9911796707
TMI Blog2021 (8) TMI 431X X X X Extracts X X X X X X X X Extracts X X X X ..... s significant to mention that both MSC Shipping and its Agency have clearly specified in item 7 details of how when Debt occurred that the claimants provide marine containers and are engaged in the business of carriage of goods by sea. Briefly put, it is stated therein that in all the 15 Bills of Lading, the Corporate Debtor and its sister concern Bhuvee Profiles were declared as Consignee and/or Notified Party . As the consignee/and endorsee and/or holder of the goods being the receiver of the goods are bound by the terms conditions of the said Bills of Lading. Therefore, admittedly being the consignee of the goods, the Corporate Debtor has a right vested in him over the goods. The goods were undisputably purchased by the Corporate Debtor . Applicability of Section 48 of the Customs Act, 1962 - HELD THAT:- In case of non-clearance of the goods within 30 days or within extended period or if the title of any imported goods is relinquished after notice to the importer and with the permission of the proper officer, the goods can be sold by the Custom Authority. Section 48 of the Customs Act, 1962 relates to sale of goods in the custody of the Customs in the man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provides marine containers in which goods are stored and transported. M/s. BRG Iron and Steel Company Pvt. Ltd. (hereinafter referred to as the Corporate Debtor ) is engaged in the manufacture of articles made out of recycled steel. Between February 2012 and June 2012 a large number of containers containing Alloy and Melting Scrap were delivered by MSC Shipping at Haldia Port to the Corporate Debtor and its group Companies. The said containers were carried under several Bills of Lading. It is stated that between April and June 2012, MSC Shipping delivered the containers and gave notice of arrival of the containers to the Corporate Debtor and its group Companies and called upon them to take delivery of the containers upon payment of the shipping charges and against the surrender of the respective Bills of Lading. It is stated that despite several notices, 256 numbers of containers remained unclaimed at the Container Freight Station. On 18.05.2015 and 20.05.2015, letters were addressed to the Corporate Debtor to collect the cargo but there was no response. 3. While so, MSC Shipping filed CS No. 168 of 2016 before the Hon ble Calcutta High Court namely MSC Meditterane ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CA 1126/KB/2019 was listed on 03.09.2019 alongwith the primary Application of the Resolution Professional and was disposed off as infructuous on the ground that the Application preferred by the Resolution Professional i.e. CA(IB) 575/KB/2019 was dismissed as withdrawn. 6. For better understanding of the case, the Impugned Orders dated 30.08.2019 and 03.09.2019 are being reproduced as hereunder:- 9. In view of the aforesaid facts and circumstances and the arguments advanced, we are of the view 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. 10. We have heard the Learned Counsels on both sides and perused the record. We, therefore pass the following orders: - i) The Customs Authorities sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CoC is considering the Resolution Plan, which is under process and needs further time to file Final Progress Report. However, no Progress Report is filed on today. CA (IB) No. 1255/KB/2019 is an application filed by the Dy. Commissioner of Customs, Special Disposal Cell for recalling the order dated 30/08/2019 praying for certain reliefs, and pressed for granting relief (e). Upon hearing the arguments advanced on the side of the applicant as well as Ld. Sr. Counsel for the RP, and on perusal of the affidavit and documents, we are not convinced, as to the reasons for recalling the order, which have been heard at length. However, in the said order, we observed that the applicant has not preferred any claim before the RP for want of bringing the copy of claim form before us at the time of hearing. But, that is not a reason for recalling the order decided on merits. From the evidence led in the said application, it is brought to our notice that vide letter dated 18/07/2019 Form- B has already been submitted before the Resolution Professional in the said circumstances, we are inclined to issue directions to the RP to re-consider the claim as per the provisions of the Code and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon ble High Court vide a Order dated 26.09.2018 and the Customs Dept. was directed to auction the cargo and hold the sale proceeds subject to further Orders. Accordingly, the Customs Dept. sold the cargo by Public Auction in accordance with the provisions of the Customs Act, 1962 for ₹ 10,60,10,000/- on 26.04.2019. It is argued that MSC Shipping is entitled to receive the sale proceeds as they have lien over the cargo. Learned Counsel vehemently contended that the Adjudicating Authority, without hearing them and in violation of the Principles of Natural Justice passed the Impugned Orders. The Corporate Debtor did not implead MSC Shipping knowing fully well that it was an interested and a necessary party. On 02.07.2019, a direction was given by Adjudicating Authority to