Delhi High Court Quashes ₹5.89-Lakh Customs Demand Against Jaiprakash Associates; Holds Unfiled Pre-CIRP Statutory Claims Extinguished After Resolution Plan Approval Under IBC Binding Clean-Slate Principle
Delhi High Court Quashes ₹5.89-Lakh Customs Demand Against Jaiprakash Associates; Holds Unfiled Pre-CIRP Statutory Claims Extinguished After Resolution Plan Approval Under IBC Binding Clean-Slate Principle
Facts
Jaiprakash Associates Limited challenged an Order-in-Original dated 2 June 2026 by which the Additional Commissioner of Customs confirmed differential customs duty of ₹5,89,366, interest under Section 28AA of the Customs Act and a ₹4 lakh penalty under Section 117. The dispute arose from import of Digital and Network Video Recorders under a Bill of Entry dated 15 September 2023.
The import transaction admittedly pre-dated commencement of the company’s Corporate Insolvency Resolution Process. Jaiprakash Associates contended that Customs had never filed its claim during CIRP and, once the Resolution Plan was approved under Section 31 IBC, the unfiled pre-CIRP liability stood extinguished.
The CIRP commenced on 3 June 2024 pursuant to an NCLT Allahabad Bench order. A public announcement invited claims, fixing 17 June 2024 as the initial deadline. Customs did not submit any claim.
Nevertheless, during CIRP, Customs issued a pre-notice consultation on 24 July 2025 and a show-cause notice on 10 September 2025 alleging that the imported equipment attracted 20% rather than 10% basic customs duty.
Meanwhile, the Committee of Creditors approved the Resolution Plan submitted by Adani Enterprises Limited on 31 October 2025, and the NCLT approved the plan on 17 March 2026.
Clause 4.12.1 of the approved Resolution Plan specifically provided that pre-CIRP claims which had not been submitted to the Resolution Professional, or had been rejected or remained unverified, would stand extinguished and become NIL. This provision and the NCLT approval order were brought to Customs’ attention before the impugned order was passed.
Issues
The principal issues were:
- Whether an unadjudicated customs liability arising from a pre-CIRP import constitutes a “claim” under the IBC.
- Whether Customs was required to submit that claim during CIRP despite no individual notice from the corporate debtor.
- Whether issuance of a later show-cause notice could convert the liability into a post-CIRP claim.
- Whether an unfiled pre-CIRP statutory claim survives approval of a Resolution Plan under Section 31(1) IBC.
- Whether Customs could continue adjudication/enforcement after the Resolution Plan became binding.
- Whether the High Court should entertain the writ despite an appellate remedy under the Customs Act.
Petitioner’s Arguments
Jaiprakash Associates submitted that the customs liability arose exclusively from the 15 September 2023 import, well before the Insolvency Commencement Date of 3 June 2024.
Customs, being an operational creditor, had not submitted a claim before the RP.
The petitioner principally relied on Ghanashyam Mishra & Sons (P) Ltd. v. Edelweiss Asset Reconstruction Co. Ltd., contending that once a Resolution Plan is approved, statutory dues which do not form part of it stand extinguished and no proceedings concerning them may continue.
It also relied on Delhi High Court decisions including National Sewing Thread Company Ltd., Ireo Fiveriver Pvt. Ltd., Surya Manufacturing Pvt. Ltd. and Garg Inox Ltd., emphasizing the right of the successful resolution applicant to take over the corporate debtor without surprise liabilities.
The petitioner further argued that the issue went to the jurisdiction of Customs to continue proceedings after extinguishment and therefore justified writ intervention despite a statutory appeal.
Respondents’ Arguments
Customs relied principally on ABG Shipyard Liquidator v. CBIC, arguing that Customs authorities remain competent to determine customs duty during CIRP even though recovery may remain subject to the IBC.
It also relied upon Rajesh Projects India Ltd. for the distinction between assessment and recovery.
The Department argued that the customs liability had neither been submitted to nor considered by the RP, CoC or NCLT, and that Jaiprakash Associates had informed Customs about CIRP only during the final hearing.
It also relied upon Rainbow Papers and argued that statutory dues could not simply be disregarded.
Analysis of the Law
1. “Claim” Under IBC Is Much Wider Than an Adjudicated Demand
The Court emphasised Section 3(6) IBC.
