Case Law Details
Income Tax Department Vs G. Madhusudhan Rao (NCLAT Delhi)
Introduction: The NCLAT Delhi recently addressed a crucial matter involving the Income Tax Department and G. Madhusudhan Rao. This article provides an in-depth analysis of the judgment dated 18.08.2023, focusing on the allocation dispute of Rs.26,06,41,424 in the Resolution Plan.
Detailed Analysis: The appeal, filed by the Income Tax Department, challenges the approval of the Resolution Plan by the Adjudicating Authority (NCLT, Indore Bench). The Appellant, an Operational Creditor, claimed Rs.26,06,41,424, but the Resolution Plan allocated only Rs.5 lakhs. The crux of the dispute lies in the Appellant’s contention that its claim was partially accepted due to a pending appeal against the assessment order.
The Appellant argues its status as a secured operational creditor, citing the judgment in “State Tax Officer vs. Rainbow Papers Limited- Civil Appeal No. 1661 of 2020.” On the contrary, the Respondents assert that the allocation complies with the Resolution Plan, and the Rainbow Papers Ltd. judgment has been subsequently clarified.
The NCLAT carefully considered both arguments. It notes the Appellant’s filed claim of Rs.26,06,41,424, admitted as a contingent liability. The allocation of Rs.5 lakhs is challenged on the grounds that, as an operational creditor, the Appellant is entitled to an amount not less than what it would receive in case of Corporate Debtor liquidation.
Please become a Premium member. If you are already a Premium member, login here to access the full content.