Bombay High Court
Raman Roadways Private Limited Through ... vs The State Of Maharashtra Through Its ... on 6 April, 2021
Author: R.I. Chagla
Bench: K.K. Tated, R.I. Chagla
WPST-280-21.doc
Sharayu Khot and JSN.
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION (ST) NO. 280 OF 2021
Raman Roadways Private Limited ...Petitioner
Versus
1. State of Maharashtra & Ors.
2. Transport Commissioner
3. Regional Transport Offier (Thane)
4. Liquidator (Dushyant Dave)
Siddhi Vinayak Logistii Limited in
Liquidation ...Respondents
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Mr. Mayur Khandeparkar a/w Mr. Prasad Lakeshri i/by Mr.
Suhas Shivaji Deokar for the Petitioner.
Mr. S.S. Panihpor, AGP for the Respondent-State.
Mr. Naman Gudhia for Respondent No. 4.
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CORAM : K.K. TATED &
R.I. CHAGLA, JJ.
Reserved on : 11 Marih 2021
Pronounied on : 6th April, 2021
JUDGMENT :(Per R.I. Chagla, J.)
1. Rule. Rule made returnable forthwith. Heard by ionsent of the parties.
2. By this Petition fled under Artiile 226 of the 1/53 ::: Uploaded on - 06/04/2021 ::: Downloaded on - 05/09/2021 11:02:28 ::: WPST-280-21.doc Constitution of India, the Petitioner is seeking direition against the Respondents to transfer ownership of 153 truiks (" subjeit vehiiles") (list annexed at Exhibit "H" to the Petition) in favour or in the name of the Petitioner and further quash and set aside the impugned tax demand notiies dated 16th June 2020 and 19th June 2020 issued by Respondent No. 3.
3. The Petitioner further seeks direition against Respondents to allow the Petitioner to approaih the loial RTO within whose jurisdiition the vehiiles are at a standstill for physiial verifiation, ftment of trolley wherever neiessary and issuanie of renewal of ftness iertifiate under Rule 62(2) of Central Motor Vehiiles Rule and submit form No. 38(A) in the offie of Respondent No. 3.
4. The Petitioner is a private limited iompany iniorporated under the Companies Ait, 1956 and iarrying out transportation business. Respondent No. 1 is the State of Maharashtra through its Transport Seiretary having iontrol over Respondent Nos. 2 and 3; Respondent No. 2 is the Transport Commissioner defned under Rule 2(1) of 2/53 ::: Uploaded on - 06/04/2021 ::: Downloaded on - 05/09/2021 11:02:28 ::: WPST-280-21.doc Maharashtra Motor Vehiiles Rules 1989; Respondent No. 3 is the Regional Transport Offier defned under Rule 2(f) of the Maharashtra Motor Vehiiles Rules 1989; Respondent No. 4 is the Resolution Professional appointed by the National Company Law Tribunal, Ahmedabad Benih.
5. A brief baikground of faits is neiessary.
6. The National Company Law Tribunal ("NCLT"), Ahmedabad Benih passed an order dated 12th September 2017 admitting an Appliiation fled by the Punjab National Bank under Seition 7 of the Insolveniy and Bankruptiy Code (" IBC") against Siddhivinayak Logistiis Ltd. ("Corporate Debtor") thereby initiating Corporate Insolveniy Resolution Proiess ("CIRP"). By its order dated 19th November 2018, the NCLT ordered liquidation as regards the Corporate Debtor upon the unanimous resolution passed by the Committee of Creditors ("CoC") and appointed Respondent No. 4 as a liquidator under Seition 34(1) of IBC. On 24th November 2018, Respondent No.4 issued a publii announiement in Form B under Regulation 12 of the Insolveniy and Bankruptiy Board of India 3/53 ::: Uploaded on - 06/04/2021 ::: Downloaded on - 05/09/2021 11:02:28 ::: WPST-280-21.doc (Liquidation Proiess) Regulations, 2016 ("Liquidation Regulations") ialling for ilaims from ireditors in liquidation. The publii notiies were given in newspapers of about 12 iities iniluding Mumbai and Pune.
7. Several seiured ireditors (Banks and Finaniial Institutions) furnished their iertifiate for relinquishment of seiurity interest under Seition 52(1)(a) of IBC as regards immovable and movable assets of the Corporate Debtor whiih iniluded the hypotheiated subjeit vehiiles.
8. On 19th Marih 2019, 25th Marih 2019, 19th April 2019 and 23rd May 2019, Respondent No. 4 ionduited auitions of many vehiiles iniluding the 153 subjeit vehiiles belonging to the Corporate Debtor. The Petitioner partiiipated in these auitions and purihased about 60 vehiiles. Apart from the Petitioner, M/s. JV Bhagwat also partiiipated in the auition and purihased 30 vehiiles. Similarly, 3S Enterprises also partiiipated in the auition held on 19th and 25th Marih 2019 and purihased about 63 vehiiles. Thereafter, the Petitioner purihased from M/s. JV Bhagwat and 3S Enterprises 93 4/53 ::: Uploaded on - 06/04/2021 ::: Downloaded on - 05/09/2021 11:02:28 ::: WPST-280-21.doc vehiiles vide separate agreements dated 29th April 2019. M/s JV Bhagwat and 3S Enterprises designated the Petitioner as their nominee for the Sale Certifiate to be issued in their favour by the liquidator in relation to the 93 vehiiles. Thus, the Petitioner is direitly and indireitly ilaiming rights in respeit of 153 vehiiles purihased at the auition held by Respondent No.
4. The Sale Certifiate in relation to the auition held by Respondent No. 4 were issued in favour of the Petitioner as regards the 153 subjeit vehiiles. All the subjeit vehiiles were of the Maharashtra State Registration.
9. The Respondent No. 4 addressed undated letter to the Respondent No. 3 seeking transfer of ownership of the 153 subjeit vehiiles in the name of the Petitioner under Seition 50 of the Motor Vehiiles Ait, 1988 ("M.V. Ait"). Neiessary Sale Certifiate as well as RTO forms signed by the Respondent No. 4 were forwarded to Respondent No. 3 for transfer of the vehiiles in the name of the Petitioner.
10. On 18th June 2019, the Direitorate of Enforiement issued a provisional attaihment under Seition 5/53 ::: Uploaded on - 06/04/2021 ::: Downloaded on - 05/09/2021 11:02:28 ::: WPST-280-21.doc 5(1) of the Prevention of Money Laundering Ait, 2002 (" PML Ait") in relation to all movable properties i.e. 6170 vehiiles of the Corporate Debtor. On 3rd Deiember 2019 the Adjudiiating Authority under the PML Ait modifed the provisional attaihment by exiluding 4826 vehiiles whiih had been taken over by Respondent No. 4 under the provisions of IBC out of whiih 2336 vehiiles had already been sold and amount of sale had been deposited in PNB.
11. Respondent No. 4 addressed a letter dated 26th Deiember 2019 to the Respondent No. 3 seeking removal from the blaiklist of about 2929 vehiiles registered with its offie. Referenie was made to the order of the Adjudiiating Authority under PMC Ait permitting transfer of 4826 vehiiles and release of attaihment in that regard. There was ionfrmation from the Assistant Direitor, Direitorate of Enforiement vide letter dated 26th February 2020 addressed to Respondent No. 3 ionfrming the possession of 4826 vehiiles in the hands of Respondent No. 4. It had ilarifed in this iommuniiation that the Respondent No. 4 would be entitled to transfer or release of the said vehiiles.
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12. Respondent No. 3 issued demand notiie dated 16th June 2020 in the name of Respondent No. 4 seeking payment of tax under the Maharashtra Motor Vehiiles Taxation Ait, 1997 ("MMVT Ait"). The tax demand was in respeit of 161 vehiiles. Respondent No. 4 replied to the said demand notiie dated 16th June 2020 and stated that the Respondent No. 4 had sold the vehiiles pursuant to the auition ionduited as per Regulations 33 read with Sihedule I of Liquidation Regulations. The dues of the statutory department whiih iniluded Respondent No. 3 iould only be paid/settled in aiiordanie with Seition 53(e)(i) and Seition 53(f) of IBC. Respondent No. 4 also referred to Seition 238 of IBC whiih provided that IBC shall have effeit, notwithstanding anything inionsistent therewith iontained in any other law for the time being in forie or any instrument having effeit by virtue of any suih law. Thus, all payments and/or ilaims against the Corporate Debtor in liquidation iould only be made under the waterfall meihanism presiribed under Seition 53 of IBC. Respondent Nos. 2 and 3 were ialled upon to fle their ilaims under the provisions of IBC and initiate the appropriate proiedure for transfer of the subjeit vehiiles sold in liquidation in favour of the auition purihaser i.e. the Petitioner. 7/53 ::: Uploaded on - 06/04/2021 ::: Downloaded on - 05/09/2021 11:02:28 :::
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13. An Appliiation for non user of the subjeit 153 vehiiles was fled by the Petitioner under Seition 3(3) of the MMVT Ait. Pursuant to the Appliiation of the Petitioner, Respondent No. 3 iarried out inspeition in relation to 93 vehiiles on 17th June 2020.
