1. Priority of income-tax dues versus other claims under the Insolvency and Bankruptcy Code, 2016. (Para 3 )
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2018 Supreme(SC) 1345
SUPREME COURT OF INDIA
ROHINTON FALI NARIMAN, INDU MALHOTRA, JJ.
Pr. Commissioner Of Income Tax - Appellant
Versus
Monnet Ispat And Energy Ltd. - Respondent
Petitions for Special Leave to Appeal (C) No(s). 6483 of 2018 (Arising out of impugned final judgment and order dated 04-09-2017 in ITA No. 543 of 2017 passed by the High Court Of Delhi At New Delhi) with SLP(C) No. 6487 of 2018 (XIV) SLP(C) No. 6488 of 2018 (XIV) (For Exemption From Filing C/C of the Impugned Judgment ON IA 31154 of 2018) SLP(C) No. 6590 of 2018 (XIV) Diary No(s). 4692 of 2018 (XIV) (For condonation of delay in Filing on IA 32173 of 2018) Diary No(s). 4781 of 2018 (XIV) (for Condonation of delay in filing on IA 34964 of 2018 For condonation of delay in Refiling on IA 34965 of 2018) SLP(C) No. 6490 of 2018 (XIV) SLP(C) No. 8382 of 2018 (XIV) Diary No(s). 5210 of 2018 (XIV) (For condonation of delay in filing on IA 34695 of 2018) Diary No(s). 6122 of 2018 (XIV) (For condonation of delay in filing on IA 33578 of 2018) SLP(C) No. 6492 of 2018 (XIV) SLP(C) No. 6489 of 2018 (XIV) (for exemption from filing C/C Of The Impugned Judgment on IA 30223 of 2018) SLP(C) No. 6493 of 2018 (XIV), SLP(C) No. 8187 of 2018, (XIV) SLP(C) No. 8380 of 2018 (XIV), Diary No(s). 7050 of 2018 (XIV), (For condonation of delay in filing on IA 34726 of 2018), SLP(C) No. 8188 of 2018 (XIV), SLP(C) No. 8383 of 2018 (XIV), Diary No(s). 7319 of 2018 (XIV), (For condonation of delay in filing on IA 33741 of 2018), SLP(C) No. 8381 of 2018 (XIV), SLP(C) No. 8189 of 2018 (XIV)
Decided on : 10-08-2018
Advocates:
Advocate Appeared:
For the Petitioner: Mr. A.N.S. Nadkarni, Mr. K.S. Radhakrishnan, Mr. S.A. Haseeb, Mr. Arijit Prasad, Mrs. Anil Katiyar, AOR
For the Respondent: Mr. Mukul Rohatgi, Mr. Shyam Divan, Mr. Mahesh Agarwal, Mr. Ankur Saigal, Mr. Himanshu Satija, Mr. E.C. Agrawala, AOR
Advocate Appeared:
For the Petitioner: Mr. A.N.S. Nadkarni, Mr. K.S. Radhakrishnan, Mr. S.A. Haseeb, Mr. Arijit Prasad, Mrs. Anil Katiyar, AOR
For the Respondent: Mr. Mukul Rohatgi, Mr. Shyam Divan, Mr. Mahesh Agarwal, Mr. Ankur Saigal, Mr. Himanshu Satija, Mr. E.C. Agrawala, AOR
The Insolvency and Bankruptcy Code, under Section 238, overrides inconsistent provisions in any other enactment, including the Income-Tax Act.
Headnote:
Insolvency and Bankruptcy Code - Section 238 - Code overriding inconsistent enactments
Fact of the Case:
The court considered the applicability of Section 238 of the Insolvency and Bankruptcy Code, 2016, in relation to the Income-Tax Act.
Finding of the Court:
The court found that the Code will override anything inconsistent contained in any other enactment, including the Income-Tax Act, based on the precedent set in Dena Bank vs. Bhikhabhai Prabhudas Parekh and Co. & Ors. (2000) 5 SCC 694 and its progeny. The court upheld the decision of the High Court of Delhi.
Issues: Interpretation of Section 238 of the Insolvency and Bankruptcy Code and its impact on the Income-Tax Act.
Ratio Decidendi: The court held that the Insolvency and Bankruptcy Code will prevail over inconsistent provisions in any other enactment, including the Income-Tax Act, based on the nature of income-tax dues as Crown debts and the precedence of secured creditors over income-tax dues.
Final Decision: The Special Leave Petitions were dismissed, and pending applications were disposed of.
Legal Category Hierarchy
Table of Contents
2. Whether income-tax dues take precedence over secured creditors under the Insolvency and Bankruptcy Code, 2016. (Para 3 )
3. Section 238 of the Insolvency and Bankruptcy Code, 2016 overrides inconsistent provisions in other enactments, including the Income-Tax Act. (Para 3 , 4 )
4. The Insolvency and Bankruptcy Code, 2016 overrides inconsistent provisions of the Income-Tax Act; income-tax dues do not take precedence over secured creditors. (Para 3 )
6. Does the Insolvency and Bankruptcy Code, 2016 override the Income-Tax Act?
Yes, pursuant to Section 238 of the Insolvency and Bankruptcy Code, 2016, the Code overrides any inconsistent provisions contained in any other enactment, including the Income-Tax Act. (Para 3 )
7. Do income-tax dues take precedence over secured creditors?
No, income-tax dues, being in the nature of Crown debts, do not take precedence even over secured creditors who are private persons. (Para 3 )
ORDER :
1. Heard.
2. Delay, if any, is condoned.
3. Given Section 238 of the Insolvency and Bankruptcy Code, 2016, it is obvious that the Code will override anything inconsistent contained in any other enactment, including the Income-Tax Act. We may also refer in this Connection to Dena Bank vs. Bhikhabhai Prabhudas Parekh and Co. & Ors. (2000) 5 SCC 694 and its progeny, making it clear that income-tax dues, being in the nature of Crown debts, do not take precedence even over secured creditors, who are private persons.
4. We are of the view that the High Court of Delhi, is, therefore, correct in law.
5. Accordingly, the Special Leave Petitions are dismissed.
6. Pending applications, if any, stand disposed of.
