Statutory dues under Motor Vehicles Act in respect of the vehicles, under auction during liquidation can only be recovered under the provisions of the Code and not from the auction purchasers – East India Enterprise Thro Proprietor Rajeshbhai Bholabhai Ramani Vs. Ministry of Finance Department of Revenue Through The Director – Gujarat High Court
The petitioners had purchased the vehicles in the E-auction proceedings conducted by Official Liquidator of the Corporate Debtor. On 18.06.2019 the respondent No. 2 issued the Provisional Attachment Order under sub-Section (1) of Section 5 of the PMLA, by which the movable properties, i.e. 6170 numbers of road vehicles of the Corporate Debtor, were ordered to be provisionally attached for a period of 180 days. The petitioners-auction purchasers made representation dated 14.08.2019 to the respondent-Department seeking release of the movable properties from attachment.
Hon’ble High Court held that the petitioners have produced on record the demand Notice issued against the Corporate Debtor by one of the respondent Regional Transport Offices claiming payment of taxes in respect of some of the subject vehicles. However, the amounts so due from the Corporate Debtor, considering that these are statutory dues in respect of the vehicles which were sold by the Official Liquidator and which belong to the Corporate Debtor, would not be in terms of the provisions of the Motor Vehicles Act and the Rules framed thereunder, but would necessarily have to be under the provisions of the IB Code. In other words, the dues relatable to the vehicles belonging to the Corporate Debtor can only be recovered under the provisions of the IB Code, i.e. the waterfall mechanism under Section 53 of the IB Code and not from the petitioners, being the auction purchasers. The petitioners could be held liable to pay statutory dues in respect of the subject vehicles, which have been claimed by the respondent – Regional Transport Offices after their purchase by the petitioners in April 2019, only from the date when they had purchased the subject vehicles after having exercised their right to raise objections to such claim. The petitioners could be held liable to pay statutory dues in respect of the subject vehicles, which have been claimed by the respondent – Regional Transport Offices after their purchase by the petitioners in April 2019, only from the date when they had purchased the subject vehicles after having exercised their right to raise objections to such claim.