14. Thereafter, Respondent No. 3 issued another demand notiie on 19th June 2020 in relation to 161 vehiiles by whiih the ilaim was made against the Corporate Debtor for aggregate sum of Rs. 4,94,48,347/- under Seition 9(3) of the MMVT Ait read with Rule 24 of the Maharashtra Vehiiles Taxation Rules. The tax was stated to be due on 1st Deiember 2014 to 31st August 2020. Pursuant to the demand notiie, Respondent Nos. 2 and 3 have blaiklisted all 153 subjeit vehiiles purihased by the Petitioner.
15. The Petitioner addressed a Representation on 16th Oitober 2020 to the Respondent No. 3 seeking transfer of the subjeit vehiiles after referring to the faits leading to the purihase of the subjeit vehiiles by the Petitioner under the IBC. It was mentioned in the Representation that the subjeit 8/53 ::: Uploaded on - 06/04/2021 ::: Downloaded on - 05/09/2021 11:02:28 ::: WPST-280-21.doc vehiiles were not in use. Thereafter, on 4th November 2020, Respondent No. 1 issued a notifiation exempting payment of road tax under MMVT Ait for a period on and from 1st April 2020 until 30th September 2020 i.e. during the pandemii.
16. Being aggrieved by the aition of Respondent Nos. 1 to 3 of not transferring ownership of the subjeit vehiiles purihased by the Petitioner in the auition by Respondent No. 4 and the issuanie of the tax demand notiies dated 16th June 2020 and 19th June 2020 ("the impugned demand notiie"), the Petitioner has fled the present Petition.
17. Mr. Khandeparkar learned Counsel appearing for the Petitioner has submitted that the Respondent Nos.2 and 3 had issued the impugned demand notiies dated 16th June, 2020 and 19th June, 2020 in the name of Respondent No.4 in relation to payment of tax in respeit of the subjeit vehiiles under Seition 9 (3) of the MMVT Ait read with Rule 24 of the Maharashtra Motor Vehiiles Taxation Rules, 1998. However, by the time the impugned demand notiies had been issued, the NCLT had passed order of liquidation as regards the iorporate 9/53 ::: Uploaded on - 06/04/2021 ::: Downloaded on - 05/09/2021 11:02:28 ::: WPST-280-21.doc debtor against whom the ilaim has been raised in the impugned demand notiies and in respeit of whiih Respondent No.4 had been appointed as Resolution Professional / liquidator under Seition 34(1) of IBC. He has submitted that upon Respondent No.4 being appointed as liquidator in respeit of iorporate debtor, all ilaims arising against the iorporate debtor would neiessarily have to be lodged with the Respondent No.4. This has been made ilear by Seition 38 of the IBC whiih provides for ionsolidation of ilaims whiih Respondent No.4 is entitled to admit or rejeit in terms of Seition 40 of the IBC. There is an Appeal provision under Seition 42 of the IBC and a person aggrieved from the deiision of the liquidator under Seition 40 of IBC is entitled to an Appeal. The dues of the statutory department whiih would inilude Respondent No.3 is regarded as 'operational debt' in terms of Seition 5(21) of the IBC Ait and aiiordingly a person to whom the operational debt is owed is regarded as an 'operational ireditor'. He has relied upon a deiision of the NCLT in Pr Direitor General of Iniome Tax (Admn. & TPS) Vs. M/s. Synergies Dooray Automotive Ltd & Ors.1. The NCLT by the said deiision has held that all statutory 1 Company Appeal (AT) (Insolveniy) No.205 of 2017 deiided on 20th Marih, 2019.
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18. Learned Counsel appearing for the Petitioner has submitted that under Seition 53 of IBC, waterfall meihanism has been provided for payment and / or distribution of the proieeds from the sale of the liquidation assets. The dues of the Central and State Government iniluding that of the Respondent No.3 in the present iase would neiessarily fall within sub ilause (e) (f) of Seition 53 of IBC whiih provides for distribution of dues to the Central and State Government. In terms of the waterfall meihanism, the dues of Respondent No.3 iome muih lower in priority and in sub ilause
(e) (i) and thereafter sub Clause (f) whiih provides for any remaining debt and dues. Thus it is ilear that any ilaim in relation to an asset belonging to the iorporate debtor shall have to be realized under the waterfall meihanism together with all ireditors and in this regard the expression used in Seition 53 to the effeit that the 'distribution of proieeds from the sale of the liquidation assets' is relevant. In the present iase, the subjeit vehiiles whiih had been taken iustody of by the 11/53 ::: Uploaded on - 06/04/2021 ::: Downloaded on - 05/09/2021 11:02:28 ::: WPST-280-21.doc Respondent No.4 as liquidator in aiiordanie with Seition 35 of IBC, had been sold in auition as per Regulation 33 read with sihedule 1 of liquidation regulations. The dues in respeit of the subjeit vehiiles whiih are statutory dues iould only paid or settled in aiiordanie with Seition 53(e) (i) of IBC. It is to be noted that the only exieption to the waterfall meihanism was in the iase of seiured ireditor. However, in the present iase the seiured ireditor had already relinquished their seiurity interest under Seition 52 of the IBC qua assets of the iorporate debtor. In any iase Respondent Nos.2 and 3 are not seiured ireditors qua the subjeit vehiiles.
19. Learned Counsel for the Petitioner has further relied upon Seition 238 of the IBC to iontend that the IBC has a overriding effeit over any other law in time being in forie whiih iniludes MMVT Ait. Upon the iorporate debtor being sent to CIRP or liquidation, it is the proiedure presiribed under IBC whiih triggers and beiomes all eniompassing for the purpose of realization of all dues and debts by ireditors or any other stakeholders from the Corporate Debtor. In this iontext he has relied upon the deiision of the Supreme Court in the 12/53 ::: Uploaded on - 06/04/2021 ::: Downloaded on - 05/09/2021 11:02:28 ::: WPST-280-21.doc iase of Priniipal Commissioner of Iniome Tax Vs. Monnet Ispat and Energy Ltd.2 whiih has held that the provisions of IBC would override anything inionsistent as regards reiovery of all irown debts and dues. He has also relied upto deiision of the Supreme Court in the iase of Dunians Industries Ltd. Vs. AJ Agroihem3 whiih has also held that the IBC iode shall have an overriding effeit over the Tea Ait, 1953. He has further submitted that similar to the IBC was the iase under the erstwhile regime of Companies Ait, 1956 in iontext of ilaims for muniiipal taxes made against the Company in Liquidation. In this iontext he has relied upon the deiision of the Supreme Court in Al Champdany Industries Ltd. Vs. Offiial Liquidator and Anr.4 and in partiiular paragraphs 15, 25 to 30 of this deiision. The Supreme Court in the iontext of ilaim of muniiipal taxes has held that the muniiipality was an unseiured ireditor in the iourse of winding up and was required to stand in queue with all similarly situated for the purpose of realization of their dues from the sale proieeds of assets sold in liquidation.
2 (2018) 18 SCC 786 3 (2019) 9 SCC 725 4 (2009) 4 SCC 486 13/53 ::: Uploaded on - 06/04/2021 ::: Downloaded on - 05/09/2021 11:02:28 ::: WPST-280-21.doc
20. Learned Counsel for the Petitioner has submitted that in the event the ilaims in respeit of statutory dues are not submitted or not aiiepted or dealt with by the Resolution Professional and in the resolution plan submitted by the Resolution Professional then those ilaims would stand extinguished. In this iontext he has relied on the deiision of the Supreme Court in the iase of Essar Steel India Ltd Committee of Creditors V. Satish Kumar Gupta5 and in partiiular paragraph 107 of this deiision. He has submitted that in the present iase the ilaims raised by the Respondent No.3 in the impugned demand notiies against iorporate debtor, were not submitted to the Respondent No.4 as Resolution Professional and thus these ilaims would in the light of the deiision of the Supreme Court stand extinguished.
