Full Text
O.M.P. (COMM) 233/2024
Date of Decision: 08.09.2025 IN THE MATTER OF:
ICRA LIMITED
REGISTERED OFFICE AT:
B-710, STATESMAN HOUSE, 148, BARAKHAMBA ROAD, NEW DELHI – 110001 ..... PLAINTIFF
Through: Mr.Percival Billomoria, Sr. Advocate
Khan, Mr.Asheesh Bhandari, Ms.Deveshi, Ms.Rachita Sood, Mr.Tushar and Ms.Shilpa, Advocates.
R/O 189, ESPACE NIRVANA, SECTOR – 50, GURUGRAM, HARYANA – 122018 .... DEFENDANT
Through: Mr.Abhishek Malhotra, Sr. Advocate
Ms.Anukriti Trivedi, Advocates.
NARESH TAKKAR
R/O 189, ESPACE NIRVANA, SECTOR – 50, GURUGRAM, HARYANA – 122018 ..... PLAINTIFF
KUMAR KAURAV
Through: Mr.Abhishek Malhotra, Sr. Advocate
Ms.Anukriti Trivedi, Advocates.
REGISTERED OFFICE AT:
B-710, STATESMAN HOUSE, 148, BARAKHAMBA ROAD, NEW DELHI – 110001 .... DEFENDANT
Through: Mr.Percival Billomoria, Sr. Advocate
Khan, Mr.Asheesh Bhandari, Ms.Deveshi, Ms.Rachita Sood, Mr.Tushar and Ms.Shilpa, Advocates.
HON'BLE MR. JUSTICE PURUSHAINDRA KUMAR KAURAV
JUDGEMENT
PURUSHAINDRA KUMAR KAURAV, J. (ORAL)
1129/2025 in OMP (ENF.) (COMM.) 113/2024
JUDGMENT
1. Heard Mr.Percival Billomoria, learned senior counsel for the ICRA Ltd. and Mr.Abhishek Malhotra, learned senior counsel appearing on behalf of Naresh Takkar.
2. There appears to be an application bearing I.A. 13043/2025 filed by ICRA Ltd for taking on record the settlement agreement dated 10.04.2025. Additionally, applications bearing I.A. Nos. 924/2025, 925/2025, and 1129/2025 have been filed by Naresh Takkar seeking (i) revival of petition bearing O.M.P. (ENF.) (COMM.) 113/2024, (ii) directions to the judgmentdebtor to pay the balance amount of INR 4,13,49,750/-, and (iii) initiation of contempt proceedings against the judgment-debtor, respectively.
3. The background of the case indicates that the dispute arose from the termination of Naresh Takkar, former Managing Director and CEO of ICRA Ltd, on 29.08.2019. Mr. Takkar alleged wrongful termination and nonpayment of dues, whereupon arbitration was invoked. An arbitral award was passed on 19.11.2023, subsequently rectified on 30.01.2024. The arbitral tribunal issued various directions against ICRA Ltd and held that the termination was not simpliciter but for cause, in violation of principles of natural justice.
4. An application under Section 34 i.e. O.M.P. (COMM) 233/2024 came to be filed by ICRA Ltd and an application under Section 36 i.e. OMP (ENF.) (COMM.) 113/2024 was filed by Naresh Takkar. During the pendency of these applications, an amicable settlement was arrived at between the parties, which was recorded by this Court in its order dated 13.05.2025.
5. The relevant portion of the order dated 13.05.2025 is extracted as under:-
6. It is, therefore, evident that the respondent therein, i.e., Naresh Takkar, undertook to bear tax liabilities, if any.
7. As per the settlement, the parties agreed on a total sum of INR 10.75 crores to be paid by ICRA Ltd to Naresh Takkar in full and final settlement.
8. Following the order dated 13.05.2025, ICRA Ltd deducted INR 4.13 crores as TDS, presumably in compliance with its obligations under the Income Tax Act.
9. Per contra, Naresh Takkar contends that such deduction is contrary to the decree and amounts to short payment, constituting wilful disobedience of the directions of this Court.