MSC Shipping to file their Reply. The Corporate Debtor appealed the Order dated 02.07.2019 which was disposed off by this Tribunal vide Order dated 08.07.2019. An impleadment Application was preferred by MSC Shipping before the Adjudicating Authority. The Counsel appeared on 15.07.2019 and on 08.08.2019 when CA(IB) No. 575/KB/2019 and the subsequent CA(IB) No. 891/KB/2019 preferred by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Corporate Debtor has relinquished its interest by its positive act of seeking sale of the cargo in GA 1852 of 2018 filed by the Hon ble High Court in May, 2018 which is much prior to the CIRP Admission Order dated 05.03.2019. The Order for sale by the Hon ble High Court dated 26.09.2018 and hence the Corporate Debtor does not have any title in the Auction cargo. Learned Counsel further submitted that the ratio relied upon by both the Respondents in Commissioner of Customs (Preventive) West Bengal Vs. Ram Swarup Industries Ltd. and Ors. Company Appeal (AT) (Insolvency) No. 563 of 2018 is not applicable to the facts of this case as the Corporate Debtor has not filed a single Bill of Entry in respect of the cargo carried in the 256 containers, but in the case of Commissioner of Customs (Preventive) West Bengal Vs. Ram Swarup Industries Ltd. and Ors. the Corporate Debtor has filed the Bill of Entry under Section 48 of the Customs Act, 1962, claiming the ownership of the goods and made part payment of the Customs Duty. 9. Submissions of the Learned Counsel appearing for the Customs Dept. : Learned Counsel appearing for the Customs Dept. submitted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stoms Act 1962, ignoring the demands of Custom Duty amounting to ₹ 78,84,54,741/- raised by the Customs Dept. as against the Corporate Debtor . A pre-deposit sum of ₹ 24,11,11,782/- was paid by the Corporate Debtor and the rest of the charges remain unpaid. Orders dated 03.11.2016 and 02.06.2016 demanding an amount of ₹ 102,31,88,263/- was appealed by the Corporate Debtor before the Commissioner of Customs (Appeals), which was dismissed for non-deposit of pre-deposits as per Section 129(E) of the Act vide Order dated 04.07.2017. The claim of the outstanding Custom Dues as against the Corporate Debtor was filed by the Additional Commissioner of Customs (EMOC Port) before the Resolution Professional on 27.03.2019. The Adjudicating Authority committed an error and employing the provision of Section 238 of the Code, did not consider the provisions of Section 48 of the Customs Act, 1962, that MSC Shipping has no legal right in the subject goods; that goods upon entry into the Custom Frontier of India have to be cleared in accordance with the procedure under the Act; that the Corporate Debtor never claimed any right, title or interest and the Shipping a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of CIRP on 05.03.2019 which is against the objective and spirit of the Code. Learned Counsel submitted that the value of the goods contained in the balance 667 containers lying in the illegal custody of the Authority is getting eroded with each passing day. The raw material stored in the 667 containers which has been directed to be returned to the Corporate Debtor by the Adjudicating Authority, can be used by the Corporate Debtor as it is still a going concern employing 1800 people. Adjudicating Authority disposed off the Application preferred by the IRP namely CA(IB) 891/KB/2019 in the recent Order dated 30.08.2019, wherein the Customs Dept. was directed to make payment to the Corporate Debtor , the amount generated by the illegal Auction sale and further permitted the relation of the remaining goods contained in the 667 containers to the Corporate Debtor. The Learned Counsel relied on the ratio of this Tribunal in Commissioner of Customs (Preventive) West Bengal (Supra) wherein it was observed that when the Customs Authority had failed to Auction the goods belonging to the Corporate Debtor , prior to the initiation of CIRP, the authority could not have proce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d circumstances of the case, it is necessary to reproduce Section 14 of the Code and Section18(1)(f)(g) of the I B Code which deal with Moratorium, the duties of IRP, the terms and conditions enumerated in the Bills of Lading, Section 48 of the Customs Act, 1962 and the relevant portions of the Orders of Hon ble High Court of Kolkata:- 20. Section 14 of the I B Code relates to Moratorium and reads as follows: 14. Moratorium.-(1) Subject to provisions of subsections (2) and (3), on the insolvency commencement date, the Adjudicating Authority shall by order declare moratorium for prohibiting all of the following, namely:- (a) the institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority; (b) transferring, encumbering, alienating or disposing of by the corporate debtor any of its assets or any legal right or beneficial interest therein; (c) any action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of its property including any action under the Securiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the corporate debtor held under trust or under contractual arrangements including bailment; (b) assets of any Indian or foreign subsidiary of the corporate debtor; and (c) such other assets as may be notified by the Central Government in consultation with any financial sector regulator. 