TaxTMI 
TaxTMI 
2021 (8) TMI 431
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....reesha Merla , Member (T) ] 1. Aggrieved by the Impugned Orders dated 30.08.2019 and 03.09.2019, passed by the Learned Adjudicating Authority (National Company Law Tribunal, Kolkata Bench) in CA(IB) No. 891/KB/2019 and in CP(IB) No. 513/KB/2018. MSC Meditteranean Shipping Company S.A. (hereinafter referred to as the ''MSC Shipping'') preferred Company Appeal (AT) (Insolvency) No. 1048-1049 of 2019. Dissatisfied with the Impugned Order dated 19.11.2019 passed by the Learned Adjudicating Authority, Assistant Commissioner of Customs Special Disposal Cell (Port), Kolkata (hereinafter referred to as the 'Customs Dept.') preferred Company Appeal (AT) (Insolvency) No. 200 of 2020. Since, all the three Appeals deal with common f acts, they are being disposed off by this Common Order. 2. The facts, in brief, are that 'MSC Shipping', in the business of carriage of goods by sea, 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 All....
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....at 'MSC Shipping' had also appeared before this Tribunal on that date and thereafter preferred CA No. 1126/KB/2019 before the Adjudicating Authority, dated 11.07.2019 for impleadment in the proceedings. It is stated that despite a direction from the Learned Adjudicating Authority for the said Application to be listed and the direction for the IRP to file the Reply to the Application, the same was not listed as on 26.08.2019 and 'MSC Shipping' issued a letter to the Registry seeking listing of the said Intervention Application. 5. Vide Impugned Order dated 30.08.2019, the second Application was filed by the Resolution Professional i.e. CA(IB) No. 891/KB/2019 was disposed off inter alia by directing the 'Customs Dept.' to make over the sale proceeds of Rs. 10,60,10,000/- to the Resolution Professional. It is stated that the Application preferred by 'MSC Shipping' i.e. 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on the ground that the Application preferred by the Resolution Professional i.e. CA(IB) 575/KB/2019 was dismissed as withdrawn. 6.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 ....
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....lication doesn't arise. We have taken note of the objections of the above intervening applicant while passing orders in the application CA(IB)No. 891/KB/2019 (vide order dated 30/08/2019). It is made clear in the said order that if M/s. MSC Mediterranean Shipping Co. SA has any claim, they can submit the same before the RP. Because of the aforesaid order in CA 575 of 2019, this application is not maintainable. CA(IB) No. 1126/KB/2019 is disposed of accordingly. For filing further Progress report list it on 01/10/2019." (Emphasis Supplied) 7. It is also relevant to reproduce the directions issued by the Adjudicating Authority in the Impugned Order dated 19.11.2019, aggrieved by which, the 'Customs Dept.' also preferred an Appeal:- "Ld. Sr. Counsel for the Resolution Professional (RP) appears. Ld. Counsel for the Custom Authorities appears. Ld. Sr. Counsel for RP submits that 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....
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....ing delivered the subject 256 containers from various foreign ports to Haldia, India, none approached 'MSC Shipping' to take delivery of the containers upon surrender of the Bills of Lading. 'MSC Shipping' filed CS No. 168 of 2016 in the Hon'ble High Court of Kolkata against the 'Corporate Debtor' for payment of container, demurrage charges, return of the containers after de-stuffing cargo sale of the de-stuffed cargo and receipt of the proceeds thereof. Learned Counsel argued that as per Clauses 17 and 20.3 of the Bills of Lading, 'MSC Shipping' has lien on the cargo for demurrage charges and other dues. Pursuant to the Order dated 21.09.2017 passed by the Hon'ble High Court of Kolkata, the cargo was de-stuffed and the empty containers returned to 'MSC Shipping'. The 'Corporate Debtor' filed GA 1852 of 2018 praying inter alia for sale of the de-stuffed cargo upon valuation by an independent valuer, which Application, was allowed by the 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 a....
