# In the matter of Tiffins Barytex Asbestos & Paints Ltd. MA-458-2018 In CP-39-IB-2018

> NCLT judgment dated 2019-02-07. Citation: TCN-2019-NCLT-04958. The case involves an application (MA/458/2018) in a corporate insolvency resolution process…

- **Court:** NCLT
- **Order date:** 7 Feb 2019
- **Citation:** TCN-2019-NCLT-04958
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/tiffins-barytex-asbestos-paints-ltd-ma-458-2018-in-cp-39-ib-2018-59552b26

## Summary

### Background

The case involves an application (MA/458/2018) in a corporate insolvency resolution process (CP/39/IB/2018). The Resolution Professional and Counsel for Union Bank of India are present. R2 (Karnataka Commercial Tax Department) filed objections, claiming priority under Section 48 of the KVAT Act, 2003, for tax payable by the Corporate Debtor. The petitioner was requested to be disallowed and direction may be given to R1 to issue DD for an amount of Rs.30,25,318/- which is in the escrow account in favour of the Respondent in the interest of justice and equity.

## Facts

The Resolution Professional initiated a corporate insolvency resolution process. The Karnataka Commercial Tax Department (R2) filed objections, asserting priority for tax dues under Section 48 of the KVAT Act, 2003. Union Bank of India (R1) clarified that it doesn't hold an escrow account, but the amount is in the Corporate Debtor's current account. The tax department had issued an attachment order/revised notice dated 2014-06-12. The amount in question is Rs. 30,25,318.

## Issues and analysis

### Issue 1: Whether the Karnataka Commercial Tax Department (R2) is entitled to priority over other creditors …

**Ratio:** The waterfall mechanism under Section 53 of the IBC, 2016, governs the distribution of

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**Reasoning:** The court reasoned that Section 53 of the IBC, 2016, provides a specific order of

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**Interpretation:** Section 53 of the IBC, 2016, is interpreted to establish a clear hierarchy for

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**Application:** The court applied the waterfall mechanism of Section 53 of the IBC, 2016, to

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## Parties

- **Judges:** Ch. Mohd Sharief…
- **Appellants:** Vasudevan…
- **Respondents:** Union Bank of…

## Timeline

- **2018-01-01 — Application…**: MA/458/2018 filed in…
- **2019-02-07 — Hearing…**: Hearing held at 10:30…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 53 — Distribution of assets](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-53)

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