VAT first charge and insolvency priority: state tax claim did not defeat the resolution plan or secured creditor status.

A state VAT first-charge claim did not displace the insolvency distribution scheme because the Maharashtra VAT provision made that charge subject to any Central Act creating a first charge. The provision was distinguished from the Gujarat VAT provision considered in the earlier Supreme Court ruling. The resolution plan was also found to satisfy the insolvency code's minimum payment requirement because the claimant was to receive at least the amount payable in liquidation. On that basis, the tax claimant was not treated as a secured creditor, and the approval of the resolution plan was not disturbed.

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Issues: Whether the appellant's tax claim entitled it to be treated as a secured creditor so as to invalidate approval of the resolution plan under the insolvency law framework.

Analysis: The claim of first charge under the state VAT legislation was held not to override the insolvency distribution scheme in the facts of the case. The cited Maharashtra VAT provision was distinguished from the Gujarat VAT provision considered in the earlier Supreme Court decision, since the Maharashtra provision itself made the first charge subject to any Central Act creating first charge. The resolution plan was also found not to offend the minimum payment requirement under the insolvency code because the appellant was being paid at least the amount payable in liquidation.

Conclusion: The appellant was not entitled to secured creditor status and no ground was made out to interfere with approval of the resolution plan.

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