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TMI Blog2018 (4) TMI 274X X X X Extracts X X X X X X X X Extracts X X X X ..... orporate Debtor. Right of suspension will not become right of taking delivery of the property from other parties. Therefore, the applicant herein cannot be said that it has a right under Insolvency & Bankruptcy Code to get the delivery of the goods lying with the Respondent herein henceforth, this Application is hereby dismissed without costs. - MA 549/2017 In CP/I&B/NCLT/MAH/2017 - - - Dated:- 7-2-2018 - MR. B. S. V. PRAKASH KUMAR AND MR. V. NALLASENAPATHY, JJ. For The Applicant : Malhar Zatakia, Aniket Nimbalkar and Ms. Sukanya Bhaumik, Advocates For The Respondent : Mukesh Pabari, Advocate ORDER B.S.V. Prakash Kumar, Member (Judicial). The applicant, Bharti Defence Infrastructure Ltd., through its Resolution Professional appointed in the Corporate Insolvency Resolution Process initiated pursuant to the order of Moratorium dated 6.6.2017 passed by this Tribunal, filed this Miscellaneous Application for transfer of the goods lying at the Respondent's warehouse to the Applicant's warehouse for the purpose of utilising the same, inter alia, for construction of shipping vessels for the Ministry of Defence. 2. The Resolution Professi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e applicant lying in its warehouse to him so as to enable the Resolution Professional to fulfil the mandate in terms of the Code and the admission order dated 6.6.2017 passed by this Bench. 4. As to legal submissions, the Resolution Professional submits that under Section 18(f) of the Code, the IRP is required to take control and custody of the assets of the Corporate Debtor as recorded in its Balance Sheet including assets that may not be in the possession of the Corporate Debtor and the same power being extended to Resolution Professional under Section 23(2) of the Code, this Respondent shall forthwith deliver the possession of the goods of the Corporate Debtor to the Resolution professional herein. The balance sheet of the company of the year 2015-16 having confirmed that the material mentioned above belongs to the Corporate Debtor, since the Resolution Professional is endowed with the duty under section 25(2)(a) of the Code to take immediate custody and control of all the assets of Corporate Debtor, the Resolution Professional says that he has filed this Miscellaneous Application for suitable directions from this Bench for delivery of the goods lying with the Respondent. He ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the goods within the time frame as mentioned under Carriage by Road Act. The Counsel of the Respondent further submits that the importer of any goods shall execute a bond under Section 59 of the Customs Act in respect of Bill of Entry for warehousing in a sum equal to thrice the amount of the duty assessed on such goods binding itself to comply with all provisions of the Customs Act and the Rules and the Regulations made thereunder in respect of such goods, to pay on or before the dates specified in the notice demand, all duties and interest payable under sub-section 2 of Section 61 and also to pay all penalties and fines incurred for the contravention of the provisions of this Act, if at all the applicant herein intends to manufacture and other operations in relation to goods in a warehouse, the Principal Commissioner of Customs or Commissioner of Customs shall grant permission for such operations in a warehouse and there being a section (Section 71) saying that no warehoused goods shall be taken out of warehouse except on clearance for home consumption or export or for removal to another house or as otherwise provided by The Customs Act, the applicant under any circumstances, c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry of anything by citing Section 14 of Insolvency Bankruptcy Code. This suspension will remain exempted from the transactions notified by the Central Government in consultation with any financial sector regulator. So by close observation of this Section, it can be safely held that no right has been given to the Corporate Debtor to proceed against others under Insolvency Bankruptcy Code whereby, we are of the view that no special right has been accrued to the Corporate Debtor for getting delivery of the goods lying with somebody governed by other provisions of law. 9. The other provision of law that has been cited by the Applicant is Section 18(1)(f) to say that the Interim Resolution Professional is conferred with a duty to take control and custody of any asset over which the Corporate Debtor has ownership rights as recorded in the balance sheet of the Corporate Debtor including an asset (Section 18(1)(f)) that may or may not be in possession of the Corporate Debtor. In addition to it, other corollary rights reflected under sections 20, 23(2) and 25(2)(a) have also been mentioned for saying that the Resolution Professional has a right to recover the assets of the Corporate D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssets and there being a Tribunal to decide all these issues, the Corporate Debtor is not expected to obtain delivery of the goods without routing through the channel that has been mentioned under The Customs Act. Non obstante clause present in the Insolvency Bankruptcy Code, 2016 is only in respect to the field the provisions operating, for Customs clearance being different field, it can't be construed that this Tribunal can exercise overriding jurisdiction to wipe out the rights of the parties accrued under different field that is falling under Entry 83 of List I of the Seventh Schedule of the Constitution. 