Development rights as insolvency property protect project land possession and keep it within the corporate insolvency process.
Development rights created in favour of a corporate debtor constitute property and an asset within the Insolvency and Bankruptcy Code, so the resolution professional may preserve and protect possession of the project land as part of the insolvency estate. The record, including the development agreement, consent award, powers of attorney, assignment agreement, arbitral possession order, and pleadings, supported possession with the corporate debtor and the resolution professional, making the contrary finding unsustainable. The adjudicating authority was competent to decide possession and need not refer the matter to a civil court merely because title remained with the landowners. The project land was therefore not liable to be excluded from the corporate insolvency resolution process.
Issues: (i) Whether the Resolution Professional had shown sufficient material to establish possession of the project land and whether the contrary finding was sustainable; (ii) whether the Adjudicating Authority had jurisdiction to decide possession of land over which the corporate debtor claimed development rights, or whether the matter had to be left to a civil court; (iii) whether the subject land was liable to be excluded from the corporate insolvency resolution process.
Issue (i): Whether the Resolution Professional had shown sufficient material to establish possession of the project land and whether the contrary finding was sustainable.
Analysis: The development agreement, consent award, powers of attorney, assignment agreement, prior arbitral order handing over possession, the RP's pleadings, and the RP's affidavit in response to the tribunal's queries all supported the conclusion that the corporate debtor had possession and was carrying on the project on the land. The project had been constructed on the developer's share, possession had earlier been handed over to the developer, and the RP had been placed back in possession pursuant to interim directions. The finding that no material existed to prove possession ignored the record and the admitted project history.
Conclusion: The contrary finding was unsustainable and the existence of possession with the Resolution Professional / corporate debtor was established.
Issue (ii): Whether the Adjudicating Authority had jurisdiction to decide possession of land over which the corporate debtor claimed development rights, or whether the matter had to be left to a civil court.
Analysis: Development rights were treated as property and as an asset of the corporate debtor within the insolvency framework. The resolution professional is required to preserve and protect the assets of the corporate debtor and to take custody and control of such assets, including immovable and intangible interests. On that basis, the question whether the project land formed part of the corporate debtor's assets and whether possession should be protected was within the insolvency jurisdiction, and not a matter to be relegated to a civil court merely because title remained with the landowners.
Conclusion: The Adjudicating Authority was competent to decide the issue of possession and the matter was not required to be referred to a civil court.
Issue (iii): Whether the subject land was liable to be excluded from the corporate insolvency resolution process.
Analysis: The land formed the site of the corporate debtor's project and represented the developer's share under the contractual and arbitral framework. Since the corporate debtor's development rights constituted protected property under the Code and the project had already been brought into the insolvency process, exclusion of the land would defeat the statutory duty to preserve the assets and the going-concern value of the corporate debtor. The owners' request for exclusion was inconsistent with the established development rights and possession record.
Conclusion: The subject land was not liable to be excluded from the corporate insolvency resolution process.
Final Conclusion: The appeals were disposed of by upholding the inclusion and protection of the project land as part of the corporate debtor's insolvency estate, while rejecting the owners' attempt to exclude it from the resolution process.
Ratio Decidendi: Development rights created in favour of a corporate debtor constitute property and an asset within the Insolvency and Bankruptcy Code, and the adjudicating authority has jurisdiction to protect such rights and the possession associated with them during the insolvency process.
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