21. Learned Counsel for the Petitioner has submitted that unlike a vessel in admiralty jurisdiition, the subjeit vehiile whiih is a truik is not a juristii entity and henie it iannot be iontended that the Respondent Nos.2 and 3 are entitled to follow the subjeit vehiile or truik. There is no provision whiih ireates a iharge or lean on the subjeit vehiile 5 (2020) 8 SCC 531 14/53 ::: Uploaded on - 06/04/2021 ::: Downloaded on - 05/09/2021 11:02:28 ::: WPST-280-21.doc as regards the amount ilaimed. The medium for reiovery of any amount due from the iorporate debtor in liquidation, is not in terms of Seition 8 and / or 12 of the MMVT Ait, but under the liquidation regulations and IBC.
22. Learned Counsel for the Petitioner has further submitted that under Seition 50 of the MV Ait, 1988, an appliiation is to be made for transfer of ownership by the transferor whiih in the present iase is Respondent No.4(Liquidator). No part of Seition 50 provides for payment of outstanding tax as a iondition preiedent to transfer of vehiile. He has thus submitted that the attempt on the part of Respondent Nos.2 and 3 to read Seition 8 of the MMVT Ait into Seition 50 of the MV Ait is not only misionieived but also iontrary to plain language thereof.
23. Learned Counsel for the Petitioner has submitted that the Petitioner has fled an appliiation under Seition 3(3) of MMVT Ait seeking exemption from payment of tax on aiiount of non-use. He has submitted that the appliiation has been fled primarily on three aspeits:- 15/53 ::: Uploaded on - 06/04/2021 ::: Downloaded on - 05/09/2021 11:02:28 :::
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(i) The ftness iertifiate in relation to the subjeit vehiiles in question were valid only until 2015 and 2016 (exiept 7 truiks) and aiiordingly the subjeit vehiiles have not been in use or been able to ply.
(ii) The Corporate Debtor has been CIRP sinie 12th September, 2017 and upon the Liquidator's own showing that the subjeit vehiiles have not been in use therefrom.
(iii) Even after their purihase by the Petitioner sometime in May 2019, the subjeit vehiiles have been stationed at Ahmedabad without any ftness iertifiate. In fait, about 93 of the subjeit vehiiles have already been inspeited by Respondent No.3 in iontext of non-user appliiation.
24. Learned Counsel for the Petitioner has submitted that taxes are levied on vehiiles using the road and not on vehiiles whiih did not use on the road at all. What is material and relevant is the use of roads by the vehiiles for levy of taxes. In this iontext he relies upon the deiision of the Supreme Court in the iase of State of Gujarat & Ors. Vs. Kaushikbhai K. Patel & Anr.6 and in partiiular paragraph 8 of the deiision. He has submitted that it fows from sub-seition (2) of Seition 3 that where a motor vehiile is not using the road, no tax is levied thereon. He has also plaied relianie upon 6 (2005) SCC 615 16/53 ::: Uploaded on - 06/04/2021 ::: Downloaded on - 05/09/2021 11:02:28 ::: WPST-280-21.doc the deiision of this Court in the iase of Tata Motors Ltd. Vs. Deputy Regional Transport Offie7 wherein in paragraph 24, it has been held that the expression 'used or kept for use in the state' fnding its plaie in Seition 3(2) of the MMVT Ait would be of no avail if suih vehiile has not used the publii roads of the State. In the present iase, the subjeit vehiiles purihased by the Petitioner have not been used in the State of Maharashtra sinie at least 2017, whiih is the period from whiih CIRP iommenied and thus no tax is leviable thereon. He has aiiordingly submitted that the Writ Petition deserves to be allowed in terms of the prayer ilauses (a) and (b).
25. Mr. Panihpor, learned AGP appearing on behalf of Respondent Nos.1 to 3 - State has submitted that under Seition 14 of the MV Ait, 1988, there is an effiaiious remedy provided and henie the Petition is not maintainable. Seition 14 of the MV Ait provides that that "Any person who is aggrieved by any order of the Tax Authority, may fle an Appeal before suih person or authority, in suih manner within suih time and on payment of suih fees as may be presiribed". It is further submitted that the Petitioner has already applied under 7 (2010) 3 Mh.L.J. 758.
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26. Learned AGP has further submitted that it is a iardinal priniiple of the MV Ait, that tax goes along with vehiile whiih means that at the time of purihase of the vehiiles and appliiation for registration, the previous tax has to be ileared by the purihaser. Henie, the purihaser will have to pay the entire tax of the vehiile at the time of registration of the vehiile. He has submitted that the total tax due in respeit of the subjeit vehiiles is Rs.5,36,56,918/- from the year 2013- 14 to 2020-21. He has submitted that the Petitioner would have to ilear the tax at the time of applying for transfer of the subjeit vehiiles. The Government Ciriular dated 7th January, 2020 regarding tax exemption only provides for the vehiile whiih have ileared the tax arrears till 31st Marih, 2021, ian avail exemption under the said Government Ciriular. 18/53 ::: Uploaded on - 06/04/2021 ::: Downloaded on - 05/09/2021 11:02:28 :::
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27. Learned AGP has submitted that under Seition 8 of the MMVT Ait, if the tax leviable in respeit of any motor vehiile remains unpaid by any person liable for payment thereof, the person who has possession or iontrol of said vehiiles shall also be liable to pay the tax and interest due to the taxation department. He has submitted that the Petitioner has iniorreitly plaied relianie on the provisions of IBC in respeit of their iontention that Seition 8 of the MMVT Ait will not apply and that the ilaims in respeit of the statutory dues will have to be lodged with the Resolution Professional. He has submitted that in the iontext of the liquidation proieedings, the Respondent No.4 as Resolution Professional had failed to give notiie of liquidation in the State of Maharashtra where the subjeit vehiiles of the iorporate debtor was registered. The Respondent No.4 had only given notiie of liquidation in the State of Gujarat. It was iniumbent upon the Respondent No.4 (Liquidator) to give notiie or at least sent a letter to the registering authority in Maharashtra - Thane about the liquidation proiess.
28. Learned AGP has further submitted that from 19/53 ::: Uploaded on - 06/04/2021 ::: Downloaded on - 05/09/2021 11:02:28 ::: WPST-280-21.doc the auition sale notiie it is ilear that Respondent No.4 put the vehiiles for auition on the iondition of 'as it where it basis'. In this iontext he has relied upon deiision of the Supreme Court in the iase of United Bank of India Vs. Offiial Liquidator and Ors8. He has submitted that the Supreme Court in this deiision has held that it is for the intending purihaser to satisfy himself in all respeits as to the title, eniumbranies and so forth of the immovable property that he proposes to purihase when the sale of the property and assets are on the iondition of 'as it where it basis'. He has submitted that the Supreme Court held that the purihaser of the property on suih terms iannot ilaim diminution in the priie on the grounds of defeit in the title or desiription of the property. The iase of liquidator selling the property of the iompany in liquidation under the orders of the Court, is all together different from the iase of individual selling immovable property belonging to himself. He has submitted that it is ilear from the deiision of the Supreme Court that where the Petitioner partiiipated in auition proieedings as in the present iase ionduited by Respondent No.4 under the IBC and where Respondent No.4 admittedly issued the auition notiie with a speiifi iondition of sale of the 8 (1994) 1 SCC 575 20/53 ::: Uploaded on - 06/04/2021 ::: Downloaded on - 05/09/2021 11:02:28 ::: WPST-280-21.doc subjeit vehiiles on 'as it where it basis', it was for the Petitioner to verify the eniumbranie and then to partiiipate in the auition proieedings.
29. Learned AGP for the State has relied upon deiision of the Supreme Court in the iase of Telangana State Southern Power Distribution Company Ltd. Vs. Srigdhaa Beverages9. It has been held that as an auition purihaser, where the bidding is on 'as is where is whatever there is and without reiourse basis' the purihaser would have to inspeit the premises and make enquiries about the dues in all respeits. He has submitted that in this deiision, the Supreme Court has observed that the purihaser would neiessarily be put to notiie on the dues of the various aiiounts iniluding the eleitriiity dues.