12. On further perusal of The Customs Act having regard to the goods imported, two situations arise for clearance of imported goods, one is the importer shall make entry of the goods by presenting a Bill of Entry to the proper officer for home consumption or warehousing in the prescribed form, if at all the importer is unable to subscribe to a declaration before the proper officer furnishing all the particulars of the goods, the proper officer after examination deposits goods in the public warehouse, two is if the importer pays import duty along with Bill of Entry, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stoms authority permitted them to do so even to exercise the rights as mentioned under Section 64 The Customs Act. In view of the above proposition of law, this applicant cannot today say that he has ownership rights over the goods warehoused under the care and custody of Customs Authority. Perhaps for this reason only, the Applicant has consciously not made the Customs Authority as a party to the proceedings as if no permission of the Customs Authority is required for moving out the goods from the warehouse. The applicant has filed the Leave and License Agreement entered between the applicant and the respondent to impress upon this Bench that goods are kept in the private warehouse basing on the agreement entered between them without saying that to maintain a warehouse, license is to be obtained from the customs authorities and the goods will be kept in the warehouse solely on the permission given by the Customs Authorities. 15. The Applicant Counsel relied upon Innoventive Industries Ltd. v. ICICI Bank Ltd. Anr. [2017] SCC Online SC 1025 to say that Insolvency Bankruptcy Code will have overriding effect upon the reaming enactments, but having gone through this citation, it i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies emanated under other provision of law. 20. On reading the judgment aforestated, 3-4 things are clear, 1. the Official Liquidator was appointed, 2. that property lying at Bombay Port Trust Dock belonging to the Company, which is permitted under Section 63 of Major Port Trust Act to auction the same by giving notice to the owner of the goods, 3. The Port Trust is assured that the claim of the custom duty would be paid by the Official Liquidator after the amount has been remitted to the account of the Official Liquidator. If we look into Section 446(2) of 1956 Act, it is clear that the Court has jurisdiction, notwithstanding anything contained any other law for the time being in force, to entertain or to dispose of any suit or proceeding by or against the company, which is conspicuously absent under Insolvency Bankruptcy Code more specially in CIRP period, whereby the sweeping power that was given under Section 446 read with Section 456 of the Companies Act, 1956 not being given in Insolvency Bankruptcy Code, the ratio that has been decided in the aforesaid case cannot be straight away applicable to the present situation. In the aforesaid case, the Court has invoked 446 rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nership rights only after Customs Authority cleared the goods on furnishing the requisite documents and compliance under The Customs Act. In the present case, the goods of the Corporate Debtor are still under the Bond executed by this Corporate Debtor to the Customs Authority, in view of this reason, goods are still in the custody of the Customs Authority in the licensed warehouse. In the backdrop of this legal impediment, can it be said that the Corporate Debtor is owner of the goods even before Customs Authorities have given clearance to the goods so as to apply Insolvency and Bankruptcy Act provisions on the goods treating the Corporate Debtor as owner of the goods. 24. We must also make it clear that since the Corporate Debtor has taken money from various people, that is Financial Creditors or Operational Creditors, it does not mean Insolvency Bankruptcy Code can wipe out the rights accrued to various authorities and people under various enactments who are no way concerned to the affairs of the Company. No doubt, consolidation of the assets of the company is very much required to distribute the assets of the company to the various claimants, it does not mean the Corporate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mes in between two laws when explicit overriding effect is not apparent on record, the best recourse is to harmonise both the laws so as to protect rights of the subjects governed by other laws. The basic doctrine behind harmonious construction is not to violate the other laws as well as rights already accrued to the parties under other laws. 26. Moreover, it is not the case that the Respondent herein proceeding to take some action against the Corporate Debtor for appropriating the proceeds of the goods lying in the warehouse, indeed the Corporate Debtor has come forward through RP to take out the asset from the custody of the Respondent and the Customs Authority. Assuming that Section 14 is applicable even against this Respondent, that can come into force only when the Respondent initiates some action against the Corporate Debtor subsequent to declaration of moratorium. Here in the given case, no action has been initiated by the Respondent against the Corporate Debtor therefore, suspension of some right against the Corporate Debtor under Section 14 shall not be construed as a right to the Corporate Debtor to take out the assets lying with others solely on the ground that proper ..... X X X X Extracts X X X X X X X X Extracts X X X X
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