INDUSTRIAL DEVELOPMENT BANK OF INDIA (THROUGH STRESSED ASSETS STABILIZATION FUND CONSTITUTED BY THE GOVERNMENT OF INDIA) versus SUPERINTENDENT OF CENTRAL EXCISE AND CUSTOMS AND OTHERS

Citation: [2023] 12 S.C.R. 1052 · Decided: 18-08-2023 · Supreme Court of India · Bench: SANJIV KHANNA · Disposal: Appeal(s) allowed

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Judgment (excerpt)

[2023] 12 S.C.R. 1052 : 2023 INSC 746
1052
CASE DETAILS
INDUSTRIAL DEVELOPMENT BANK OF INDIA (THROUGH 
STRESSED ASSETS STABILIZATION FUND CONSTITUTED BY 
THE GOVERNMENT OF INDIA)
v.
SUPERINTENDENT OF CENTRAL EXCISE AND CUSTOMS 
AND OTHERS
(Civil Appeal No. 2568 of 2013)
AUGUST 18, 2023
[SANJIV KHANNA AND SUDHANSHU DHULIA, JJ.]
HEADNOTES
Issue for consideration: Whether the Customs Act, 1962 creates a 
fi rst charge overriding the charge in favour of the secured creditor.
Customs Act, 1962 – Companies Act, 1956 – ss.529A, 530(1) 
– Customs duty ‘due and payable’ – ‘relevant date’ – Preferential 
payments u/clause (a) to s.530(1) – Customs Act if negates or overrides 
the statutory preference in terms of s.529A, Companies Act – Prior 
secured creditors if entitled to enforce their charge, notwithstanding 
the government dues payable under the Customs Act:
Held: Upon import of the goods, the Company had entered the 
goods for home consumption u/s.46, Customs Act – However, the goods 
were stored in a private bonded warehouse, in the terms of s.68, Customs 
Act – Goods were not released on non-payment of customs duty etc. and, 
thereupon, show cause notices were issued and two adjudication orders 
dated 15.09.2000 and 10.10.2000 were passed – The debt had become 
‘due’ in terms of the aforesaid two adjudication orders and ‘payable’ 
immediately – Thus, the customs duty became ‘due and payable’ prior 
to twelve months next to the ‘relevant date’; the ‘relevant date’ being the 
date of winding up of the Company on 01.12.2003 – The amount ‘due and 
payable’ in terms of the two adjudication orders would, thus, not fall in the 
category of preferential payments u/clause(a) to s.530(1), Companies Act 
– Provisions in the Customs Act do not, in any manner, negate or override 
the statutory preference in terms of s.529A, Companies Act, which treats 
1053
the secured creditors and the workmen’s dues as overriding preferential 
creditors; and the government dues limited to debts ‘due and payable’ in 
the twelve months next before the relevant date, which are to be treated 
as preferential payments u/s.530, Companies Act, but are ranked below 
overriding preferential payments and have to be paid after the payment has 
been made in terms of s.529 and 529A, Companies Act – Therefore, the 
prior secured creditors are entitled to enforce their charge, notwithstanding 
the government dues payable under the Customs Act – Impugned judgment 
set aside – Company Application fi led by the Offi  cial Liquidator allowed – 
Sale proceeds deposited in Supreme Court and converted into fi xed deposit 
receipts, along with the interest accrued thereon, be paid to the Offi  cial 
Liquidator to be distributed in accordance with the provisions of ss.529A 
and 530, Companies Act – Constitution of India – Article 372(1). [Paras 
22, 23, 26 and 28]
Customs Act, 1962 – s.142A – Companies Act, 1956 – ss.529A, 530:
Held: Provision of s.142A, insofar as it protects the rights of overriding 
preferential creditors governed and covered by s.529A, Companies Act, is 
clarifi catory and declaratory in nature, and does not lay down a new dictum 
or confer any new right as far as the present case is concerned – However, the 
enactment of s.142A of the Customs Act does confer or create a fi rst charge 
on the dues ‘payable’ under the Customs Act, notwithstanding provisions 
under any Central Act, but not in cases covered u/s.529A of the Companies 
Act, RDDBFI Act, SARFAESI Act and the IBC – s.142A, Customs Act, 
post its enactment, would dilute the impact of s.530 of the Companies 
Act, which had restricted preferential treatment to government taxes ‘due 
and payable’ limited to twelve months prior to the ‘relevant date’, without 
preferential right for taxes that had become ‘due and payable’ in the earlier 
period. [Para 25]
Companies Act, 1956 – ss.529A, 530 – Non-obstante nature of 
s.529A:
Held: In view of the non-obstante nature of s.529A of the Companies 
Act, notwithstanding anything contained in any other provision of the 
Companies Act or any other law for the time being in force on 24.05.1985, 
on winding up of a company, the debt due to the workmen and the debt 
due to secured creditors as specifi ed, rank pari passu and are to be paid 
IDBI (THROUGH STRESSED ASSETS STABILIZATION FUND 
CONSTITUTED BY THE GoI) v. SUPT. OF CENTRAL EXCISE AND 
CUSTOMS AND OTHERS
1054
SUPREME COURT REPORTS 
[2023] 12 S.C.R.
in the manner prescribed therein in priority to all other debt

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