By S&S Co. Advocates & Solicitors · Published 14 March 2026 · Informational content, not legal advice
About this article: A general explainer prepared by S&S Co. Advocates & Solicitors on a recurring type of dispute. It does not report a specific judgment or order, names no parties and gives no case citation, so it should not be cited as authority. Law and practice change; please verify against the current statute and primary sources before relying on it.
Under Section 30(2)(b) of the Insolvency and Bankruptcy Code, 2016, a resolution plan must provide for payment to operational creditors of an amount not less than the amount they would receive on liquidation of the corporate debtor under Section 53, or the amount that would be paid to them if the resolution plan amount were distributed in accordance with Section 53(1), whichever is higher. A plan that does not meet this requirement is open to challenge.
Statutory dues owed to the Central or a State Government or a local authority have been treated by the Supreme Court as operational debt in several decisions, and the plan must therefore deal with them. Where a statute creates a charge in favour of the authority, a question may also arise as to whether it is a secured creditor, as discussed in State Tax Officer v. Rainbow Papers Ltd. (2022). The position depends on the statute under which the dues arise.
Claims that are not dealt with in an approved plan are generally treated as extinguished once the plan is approved, so the treatment of government dues is an important point for the authority to raise in the process, and a plan that provides for nil payment without a liquidation-value calculation is open to challenge.