2021 (5) TMI 307 - Tri - Insolvency and Bankruptcy

Financial Creditors Must Transfer Title Deeds & Shares, Follow Tribunal Orders for Successful Resolution

The Tribunal directed the Financial Creditors to hand over title deeds and issue NOCs to the successful Resolution Applicant for lands at Bhoothpur and ... Release of title deeds and issuance of No Objection Certificate (NOC) under an approved resolution plan - custody of title documents by charge holders versus entitlement of successful resolution applicant - implementation of an approved resolution plan and obligations of Committee of Creditors - assignment of security interest and stepping into shoes of assignor - prohibition on disposal/alienation of assets without prior tribunal order to protect stakeholders - release of pledge of shares upon payment under the resolution planRelease of title deeds and issuance of No Objection Certificate (NOC) under an approved resolution plan - custody of title documents by charge holders versus entitlement of successful resolution applicant - implementation of an approved resolution plan and obligations of Committee of Creditors - Financial Creditors holding original title deeds must hand over the original title deeds of the lands at Bhoothpur and Vadodara and issue NOC in favour of the successful Resolution Applicant as provided in the approved Resolution Plan. - HELD THAT: - The Tribunal noted prior orders directing Financial Creditors to release security and provide NOC for transfer of leasehold rights in implementation of the approved Resolution Plan. Although the CoC of the holding company reiterated its stand of not parting with custody of the original lease documents, the Tribunal observed that repeated directions had been issued and, to give effect to the Resolution Plan, directed the Financial Creditors to hand over the original title deeds and give NOC in favour of the successful Resolution Applicant as provided by the Plan. This direction implements the obligations flowing from the approved Resolution Plan and earlier orders of the Tribunal. [Paras 29, 32]Financial Creditors to hand over the original title deeds and issue NOC to the successful Resolution Applicant as provided in the Resolution Plan.Prohibition on disposal/alienation of assets without prior tribunal order to protect stakeholders - custody of title documents by charge holders versus entitlement of successful resolution applicant - The successful Resolution Applicant is restrained from disposing of or alienating the properties of the Corporate Debtor without prior and specific order of the Tribunal. - HELD THAT: - Recognising the apprehensions of Financial Creditors-particularly that handing over documents might enable the Resolution Applicant to dispose of properties that are subject to existing charges and CIRP proceedings-the Tribunal balanced the need to implement the Resolution Plan with protection of stakeholder interests. Consequently, while directing handover and NOC, the Tribunal expressly prohibited the successful Resolution Applicant from disposing of or alienating the Corporate Debtor's properties unless and until the Tribunal gives a prior and specific order permitting such action. [Paras 31, 32]Successful Resolution Applicant shall not dispose of or alienate the Corporate Debtor's properties without prior and specific order of the Tribunal.Release of pledge of shares upon payment under the resolution plan - implementation of an approved resolution plan and obligations of Committee of Creditors - Banks are directed to release the pledge of shares in favour of the successful Resolution Applicant after being paid the amounts as provided in the Resolution Plan. - HELD THAT: - Consistent with earlier directions and the terms of the approved Resolution Plan, the Tribunal reiterated that the release of pledge of shares is contingent upon payment under the Plan. The direction aligns the security release mechanism with the Plan's implementation, ensuring that share pledge will be released only after receipt of the stipulated payment by the Financial Creditors. [Paras 32]Banks to release the pledge of shares in favour of the successful Resolution Applicant after being paid sums as indicated in the Resolution Plan.Final Conclusion: IA No. 117 of 2020 is disposed of by directing Financial Creditors to hand over original title deeds and issue NOC to the successful Resolution Applicant as per the approved Resolution Plan, subject to a prohibition on the Resolution Applicant disposing of the properties without prior Tribunal order, and directing release of pledged shares upon payment under the Plan. Issues Involved:1. Release of title deeds and their custody.2. Issuance of No Objection Certificate (NOC) for leasehold rights.3. Discharge of Financial Creditors from the Monitoring Committee.4. Implementation of the approved Resolution Plan.5. Compliance with previous Tribunal orders.Detailed Analysis:1. Release of Title Deeds and Their Custody:The primary issue revolves around the release of title deeds held by IDBI Bank and Axis Bank, which are Financial Creditors. The applicant, IDBI Bank, sought directions for the Interim Resolution Professional (IRP) of Aster Pvt. Ltd. to present the matter to the Committee of Creditors (CoC) to determine the custodian of these deeds. The Tribunal had previously directed IDBI Bank and Axis Bank to hand over the title deeds to the successful Resolution Applicant for effective implementation of the Resolution Plan. However, the Financial Creditors expressed concerns about the Resolution Applicant potentially disposing of the properties, which are under charge for the holding company also under CIRP.2. Issuance of No Objection Certificate (NOC) for Leasehold Rights:The applicant argued that no NOC was required from GIDC as per their letter dated 15.10.2015. However, the Tribunal had earlier directed the Financial Creditors to issue NOCs to facilitate the transfer of leasehold rights to the Resolution Applicant. The Resolution Applicant contended that the CoC’s failure to issue the NOC would hinder the implementation of the Resolution Plan, leading to potential withdrawal from the plan.3. Discharge of Financial Creditors from the Monitoring Committee:The applicant requested the discharge of the erstwhile Financial Creditors from the Monitoring Committee, asserting that their obligations under the Resolution Plan were completed. The Tribunal noted that the role of respondent no. 4 had changed from Resolution Professional to Chairperson of the Monitoring Committee, responsible only for supervising the implementation of the Resolution Plan.4. Implementation of the Approved Resolution Plan:The Tribunal observed that despite multiple orders directing the Financial Creditors to comply with the Resolution Plan, including the release of security interests and issuance of NOCs, compliance was still pending. The Tribunal emphasized the necessity of these actions for the successful implementation of the Resolution Plan.5. Compliance with Previous Tribunal Orders:The Tribunal reiterated its directions from previous orders, emphasizing the need for the Financial Creditors to comply with the Resolution Plan. The Tribunal had issued multiple orders directing the release of title deeds and the issuance of NOCs, but these directives had not been fully executed, leading to the current application.Order:The Tribunal issued the following directions to address the issues:1. Handing Over Title Deeds and Issuance of NOC:- The Financial Creditors were directed to hand over the original title deeds to the successful Resolution Applicant for the lands at Bhoothpur and Vadodara.- The Financial Creditors were also directed to issue the necessary NOC in favor of the Resolution Applicant as stipulated in the Resolution Plan.2. Restriction on Disposal of Properties:- The successful Resolution Applicant was prohibited from disposing of or alienating the properties of the Corporate Debtor without a prior and specific order from the Tribunal to protect the interests of the Financial Creditors and other stakeholders.3. Release of Pledge of Shares:- The Banks were directed to release the pledge of shares in favor of the successful Resolution Applicant upon receiving the payments outlined in the Resolution Plan.The application (IA No. 117 of 2020) was disposed of in accordance with these terms, ensuring the compliance of the Financial Creditors with the Tribunal's orders for the effective implementation of the Resolution Plan.