TaxTMI 
TaxTMI 
TaxTMI 
2018 (4) TMI 274
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....so as to protect and preserve the company's assets including the assets owned by the applicant that are not in the Respondent possession. The applicant being in the business of building ships, in its regular course of business, on 20.8.2009, entered into a Leave and License Agreement with the Respondent maintaining a warehouse situated at the Village- Bandarli, Mumbra Panvel Road, Dist- Thane for a period of 5 years, commencing from 1.9.2009 to 31.8.2014 for using its premises for commercial purposes of custom bond warehouse for storage of the applicant's ship building material for construction of vessels for its customers. Since the leave and license agreement period came to end on 31.8.2014, the applicant and the Respondent entered into an Amendment Agreement dated 9.5.2016 reducing the licensed premises from 1,00,000 sq.ft to 25,000 sq.ft for a further period of 3 years i.e. from 1.9.2014 to 31.8.2017 with a clause of further modification. 3. The Resolution Professional submits that the applicant's material worth approximately Rs. 13 crores is still lying in the licensed premises, for having the applicant failed to pay crane hiring charges, transport charges, wareho....
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....erty of the corporate debtor and manage the operations of the Corporate Debtor as a going concern. In addition to it, the applicant submits that under Section 14 of the Code, the Respondent shall not withhold the applicant's goods towards lease outstanding dues payable by the applicant because such withholding is not only contrary to the terms of the agreement but also amounts to exercising a security interest which is expressly barred by the order passed under Section 14 of the Code. 5. To which, the Respondent submits that this applicant is due to pay Rs. 14,85,24,824 towards the charges aforementioned, for the same not being paid, it has preferential right of set-off by virtue of right of lien it has over the goods lying with it, moreover that these goods having been in the custody of custom bonded warehouse, the customs authority shall be necessary party in the present application because these goods cannot be moved out of the warehouse until and unless Customs Commissioner has granted permission to move out these goods from the warehouse. The Respondent has admitted making a demand of payment of dues for goods lying in the warehouse by filing a company petition against th....
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....apart from debt liability payable to the Respondent, this application is liable to be dismissed. 7. On hearing the submissions of either side, this Bench has observed that it is a fact that the goods have been lying in the custody of the Respondent governed by The Customs Act to which this applicant neither paid dues payable by it nor obtained permission from the respective customs authorities for delivery of these goods from the warehouse maintained by the Respondent herein. The only ground that has been taken by the applicant is, since moratorium has been declared on 6.6.2017 under Section 14 of the Insolvency & Bankruptcy Code and the Resolution Professional being vested with the duty to take the custody of the Corporate Debtor properties, the Resolution Professional Shall be permitted to take the delivery of the goods from the Respondent. As to compliances set out under The Customs Act, the Counsel of the applicant says that they need not be complied with because Insolvency & Bankruptcy Code has overriding effect upon the provisions of The Customs Act. 8. In the backdrop of these contentions, let us look into the provisions of Insolvency & Bankruptcy Code mentioned by the app....
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....and custody of assets of the Corporate Debtor over which the Corporate Debtor has right of ownership, as against this right, if we see The Customs Act, the Corporate Debtor's right of ownership over the goods lying in the custody of the Customs Authority is very much qualified under various provisions of The Customs Act. By which, the Corporate Debtor/importer has to take permission of the Customs Authority to keep the goods in the warehouse governed by The Customs Act, the importer has to take a warehousing bond as reflected under Section 59 of The Customs Act. Once these bonded goods are kept in warehouse, as per Section 65 of The Customs Act, permission has to be taken from the Principal Commissioner of the Customs or Commissioner of Customs as may be prescribed, unless such permission is taken, the goods cannot even be moved out from one warehouse to other warehouse as well. Unless and until such clearance has come from the Customs Commissioner, it cannot be construed that the Corporate Debtor is free to exercise any right over the said goods. When custody of goods lying in the warehouse is connected to a permission from Government Authority under a statute based restrictio....
