Amar Nath Liquidator For Karan ... vs Excise & Taxation Commissioner Haryana ...

Comp. App. (AT) (Ins) No. 221 of 2023 & I.A. No. 795, 796 of 2023 IN THE MATTER OF: Amar Nath ...Appellant Liquidator for Karan Processors Pvt. Ltd. (In Liquidation)

Versus

Excise & Taxation Commissioner ...Respondent

Present: For Appellant : Mr. Saurabh Jain, Mr. Amar Nath and Mr. Prayag Jain, Advocates.

For Respondent : None.

ORDER

[Per : Justice Mr. Rakesh Kumar Jain (Oral)]

11.01.2024 This appeal is directed against the order dated 24.01.2023

passed by the National Company Law Tribunal, Chandigarh Bench,

Chandigarh ( in short 'Adjudicating Authority') by which an application bearing

I.A. 486/2021 filed by the Respondent in CP (IB) No. 339/Chd/Hry/2019

under Section 54 of the Insolvency and Bankruptcy Code, 2016 (the "Code")

has been allowed.

2. Shorn of unnecessary details, M/s Ultratreat Industrial Services filed a

petition under Section 9 of the Code against M/s Karan Processors Pvt. Ltd.

('Corporate Debtor') which was admitted and the CIRP proceedings were

initiated. There was no resolution of the amount claimed, therefore, order for liquidation was passed and Amar Nath was appointed as the Liquidator of the

Corporate Debtor. The Liquidator filed the application under Section 54 of the

Code for dissolution. While the said application was pending, the Respondent

filed an application/ appeal under Section 42 of the Code bearing I.A. No. 486/

2021 seeking a direction to the liquidator to accept the claim filed by the

Respondent in Form C in terms of IBBI (Liquidation Process), Regulations 2016

(in short 'the Regulations').

3. Case of the Respondent is that the books of accounts of the Corporate

Debtor, for the assessment year 2014-15 and 2016-17, were assessed on

15.03.2018 and 05.02.2020 respectively and an amount of tax was found due

of Rs. 3,39,157/- and Rs. 14,82,357/-, total amounting to Rs. 18,21,513/-.

3. The Respondent came to know that the liquidation proceedings against

the Corporate Debtor is pending, therefore, filed an application on 01.03.2021

and informed the liquidator through e-mail. The Liquidator replied on

03.03.2021 that the date of submission of claim was upto 26.12.2020 and the

claim received much beyond the period prescribed cannot be entertained.

4. The case of the Liquidator is that he had sent an e-mail to all the

stakeholder including the Respondent 02.12.2020 and also sent final reminder

on 11.12.2020 but the claim was filed on 01.03.2021 much after the period

had expired on 26.12.2020.

5. The Tribunal while relying on the judgment of the Hon'ble Supreme

Court in the case of State Tax Officer Vs. Rainbow Papers Limited, Civil

Appeal No. 1661 of 2020 and Civil Appeal No. 2568 of 2020 decided on 06.09.2022, held that filing of dues within the prescribed period does not apply

to the taxation department as Section 26 of Haryana Value Added Tax, 2003

creates a first charge on the property of the defaulter. On this premise, the

Tribunal issued a direction to the Appellant to treat the claim of the

Respondent under Section 53(1)(b)(ii) at par with the debt owed to a Secured

Creditor ranking equally with other secured debts. It also directed the

Liquidator to ensure that the stakeholders, who have received any money

beyond their entitlement at the time of distribution, forthwith return the same

as per Regulation 43 of IBBI (Liquidation Process) Regulation, 2016 so that

dues of Respondent are paid as directed. Aggrieved by the aforesaid order the

present appeal has been filed.

6. It is submitted by Counsel for the Appellant that there is no dispute that

Form C was sent by the Respondent through e-mail on 01.03.2021 and it was

replied on 03.03.2021 by the Liquidator informing them that the claim cannot

be submitted after 26.12.2020. It is further submitted that from 11.03.2021 to

31.03.2021, the property under liquidation was sold in auction and the

proceeds of Rs. 39 Lakhs was distributed to as many as 29 stakeholders

including the liquidation cost.

7. It is also submitted that the at the time when the claim filed by the

Respondent was rejected, the decision of the Hon'ble Supreme Court in the

matter of Rainbow Papers Limited (Supra) had not come as it was delivered

on 06.09.2022 and therefore, the Appellant has followed the provisions of law as per which timeline was given for the purpose of seeking claims before him

by the stakeholders.

