An Analytical Study Of Revenue Recovery Trends In Insolvency And Bankruptcy Code Proceedings

This paper examines the treatment and recovery of Government dues particularly taxes and
statutory levies within the framework of the Insolvency and Bankruptcy Code, 2016 (IBC).
Historically, sovereign dues derived preferential treatment under the common-law doctrine of
crown debts. However, the IBC introduces a structured, resolution-driven model that
significantly subordinates Government claims to secured creditors, insolvency costs and certain
financial debts. This shift reflects a modern insolvency philosophy emphasising value
maximisation, predictability and time-bound resolution. The doctrinal analysis focuses on three
central provisions: Section 53, which places Government dues low in the liquidation waterfall;
Section 31, which binds all stakeholders including Government departments to approved
resolution plans and effectuates the "clean slate" principle; and Section 238, which grants
overriding effect to the IBC over conflicting recovery statutes. Judicial developments,
including landmark pronouncements in Ghanashyam Mishra and Sons (P) Ltd v Edelweiss
Asset Reconstruction Co (2021) and State Tax Officer v Rainbow Papers Pvt Ltd (2022), have
shaped and at times unsettled the contours of sovereign priority. A comparative analysis of the
United Kingdom, United States, Australia and Singapore reveal that mature insolvency regimes
similarly limit sovereign preference, prioritising efficiency, creditor equality and restructuring
viability. The paper concludes with targeted recommendations for statutory clarification,
uniform administrative procedures, digital integration and expanded MSME-focused
restructuring tools.Keywords: Insolvency and Bankruptcy Code (IBC); Government Dues; Priority of Claims;
Corporate Insolvency Resolution; Statutory Charges.