raj B
Singh Jamwal, Advs. for the Appellants.
K. K. Venugopal, AG, Gurukrishna Kumar, Sr. Adv., Omkar
Kambi, Ankur Mittal, Manendra Pal Gupta, Prakash Jadhav, V. N.
Raghupathy, Advs. for the Respondents.
C
The Judgment of the Court was delivered by
V. RAMASUBRAMANIAN, J.
1. Leave Granted.
2. Two seminal questions of importance namely:- D

i) Whether the High Court ought to interfere, under Article
226/227 of the Constitution, with an Order passed by
the National Company Law Tribunal in a proceeding
under the Insolvency and Bankruptcy Code, 2016,
E
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 F
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
G
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. H
572 SUPREME COURT REPORTS [2019] 17 S.C.R.

A 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
B 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
C 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
D 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
E 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
F (hereinafter referred to as CIRP).
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
G 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 8-A (6)
of the Mines & Minerals (Development and Regulation)
Act, 1957 (hereinafter referred to as MMDR Act,
H 1957).
M/S EMBASSY PROPERTY DEVELOPMENTS PVT. LTD. v. 573
STATE OF KARNATAKA [V. RAMASUBRAMANIAN, J.]

v) Finding that there was no response, the Interim A
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.
B
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 C
Mineral Concession Rules, 1960 and Rule 24 of the
Minerals (Other than Atomic and Hydro Carbons
Energy Minerals) Rules, 2016.
vii) In view of the Order of rejection passed by the
Government of Karnataka, the Corporate Debtor, D
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 E
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 F
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 G
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. H
574 SUPREME COURT REPORTS [2019] 17 S.C.R.

A 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
B
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
C ex-parte, 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
D 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
E to adjudicate upon disputes arising out of the grant of
mining leases under the MMDR Act, 1957, between the
State-Lessor 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
F to corner the benefits of the mining lease.
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
G 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
H admission, the Corporate Debtor represented by the
M/S EMBASSY PROPERTY DEVELOPMENTS PVT. LTD. v. 575
STATE OF KARNATAKA [V. RAMASUBRAMANIAN, J.]

Resolution Professional appeared through counsel and A
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
B
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 C
Professional and the Committee of Creditors have come
up with the present appeals.
Rival Contentions
5. Sh. K. V. Viswanathan, learned Senior Counsel appearing on D
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 E
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/ F
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 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 G
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 H
576 SUPREME COURT REPORTS [2019] 17 S.C.R.

A 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.
B
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 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
C
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,
D 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
E
(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 purview of the expression “Property”, it
was contended by the learned Senior Counsel that the Resolution
F 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
G
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
H the learned counsel, does not arise. Any recognition by this court, of
M/S EMBASSY PROPERTY DEVELOPMENTS PVT. LTD. v. 577
STATE OF KARNATAKA [V. RAMASUBRAMANIAN, J.]

the jurisdiction of the High Court under Article 226 to interfere with A
the Orders of the NCLT under IBC, 2016, according to the learned
Senior Counsel, would completely derail the resolution process which
is bound 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.
B
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 C
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 D
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 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 Sub-section (5) of Section 60 and also E
since the powers of the NCLT are defined in Sub-section (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 inter-parties. An order passed by a statutory/ F
quasi-judicial 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 G
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 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, H
578 SUPREME COURT REPORTS [2019] 17 S.C.R.

A 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
B
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
C 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 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.
D
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
E gamut of the law relating to insolvency resolution of corporate persons
and others in a time bound manner. The code provides a three-tier
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
F to the reorganisation and insolvency resolution of corporate persons.
In so far as insolvency resolution of corporate debtors and personal
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
G in by-passing 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.
1
(1953) 2 WLR 995
2
(1958) SCR 595
H 3
AIR 2017 SC 4084
M/S EMBASSY PROPERTY DEVELOPMENTS PVT. LTD. v. 579
STATE OF KARNATAKA [V. RAMASUBRAMANIAN, J.]