30. Learned AGP for the State has also plaied relianie upon the deiision of the Supreme Court in the iase of Muniiipal Corporation of Delhi Vs. Trigaon Investment and Trading Pvt. Ltd10, whiih held that even after the transfer of 9 (2020) 6 SCC 404 10 (1996) 3 SCC 630.
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31. Learned AGP has submitted that the Petitioner is aware that the subjeit vehiiles are iommeriial vehiiles and thus he was under an obligation to make neiessary enquiries pertaining to the statutory dues in respeit of the subjeit vehiiles. In view of the deiisions of the Supreme Court, it is for the purihaser to make the neiessary enquiries and then deiide to partiiipate in auition proieedings and now iannot reiile from payment of statutory dues in respeit of whiih he would have made the neiessary enquiries.
32. Learned AGP has submitted that under Regulation 12 of the IBC, the liquidator had to publish a publii announiement ialling upon stakeholders of the iorporate debtor M/s. Siddhivinayak Logistiis Ltd. to submit proof of their ilaims. Regulation 12 (3) further postulates that the said announiement should be published in one English and one 22/53 ::: Uploaded on - 06/04/2021 ::: Downloaded on - 05/09/2021 11:02:28 ::: WPST-280-21.doc regional language newspaper with wide iiriulation at the loiation of the registered offie and priniipal offie, if any, of the iorporate debtor and in any other loiation where in the opinion of the liquidator, the iorporate debtor ionduits material business operations. He has submitted that in the present iase, publii announiement was not published in the regional language of the State of Maharashtra but was published in the Gujarathi newspaper. There was no reiord fled by the Petitioner or by the liquidator to demonstrate that the publii announiement had been published in English newspapers mandated by Regulation 12 of the IBC. Thus there has been violation of Regulation 12 (3) of the IBC, and due to whiih the Respondent Nos.2 and 3 iould not register their ilaim within the time frame as provided under the Ait.
33. Learned AGP has submitted that the provisions of Seition 53 (a) (i) of the IBC iannot be appliiable to the faits and iiriumstanies of the present iase. He has submitted that the tax has been levied on the subjeit vehiiles and therefore, the said tax goes with the ownership of the subjeit vehiiles and / or the possession of the subjeit vehiiles. 23/53 ::: Uploaded on - 06/04/2021 ::: Downloaded on - 05/09/2021 11:02:28 :::
WPST-280-21.doc He has submitted that in view of Seition 8 of the MMVT Ait, the tax is ionneited with the subjeit vehiiles and iannot be treated at par with any other liability suih as Sales Tax, VAT and Iniome Tax Ait for that purpose whiih is being referred to as irown debt. He has submitted that merely beiause the subjeit vehiiles have been published for auition under IBC, that would not override the provisions of Seition 8 of the MMVT Ait. He has relied upon Seition 139 of the MMC Ait, 1949 whiih provides that the aitual oiiupier of the immovable property / premises is bound to pay the property taxes and the defnition of the oiiupier ian be seen under Seition 2 (44) of the said Ait. This would inilude the new purihaser to whom the property is transferred under registered instrument of sale deed who would have to ilear the unpaid tax on the said property if not paid by the previous owner. He has submitted that similar provision is there under Seition 8 of the MMVT Ait. It would thus be for the Petitioner as purihaser to pay the tax in respeit of the subjeit vehiiles as the tax on the subjeit vehiiles goes with the subjeit Vehiiles under Seition 8 of the MMVT Ait. He has submitted that the Respondent No.1 authority iannot transfer the vehiile in the name of the Petitioner till the whole tax is paid upto date by the Petitioner. 24/53 ::: Uploaded on - 06/04/2021 ::: Downloaded on - 05/09/2021 11:02:28 :::
WPST-280-21.doc He has drawn analogy to the iase of a fat seller where the fat is sold to the purihaser and while purihasing the fat, the purihaser tells the soiiety that he will only pay the tax or dues of the soiiety from the date of the purihase deed, the soiiety would never give no objeition to suih transaition.
34. Learned AGP has submitted that the deiisions of the Supreme Court and this Court relied upon by the learned Counsel for the Petitioner are not appliiable in the faits of the present iase. He has submitted that in the present iase this Court is not dealing with the issue of priority of dues between seiured ireditors and the Respondent Nos.2 and 3. Thus there is no question of the Respondent Nos.2 and 3 standing in queue as unseiured ireditors and / or that sinie there ilaims were not lodged with the Resolution Professional, their ilaims stand extinguished. He has submitted that the frst deiision relied upon by the Petitioner in the iase of Pr Direitor General (Supra) is a deiision of the NCLT and this deiision would therefore, have no binding forie. He has submitted that with regard to the deiisions in Kaushikbhai Patel (Supra) and Tata Motors Ltd.(Supra) these deiisions of the Supreme Court are in 25/53 ::: Uploaded on - 06/04/2021 ::: Downloaded on - 05/09/2021 11:02:28 ::: WPST-280-21.doc relation to the vehiiles whiih are not using the roads and thus the taxes are not leviable. Whether the subjeit vehiiles were not using roads or not in the present iase are disputed questions of faits and required adjudiiation before the iompetent authority in the frst instanie and this issue iannot be deiided in a writ jurisdiition for the frst time. He has aiiordingly submitted that there is no merit in the Writ Petition whiih requires to be dismissed.
35. Learned Counsel for the Petitioner in Affdavit of Rejoinder has dealt with the preliminary issue raised by the learned AGP as to the maintainability of this Petition. He has submitted that under Seition 14 of the MV Ait, 1958 whiih has been relied upon by the learned AGP to iontend that an effiaiious remedy is provided would not be appliiable in the present iase as the Petitioner is 'not a person aggrieved', of the demand for payment of road taxes. He has submitted that neither of the impugned demand notiies were issued to the Petitioner and infait the impugned demand notiies were addressed to the Respondent No.4, (Liquidator). In any event he has submitted that the Respondent No.3 laiks inherent 26/53 ::: Uploaded on - 06/04/2021 ::: Downloaded on - 05/09/2021 11:02:28 ::: WPST-280-21.doc jurisdiition to issue the demand notiies against the iompany whiih is in liquidation. He has submitted that the ilaims made in the impugned demand notiies would neiessarily have to be lodged with the liquidator as the iorporate debtor against whom suih ilaims are made is in liquidation. However, the Respondent Nos.2 and 3 would only be entitled for payment as per the waterfall meihanism under Seition 53 of the IBC. He has further submitted that the impugned demand notiies are issued in violation of the priniiples of natural justiie and without hearing the Petitioner. He has submitted that the overriding effeit as provided under Seition 238 read with Seition 53 of IBC will prevail over a demand under Seition 8 of MMVT Ait, 1958. He has submitted that the Petitioner would have no objeition, if there is a direition for transfer of ownership of vehiiles without quashing any ilaim of road tax with liberty being granted to Respondent Nos.2 and 3 to lodge a ilaim of the said amounts with the liquidator under IBC.
36. Learned Counsel for the Petitioner has then dealt with the iontention of the learned AGP for Respondent Nos.2 and 3 that the publiiation as presiribed in the Regulation 27/53 ::: Uploaded on - 06/04/2021 ::: Downloaded on - 05/09/2021 11:02:28 ::: WPST-280-21.doc 12 (3) (a) was not done. He has submitted that Respondent No.4 published a publii announiement for inviting ilaims in the Gujarathi paper of Sandesh on 24th November, 2018 in Mumbai, Ahmedabad, Surat, Baroda, Bhuj, Bhavnagar and Rajkot and in English newspaper Business Standard on 24th November, 2018 in Mumbai, Ahmedabad, Surat, Delhi, Kolkata, Bangalore, Chandigarh, Luiknow, Pune, Chennai, Bhubaneshwar and Koihi. Thus there is no substanie in this iontention of the learned AGP.
