Precedents Cited

• Sunil Vasudeva v. Sundar Gupta (2019) 17 SCC 385: Emphasized that no party should be left without remedy and that courts must examine grievances on their merits.
• Calcutta Iron Merchants' Association v. Commissioner of Commercial Taxes (1997) 8 SCC 42: Established that no law can compel a person to perform the impossible.
• Gyanichand v. State of Andhra Pradesh (2016) 15 SCC 164: Highlighted that courts should not mandate actions that are legally or practically impossible for parties to undertake.
• Anmol Kumar Tiwari v. State of Jharkhand (2021) 5 SCC 424: Reinforced that parties should not suffer due to legal impediments beyond their control.
• Principal Commissioner Of Income Tax v. Monnet Ispat & Energy Ltd. (2018) 18 SCC 786: Affirmed the precedence of IBC over inconsistent statutes and the protection offered by the moratorium.
• United Air Travel Services v. Union of India (2018) 8 SCC 141: Discussed the judiciary's role in not enforcing impossible directives.
• Union of India v. Asish Agarwak (2022 SCC OnLine SC 543): Supported the notion that legal constraints should not lead to unjust penalties for parties.
• Gyanichand (supra): Reiterated that courts should avoid directing impossible actions.

These precedents collectively underscored the judiciary's stance against imposing obligations that are unfeasible due to legal restrictions, ensuring that parties are not unjustly penalized for circumstances beyond their control.

Legal Reasoning

The Supreme Court meticulously analyzed the conflict between the appellant's obligations under the “Sabka Vishwas” Scheme and the prohibition of payments during the IBC's moratorium period. Recognizing that the moratorium, a fundamental aspect of the IBC, legally barred the appellant from making any payments, the Court concluded that enforcing the settlement payment within the original timeline would amount to compelling an impossible act.

The Court further noted that the appellant had acted in good faith by submitting the necessary forms within the prescribed deadlines and that the inability to comply with the payment requirement was solely due to the statutory moratorium. By citing the aforementioned precedents, the Court reinforced the principle that legal impediments should not result in unjust outcomes.

Additionally, the Court acknowledged the CBEC's instructions allowing manual processing of declarations post-30.06.2020, indicating that the Designated Committees continued to function albeit manually. This supported the appellant's position that the refusal to accept the payment was unfounded.

Impact

This landmark judgment serves as a crucial precedent in balancing statutory obligations with unforeseen legal impediments. It reinforces the judiciary's role in ensuring that entities are not left without recourse when faced with legal barriers beyond their control. Specifically, the decision highlights the precedence of insolvency laws over other statutory requirements, safeguarding entities undergoing insolvency proceedings from conflicting obligations.

Future cases involving statutory schemes and insolvency filings will likely refer to this judgment to argue against penalties imposed due to legal constraints. Moreover, it may prompt regulatory bodies to consider more flexible mechanisms within their schemes to accommodate such legal overlaps.

In the broader legal context, the judgment emphasizes the necessity for clear legislative frameworks that account for interactions between different laws, thereby preventing similar conflicts and ensuring fair treatment of parties.