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TMI Blog2024 (5) TMI 1151X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Authority') in IA No. 735/NCLT/AHM/2023 in IA No. 435/NCLT/AHM/2023 in CP(IB) No. 66/NCLT/AHM/2017, whereby the Adjudicating Authority rejected the application of the Appellant to treat its claim as Secured Creditor during the liquidation under waterfall arrangement as stipulated in Section 53 of the Code. 2. Mr. Ramchandra Dallaram Chaudhary is the Liquidation (in short 'Respondent' herein) of M/s Anil Limited ('Corporate Debtor'). 3. Heard the Counsel for the Parties and perused the records made available including the cited judgements. 4. It has been brought out that the Corporate Debtor was admitted into Corporate Insolvency Resolution Process (in short 'CIRP') vide the Adjudicating Authority its Order dated 23.08.2017 and moratorium came into effect same day. 5. The Resolution Professional published a public announcement on 28.08.2017 inviting claims from all by stipulating the last date of claim filing as on 06.09.2017. It has been stated that in the public announcement, it was indicated that the estimated date for closure of CIRP would be 19.02.2018. 6. It is further submitted that due to no resolution of the Corporate Debtor, the CoC decided to liquidate the Corpora ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplicability of the judgment passed by Hon'ble Supreme Court in Rainbow Papers Limited, and on the assurance from the liquidator to treat it as a secured creditor in view of the said judgment they have lift the attachment within a specific time period. Let the affidavit be filed within five days, and with the time line of lifting the attachments within a week." (SIC.) 13. The Appellant elaborated that based on the Order of the Adjudicating Authority dated 22.11.2022, it was understanding on his part that the claims would be considered in the category of Secured Creditors. The Appellant submitted that to his shock the Respondent again sent a letter to the Appellant on 22.06.2023 and informed about the rejection of the Appellant's claim for AY 1994 to 98 and for AY 2013 to 2017 and thereby admitting claims of the AY 2007 to 2012. The Respondent also sent a communication vide letter dated 26.06.2023 to the Appellant reiterating that the claims of the Appellant have been rejected. 14. The Appellant thereafter filed an I.A. No. 435 of 2023 seeking that he may be declared as Secured Creditors for his entire claims. 15. The Appellant gave the background of the case and stated that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Papers (Supra) in Sanjay Kumar Agarwal v. State Tax Officer [(2024) 2 SCC 362], on the ground that such subsequent decision cannot be a ground for review and co-ordinate bench ought not to have commented bench/It upon decision of another co-ordinate bench. 20. The Appellant attempted to argue that his demands for the amount for AY 2013-14, 2014-15, 2015-16 and 2016-17 were sent after the date of closure of CIRP and thereafter it cannot be said that the merely because the Respondent was not able to adhere the timelines given the public announcement, the Appellant should have not filed his claims or legal demands due to alleged moratorium period. 21. The Appellant submitted that it is a failure of the Respondent not to complete the CIRP or liquidation process within the stipulated time and therefore the Appellant cannot be put to any adverse situation invoking continuing moratorium. The Appellant also stated that his attachment are legal and valid as per VAT Act and belong to the prior CIRP period hence should not have been affected by the moratorium. 22. The Appellant pleaded that the Code does not provide the recovery mechanism for tax which is covered by the VAT Act and theref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... partial claims of the Appellant for the AY 2007-08, 2008-09, 2009-10, 2010-11, 2011-12 and 2012-13 in terms of judgment of the Hon'ble Supreme Court of India in the matter of Rainbow Paper (Supra) according to which dues of the government are secured dues and has recognized as Secured Creditors by virtue of Section 48 of the VAT Act. The Appellant further submitted that the decision of Rainbow Paper (Supra) has been upheld in the revenue case of Sanjay Kumar Agarwal Vs. State Tax Officer & Ors. [(2024) 2 SCC 362]. However, the Respondent rejected the other claims of the Appellant on the ground that these years are covered by old laws of Sales Tax Act hence there is no pari-materia provisions like Section 48 of the VAT Act and therefore the Appellant was treated as Unsecured Creditors. 