Commissioner Of Customs vs M/S Ajit Solar Private Ltd

IN THE MATTER OF: Commissioner of Customs (Prev.), Jodhpur ...Appellant

Versus

Ajit Solar Pvt. Ltd. & Anr. ...Respondents

Present: For Appellant : Mr. Kapil Sharma, Advocate. For Respondents : Mr. Kanishk Khetan, Mr. Akash Srivastava, Advocates for R-1. Ms. Varsha Banerjee, Advocate for R-2.

ORDER

(Hybrid Mode)

13.01.2025: I.A. No.7176 of 2024: This is an application praying for

condonation of 14 days' delay in filing the appeal. Learned counsel for the

Appellant submits that when the order was passed the authorised

representative of the Appellant was not present and they came to know about

the impugned order by letter dated 13.08.2024 received on 27.08.2024,

hence, delay was occurred in preparation and filing of appeal. Learned

counsel for the Respondent opposing the condonation of delay submits that

no sufficient cause has been shown in Para 3 of the application. After hearing

learned counsel for the parties, we are of the view that there is sufficient cause

shown by the Appellant in the application and the fact that order impugned

was received by letter dated 13.08.2024 on 27.08.2024 and thereafter steps

were taken for filing the appeal and appeal was filed on 26.09.2024. We, thus,

Cont'd.../ 2

find sufficient cause for condonation of delay. Delay condoned. I.A. No.7176

of 2024 is allowed.

2. Heard learned counsel for the Appellant as well as learned counsel for

the Respondent. This Appeal has been filed by the Appellant challenging

order passed by the Adjudicating Authority dated 13.08.2024 by which

application filed by the Appellant being I.A. No.218/JPR/2019 for recall of the

admission order has been rejected. The CIRP against the Corporate Debtor

commenced by an order passed by the Adjudicating Authority dated

26.04.2019. The application was filed by M/s JFC Finance (India) Ltd., a

NBFC, who had extended loan to the Corporate Debtor. On default being

committed by the Corporate Debtor, Section 7 application has been filed,

which was admitted. The IRP made public announcement on 28.04.2019

inviting claims. Appellant also informed the IRP of their claim of

Rs.5,25,93,585/-. The claim of the Appellant was admitted. On 18.07.2019,

the Appellant filed application IA No.218/JPR/2019 under Section 49, 66 and

69 of the Code praying for recall of the admission order, which application

was heard and rejected by the impugned order. Inspite of Form G having

issued, no Resolution Plans have come, hence, order of liquidation has been

passed on 11.09.2024. The Adjudicating Authority returned a finding that

Applicant could not prove that there was fraudulent initiation of CIRP and it

was further noticed that claim of the Appellant amounting to Rs.5,25,93,585

was admitted, hence, there was no ground made out and recall Section 7

application.

Company Appeal (AT) (Insolvency) No.1938 of 2024 3

3. Learned counsel for the Appellant contends that there were only two

defaults of EMI payment by the Corporate Debtor on which basis the Financial

Creditor has initiated the Section 7 proceeding. It is further submitted that

in the Balance Sheet of the Corporate Debtor there was sufficient revenue,

hence, it is a case of fraudulent initiation of CIRP by the Financial Creditor.

4. We have considered the submissions of learned counsel for the parties

and perused the record.

5. The Adjudicating Authority in Para 5.1 of the order has noticed

following:

"5.1. It was submitted that the Customs Department has already filed its claim in the CIRP of the Corporate Debtor and the same has already been admitted to the tune of Rs. 5,25,93,585/- (Rupees Five Crores Twenty- Five Lakh Ninety-Three Thousand Five Hundred and Eighty-Five Only). Further, the legal position is well settled that the provisions of the IBC shall override the provisions of any other applicable law and accordingly, the claim of the Customs Department shall be dealt in accordance with the provisions of the IBC. The Applicant has actively participated in the proceeding for the admission of its claim. Thus, the instant Application is liable to be dismissed on this ground alone."

