Statutory first charge and delayed tax claim under insolvency law cannot be defeated merely by late filing.

Statutory first charge under the Himachal Pradesh Value Added Tax Act, 2005 was treated as relevant in liquidation under the Insolvency and Bankruptcy Code, 2016, and the later Rainbow Papers principle was noted to support the view that such state dues may rank as secured debts. The claim could not be rejected merely because it was filed belatedly, and delay alone was insufficient to defeat the State tax authorities' charge over the corporate debtor's property. The direction to issue a no-objection certificate for registration of the properties was therefore unsustainable, and the claim rejection on the ground of delay could not stand.

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Issues: Whether the State tax authorities' statutory charge over the corporate debtor's property survived liquidation proceedings under the Insolvency and Bankruptcy Code, 2016, and whether delay in filing the claim was a sufficient ground to reject the claim and direct issuance of no-objection certificate for registration of the properties.

Analysis: The appeal turned on the effect of the statutory first charge created under the Himachal Pradesh Value Added Tax Act, 2005, read with the treatment of secured creditors and statutory dues under the Insolvency and Bankruptcy Code, 2016. The decision considered the later pronouncement of the Supreme Court in Rainbow Papers, which held that statutory dues backed by a first charge cannot be ignored merely because a claim is filed belatedly and that such dues may rank as secured debts. The liquidation framework under Regulation 21A of the IBBI (Liquidation Process) Regulations, 2016 and the claim-admission process were also examined, but the rejection of the State's claim solely on delay and the direction to issue no-objection certificate were found unsustainable.

Conclusion: The statutory charge of the State tax authorities could not be defeated merely on the ground of delay in filing the claim, and the order directing issuance of no-objection certificate and rejecting the claim could not stand.

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