Govt bodies can't seek old dues after IBC process completed: Delhi HC in Jaiprakash case
Delhi High Court ruled that government agencies must file claims during insolvency proceedings and cannot recover old dues after approval of a resolution plan. It quashed Customs’ ₹5.89 lakh demand against Jaiprakash Associates, reinforcing the IBC’s ‘clean slate’ principle.
The Delhi High Court ruled on Wednesday that government entities cannot seek recovery of past dues after a company's insolvency proceedings have been completed. The decision concerns a case involving Jaiprakash Associates, which imported digital and network video equipment in September 2023, before the company entered insolvency on June 3, 2024.
The customs department filed a claim in June 2026, stating that Jaiprakash Associates had paid basic customs duty at 10% instead of the required 20%, along with interest and penalties totaling ₹589,000. The court emphasized that creditors, including government authorities, must submit their claims during the insolvency process and not wait for the resolution plan to be approved before filing.
The court stated that allowing the customs claim would undermine the purpose of the insolvency law, which aims to provide a clean slate for the new owner, ensuring they are aware of all liabilities they are assuming.
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