# In the matter of Leo Edibles & Fats Ltd. Vs. The Tax Recovery Officer (Central) IT Dept., Hyderabad Writ Petition No. 8560-2018

> HC judgment dated 2018-07-26. Citation: TCN-2018-HC-00011. The petitioner company filed a writ petition against the Sub-Registrar, Erragadda, Hyderabad, for…

- **Court:** HC
- **Order date:** 26 Jul 2018
- **Citation:** TCN-2018-HC-00011
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/high-courts-chandigarh-bench/leo-edibles-fats-ltd-vs-the-tax-recovery-officer-b07a954d

## Summary

### Background

The petitioner company filed a writ petition against the Sub-Registrar, Erragadda, Hyderabad, for refusing to register its purchase of immovable property in the liquidation proceedings of VNR Infrastructures Limited under the Insolvency and Bankruptcy Code, 2016. The registration authorities' refusal was at the behest of the Income-tax Department, which claimed a charge over the property due to attachment proceedings. The petitioner company participated in an e-auction and was declared the highest bidder. The liquidator confirmed the sale but the registration was hindered by the Income-tax Department's attachment.

## Facts

VNR Infrastructures Limited was undergoing liquidation under the Insolvency and Bankruptcy Code, 2016. The National Company Law Tribunal (NCLT), Hyderabad, appointed a liquidator to manage the liquidation process. The liquidator initiated an e-auction to sell the company's assets, including a commercial/residential building and land located in Banjara Hills, Hyderabad. Leo Edibles & Fats Limited participated in the auction and was declared the highest bidder with a bid of Rs. 11,55,00,000. The liquidator issued a letter confirming the sale and requested the petitioner to deposit the balance sale consideration. However, the Sub-Registrar refused to register the sale due to an attachment order issued by the Income-tax Department against VNR Infrastructures Limited

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## Issues and analysis

### Issue 1: Whether the Income-tax Department can claim priority over other creditors in the liquidation …

**Ratio:** The Income-tax Department does not enjoy the status of a secured creditor under the

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**Reasoning:** The court reasoned that the Income-tax Department's claim is subject to the provisions of

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**Interpretation:** The court interpreted Section 53 of the Code to mean that the Income-tax

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**Application:** The court applied the ratio to the facts of the case, holding that the

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## Parties

- **Judges:** Sanjay…; T.Amarnat…
- **Appellants:** Leo Edibles &…
- **Respondents:** VNR Infrastructure…; The Tax Recovery…

## Timeline

- **2016-10-28 — Attachment…**: Income-tax Department issued an attachment order against VNR Infrastructures Limited for…
- **2017-09-21 — Liquidator App…**: NCLT, Hyderabad, appointed a…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 7 — Initiation of corporate insolvency resolution…](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-7)

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