12. For finding an answer to the question on hand, the scope of A
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 B
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 of the rights conferred
by Part III and (ii) for any other purpose. But the exercise of the power C
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) D
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” E
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 available in private
law. As observed by this Court in Nilabati Behera @ Babita Behera F
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 self-imposed
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 G
the statutory/quasi-judicial authority, against whose order a judicial
review is sought. Traditionally, English courts maintained a distinction
between cases where a statutory/quasi-judicial authority exercised a
jurisdiction not vested in it in law and cases where there was a wrongful
4
(1993) 2 SCC 746 H
580 SUPREME COURT REPORTS [2019] 17 S.C.R.

A 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 Reg. vs. Governor of Brixton Prison, Ex parte Armah6 to
B
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 break-through and a legal landmark
C (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
D 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.
17. But In Re Racal made a distinction between courts of law
E 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
F Racal. This could be seen from the after effects of Anisminic.9
5
(1969) 2 WLR 163
6
(1968) AC 192
7
(1981) AC 374
8
(1983) 2 AC 237
9
G 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
H principle and that ultra vires is, in truth, a fig-leaf which has enabled the courts
M/S EMBASSY PROPERTY DEVELOPMENTS PVT. LTD. v. 581
STATE OF KARNATAKA [V. RAMASUBRAMANIAN, J.]

18. Interestingly just four days before the House of Lords A
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 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.
B
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 C
(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 Co-
operative Ltd. vs. Bhadra Products,12 quite independent of Anisminic
and its followers.
D
19. Though the decision in Official Trustee preceded Anisminic
and can proudly be claimed as the Indian 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: E

(1) Union of India vs. Tarachand Gupta & Bros., (1971) 1
SCC 486
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
F
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. G
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.”
10
(1969) 3 SCR 92
11
ILR LXVIII Calcutta 138
12
(2018) 2 SCC 534
13
(1997) 5 SCC 536 H
582 SUPREME COURT REPORTS [2019] 17 S.C.R.

A (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
B (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

C 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 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
D 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
E 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/
F 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 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
G 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.
14
(1972) 2 SCC 427
15
(1974) 3 SCC 415
16
H (1956) AC 736
M/S EMBASSY PROPERTY DEVELOPMENTS PVT. LTD. v. 583
STATE OF KARNATAKA [V. RAMASUBRAMANIAN, J.]

Secretary of State for the Environment, Ex p. Ostler17 that the A
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 B
relevant to test whether a statutory alternative remedy should be allowed
to be bypassed or not.
23. In several cases, both in England and India, the ancient rule
stated by Willes, J., in Wolverhampton New Waterworks Co. vs.
Hawkesford 18 to the effect that where a liability not existing at C
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
D
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) E
Nivedita Sharma vs. Cellular Operators Association of 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
F
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. G
17
(1977) QB 122
18
[1859] 6 CB (NS) 336
19
(2010) 8 SCC 110
20
(2003) 3 SCC 524
21
(2011) 14 SCC 337
22
(2012) 8 SCC 524 H
584 SUPREME COURT REPORTS [2019] 17 S.C.R.

A 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 a wrong question or applying a wrong test
B
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,
C 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
D 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 Sub-section (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
E 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
F 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
G 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
H for filing a revision is prescribed in Rule 54 and the method of disposal
M/S EMBASSY PROPERTY DEVELOPMENTS PVT. LTD. v. 585
STATE OF KARNATAKA [V. RAMASUBRAMANIAN, J.]

of such revisions is prescribed in Rule 55 of the Mineral Concession A
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 B
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, C
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 traceable to Entry 54
in List I of the Seventh Schedule. This Entry 54 speaks about regulation D
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 E
“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: F
“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 G
General, the decision of the Government of Karnataka to 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

23
(2013) 9 SCC 725 H
586 SUPREME COURT REPORTS [2019] 17 S.C.R.

