Court upholds ownership in dispute over sugar consignment under Insolvency & Bankruptcy Code

The court found the writ petition maintainable under Article 226/227 of the Constitution of India, as the National Company Law Tribunal (NCLT) lacked jurisdiction over ownership disputes not recorded in a corporate debtor's balance sheet. The petitioner retained ownership of the sugar consignment due to unpaid status of the buyer. The NCLT and Resolution Professional's jurisdiction under the Insolvency and Bankruptcy Code, 2016 was limited to recorded assets, excluding the sugar consignment. The court directed officials to assess the petitioner's request for re-export within four weeks, emphasizing customs authorities' involvement.

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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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