13. As can be seen from Section 14 of the IBC Code, the plain language of the Section is that on the commencement of the CIRP, Moratorium shall be declared for prohibiting any action to recover any security interest created by the Corporate Debtor in respect of its property . Its property denotes the property owned by the Corporate Debtor , simply meaning that, the property not owned by the Corporate Debtor does not fall within the ambit of the Moratorium . 14. Learned Counsel for MSC Shipping drew our attention to Section 2(4) of the Sale of Goods Act, 1930, is reproduced as hereunder:- 2. Definitions- In this Act, unless there is anything repugnant in the subject or context,- (4) document of title to goods includes a bill of lading, dockwarrant, warehouse keeper s certificate, wharfingers certificate, railway receipt, [multimodal transport document] wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... MSC Shipping and its Agency have clearly specified in item 7 details of how when Debt occurred that the claimants provide marine containers and are engaged in the business of carriage of goods by sea. Briefly put, it is stated therein that in all the 15 Bills of Lading, the Corporate Debtor and its sister concern Bhuvee Profiles were declared as Consignee and/or Notified Party . As the consignee/and endorsee and/or holder of the goods being the receiver of the goods are bound by the terms conditions of the said Bills of Lading. Therefore, admittedly being the consignee of the goods, the Corporate Debtor has a right vested in him over the goods. The goods were undisputably purchased by the Corporate Debtor . The letters of Credit establish that the Corporate Debtor is the purchaser of the goods. The seller has not preferred any claim against the Corporate Debtor . Simply put, only because the Corporate Debtor , a consignee, has a right and title over the goods purchased, MSC Shipping is seeking payment of dues from them. 18. Further, the claim of MSC Shipping is based on the container detention handling charges only and can at best be treated as an O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ofessional on 04.06.2019 prior to filing of the Appeal on 01.10.2019. 20. Having held so, we observe that Its Property specified under Section 14 of IBC, refers to the property of the Corporate Debtor and in the instant case, Moratorium has application on the subject property as it is owned by the Corporate Debtor and the Resolution Professional under Section 18(1)(f) (g) of the Code has the right to take control and custody of the asset. 21. Now we address ourselves to whether Adjudicating Authority was justified to making over the Auction proceeds to the Corporate Debtor ? 22. At the outset we find it relevant to reproduce the observations of the Hon ble High Court of Kolkata in CS 168 of 2016, dated 19.07.2018, wherein it has observed as follows:- GA 1852 of 2018 CS 168 of 2016 IN THE HIGH COURT AT CALCUTTA Ordinary Original Civil Jurisdiction Original Side Dated: 19.07.2018 Several orders have been passed in this matter pursuant to which the goods were de-stuffed by the Customs and all 256 containers returned to the plaintiff. The Customs has also made a valuation of the goods lying in the space provided by the container and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also directed to de-stuff and sell the goods upon notice to the defendants. An appeal carried by the defendant no. 1 from the aforesaid order to the Division Bench was dismissed on 27th October, 2017 where it was noted that the defendant no. 1 had used the custom duties and banker s charges as an excuse to thwart return of the containers to the plaintiff. The last order was passed on 30th April, 2018 where the Court expressed disappointment at the Customs not having taken any steps for de-stuffing the containers in terms of the earlier orders passed by this Court and observed that the cost of de-stuffing of the containers and sale of the goods would be treated as first charge on the proceeds of the sale. Since all 256 containers have been de-stuffed pursuant to orders of Court and the Customs has recently done a valuation of the same, the only issue which remains to be determined now is the steps required to be taken for protecting the claims of the plaintiff on account of detention and demurrage as well as the claims of the Customs and the container and freight station. The prayer for appointment of an independent valuer is not relevant any more since a valuation has al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r sale of goods in the given circumstances has also been provided for under Section 150 of The Customs Act, 1962 which also provides for the manner in which the proceeds of such sale shall be applied. The carrier s lien, as provided for in Clauses 17 and 20.3 of the contract of carriage recorded in the 15 Bills of Lading can be taken into consideration at the appropriate stage. Clause 3.1 of the Circular No. 12/2006 dated 20th February, 2006 of the Customs is particularly relevant. Under this clause, the disposal of seized, confiscated and time-expired goods shall take place simultaneously through public auction and sealed tender. In view of the above, the