Assistant Commissioner Of Customs vs Mr. Renahan Vemakesan, Liquidator Of Rubber Wood India Private Limited

(Hybrid Mode)

Per : Justice Sharad Kumar Sharma, Member (Judicial)

The challenge by the Appellant in the instant Company Appeal (AT) (CH) (Ins) No. 44/2026, is the impugned order of 30.10.2025, that was rendered in CA(IBC)/6/KOB/2025 in IA(IBC)/408/KOB/2022 in CP(IBC)/26/KOB/2022, preferred under Section 42 of the I & B Code, 2016, to be read with Rule 11 of the NCLT Rules, 2016.

The brief facts that emerges for consideration before the Ld. Adjudicating Authority, while considering the Appeal under Section 42 of the I & B Code, which was preferred against the rejection of their claim by the Liquidator, vide its order, which was communicated to the Appellant via e-mail of the Liquidator on 19.03.2025, on the grounds narrated therein, that the claim of the Customs Department stood rejected because there was a delay of 787 days in filing of the claim. In the application thus preferred by the Applicant/Appellant herein, had prayed for the following reliefs: -

The reliefs were in the shape of seeking condonation of 787 days of delay in filing, the claim before the Liquidator, and further it contained a relief for issuing directions to the Liquidator to accept the claim that was submitted by the Appellant. Looking into the nature of the relief, which has been modulated by the Appellant, in the proceedings before the Ld. Adjudicating Authority in CA(IBC)/6/KOB/2025, it showed that, the Appellant admits the fact that, there was a delay of 787 days in filing the claim and that is why the condonation was sought by the Appellant, and it was thereafter only after condonation of delay the Appellant has sought that the claim, which was preferred with a delay of 787 days may be directed to be accepted to be considered on merits, as against the order of the Liquidator dated 19.03.2025, rejecting the claim of the Appellant.

The facts are that, the Corporate Debtor, M/s. Rubberwood India Private Limited, was admitted into the CIRP by the order of the Ld. Adjudicating Authority, rendered as back as on 17.05.2022. Consequent to which, in the absence of there being any valid plan being submitted or accepted by the Ld. Adjudicating Authority, the Ld. Adjudicating Authority in the subsequent proceedings that were held on IA(IBC)/408/KOB/2022, had passed an order of liquidation on 15.12.2022 and appointed Respondent No. 1 as a Liquidator to the Corporate Debtor.

The allegation of the Appellant is that, the Corporate Debtor was said to be engaged in an import and export business, and had imported certain goods through 8 Bills of Entry during the period of 2000 to 2001, availing certain concessions as were extended in the duty benefits, under the guidelines of Notification No. 49/2000 dated 27.04.2000, and the Export Promotion Capital Goods License No.1030000031/3/11/00 dated 10.08.2000. It was as per the terms of the Export Promotion Capital Goods Scheme, the license holders who were dealing with the customs goods in the business of import and export were supposed to fulfil the corresponding export obligation, were to be exempted from duty and certain benefits provided by the notification, wherein as per the conditions the Corporate Debtor under the Export Promotion Capital Goods Scheme, was also required to fulfil the export obligation, depending upon the export obligations, which was to stand satisfied by the Corporate Debtor within the prescribed period.

The liability of the Corporate Debtor had arisen owing to the determination, that was made because of non-fulfilment of the export obligation hence a demand of the customs duty was raised to the tune of Rs. 14,08,172/- and an order in that regard was issued as back as on 25.06.2009, by the Assistant Commissioner of Customs.

This aspect would be important, for the purposes of the instant controversy, for the reason being that, as against the determination made by the Assistant Commissioner of Customs, that is for an obligation for the payment of custom duty by the Corporate Debtor, under the export obligation as created under the Export Promotion Capital Goods Scheme, and the liability as fastened by the order of 25.06.2009, that was put to challenge by the Corporate Debtor by filing a proceeding by way of an Appeal No. 119/2013, preferred under Section 128A of the Customs Act, 1962, before the Commissioner of Customs (Appeals), Cochin. The aforesaid company appeal under Section 128A was decided by the Appellate Authority by the Judgment dated 09.10.2013.