A “claim” includes a right to payment irrespective of whether it is:
- reduced to judgment or not;
- fixed or disputed;
- matured or unmatured;
- secured or unsecured.
Therefore, Customs could not argue that because differential duty had not yet been formally adjudicated when CIRP began, no “claim” existed.
The relevant point was the underlying right to payment arising from the import transaction, not the later date upon which that right was quantified.
2. Public Announcement Was Sufficient — Individual Notice Not Required
The Court rejected Customs’ argument that it had not been personally informed about CIRP.
The IBC creates a statutory mechanism of public announcement precisely so creditors can identify and submit their claims.
Once that mechanism was followed, no requirement was shown requiring the corporate debtor to individually notify every possible statutory creditor.
The responsibility to identify and lodge the claim rested upon Customs.
3. Subsequent SCN Did Not Change the Pre-CIRP Character of the Liability
The underlying import occurred on 15 September 2023.
The fact that Customs issued its pre-notice consultation in July 2025 and SCN in September 2025 did not transform the liability into a post-CIRP claim.
The Court reiterated that a claim under Section 3(6) is not rendered post-CIRP merely because its quantification or adjudication happens later.
4. Section 31(1) Makes Resolution Plans Binding on Government Authorities
The Court highlighted the 2019 amendment to Section 31(1), expressly including:
- Central Government;
- State Government;
- local authorities; and
- authorities to whom statutory dues are owed.
An approved Resolution Plan is therefore binding upon government revenue authorities as well.
5. Clean-Slate Principle Extinguishes Claims Outside the Plan
The Court relied heavily on Ghanashyam Mishra.
The Supreme Court held that once the Resolution Plan is approved:
- claims forming part of the plan become frozen;
- claims not forming part of it stand extinguished; and
- no proceedings concerning such extinguished pre-resolution claims may thereafter be initiated or continued.
The object is to allow the successful resolution applicant to commence operations on a clean slate, free from surprise claims.
6. Failure to File a Claim Does Not Preserve It
The Court rejected the Department’s argument that because Customs had never placed its liability before the RP or NCLT, it remained enforceable.
That reasoning inverted the statutory scheme.
The very purpose of the claims process is for creditors to submit their claims so the RP can collate them and the resolution applicant can factor them into its proposal.
A creditor cannot stay outside the CIRP and then use its own failure to file a claim as the basis for enforcing it later.
7. Approved Plan Expressly Made Such Claims NIL
The position was even stronger because Clause 4.12.1 expressly provided that pre-CIRP claims which had not been submitted, had been rejected, or remained unverified would:
stand extinguished and become NIL.
Thus, the Customs liability fell squarely within the plan’s extinguishment mechanism.
8. IBC Overrides Inconsistent Customs Enforcement
Section 238 IBC gives the Code overriding effect over inconsistent provisions of other laws.
The High Court acknowledged that the Customs Act is itself a special statute governing levy, assessment and collection of customs duty.
But where exercise of Customs power conflicts with the binding consequences of an approved Resolution Plan, Section 238 requires the IBC to prevail.
9. ABG Shipyard Distinguished — Determination During CIRP vs Enforcement After Plan Approval
This distinction was central.
ABG Shipyard permits Customs to determine statutory liability during insolvency, subject to the IBC’s restrictions upon recovery.
But that does not mean Customs may indefinitely continue proceedings irrespective of subsequent approval of a Resolution Plan.
Once the plan is approved under Section 31(1), pre-CIRP claims omitted from the plan stand on a fundamentally different footing.
The High Court therefore held that Customs could have determined its claim during CIRP and submitted it through the statutory process, but could not enforce that claim after it stood extinguished.
10. Rainbow Papers Did Not Give Government Dues Automatic Superiority
The Court rejected a broad reading of Rainbow Papers.
It relied on Paschimanchal Vidyut Vitran Nigam Ltd. v. Raman Ispat Pvt. Ltd., which confined Rainbow Papers to its particular factual and statutory context.
The subsequent Supreme Court jurisprudence did not support the proposition that statutory dues may be enforced outside the IBC merely because they are owed to Government.
11. Customs Appeal Did Not Bar the Writ
Normally, the Court would require an assessee to pursue the statutory appellate remedy under the Customs Act.
But this was not principally a dispute concerning:
- classification;
- valuation;
- rate of duty; or
- mathematical computation.