A 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 Sub-
Committee on Judicial Accountability vs. Union of India,24 flows
B
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
C 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
D 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 is to be noted
that the British Parliament with the Crown is supreme and
E 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
F 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
G
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
24
H (1991) 4 SCC 699
M/S EMBASSY PROPERTY DEVELOPMENTS PVT. LTD. v. 587
STATE OF KARNATAKA [V. RAMASUBRAMANIAN, J.]

Government shall constitute a National Company Law Tribunal, to A
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 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
B
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 C
jurisdiction and powers of NCLT.
31. In contrast, Sub-sections (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 D
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 E
corporate person is located.
(2) Without prejudice to sub-section (1) and notwithstanding
anything to the contrary contained in this Code, where a
corporate insolvency resolution process or liquidation
proceeding of a corporate debtor is pending before the F
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.
G
(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. H
588 SUPREME COURT REPORTS [2019] 17 S.C.R.

A (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 sub-section (2).
(5) Notwithstanding anything to the contrary contained in
B 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;
C (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
D 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
E 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.”
F 32. Sub-section (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 Sub-section (2). Sub-section (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
G
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
H with both. This is to ensure that the CIRP of a corporate debtor and
M/S EMBASSY PROPERTY DEVELOPMENTS PVT. LTD. v. 589
STATE OF KARNATAKA [V. RAMASUBRAMANIAN, J.]

the insolvency resolution of the individual guarantors of the very same A
corporate debtor do not proceed on different tracks, before different
Fora, leading to conflict of interests, situations or decisions.
33. If the object of Sub-section (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 B
should be a reference to the powers of the DRT in Sub-section (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 C
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 Sub-section (2) of Section 60 is to avoid
any confusion that may arise on account of Section 179(1) and to ensure D
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 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 E
individuals. This is also why Sub-section (2) of Section 60 uses the
phrase “notwithstanding anything to the contrary contained in this Code”.
34. Sub-section (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 F
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 Sub-section (2) of
Section 179 are identical to Clauses (a), (b) and (c) of Sub-section (5)
of Section 60. Therefore the only reason why Sub-section (4) is
G
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 Sub-section (5) of Section 60 in relation
to the corporate debtor, (2) but also to entertain and dispose of the
matters specified in Clauses (a), (b) and (c) of Sub-section (2) of
Section 179, whenever the contingency stated in Section 60(2) arises. H
590 SUPREME COURT REPORTS [2019] 17 S.C.R.

A 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
B
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 (1) No civil court or authority
C have jurisdiction to entertain any shall have jurisdiction to
suit or proceedings in respect of entertain any suit or proceedings
any matter on which National in respect of any matter on which
Company Law Tribunal or the the Debt Recovery Tribunal or the
National Company Law Appellate Debt Recovery Appellate Tribunal
Tribunal has jurisdiction under has jurisdiction under this Code.
D this Code. Civil court not to have (2) No injunction shall be granted
jurisdiction. by any court, tribunal or authority
in respect of any action taken, or
to be taken, in pursuance of any
power conferred on the Debt
E Recovery Tribunal or the Debt
Recovery Appellate Tribunal by
or under this Code.
Though what is found in Sub-section (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
F
64, which primarily deals with expeditious disposal of applications. Thus,
there appears to be some mix-up. However, we are not concerned
about the same in this case and we have made a reference to the same
only because of Sub-section (4) of Section 60, vesting upon the NCLT,
all the powers of the DRT.
G
36. From a combined reading of Sub-section (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 government under the provisions of MMDR
Act, 1957 and the Rules issued there-under. The only provision which
H can probably throw light on this question would be Sub-section (5) of
M/S EMBASSY PROPERTY DEVELOPMENTS PVT. LTD. v. 591
STATE OF KARNATAKA [V. RAMASUBRAMANIAN, J.]

