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2013 (9) TMI 662 - HC - CustomsSetting Aside Auction Sale – Permission to Sell Plant and Machinery - Application for seeking the setting aside of the auction sale of the capital goods and raw materials - Permission to sell the plant and machinery of YMIL purchased by him in the auction sale to enable him to generate capital for his company - Held that:- In the event the capital goods and raw material tally with the goods confiscated by the Customs Department, this Court would be inclined to either return the aforesaid capital goods and raw material to the Customs Department or direct the secured creditors to pay the auctioned price to the Customs Department - The Customs Department is directed to inform this Court about its stand within two weeks - This Court may also indicate that in the event the auction conducted by this Court was set aside or the secured creditors were directed to refund the amount to the Customs Departments, this Court would be inclined to impose costs on the Customs Department as it did not intimate the Court prior to the confirmation of the auction that goods had been confiscated by it. Stay of Auction – Held that:- confiscated by the Customs Department in 1997 - What had been produced by the Customs Department were Bills of Exchange and Packing List dated 1990 and 1991 recording ‘capital goods and ‘raw materials - In the absence of any inventory prepared by the Customs Department at the time of confiscation in 1997, it was not possible to verify whether the ‘capital goods described in the Bills of Exchange and Packing List nearly six years earlier to the confiscation were the ones that were in fact confiscated - Another reason and in our opinion a very cogent one, which was given by the learned Company Judge, was that in the absence of any mark on said ‘capital goods to indicate that they had been confiscated by the Customs Department, it was not possible to conclude that they were the ‘plant and machinery which were sold to and handed over to the auction purchaser in February, 2007 - The learned Company Judge concluded and we think rightly so that the laxity of the Customs Department and its failure to mark the goods confiscated by it rendered the goods incapable of identification - We may note at this juncture that one of the secured creditors, namely, IDBI also urged before the Company Court that Customs Departments prayer was highly belated and should not be entertained at this stage when the auction sale had already been confirmed by the Company Court and the proceeds of the dues of the auction sale distributed amongst the workmen and secured creditors pro rata in accordance with Section 529A of the Act. The Customs Department had been not only extremely lax but appallingly negligent in the matter - It was more than evident that no inventory was drawn up by the Customs Department at the time when the goods were confiscated way back in the year 1997 - The goods were not even marked for the purpose of identification at the time of confiscation - Then again, having confiscated the goods the Customs Department sat on the fence and watched the auction sale take place - The application for setting aside of the auction sale was eventually filed by it in the year 2008, i.e., eleven years after it had confiscated the goods in question - There being nothing with the Official Liquidator to indicate that the goods were confiscated by the Customs Department, the Department sought to rely upon the Bills of Exchange dated 1990 and 1991 prepared six years earlier to the confiscation, which in no way are indicative of the goods confiscated by the Department. The Company Judge rightly concluded that it was not possible to speculate at this stage that the goods sold to the auction purchaser in 2007 were in fact the very goods that were confiscated by the Customs Department in 1997 - The Customs Department not only failed to inform the Official Liquidator that goods had been confiscated by it, but also could not place on record any material to identify the goods confiscated by it 11 years ago - Suffice it to state that at this stage when the workmen and secured creditors have been paid pro rata by the Official Liquidator from out of the proceeds of the auction sale, it was not possible to turn back the clock and entertain the prayer of the Customs Department to cancel the auction sale and return the auctioned goods to the Customs Department.
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