Development rights in insolvency can form part of CIRP; arbitral termination orders are not final awards.
Development rights constitute property under the Insolvency and Bankruptcy Code, so the insolvency tribunal could determine whether the subject land formed part of the corporate debtor's assets and the parties were not required to go to civil court. A termination order passed by a sole arbitrator under Section 32(2)(c) of the Arbitration and Conciliation Act, 1996 is not an arbitral award and does not carry finality under Sections 34 and 35. The IRP/RP was therefore entitled to include the subject land in the information memorandum and CIRP, and the explanation to Section 18(1)(f) did not bar that inclusion. The refusal to exclude the land from CIRP and the allowance of intervention by the successful resolution applicant were upheld.
Issues: (i) Whether the Adjudicating Authority had jurisdiction to decide if the subject land formed part of the corporate debtor's assets and whether the parties had to be relegated to the civil court; (ii) Whether the orders passed by the sole arbitrator dated 27.05.2014 and 15.07.2015 amounted to an arbitral award binding the parties; (iii) Whether the IRP/RP could include the subject land in the information memorandum and CIRP notwithstanding the explanation to Section 18(1)(f) of the Insolvency and Bankruptcy Code, 2016; (iv) Whether the Adjudicating Authority erred in refusing exclusion of the subject land from the CIRP; (v) Whether the Adjudicating Authority erred in allowing the intervention application filed by the successful resolution applicant.
Issue (i): Whether the Adjudicating Authority had jurisdiction to decide if the subject land formed part of the corporate debtor's assets and whether the parties had to be relegated to the civil court.
Analysis: The question whether an asset should be reflected in the information memorandum arises out of and in relation to the insolvency resolution process. The tribunal's jurisdiction under Section 60(5)(c) of the Insolvency and Bankruptcy Code, 2016 extends to questions of law and fact connected with CIRP. Development rights are property within Section 3(27) of the Code, and the Resolution Professional is required to deal with assets of the corporate debtor for the purposes of the process. The dispute over title and contractual consequences did not oust the tribunal's jurisdiction merely because the parties also claimed civil court adjudication was necessary.
Conclusion: The Adjudicating Authority had jurisdiction to decide the issue and the parties were not required to be relegated to the civil court.
Issue (ii): Whether the orders passed by the sole arbitrator dated 27.05.2014 and 15.07.2015 amounted to an arbitral award binding the parties.
Analysis: An arbitral award is distinct from an order terminating proceedings under Section 32(2)(c) of the Arbitration and Conciliation Act, 1996. Section 34 provides recourse only against an arbitral award, while Section 35 attaches finality to an award alone. The order dated 15.07.2015 terminated the arbitration as infructuous and did not determine the dispute on merits as an award. Accordingly, it could not be treated as a final award binding the parties in later proceedings.
Conclusion: The proceedings and orders of the sole arbitrator did not amount to an arbitral award binding the parties.
Issue (iii): Whether the IRP/RP could include the subject land in the information memorandum and CIRP notwithstanding the explanation to Section 18(1)(f) of the Insolvency and Bankruptcy Code, 2016.
Analysis: The corporate debtor asserted development rights, not ownership, over the subject land. Such development rights constitute property under the Code and may be reflected in the information memorandum. The explanation to Section 18(1)(f) excludes third-party owned assets in possession of the corporate debtor under specified circumstances, but it does not bar inclusion of development rights claimed by the corporate debtor. The Assignment Agreement also preserved the collaboration arrangement and did not extinguish the corporate debtor's rights in the manner suggested by the appellants.
Conclusion: The IRP/RP rightly included the subject land in the information memorandum and CIRP, and the explanation to Section 18(1)(f) did not preclude it.
Issue (iv): Whether the Adjudicating Authority erred in refusing exclusion of the subject land from the CIRP.
Analysis: Since the corporate debtor's development rights subsisted and the dispute did not warrant exclusion of the property from the insolvency process, the prayer for deletion of the subject land from the CIRP and information memorandum was unsustainable. The tribunal's refusal to grant the relief sought was consistent with the Code and with the nature of the rights asserted by the corporate debtor.
Conclusion: The Adjudicating Authority did not err in refusing to allow the application for exclusion of the subject land from the CIRP.
Issue (v): Whether the Adjudicating Authority erred in allowing the intervention application filed by the successful resolution applicant.
Analysis: The applicant seeking intervention was the successful resolution applicant whose plan had already been approved by the committee of creditors with substantial voting share. In those circumstances, permitting intervention to enable submissions in the main application was and caused no legal infirmity.
Conclusion: The Adjudicating Authority did not commit any error in allowing the intervention application.
Final Conclusion: The challenge to exclusion of the subject land failed, the tribunal's jurisdiction was affirmed, the arbitral termination order was not treated as an award, and both appeals were dismissed.
Ratio Decidendi: Development rights constitute property under the Insolvency and Bankruptcy Code, and a termination order under Section 32(2)(c) of the Arbitration and Conciliation Act, 1996 is not an arbitral award carrying finality under Sections 34 and 35 of that Act.
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