W.P.(T). No. 6324 of 2019 and analogous matters
Re: Electrosteel Steels Limited v. The State of Jharkhand and Ors
In this matter, the State Bank of India had filed a Company Petition, being CA (IB) No.361/KB/2017 before the National Company Law Tribunal, Kolkata Bench, Kolkata, (for short ‘NCLT’), under the provisions of Insolvency and Bankruptcy Code, 2016, (hereinafter referred to as the ‘IB Code’), for initiating corporate insolvency resolution process against the Company, which application of the State Bank of India was admitted by the NCLT, and the interim resolution professional was appointed.
After that, the petitioner Company has challenged the garnishee order bearing No.727 dated 21.11.2019, issued under Section 46 of the Jharkhand Value Added Tax Act, 2005 (hereinafter referred toas the ‘JVAT Act’), as contained in Annexure-4 to the writ applications, issued by the respondent No.3, Deputy Commissioner of Commercial Taxes, Bokaro Circle, Bokaro, to the Respondent No.5, State Bank of India, in its branch situated in the campus of the petitioner Company, asking the respondent Bank to pay into the Government Treasury, the sum of Rs.37,41,41,602/-, on account of tax / penalty due under the JVAT Act, from the petitioner Company, who failed to deposit the taxes for the period from 2011-12 & 2012-13, from the Bank account of the Company.
Contentions of the parties:
Petitioner: Once the resolution plan was approved, the tax liability of the petitioner Company which was not claimed by the State Government during the corporate insolvency resolution process, stood completely barred under Section 31 of the IB Code.
Respondents: The tax amount, which had been sought to be realised from the petitioner Company, had already been realised by the petitioner Company from the customers which was to be deposited in the Government Exchequer, but that having not been done by the Company and the amount having been utilized for its business purposes, throughout after the years 2011-12 and onwards, shall certainly amount to criminal misappropriation of the Government money by the Company, and the State Government is entitled to realize the same with the penalty due thereon. They also contended that since the notice was never published in the State of Jharkhand, the State authorities had no knowledge of any such corporate insolvency resolution process and accordingly, the State Government was deprived from making any claim in the corporate insolvency resolution process.
Hon’ble High court of Jharkhand stated, the registered office of the petitioner Company is at Ranchi, and its principal place of business is in the District of Bokaro, both of which are situated in the State of Jharkhand, but no public announcement of the corporate insolvency resolution process was made in the State of Jharkhand. We are conscious of the fact that since the resolution plan is approved by the NCLT, and not interfered with even by the Hon’ble Apex Court as pointed out above, we are not required to look into the legality or otherwise of the resolution process, but the fact remains that due to non-publication of the public announcement of the corporate insolvency resolution process in the State of Jharkhand, the authorities of the Commercial Taxes Department had no occasion to have any knowledge about the corporate insolvency resolution process of the Company, and they were deprived of making their claim before the interim resolution professional. Since the State Government was not involved in the resolution process, the resolution plan cannot be said to be binding on the State Government under Section 31 of the IB Code.
For the aforesaid reasons, Hon’ble court find that the writ petitioner is not entitled to any relief whatsoever, there is no merit in these writ applications and all these writ applications are accordingly, dismissed.