27. It is a case of the Appellant that merely because the equivalent provision of Section 48 of the VAT Act was not present in Sales Tax Act does not take away his rights to be treated as Secured Creditors. 28. The Appellant pleaded that it is a spirit and the intention of the statute which is important and not the wordings and prints and submitted that the spirit of all the concerned acts and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant does not get an opportunity to place the facts and contentions necessary to repudiate or challenge such a claim or relief. Therefore, the court cannot, on finding that the plaintiff has not made out the case put forth by him, grant some other relief. The question before a court is not whether there is some material on the basis of which some relief can be granted. The question is whether any relief can be granted, when the defendant had no opportunity to show that the relief proposed by the court could not be granted. When there is no prayer for a particular relief and no pleadings to support such a relief, and when defendant has no opportunity to resist or oppose such a relief, if the court considers and grants such a relief, it will lead to miscarriage of justice. Thus it is said that no amount of evidence, on a plea that is not put forward in the pleadings, can be looked into to grant any relief." 35. The Respondent submitted that he has acted completely as per law and followed various sections of the Code and the relevant regulations. It is a case of Respondent that he also kept in view the relevant judgments including Rainbow Papers (Supra) therefore the Appellant could n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 43. The Respondent submitted that through I.A. No. 735 of 2023, the Appellant, in fact, acknowledged and admitted that the treatment of its claim by the Liquidator being correct on the rationale that the old Assessment orders were under Section 67 of the Gujarat Sales Tax Act, 1969 and as the said enactment doesn't contain pari-materia stipulation akin to Section 48 of the Gujarat Value Added Tax Act, 2003, creating a first charge on the payable amount, therefore the decision of Apex Court rendered in case of Rainbow Paper Judgment would not be applicable to claims the of old Assessment Years. 44. The Respondent admitted that in terms of the Judgement of Rainbow Papers (Supra) few claims of the Appellant are covered under VAT Act, which are to be treated as secured debts and same treatment has been given by the Respondent. 45. It is strong pleading of the Respondent that the cases which are not covered either by Section 48 of the VAT Act and by Rainbow Papers (Supra) could not have been considered by him as Secured Creditors. 46. The Respondent took pains to explain that all remaining claims of the Appellant have been admitted and treated, albeit, as Unsecured Creditors. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sidered the claim of the Appellant for the period from AY 2007-08 to 2012-13 as a 'Secured Creditor'. As regards, the AY 2007-08 the assessment order was passed on 17.03.2012, in relation to the AY 2008-09 the assessment order was passed on 20.09.2012, in relation to the AY 2009-10 the assessment order was passed on 15.06.2013, in relation to the AY 2010-11 the assessment order was passed on 31.03.2015 and in relation to the AY 2012-13, the assessment order was passed on 31.03.2017. 54. As all the assessment orders were passed before the initiation of CIRP of the Corporate Debtor particularly before declaration of moratorium under the provisions of the Code, the said claim for the aforesaid Assessment Year from AY 2007-08, 2008-09, 2009-10, 2010-11 and 2012-13, were considered as a Secured Creditor in view of the judgment passed by the Hon'ble Supreme Court of India in the matter of Rainbow Paper (Supra). 55. The claims of the aforesaid duration is undisputed by the Appellant. It is noted that the Appellant filed its claims for the AY 2013-14 wherein the Assessment Order was passed on 30.03.2018 by the Appellant, AY 2014-15 wherein the Assessment Order was passed on 31.07 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecured claim". 