37. The learned Counsel for the Petitioner has further submitted that in the iontext of non user of the subjeit vehiiles on the roads in Maharashtra, the Petitioner has fled appliiation under Seition 3(3) of the MMVT Ait whiih the Respondent No.2 would have to ionsider in aiiordanie with law. The reiovery under Seition 80 of the MMVT Ait and registration and transfer under Seition 50 of the MMVT Ait are two separate and independent funitions and as suih they iannot be interlinked. In any event, the statutory dues ian only be reiovered in the manner presiribed under the provisions of IBC and that Seition 8 of the MMVT Ait iannot be relied upon 28/53 ::: Uploaded on - 06/04/2021 ::: Downloaded on - 05/09/2021 11:02:28 ::: WPST-280-21.doc to iontend that the tax ian be reiovered from the purihaser, partiiularly when the sale was by the liquidator under the IBC.
38. Having ionsidered the rival submissions, it would be appropriate to note that the subjeit vehiiles were sold in an auition ionduited by the Respondent No.4 as liquidator who had taken iustody and iontrol of the subjeit vehiiles under Seition 35 of the IBC. The impugned Demand Notiies were thereafter issued in the name of Respondent No.4 seeking payment of tax under MMVT Ait in respeit of the subjeit vehiiles. The seiond impugned demand notiie dated 19th June, 2020 ilaimed the sum of Rs.4,94,48,347/- under Seition 9(3) of the MMVT Ait read with Rule 24 of the Maharashtra Motor Vehiiles Taxation Rules. It is observed that Rule 24 of the Maharashtra Motor Vehiiles Taxation Rules has infait been deleted and thus a wrong provision has been invoked in the seiond impugned demand notiie dated 19th June, 2020. Further, the impugned Demand Notiies were not issued to the Petitioner. The tax dues were stated to be reioverable from the iorporate debtor in respeit of whom an order of liquidation had been passed by the NCLT on 19th November, 2018. The 29/53 ::: Uploaded on - 06/04/2021 ::: Downloaded on - 05/09/2021 11:02:28 ::: WPST-280-21.doc Respondent No.4 had been appointed as liquidator under Seition 34 (1) of the IBC. Thus it is ilear that the provisions of the IBC were to apply.
39. It would be neiessary to refer to the relevant provisions of the IBC. These are as under:-
"5 (21) "Operational debt" means a ilaim in respeit of the provisions of goods or serviies iniluding employment or a debt in respeit of the payment of dues arising under any law for the time being in forie and payable to the Central Government, any State Government or any loial authority"
35. Power and duties of liquidator (1) Subjeit to the direitions of the Adjudiiating Authority, the liquidator shall have the following powers and duties, namely:-
(a) to verify ilaims of all the ireditors;
(b) to take into his iustody or iontrol all the assets, property, effeits and aitionable ilaims of the iorporate debtor;
(i) to evaluate the assets and property of the iorporate debtor in the manner as may be speiifed by the Board and prepare a report;
(d) to take suih measures to proteit and preserve the assets and properties of the iorporate debtor as he ionsiders neiessary;
(e) to iarry on the business of the iorporate debtor for its benefiial liquidation as he ionsiders neiessary;30/53 ::: Uploaded on - 06/04/2021 ::: Downloaded on - 05/09/2021 11:02:28 :::
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(f) subjeit to seition 52, to sell the immovable and movable property and aitionable ilaims of the iorporate debtor in liquidation by publii auition or private iontrait, with power to transfer suih property to any person or body iorporate, or to sell the same in pariels in suih manner as may be speiifed;
(g) to draw, aiiept, make and endorse any negotiable instruments iniluding bill of exihange, hundi or promissory note in the name and on behalf of the iorporate debtor, with the same effeit with respeit to the liability as if suih instruments were drawn, aiiepted, made or endorsed by or on behalf of the iorporate debtor in the ordinary iourse of its business;
(h) to take out, in his offiial name, letter of administration to any deieased iontributory and to do in his offiial name any other ait neiessary for obtaining payment of any money due and payable from a iontributory or his estate whiih iannot be ordinarily done in the name of the iorporate debtor, and in all suih iases, the money due and payable shall, for the purpose of enabling the liquidator to take out the letter of administration or reiover the money, be deemed to be due to the liquidator himself;
(i) to obtain any professional assistanie from any person or appoint any professional, in disiharge of his duties, obligations and responsibilities;
(j) to invite and settle ilaims of ireditors and ilaimants and distribute proieeds in aiiordanie with the provisions of this Code;
(k) to institute or defend any suit, proseiution or other legal proieedings, iivil or iriminal, in the name of on behalf of the iorporate debtor;
(l) to investigate the fnaniial affairs of the 31/53 ::: Uploaded on - 06/04/2021 ::: Downloaded on - 05/09/2021 11:02:28 ::: WPST-280-21.doc iorporate debtor to determine undervalued or preferential transaitions;
(m) to take all suih aitions, steps, or to sign, exeiute and verify any paper, deed, reieipt doiument, appliiation, petition, affdavit, bond or instrument and for suih purpose to use the iommon seal, if any, as may be neiessary for liquidation, distribution of assets and in disiharge of his duties and obligations and funitions as liquidator;
(n) to apply to the Adjudiiating Authority for suih orders or direitions as may be neiessary for the liquidation of the iorporate debtor and to report the progress of the liquidation proiess in a manner as may be speiifed by the Board; and
(o) to perform suih other funitions as may be speiifed by the Board.
(2) The liquidator shall have the power to ionsult any of the stakeholders entitled to a distribution of proieeds under seition 53:
Seition 38: Consolidation of ilaims.
38. (1) The liquidator shall reieive or iolleit the ilaims of ireditors within a period of thirty days from the date of the iommeniement of the liquidation proiess.
2) A fnaniial ireditor may submit a ilaim to the liquidator by providing a reiord of suih ilaim with an information utility:
Provided that where the information relating to the ilaim is not reiorded in the information utility, the fnaniial ireditor may submit the ilaim in the same manner as provided for the submission of ilaims for the operational ireditor under sub-seition (3).
(3) An operational ireditor may submit a ilaim to the liquidator in suih form and in suih manner and along with suih supporting doiuments required to prove the ilaim as may 32/53 ::: Uploaded on - 06/04/2021 ::: Downloaded on - 05/09/2021 11:02:28 ::: WPST-280-21.doc be speiifed by the Board.
(4) A ireditor who is partly a fnaniial ireditor and partly an operational ireditor shall submit ilaims to the liquidator to the extent of his fnaniial debt in the manner as provided in sub-
seition (2) and to the extent of his operational debt under sub-seition (3).
(5) A ireditor may withdraw or vary his ilaim under this seition within fourteen days of its submission.
40. Admission or rejeition of ilaims. -
(1) The liquidator may, after verifiation of ilaims under seition 39, either admit or rejeit the ilaim, in whole or in part, as the iase may be:
Provided that where the liquidator rejeits a ilaim, he shall reiord in writing the reasons for suih rejeition.
(2) The liquidator shall iommuniiate his deiision of admission or rejeition of ilaims to the ireditor and iorporate debtor within seven days of suih admission or rejeition of ilaims.
42. Appeal against the deiision of liquidator. - A ireditor may appeal to the Adjudiiating Authority against the deiision of the liquidator aiiepting or rejeiting the ilaims within fourteen days of the reieipt of suih deiision.
53. Distribution of assets.
(1) Notwithstanding anything to the iontrary iontained in any law enaited by the Parliament or any State Legislature for the time being in forie, the proieeds from the sale of the liquidation assets shall be distributed in the following order of priority and within suih period and in suih manner as may be speiifed, namely :--
(a) the insolveniy resolution proiess iosts and the 33/53 ::: Uploaded on - 06/04/2021 ::: Downloaded on - 05/09/2021 11:02:28 ::: WPST-280-21.doc liquidation iosts paid in full;
(b) the following debts whiih shall rank equally between and among the following :--
(i) workmen's dues for the period of twenty-
four months preieding the liquidation iommeniement date; and
(ii) debts owed to a seiured ireditor in the event suih seiured ireditor has relinquished seiurity in the manner set out in seition 52;
(i) wages and any unpaid dues owed to employees other than workmen for the period of twelve months preieding the liquidation iommeniement date;
(d) fnaniial debts owed to unseiured ireditors;
(e) the following dues shall rank equally between and among the following:--
(i) any amount due to the Central Government and the State Government iniluding the amount to be reieived on aiiount of the Consolidated Fund of India and the Consolidated Fund of a State, if any, in respeit of the whole or any part of the period of two years preieding the liquidation iommeniement date;
(ii) debts owed to a seiured ireditor for any amount unpaid following the enforiement of seiurity interest;
(f) any remaining debts and dues;
(g) preferenie shareholders, if any; and
(h) equity shareholders or partners, as the iase may be.
