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MARKANDEY KATJU, D.MURUGESAN
ICICI Bank Ltd. , – Appellant
Versus
The Official Liquidator – Respondent
What is the priority of a secured creditor’s claim over crown debts in the liquidation of a company? What is the effect of Section 529A of the Companies Act on the priority of a secured creditor’s claim? What are the authorities or precedents that govern the priority of secured creditors against Income-tax and Sales Tax Department in liquidation?
Markandey Katju, CJ.
This Civil Revision Petition has been filed against the order of the Debts Recovery Appellate Tribunal dated 27.8.2004. We have heard counsel for the parties and have perused the records.
2. The revision petitioner is a secured creditor. M/s.Vibrant Investments & Properties Ltd. was a company which went into liquidation and the question is whether the claim of the petitioner will prevail over the claim of the Income-tax Department and the Karnataka Sales Tax Department.
3. This issue is no longer res integra in view of the decision of the Supreme Court in Dena Bank v. Bhikhabhai Prabhudas Parekh & Co. {(2000)5 SCC 694 vide para 10} where it has been held that the claim of a secured creditor will prevail over crown debts.
4. In view of the above, we modify the impugned judgment of the Debts Recovery Appellate Tribunal dated 27.8.2004 and direct that the claim of the petitioner will prevail over that of the Income-tax Department and the Karnataka Sales Tax Department, but this will be subject to the provisions of Section 529A of the Companies Act. This revision petition is disposed of accordingly. No costs. Consequently CMP Nos.15322 and 19436 of 2004 ar
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