First charge tax claims in liquidation require reconsideration where recovery from distributed proceeds creates operational difficulty.

Tax dues asserted as a first charge were treated as not defeated merely because the claim was lodged after the liquidation claim period, but the appellate forum held that the practical consequences of recovering amounts already distributed to multiple stakeholders after completion of liquidation had not been properly addressed. It noted substantial operational difficulty in clawing back distributed proceeds and required reconsideration in light of the earlier Delhi High Court view referred to in the order. The impugned order was set aside and the matter remanded for fresh decision.

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Issues: Whether the impugned order directing acceptance of the tax claim and recovery of distributed liquidation proceeds required interference, and whether the matter should be remanded for fresh consideration in light of the practical difficulties stated by the liquidator.

Analysis: The appeal arose from an order that relied on the principle that tax dues enjoying a first charge may not be defeated merely because the claim was lodged after the liquidation claim period. The order, however, did not address the practical consequence of directing recovery of amounts already distributed to multiple stakeholders after completion of liquidation. The appellate forum noted that the liquidation estate had already been distributed and that recovery from numerous stakeholders would raise substantial operational difficulty. It also observed that the matter required reconsideration with reference to the earlier Delhi High Court view referred to in the order.

Conclusion: The impugned order was set aside and the matter was remanded for fresh decision.

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