National Company Law Appellate Tribunal
Directorate Of Revenue Intelligence vs M/S Shree Ganesh Jewellery House & Ors on 17 October, 2022
NATIONAL COMPANY LAW APPELLATE TRIBUNAL
PRINCIPAL BENCH, NEW DELHI
Company Appeal (AT) (Insolvency) No. 796 of 2019
&
I.A. No. 970 & 971 of 2020
IN THE MATTER OF:
Directorate of Revenue Intelligence ...Appellant
Versus
Shree Ganesh Jewellery House & Ors. ...Respondents
Present:
For Appellant : Mr. Ajit Sharma, Sr. Standing Counsel
For Respondents : Mr. Krishnendu Dutta, Sr. Advocate with Mr.
Debarshi Dutta, Mr. Ishaan Chhaya, Mr. Aayush
Kevlani and Mr. Himanshu Shembekar, R-1 & 2.
Ms. Ruchir Mishra and Ramneek Mishra, Advocates
for Intervenor.
With
Company Appeal (AT) (Insolvency) No. 1230 of 2022
&
I.A. No. 3752 of 2022
IN THE MATTER OF:
Directorate of Revenue Intelligence ...Appellant
Versus
Shree Ganesh Jewellery House & Ors. ...Respondents
Present:
For Appellants : Mr. Ajit Sharma, Sr. Standing Counsel
For Respondents : Mr. Krishnendu Dutta, Sr. Advocate with Mr.
Debarshi Dutta, Mr. Ishaan Chhaya, Mr. Aayush
Kevlani and Mr. Himanshu Shembekar, R-1 & 2.
Company Appeal (AT) (Ins.) No. 796 of 2019 & I.A. No. 970 & 971 of 2020
Company Appeal (AT) (Ins.) No. 1230 of 2022 & I.A. No. 3752 of 2022 1 of 11
ORDER
(Per: Justice Rakesh Kumar Jain) 17.10.2022 Company Appeal (AT) (Insolvency) No. 796 of 2019 This appeal is directed against the order dated 23.04.2019 by which Misc. Application No. (IB) No. 21/KB/2019 filed by the Liquidator under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 (in short 'Code') read with Rule 11 of the National Company Law Tribunal Rules, 2016 (in short 'Rules') seeking the following reliefs: (a) An order directing the Respondent No.1, to give the custody of the assets of the Corporate Debtor, seized pursuant to Inventory cum Seizure list dated 23.02.2018 being Annexure 'A' hereto, to the Applicant forthwith so that all necessary steps in accordance with the IBC, 2016 can be taken by the Liquidator; (b) An order directing the Respondent No.1 DRI, to remit the sum of the 25,25,02,220/- paid to it by the Respondent No.2 namely, Bank of Nova Scotia, under the cover of its letter dated 2.2.2018, to the Applicant forthwith so that and all necessary steps in accordance with the IBC, 2016 can be taken by the Liquidator; (c) An order directing the Receivers appointed by the Debts Recovery, Kolkata and/or the erstwhile management of the Corporate Debtor or such other person or persons who are in physical possession of the properties described in Schedule being Annexure L annexed hereto to handover the possession of the said immovable properties to the Liquidator so that appropriate steps in accordance with law can be taken by the Liquidator; (d) Such further and other order or orders as this Hon'ble Tribunal may deem fit and proper." has been allowed with the following directions:
Company Appeal (AT) (Ins.) No. 796 of 2019 & I.A. No. 970 & 971 of 2020 Company Appeal (AT) (Ins.) No. 1230 of 2022 & I.A. No. 3752 of 2022 2 of 11 "(i) Respondent No.1, is hereby directed to give the custody of the assets of the Corporate Debtor, seized pursuant to Inventory cum Seizure List dated 23.03.2018 being Annexure 'A' to the liquidator within two weeks from the date of receipt of this order.
(ii) Respondent No.2 is directed to remit the sum of INR 12,23,04,074.14 to the Liquidator account within two weeks of the receipt of the order.
(iii) The Receivers No.3 to 9 are directed to hand over possession of the properties as per the list Annexure-K within two weeks of the date of the order."
