Mr. Justice Devan M. Desai

If claim lodged during CIRP was rejected for want of sufficient proof and during the liquidation, no claim was lodged by GST Department, Purchaser in liquidation process is entitled to a clean slate and not responsible to pay any due amount to the Government – KRBL Ltd. Vs. State of Gujarat – Gujarat High Court

Hon’ble High Court held that:
(i) In light of the judicial pronouncement in Ghanashyam Mishra and Sons (2021) ibclaw.in 54 SC the debt therefore did not form a part of the resolution plan and therefore stood extinguished.
(ii) State tax dues and the State would be a claimant as an operational creditor.
(iii) In the facts of the present case having failed to assert its claim the State as an operational creditor/stakeholder/secured creditor would have to fall in line as per the “waterfall mechanism” under Section 53 of the IBC.
(iv) The decision of the Supreme Court in the case of Paschimanchal Vidhyut Vitran Nigam Limited would indicate that once having relinquished its interest under Section 52, the State cannot continue the insistence of maintaining the charge in the revenue records and its claim will have to stand in priority.
(v) Even otherwise as per Section 100 of the Transfer of Property Act, a charge cannot be enforced against any property in the hands of a person to whom such property has been transferred for consideration and without notice of such charge.
(vi) The Purchaser was entitled to a clean slate.

If claim lodged during CIRP was rejected for want of sufficient proof and during the liquidation, no claim was lodged by GST Department, Purchaser in liquidation process is entitled to a clean slate and not responsible to pay any due amount to the Government – KRBL Ltd. Vs. State of Gujarat – Gujarat High Court Read Post »

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