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<h1>Supreme Court interprets Insolvency Code on property recovery vs. Joint Development Agreement</h1> <h3>RAJENDRA K. BHUTTA Versus MAHARASHTRA HOUSING AND AREA DEVELOPMENT AUTHORITY AND ANOTHER</h3> RAJENDRA K. BHUTTA Versus MAHARASHTRA HOUSING AND AREA DEVELOPMENT AUTHORITY AND ANOTHER - 2020 AIR 3274, 2020 (13) SCC 208, 2020 (4) SCALE 502 Issues Involved:1. Interpretation of Section 14(1)(d) of the Insolvency and Bankruptcy Code, 2016.2. Whether the Joint Development Agreement created a license or an interest in property.3. Applicability of the moratorium under Section 14(1)(d) to the recovery of property occupied by the Corporate Debtor.4. The clash between the provisions of the MHADA Act and the Insolvency and Bankruptcy Code.5. The relevance of previous judgments and statutory provisions to the current case.Issue-wise Detailed Analysis:1. Interpretation of Section 14(1)(d) of the Insolvency and Bankruptcy Code, 2016:The Supreme Court examined the correct interpretation of Section 14(1)(d) of the Insolvency and Bankruptcy Code, 2016. The Court highlighted that Section 14(1)(d) does not deal with the assets or legal rights or beneficial interests in such assets of the corporate debtor. Instead, it focuses on the 'recovery of any property' by an owner or lessor where such property is 'occupied by or in the possession of the corporate debtor.' The Court emphasized that 'occupied by' should be interpreted as actual physical possession or use, rather than legal possession.2. Whether the Joint Development Agreement created a license or an interest in property:The Court reviewed the Joint Development Agreement and the Deed of Modification, concluding that the agreement granted a license to the developer (Corporate Debtor) to enter upon the land, demolish existing structures, and construct new ones. The agreement explicitly stated that a license was granted to the developer to perform these activities, and it did not create an interest in the property.3. Applicability of the moratorium under Section 14(1)(d) to the recovery of property occupied by the Corporate Debtor:The Court held that the moratorium under Section 14(1)(d) applies to the recovery of property that is 'occupied by' the Corporate Debtor. Since the Joint Development Agreement allowed the Corporate Debtor to occupy the land for development purposes, the property was considered to be 'occupied by' the Corporate Debtor. Consequently, the recovery of this property by MHADA during the moratorium period was prohibited.4. The clash between the provisions of the MHADA Act and the Insolvency and Bankruptcy Code:The Court acknowledged the important functions of MHADA under the MHADA Act, including repairs and reconstruction of dilapidated buildings. However, the Court emphasized that in case of a conflict between the MHADA Act and the Insolvency and Bankruptcy Code, the latter prevails due to Section 238 of the Code, which contains a non-obstante clause. The Court reasoned that the moratorium under Section 14 is essential to facilitate the insolvency resolution process without hindrances.5. The relevance of previous judgments and statutory provisions to the current case:The Court distinguished the present case from previous judgments cited by the respondents. It clarified that the judgment in Municipal Corporation of Greater Mumbai vs. Abhilash Lal & Ors. dealt with a different fact situation and did not apply to the current case. Similarly, the judgment in Sushil Kumar Agarwal vs. Meenakshi Sadhu and Others, which discussed specific performance of development agreements, was found to be inapplicable as Section 14(1)(d) focuses on actual physical occupation rather than rights or interests in property.Conclusion:The Supreme Court allowed the appeal, set aside the impugned order of the NCLAT, and directed the NCLT to dispose of the resolution professional’s application within six weeks. The Court concluded that Section 14(1)(d) of the Insolvency and Bankruptcy Code applies to the recovery of property occupied by the Corporate Debtor, and the moratorium prohibits such recovery during the insolvency resolution process.