Section 60, as it speaks about the jurisdiction of the NCLT. Clause (c) A
of Sub-section (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
B
of the phrase “arising out of or in relation to the insolvency
resolution” appearing in Clause (c) of Sub-section (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/ C
Resolution Professional will then claim a right to challenge the order
of the Income Tax Appellate Tribunal 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
D
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 E
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 F
under Section 20(1) to preserve the value of the property of the
Corporate Debtor and that the word “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 G
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 H
592 SUPREME COURT REPORTS [2019] 17 S.C.R.

A 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
B resolution professional shall perform the following duties,
namely:-
(a) …
(b) …
C (c) …
(d) …
(e) …
(f) take control and custody of any asset over which the
D 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) …
E (ii) …
(iii) …
(iv) …
(v) …
F (vi) assets subject to the determination of ownership by
a court or authority;
(g) …
Explanation. - For the purposes of this section, the term
G ‘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
H corporate debtor; and
M/S EMBASSY PROPERTY DEVELOPMENTS PVT. LTD. v. 593
STATE OF KARNATAKA [V. RAMASUBRAMANIAN, J.]

(c) such other assets as may be notified by the Central A
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 B
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 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 C
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 D
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, quasi-judicial and
arbitration proceedings. Section 25(1) and 25(2)(b) reads as follows: E

“25. Duties of resolution professional –
(1) It shall be the duty of the resolution professional to
preserve and protect the assets of the corporate debtor,
including the continued business operations of the corporate F
debtor.
(2) For the purposes of sub-section (1), the resolution
professional shall undertake the following actions:-
(a) ………….
(b) represent and act on behalf of the corporate debtor G
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, quasi-judicial proceedings, the resolution professional H
594 SUPREME COURT REPORTS [2019] 17 S.C.R.

A cannot short-circuit 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
B 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 grant the benefit
C
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
D 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
E 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 advantage of this
F 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.
G
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
H be clothed with a jurisdiction, by any concession made by a party.
M/S EMBASSY PROPERTY DEVELOPMENTS PVT. LTD. v. 595
STATE OF KARNATAKA [V. RAMASUBRAMANIAN, J.]

44. A lot of stress was made on the effect of Section 14 of IBC, A
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 preserve the status quo and not to create a
new right. Therefore nothing turns on Section 14 of IBC, 2016. Even B
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
C
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 D
a specified period of time. The Deed of Lease contains a Schedule
divided into several parts. Part-I of the Schedule describes the location
and area of the lease. Part-II indicates the liberties and privileges of
the lessee. The restrictions and conditions subject to which the grant
can be enjoyed are found in Part-III of the Schedule. The liberties, E
powers and privileges reserved to the Government, despite the grant,
are indicated in Part-IV. This Part-IV 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 F
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 G
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. H
596 SUPREME COURT REPORTS [2019] 17 S.C.R.

A 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
B 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
C 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.
D M. Poobalan and his wife were partners; (iii) that another agreement
dated 11.12.2012 was entered into 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
E
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
F 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,
G taking up the cause of the Corporate Debtor as its authorized 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.
H Udhyaman Investments Pvt. Ltd. are all related parties and (xii) that
M/S EMBASSY PROPERTY DEVELOPMENTS PVT. LTD. v. 597
STATE OF KARNATAKA [V. RAMASUBRAMANIAN, J.]

Mr. Poobalan had not only acted on behalf of the Corporate Debtor A
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 B
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. C
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. –
D
(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 E
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 F
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, G
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 initiated
fraudulently “for any purpose other than for the resolution of
insolvency or liquidation”. H
598 SUPREME COURT REPORTS [2019] 17 S.C.R.

A 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
B
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
C 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 the disputes revolve around decisions of statutory or
quasi-judicial authorities, which can be corrected only by way of judicial
D 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.

E
Devika Gujral Appeals dismissed.

F

G

H