Authority: National Company Law Tribunal, Hyderabad Bench – I

Order Date: 16 June 2026

Case Overview

The application was filed by Mr. Bihari Lal Chakravarti, Resolution Professional of M/s. NCS Sugars Limited (Corporate Debtor), under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 against the Directorate General of Foreign Trade (DGFT) and the Office of the Principal Commissioner of Customs, Visakhapatnam. The Corporate Debtor was admitted into Corporate Insolvency Resolution Process (CIRP) by NCLT on 24 June 2022.

The application sought revival of Advanced Authorization License No. 0910055746 dated 15 April 2013 issued by DGFT, which permitted the Corporate Debtor to import 30,030 MT of raw sugar duty-free under Exemption Notification No. 096/2009-Cus. dated 11 September 2009, subject to fulfillment of an export obligation of 28,600 MT of white sugar within eighteen months (by 15 October 2014).

Pursuant to this license, the Corporate Debtor imported 26,500 MT of raw sugar from Brazil through Gangavaram Port under Bills of Entry dated 1 May 2013 without paying customs duty, thereby undertaking an obligation to manufacture and export 25,238.09 MT of white sugar by 15 October 2014.

However, the Corporate Debtor failed to fulfill this obligation. On 16 March 2015, it admitted inability to comply due to lack of price parity in global and domestic markets and sought extension till 31 October 2015. Customs authorities found that instead of exporting, the Corporate Debtor had diverted 17,255 MT of white sugar manufactured from the duty-free imported raw sugar into the domestic market.

After adjudication, the Principal Commissioner of Customs, Visakhapatnam, vide Order-in-Original dated 11 March 2016, confirmed customs duty of Rs. 13.67 crores with interest, imposed a penalty of Rs. 70 lakhs, and ordered confiscation of the imported raw sugar with an option of redemption upon payment of Rs. 7.50 crores. The Corporate Debtor's writ petition challenging this order was dismissed by the High Court on 8 August 2016.

During CIRP, the Committee of Creditors (CoC) in its meeting on 6 December 2023 resolved to direct the Resolution Professional to approach NCLT for directions to DGFT/Policy Relaxation Committee for revival of the license, believing it would enhance the Corporate Debtor's value. The Resolution Professional subsequently filed representations and applications which remained pending.

Final Outcome

The NCLT dismissed the application, holding that:

1. The export obligation had lapsed on 15 October 2014, and all adjudication of liability and confiscation proceedings were complete well before the Corporate Debtor entered insolvency on 24 June 2022.

2. The relief sought did not originate in nor bear any nexus with the insolvency resolution process, falling outside the ambit of the IBC.

3. Revival/revalidation of an Advance Authorization License is an exercise of statutory discretion vested exclusively in DGFT and the Policy Relaxation Committee under the Foreign Trade (Development and Regulation) Act, 1992.

4. The license does not constitute a "critical supply" under Section 14(2A) of IBC as there was no material to establish the Corporate Debtor is presently engaged in manufacturing operations or operating as a going concern.

5. The Resolution Professional should focus on expeditious resolution rather than prolonging interlocutory proceedings.

The tribunal cited Supreme Court judgments in Gujarat Urja Vikas Nigam Ltd. v. Amit Gupta & Ors. (2021) and Tata Consultancy Services Ltd. v. Vishal Ghisulal Jain (2020) which clarified that NCLT's residuary jurisdiction under Section 60(5)(c) cannot be exercised over matters dehors the insolvency proceedings.

Topics: Insolvency Resolution, Trade Compliance