The issue was whether Customs had legal authority or jurisdiction to continue proceedings at all after the claim had been extinguished under an approved Resolution Plan.
That made writ jurisdiction appropriate notwithstanding the alternative appellate remedy.
12. Statement Offering to Pay Could Not Revive an Extinguished Claim
Customs relied upon an alleged statement by the petitioner’s representative expressing willingness to discharge the dues.
The High Court held that such a statement could not confer jurisdiction where the liability had ceased to be enforceable by operation of law.
The effect of Section 31(1) could not be waived or defeated through an isolated statement at a personal hearing.
Precedent Analysis
Ghanashyam Mishra & Sons (P) Ltd. v. Edelweiss Asset Reconstruction Co. Ltd., (2021) 9 SCC 657
The principal authority.
Applied for the proposition that all claims not forming part of an approved Resolution Plan, including Government statutory dues, stand extinguished upon approval and cannot later be pursued.
Committee of Creditors of Essar Steel India Ltd. v. Satish Kumar Gupta, (2020) 8 SCC 531
Reinforced the clean-slate principle: the successful resolution applicant cannot suddenly be confronted with undecided claims after approval of its plan.
Vaibhav Goel v. Deputy Commissioner of Income Tax, 2025 INSC 375
The Supreme Court reiterated that statutory dues absent from the Resolution Plan stand extinguished and proceedings concerning them cannot continue.
ABG Shipyard Liquidator v. CBIC, (2023) 1 SCC 472
Distinguished.
It permits Customs to determine liability during insolvency, but enforcement remains subject to the IBC. It did not authorize enforcement of an omitted pre-CIRP claim after approval of the Resolution Plan.
State Tax Officer v. Rainbow Papers Ltd., (2023) 9 SCC 545
Distinguished and confined to its particular statutory circumstances, especially in view of the later clarification in Paschimanchal Vidyut Vitran Nigam Ltd. v. Raman Ispat Pvt. Ltd.
Court’s Reasoning
The decisive chronology was straightforward:
- Import: 15 September 2023
- CIRP commencement: 3 June 2024
- Public announcement: 6 June 2024
- Customs claim filed during CIRP: None
- SCN: 10 September 2025
- CoC approval: 31 October 2025
- NCLT approval: 17 March 2026
- Customs Order-in-Original: 2 June 2026
Thus, Customs had a pre-CIRP claim but failed to participate in the insolvency process.
Once the NCLT approved the Resolution Plan, that claim stood extinguished.
The impugned Customs order wrongly placed the burden upon Jaiprakash Associates to prove that Customs had submitted its claim. The correct question was whether Customs itself had availed the statutory claims mechanism. It admittedly had not.
The Court held that a creditor who fails to participate in CIRP cannot emerge after resolution in a better position and disturb the successful resolution applicant’s clean slate.
Conclusion
The Delhi High Court held that the Customs Department could not confirm differential duty, interest or penalty against Jaiprakash Associates after approval of the Resolution Plan because the underlying liability:
- arose before CIRP;
- was never submitted as a claim;
- was not part of the Resolution Plan; and
- stood extinguished under Section 31(1) IBC and the approved plan.
Accordingly, the Order-in-Original dated 2 June 2026 was quashed and set aside.
The Court expressly did not decide the merits of the customs classification or the petitioner’s eligibility for Notification No. 50/2017-Customs, because those questions had become academic once the pre-CIRP claim was held unenforceable.
Case Details
Case: Jaiprakash Associates Limited v. The Office of the Commissioner of Customs Air Cargo Complex Import & Anr.
Court: High Court of Delhi at New Delhi
Case Number: W.P.(C) 10387/2026 & CM APPL. 48073/2026
CNR No.: DLHC010334532026
Bench: Justice Anil Kshetarpal and Justice Shail Jain
Judgment by: Justice Anil Kshetarpal
Reserved on: 18 August 2026
Date: 2 September 2026
Impugned Demand: ₹5,89,366 differential customs duty + interest + ₹4,00,000 penalty
Relevant Provisions: Sections 3(6), 31(1) and 238, Insolvency and Bankruptcy Code, 2016; Sections 28(1), 28AA and 117, Customs Act, 1962
Resolution Applicant: Adani Enterprises Limited
Result: Writ petition allowed; Customs Order-in-Original quashed because the unfiled pre-CIRP customs claim stood extinguished upon NCLT approval of the Resolution Plan; classification merits left open.
