The court reaffirmed the status of statutory dues under the Gujarat VAT Act as secured interests, emphasizing the supremacy of judicial interpretations in insolvency proceedings.

JUDGMENT

(13^th November, 2025)

INDEVAR PANDEY, MEMBER (T)

The present appeal has been filed under Section 61 of the Insolvency and Bankruptcy Code, 2016 (“IBC”) by The Cosmos Co-operative Bank Ltd., the sole Financial Creditor and member of the Committee of Creditors (“CoC”) of Sterling Lam Limited (“the Corporate Debtor”). The appeal arises out of the impugned order dated 22.02.2024 passed by the National Company Law Tribunal, Ahmedabad Bench (“Adjudicating Authority”) in IA No. 195(AHC)/2024 in CP (IB) No. 72 of 2018, whereby the Adjudicating Authority directed Shri Kailash T. Shah, Resolution Professional/ Respondent No. 1 to release an amount of Rs. 1,31,19,769.08 in favour of the Gujarat State Tax Department/ Respondent No.3 treating it as a secured creditor under Section 48 of the Gujarat Value Added Tax Act, 2003 (“GVAT Act”).

2. The said direction was passed while deciding I.A. No. 522 of 2021, an earlier application filed by the Resolution Professional seeking removal of the State Tax Department’s attachment over the properties of the Corporate Debtor, which had remained pending even after the approval of the Resolution Plan. Aggrieved by this order, the Appellant–Bank has approached this Appellate Tribunal contending that the Adjudicating Authority exceeded its jurisdiction by modifying the distribution under an already approved and implemented Resolution Plan.

Brief facts of the case

3. Brief facts of the case are given below:

(i) CP (IB) 72/2018 was filed by Ramniklal S. Gosalia & Co. under Section 9 of the Code before the Adjudicating Authority seeking initiation of Corporate Insolvency Resolution Process. The Adjudicating Authority, vide its order dated 10.11.2020, admitted an application and appointed Mr. Rajendra Jain as Interim Resolution Professional (IRP).

(ii) On 20.11.2020, the IRP issued a public announcement inviting claims from the Creditors of the Corporate Debtor/Sterling Lam Limited.

(iii) Respondent No. 3/ Gujrat State Tax Department submitted its claim of Rs. 38,58,19,833/- on 01.12.2020, which was verified and admitted only to the extent of Rs. 3,37,65,975/- on 17.12.2020.

(iv) In the first CoC meeting held on 18.12.2020, Respondent No. 1, Mr. Kailash T. Shah, was appointed as Resolution Professional (RP), and his appointment was subsequently confirmed by the Adjudicating Authority on 10.02.2021.

(v) During verification of assets, the RP discovered that Respondent No. 3 had created encumbrances on the factory land of the Corporate Debtor at Village Mahiyal, Taluka Talod. On 27.04.2021, the RP addressed an email to Respondent No. 3 seeking removal of such encumbrances. The encumbrance was for a sum of Rs. 47,52,564 for the year 2014-15 including interest of a sum of Rs.2,31,84,958 for the year 2017-18 and sum of Rs. 1,05,81,017 for the year 2018-19.

(vi) In the 4th CoC meeting held on 28.04.2021, the RP apprised the members about the encumbrance created by the State Tax Depart