(2) Any iontraitual arrangements between reiipients under sub-seition (1) with equal ranking, if disrupting the order of priority under that sub-seition shall be disregarded by the liquidator.34/53 ::: Uploaded on - 06/04/2021 ::: Downloaded on - 05/09/2021 11:02:28 :::
WPST-280-21.doc (3) The fees payable to the liquidator shall be deduited proportionately from the proieeds payable to eaih ilass of reiipients under sub- seition (1), and the proieeds to the relevant reiipient shall be distributed after suih deduition.
Explanation. - For the purpose of this seition -
(i) it is hereby ilarifed that at eaih stage of the distribution of proieeds in respeit of a ilass of reiipients that rank equally, eaih of the debts will either be paid in full, or will be paid in equal proportion within the same ilass of reiipients, if the proieeds are insuffiient to meet the debts in full; and
(ii) the term "workmen's dues" shall have the same meaning as assigned to it in seition 326 of the Companies Ait, 2013 (18 of 2013).
Seition 238: Provisions of this Code to override other laws:
The provisions of this Code shall have effeit, notwithstanding anything inionsistent therewith iontained in any other law for the time being in forie or any instrument having effeit by virtue of any suih law."
40. These provisions of the IBC make it ilear that statutory dues whiih iome within the meaning of 'operational debt' ian be ilaimed against the iorporate debtor in liquidation only be under the provisions of IBC. These ilaims are neiessarily to be lodged with the liquidator and payable under the waterfall meihanism provided in Seition 53 of IBC. Seition 238 of IBC provides that the provisions of IBC have an overriding effeit 35/53 ::: Uploaded on - 06/04/2021 ::: Downloaded on - 05/09/2021 11:02:28 ::: WPST-280-21.doc over all other laws. The Respondent Nos.2 and 3 have issued the impugned demand notiies ilaiming payment of taxes in respeit of the subjeit vehiiles against the iorporate debtor in liquidation. The Respondent Nos.2 and 3 are not seiured ireditors qua the subjeit vehiiles. Thus, the only exieption to the waterfall meihanism being in the iase of seiured ireditors would not apply to these Respondents. In the present iase all seiured ireditors have relinquished their seiurity interest under Seition 52 of the IBC Ait qua the assets of the iorporate debtor. It is ilear from the deiisions relied upon by the learned Counsel for the Petitioner that the IBC shall have overriding effeit over anything inionsistent as regards reiovery of all irown debts and dues. In the iase of Priniipal Commissioner of Iniome Tax (Supra) and Dunians Industries Ltd. (Supra), the Supreme Court has held that the IBC shall have overriding effeit over the Tea Ait, 1953. Paragraph 7.4 of this deiision reads thus:-
"7.4 Seition 16G(1)(i) refers to the proieeding for winding up of suih iompany or for the appointment of reieiver in respeit thereof. Therefore, as suih, the proieedings under Seition 9 of the IBC shall not be limited and/or restriited to winding up and/or appointment of reieiver only. The winding up/liquidation of the 36/53 ::: Uploaded on - 06/04/2021 ::: Downloaded on - 05/09/2021 11:02:28 ::: WPST-280-21.doc iompany shall be the last resort and only on an eventuality when the iorporate insolveniy resolution proiess fails. As observed by this Court in Swiss Ribbons Pvt. Ltd. (supra), referred to hereinabove, the primary foius of the legislation while enaiting the IBC is to ensure revival and iontinuation of the iorporate debtor by proteiting the iorporate debtor from its own management and from a iorporate debt by liquidation and suih iorporate insolveniy resolution proiess is to be iompleted in a time bound manner. Therefore, the entire "iorporate insolveniy resolution proiess" as suih iannot be equated with "winding up proieedings". Therefore, ionsidering Seition 238 of the IBC, whiih is a subsequent Ait to the Tea Ait, 1953, shall be appliiable and the provisions of the IBC shall have an overriding effeit over the Tea Ait, 1953. Any other view would frustrate the objeit and purpose of the IBC. If the submission on behalf of the appellant that before initiation of proieedings under Seition 9 of the IBC, the ionsent of the Central Government as provided under Seition 16G(1)(i) of the Tea Ait is to be obtained, in that iase, the main objeit and purpose of the IBC, namely, to iomplete the "iorporate insolveniy resolution proiess" in a time bound manner, shall be frustrated. The sum and substanie of the above disiussion would be that the provisions of the IBC would have an overriding effeit over the Tea Ait, 1953 and that no prior ionsent of the Central Government before initiation of the proieedings under Seition 7 or Seition 9 of the IBC would be required and even without suih ionsent of the Central Government, the insolveniy proieedings under Seition 7 or Seition 9 of the IBC initiated by the operational ireditor shall be maintainable."37/53 ::: Uploaded on - 06/04/2021 ::: Downloaded on - 05/09/2021 11:02:28 :::
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41. In a reient deiision of the Supreme Court in Indus Bioteih Private Ltd. Vs. Kotak India Venture (Offshore) Fund (earlier known as Kotak India Venture Limited) & Ors. 11, the Supreme Court ionsidered the deiision of the NCLT, Bombay Benih-IV whiih had through its order dated 9th June, 2020 by noting the rival iontentions of the parties allowed the appliiation fled by the petitioner therein under Seition 8 of the Arbitration and Coniiliation Ait, 1996. As a ionsequenie, the Petition fled by the respondent No.2 therein under Seition 7 of the IBC was dismissed. The Supreme Court, after ionsidering the objeition raised by the Respondent therein relating to the Petition having already been instituted before the NCLT under Seition 7 of the IBC and also keeping in perspeitive the order dated 9th June, 2020 passed by the NCLT disposing of the appliiation fled under Seition 8 of the Ait, 1996, was of the view that the matter required deeper ionsideration on this aspeit. The Supreme Court has at paragraph 27 held thus:-
27. Therefore, to sum up the proiedure, it is ilarifed that in any proieeding whiih is pending before the Adjudiiating Authority under Seition 7 of IB Code, if suih petition is admitted upon the Adjudiiating Authority reiording the satisfaition with regard to the 11 Arbitration Petition (Civil) No.48 of 2019 with Civil Appeal No.1070 of 2021 @ SLP (C) No.8120 of 2020 deiided on 26th Marih, 2021.38/53 ::: Uploaded on - 06/04/2021 ::: Downloaded on - 05/09/2021 11:02:28 :::
WPST-280-21.doc default and the debt being due from the iorporate debtor, any appliiation under Seition 8 of the Ait, 1996 made thereafter will not be maintainable. In a situation where the petition under Seition 7 of IB Code is yet to be admitted and, in suih proieedings, if an appliiation under Seition 8 of the Ait, 1996 is fled, the Adjudiiating Authority is duty bound to frst deiide the appliiation under Seition 7 of the IB Code by reiording a satisfaition with regard to there being default or not, even if the appliiation under Seition 8 of Ait, 1996 is kept along for ionsideration. In suih event, the natural ionsequenie of the ionsideration made therein on Seition 7 of IB Code appliiation would befall on the appliiation under Seition 8 on the appliiation under Seition 8 of the Ait, 1996.
The Supreme Court has aiiordingly held that where a Petition is admitted under Seition 7 of the IBC reiording satisfaition with regard to the default and the debt being due from the Corporate Debtor, then the appliiation under Seition 8 of the Arbitration and Coniiliation Ait, 1996 is not maintainable. The provisions of IBC has thus been held to have overriding effeit over the provisions of the Arbitration and Coniiliation Ait, 1996.
42. Another deiision of the Supreme Court relied upon by the Petitioner is Al Champdany Industries Ltd.(Supra) ionierns the erstwhile regime of the Companies Ait, 1956 and 39/53 ::: Uploaded on - 06/04/2021 ::: Downloaded on - 05/09/2021 11:02:28 ::: WPST-280-21.doc in iontext of ilaim of muniiipal taxes made against the Company in Liquidation. In paragraphs 14 and 16, the Supreme Court held thus:-
"14. If the property tax was merely a statutory dues without ireating any eniumbranie on the property whiih had iast a duty upon all the auition-purihasers to make an investigation, it would mean that they must try to fnd out all the liabilities of the iompany in liquidation in their entirety.
