Case Law Details
East India Enterprise Thro Proprietor Rajeshbhai Bholabhai Ramani Vs Ministry of Finance (Gujrat High Court)
Conclusion: Statutory dues, which came within the meaning of ‘operational debt’, could be claimed against the Corporate Debtor only under the provisions of the IB Code and not under any other law. Assessee was diercted to make payment of the statutory dues from the date of purchase of the subject vehicles by assessees, which would be made subject to other proceedings in relation to the said vehicles since assessees, being the auction purchasers, could not be asked to make payment of the statutory dues claimed against the Corporate Debtor in liquidation in respect of vehicles prior to their date of purchase by assessees.
Held: On a plain reading of the provisions of the IB Code, it was clear that statutory dues, which come within the meaning of ‘operational debt’, could be claimed against the Corporate Debtor only under the provisions of the IB Code and not under any other law. All such claims had to be lodged with the Official Liquidator and were payable under the waterfall mechanism provided in Section 53 of IB Code. Assessee had 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 were 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 could 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 assessees, being the auction-purchasers. Assessee could be held liable to pay statutory dues in respect of the subject vehicles, which had been claimed by the respondent – Regional Transport Offices after their purchase by assessee 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. Considering the overall facts of the case and the provisions of the IB Code, it would be appropriate to direct assessee to make payment of the statutory dues from the date of purchase of the subject vehicles by assessees, which would be made subject to other proceedings in relation to the said vehicles since assessees, being the auction purchasers, could not be asked to make payment of the statutory dues claimed against the Corporate Debtor in liquidation in respect of vehicles prior to their date of purchase by assessees.
FULL TEXT OF THE JUDGMENT/ORDER OF GUJARAT HIGH COURT
1. RULE. Service of notice of rule is waived by learned advocates appearing for the respective respondents. With the consent of both the sides, the matter is taken up for final hearing today.
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