2. In brief, an application under Section 7 of the Code was filed by Abhishek Stock Broking Services Pvt. Ltd. & 3 Others. for Initiation of Corporate Insolvency Resolution Process (in short 'CIRP') against the Respondent herein, namely, Shree Ganesh Jewellery House (I) Ltd. (Corporate Debtor). The said application was admitted by the National Company Law Tribunal, Kolkata Bench, Kolkata vide its order dated 12.02.2018 by which Manish Jain was appointed as the Interim Resolution Professional and moratorium in terms of Section 13 and 14 of the Code was imposed. The order dated 12.02.2018 admitting the Application filed under Section 7 of the Code was not challenged by the Corporate Debtor and attained finality.
3. The present Appellant, namely, Directorate of Revenue Intelligence (DRI) seized various immovable and movable assets of the Corporate Debtor on 23.02.2018 under Section 110 of the Customs Act, 1962 (in short 'Act') in an ongoing investigation of failure to receive remittances for export of gold imported duty free.
Company Appeal (AT) (Ins.) No. 796 of 2019 & I.A. No. 970 & 971 of 2020 Company Appeal (AT) (Ins.) No. 1230 of 2022 & I.A. No. 3752 of 2022 3 of 11
4. On 14.09.2018, the Tribunal appointed the Liquidator in the aforesaid Insolvency Proceedings for the liquidation of the Corporate Debtor. On 21.02.2019, the Appellant issued a show cause notice under Section 28 read with Section 124 of the Customs Act, 1962 (in short 'Act') to the Corporate Debtor demanding a duty of Rs. 117 crores (approximately) for import of duty- free gold in violation of the terms of the scheme framed by the Government of India.
5. The Liquidator filed an I.A. No. 21 of 2019 before the Tribunal for releasing the seized assets belonging to the Corporate Debtor and handing over the same to him. The said application has been allowed by the impugned order and hence the present appeal has been filed.
6. The impugned order also deals with another application bearing Misc. Application (IB) No. 22/KB/2019 purported to have been filed by the Liquidator in which he has prayed for the following reliefs: "(a) An order directing the respondent nos. 1, 2 and 3 to allow complete custody of the asset of the corporate debtor at Manikanchan to the applicant within the Special Economic Zone, Manikanchan so that the applicant can take physical possession of the said property; (b) Inspector-in-Charge of Diamond Harbour Police Station be directed to provide all assistance to the applicant for facilitating smooth take over physical possession of the Manikanchan property of the Corporate Debtor situated within the Special Economic Zone, Manikanchan; (c) Further and other order or orders and/or direction or Company Appeal (AT) (Ins.) No. 796 of 2019 & I.A. No. 970 & 971 of 2020 Company Appeal (AT) (Ins.) No. 1230 of 2022 & I.A. No. 3752 of 2022 4 of 11 directions be given." The said application was also allowed by the same impugned order dated 23.04.2019 with the following reliefs:
"(i) Respondent nos. 1, 2 and 3 are directed to allow complete custody of the assets of the corporate debtor at Manikanchan to the applicant within the Special Economic Zone, Manikanchan so that the applicant can take physical possession of the said property;
(ii) Inspector-in-Charge of Diamond Harbour Police Station is directed to provide all assistance to the applicant for facilitating smooth take over physical possession of the Manikanchan property of the Corporate Debtor situated within the Special Economic Zone, Manikanchan subject to the lease-hold right as per the terms in Annexure - C."
7. It is pertinent to mention that being aggrieved against the order, passed in Misc. Application No. 22/KB/2019, statutory appeal was filed in terms of Section 61 of the Code, titled as Manikanchan Special Economic Zone Vs. M/s Shree Ganesh Jewellery House & Ors. in Company Appeal (AT) (Insolvency) No. 94 of 2020 but the said appeal was dismissed on 20.01.2020 with the following order:
"20.01.2020 As the appeal is barred by limitation having filed after about 210 days, we are not inclined to interfere with the appeal.
Learned counsel for the Appellant submits that from the same very impugned order dated 23rd April, 2019 the other aggrieved person moved an appeal which is pending and the Appellant will intervene in the said appeal.
In the circumstances, while we dismiss the appeal being not maintainable and barred by limitation, give liberty to the Company Appeal (AT) (Ins.) No. 796 of 2019 & I.A. No. 970 & 971 of 2020 Company Appeal (AT) (Ins.) No. 1230 of 2022 & I.A. No. 3752 of 2022 5 of 11 Appellant to move intervention application in the appeal, if any pending, against the impugned order dated 23rd April, 2019."