defendant no. 2 is directed to hold the public auction within a week from date upon notice to all concerned parties including the defendant no. 1. The mode and manner of such public auction shall be in compliance with the relevant Customs circulars as stated above. If the Customs intends to follow any additional procedure for the sale to be made more effective or expedient, it shall give notice of such proposed/intended procedures to all concerned parties including the defendant no. 1 at least three days before the sale is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ods mentioned in the bill of lading or other receipt given by the carrier to the consignor. [(3) The importer shall present the Bill of Entry under sub-section (1) before the end of the next day following the day (excluding holidays) on which the aircraft or vessel or vehicle carrying the goods arrives at a customs station at which such goods are to be cleared for home consumption or warehousing: Provided that a Bill of Entry may be presented [at any time not exceeding thirty days prior to] the expected arrival of the aircraft or vessel or vehicle by which the goods have been shipped for importation into India: Provided further that where the Bill of Entry is not presented within the time so specified and the proper officer is satisfied that there was no sufficient cause for such delay, the importer shall pay such charges for late presentation of the Bill of Entry as may be prescribed.] (4) The importer while presenting a Bill of Entry shall *** make and subscribe to a declaration as to the truth of the contents of such Bill of Entry and shall, in support of such declaration, produce to the proper officer the invoice, if any, 1 [and such other documents relating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the Official Gazette, specify the class or classes of importers who shall pay such duty electronically: Provided further that] where the Bill of Entry is returned for payment of duty before the commencement of the Customs (Amendment) Act, 1991 (55 of 1991) and the importer has not paid such duty before such commencement, the date of return of such Bill of Entry to him shall be deemed to be the date of such commencement for the purpose of this section:] [Provided also that] if the Board is satisfied that it is necessary in the public interest so to do, it may, by order for reasons to be recorded, waive the whole or part of any interest payable under this section.] 48. Procedure in case of goods not cleared, warehoused, or transhipped within 3 [thirty days] after unloading.-If any goods brought into India from a place outside India are not cleared for home consumption or warehoused or transhipped 4 [within 5 [thirty days]] from the date of the unloading thereof thereof at a customs station or within such further time as the proper officer may allow or if the title to any imported goods is relinquished, such goods may, after notice to the importer and with the permission o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Ram Swarup Industries Ltd. and Ors. Company Appeal (AT) (Insolvency) No. 563 of 2018 has dealt with Section 48 of the Customs Act, 1962, in similar circumstances where the goods were auctioned during the Moratorium period, held that the assets of the Corporate Debtor , during the Moratorium period, cannot be alienated, transferred or sold to the third party. In the instant case also the Order of Moratorium was passed by the Adjudicating Authority on 05.03.2019. Immediately thereafter it was not open to the Customs Dept. to conduct the auction on 26.04.2019 though the goods were lying with them for more than 2 years and there was a direction by the Hon ble High Court Kolkata prior to the CIRP period. Having failed to auction the goods prior to the CIRP period, the Customs Dept. cannot now, subsequent to the imposition of Moratorium, proceed to auction the goods. Having done so, the sale proceeds of the so conducted auction cannot be made over to the Customs Dept. . It is relevant to mention that a Review Application has been filed before the Adjudicating Authority on 30.08.2019 which was dismissed vide Order dated 19.11.2019 and the Customs Authority was directed to make ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The provisions of this Code shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law. 8. Section 231 of the IBC bars the jurisdiction of civil courts in respect of any matter in which the Adjudicating Authority i.e. the NCLT or the NCLAT is empowered by the Code to pass any Order. Section 231 is set out hereinbelow for ready reference: 231. Bar of jurisdiction. No civil court shall have jurisdiction in respect of any matter in which the Adjudicating Authority or the Board is empowered by, or under, this Code to pass any order and no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any order passed by such Adjudicating Authority or the Board under this Code. 9. In view of the provisions of the IBC, the High Court ought not to have proceeded with the auction of the property of the Corporate Debtor Respondent No. 4 herein, once the proceedings under the IBC had commenced, and an Order declaring moratorium was passed by the NCLT. The High Court passed the impugned ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