Being aggrieved against the order dated 09.10.2013, by which the Commissioner of Customs had dismissed the Appeal and upheld the original order of Assistant Commissioner of Customs, dated 25.06.2009, and thereafter the Respondent No.2 (Corporate Debtor) is said to have further agitated his grievances by preferring an Appeal being Appeal No.20906/2024, before the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Bangalore, by filing the same under Section 129E of the Customs Act, 1962. This Appeal had been directed to be abated and was closed by an order passed on 26.09.2024, meaning thereby, the aspect of fastening of the liability on the Corporate Debtor and the Appellant’s entitlement of claim of the Customs Duty, which were subject matter of the proceedings under Section 128A and 129E of the Customs Act, 1962, was well within the knowledge of the Appellants, as the Appellant’s were contesting the proceedings of the two Company Appeals. In that eventuality, when the appeal under Section 129E was decided on 26.09.2024, which was not on merits, but rather on the ground that it stood abated, that would be deemed as an automatic knowledge attributed to the Appellant of giving an opportunity for resorting to the proceedings under the provisions of the I & B Code, 2016, for the purposes of recovery of the amount as defaulted by Corporate Debtor in the remittance of the customs duty, and for that purposes, the Appellant would be deemed to have knowledge from 28.06.2009 to 26.09.2024, and also the Appellant would be deemed to have had knowledge of the Corporate Debtor being placed under the liquidation process, on the basis of CESTAT proceedings dismissed as abated on 26.04.2024, and for which the Appellant was supposed to raise its claim under Section 15 of the I & B Code, 2016. Section 15 of the I & B Code reads as under: -

Section 15(1) prescribes for a public announcement of the Corporate Insolvency Resolution Process (CIRP) of Corporate Debtor, and it contemplates an invitation of the claim and it refers as to what would be the outer limit during which the claim could be submitted, which prescribes for that the last date of submission of the claim would as may be specified. The use of word “specified” under Section 15 (1) (c) has been defined under the I & B Code, which means that, it has had to be specified in accordance with the definition given under Section 3 (32) of the I & B Code, wherein the word “specified” has been described as under: -

It could be inferred that, in accordance with the definition of the word “specified” given therein under the Code, it would mean that, the specification and time restrictions as prescribed by the Regulations made by the Board under this Code. For the instant purpose, the Regulations herein would be deemed to be the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. The said Regulations in its Chapter IV and in its Regulation 12 provides for submission of proof of claims. It provides that, the creditor is required to submit its claim with proof of it on or before the last date mentioned in the public announcement, meaning thereby, even at the stage of submission of the claim during the resolution process, then too it cannot under law, be submitted beyond the time period as it has been specified under Regulation 12, as referred to herein above. But the case at hand happens to be that of raising of the claim before the Liquidator, which was rejected and subsequently, it was made as a subject matter of challenge in an Appeal under Section 42 of the I & B Code. Under the prevailing law, the claim was required to be submitted within 30 days from the liquidation commencement date, i.e., 15.12.2022, in accordance with Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016, as per the provisions contained under Regulation 12 (2) (b), which is extracted hereunder: -

It is not the case of Appellant that liquidator has not made public announcement in the shape of Form-B as provided under the Regulations, that itself attributes knowledge to the Appellant, a publication has fallen in public domain and the factum of liability was an aspect already known to the Appellant, due to earlier proceedings under the Customs Act, 1962.

The Regulation itself prescribes that, upon publication by way of a public announcement in the shape of Form-B as statutorily contemplated under Schedule II, the last date of submission or updating the claim shall be made within 30 days from the date of the liquidation commencement. The manner in which law has been modulated, the provision it is mandatory, looking at the aspect of time being the essence of the I & B Code.

The use of the word “shall” as given under the Regulation 12 of IBBI (Liquidation Process) Regulations, 2016, makes the provision particularly as to be mandatory. Admittedly, in the case at hand, the Appellant was already pursuing the proceedings initiated at the behest of the Corporate Debtor under Section 128A and 129E of the Customs Act, 1962, by way of an Appeal before the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), which was directed to be abated by an order that was passed on 26.09.2024. Once the knowledge of the aforesaid proceeding could be inferred to the Appellant, from the proceedings having being dismissed as having abated, where the Appellant was resorting to the remedies for recovery of the same dues of an amount of duty payable as per the provisions contained under the Customs Act, 1962, if that has been dismissed as abated, because of subsequently the Corporate Debtor being placed under liquidation, the recourse of preference of a claim by agitating the same before the Liquidator ought to have been resorted to within the prescribed period of the limitation at least as contemplated under Regulation 12 (2) (b) as extracted above.

