Court sets aside NCLT order on land inclusion in Liquidation Estate, emphasizes right to be heard

The Court set aside the NCLT's order allowing the inclusion of the petitioners' mortgaged land in the Liquidation Estate. It directed a fresh consideration, emphasizing the petitioners' right to be heard. The judgment did not opine on the merits of including the properties in the Estate.

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Issues Involved:
1. Maintainability of writ petitions in view of the availability of alternate remedy.
2. NCLT's jurisdiction to pass orders regarding guarantors' properties without initiating proceedings against personal guarantors.
3. Inclusion of guarantors' properties in the Liquidation Estate without notice and hearing.
4. Right of redemption under the Transfer of Property Act, 1882.

Detailed Analysis:

1. Maintainability of Writ Petitions:
The Court examined whether the writ petitions are maintainable given the availability of an alternate remedy under Section 61 of the Insolvency and Bankruptcy Code (IBC). The petitioners argued that the availability of an appellate remedy does not bar the filing of a writ petition, citing precedents like *Commissioner of Income Tax v. Chhabil Dass Agarwal* and *Sulochana Gupta v. RBG Enterprises Private Ltd.* The Court referred to *Embassy Property Developments Private Limited v. State of Karnataka* and *Gujarat Urja Vikas Nigam Ltd. v. Amit Gupta* to distinguish between lack of jurisdiction and wrongful exercise of jurisdiction, concluding that the writ petitions are maintainable in exceptional cases where the Tribunal's order affects constitutional rights or violates principles of natural justice.

2. NCLT's Jurisdiction:
The Court analyzed whether the NCLT can pass orders affecting guarantors' properties without initiating proceedings against personal guarantors. The petitioners contended that Section 36(4)(c) of the IBC excludes personal assets of shareholders or partners from the Liquidation Estate. The Court noted that while the Liquidator can include leasehold rights in the Liquidation Estate, the ownership rights of the petitioners, who stood as guarantors, cannot be included without proper proceedings and hearing.

3. Inclusion of Guarantors' Properties:
The Court scrutinized the Tribunal's order directing the inclusion of mortgaged properties into the Liquidation Estate without hearing the petitioners. The petitioners argued that such inclusion without notice violates principles of natural justice. The Court emphasized that Rule 51 of the National Company Law Tribunal Rules, 2016, mandates adherence to principles of natural justice. The Court found the Tribunal's order lacked clarity on whether it included leasehold rights or ownership rights, affecting the petitioners' constitutional rights under Article 300A.

4. Right of Redemption:
The petitioners asserted their right of redemption under Section 60 of the Transfer of Property Act, 1882, arguing that their properties should not be included in the Liquidation Estate, making them answerable for other liabilities of the Corporate Debtor. The Court acknowledged this right and highlighted that the Tribunal must reconsider the matter, ensuring the petitioners are heard before any decision on including their properties in the Liquidation Estate.

Conclusion:
The Court set aside the impugned order of the NCLT to the extent it allowed the inclusion of the petitioners' mortgaged land in the Liquidation Estate. It directed the Tribunal to reconsider the issue afresh, ensuring the petitioners are given an opportunity to be heard. This judgment does not express any opinion on the merits of including the petitioners' properties in the Liquidation Estate.

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