The Delhi High Court on Wednesday said government authorities cannot remain outside a company’s insolvency process and later seek recovery of old dues after the resolution plan is approved.
The ruling related to digital and network video recorders imported by Jaiprakash Associates in September 2023, before the company entered insolvency on 3 June 2024. The customs department, which did not file its claim during the insolvency process, alleged on 2 June 2026 that the company had paid basic customs duty at 10% instead of 20% and sought ₹589,000 in additional customs duty, along with interest and penalty.
Jaiprakash Associates later challenged the order in the high court.
The court said that creditors, including government agencies such as tax authorities, must raise their claims during the insolvency process. They cannot wait for their dues to be decided and then seek payment after the process is over.
“The object of the IBC would be defeated if a creditor, including a statutory authority, were permitted to stand outside the CIRP (Corporate Insolvency Resolution Process), await adjudication of a pre-CIRP liability and thereafter seek enforcement against the resolved Corporate Debtor,” the court said.
A public notice had invited creditors to submit their claims, with 17 June 2024 as the last date. However, Customs did not file its claim during the insolvency process. “The responsibility of identifying and filing its claim lies upon the creditor," the judgment noted
The court said the company was not required to separately inform every government department about the insolvency. It was the creditor's responsibility to file its claim.
Meanwhile, creditors cleared Adani Enterprises’ resolution plan worth more than ₹15,000 crore on 31 October 2025, and the National Company Law Tribunal (NCLT) approved it on 17 March 2026. The plan said that old claims that had not been filed, accepted, or verified would be treated as nil.
The court said allowing Customs' claim would defeat the purpose of the insolvency law and leave the new owner facing unexpected old dues. The idea is to give the successful buyer a “clean slate” so that it knows what liabilities it is taking on, the court added.
The court quashed the Customs order confirming the duty, interest and penalty. It did not decide whether Jaiprakash Associates was actually entitled to the lower 10% customs duty rate, as that issue was no longer necessary.
Gauhar Mirza, senior partner at Saraf and Partners, who represented Jaiprakash Associates, said the ruling makes it clear that government departments must file their claims during the insolvency process, even if the exact amount has not yet been determined.
“Failure to do so may result in the claim being extinguished upon approval of the Resolution Plan,” Mirza said. He added that government authorities can still decide their dues during insolvency, but cannot later use that decision to revive an old claim that was left out of the insolvency process.
Krishna Yadav is a Senior Correspondent at Mint, based in New Delhi, and part of the corporate bureau. He joined the newsroom as a trainee in 2023 and quickly grew into his current role. He writes on legal and regulatory developments in corporate India, with a focus on insolvency, taxation, company law, and policy. His reporting includes tracking and breaking key legal stories from the Supreme Court, Delhi High Court, NCLT, and NCLAT.<br><br>With a background in law, Krishna is known for simplifying complex legal developments into clear, accessible stories for readers. His work focuses on trends in corporate law and policy that affect businesses. This ranges from explaining tax disputes—like whether coconut hair oil is edible—to writing on why celebrities are seeking personal rights protection. He closely tracks India’s insolvency system, covering issues such as creditor losses, gaps in the process, and challenges in how the framework works in practice.<br><br>Krishna also tracks developments within law firms—covering hiring trends, how firms help companies navigate global challenges, and how the legal industry is adapting to artificial intelligence. Beyond legal reporting, he has written long-form pieces, including on-ground coverage of the 2024 general elections, capturing the scale and logistics of polling across India.<br><br>Outside work, he enjoys travelling, exploring new places, and reading about geopolitics and history.
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