More particularly when, after the decision of the Appellate Tribunal of 26.09.2024, the Appellant had filed the claim only on 12.03.2025, under Regulation 7 of IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, by submitting Form-B. The said claim raised on 12.03.2025, in the shape of Form-B has been held by the Ld. Tribunal, by the impugned order to be barred by limitation and accordingly it has been rejected, which is a subject matter of challenge in the instant Company Appeal.

The Ld. Counsel for the Appellant has submitted that, the claim thus submitted by the Appellant on 15.03.2025, ought not to have been dismissed on the ground of limitation for not having preferred the claim within the prescribed period of limitation as prescribed under Regulation 12 (2) (b), owing to the fact that, it was argued as the Corporate Debtor was already under the proceedings for recovery of duty under the provisions of Customs Act, 1962, and hence the continuity of the same has to be accorded to him when the Assistant Commissioner of Customs had issued notices for recovery of the amount as back as on 25.06.2009.

We are of the view that, passing of an order for recovery and submission of the proceedings under Section 128A and 129E of the Customs Act, 1962, cannot be taken as an excuse to extend the benefit of limitation, which otherwise is not extendable in accordance with the specific intention contemplated under the Regulations, which prescribes for submission of claim within the specified time frame, which is a mandatory provision. The Regulations do not contemplate extension of any such benefit of time, under the principles of Section 14 of the Limitation act, as no exception has been carved out for that. Besides being special act will prevail and would not be governed by general law of limitation.

The Ld. Counsel for the Appellant had submitted that, the aforesaid provision contained under Regulation 12 (2) (b) of submission of claim within a period of 30 days from the date when the Corporate Debtor has been put to liquidation, is directory in nature and not mandatory. For the aforesaid purpose, the Ld. Counsel for the Appellant had relied upon the judgment of State Tax Officer (1) Vs. Rainbow Papers Limited, MANU/SC/1109/2022, and particularly had made reference to para. 39 which is extracted hereunder: -

We are of the view, that if the controversy taken therein Rainbow Paper Mills (supra) is taken into consideration, the Hon’ble Apex Court therein was seized with an Appeal as prescribed under Section 62 of the I & B Code, as against the order dated 19.12.2019. The brief facts are that the Resolution Applicant had filed an amended Resolution Plan on 26.05.2018, as the case therein was, that it had granted an approval under Section 30 (6), to be read with Section 31 of the I & B Code. This issue was, as against the order of approval of the plan dated 27.02.20219 of the Ld. Adjudicating Authority. The Appeal was preferred before the NCLAT, being aggrieved as against the order dated 27.02.2019 of the Ld. Adjudicating Authority, under Section 61, which was dismissed by the NCLAT, by upholding the order of Ld. NCLT.

The controversy involved therein was quite distinct to the one at hand because therein, the Ld. Adjudicating Authority ultimately found that the Appellant had approached the Resolution Professional on 22.10.2018, whereas the plan dated 26.05.2018 along with the addendum dated 05.06.2018, which was already approved by the Committee of Creditors (CoC) by a majority vote. Consequentially, it was in those circumstances the NCLAT has held that, since the Appellant had not filed any claim within the time and its approach to the Resolution Professional at a belated stage after the approval of the Resolution Plan by the Ld. Adjudicating Authority was ultimately upheld by the NCLAT holding it to be barred by limitation. The ratio, which has been sought to be attracted by the Ld. Counsel for the Appellant herein has to be taken into consideration in the light of the factual background under which the Rainbow Papers (supra) Judgment was rendered, particularly in the context of the issue decided by the NCLAT as it has been dealt in para. 18 of Judgment of the Rainbow Papers Limited (supra), which is extracted hereunder: -

It was further observed that, since the claim was belated and the plan has already stood approved by the CoC, it was held by Ld. NCLT and NCLAT that there was no jurisdiction to entertain the same. The Hon’ble Apex Court has taken a different view that the delay in filing a claim cannot be the sole ground for rejecting the claim. The Hon’ble Supreme Court in Rainbow Papers (supra) has taken a view that there was no obligation on the part of the State to lodge a claim in respect of statutory dues for which the recovery proceedings are already initiated, it was issue regards the effect of non-filing of a claim (para. 25).

