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Home Case Index All Cases Insolvency and Bankruptcy Insolvency and Bankruptcy + Tri Insolvency and Bankruptcy - 2020 (10) TMI Tri This

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2020 (10) TMI 736 - Tri - Insolvency and Bankruptcy


Issues:
1. Application for directions to ensure payment of dues as Secured Creditors under the Insolvency & Bankruptcy Code, 2016.
2. Claim of being a Secured Creditor under the Gujarat Value Added Tax.
3. Interpretation of "Operational Creditor," "Financial Creditor," and "Operational Debt."
4. Applicability of Section 238 of the IBC overriding other laws.
5. Precedents related to the overriding effect of the IBC.

Analysis:
1. The Applicant, a State Tax Officer-1, filed applications seeking directions for securing dues as Secured Creditors under the Insolvency & Bankruptcy Code, 2016, specifically under Part II Chapter II. The Applicant claimed to be a Secured Creditor based on the provisions of the Gujarat Value Added Tax, aiming to be recognized as such in a case under Corporate Insolvency Resolution Process (CIRP).

2. The Tribunal examined the definitions of "Operational Creditor," "Financial Creditor," and "Operational Debt." It was noted that dues to the Government, Central Government, State Government, or any legal authority fall under the category of "Operational Debt." The Applicant's assertion of being a Secured Creditor under the Gujarat Value Added Tax was deemed unsustainable under the IBC's definitions and Section 238, which takes precedence over other laws.

3. Referring to the Hon'ble Supreme Court's rulings, the Tribunal highlighted the significance of Section 238 of the IBC, emphasizing its overriding effect on conflicting laws. The judgments underscored that the IBC's objective of completing Corporate Insolvency Resolution Processes promptly would be thwarted if other laws were allowed to impede the process.

4. Citing the Swiss Ribbons Pvt. Ltd. case, the Tribunal reiterated that statutory dues payable to Government Departments are categorized as "Operational Creditor" under the IBC. Consequently, the Tribunal concluded that the Applicant's claim did not align with the IBC's provisions, as Government dues are inherently considered operational debts.

5. Despite dismissing the Applicant's claim, the Tribunal granted the State Tax Officer-1 the liberty to present their claim as an "Operational Creditor" before the Resolution Professional. Ultimately, the Tribunal found no merit in the Applicant's application, leading to its disposal with the outlined observations.

 

 

 

 

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