In Brief
The Supreme Court clarified that Government tax authorities are secured creditors under the Insolvency and Bankruptcy Code when a statutory charge exists (here, under the Gujarat VAT Act). The Court held that a Resolution Plan approving the corporate debtor's restructuring cannot ignore statutory dues to the Government. The time limits for filing claims are directory, not mandatory. The Adjudicating Authority must reject any Resolution Plan that fails to account for Government statutory dues. The Court set aside the lower tribunals' orders that had waived off tax dues and approved the restructuring plan, and remitted the matter for a fresh Resolution Plan compliant with statutory requirements."
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