Insolvency liquidation claims cannot be enforced against a bona fide auction purchaser when government dues were not admitted.

Government dues not admitted in the insolvency or liquidation claim framework cannot survive liquidation sale and cannot be enforced against a bona fide purchaser from the liquidator. Applying Sections 52 and 53 of the Insolvency and Bankruptcy Code, together with the clean slate principle and the Code's overriding effect, the Court held that the State's asserted tax charge ranked within the statutory waterfall and could not override the sale. The revenue authorities also could not insist on that charge as a condition for mutation, where the sale deed excluded prior governmental dues. The purchaser was therefore entitled to certification of the revenue entry and deletion of the consequential charge.

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Issues: (i) Whether the State's tax dues and charge could survive the liquidation process under the Insolvency and Bankruptcy Code and be enforced against the auction purchaser. (ii) Whether the purchaser was entitled to mutation and certification of the revenue entry without being burdened by the State's dues.

Issue (i): Whether the State's tax dues and charge could survive the liquidation process under the Insolvency and Bankruptcy Code and be enforced against the auction purchaser.

Analysis: The corporate debtor underwent insolvency and liquidation. Claims were invited both during the resolution stage and again in liquidation, but the State failed to sustain its claim in the first stage and did not lodge any effective claim in liquidation. The Court applied the scheme of Sections 52 and 53 of the Insolvency and Bankruptcy Code, 2016, and held that government dues, in the absence of admission or inclusion in the liquidation framework, rank in the statutory waterfall and cannot override the liquidation sale. The Court also relied on the clean slate principle and the overriding effect of the Code to hold that the purchaser could not be fastened with pre-existing dues after sale by the liquidator.

Conclusion: The State's tax claim and the asserted charge could not be enforced against the purchaser and stood displaced by the liquidation framework.

Issue (ii): Whether the purchaser was entitled to mutation and certification of the revenue entry without being burdened by the State's dues.

Analysis: The sale deed contained a covenant that the purchaser would not be liable for prior governmental dues, and the property was sold by the liquidator on the basis of the insolvency process. The Court held that, in these circumstances, the revenue authorities could not insist on the State's charge as a condition for transfer in the purchaser's name. The later attempt to register or retain a charge in the revenue records was therefore unsustainable.

Conclusion: The purchaser was entitled to certification of the entry and deletion of the consequential charge entry.

Final Conclusion: The writ petition succeeded, the impugned order and consequential revenue entry were set aside, and the revenue authorities were directed to certify the purchaser's entry in the land records.

Ratio Decidendi: In liquidation, government dues not forming part of the admitted claim structure cannot be enforced against a bona fide purchaser from the liquidator, and the statutory waterfall under the Insolvency and Bankruptcy Code prevails over a post-sale assertion of charge in the revenue records.

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