8. It is pertinent to mention here that after the dismissal of the appeal and liberty having been granted by this Tribunal, the aforesaid Appellant (SEZ) filed an I.A. No. 970 of 2020 to intervene in this matter.
9. Counsel for the Appellant has vehemently argued that it is a case in which the Appellant has been defrauded because of the collusion between the alleged Financial Creditor and the Corporate Debtor. He has submitted that during the course of investigation by the revenue intelligence, some statements were recorded and in that process the statement of Shrikant Mohta one of the Director of M/s Multiplus Resources Limited (one of the Financial Creditor) was recorded and he then referred to Questions No. 2, 3, 4 and 5 along with their answers to show that the said Financial Creditor had not advanced any financial loan to the Respondent, therefore, the application filed under Section 7 at their instance was not maintainable which has wrongly been admitted by the Learned Tribunal. It is also submitted that this Court can always lift the veil to find out the fraud because fraud vitiates everything even though the Appellant had not challenged the order of admission dated 12.02.2018.
10. Counsel for the Respondent has submitted that the argument raised by the Appellant is not available to him because they are only concerned with the seizure of the goods on 23.03.2018 which has been ordered to be returned by the impugned order dated 23.04.2019 by the Hon'ble Tribunal. It is further Company Appeal (AT) (Ins.) No. 796 of 2019 & I.A. No. 970 & 971 of 2020 Company Appeal (AT) (Ins.) No. 1230 of 2022 & I.A. No. 3752 of 2022 6 of 11 submitted that the admission order could have been challenged only by the Corporate Debtor and not by the Appellant that too merely by showing that there were some statements recorded during the investigation. It is rather submitted that the whole case in fact is that as to whether the Appellant had the jurisdiction and competence to seize the goods (gold) after the imposition of moratorium w.e.f. 12.02.2018 and as to whether the provisions of the Act would prevail over and above the provisions of the Code. In this regard, he has relied upon a recent decision of the Hon'ble Supreme Court rendered in the case of Sundaresh Bhatt, Liquidator of ABG Shipyard Vs. Central Board of Indirect Taxes and Customs in Civil Appeal No.7667 of 2021 decided on 26.08.2022.
11. Learned Counsel for the Intervenor has submitted that the issue is as to whether the Special Economic Zone which is considered a foreign territory for the purpose of business and trade is governed by the provisions of the IBC. Counsel for the Respondent while contesting the argument of the Intervenor has submitted that the Intervenor has already lost his appeal and is thus not eligible to raise this argument which was the part of his appeal. It is further submitted that he could either take the side of either of the parties who are before the Court and in this regard, reliance has been placed on a decision of the Hon'ble Supreme Court in the case of Saraswati Industrial Syndicate Ltd. Vs. Commissioner of Income Tax Haryana, Tohtak (1999) 3 SCC 141.
12. We have Heard Counsel for the parties and perused the record. The issues involved are as to: (i) whether the provisions of the IBC would prevail Company Appeal (AT) (Ins.) No. 796 of 2019 & I.A. No. 970 & 971 of 2020 Company Appeal (AT) (Ins.) No. 1230 of 2022 & I.A. No. 3752 of 2022 7 of 11 over the Customs Act? and (ii) whether the Intervenor can raise a fresh issue in the appeal instead of taking the side of one of the parties before the Court?
13. In so far as the first question is concerned, the answer is no more res- integra in view of the decision of the Supreme Court in the case of Sundaresh Bhatt (supra). In the said case also the same issue was involved and the Hon'ble Supreme Court has answered the issue in the following manner:
"53. For the sake of clarity following questions, may be answered as under:
a) Whether the provisions of the IBC would prevail over the Customs Act, and if so, to what extent?
The IBC would prevail over The Customs Act, to the extent that once moratorium is imposed in terms of Section 14 or 33(5) of the IBC as the case may be, the respondent authority only has a limited jurisdiction to assess/determine the quantum of customs duty and other levies. The respondent authority does not have the power to initiate recovery of dues by means of sale/confiscation, as provided under the Customs Act.
b) Whether the respondent could claim title over the goods and issue notice to sell the goods in terms of the Customs Act when the liquidation process has been initiated?
answered in negative.