6. Further findings have been returned by the Adjudicating Authority in

Para 18 of the order, which are to the following effect:

Company Appeal (AT) (Insolvency) No.1938 of 2024 4

"18. In the instant case, the Customs Departinent has made bald allegations without substantiating the same qua fraudulent initiation of the CIRP. Further, the mere allegation pertaining to lack of due-diligence in granting of loan by the Financial Creditor cannot warrant invocation of Section 65 of the Code as the Financial Creditor is an NBFC engaged in the business of lending and the said loan was given in normal course of business. Further, the difference in the amount claimed by the Financial Creditor and the Customs Department cannot by itself bring the case within the folds of fraudulent initiation of the CIRP. In our opinion, the Customs Department has failed to make out a case concerning fraudulent initiation of the CIRP and recalling of the order wherein the CIRP of the Corporate Debtor was initiated."

7. The submission of the Appellant that there is default of only two EMIs

by the Corporate Debtor, hence, Section 7 proceeding ought not to have been

initiated does not commend us. When default was committed by the

Corporate Debtor, it was always open for the Financial Creditor to initiate

proceeding which is remedy provided under I&B Code.

8. Insofar as submission of learned counsel for the Appellant that there

was enough revenue in the Balance Sheet of the Corporate debtor ending

31.03.2018, the Balance Sheet ending 31.03.2018 has been brought on the

record at page 139 of the appeal, which is as follows:

Company Appeal (AT) (Insolvency) No.1938 of 2024 5

"Ajit Solar Private Limited National Motors Building, M.L. Road, Jaipur, Rajasthan 302001 CIN:U40106RJ2007PTC024478 Profit and Loss Statement for the Year Ended 31st March 2018 (Amount in Rs.) Particulars Refer For the Year For the Year Note Ended Ended No. 31.03.2018 31.03.2017

I. Revenue from Operations 2.13 28,149,604 51,402,773 Other Income 2.14 5,298,338 1,400,841

II. Total Revenue 33,447,942 52,803,614 III. Expenses:

Cost of Materials Consumed 2.15 14,688,669 24,917,647 Purchases of Stock-in-Trade 19,360 34,948,786 Changes in Inventories of FG, 2.16 14,973,374 (5,832,504) WIP and Stock-in-Trade Employee Benefits Expense 2.17 917,000 8,704,459 Finance Costs 2.18 10,418,638 10,554,986 Depreciation and Amortization 2.7 24,581,307 25,526,469 Expense Other Expenses 2.19 338,255 3,773,673 IV. Total Expenses 65,936,603 102,593,514

V. Profit before exceptional and (32,488,661) (449,789,900) extraordinary items and tax (II-

IV) VI. Exceptional items - 30,478,734 VII. Prior Period Interest 4,506,760 - VIII. Profit before extraordinary (36,995,421) (19,311,165) items and tax (V-VI) IX. Extraordinary Items - - X. Profit before tax (VII-VIII) (36,995,421) (19,311,165)

XI. Tax expense: (1) Current tax - - (2) Deferred tax - - XII. Profit (Loss) for the period (36,995,421) 19,311,165) (IX+X) XIII. Earnings per equity share: (1) Basic (19.31) (10.08) Significant Accounting Policies and Notes on Accounts 1&2

Company Appeal (AT) (Insolvency) No.1938 of 2024 6

9. When we look into the 'Total Revenue' it is Rs.33,447,942/- it is much

less than the revenue of earlier year. When we look into the 'Total Expenses'

it is Rs.65,936,603/- and profit thus is shown in minus, as noted in the above

Balance Sheet, which in no manner support the submission of the Appellant

that initiation of CIRP was fraudulent. Further it is relevant to notice that in

the CIRP the Appellant has filed its claim which claim has already been

admitted and shall be dealt with in the proceeding in accordance with law.

10. An application to recall an admission order needs sufficient grounds,

which are not present in the present case. The Adjudicating Authority in Para

18 of the order has rightly noted that allegations of fraud could not be proved

by the Appellant. We, thus, do not find any ground to interfere with the order

passed by the Adjudicating Authority rejecting the application filed by the

Appellant for recall of admission order. There is no merit in the appeal.

Appeal is dismissed.

[Justice Ashok Bhushan] Chairperson

[Barun Mitra] Member (Technical)

[Arun Baroka] Member (Technical) Archana/km

Company Appeal (AT) (Insolvency) No.1938 of 2024