Delhi High Court- Customs Department Cannot Enforce Pre-Insolvency Claims Not Submitted During CIRP

Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration

Date: 03.09.2026

Delhi High Court- Customs Department Cannot Enforce Pre-Insolvency Claims Not Submitted During CIRP

The Delhi High Court recently delivered a significant judgment in the case of Jaiprakash Associates Limited vs. The Office of the Commissioner of Customs Air Cargo Complex Import & Anr., addressing the interplay between customs liabilities and the Insolvency and Bankruptcy Code, 2016 (IBC). This article provides a detailed analysis of the case, its background, legal arguments, and the broader implications for insolvency proceedings and statutory dues in India.

Background of the Case

• Import Transaction: On 15 September 2023, Jaiprakash Associates Limited (JAL) imported Digital and Network Video Recorders, availing a concessional customs duty rate.
• Customs Dispute: The Customs Department later alleged that the goods were not eligible for the concessional rate, raising a demand for differential duty, interest, and penalty.
• Insolvency Proceedings: Meanwhile, insolvency proceedings against JAL commenced on 3 June 2024, with a public announcement inviting creditor claims. The Customs Department did not submit any claim during the Corporate Insolvency Resolution Process (CIRP).
• Resolution Plan: The Committee of Creditors approved a Resolution Plan by Adani Enterprises Limited, which was subsequently approved by the National Company Law Tribunal (NCLT) on 17 March 2026. The plan explicitly extinguished all pre-CIRP claims not submitted during the process.
• Customs Order: Despite being informed of the approved Resolution Plan, the Customs Authority passed an order on 2 June 2026, confirming the demand against JAL.

Key Legal Issues

1. Whether customs liabilities arising from pre-CIRP transactions can be enforced after approval of a Resolution Plan if the claim was not submitted during CIRP.
2. Whether the Customs Department’s failure to submit a claim during CIRP extinguishes its right to recover dues post-approval of the Resolution Plan.

Arguments Presented

Petitioner (Jaiprakash Associates Limited)

• The customs liability pertained to a period before the insolvency commencement date.
• The Customs Department, as an operational creditor, failed to submit its claim during CIRP.
• Section 31(1) of the IBC and the Supreme Court’s decision in Ghanashyam Mishra & Sons (P) Ltd. v. Edelweiss Asset Reconstruction Co. Ltd. establish that unfiled pre-CIRP claims are extinguished upon approval of the Resolution Plan.
• The Resolution Plan, binding on all stakeholders including government authorities, specifically extinguished such claims.

Respondents (Customs Department)

• The Customs Act allows determination of customs duty, interest, and penalty, regardless of CIRP.
• The customs liability was not shown to have been considered in the Resolution Plan.
• The pendency of CIRP was only brought to their notice at the final hearing stage.
• An appeal remedy exists under the Customs Act.

Court’s Analysis and Findings

• Wide Definition of “Claim”: The IBC defines “claim” broadly, covering all rights to payment, whether adjudicated or not. The customs liability, though not quantified before CIRP, was a claim under the IBC.
• Public Announcement Mechanism: The IBC requires a public announcement for creditors to submit claims. The Customs Department’s failure to respond to this announcement meant its claim was not considered in the Resolution Plan.
• Binding Nature of Resolution Plan: Section 31(1) of the IBC, especially after the 2019 amendment, makes the approved Resolution Plan binding on all creditors, including government authorities. The Supreme Court has clarified that unfiled claims are extinguished upon approval.
• IBC Prevails Over Other Laws: Section 238 of the IBC gives it overriding effect in case of inconsistency with other laws, including the Customs Act.
• No Exception for Statutory Dues: The Court rejected the argument that statutory dues enjoy a special status outside the IBC framework, citing recent Supreme Court jurisprudence.
• No Recovery Post-Approval: The Customs Department could not enforce a pre-CIRP claim after the Resolution Plan’s approval, as it had not participated in the CIRP.

Judgment and Impact

• The High Court quashed the Customs Department’s order confirming the demand against JAL.
• The judgment reinforces that all creditors, including government authorities, must submit their claims during CIRP or risk extinguishment upon approval of the Resolution Plan.
• The decision upholds the IBC’s objective of providing a “clean slate” to successful resolution applicants and ensures finality in insolvency proceedings.

Key Takeaways for Stakeholders

1. Government Authorities as Creditors: Statutory authorities must actively participate in CIRP and submit claims within prescribed timelines.
2. Resolution Applicants: Can rely on the finality of the Resolution Plan and are protected from undisclosed or unfiled pre-CIRP claims.
3. Corporate Debtors: Are not liable for pre-CIRP claims not included in the Resolution Plan post-approval.
4. Legal Certainty: The judgment provides clarity and certainty for all stakeholders in insolvency proceedings.

Conclusion

The Delhi High Court’s decision in the Jaiprakash Associates Limited case is a landmark in harmonizing the IBC with other statutory regimes. It underscores the importance of timely claim submission by all creditors and affirms the supremacy of the IBC in insolvency matters, ensuring that successful resolution applicants are not burdened with legacy liabilities outside the Resolution Plan.

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Source: Delhi High Court

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Ravi Shekhar Jha – Advocate, Bar Council of Delhi