10. During the hearing, Mr. Percival Billimoria, learned senior counsel for ICRA Ltd, submitted that the deduction was made as per statutory obligation under the Income Tax Act, and failure to do so would have attracted penal consequences. He further submitted that the consent decree was passed in terms of the settlement agreement, which itself was made subject to applicable taxes
11. Mr. Malhotra, learned senior counsel for Naresh Takkar, however, argued that the amount in question constitutes a judgment debt and is, therefore, not liable to TDS. He relied on several judgments of the Supreme Court and of this Court to contend that such deductions are impermissible under the Income Tax Act.
12. In order to substantiate his submission, he has placed reliance on the decision of the Supreme Court in the case of All India Reporter Ltd. Vs. Ramchandra D. Datar[1], Voith Hydro Ltd. and Others vs. NTPC Ltd[2] and Joginder Singh Nijjar and Anr. Vs. M/s Omaxe Ltd.[3]
13. He also referred to the judgment in Tupperware India Pvt. Ltd. vs. Commissioner of Income Tax (International Taxation)-3 & Anr[4]., wherein the Division Bench of this Court held that even a deductor is entitled to claim a refund of TDS if the same is found to be wrongfully deducted.
14. Mr. Billimoria, while disputing the applicability of the above judgments, contended that TDS was rightly deducted in accordance with law and the settlement terms. However, he submitted that he has no objection if the Income Tax Department refunds the deducted amount to Naresh Takkar. He further submitted that Naresh Takkar is at liberty to apply for such a refund.
15. Though Mr. Billimoria contended that the Executing Court cannot go beyond the terms of the settlement, however the issue at hand is somewhat different i.e whether ICRA Ltd was justified in deducting TDS?
16. ICRA claims that deduction was mandatory under law, while the respondent disputes the same
17. I have considered the submissions made by learned counsel for both the parties and also perused the record.
18. In All India Reporter Ltd., the Supreme Court held that once a decree is passed for arrears of salary, compensation for wrongful termination, and interest, the amount becomes a judgment debt. Following this, this Court in Voith Hydro Ltd. reiterated that no TDS is deductible on such judgment (1961) 41 ITR 446 2021 SCC OnLine Del 1325 2024:DHC:5616 debts unless specifically mandated by law or applicable circulars.
19. In paragraph no. 38 of Voith Hydro Ltd., it has been held that tax was required to be deducted at source if the payments made by NTPC were in discharge of the award or as ad hoc payments under a mechanism evolved pursuant to the applicable circular. The Court, therefore, in paragraphs 42 and 43, directed NTPC to release the amount to the extent of TDS deducted from the decree-holder therein, and also held that NTPC is entitled to apply to the Income Tax Authorities for a refund of the same. The Income Tax Authorities were also directed to process NTPC’s request for refund accordingly.
20. For the sake of clarity, paragrapy nos. 38, 42 and 43 thereof, are extracted as under:-
21. A similar view is taken in Joginder Singh Nijjar & Anr., wherein this Court relied on All India Reporter Ltd., Islamic Investment Company vs. UOI[5], and Voith Hydro Ltd. to hold that no TDS can be deducted on the awarded amount under execution W.P. (C) 8275/2018 (2002) 4 Bom CR 685
22. The relevant paragraphs (6, 18 to 20) from Joginder Singh Nijjar & Anr. are also extracted for reference:-
23. Furthermore in Tupperware India Pvt. Ltd., the Division Bench of this Court, relying on Union of India vs. Tata Chemicals Ltd[6], held that even the deductor is entitled to a refund of wrongfully deducted TDS along with interest. Paragraph no.17 thereof, has held as under:-
under:–
24. It is, therefore, evident that there is no legal bar on a deductor applying for a refund of TDS wrongly deducted.
25. In these circumstances, the Court is of the prima facie view that the amount in question constitutes a judgment debt on which no TDS is liable to be deducted. However, the matter shall be subject to final orders of the Income Tax Authorities. Accordingly, the Court directs as follows:-
(i) ICRA Ltd shall make an application seeking refund of the TDS amount, along with a copy of this order.
(ii) Upon such application being made, the Income Tax Department shall decide the same with due expedition, preferably within four months from the date of receipt of this order.
(iii) If the Income Tax Department accedes to the request for a refund, the same shall be transmitted to the account of Naresh Takkar.
(iv) In view of the above, all pending applications stand disposed of.
PURUSHAINDRA KUMAR KAURAV, J SEPTEMBER 8, 2025 Nc/sph