# In the matter of Directorate of Commercial Taxes Vs. Kharkia Steels Pvt. Ltd. & Ors. Company Appeal (AT) (Insolvency) No. 387 of 2021

> NCLAT judgment dated 2022-03-22. Citation: TCN-2022-NCLAT-00571. The Directorate of Commercial Taxes, West Bengal, filed an appeal against the order dated…

- **Court:** NCLAT
- **Order date:** 22 Mar 2022
- **Citation:** TCN-2022-NCLAT-00571
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclat-new-delhi/directorate-of-commercial-taxes-vs-kharkia-steels-pvt-ltd-ors-company-appeal-14e01ad9

## Summary

### Background

The Directorate of Commercial Taxes, West Bengal, filed an appeal against the order dated 21.9.2020 passed by the Adjudicating Authority (NCLT, Kolkata) in CP (IB) No. 1440/KB/2018, which approved a resolution plan for Kharkia Steels Pvt. Ltd. The appellant, an operational creditor, claimed that the resolution plan unfairly allocated only 0.16% of its admitted claim of Rs. 76,12,41,782/-. The appellant argued that the plan did not adequately consider the dues owed to operational creditors and that the appointment of registered valuers was delayed, violating CIRP regulations.

## Facts

The Directorate of Commercial Taxes, West Bengal, is an operational creditor of Kharkia Steels Pvt. Ltd. Kharkia Steels Pvt. Ltd. was undergoing Corporate Insolvency Resolution Process (CIRP) initiated by Dena Bank under Section 7 of the Insolvency and Bankruptcy Code (IBC). The Directorate of Commercial Taxes claimed an admitted operational debt of Rs. 76,12,41,782/-. The resolution plan approved by the Committee of Creditors (CoC) allocated only 0.16% of the admitted claim to the Directorate of Commercial Taxes. The appellant contended that the resolution plan did not treat operational and financial creditors on parity, violating the principles of the IBC. The appellant also argued that the appointment of registered valuers was delayed beyond the stipulated time

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## Issues and analysis

### Issue 1: Whether the commercial wisdom of the CoC has taken into account the feasibility and viability of …

**Ratio:** The commercial wisdom of the Committee of Creditors (CoC) is paramount and should not be

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**Reasoning:** The NCLAT relied on the judgment of Ghanashyam Mishra & Sons Private Limited Vs

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**Interpretation:** The IBC gives significant weight to the commercial wisdom of the CoC in

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**Application:** In this case, the NCLAT found that the operational creditors had been paid an

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## Parties

- **Judges:** Ashok Bh…; Alok Sriv…
- **Appellants:** Directorate of…
- **Respondents:** Kharkia Steels…

## Timeline

- **2020-04-04 — CoC Meet…**: The Committee of Creditors (CoC) approved the resolution plan with a voting share of…
- **2020-09-21 — Order by Adjudicating…**: The Adjudicating Authority (NCLT, Kolkata)…

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