Legal principle

Once moratorium is imposed under Sections 14 or 33(5) of the IBC, statutory authorities such as customs have only a limited jurisdiction to assess/determine the quantum of duty and other levies and must submit their claims under the IBC's timelines; they have no power to recover dues by sale or confiscation or to claim title over and sell the goods, since Section 238 of the IBC overrides other laws including special recovery statutes.

Court decision

The Supreme Court dismissed PVVNL's appeal, holding that Section 238 of the IBC overrides Sections 173 and 174 of the Electricity Act, 2003 despite their non-obstante clauses, so PVVNL cannot stand outside the liquidation and must have its claim decided within the IBC framework (the liquidator was directed to decide the claim within 10 weeks). The Court confined Rainbow Papers to its own facts. On Section 77, it declined to rule, noting concurrent NCLT/NCLAT findings that PVVNL is a secured creditor and that PVVNL had already filed its claim and been added as a 'secured operational creditor' to the stakeholder list.

Facts

Paschimanchal Vidyut Vitran Nigam Ltd. (PVVNL), an electricity supplier, had unpaid dues of about ₹4.32 crore from Raman Ispat Pvt. Ltd., a corporate debtor that had passed through CIRP and gone into liquidation under the IBC. No goods are involved; the dispute concerns electricity dues for which PVVNL attached the corporate debtor's properties through the District Collector and Tehsildar, Muzaffarnagar (orders dated 12.01.2016 and 23.01.2016), creating a charge and restraining transfer. The NCLT and then the NCLAT directed immediate release of the attached property to the liquidator for sale, treating PVVNL as an 'operational creditor' to be paid per the IBC waterfall, prompting PVVNL's appeal to the Supreme Court. The Customs Act enters only through the Court's reliance on Sundaresh Bhatt v. CBIC, where customs authorities under moratorium were held confined to assessing duty quantum, not recovering dues by sale/confiscation.

Key provisions

• Section 33(5), Customs Act, 1962 — Unloading and loading of goods at approved places only
• Section 14, Customs Act, 1962 — Valuation of goods
• Section 142A, Customs Act, 1962 — Liability under Act to be first charge