SUPREME COURT: Financial creditors cannot secure their own dues at the cost of statutory ones owed to a government authority in approving a resolution plan to revive a sick company under the Code
State Tax Officer Vs. Rainbow Papers Limited 06.09.2022 SC Hon’ble Supreme Court of India The Hon’ble Supreme Court (SC) in its judgment dated 6th September, 2022 while considering as to whether the provisions of the Insolvency and Bankruptcy Code, 2016 (IBC/Code) and, in particular, section 53 thereof, overrides section 48 of the Gujarat Value Added Tax Act 2003 (GVAT Act), held that financial creditors cannot secure their own dues at the cost of statutory ones owed to a government authority in approving a resolution plan to revive a sick company under the Code. SC set aside the orders of the AA/ NCLAT whereby the resolution plan to revive Rainbow Papers Limited, a private firm, was approved, even when it did not consider the dues of over Rs 53.71 crore payable to the state government on account of VAT and Central Sales Tax (CST) under the GVAT Act. SC held that if a company is unable to pay its debts, which should include its statutory dues to the government or other authoriti...