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....hipping' on the ground that it has become infructuous as the Resolution Professional withdrew their Application. It is vehemently contended by the Learned Counsel that the Impugned Orders are liable to be set aside as they were passed without affording an effective hearing to the Applicants/'MSC Shipping'. Learned Counsel strenuously argued that the Bill for Lading establishes the title of the owner of the goods and in the instant case the 'Corporate Debtor' has not disclosed a single Bill of Lading in support of their case. A consignee/endorsee named in the Bill of Lading is the owner of the cargo. These goods do not belong to the 'Corporate Debtor' which is evident from GA 1852 of 2018 filed by the Corporate Debtor before the Hon'ble High Court of Kolkata seeking permission to participate in the Public Auction thereof. The Resolution Professional is fully aware of the facts and impleaded in CS No. 168 of 2016 to suppress this fact from the Adjudicating Authority. 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 Admi....
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....on amount of Rs. 10,60,10,000/-. In compliance with the direction passed by the Hon'ble High Court the bid amount was kept in a Fixed Deposit Account with SBI. On 05.03.2019 NCLT/Adjudicating Authority Kolkata Bench, initiated CIRP and a Moratorium under Section 14 of the IBC Code was imposed. The Resolution Professional preferred CA(IB) 891/KB/2019 and CA(IB) 575/KB/2019 praying for restraining the 'Customs Dept.' from selling the goods de-stuffed from the 256 containers, when in fact, the 'Corporate Debtor' did not have any right, title or interest of any nature whatsoever in the same. Vide Order dated 30.08.2019, the second Application filed by the 'Corporate Debtor' was disposed off inter alia by directing the 'Customs Dept.' to make over the sale proceeds and handover the custody of remaining 667 containers to the Resolution Professional representing the 'Corporate Debtor'. Learned Counsel strenuously contended that the Adjudicating Authority has failed to appreciate the provisions of the Customs Act 1962, ignoring the demands of Custom Duty amounting to Rs. 78,84,54,741/- raised by the 'Customs Dept.' as against the 'Corporate Debtor'. A pre-deposit....
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....he IRP came to know that certain goods belonging to the 'Corporate Debtor' was detained by the 'Customs Dept.' for clearing the statutory dues, addressed a letter dated 11.03.2019 informing the authority about the initiation of CIRP with respect to the 'Corporate Debtor' but further on 14.03.2019, much to their surprise, received a letter from the 'Customs Dept.' informing the 'Corporate Debtor' that the goods detained by them have been put up for auction on 26.03.2019, despite having complete knowledge of the fact that Moratorium was declared under Section 14 of the IBC on 05.03.2019 itself. In order to stop the 'Customs Dept.' from going ahead, the IRP preferred an Application before the Adjudicating Authority being CA(IB) No. 575/KB/2019 on 24.04.2019 praying for stopping the 'Customs Dept.', from auctioning the goods belonging to the 'Corporate Debtor' and Notice was issued in the said Application. Ignoring the intimation by IRP, the Dept. illegally auctioned the goods contained in the 256 containers on 26.04.2019 after the initiation of CIRP on 05.03.2019 which is against the objective and spirit of the Code. Learned Counsel submitted that the value of the go....
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....ofessional on 30.08.2019 and thereafter on 03.09.2019 Application CA No. 1126/KB/2019 was listed alongwith the primary Application preferred by RP i.e. 575/KB/2019 and was disposed off as infructuous as RP has withdrawn its Application, we are of the view that since considerable time has lapsed subsequent to the directions given by the Hon'ble High Court of Kolkata and the auction having taken place, we do not find it a fit case to set the clock back and remand the matter back to the Adjudicating Authority. In the interest of justice and keeping in view that an urgent Application was filed before the High Court of Kolkata way back in 2016 itself seeking to de-stuff the containers as the goods would be deteriorated and 5 years has lapsed, since, to balance equities, we are of the considered view that remanding the matter back to the Adjudicating Authority would only defeat the scope and spirit of IBC which is a time bound process. 12. To ascertain whether the 'Corporate Debtor' can claim the sale proceeds of the goods of 256 containers, in the present facts and circumstances of the case, it is necessary to reproduce Section 14 of the Code and Section18(1)(f)(g) of the I&B Code wh....
