TaxTMI 
TaxTMI 
2026 (5) TMI 761
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....al Bank - Bank and directed to take steps as per the provisions of law. 2. Brief facts as narrated by the Appellant - Federal Bank are that the present Appeal is against the Order dated 30.05.2025 passed by the Hon'ble National Company Law Tribunal, New Delhi Bench, Court-4 in I.A. No. 2341 (ND)/2024 in CP (IB) No. 1581 (ND)/ 2019. 3. The Operational Creditor, M/s Roofs and Ceilings (I) Private Limited, had filed an application bearing no IB- 1581(ND) / 2019 under Section 9 of the Insolvency and Bankruptcy, 2016 for initiation of the Corporate Insolvency Resolution Process against the Corporate Debtor M/s. Dugal Associates Private Limited. Vide an order dated 11.12.2019, the Hon'ble Adjudicating Authority had initiated the CIRP of the Corporate Debtor. Further, on the application made by the Respondent, the then Resolution Professional under Section 33(2) of Insolvency and Bankruptcy Code, 2016 liquidation proceeding was initiated vide an order dated 12.01.2022. 4. Upon initiation of the liquidation process, the Appellant - Federal Bank had filed its claim with the Respondent - Liquidator for an amount of Rs. 6,09,82,591/- on 11,03.2022 by relinquishing security in....
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....d the structure of distribution of the sale proceeds to the secured financial creditors against the mandate of Section 53 of the Code, 2016 by including the Excise and Taxation Department Gurgaon in the list of secured financial creditor despite the fact that the said department doesn't own any security interest within the meaning of Section 52 read with Section 53(1)(b)(ii) by wrongly placing the reliance on the Hon'ble Supreme Court judgment passed in the matter of State Tax officer (1) versus Rainbow Papers Limited (2023) 9 SCC 545. 11. The Appellant - Federal Bank and another secured financial creditor namely Punjab National Bank has strongly objected the above action of the Respondent - Liquidator in including the Excise and Taxation Department Gurgaon in the list of Secured creditors. 12. Respondent has blindly placed the reliance on the Rainbow (Supra) without considering the fact that the rainbow (Supra) judgment is passed based on the different facts and circumstances wherein the challenge was with respect to the hypothetical liquidation for giving effect to the Section 30(2)(b)(ii) and the Corporate Debtor is now is not in the stage of hypothetical liquidati....
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.... been held that where the statute creates a charge over the property of the assesse, the Government can be treated as a secured creditor under Section 53 of the IBC. Accordingly, the Liquidator, in compliance with the law laid down by the Hon'ble Supreme Court in Rainbow Papers (supra), considered Haryana VAT dues as secured debt subject to verification and adjudication. the Appellant M/S Federal Bank Limited has filed an appeal before the Hon'ble NCLAT against the impugned order dated 30.05.2025 passed by the Hon'ble Adjudicating Authority taking plea against the treatment of Huyana VAT Department as a secured creditor and is claiming priority distribution under Section 53 of the IBC. The Respondent/Liquidator, relying on the reasoning laid down by the Hon'ble Supreme Court in the Rainbow Papers case, considered the claim of the Excise and Taxation Department as a 'Secured Creditor'. The claim of the Excise & Taxation Department is founded on Section 26 of the Haryana VAT Act, 2003, which is Pari Materia with Section 48 of the Gujarat VAT Act, as considered in the Rainbow Papers case, and thus qualifies as a 'Secured Creditor' under Section 3(30) of the IBC. Accordingly, t....
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.... VAT Department is entitled to distribution as a secured creditor under Section 53 of the IBC. Analysis 17. We have heard both sides and also gone through the material placed on record. 18. We note that on 30.05.2025, the Hon'ble Adjudicating Authority passed the impugned order stating that the application filed by the Appellant - Federal Bank does not warrant any merits and dismissed the Application filed by the Appellant - Federal Bank by referring the decision of the Hon'ble Supreme Court in State Tax Officer vs Rainbow Papers Limited (Civil Appeal Nos. 1661 of 2020 and 2568 of 2020 dated 06.09.2022) and giving various below-mentioned reasons: "5. In the present matter we observe that the Excise & Taxation Department, Gurgaon has already submitted its claim, and its claim had been duly acknowledged and accordingly admitted by the Respondent - Liquidator as per the provisions of the Code. 6. We are inclined to refer the decision of the Hon'ble Supreme Court in the case of State Tax Officer vs Rainbow Papers Limited (Civil Appeal Nos. 1661 of 2020 and 2568 of 2020 dated 06.09.2022), wherein it is held that: (I) Under the un-amended p....
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....e were arrears of land revenue". 8. In view of the discussion above and the directions passed by the Hon'ble Supreme Court's in State Tax Officer (1) v. Rainbow Papers Ltd., (2023) 9 SCC 545, we do not find any merit in the contentions raised by the Applicant in the present application. The Ld. Respondent - Liquidator is directed to take steps as per the provisions of laws. Accordingly, the present application i.e. IA/2341/ND/2024 stands dismissed." 17. The counsel of the Respondent - Liquidator relies on the judgment of Rainbow Papers Limited (supra) and with respect to Paschimanchal Vidyut Vitran Nigam Ltd. (supra) he has not stated anything in his reply. Also, on a pointed query from this bench, he concedes that it is up to the bench to decide the case on the merit and the law position. 18. Basis the material placed on record we find that Adjudicating Authority has erred in ignoring the judgement of the Hon'ble Supreme Court given in the matter of Paschimanchal Vidyut Vitran Nigam Ltd. versus Raman Ispat Private Limited & Ors. (2023) 10 SCC 60 wherein when the similar question of law arose, the state government did not get any relief from the ....