# In the matter of Electrosteel Steels Limited vs. The State of Jharkhand and Ors.

> HC judgment dated 2020-05-01. Citation: TCN-2020-HC-00032. The case involves a challenge by Electrosteel Steels Limited against garnishee orders issued by the…

- **Court:** HC
- **Order date:** 1 May 2020
- **Citation:** TCN-2020-HC-00032
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/high-courts-chandigarh-bench/electrosteel-steels-limited-vs-the-state-of-jharkhand-and-ors-e97264af

## Summary

### Background

The case involves a challenge by Electrosteel Steels Limited against garnishee orders issued by the Deputy Commissioner of Commercial Taxes, Bokaro Circle, Bokaro, for the recovery of tax/penalty dues under the Jharkhand Value Added Tax Act, 2005 (JVAT Act). These orders were issued to the State Bank of India, directing them to pay sums from the petitioner's account into the Government Treasury. The petitioner argues that these claims are barred under Section 31 of the Insolvency and Bankruptcy Code, 2016 (IB Code), as a resolution plan had been approved by the NCLT and NCLAT, and the State Government did not make any claim during the corporate insolvency resolution process (CIRP). The State argues that the tax was collected from customers but not deposited, amounting

…

## Facts

Electrosteel Steels Limited faced garnishee orders for tax/penalty dues under the JVAT Act for the period 2011-12 and 2012-13. The orders directed the State Bank of India to pay Rs. 37,41,41,602/- and Rs. 75,57,000/- from the company's account. The State Bank of India had filed a Company Petition under the IB Code, which was admitted by the NCLT, and an interim resolution professional was appointed. A resolution plan by M/s. Vedanta Limited was approved by the NCLT and NCLAT. The matter was taken to the Supreme Court, which sent it back to the NCLT. The petitioner argued that the State Government's claim was barred under Section 31 of the IB Code as no claim was made during the CIRP. The State Government argued that the petitioner had collected the tax from customers

…

## Issues and analysis

### Issue 1: Whether the tax liabilities of the petitioner company are barred under Section 31 of the IB Code, …

**Ratio:** Section 31 of the IB Code states that the approved resolution plan is binding on the

…

**Reasoning:** The court reasoned that the State Government was not properly involved in the CIRP

…

**Interpretation:** Section 31 of the IB Code is interpreted to mean that the resolution plan is

…

**Application:** Since the State Government was not properly notified and did not participate in

…

## Parties

- **Judges:** H. C. M…; Deepak R…
- **Respondents:** Electrosteel…; The State of…

## Timeline

- **2016-01-21 — Original Assessment…**: Petitioner Company was originally assessed to tax for the period 2012-13 u/s 35(6) of the…
- **2016-11-08 — Revision Case…**: Revision case was disposed and the assessment order dated 21.01.2016 was set aside and…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 5(20) — Definitions](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-5)

---

This is a preview. The full structured summary, issues, precedents and source judgment are available on CaseEase - Legal Intelligence Simplified: https://caseease.in/cases/ibc/high-courts-chandigarh-bench/electrosteel-steels-limited-vs-the-state-of-jharkhand-and-ors-e97264af