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....fessional shall perform the following duties, namely:- xxx xxx xxx (f) 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, or with information utility or the depository of securities or any other registry that records the ownership of assets including- (i) assets over which the corporate debtor has ownership rights which may be located in a foreign country; (ii) assets that may or may not be in possession of the corporate debtor; (iii) tangible assets, whether movable or immovable; (iv) intangible assets including intellectual property; (v) securities including shares held in any subsidiary of the corporate debtor, financial instruments, insurance policies; (vi) assets subject to the determination of ownership by a court or authority; (g) to perform such other duties as may be specified by the Board. Explanation.-For the purposes of this subsection, the term "assets" shall not include the following, namely:- (a) assets owned by a third party in possession of the corporate debtor held under....
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....may however be necessary to examine some of the provisions of the Bills of Lading Act as well as the Contract Act, since the claim of both Shipping Corporation and Container Corporation, charging demurrage for the space occupied for the goods, not being released, - is on account of the contract between them. Under the Indian Bills of Lading Act, 1956, every consignee of goods, named in a Bill of Lading and every endorsee of a Bill of Lading, is vested with absolute right over the goods. The Bill of Lading is a well-known mercantile document of title, which is transferred in the business world by endorsement passing to the endorsee, the title of the goods covered by such Bill of Lading. Clause (18) provides for payment of demurrage charges in case of non-clearance of goods within the free time available." (Emphasis Supplied) 17. At this juncture, it is relevant to note that the 'MSC Shipping' filed Form B on 04.06.2019 as an 'Operational Creditor' prior to the filing of this Appeal. Additionally, its Agency 'MSC Agency' (India) Pvt. Ltd. also filed Form B on 04.06.2019 as an 'Operational Creditor' before the Resolution Professional. It is significant to mention that both....
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....ge, the said correspondence refers to the 'goods' as 'your cargo' and demands payment of dues only on that basis. We hold that the goods belong to the 'Corporate Debtor' for the following reasons:- a. the goods were purchased by 'Corporate Debtor' through Letters of Credit. b. the seller never made any claim for any amounts due. c. the correspondence between the parties demanding the amounts due is based on the ground that the goods belonged to the 'Corporate Debtor'. d. the 'Bills of Lading' specify the name of the 'Corporate Debtor' as the Notified Party and 'MSC Shipping' has in its capacity as 'Operational Creditor' in Form B stated that the 'Corporate Debtor' was the 'Consignee'. The ratio of the Judgement in 'Shipping Corporation of India' (Supra) relied upon by the Counsel in support of his case regarding title of goods, it is specified that Bill of Lading is an important mercantile document of title which is transferred in the business world by endorsement to the endorsee. The 'Corporate Debtor' is the consignee/endorsee and has the right & title of the goods. e. 'MSC Shipping' & MSC Agency have filed Form B as 'Operational Credi....
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....cordance with the procedure provided under the Customs Act, 1962 and under relevant notifications issued by the Customs. By an order dated 16th September, 2016 a direction was given for de-stuffing the containers and it was observed that the containers are valuable properties of the plaintiffs. It appears from the said order that the parties had proposed before this Court that the containers would be de-stuffed under the supervision of the Customs authorities and the goods would then be sold by public auction after giving reasonable notice to the first defendant. The next order was passed on 4th October, 2016 by which the first defendant was given liberty to re-export the containers with the imported cargo within a period of four weeks from the date of the order upon payment of the demurrage charges, rent of the container yard, container detention charges and other dues of the plaintiffs. The order records that the first defendant had agreed to the directions given in this order. The third order was passed on 21st September, 2017 wherein the Customs Authority were directed to de-stuff the cargo and the plaintiff was given liberty to take delivery of the empty containers. By the sai....
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....nfiscated/seized consumer goods exceeding value of Rs. Five lakhs in single lot, may be disposed through e-auction or auction-cum-tender, since it offers enhanced transparency and accountability for quick disposal of goods. In such e-auction or auction-cum-tender process, all persons including NCCF, KB, other CG employee's consumer cooperatives, Multi-State/State cooperatives or National/State level Cooperative Federations can also participate. If the NCCF/KB/other Consumer Cooperative societies are found to be successful bidder, then the goods may be sold to them with the eligible rebate/discount as prescribed, subject to fulfilment of other conditions of e-auction/auction-cum-tender. Instructions for use of E-auction or auction-cum-tender have already been prescribed vide Board's Circular No. 50/2005. Customs dated 1.12.2005 and No. 12/2006. Customs dated 20.2.2006". There cannot possibly be any objection to sale by public auction as all interested parties would be able to bid for the goods ensuring that the goods fetch the highest price. Needless to say, the defendant no. 1 will also have an opportunity to participate in such auction and offer the price suggested by cou....
