# In the matter of Leel Electricals Limited IA No. 128 of 2020 in CP(IB) No. 189-ALD-2019

> NCLT judgment dated 2020-10-16. Citation: TCN-2020-NCLT-00368. The case involves an application filed by the Interim Resolution Professional (IRP) of MKM…

- **Court:** NCLT
- **Order date:** 16 Oct 2020
- **Citation:** TCN-2020-NCLT-00368
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/leel-electricals-limited-ia-no-128-of-2020-in-cpib-no-189-ald-2019-d40e2c5c

## Summary

### Background

The case involves an application filed by the Interim Resolution Professional (IRP) of MKM Technologies Pvt. Ltd., which is undergoing Corporate Insolvency Resolution Process (CIRP). The IRP sought a direction from the Adjudicating Authority to the Commissioner of Customs to hand over goods/assets owned by the Corporate Debtor, which were lying with the Customs Department as of the CIRP commencement date. The Customs Department argued that it had the right to dispose of the goods to recover unpaid duties, interest, and penalties. The IRP contended that the moratorium under Section 14 of the Insolvency and Bankruptcy Code (IBC) overrides other laws, including customs laws, and that the goods should be handed over to the IRP.

## Facts

MKM Technologies Pvt. Ltd. is undergoing CIRP. Arvind Mittal is the Interim Resolution Professional (IRP). The CIRP was initiated based on a petition filed by the Operational Creditor under Section 9 of the IBC, with an order dated 2020-03-04. The IRP made a public announcement on 2020-03-07. The Corporate Debtor had certain imported goods lying with the Commissioner of Customs, Noida, valued at Rs. 36,44,46,464.88 as of 2020-03-04. The IRP requested the Commissioner of Customs to hand over the goods, but received no response. The IRP sent a legal notice on 2020-05-20. The Customs Department argued that it could recover Government dues, interest, and penalties under Section 72 of the Customs Act, 1962, and that the importer, Leel Electricals Ltd., had not filed the

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## Issues and analysis

### Issue 1: Whether the moratorium imposed under Section 14 of the Insolvency and Bankruptcy Code (IBC) …

**Ratio:** Section 238 of the IBC has an overriding effect over other laws, including the Customs

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**Reasoning:** The Adjudicating Authority reasoned that the purpose of the moratorium is to protect the

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**Interpretation:** Section 14 of the IBC is interpreted to create a protective shield around the

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**Application:** In this case, the moratorium imposed under Section 14 prevents the Customs

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## Parties

- **Judges:** Rajesh Daya…
- **Appellants:** Arvind M…
- **Respondents:** MKM TECHNOLOGIES…; LEEL Electricals…

## Timeline

- **2020-03-04 — CIRP Init…**: Adjudicating Authority order initiating CIRP based on a petition filed by the Operational…
- **2020-03-07 — Public Annou…**: The IRP made a public…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 60 — Adjudicating Authority for corporate persons](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-60)

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