2023 (12) TMI 1430 - AT - IBC

Challenge to allocation of Rs.5 lakhs in a Resolution Plan approved by the National Company Law Tribunal (NCLT) Indore Bench - appellant is an operational creditor - HELD THAT - 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 - thus no error can be found out in allocation of Rs.5 lakhs in the Resolution Plan. Conclusion - 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 creditor. There are no error in the impugned order approving the Resolution Plan. Appeal dismissed.

Summary

The National Company Law Appellate Tribunal (NCLAT), Principal Bench, New Delhi, presided over by Justice Ashok Bhushan, Barun Mitra, and Arun Baroka, dismissed an appeal filed by the Income Tax Department, an Operational Creditor, challenging the allocation of Rs.5 lakhs in a Resolution Plan approved by the National Company Law Tribunal (NCLT), Indore Bench. The Income Tax Department had filed a claim of Rs.26,06,41,424/- in the Corporate Insolvency Resolution Process (CIRP), but only Rs.5 lakhs was allocated to them in the Resolution Plan.The appellant argued that as a secured operational creditor, they were entitled to a higher allocation based on the Supreme Court's judgment in "State Tax Officer vs. Rainbow Papers Limited." However, the respondents contended that subsequent clarifications to the judgment negated the appellant's claim of being a secured creditor.The Tribunal noted that the appellant's claim was admitted as a contingent liability pending an appeal against the assessment order. It was determined that the allocation of Rs.5 lakhs was not less than what the appellant would receive if the Corporate Debtor were liquidated. The Tribunal concluded that there was no error in the allocation and that the appellant was not a secured operational creditor as per the statutory provisions. Consequently, the appeal was dismissed, and the Resolution Plan was upheld.