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Informist, Wednesday, Sept. 2, 2026

 

--HC: Customs dept can't levy duty on co after IBC plan OK if no claim filed 

--HC says outcome of approved IBC plan overrides powers under Customs Act 

 

NEW DELHI – The Delhi High Court Wednesday held that the consequences of an approved resolution plan under the Insolvency and Bankruptcy Code, 2016, take precedence over powers exercised under the Customs Act, 1962. The customs department cannot, after approval of the resolution plan of a debt-ridden company and extinguishment of the unfiled pre-corporate insolvency resolution process claims, proceed to impose duty upon the corporate debtor when it had not filed the claims before, the court said.

 

The failure of the department to submit its claim cannot operate to the prejudice of the corporate debtor or the successful resolution applicant, said a Bench of Justice Anil Kshetarpal and Justice Shail Jain. The Insolvency and Bankruptcy Code does not contemplate that a creditor who fails to participate in the corporate insolvency resolution process acquires a superior position after its conclusion, the bench said. On the contrary, the consequence of the statutory process is that the resolution plan, once approved, becomes binding and claims not forming part of the plan cannot subsequently be enforced to disturb the resolution, it said.

 

The high court set aside the customs department's demand of differential customs duty and penalty against Jaiprakash Associates Ltd., which has now been acquired by Adani Enterprises Ltd. through the corporate insolvency resolution process. The department had proceeded substantially on the premise that Jaiprakash Associates had not established that the customs liability had been disclosed to the resolution professional or had formed part of the claims considered under the resolution plan, the court noted. This approach reverses the statutory scheme of the Insolvency and Bankruptcy Code, it said. The relevant inquiry was whether the customs department had submitted its claim pursuant to the public announcement in the corporate insolvency resolution process and within the opportunities available, which the department had not, it said.

 

However, the court's conclusion does not mean the Customs Act ceases to apply to the corporate debtor or that customs authorities are divested of their statutory power to assess transactions, the bench said. The conclusion is confined to the consequence which the Insolvency and Bankruptcy Code attaches to a claim arising prior to the insolvency commencement date once the resolution plan has been approved, it said.

 

The case springs from the import by Jaiprakash Associates of digital and network video recorders in 2023. The company, challenging the customs department's demand and penalty on the import, had said the liability relates to a transaction that preceded the insolvency commencement date and the department did not submit any claim before the resolution professional during the corporate insolvency resolution process. Upon approval of the resolution plan under the Insolvency and Bankruptcy Code, such unfiled pre-insolvency claims stood extinguished and could not thereafter form the subject matter of adjudication or recovery proceedings, it said.

 

The department said the customs liability was never shown to have been placed before or dealt with by the resolution professional, the committee of creditors, or the National Company Law Tribunal. Mere reliance upon the tribunal's order to approve the resolution plan was insufficient, particularly when the petitioner had not produced material establishing that the subject customs liability formed part of the claims considered under the resolution plan, it said.

 

Wednesday, shares of Adani Enterprises Ltd. ended at INR 2,891.80 on the National Stock Exchange, up 1.0% from Tuesday.  End 

 

Reported by Surya Tripathi

Edited by Rajeev Pai

 

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