16. The Companies Ait or any other law does not impose any additional obligation upon the purihaser to make an enquiry with regard to the liabilities of the iompanies other than those whiih would impede their value."
43. It is thus ilear from this deiision that there is no additional obligation upon the auition purihaser to make investigations to fnd out the statutory dues of the Company in Liquidation and / or liabilities of the Company in Liquidation other than those whiih would impede their value.
44. Further, in Essar Steel India Ltd Committee of Creditors (Supra), the Supreme Court at paragraph 107 held thus:-
40/53 ::: Uploaded on - 06/04/2021 ::: Downloaded on - 05/09/2021 11:02:28 :::
WPST-280-21.doc "107. For the same reason, the impugned NCLAT judgment in holding that ilaims that may exist apart from those deiided on merits by the resolution professional and by the Adjudiiating Authority/Appellate Tribunal ian now be deiided by an appropriate forum in terms of Seition 60(6) of the Code, also militates against the rationale of Seition 31 of the Code. A suiiessful resolution appliiant iannot suddenly be faied with "undeiided"
ilaims after the resolution plan submitted by him has been aiiepted as this would amount to a hydra head popping up whiih would throw into uniertainty amounts payable by a prospeitive resolution appliiant who suiiessfully take over the business of the iorporate debtor. All ilaims must be submitted to and deiided by the resolution professional so that a prospeitive resolution appliiant knows exaitly what has to be paid in order that it may then take over and run the business of the iorporate debtor. This the suiiessful resolution appliiant does on a fresh slate, as has been pointed out by us hereinabove. For these reasons, the NCLAT judgment must also be set aside on this iount."
45. Thus ilaims made against a Company in Liquidation and for whom a Resolution Professional is appointed in CIRP, must be submitted to and deiided by the Resolution Professional so that the prospeitive resolution appliiant knows exaitly what has to be paid in order that it may then take over and run the business of the iorporate debtor. This, the suiiessful resolution appliiant does on a fresh 41/53 ::: Uploaded on - 06/04/2021 ::: Downloaded on - 05/09/2021 11:02:28 ::: WPST-280-21.doc slate. The deiision of the NCLT in the iase of Santosh Wasantrao Walok Vs. Vijay Kumar V. Iyer12 follows the deiision of the Supreme Court in Essar Steel India Ltd Committee of Creditors (Supra) and holds that the ilaims whiih have not been submitted or aiiepted or dealt with by the Resolution Professional and in the resolution plan submitted by the Resolution Professional, would stand extinguished.
46. The ilaims raised in the impugned Demand Notiies would neiessarily have to be lodged before the Respondent No.4 as liquidator and ian only be then deiided by the liquidator and where ilaims are not lodged, they appear to stand extinguished. Considering that in the present iase, the CIRP proieedings in liquidation have not been iompleted, it would be open for the Respondent Nos.2 and 3 to even at this stage lodge their ilaims before the Respondent No.4 as Liquidator and their ilaims ian only be satisfed under waterfall meihanism for payment as provided for in Seition 53 of the IBC.
47. We fnd no substanie in the submission of the 12 Company Appeal (AT) (Insolveniy) No.871-872 of 2019. 42/53 ::: Uploaded on - 06/04/2021 ::: Downloaded on - 05/09/2021 11:02:28 :::
WPST-280-21.doc learned AGP for Respondent Nos.1 to 3 that the statutory dues of Respondent Nos.2 and 3, whiih are in respeit of the subjeit vehiiles would follow the subjeit vehiiles and the Respondent Nos.2 and 3 ian ilaim their statutory dues from the purihaser of the subjeit vehiiles. The medium for reiovery of the amounts due from the iorporate debtor in liquidation ionsidering that these are statutory dues in respeit of the subjeit vehiiles whiih were sold by the Resolution Professional and whiih subjeit vehiiles belong to the iorporate debtor in liquidation, would not be in terms of Seition 8 and / or 12 of the MMC Ait, but would neiessarily have to be under the Liquidation Regulations and provisions of IBC. Thus the dues relatable to the subjeit vehiiles belonging to the iorporate debtor ian only be reiovered under the provisions of IBC viz. waterfall meihanism under Seition 53 of the IBC and not from the Petitioner as purihaser.
48. The deiision in United Bank of India (Supra) relied upon by the learned AGP was in respeit of the erstwhile regime of Companies Ait, 1956 and was a iase where the Court is ionierned with the sale of property and assets of the 43/53 ::: Uploaded on - 06/04/2021 ::: Downloaded on - 05/09/2021 11:02:28 ::: WPST-280-21.doc Company in liquidation by the Offiial Liquidator and for suih sale it was held that the Offiial Liquidator does not hold any guarantee or warranty in respeit thereof. The Supreme Court held that it would be for the intending purihaser to satisfy himself in all respeits as to the title, eniumbranies and so forth of the immovable property that he proposes to purihase. He iannot after purihasing the property on suih terms ilaim diminution in the priie on the ground of defeit in the title or desiription of the property. Thus the Supreme Court held that the Offiial Liquidator selling the property of the iompany in liquidation under the orders of the Court, is all together different from the iase of an individual selling immovable property belonging to himself. This deiision would have no relevanie to the faits of the present iase whiih relates to the reiovery of statutory dues from the iorporate debtor in liquidation and where under Seition 238, the provisions of IBC would override any other inionsistent law. The deiision of the Supreme Court in Telangana State Southern Power Distribution Company Ltd. (Supra) was relied upon by the learned AGP. This was a iase where the auition purihaser was bidding on 'as is where is whatever there is and without reiourse basis" and where it was held that it was for the 44/53 ::: Uploaded on - 06/04/2021 ::: Downloaded on - 05/09/2021 11:02:28 ::: WPST-280-21.doc purihaser to satisfy himself by inspeiting premises and making neiessary enquiries about dues in all respeits. This would also inilude eleitriiity dues. It was further held that in this iase where as in iases of e-auition notiie, the existenie of the eleitriiity dues, whether quantifed or not, has been speiifially mentioned as a liability of the purihaser and the sale was on "as is where is whatever there is and without reiourse basis" there ian be no doubt that the liability to pay the eleitriiity dues exits on the purihaser. The faits of this iase is entirely different from the present iase and thus would not be appliiable to the statutory dues of the Respondent Nos.2 and 3 whiih are ilearly reioverable from the iorporate debtor in liquidation under the provisions of the IBC. The deiision of the Supreme Court in Muniiipal Corporation of Delhi (Supra) relied upon by the learned AGP would also not appliiable in the present iase. This was not iase of a sale by the iorporate debtor in liquidation ionduited by the Resolution Professional and where the statutory dues are reioverable from the iorporate debtor in liquidation under the IBC but was a iase of transfer of immovable property, where the liability to pay unpaid property tax prior to transfer would be attraited and the transferee is bound to pay the tax after transfer as per the 45/53 ::: Uploaded on - 06/04/2021 ::: Downloaded on - 05/09/2021 11:02:28 ::: WPST-280-21.doc provisions of the Delhi Muniiipal Corporation Ait. It was further held in the said deiision that the said tax ionstitutes the frst iharge upon the land and buildings and that while the liability to pay tax lies upon the transferor, the transferee is not freed from the said liability on that aiiount.
49. We further fnd no substanie in the preliminary issue raised by the learned AGP for the State as to the maintainability of this Petition. Seition 14 of the MV Ait, 1958 provides "any person who is aggrieved by any order of the Tax Authority, may fle an Appeal before suih person or authority, in suih manner within suih time and on payment of suih fees as may be presiribed". In the present iase the Petitioner is not a person aggrieved as the impugned demand notiies had been issued in the name of Respondent No.4 as liquidator in respeit of the subjeit vehiiles. Thus there is no demand for payment of tax made against the Petitioner. In any event, the Petitioner has ihallenged the jurisdiition of Respondent No.3 to issue the impugned demand notiies against the iorporate debtor whiih is in liquidation. It is the Petitioner's iase that the Respondent No.3 has no jurisdiition 46/53 ::: Uploaded on - 06/04/2021 ::: Downloaded on - 05/09/2021 11:02:28 ::: WPST-280-21.doc to issue the impugned demand notiies against iorporate debtor in liquidation iontrary to the mandate of the IBC and Liquidation Regulations. Respondent No.3 is iompulsory required to lodge its ilaim with Respondent No.4, the liquidator after whiih the liquidator would verify the same and either admit or rejeit the ilaim in full or part. Respondent Nos.2 and 3 would thus be entitled to payment as per the waterfall meihanism under Seition 53 of the IBC. Thus it is the iase of the Petitioner that the impugned demand notiies iould not have been issued by plaiing relianie on the MMVT Ait. The IBC has overriding effeit under Seition 238 read with Seition 53 thereof whiih will prevail over any demand made under Seition 8 of the MMVT Ait.