7. It is further argued that decision in the case of Rainbow Papers Limited

(Supra) has been confined to facts of that case as held in the case of

Paschimanchal Vidyut Vitran Nigam Ltd Paschimanchal Vidyut Vitran

Nigam Ltd Vs. Raman Ispat Private Limited & Ors. Civil Appeal No. 7976 of

2019 decided on 17.07.2023.

8. It is argued that even the decision rendered in the case of Rainbow

Papers Limited (Supra) is distinguishable on the facts because that has been

rendered in the matter where the CIRP proceedings were pending, whereas it is

the case where even the liquidation proceedings are over.

9. It is further submitted that it would be a herculean task for the Appellant

(as Liquidator), after the completion of the liquidation proceedings and making

all the payment to the Stakeholders, to recover the amount from as many as 29

stakeholders.

10. It is submitted that the total claim received was of Rs. 2.48 Crores and

the admitted claim was of Rs. 2.32 Crores but the liquidation value was only of

Rs. 39 Lakhs i.e, only about 15% of the total claim admitted out of which the

amount has been distributed to as many as 29 stakeholders.

11. It is also submitted that after the liquidation proceedings were over and

the application was filed for an order of dissolution, the liquidator does not

have any mechanism to incur expenses for recovery of the amount for which

the direction has been issued.

12. It is further submitted that even the bank account of the Corporate

Debtor has been closed.

13. Counsel for the Appellant has also referred to a decision of the Delhi

High Court rendered in the case of M/s Kamla Syntex Limited vs. -----,

CO. PET. 125 of 2000 decided on 18.05.2018 and referred to para 13 and 14

which is reproduced as under :

"13. Reference may also be had to A. Ramaiya "Guide to Companies Act,"

Seventeenth Edition, where in respect of Section 474 of the Companies Act, the learned Author notes:

"The object of the section is that the assets of a company in liquidation should be realized and distributed pari passu among the creditors as expeditiously as possible. It is, therefore, only proper that creditors who want to claim the benefit of any distribution of the assets should prove their debts and claims as soon as possible.

The section provides for the court fixing a time or times within which the creditors are to send their proofs. The fixing of a date does not mean that a creditor who fails to prove within the time is excluded altogether. He may come in and prove at any time, before the company is dissolved. The only penalty is that he disentitles himself from participating in any dividend declared before he comes in. That is to say, he will not be allowed to disturb or reopen dividends already declared."

14. What emerges from the catenae of judgments above is that it was for the applicant to have approached the OL to have his claim settled within the stipulated period. As he failed to do the same, he is entitled to the fund, which is presently available with the OL, He cannot undo the dividends already paid."

14. No one appears on behalf of the Respondent.

15. We have heard Counsel for the Appellant and perused the record.

16. There is no doubt that at the time when the Appellant rejected the claims

of the Respondent, there was a timeline and the window was open till

26.12.2020 whereas Form C was submitted on 01.03.2021 but the decision of

the Hon'ble Supreme Court, which is a declaration of law, rendered on

06.09.2022 categorically says that the filing of dues within the prescribed

period does not apply to the Respondent as in that case also there was a claim

of the taxation department and it was held that as per Section 26 of Haryana

Value Added Tax, 2003 the first charge on the dues under the said act, on the

property of the defaulter, is of the department.

17. But the important aspect of the matter has not been looked into by the

Learned Tribunal while issuing the directions.

18. The Tribunal has not taken into consideration the practical difficulties to

be faced by the Liquidator for the purpose of recovering the amount from 29

stakeholders after the entire proceedings were over.

19. In such circumstance, we find it just and expedient to set aside the

Impugned Order and remand it back to the Learned Tribunal to have a fresh

look into the matter in regard to the direction issued, keeping in view the

practical aspect much less difficulties, which are likely to be faced by the Appellant in-effecting recovery from 29 stakeholders as far as the money is

concerned.

20. The Learned Tribunal shall also take into consideration the decision of

the Hon'ble Delhi High Court which we have referred in the earlier paragraphs

of this order.

21. With these observations, the present appeal is hereby allowed. The

Impugned Order is set aside. The matter is remanded back to the Learned

Tribunal to decide it again in view of the aforesaid observations. The Parties

are directed to appear before the Tribunal on 31 January, 2024.

[Justice Rakesh Kumar Jain] Member (Judicial)

[Mr. Naresh Salecha] Member (Technical) Sim/Ravi