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....7 of Customs Act, 1962, need to seen:- "46. Entry of goods on importation.-(1) The importer of any goods, other than goods intended for transit or transhipment, shall make entry thereof by presenting [electronically] [on the customs automated system] to the proper officer a Bill of Entry for home consumption or warehousing 6 [in such form and manner as may be prescribed]: [Provided that the [Principal Commissioner of Customs or Commissioner of Customs] may, in cases cases where it is not feasible to make entry by presenting electronically [on the customs automated system], allow an entry to be presented in any other manner: Provided further that] if the importer makes and subscribes to a declaration before the proper officer, to the effect that he is unable for want of full information to furnish all the particulars of the goods required under this sub-section, the proper officer may, pending the production of such information, permit him, previous to the entry thereof (a) to examine the goods in the presence of an officer of customs, or (b) to deposit the goods in a public warehouse appointed under section 57 without warehousing the same. (2) Sa....
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....or home consumption: [Provided that such order may also be made electronically through the customs automated system system on the basis or risk evaluation through appropriate selection criteria: Provided further that] the Central Government may, by notification in the Official Gazette, permit certain class of importers to make deferred payment of said duty or any charges in such manner as may be provided by rules.] [(2) [The importer shall pay the import duty- (a) on the date of presentation of the Bill of Entry in the case of self assessment; or (b) within one day (excluding holidays) from the date on which the Bill of Entry is returned to him by the proper officer for payment of duty in the case of assessment, reassessment or provisional assessment; or (c) in the case of deferred payment under the proviso to sub-section (1), from such due date as may be specified by rules made in this behalf, and if he fails to pay the duty within the time so specified, he shall pay interest on the duty not paid or short-paid till the date of its payment, at such rate, not less than ten per cent. but not exceeding thirty-six per cent. per annu....
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....No. 513/KB/2018 on 24.04.2019 seeking to restrain the 'Customs Dept.' from auctioning the goods belonging to the 'Corporate Debtor' in which Application/Notice was issued on 25.04.2019. It is an admitted fact that the goods contained in 256 containers were auctioned on 26.04.2019 subsequent to the initiation of the CIRP on 05.03.2019. To reiterate, though the Hon'ble High Court of Kolkata has permitted the auction of the goods by the Customs Authority following due procedure provided in the Customs Act, 1962, and the Order is dated 19.07.2018, the Customs Authorities did not auction the goods till Moratorium under Section 14 of the IBC was imposed on 05.03.2019. Subsequent to the Notice issued on 25.04.2019, by the Adjudicating Authority, on 26.04.2019 the goods were finally auctioned, after the initiation of the CIRP and during the Moratorium period. It is stated that the goods contained in the balance 667 containers continue to remain in the custody of the 'Customs Dept.'. Vide Order dated 03.02.2020, by the Adjudicating Authority, 'Corporate Debtor' has gone into liquidation and is being run as a going concern. We do not find force in the contention of the Learned Counsel appear....
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....on of the value of the assets of such persons, and balance the interest of all the stakeholders. The Corporate Insolvency Resolution Process ("CIRP") could be initiated when a corporate debtor commits a default, either by a financial creditor, or an operational creditor, or the corporate debtor itself. Section 12 of the IBC provides a timeframe to complete the CIRP. As per Section 13 of the IBC, the Adjudicating Authority i.e. the National Company Law Tribunal ("NCLT") shall declare a moratorium for the purposes referred to in Section 14 of the IBC. Section 14 provides that on the insolvency commencement date, the Adjudicating Authority shall by order, declare a moratorium prohibiting 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 any other authority. Section 14 reads as follows : "14. Moratorium. ..... 7. Section 238 gives an overriding effect to the IBC over all other laws. The provisions of the IBC vest exclusive jurisdiction on the NCLT and the NCLAT to deal with all iss....