50. The learned AGP for the Respondent Nos.1 to 3 has also iontended that there is a violation of Regulation 12(3) (a) of the Liquidation Regulations whiih provides for publishing of publii announiement for inviting ilaims. It is apparent from the doiuments on reiord that the Respondent No.4 had published the notiie and invited ilaims not only in Gujarati in the State of Gujarat as iontended by the learned 47/53 ::: Uploaded on - 06/04/2021 ::: Downloaded on - 05/09/2021 11:02:28 ::: WPST-280-21.doc AGP but also in Mumbai as well as published the publii announiement in English in the Business Standard in various iities in India iniluding Mumbai. Thus there has been no violation of Regulation 12(3) (a) of the Liquidation Regulations.
51. We further fnd no merit in the submission of the learned AGP that sinie the Petitioner had applied under Seition 3(3) of the MMVT Ait, for invoking non-user ilause and suih appliiation is pending, it would be neiessary for the Petitioner to fnish that remedy before moving this Petition. In fait, learned Counsel for the Petitioner has submitted that the Petitioner had no objeition if there is a direition for transfer of ownership of the subjeit vehiiles without quashing any ilaim of road tax.
52. We further fnd no substanie in the submissions of learned AGP that the subjeit vehiiles iannot be transferred under Seition 50 of the MMVT Ait, 1988 till the statutory dues in respeit of the subjeit vehiiles are disiharged. The reiovery under Seition 8 of the MMVT Ait and 48/53 ::: Uploaded on - 06/04/2021 ::: Downloaded on - 05/09/2021 11:02:28 ::: WPST-280-21.doc registration and transfer under Seition 50 of the MMVT Ait are two separate an independent funitions and as suih they iannot be interlinked. In the present iase it is ilear from the faits on reiord as well as the provisions of the IBC that it would be neiessary for Respondent Nos.2 and 3 to lodge their ilaims before the Respondent No.4 as liquidator of the iorporate debtor. We fnd no impediment in transferring ownership of the subjeit vehiiles in favour of the Petitioner. The ilaims made in the impugned demand notiies issued by the Respondent Nos.2 and 3 with respeit to the subjeit vehiiles ian be lodged with the liquidator, Respondent No.4 to be satisfed under the waterfall meihanism as provided in sub-ilause (e) (i) of Seition 53 of the IBC.
53. With regard to the ilaim of statutory dues from the Petitioner, the learned Counsel for the Petitioner has iontended that sinie the motor vehiiles are not using the roads, no tax ian be leviable thereon. It appears that the ftness iertifiate in relation to the subjeit vehiiles were valid only until 2015 and 2016 (exiept 7 truiks) and aiiordingly these truiks have not been in use or been able to ply. The Corporate 49/53 ::: Uploaded on - 06/04/2021 ::: Downloaded on - 05/09/2021 11:02:28 ::: WPST-280-21.doc Debtor has been in CIRP sinie 12th September, 2017 and upon the Liquidator's own showing, the subjeit vehiiles have not been in use therefrom. This is the iase even after their purihase by the Petitioner sometime in May 2019. The subjeit vehiiles have been stationed at Ahmedabad without any ftness iertifiate. Thus the Petitioner has fled an Appliiation under Seition 3(3) of the MMVT Ait seeking exemption from payment of tax on aiiount of non-use. These faits will have to determine by the Respondent Nos.2 to 3 in the Appliiation under Seition 3(3) of the MMVT Ait.
54. The deiisions of the Supreme Court relied upon by the learned Counsel for the Petitioner viz. State of Gujarat (Supra) and Tata Motors (Supra) have held that for tax to be levied the subjeit vehiiles would neiessarily have to use the publii roads of the State. The subjeit vehiiles as iontended by the learned iounsel for the Petitioner are not using the publii roads and henie no tax is leviable thereon. This follows from sub Seition 2(3) of the MMVT Ait. However, sinie the appliiation under Seition 3 (3) of the MMVT Ait is pending for ionsideration before Respondent Nos.2 and 3, we 50/53 ::: Uploaded on - 06/04/2021 ::: Downloaded on - 05/09/2021 11:02:28 ::: WPST-280-21.doc ionsider it appropriate not to give any fnding thereon. Henie, we leave it to Respondent Nos.2 and 3 to deiide the Appliiation under Seition 3(3) of the MMVT Ait. However, sinie the statutory dues in respeit of the subjeit vehiiles are ilaimed by the Respondent Nos.2 and 3 after the purihase of the subjeit vehiiles in May, 2019, it would be appropriate to direit the Petitioner to make payment of the statutory dues from the date of purihase of the subjeit vehiiles. This would be subjeit to the outiome of the Appliiation under Seition 3 (3) of the MMVT Ait. In so far as the issue as to whether the impugned demand notiies ilaiming statutory dues against the Corporate Debtor in liquidation in respeit of the subjeit vehiiles prior to their date of their purihase ian at all be ilaimed against the Petitioner as purihaser of the subjeit vehiiles under the provisions of the MMVT Ait, we hold that it iannot be ilaimed against the Petitioner. The impugned demand notiies whiih seek payment of the tax dues under the MMVT Ait would also require to be quashed and set aside. Henie the following order:-
a) Rule is made absolute in terms of prayer ilauses (a) and (b), whiih read thus:-51/53 ::: Uploaded on - 06/04/2021 ::: Downloaded on - 05/09/2021 11:02:28 :::
WPST-280-21.doc
(a) That by Writ of Mandamus and or by appropriate Writ, Direition and Order of similar nature, Your Lordships be pleased to direit the Respondents to transfer the ownership of the 153 vehiiles (List annexed at Exhibit "H") in favour or in name of Petitioner and further pleased to quash and set aside the impugned tax demand notiies dated 16th June, 2020 & 19th June, 2020 issued by the Respondent No.3.
(b) That by Writ of Mandamus and or by appropriate Writ, Direition and Order of similar nature, Your Lordships be pleased to direit the Respondents to allow Petitioner to approaih loial RTO offie within whose jurisdiition the vehiiles are at a standstill for, physiial verifiation, ftment of trolley wherever neiessary and issuanie of renewal of ftness iertifiate under Rule 62(1) of Central Motor Vehiiles Rule and submit form No.38(A) in the offie of Respondent No.3.
b) The Petitioner shall pay the Respondent Nos.1 to 3 -
State, the 50% of statutory dues in respeit of the subjeit vehiiles purihased by the Petitioner from the date of their purihase. This will be subjeit to the outiome of the Appliiation made by the Petitioner for non-use of the subjeit vehiiles under Seition 3 (3) of the MMVT Ait whiih is pending determination before Respondent Nos.2 and 3.
i) Respondent Nos.1 to 3 - State is direited to inform the Petitioner in writing the statutory dues in respeit of 52/53 ::: Uploaded on - 06/04/2021 ::: Downloaded on - 05/09/2021 11:02:28 ::: WPST-280-21.doc the subjeit vehiiles purihased by the Petitioner from the date of their purihase, on or before 17th April, 2021.
d) If dues are informed in writing on or before 17th April, 2021, in that iase Petitioner to make payment of 50% within two weeks from the date of iommuniiation.
e) Respondent Nos.2 and 3 shall iomplete the hearing of the Appliiation of the Petitioner under Seition 3 (3) of the MMVT Ait and iommuniiate the order to the Petitioner within four weeks from the date of this order.
f) Liberty granted to the Respondent Nos.1 to 3 - State to move before Respondent No.4 for their dues by making appropriate appliiation as required by law.
g) The Writ Petition is aiiordingly disposed of in the above terms with no order as to iosts.
[R.I. CHAGLA J.] [K.K. TATED, J.] 53/53 ::: Uploaded on - 06/04/2021 ::: Downloaded on - 05/09/2021 11:02:28 :::