54. On the basis of the above discussions, following are our conclusions:
i) Once moratorium is imposed in terms of Sections 14 or 33(5) of the IBC as the case may be, the respondent authority only has a limited jurisdiction to assess/determine the quantum of customs duty and other levies. The respondent Company Appeal (AT) (Ins.) No. 796 of 2019 & I.A. No. 970 & 971 of 2020 Company Appeal (AT) (Ins.) No. 1230 of 2022 & I.A. No. 3752 of 2022 8 of 11 authority does not have been the power to initiate recovery of dues by means of sale/confiscation, as provided under the Customs Act.
ii) After such assessment, the respondent authority has to submit its claims (concerning customs dues/operational debt) in terms of the procedure laid down, in strict compliance of the time periods prescribed under the IBC, before the adjudicating authority.
iii) In any case, the IRP/RP/liquidator can immediately secure goods from the respondent authority to be dealt with appropriately, in terms of the IBC."
14. As regards the second issue is concerned, admittedly the Intervenor had filed its own appeal in order to challenge the findings recorded in its I.A. No. 22 of 2019 but their Appeal No. 94 of 2020 was dismissed on 20.01.2020. The Hon'ble Supreme Court in the case of Saraswati Industrial Syndicate Ltd. has observed that:
"12. Learned counsel for the intervenors submits that he is entitled to the same order as we have just passed. We cannot pass such an order in an intervention application. The only purpose of granting an intervention application is to entitle the intervener to address arguments in support of one or the other side. Having heard the arguments, we have decided in the assessee's favour. The interveners may take advantage of that order."
15. No other point has been raised. In view of the aforesaid discussion, we do not any find any merit in the present appeal and the same is hereby dismissed.
Company Appeal (AT) (Ins.) No. 796 of 2019 & I.A. No. 970 & 971 of 2020 Company Appeal (AT) (Ins.) No. 1230 of 2022 & I.A. No. 3752 of 2022 9 of 11
16. Since we have dismissed the Appeal, therefore, the order of stay granted by this Tribunal is hereby vacated automatically and the period which has been spent during this litigation available to the liquidator is excluded.
Company Appeal (AT) (Insolvency) No. 1230 of 2022
17. Since we have dismissed the Application for condoning delay in filing of the appeal by a separate order passed today, therefore, this Appeal is not found duly constituted and therefore the same is hereby dismissed. All other applications, if any, pending also dismissed.
I.A. No. 3752 of 2022
18. This Application is filed under Section 151 of CPC for Condonation of Delay in filing of the Appeal against the order dated 14.09.2018 passed by the NCLT, Kolkata Bench, Kolkata in C.A. (I.B.) No. 839/KB/2018 in C.P. (I.B.) No. 579/KB/2017 titled as Directorate of Revenue Intelligence Vs. Shree Ganesh Jewellery House & Ors.
19. In brief, the Company Appeal (AT) (Insolvency) No.1230 of 2022 is directed against the order dated 14.09.2018 by which the Tribunal had appointed the Liquidator. It is needless to mention that limitation to file an appeal against order of this Tribunal is 30 days as provided in Section 61 of the I&B Code, 2016. It is also not in dispute that an additional period of 15 days can be granted by the Appellate Authority in case a sufficient ground is shown by the Appellant/Applicant for not having preferred the Appeal within the prescribed period. However, in the present case, there is a huge delay in approaching the Appellate Authority against the impugned order dated 14.09.2018. The Appellate Authority is not vested with the jurisdiction to Company Appeal (AT) (Ins.) No. 796 of 2019 & I.A. No. 970 & 971 of 2020 Company Appeal (AT) (Ins.) No. 1230 of 2022 & I.A. No. 3752 of 2022 10 of 11 condone the delay after a period of 45 days. Thus, looking from any angle, there is hardly any merit in the present application for condonation of delay. Hence the application is dismissed.
[Justice Rakesh Kumar Jain] Member (Judicial) [Mr. Kanthi Narahari] Member (Technical) pks/rr Company Appeal (AT) (Ins.) No. 796 of 2019 & I.A. No. 970 & 971 of 2020 Company Appeal (AT) (Ins.) No. 1230 of 2022 & I.A. No. 3752 of 2022 11 of 11