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2021 (11) TMI 848 - HC - CustomsAuction - ownership of the asset vests in the petitioner - NCLT is the appropriate forum to adjudicate the petitioner s prayers or not - re-export of goods - HELD THAT - There is no dispute on facts and the question of i) error in the contract heading, ii) inadvertent absence of the signature of R5 in the copy of the contract placed in the typed set, iii) quantification of the asset supplied and paid for being 9899 MT and the remaining being 19537.50 MT stand categorically explained. Thus, the so-called factual discrepancies will not frustrate the maintainability of this writ petition. The Code is intended to consolidate and address the laws relating to re-organisation and insolvency resolution of corporate persons, firms and individuals in a time bound manner and in the interests of all stake holders. The RP is appointed to guide the process of CIRP under Section 20 of the Code and is expected to manage the operations of the corporate debtor as a going concern. As a part of such management, he is to make every endeavour to protect and preserve the value of the property of the corporate debtor - In the present case, the RP endeavours to auction the asset and secure the proceeds of such sale to the credit of the debtor and the benefit of the insolvency proceedings. In order to preserve the property either by way of auction or otherwise, the pre-condition under Section 20 is that what is stated to be preserved would be the property of the corporate debtor . This is on the one side. It is thus clear that the intention of the Code is never to address those assets over which a debtor has no title. Such assets, infact, stand specifically excluded from the liquidation process, being assets where the debtor might hold some right, but is not the owner to title of the asset. A pre-condition set out is the inclusion of the asset in question in the inventory of the debtor - The facts and circumstances that arose in those writ petitions are different and distinct from those that present themselves in the matter under consideration now. Reliance upon those decisions is thus to no avail. The petitioner thus assumes the status of an unpaid seller who continues to hold title/ownership to the asset imported - the official respondents are directed to dispose the representations of the petitioner dated 04.10.2019 and 04.02.2020 within a period of four weeks from today. Writ Petition is held to be maintainable.
Issues Involved:
1. Maintainability of the Writ Petition under Article 226/227 of the Constitution of India. 2. Ownership and title of the sugar consignment. 3. Jurisdiction of the National Company Law Tribunal (NCLT) and the Resolution Professional (RP) under the Insolvency and Bankruptcy Code (IBC), 2016. 4. Entitlement to re-export the sugar consignment. Detailed Analysis: 1. Maintainability of the Writ Petition under Article 226/227 of the Constitution of India: The primary objection raised by the respondents was regarding the maintainability of the writ petition, arguing that the petitioner should have approached the NCLT as per the IBC, 2016. The court referred to the case of Embassy Property Developers Pvt. Ltd. V. State of Karnataka and others (2019 SCC Online SC 1542) which clarified that the High Court has jurisdiction to entertain writ petitions under Article 226/227 against orders passed by the NCLT if the NCLT has exercised jurisdiction not vested in it. The court concluded that the writ petition is maintainable because the NCLT cannot adjudicate on the ownership of assets not recorded in the corporate debtor's balance sheet. 2. Ownership and title of the sugar consignment: The petitioner claimed ownership of the sugar consignment, asserting that it was an unpaid seller retaining title to the goods. The court examined the contract, which stipulated that title would not pass to the buyer (R5) until full payment was made. The court also reviewed the balance sheets and inventory records of R5, which did not include the sugar consignment. The court concluded that the petitioner retains ownership of the sugar, as R5 had not paid for the entire consignment. 3. Jurisdiction of the NCLT and the Resolution Professional (RP) under the Insolvency and Bankruptcy Code (IBC), 2016: The court analyzed the jurisdiction of the NCLT and the RP under the IBC, 2016. It was noted that the RP is responsible for managing the corporate debtor's assets, but only those assets recorded in the corporate debtor's balance sheet. The court referred to Sections 18 and 20 of the IBC, which outline the RP's duties and the definition of "assets." The court concluded that the sugar consignment, not being part of R5's recorded assets, falls outside the jurisdiction of the NCLT and the RP. 4. Entitlement to re-export the sugar consignment: The petitioner sought permission to re-export the sugar consignment, arguing that it had not entered the domestic market and was deteriorating in the bonded warehouse. The court directed the official respondents to verify the petitioner's claims and decide on the representation for re-export. The court emphasized that this decision should be made by the customs authorities and the Directorate of Revenue Intelligence (DRI), considering the petitioner's claim that the sugar is still within the customs frontier and eligible for the Advance Authorisation Scheme (AA Scheme). Conclusion: The writ petition was held to be maintainable. The court directed the official respondents to dispose of the petitioner's representations regarding the re-export of the sugar consignment within four weeks. The court did not grant any costs and closed the connected miscellaneous petitions.
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