The reference made by the Ld. Counsel for the Appellant to the contents of para. 39 of the said judgment, contending thereof that, the claim was belated, the ld. Counsel contended that if para. 39 is taken into consideration, rather the Hon’ble Apex Court, has held that, the claim of the State was submitted belatedly under Regulation 12 it deals with the period of submission of the claim along with the proof as stipulated in the public announcement under Section 15 of the I & B Code, 2016, and ultimately came to the conclusion that, the stipulations contained under Section 15 of I & B Code, 2016, is not mandatory but rather directory in nature.

The Ld. Tribunal in the impugned order while making reference to the Y. Shivram Prasad Vs. S. Dhanpal and Ors., Judgment as it was rendered in Company Appeal (AT) (CH) (Ins) No.224/2018, it had observed that, there could be no distinction which could be carved out in relation to Government Departments, as no special treatment is contemplated under law, which could be granted to them in filing of a claim, as the State and its agencies too would be bound by the statutory timelines, unless they are sufficiently able to explain the cause for the delay, which was to be established by the records. The Ld. Tribunal had rightly further observed that, so far as the Customs Department, the Appellant herein is concerned, was unable to place any adequate reasons to justify the inordinate delay of 787 days in filing the claim. Even if law is portrayed to be directory, but still the delay is required to be satisfactorily explained, which was given by the Appellant in the present case. Even if for the time being it is taken that, the aspect of delay as contained under Regulation 12 of IBBI (Liquidation Process) Regulations, is directory in nature and not mandatory, even if a provision of law is directory in nature and not mandatory, then too if there is an inordinate unexplained delay, then too it has to be satisfactorily explained as to why the claim could not be submitted within the time period prescribed under the statute. In fact, in the instant case there was no reasoning whatsoever which was assigned by the Appellant before the Ld. Tribunal, while pursuing his proceeding under Section 42, the Ld. Tribunal observed that, and rightly so too, that in the absence of any reasonable explanation even if the concept of the provisions of limitation as contained under Regulation 12 is taken as to be directory in nature, then too even if the provision are taken to be directory in nature doesn’t exonerate the Appellant from giving a reasonable explanation to satisfy the reasons for delay, and that too particularly, which happens to be unprecedented of 787 days from the date of the liquidation.

This particular number of days of delay becomes more relevant for the reason being that, if the period of 30 days, as contemplated under Regulation 12 (2) (b) of Liquidation Regulations, is taken into consideration for the purposes of filing a claim, it is the case of the Appellant, that if it is determined from the date of closure of the proceedings of the CESTAT on 26.09.2024 and filing of a much belated claim at a belated stage, i.e., on 12.03.2025, then too it was much beyond the period prescribed therein and for the aforesaid period from 26.09.2024 till 12.03.2025, there was no reasonable explanation whatsoever which was forthcoming from the Appellant, in the proceedings under Section 42 of the I & B Code, before the Ld. Adjudicating Authority which stood dismissed by virtue of the impugned order under challenge.

It leads to logical inference that, in accordance with the ratio propounded in by various dictum of the Appellate Tribunal, the number of days of delay at times depending on facts of a case is irrelevant, what is more material is the reasonability of the explanation which was to be extended by the Applicant before the Tribunal, to exercise its discretion to accept the reasons for delay. We are of the view, as Appellant merely being State do enjoy any special status under Constitution, merely because of the fact that, the Appellant happens to be a statutory organization or a state agency, that itself cannot be a reason to condone the delay. Because for the purposes of a proceeding before the court of law the Appellant will not enjoy any special status merely because of the fact that, it happens to be a state agency. Once it comes to being a litigant before the court of law, there could be no disparity in the treatment of Appellant before the court of law being provided with a special status.

The aforesaid provision is to be looked into from yet another perspective that, in accordance with the Statement of Objects and Reasons (SOR) of the I&B Code, the time is the essence of the provisions of law, where under law any proceedings prescribed under law are required to be concluded within a determined time frame. In that eventuality, whichever procedural provisions are contained therein, that has to be rigidly construed so to ensure that the proceedings are decided within a time frame and extension of the same cannot be without assigning rational and satisfactory reasons. In the absence of there being any fruitful or justifiable reason having being extended by the Appellant, merely on the ground that, the Appellant being a government body had consumed sufficient time to get necessary sanctions, that itself cannot be taken as to be a sufficient ground to condone the delay as aspect of sanctioned, being accorded would be regulated by the wisdom of the authority, vested with authority to carry litigation, particularly when it runs contrary to the very objective of the I & B Code, where time is the essence of the provisions of law. If such type of claim is permitted to be entertained, it defeats the very objective of the Code of an expeditious completion of the insolvency and the liquidation processes. Thus, pendency of appeal or the Appellant being the government body cannot be treated as to be a sufficient reason, even if we accept the principle that the provisions contained under Regulation 12 (2) (b) is directory in nature.

