Sundaresh Bhatt, Liquidator of Abg Shipyard vs Central Board of Indirect Taxes and Customs

Court

Supreme Court of India

Date

26 August 2022

Case No.

Civil Appeal No. 7667 of 2021

Result

Allowed

Bench

N.V. Ramana, J.K. Maheshwari, Hima Kohli

Citation

[2022] 12 S.C.R. 641 : 2022 INSC 872

Headnote

Insolvency and Bankruptcy Code, 2016 – ss.14, 33(5), 53,

238 – Customs Act – Whether the provisions of the IBC would prevail over the Customs Act and if so, to what extent – Held: The IBC would prevail over the Customs Act to the extent that once moratorium is imposed in terms of ss.14 or 33(5) of the IBC as the case may be, the respondent authority only has a limited jurisdiction to assess/determine the quantum of customs duty and other levies – The respondent authority does not have the power to initiate recovery of dues by means of sale/confiscation, as provided under the Customs Act – After such assessment, the respondent authority has to submit its claims (concerning customs dues/ /operational debt) in terms of the procedure laid down, in strict compliance of the time periods prescribed under the IBC, before the adjudicating authority – In any case, the IRP/RP/liquidator can immediately secure goods from the respondent authority to be dealt with appropriately, in terms of the IBC – Interpretation of Statutes – Harmonious Construction. Insolvency and Bankruptcy Code, 2016 – Corporate Insolvency Process – Various stages involved in the corporate insolvency process in India – Discussed.

Insolvency and Bankruptcy Code, 2016 – s.14 – Purpose of the moratorium – Held: s.14 of the IBC prescribes a moratorium on the initiation of Corporate Insolvency Resolution Process (CIRP) proceedings and its effects – One of the purposes of the moratorium is to keep the assets of the Corporate Debtor together during the insolvency resolution process and to facilitate orderly completion of the processes envisaged under the statute – Such measures ensure the curtailing of parallel proceedings and reduce the possibility of conflicting outcomes in the process – One of the motivations of imposing a moratorium is for s.14(1)(a), (b), and (c) of the IBC to form a shield that protects pecuniary attacks against the Corporate Debtor – This is done in order to provide the Corporate Debtor with breathing space, to allow it to continue as a going concern and rehabilitate itself – Any contrary interpretation would crack this shield and would have adverse consequences on the objective sought to be achieved.

Words and Phrases – “Abandonment of Goods” – Discussed.

Collector of Customs v. Dytron (India) Ltd. 1999 ELT

The Judgment of the Court was delivered by N. V. RAMANA, CJI 1. The present Civil Appeal under Section 62(1) of the Insolvency and Bankruptcy Code, 2016 (“IBC”) arises out of the impugned judgment dated 22.11.2021 passed by the National Company Law Appellate Tribunal, New Delhi (“NCLAT”) in Company Appeal (AT) (Insolvency) No. 236 of 2021. Vide the impugned judgment, the NCLAT has allowed the appeal filed by the respondent against the order of the National Company Law Tribunal, Ahmedabad (“NCLT”) /Adjudicating Authority whereby the Adjudicating Authority directed the release of certain goods

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