2024 (3) TMI 20 - AT - Insolvency and Bankruptcy

Appeal dismissed for eviction from property during insolvency proceedings under Section 60(5) IBC jurisdiction

NCLAT dismissed appeal regarding eviction from property during corporate insolvency proceedings. The tribunal held that under Section 60(5) of the ... Eviction of the Appellant from the property - handing over the possession of the property in question to the RP (now Liquidator) within 15 days from the passing of the order and the Statutory Authorities i.e. Local Police - HELD THAT:- Section 60(5) of the Code provides the power to the Adjudicating Authority which can be invoked to entertain or dispose of any claim made by or against the corporate debtor or corporate person, including claims by or against any of its subsidiaries situated in India; and also any question of priorities or any question of law or facts, arising out of or in relation to the insolvency resolution or liquidation proceedings of the corporate debtor or corporate person under this Code. Section 238 of the Code creates an overriding effect which provides that the provisions of this Code shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law. It was held by the Hon’ble Supreme Court in Gujarat Urja [2021 (3) TMI 340 - SUPREME COURT] that the NCLT has the jurisdiction to adjudicate disputes, which arise solely from or which relate to the insolvency of the corporate debtor but it has also been held that while doing so, the Tribunal may not usurp the legitimate jurisdiction of other courts, tribunals and fora when the dispute is one which does not arise solely from or relate to the insolvency of the corporate debtor and nexus with the insolvency of the corporate debtor must exist - The termination is not on a ground independent of the insolvency, therefore, the dispute in that case solely arising out of and relates to the insolvency of the corporate debtor and it was thus held that the RP can approach the NCLT for adjudication of the dispute that were related to the insolvency resolution. Similarly, in the present case also, the issue is in regard to the title of the property of the Corporate Debtor which is in CIRP and as per Section 60(5)(c) of the Code the question of fact as to whether the asset of the Corporate Debtor is the property of the Appellant on account of the agreement or is the property of the Corporate Debtor in CIRP is a question relating to the insolvency resolution. It is also pertinent to mention that the argument raised by the Appellant that the Appellant is entitled to double of the earnest money paid towards the part performance, in view of clause 7 of the agreement is concerned, it would not apply to this case because there was no denial on the part of the Corporate Debtor for the execution of the sale deed rather it was agreed by both the parties that the Appellant shall complete his part of the contract by 30.11.2018 which he had failed to perform, therefore, there are no substance in this argument as well. There is hardly any merit in this appeal which requires interference by this Court - Appeal dismissed. Issues Involved:1. Eviction of the Appellant from the property in question.2. Ownership rights under the agreement to sell.3. Jurisdiction of the Adjudicating Authority.4. Entitlement to refund or specific performance under the agreement to sell.Summary:Eviction of the Appellant from the property in question:The appeal challenges the order dated 02.06.2023 by the Adjudicating Authority (NCLT, Chandigarh Bench) directing the Appellant to hand over possession of the property to the Resolution Professional (RP), now Liquidator, within 15 days, with police assistance if necessary.Ownership rights under the agreement to sell:The Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor commenced on 06.12.2019. The RP filed I.A. No. 937 of 2020 alleging that the property in question belongs to the Corporate Debtor based on a sale deed dated 03.09.2014. The Appellant claimed possession based on an agreement to sell dated 31.03.2018, paying Rs. 30,40,000/- in part performance. However, the sale deed was never executed, and the RP did not accept the Appellant's claim during CIRP, though the Liquidator later admitted a part claim of Rs. 18 lakh as 'other stakeholder'.Jurisdiction of the Adjudicating Authority:The Appellant argued that the Adjudicating Authority lacked jurisdiction, citing several Supreme Court decisions. However, the Tribunal held that under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 (Code), the Adjudicating Authority has jurisdiction to adjudicate disputes relating to the insolvency resolution or liquidation proceedings of the corporate debtor. The Tribunal referenced the Supreme Court's observation in Gujarat Urja Vikas Nigam Limited Vs. Amit Gupta, emphasizing that NCLT has exclusive jurisdiction over matters relating to insolvency.Entitlement to refund or specific performance under the agreement to sell:The Appellant argued for either a refund of double the earnest money or specific performance of the contract. The Tribunal noted that the agreement to sell had specific clauses for refund or specific performance if the Corporate Debtor defaulted. However, the Appellant failed to perform his part by not making full payment by the agreed final date of 30.11.2018, thus invalidating his claim for protection under Section 53A of the Transfer of Property Act, 1882.Conclusion:The Tribunal dismissed the appeal, affirming the Adjudicating Authority's jurisdiction and rejecting the Appellant's claims for refund or specific performance due to non-fulfillment of contractual obligations. The Appellant's possession was deemed illegal post the final payment date, and the eviction order was upheld.