The Ld. Counsel for the Appellant had argued the controversy from yet another perspective contending thereof that, this Appellate Tribunal has got enough discretionary powers to condone the delay. We are of the considered view that, when a statute prescribes to do an act in a specified time frame, it has had to be done in accordance with the mandate of the statute within the specified time frame and discretion doesn’t come into play, where a human factor of determination of limitation could dominate the process of determining the limitation, because the aspect of human determination has no scope under law, particularly when it has a possibility of distortion of law, which is not the scope open to be considered under the provisions of the I & B Code.

The Ld. Counsel for the Appellant, for the purposes to contend that, there could be a discretion, which could be exercised by this Appellate Tribunal in the light of the judgment of State of Nagaland Vs. Lipok AO & Ors. MANU/SC/0250/2005, particularly while making reference to para. 17, which is extracted hereunder: -

The Hon’ble Apex Court in said matter has held that, an exception is to be granted for the State, when it comes to the aspect of determination of limitation and some latitude is to be granted, while considering the aspect of sufficient cause as given therein in para. 17. We are of the view that, if the said judgment is taken into consideration in its entirety, it was arising out of the proceedings, where the issue for consideration before the Hon’ble Apex Court was for the grant of leave in terms of Section 378 of the Code of Criminal Procedure (CrPC), for preferring of an Appeal as against the judgment of acquittal, that was passed by the competent authority, and there was a delay in making an application for the grant of leave to prefer an Appeal as against the aforesaid order of acquittal. The parameters of criminal law cannot be equated to be applied over a field governed by civil laws, as both have different social and legal consequences.

First of all, the said judgment was based upon a proceeding, which was emanating from the orders of the criminal court. Secondly, it was limited for seeking a relief of preference of an Appeal under Section 378 (3) of the CrPC, as against the order of an acquittal, the ratio propounded therein for condonation of delay cannot be kept at a common pedestal, while applying the same principles over general law of limitation and for exercise of discretion and extension of limitation for condonation of delay. Hence, the Ld. Tribunal has rightly observed that, since the liquidation has already reached at an advanced stage, and if at all the claim of the Appellant at this stage is permitted to be entertained, even if the aspect of limitation is taken to be discretionary, though not under the given circumstances. The same cannot be permitted to be introduced at a belated stage, more particularly when it was likely to prejudice the entire proceedings, which has reached up to the stage of Section 53 of the I & B Code, entailing the finality of the liquidation process, where distribution of assets under Section 53 of the I & B Code, was in progress. If such type of delay is condoned and the clock is put back to consider the belated claim of the Appellant, in the exercise of its Appellate jurisdiction under Section 42 of the I & B Code, as against the order of rejection of claim by the Liquidator, that will amount to putting the clock back, which is not the intention of the I & B Code, rather it runs contrary and defeats the very spirit of the special statute, which has got an overriding effect to the general law.

Apart from the observations made above, the records revealed that the Appellant had already determined the duty or the liability that was payable under the customs act as against the Corporate Debtor, which being the reason for the Corporate Debtor to file an Appeal before the Commissioner and thereafter before the CESTAT. Mere pendency of an Appeal, before the Appellate Tribunal at the behest of the Corporate Debtor in itself did not create any legal bar as against the Appellant for raising of a claim under Section 12 (b) of IBBI (Liquidation Process) Regulations. Preference of an Appeal and its pendency was not the choice of the Appellant, rather it was a burden flowing from the proceedings drawn by the Corporate Debtor. In that eventuality, the mere pendency of the proceedings of an Appeal under the Customs Act, at the behest of the Corporate Debtor cannot be a scape for the Appellant to contend that, there were at all, any reasons specified to, refrain from raising a claim by invoking Regulation 12 (2) (b), for which the Appellant themselves have to blame.

Hence, the dismissal of the Appeal under Section 42 of the I & B Code, by the impugned order, on the ground that, the claim itself was preferred at a belated stage, which suffered a delay of 787 days, doesn’t suffer from any legal error apparent on the face of the record which calls for any interference. Hence, the Company Appeal lacks merits and the same stands ‘dismissed’.

All pending interlocutory applications would stand ‘closed’.