2020 (11) TMI 678 - HC - Insolvency and Bankruptcy

Court upholds property protection for buyers, clarifies jurisdiction over pre-IBC petitions. Interim relief granted.

The Court emphasized the preservation and protection of properties for which consideration money was paid in 2015. It clarified the jurisdiction of the ... Winding up of Company - whether the Company Court would retain jurisdiction to hear the winding up petition? - HELD THAT:- It is clear from the Judgment that the learned Judge was of the view that the Company Court retains jurisdiction over winding-up petitions which were filed before the IBC came into force. In that view of the matter, the Court held that the Official Liquidator acting as the Provisional Liquidator could retain the symbolic possession of the assets and properties of the Company (in liquidation). It was also decided that questions of title to the flats, etc. were declaratory in nature and could hence only be decided by this Court. The important part of the Judgment however is the point of time when this Court reasserts its jurisdiction for deciding the issues related to the Company (in liquidation). This Court is informed that the Corporate Insolvency Resolution Professional (CIRP) commenced in March, 2019. An order of the NCLT, Kolkata Bench dated 12th February, 2020 records that the CIRP period of 330 days was completed on 5th February, 2020 and that one more opportunity for resolution of the corporate debtor [the Company (in liquidation)] was being given and 90 days was excluded from the CIRP period. The Resolution Plan has admittedly not seen the light of the day. More than six months have passed since the 90 days extension given to the RP in terms of the order dated 12th February 2020 of the NCLT. It is evident therefore that no Resolution Plan is forthcoming in the near future. However, since the application of the RP is due to be listed on 15th December, 2020, this Court is inclined to pass final order only after 16th December, 2020. List this matter on 16th December, 2020. Issues:1. Preservation and protection of properties for which consideration money was paid in 2015.2. Jurisdiction of Company Court over winding-up petitions filed before the Insolvency and Bankruptcy Code, 2016.3. Retention of symbolic possession by Official Liquidator.4. Declaratory nature of issues related to title of properties.5. Completion of Corporate Insolvency Resolution Process (CIRP) and absence of Resolution Plan.6. Potential impact on home buyers in case of liquidation order.7. Transition of authority from NCLT to Company Court in case of failed Resolution Plan.Analysis:1. The primary issue in this case revolves around the preservation and protection of properties for which the consideration money was paid in 2015. The applicant seeks an order directing the respondents to safeguard the properties. The respondent no.1 is the Official Liquidator, and respondent no.2 is a Resolution Professional in the Corporate Insolvency Resolution Process initiated against the Company promoting the building. The applicant paid the entire consideration money to the Company (in liquidation) for purchasing a flat.2. The Court analyzed the Judgment dated 12th December, 2019, which clarified that the Company Court retains jurisdiction over winding-up petitions filed before the Insolvency and Bankruptcy Code, 2016 came into force. It was held that the Official Liquidator, acting as the Provisional Liquidator, could retain symbolic possession of the assets. The Court emphasized that declaratory issues regarding title to properties should be decided by the Company Court.3. The Resolution Professional informed the Court that no Resolution Plan had been received for the Corporate Debtor. The CIRP period had ended, and no progress was made towards a Resolution Plan. The Court noted that numerous intending flat owners were in a similar situation, emphasizing the urgency of the matter.4. The NCLT order highlighted the potential impact on 150 home buyers if a liquidation order was passed. The Court directed that proceedings before the NCLT should continue until the Resolution Plan's acceptance or rejection. If the Plan is rejected, the Company Court should proceed with the winding-up process.5. Considering the lack of a Resolution Plan and the imminent listing of the RP's application, the Court decided to grant interim protection to the applicant until 21st December, 2020. The Court acknowledged the risk of the flat being treated as an asset of the Company by the NCLT and scheduled further proceedings for 16th December, 2020.