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....fall under the caption of home consumption. The meaning in fact is if duty is paid after making Bill of Entry with all documents specified therein, clearance will be given for taking out goods which is called home consumption. If goods for any reason put to warehousing on execution of a Bond, they may be stored either in a public warehouse or a private warehouse licensed by Customs Authorities. When goods are deposited in a warehouse they shall be caused to be locked by the proper officer and no person shall enter the warehouse or remove the goods therefrom without the permission of the proper officer. In case the licensee, i.e. Private Warehouse, contravenes any of the provisions of this Act or other Rules thereto, the Principal Commissioner of Customs or Commissioner of Customs may cancel the license granted under section 58 of this Act. For depositing goods in a warehouse, as I said earlier, the importer shall execute a Bond in a sum equal to thrice the amount of duty assessed on such goods binding himself to comply with all provisions of this Act and Rules and Regulations made thereunder in respect of such goods, to pay such duty on or before the date specified in the notice of....
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....isions) Act, 1958. Since that not being the case herein, the ratio decided in the case aforesaid is not applicable to the present case. 16. The Applicant Counsel relied upon Board of Trustees of the Port of Bombay v. Sriyanesh Knitters [1999] 7 SCC 359 to say that the lien given under Section 171 of the Contract Act will not enable the Respondents to retain goods as security. On going through this citation, it appears that the Port Authority is no doubt a wharfinger, but the reason for not allowing to exercise the right of lien is, the authority wanted to retain goods in respect to the earlier dues, not for the goods present in the custody of Port Authorities, therefore, this ratio cannot be directly applicable to the given case. 17. The Applicant Counsel relied upon Lalchand Ramchand v. Pyare Dasrath Chamar AIR 1971 MP 245 to say that Section 171 of the Contract Act is not applicable to an advocate to retain the promissory note for an advocate will not fall under the category of attorneys of High Court as mentioned under Section 171 of the Contract Act, since we have not stated anywhere that the Respondent herein will come under the categories of either Banker, or factor or whar....
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.... to the extent to say that the liquidator can take into his custody or control all the assets, property, effects and the actionable claim of the Corporate Debtor which is almost analogous to Section 456(1) of the Companies Act, 1956, but the same is not the case under Section 18(1)(f)(ii) of the Code. 21. In view of these variations and absence of power to this Adjudicating Authority to decide the issues governed by another enactment which is otherwise governed by another Tribunal, we are of the view that there being no explicit jurisdiction to this Bench to the issues and subject matter falling under another enactment, thereby it can't be said that jurisdiction available under 1956 Act in respect to liquidation proceedings is equally available under Insolvency & Bankruptcy Code, henceforth this ratio decided in the above case is not applicable in the present case. 22. In a similar situation arose before, the Hon'ble Supreme Court in between Board of Trustees Port Mumbai v. Indian Oil Corpn. [1999] 19 SCL 243, it has categorically mentioned that Port Board's Law over the vessel is paramount even over the claims of secured creditors in winding up thereby such right can....
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...., a party can assail the actions of the Customs Authorities before the Appellate Tribunal constituted under The Customs Act. If at all any importer is felt aggrieved of the actions of the Customs Authority, he has to avail the recourse before the Competent Appellant Tribunal constituted under the said enactment not by filing an application before this Authority without even making Customs Authority as a party to this proceeding. It goes without saying, to apply Indian Law over any transaction that happened on the soil of a foreign country, goods have to pass through the gateway of Customs Authority for getting foreign goods into India and to avail rights over these goods, without which no saleable interest will be accrued to the importer to enter into any commercial transaction because the very element of right of disposal will not come to the importer. It may be said that when an asset encumbered with security interest is covered under Section 14 of moratorium, how these goods lying with the customs authorities should be treated otherwise. The simple answer to this point is, under Indian Law ownership right has already accrued to the man creating security interest over the goods, ....