TaxTMI 
TaxTMI 
2024 (9) TMI 565
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....t M/s Rajpal Abhikaran Pvt. Ltd. (Corporate Debtor) bearing CP (IB) No. 6 of 2020 which was admitted by the Adjudicating Authority (National Company Law Tribunal, Indore Bench) on 26.03.2021 and appointed Ms Teena Saraswat as the Interim Resolution Professional. 2. The IRP formed the CoC of the following financial creditors which is reproduced as under:- Sr. Name of FC % Voting share 1. State Bank of India 23.24% 2. Volark Auto Pvt. Ltd. 1.61% 3. Suraksha ARC 42.36% 4. AU Small Finance Bank Limited 12.45% 5. Sudaaram Finance Limited 0.63% 6. Shri Ram City Union Finance Ltd. 7.98% 7. Toyota Financial Services India Ltd. 11.12% 8. PPG Asian Paints Pvt. Ltd. 0.60% 3. The resolution plan submitted by Agarwal Real City Pvt. Ltd. (PRA) was approved by the CoC with 90.41% votes in 17th meeting held on 17.12.2021. 4. The Liquidation value and fair value of the CD was reported at Rs. 18,39,91,863/- and Rs. 23,22,47,203/- respectively. 5. The Prospective Resolution Applicant proposed to pay a sum of Rs. 22,61,33,000 against the total admitted claim which is as follows:- Sr. Particul....
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....shall submit claim with proof on or before the last date mentioned in the public announcement". 24. In this case, claims were invited well before the 5th October, 2017 which was the last date for submission of claims. Under the unamended provisions of Regulation 12(1), the Appellant was not required to file any claim. Read with Regulation 10, the appellant would only be required to substantiate the claim by production of such materials as might be called for. The time stipulations are not mandatory as is obvious from Sub-Regulation (2) of Regulation 14 which enables the Interim Resolution Professional or the Resolution Professional, as the case may be, to revise the amounts of claims admitted, including the estimates of claims made under Sub- Regulation (1) of the said Regulation as soon as might be practicable, when he came across additional information warranting such revision. 25. In this case, at the cost of repetition, it may be noted that there was no obligation on the part of the State to lodge a claim in respect of dues which are statutory dues for which recovery proceedings have also been initiated. The appellants were never called upon to produce materia....
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....any Central Act and was not akin to the provision of Section 48 of the GVAT Act and thus it was held that the decision in the case of Rainbow papers (Supra) is not applicable. It is further submitted that the decision in the case of Zicom Saas (Supra) was followed in the case of Department of State Tax Vs. D.S Kulkarni Developers Ltd., CA (A) (Ins) No. 1284 of 2023 and Devarajan Raman Liquidator Vs Principal Commissioner Income Tax, CA (AT) (Ins) No. 977 of 2023. It is further submitted by Counsel for Respondent No. 2 that the decision in the case of Rainbow papers (Supra) has been held to be a decision in the facts of that case in a subsequent judgment by the Hon'ble Supreme Court in the case of Paschimanchal Vidyut Vitran Nigam Limited Vs. Rama Ispat Pvt. Ltd. & Ors. Civil appeal No. 7976 of 2019 decided on 17.07.2023. In order to bring all the facts of record, he has referred to a decision in the Review Petition (Civil) No. 1620 of 2023 filed in the matter of Rainbow Papers (Supra) which came to be dismissed on 31.10.2023. Counsel for Respondent No. 2 has further submitted that Section 530 of the Companies Act, 1956 which is para materia with Section 327 of Companies Act, 2013 s....
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....dues and debts due to secured creditors as provided Under Clause (b) of Section 529A(1), has to be paid in priority to all other debts, including tax dues to the Revenue. In view of the clear language of Sections 529A and 530, there is no escape from this conclusion, and we must, therefore, hold that the High Court was right in its decision. We, therefore, find no merit in these appeals and the same are accordingly dismissed." 13. The contention of the R2 is that priority has to be given in terms of Section 529A of the Act, 1956. 14. State Bank of India also filed an application to intervene in this matter and Counsel appearing on its behalf has argued that SBI had a voting share of 23.24% in the CoC, the SBI was the sole secured creditor having admitted claims of Rs. 23 Cr. and was paid around Rs. 19 Cr. under the resolution plan which has been approved by voting share of 98.39% of the CoC. He has also supported the argument of Respondent No. 2 to contend that the decision in the case of Rainbow papers (Supra) is not applicable to the facts of this case because Section 48 of the GVAT Act and Section 33 of the MPVAT Act are not pari materia. 15. In rebuttal, Counsel for th....
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.... Preferential payments . (1) In a winding up, [subject to the provisions of section 529-A, there shall be paid] in priority to all other debts- (a) all revenues, taxes, cesses and rates due from the company to the Central or a State Government or to a local authority at the relevant date as defined in clause (c) of sub-section (8), and having become due and payable within the twelve months next before that date; (b) all wages or salary (including wages payable for time or piece work and salary earned wholly or in part by way of commission) of any employee, in respect of services rendered to the company and due for a period not exceeding four months within the twelve months next before the relevant date [* * *] [ Certain words omitted by Act 35 of 1985, Section 6 (w.e.f. 24.5.1985).], subject to the limit specified in sub-section (2); (c) all accrued holiday remuneration becoming payable to any employee, or in the case of his death to any other person in his right, on the termination of his employment before, or by the effect of, the winding up order or resolution; (d) unless the company is being wound-up voluntarily merely for the purpos....
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....riority in respect of the money so advanced and paid, up to the amount by which the sum in respect of which the employee or other person in his right, would have been entitled to priority in the winding up has been diminished by reason of the payment having been made. (5) The foregoing debts shall- (a) rank equally among themselves and be paid in full, unless the assets are insufficient to meet them, in which case they shall abate in equal proportions; and (b) so far as the assets of the company available for payment of general creditors are insufficient to meet them, have priority over the claims of holders of debentures under any floating charge created by the company, and be paid accordingly out of any property comprised in or subject to that charge. (6) Subject to the retention of such sums as may be necessary for the costs and expenses of the winding up, the foregoing debts shall be discharged forthwith so far as the assets are sufficient to meet them, and in the case of the debts to which priority is given by clause (d) of sub-section (1), formal proof thereof shall not be required except in so far as may be otherwise prescribed. (....
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....n full force. Effect of winding up on antecedent and other transactions" 20. Section 530 has been made subject to the provisions of Section 529A of the Act which is also reproduced as under:- "529A. [Overriding preferential payments (1) Notwithstanding anything contained in any other provision of this Act or any other law for the time being in force, in the winding up of a company- (a) workmen's dues; and (b) debts due to secured creditors to the extent such debts rank under clause (c) of the proviso to sub-section (1) of section 529 pari passu with such dues, shall be paid in priority to all other debts. (2) The debts payable under clause (a) and clause (b) of sub-section (1) shall be paid in full, unless the assets are insufficient to meet them, in which case they shall abate in equal proportions.]" 21. In the case of Commissioner of Income Tax Vs. KTC Tyres (India) Ltd. (Supra), the argument raised was that the capital gain tax which was payable by the company must be treated as liquidation expenses and therefore, must be paid first even before the dues of the workmen and secured creditors are discharged. T....