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Quashes Customs Demand Against Jaiprakash Associates After Unfiled Pre-CIRP Claim Extinguished
The has ruled that customs authorities cannot enforce a against a corporate debtor after the approval of a under the , if the department failed to file its claim during the . A Division Bench of Justice Anil Kshetarpal and Justice Shail Jain quashed an order confirming a differential customs duty demand of ₹5.89 lakh and a penalty of ₹4 lakh against , holding that the stood .
When a Creditor Sleeps on Its Rights
The dispute arose from an import of digital video recorders by JAL in , months before initiated CIRP against the company. The , admitted the insolvency petition on , and a public announcement inviting claims was issued. The , despite being a potential , did not submit any claim within the prescribed timeline. Meanwhile, the approved a submitted by on , which was subsequently approved by the NCLT on .
It was only after the was approved that the issued a in and passed the impugned order on , confirming the demand. JAL argued that the liability, being pre-CIRP, stood extinguished under read with , which explicitly provided that claims not submitted to the resolution professional would become nil.
No After Approval
The court emphasized that the definition of "claim" under is deliberately wide and includes unmatured, disputed, or unadjudicated rights to payment. The fact that the customs duty had not been quantified or adjudicated before the insolvency commencement date did not take it outside the ambit of a claim. Once the was approved, all claims not part of the plan stood frozen and extinguished.
Relying on the 's decision in , the Bench noted that the expressly made the . The court observed:
"The legislative intent behind this is to freeze all the claims so that the resolution applicant starts on a and is not flung with any ."
The court also distinguished the case from , clarifying that while customs authorities retain the power to determine liability during CIRP, they cannot enforce it after the is approved in a manner inconsistent with the IBC.
Customs' Failure to File Claim Fatal
Rejecting the argument that JAL should have proved the customs liability was placed before the resolution professional, the court held that the onus lay on the creditor to submit its claim. The public announcement mechanism under the does not require the corporate debtor to individually notify every potential creditor.
The judgment noted that the impugned order erroneously shifted the burden onto the petitioner.
"The question is not whether the Customs liability was considered by the RP despite the
not filing a claim. The question is whether the
had a claim arising from a pre-CIRP transaction and whether it availed the statutory mechanism for submitting that claim. The answer to both questions is clear."
The court also dismissed reliance on an isolated statement by JAL's representative during the personal hearing expressing willingness to pay, observing that such a statement cannot revive a liability extinguished by statute.
Decision and Implications
The High Court quashed the dated , while clarifying that it expressed no opinion on the merits of the classification or exemption eligibility. The decision reinforces the "" doctrine under the IBC, ensuring that successful resolution applicants are not burdened with undisclosed pre-CIRP claims. It also serves as a caution to statutory authorities to participate actively in the insolvency process or risk losing their claims.
The court concluded with a clear message:
"The IBC does not contemplate that a creditor who fails to participate in the CIRP acquires a superior position after its conclusion."
