TMI Blog2022 (10) TMI 742X X X X Extracts X X X X X X X X Extracts X X X X ..... , he cannot exercise any charge over the property and the said property would from part of the Liquidation Estate. The impugned order passed by the Adjudicating Authority cannot sustain in the eye of law as the Adjudicating Authority has failed to consider the aspects of the matter, therefore, the impugned order is hereby set aside - Appeal allowed. - Company Appeal (AT) (Insolvency) No. 26 of 2021 - - - Dated:- 18-10-2022 - [ Justice Anant Bijay Singh ] Member ( Judicial ) And [ Ms. Shreesha Merla ] Member ( Technical ) For the Appellant : Mr. Abhimanyu Jhamba , Mr. R. A. Thanpinao Thangal, Ms. Hatneimawi , Advocates For the Respondent : Mr. Ajay Kumar Jain , Mr. Sourit Arora , Advocates for Liquidator JUDGMENT Justice Anant Bijay Singh ; The instant Appeal has been preferred by the three Appellants being aggrieved and dissatisfied by the order dated 12.10.2020 passed by the Adjudicating Authority (National Company Law Tribunal, Principal Bench, New Delhi) in IA/1459/2020 in (IB)/239(PB)/2017 whereby and whereunder the Adjudicating Authority directed the Respondent No. 1 and 2 (the Appellant Nos. 1 and 2 herein) to issue No Objection Certificate (NOC) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance of the Appellant No. 1 as to applicability or otherwise of GST to certain assets proposed to be disposed of. vi) The Appellant No. 1 acting bonafide after making due enquiry as stipulated under sub-Section 2 of Section 88 of CGST Act, reiterated its claim under the HP VAT Act, 2005 for the assessment year 2011-12, 2012-13, 2013-14, 2014-15, 2015-16 aggregating to Rs. 3,62,86,336.00 vide email and letter dated 06.02.2019. The limitation to make such claim was to expire on 15.02.2019. In the letter dated 06.02.2019 (Annexure A/8 of the Appeal) filed through Assistant Commissioner, Sales Tax Department BBNDA, Baddi a specific note referring to earlier claim dated 15.06.2018 was made by the Assessing Authorities. vii) The Respondent vide email dated 07.02.2019 (Annexure A/9 of the Appeal) informed the Appellant No. 1 that the last date for submission of claim expired under Section 38(1) of the Code and Regulations read therewith and hence the claim of Appellant No. 1 was rejected. viii) Further case is that the Respondent on the ground of delay rejected the claim of the Appellants herein and proceeded with the liquidation process. In pursuance thereto inter alia sold thro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AESI Act (akin to Section 238 of the IBC, 2016) over Section 26 of Kerala General Sales Tax Act (akin to Section 26 of HP VAT Act 2005). 6. The Ld. Counsel for the Appellant in his written submissions given comparison of the Judgments and facts of the present case which is tabulated hereunder: Central Bank Judgment- Hon ble Supreme Court Facts in present case The Securitisation Act 95.2. 35. The provisions of this Act to override other laws.-The provisions of this Act shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law. IBC, 2016; Section 238 238. Provisions of this Code to override other laws- The provisions of this Act shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law. The Kerala General Sales Tax Act, 1963. 95.4. 26-B. tax payable to be first charge on the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion, the company would necessarily have to be liquidated and its assets sold and distributed in the manner stipulated in Section 53 of the IBC. 54. In our considered view, the Committee of Creditors, which might include financial institutions and other financial creditors, cannot secure their own dues at the cost of statutory dues owed to any Government or Governmental Authority or for that matter, any other dues. 55. In our considered view, the NCLAT clearly erred in its observation that Section 53 of the IBC over-rides Section 48 of the GVAT Act. Section 53 of the IBC begins with a non-obstante clause which reads :- Not withstanding anything to the contrary contained in any law enacted by the Parliament or any State Legislature for the time being in force, the proceeds from the sale of the liquidation assets shall be distributed in the following order of priority........... 56. Section 48 of the GVAT Act is not contrary to or inconsistent with Section 53 or any other provisions of the IBC. Under Section 53(1)(b)(ii), the debts owed to a secured creditor, which would include the State under the GVAT Act, are to rank equally with other specified debts includin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat they have submitted any Form in the prescribed format or intimated their decision to the Liquidator, with respect to their stand in the Liquidation process. 2nd Respondent cannot approbate and reprobate at the same time, by submitting themselves to the Liquidation process and to have charge over the property. Under the circumstances, Respondents 1 and 2 are directed to issue No objection Certificate (NoC) to the Liquidator and Director of Industries in order to register the properties. Accordingly, the Application stands allowed. 12. It is further submitted that Regulation 21 of the IBBI (Liquidation process) Regulations, 2016 provide the provisions for proving security interest. The Appellants have failed to provide any records or documents in compliance with the above regulation for proving their claim as a secured creditor. Based on these submissions, there is no merit in the present Appeal, the Appeal is fit to be dismissed. FINDINGS 13. After hearing the parties and going through the pleadings made on behalf of the parties and also perusing the impugned order, it appears that the Adjudicating Authority relied on a judgment of Sanjay Gupta, Liquidator vs. Of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Resolution Plan. 53. In other words, if a company is unable to pay its debts, which should include its statutory dues to the Government and/or other authorities and there is no plan which contemplates dissipation of those debts in a phased manner, uniform proportional reduction, the company would necessarily have to be liquidated and its assets sold and distributed in the manner stipulated in Section 53 of the IBC. 54. In our considered view, the Committee of Creditors, which might include financial institutions and other financial creditors, cannot secure their own dues at the cost of statutory dues owed to any Government or Governmental Authority or for that matter, any other dues. 55. In our considered view, the NCLAT clearly erred in its observation that Section 53 of the IBC over-rides Section 48 of the GVAT Act. Section 53 of the IBC begins with a non-obstante clause which reads :- Not withstanding anything to the contrary contained in any law enacted by the Parliament or any State Legislature for the time being in force, the proceeds from the sale of the liquidation assets shall be distributed in the following order of priority........... 56. Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X
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