NCLT dismisses Customs Dept’s plea against Jyoti Structures resolution plan

The National Company Law Tribunal (NCLT) has dismissed the plea of customs department to revoke the resolution plan of Jyoti Structures approved by the NCLT on 27 March 2019.

The Commissioner of Customs, Mumbai Zone I had filed a plea asking the Mumbai bench of the NCLT to either admit its claims of Rs 124 crore or revoke the resolution plan approved by the NCLT.

However, the tribunal dismissed the plea noting that it was the operational creditor’s responsibility to file claim within the time after the issue of public notice inviting claims by the Resolution Professional, and that the creditor concerned had filed its claim only after the completion of CIRP period of 270 days and also the after the approval of the Resolution Plan by this Tribunal.

The customs department had in its plea said that customs duty amounting to Rs 43.44 crore along with applicable interest of Rs 53.44 crore and penalty of Rs 27.28 crore were found to be due and recoverable from Jyoti Structures and that it filed the claims to resolution professional on 31 December 2019.

However, Resolution professional Vandana Garg refused to accept the claim on the ground that the CIRP period of 270 days was over on 08 April 2018 and that the Resolution Plan for the Corporate Debtor was also approved by the tribunal on 27 March 2019.

The Counsel for the Customs Department argued that that by virtue of Section 18(1)(a) and 18(1)(b) of the IBC, the resolution professional is duty bound to identify the liabilities of the Corporate Debtor and should have sent the notice to the Applicant enabling them to file a claim.

However, the NCLT rejected the Customs department’s this argument and said that it is unable to accept the contentions that Resolution Professional is bound to send notice to the Creditors requiring them to file their claim.

“In fact, it is the responsibility of the creditor concerned to file claim within the time after the issue of public notice inviting claims by the Resolution Professional. In this regard, Regulation 6 of the Insolvency and Bankruptcy Board of India (Insolvency Regulation Process for Corporate Person) Regulation, 2016 provides that the Insolvency Professional shall make public announcement in “Form-A” within 3 days from date of his appointment as IRP, inviting claims from the public and the claimant should file claim within the stipulated time,” said the tribunal.

The Counsel for the customs department submitted that the NCLT can invoke inherent powers of the tribunal as provided under Rule 11 of the NCLT Rules, 2016 for allowing this Application. However, lawyers appearing on behalf of successful resolution applicant Sharad Sanghi argued that inherent powers of the tribunal cannot be exercised in violation of the express provisions of the Code.

Jyoti Structures was one of the 12 large loan default cases referred to NCLT for resolution by the Reserve Bank of India in June 2017. Jyoti Structures was acquired by a consortium of investors led by Sharad Sanghi, MD and CEO of Netmagic, for Rs 4,000 crore.