TaxTMI 
TaxTMI 
2022 (3) TMI 996
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....2. The Appellant has stated in the appeal that Respondent No. 1/Kharkia Steels Pvt. Ltd. is a dealer vide registration No. 192035057712 since 19.3.2008 and is liable to pay Entry Tax as levied under the West Bengal Tax of Entry on Goods into Local Areas Act, 2012, Value Added Tax and Central Sales Tax to the Appellant as a registered dealer. Due to non-payment of dues, there was an accumulated amount of Rs. 76,12,41,782/- that became due for payment to the Appellant by Respondent No. 1. The Appellant has further stated that on an application filed by Dena Bank/ Financial Creditor under section 7 of the Insolvency and Bankruptcy Code, 2016 (hereafter called 'IBC') Corporate Insolvency Resolution Process (hereafter called 'CIRP') was initiated against the Respondent No. 1/Corporate Debtor Kharkia Steels Pvt. Ltd. During the CIRP, the Resolution Professional (in short 'RP') sought Resolution Plan from prospective Resolution Applicants and the submitted resolution plans were considered by the Committee of Creditors (in short 'CoC') and approved by a voting share of 82.75% in a meeting of the CoC on 4.4.2020. Thereafter, an application bearing IA No. 680/KB/2020 was submitted by the Res....
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....d Counsel for Appellant has also argued that the appointment of registered valuers for ascertaining the liquidation value of the Corporate Debtor was not done in accordance with the requirement of Regulation 27 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (in short 'CIRP Regulations') whereby the appointment of registered valuers has to be done by the Resolution Professional within 47 days from the insolvency commencement date, which was not done in this case. She has further argued that the total admitted claim of the Operational Creditor, which is Rs. 76.12 crores, pertains to the dues that relate to a long period which is much before the commencement of CIRP and was assessed by the State Tax Authorities and such an assessment can only be overturned through an appeal to the designated authority and not through a Resolution Plan which is approved by the Adjudicating Authority. 7. The Learned Counsel for Appellant has, therefore, urged that while the satisfaction of the CoC and the Adjudicating Authority has to be subjective in approving the proposed Resolution Plan, it cannot be arbitrary in approving th....
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....he Learned Senior Counsel of Respondent No.1. He has cited the judgment of the Hon'ble Supreme Court in the matter of Principal Commissioner of Income Tax vs. Monnet Ispat and Energy Limited (2018 18 SCC 786) wherein the Hon'ble Supreme Court has held that by virtue of section 238 of IBC, the provisions of IBC will override anything inconsistent contained any other enactment, including Income Tax Act and in such a view the Appellant's contention that the liability accrued due to state taxes prior to enactment of the IBC cannot be overridden by the resolution plan approved under the provisions of IBC is erroneous. 10. The two issues that arise in this appeal are :- (i) Whether the commercial wisdom of the CoC has taken into account the feasibility and viability of the proposed resolution plan which does not treat the operational and financial debts on parity; and (ii) Whether the process assessment of liquidation value is vitiated as the registered valuers were appointed beyond the stipulated time period stipulated in the CIRP regulations rendering the approval of resolution plan defective. 11. Section 30(2)(b), clauses (i) and (ii) read with section 53 of th....
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....utlay Rs. Crore Particulars Upfront Payment (within 15 days of Effective Date) For Business Improvement within 12 months of Total IRP Cost 0.300 0.300 Workman/Employees - - Operational Creditors (Other Workman/ Employees) 0.140 0.140 Secured Financial Creditors 8.220 8.220 Unsecured Financial Creditors 0.004 0.004 Sub-Total 8.664 8.664 Business Improvement 25.00 25.000 Total 8.664 25.00 33.664 Funded by Equity 0.500 0.500 Own contribution of RA (in the form of other instrument 8.164 33.164 Total 8.664 25.00 33.664 13. In the above scheme of distribution, operational creditors (other than workmen/employees) have been provided a total amount of Rs. 0.14 crore which is to be distributed among the operational creditors vide clause 5 of Section II - "Detailed Financial Proposal of the Resolution Applicant" of the resolution plan. The two operational creditors, namely Commissioner of Commercial Taxes and Damodar Valley Corporation have been provided....
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....tional Creditors under this Resolution Plan is not be less than: a) The amount to be paid to such creditors in the event of a liquidation of the Corporate Debtor under Section 53; or b) The amount that would have been paid to such creditors, if the amount to be distributed under the resolution plan has been distributed in accordance with the order of priority in sub-section (1) of section 53. whichever is higher." 15. We, therefore, find that the operational creditors have been paid an amount in accordance with section 30(2)(b) of the IBC, when the liquidation value of the Corporate Debtor was assessed as Rs. 6.52 crores. Hence the successful resolution plan is in consonance with the provisions of IBC, wherein the payment to the operational and financial creditors and other stakeholders is according to the commercial wisdom of the CoC. 16. We refer to the judgment of Hon'ble Supreme Court in the matter of Ghanashyam Mishra & Sons Private Limited through the authorized signatory Vs Edelweiss Asset Reconstruction Company Ltd. through the Director and Ors. (2021 SSC Online SC 313) wherein the Hon'ble Supreme Court has observed as follows regarding the ....
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....ll for interference unless creditors belonging to a class being similarly situated are denied fair and equitable treatment' also provides strength and support to the contention of the Respondents. 20. Insofar as the issue of the late appointment of registered valuers is concerned, admittedly they were appointed two days after the stipulated timeline given in the Regulation 35 and Regulation 27 of the CIRP Regulations. Regarding the appointment of professionals, Regulation 27 (1) states as hereunder:- "27. Appointment of Professionals. (1) The resolution professional shall, within seven days of his appointment but not later than forty-seventh day from the insolvency commencement date, appoint two registered valuers to determine the fair value and the liquidation value of the corporate debtor in accordance with regulation 35." 21. There is no other allegation against the valuation done by registered valuers who were appointed to determine the fair and liquidation value of the corporate debtor in accordance with regulation 35 which calls in question the assessment of liquidation value. The mere fact that the appointment was done two days after the 47th day from....