Income Tax Department vs G. Madhusudhan Rao Resolution ...

Income Tax Department ....Appellant Vs. Mr. G. Madhusudhan Rao ...Respondents Resolution Professional of M/s. Midland Polymers Ltd. & Anr. For Appellant Mr. Maithili Mehta, Advocate. For Respondents Mr. Rohit Rathi, Mr. Yashas RK, Advocates.

ORDER

(Hybrid Mode)

12.12.2023: Heard Learned Counsel for the Appellant.

2. This Appeal has been filed against the order dated 18.08.2023 passed

by the Adjudicating Authority (National Company Law Tribunal), Indore

Bench, by which order Adjudicating Authority has allowed the application IA

No.177 of 2023 filed by the Resolution Professional for approval of the

Resolution Plan. Appellant before us is the Income Tax Department who was

an Operational Creditor and has filed the claim in the CIRP for an amount of

Rs.26,06,41,424/-. In the Resolution Plan, the Appellant has been allocated

only Rs.5 lakhs which allocation is under challenge in this Appeal.

3. Learned Counsel for the Appellant submitted that the Appellant's claim

was only partially accepted since the Appeal against the order of assessment

was pending. It is submitted that the Appellant is secured operational creditor 2

and it was entitled for the benefit of the judgment of the Hon'ble Supreme

Court in "State Tax Officer vs. Rainbow Papers Limited- Civil Appeal No.

1661 of 2020".

4. Learned Counsel for the Respondents refuting the submission of the

Appellant contends that the judgment of the Hon'ble Supreme Court in

'Rainbow Papers Ltd.' (supra) has been clarified subsequently and there is no

error in allocation of amount of Rs.5 lakhs in the Resolution Plan, the

Appellant being only an operational creditor.

5. We have considered the submissions of the Counsel for the Appellant

and perused the record. The Appellant has filed the claim of Rs.26,06,41,424/-

and the claim was admitted for the same amount. The nature of claim was

mentioned as contingent liability. As appeal was pending against the

assessment order. The amount of Rs.5 lakhs which was allocated the

Appellant being operational creditor, Appellant was entitled for allocation of

the amount which is not less than the amount which the Appellant would have

been paid in event the Corporate Debtor is liquidated. It is not shown that the

amount of Rs.5 lakh is below the amount which the Appellant was entitled in

the event of liquidation of the Corporate Debtor. We, thus, are of the view that

no error can be found out in allocation of Rs.5 lakhs in the Resolution Plan.

6. Insofar as judgment of the Hon'ble Supreme Court is concerned, we are

of the view that in 'Rainbow Papers Ltd.' (supra), the Operational Creditor was

held to be secured creditor on the basis of relevant statutory provisions

whereas there is no basis to contend that the Appellant is secured operational

Company Appeal (AT) (Insolvency) No. 1302 of 2023 3

creditor. We, thus, do not find any error in the impugned order approving the

Resolution Plan. There is no merit in the Appeal. The Appeal is dismissed.

[Justice Ashok Bhushan] Chairperson

[Barun Mitra] Member (Technical)

[Arun Baroka] Member (Technical) Anjali/nn

Company Appeal (AT) (Insolvency) No. 1302 of 2023