# In the matter of Commercial Tax Department vs. Teena Saraswat Pandey & Anr.

> NCLAT judgment dated 2024-09-09. Citation: TCN-2024-NCLAT-00205. The case involves an appeal filed by the Commercial Tax Department against an order dated…

- **Court:** NCLAT
- **Order date:** 9 Sept 2024
- **Citation:** TCN-2024-NCLAT-00205
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclat-new-delhi/commercial-tax-department-vs-teena-saraswat-pandey-anr-3a5b6a55

## Summary

### Background

The case involves an appeal filed by the Commercial Tax Department against an order dated 25.08.2022, where the department was treated as an unsecured creditor in the resolution plan of M/s Rajpal Abhikaran Pvt. Ltd. The Corporate Insolvency Resolution Process (CIRP) was initiated against the corporate debtor, and a resolution plan submitted by Agarwal Real City Pvt. Ltd. was approved. The appellant contends that its statutory demand should have been considered as a secured debt, relying on a Supreme Court decision in Rainbow Papers Limited. The appeal challenges the Adjudicating Authority's decision to treat the tax department's claim as unsecured.

## Facts

M/s Chandraudai Automobiles Pvt. Ltd. initiated Corporate Insolvency Resolution Process (CIRP) against M/s Rajpal Abhikaran Pvt. Ltd. under Section 9 of the Insolvency and Bankruptcy Code, 2016. The application was admitted, and an Interim Resolution Professional (IRP) was appointed. The IRP formed a Committee of Creditors (CoC) with various financial creditors, including State Bank of India and Suraksha ARC. A resolution plan submitted by Agarwal Real City Pvt. Ltd. was approved by the CoC with 90.41% votes. The Commercial Tax Department, Government of Madhya Pradesh, filed a claim but was treated as an unsecured creditor. The department's claim amounted to Rs. 12,61,57,345/-, filed vide Form B dated 29.07.2021. The department argued that its statutory demand should

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## Issues and analysis

### Issue 1: Whether the statutory demand of the Commercial Tax Department should be considered a secured debt …

**Ratio:** The ratio is that for a statutory demand to be considered a secured debt, the relevant

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**Reasoning:** The court reasoned that while Section 48 of the GVAT Act creates a first charge, Section

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**Interpretation:** The interpretation is that the creation of a first charge under state VAT laws

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**Application:** The court applied this reasoning to the facts by finding that because the MPVAT

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## Parties

- **Judges:** Rakesh Kuma…; Naresh Sa…; +1 more
- **Appellants:** Commercial Tax…
- **Respondents:** Rajpal Abhikaran…; Teena Saraswat…

## Timeline

- **2020-01-01 — CP (IB) No. 6…**: CP (IB) No. 6 of 2020 filed against…
- **2021-03-26 — Admission of Ap…**: Application admitted by the Adjudicating Authority (National Company Law Tribunal, Indore…

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