61. It seems that the Reply of the Appellant to the Respondent vide letter dated 23.06.2023 is very significant and directly connected to present appeal. Hence, it would be desirable to look into same and the letter reads as under : - Hence the Appellant clearly acknowledged in Para 2 that AY 1994-95 to 1997 to 98 do not full as Secured Creditor. "2. Considering the said calculation, the claim of the department for AY 1994-95 to 97-98, undisputedly falls under the Gujarat Sales Tax Act, 1969 and not under the Gujarat Value Added Tax Act, 2003. Hence, for the said period State Tax Department would not fall within the purview of "Secured Creditor" as per the decision of the Hon'ble Apex Court in the case of Rainbow Paper being Civil Appeal No. 1661 of 2020." (Emphasis Supplied) Similarly the Appellant accepted that the issue AY 2014-15, 2015-16 and 2016-17 is post moratorium period :- "5. It is necessary to further clarify that the claim of the State Tax Department amounting to Rs.3,80,70,08,255/- for AY 2014-15 accrued vide Assessment Order dated 31.07.2018 which is post the period of Moratoriums. 8. The department does not dispute the fact that for AY ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eriod ends on the 19.02.2018 as per estimated date of closure of CIRP provided in Form A 'Public Announcement of the Corporate Debtor cannot be accepted. 65. It is also observed that the assessment orders for the AY 2015-16 & 2016-17 came to be passed by the Appellant on 29.11.2019 & 23.03.2020, respectively after passing of order of liquidation of Corporate Debtor i.e., 25.10.2018 which was not permitted as per Section 33(5) of the Code which provides that Subject to section 52, when a liquidation order has been passed, no suit or other legal proceeding shall be instituted by or against the Corporate Debtor. Therefore, after liquidation order has been passed by the Adjudicating Authority the moratorium under Section 33(5) of the Code comes into effect which is further confirmed by the Apex Court in the matter of Sundaresi Bhatt (Supra). The relevant portion of this judgement reads as under :- "44. At the cost of repetition, we may note that the demand notices issued by the respondent are plainly in the teeth of Section 14 of the IBC as they were issued after the initiation of the CIRP proceedings. Moratorium under Section 14 of the IBC was imposed when insolvency proceeding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2023 passed by Adjudicating Authority whereby, the Appellant was directed to lift the attachment within ten days of receipt of such intimation from the Respondent, however, till date, the Appellant continues illegally and unlawfully attachment on the subject property of the Corporate Debtor. This obviously is not in consonance with the law . 68. We also find logic in the pleadings of the Respondent that allowing such attachment over property during the subsistence of the moratorium, would undermine resolution of the Corporate Debtor and well prejudice the interests all stakeholders. This is found to be against the spirit of the Code. 69. We consciously note that the Appellant fairly conceded that his case to be partly covered by the Rainbow Paper (Supra) and the same fact has not been disputed by the Respondent. We also observe that the Respondent pleaded that he has treated the claims as Secured Creditors which are protected under of the VAT Act keeping in view of the Rainbow Paper (Supra) . 70. We understand from the information given by the parties that total 13 claims were submitted by the Appellant for the period 1994-95 onwards with total tax dues amounting to Rs. 1001,7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elow for convenience : " 48. Tax to be first charge on property. - Notwithstanding anything to the contrary contained in any law for the time being in force, any amount payable by a dealer or any other person on account of tax, interest or penalty for which he is liable to pay to the Government shall be a first charge on the property of such dealer, or as the case may be, such person." 29. As argued by the learned Solicitor General, the term "secured creditor" as defined under IBC is comprehensive and wide enough to cover all types of security interests, namely, the right, title, interest or a claim to property, created in favour of, or provided for a secured creditor by a transaction, which secures payment or performance of an obligation and includes mortgage, charge, hypothecation, assignment and encumbrance or any other agreement or arrangement securing payment or performance of any obligation of any person. 30. The learned Solicitor General rightly argued that in view of the statutory charge in terms of Section 48 of the GVAT Act, the claim of the Tax Department of the State, squarely falls within the definition of "security interest" under Section 3(31) IBC and the Sta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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