The Supreme Court has passed a landmark decision today in the
matter of “Sundaresh Bhatt vs. Central Board of
Indirect Taxes & Customs” [Civil Appeal No. 7667
of 2021] and held that the provisions of the Insolvency and
Bankruptcy Code, 2016 (“Code”) will
prevail over the provisions of the Customs Act, 1962
(“Customs Act”) and consequently set
aside the order of the National Company Law Appellate Tribunal
(“NCLAT”).
The appeal was filed by the Liquidator of ABG Shipyard Ltd.
(“Corporate Debtor”), challenging the
order of the NCLAT wherein inter alia it was held by
the NCLAT that the Goods lying in the customs bonded warehouses are
not the assets of Corporate Debtor as the Corporate Debtor failed
to take positive steps to take control of its assets by failing to
pay customs duties and for that reason, the Corporate Debtor is
deemed to have relinquished its title to its Goods by legal
implication in terms of the Customs Act.
