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2019 (8) TMI 1759 - Tri - Insolvency and BankruptcyAuction of 256 Containers - remission of sale proceeds to the Resolution Professional/ Corporate Debtor's - HELD THAT - After the initiation of CIRP and declaration of moratorium, the Customs Authority/Respondent could not have auctioned the goods stuffed in the 256 containers. But, since the goods have been sold by auction and taken away by the bona-fide buyers, there is no use pursuing the buyers and thus it would be in the interest of the Corporate Debtor that the sale proceeds of ₹ 10,60,10,000/- are directed to be deposited with the Resolution Professional, along with the remaining 667 containers still lying with the Customs. The Custom Authorities shall remit/pay the amount of ₹ 10,60,10,000/- as the sale proceeds in their possession within two weeks of the date of receipt of this order, to the Resolution Professional/ Corporate Debtor's account either by way of Demand draft or through e-payment facility in the Bank directly, to be provided by the Resolution Professional to the Respondent, immediately - Application disposed off.
Issues:
1. Auction of goods by Customs Authority post initiation of Corporate Insolvency Resolution Process. 2. Ownership and disposal of goods in containers. 3. Rights of Resolution Professional over goods and raw materials. 4. Legal precedence regarding conflict between Insolvency and Bankruptcy Code and Customs Act. Issue 1: Auction of goods by Customs Authority post initiation of Corporate Insolvency Resolution Process The Tribunal addressed the issue of the Customs Authority retaining custody over 923 containers of goods belonging to the Corporate Debtor post initiation of Corporate Insolvency Resolution Process (CIRP). It was noted that out of the 923 containers, 256 had been auctioned by the Customs Authority, leading to a dispute over the sale proceeds and the legality of the auction during the moratorium period. Issue 2: Ownership and disposal of goods in containers The Tribunal examined the ownership and disposal of the goods in the containers, highlighting that the Corporate Debtor had imported the goods which were retained by the Customs Authority. The dispute arose as the Customs Authority claimed ownership due to non-cooperation by the Corporate Debtor, leading to legal proceedings and directions from the Hon'ble High Court regarding destuffing and storage of the cargo. Issue 3: Rights of Resolution Professional over goods and raw materials The Resolution Professional asserted rights over the goods and raw materials in the remaining 667 containers, arguing that these could be utilized for the Corporate Debtor's operations during the CIRP. The Resolution Professional sought immediate handover of the containers to avoid additional costs incurred in purchasing raw materials from the market. Issue 4: Legal precedence regarding conflict between Insolvency and Bankruptcy Code and Customs Act In considering legal precedence, the Tribunal referred to judgments by the National Company Law Appellate Tribunal and National Company Law Tribunal, highlighting the overriding effect of the Insolvency and Bankruptcy Code over the Customs Act. The Tribunal emphasized that post initiation of CIRP and declaration of moratorium, the Customs Authority should not have auctioned the goods, and directed the Customs Authority to remit the sale proceeds and hand over the remaining containers to the Resolution Professional. In conclusion, the Tribunal ordered the Customs Authority to remit the sale proceeds and hand over the remaining containers to the Resolution Professional within a specified timeline. It also allowed all concerned parties, including the Customs Authority and other applicants, to submit their claims as Operational Creditors for consideration in the Resolution Plan implementation. The Registry was directed to communicate the order to relevant parties, ensuring compliance with formalities for issuing certified copies.
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