2019 (7) TMI 10 - Tri - Insolvency and Bankruptcy

Jointly owned property disclaimed under Insolvency & Bankruptcy Code, 2016, for liquidation.

The tribunal declared a 7.5 cents property jointly owned by guarantors as disclaimed under the Insolvency and Bankruptcy Code, 2016, due to its use by the ... Declaration sought that the Scheduled property of 7.5 cents as DISCLAIMED - Section 36(3) (c) and (h) of the Insolvency and Bankruptcy Code, 2016 - whether the property admeasuring 7.5 cents under survey No. 243/6 can be declared as “Disclaimed” under rule 10 (1) (a) and (c) of the IBBI (Liquidation Process) Regulations 2016 for being treated as part of the liquidation estate? HELD THAT:- In order to maximise the value of the landed property of the Company under liquidation, it is essential that the property having onerous characteristics admeasuring 7.5 cents should form the part of the liquidation estate of the Company. Therefore, the property admeasuring 7.5 cents under survey No. 243/6 is declared as “Disclaimed” under Regulation 10 (1) (a) and (c) of the IBBI (Liquidation Process) Regulations 2016 and is being treated as part of the liquidation estate of the Company - Thus, as per Regulation 10 (5) of the Liquidation Regulations, the Respondents being affected by the disclaimer shall be deemed to be a creditor of the Corporate Debtor for the amount of compensation or damages payable in respect of such effect, and maybe paid as a debt in liquidation under Section 53(l)(f). The Respondents are directed to immediately handover the title deed and all concerned paper of the property admeasuring 7.5 cents under survey No. 243/6 to the Liquidator along with power of attorney authorising the sale of the property so that the sale proceeds of whole of property of the Company under liquidation could be appropriated to the account of the Company for being dealt under Section 53 of the IBC, 2016. Application disposed off. Issues:1. Declaration of property as disclaimed under the Insolvency and Bankruptcy Code, 2016.2. Treatment of property as part of the liquidation estate.3. Handover of title deed and papers to the Liquidator.Issue 1: Declaration of property as disclaimed under the Insolvency and Bankruptcy Code, 2016:The case involved an application filed by the liquidator seeking an order to declare a property of 7.5 cents as disclaimed under the Insolvency and Bankruptcy Code, 2016. The property in question was jointly owned by two respondents who were also guarantors to the Financial Creditor. The liquidator argued that even though the property was owned by the respondents, it was developed and used by the Corporate Debtor, justifying its classification as disclaimed property. The respondents contested this, claiming that the property was not part of the factory premises of the Corporate Debtor and was separate family property. However, the tribunal found merit in the liquidator's arguments, especially supported by a sale deed indicating the property's use by the Corporate Debtor. The tribunal declared the property as disclaimed under the relevant regulations, considering its onerous characteristics and its essential role in the Corporate Debtor's operations.Issue 2: Treatment of property as part of the liquidation estate:The tribunal examined the ownership and usage of the property in question to determine its status as part of the liquidation estate. The liquidator emphasized the importance of the 7.5 cents property for the smooth operation and maintenance of the Corporate Debtor's activities. The respondents argued that the property was not connected to the Corporate Debtor's factory premises and was separate family property. However, the tribunal, after reviewing the sale deed and considering the property's essential role in the Corporate Debtor's operations, concluded that the property should be treated as part of the liquidation estate. This decision was based on maximizing the value of the Corporate Debtor's assets and ensuring proper compensation to all stakeholders involved.Issue 3: Handover of title deed and papers to the Liquidator:In the final part of the judgment, the tribunal directed the respondents to immediately hand over the title deed and all relevant documents of the 7.5 cents property to the Liquidator. This directive aimed to facilitate the sale of the property and appropriate the proceeds towards the Corporate Debtor's account for distribution as per the provisions of the Insolvency and Bankruptcy Code, 2016. The order emphasized the importance of cooperation and compliance to ensure the smooth liquidation process and the fair treatment of all parties involved.This detailed analysis of the judgment highlights the key issues addressed by the tribunal regarding the declaration of property as disclaimed, its treatment as part of the liquidation estate, and the directive for handing over the necessary documents to the Liquidator.