TaxTMI 
TaxTMI 
2020 (2) TMI 1407
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....plication under Section 9 of the Insolvency and, Bankruptcy Code, 2016 (in short IB Code) read with Rule 6 of the Insolvency and Bankruptcy Code ( Application to Adjudicating Authority) Rules, 2016 for initiation of corporate insolvency resolution process as against the corporate debtor/ Amrit Hatcheries Private Limited. The said application was admitted vide order dated 20th August, 2019, wherein Mr. Khetan Mukhija was appointed as Insolvency Resolution Professional. Subsequently the Interim Resolution Professional was replaced by the CoC Mr. Arun Kumar Gupta. Mr. Arun Kumar Gupta, the learned R.P continued the process. The erstwhile Interim Resolution Professional had constituted the Committee of Creditors as on 6/9/2019 and filed a report before the Hon'ble Tribunal on 6.9.2019. The IRP was in receipt of two claims from two financial creditors. One claim from Punjab National Bank. Its admitted claim come to Rs. 77, 23, 99,218.17-99.83% share of vote and second claim was from HDFC Bank Ltd. Its admitted claim is Rs. 13,11,622 and held 67-0.17% voting share. 3. The RP has convened altogether 8 meetings of CoC. The 8th meeting of the CoC was held on 14.02.2020. The last day fo....
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.... voted upon/ approved by the CoC, then the corporate debtor would likely be liquidated in terms of Section 33(1)(a) of IBC, 2016 by the Adjudicating Authority. 8. The Ld. RP submits that he had informed the CoC that it was required to deliberate on issues as required under Regulations 38B, 39C and 39D of the CIRP Regulations (amendment inserted from 25/06/2019) however, as there was no decision on extension by the CoC, he is praying for passing an order for liquidation. 9. The Ld. RP also submitted that before passing an order of liquidation CA(IB) No. 1635/KB/2019 and CA(IB) No. 1402/KB/ 2019 are to be disposed of as these applications raise question as to the transfer of possession of two properties mortgaged by the corporate debtor in favour of the Punjab national Bank who is R-1 in CA(IB) No. 1635/ KB/2019. This CA was filed by the RP praying for the following relief:- a) Directions contained in the order dated 29th October, 2019 as more fully stated in paragraph 10 hereof be kept in abeyance until decision in C.A.(IB) No. 1402/KB/2019 b) The Applicant be allowed access to both the subject properties to conduct the exercise to determine valuation of the Corporate debtor a....
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....ssional and/or the Punjab National Bank and/or the Committee of Creditors in respect of Howrah property more fully and particularly described in paragraph 6 above be set aside and /or canceled. (c) The Resolution Professional be directed to forthwith take back the possession of the said Howrah property more fully and particularly described in paragraph 6 above from the Respondent No.4. (d) Status quo ante in respect of the said Howrah property more fully and particularly described in paragraph 6 above as on 5th July 2019 and 16th August 2019 be restored. (e) Ad-interim orders in terms of prayers above. (f) Such further or other order and/or orders be made and/or direction and/or directions be given as to which this Learned Tribunal may deem fit and proper. 11. Before going into the controversy regarding the transfer of possession of the properties of corporate debtor by the Punjab national Bank (hereinafter referred to as R1), let us examine the background behind the transfer of possession of the disputed property in the case in hand. The Corporate Debtor availed loan facilities by mortgaging two plots of land inclusive of plant & machinery as described in sale confirmatio....
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....to hand over possession of the property to the auction purchasers illegally in violation of the moratorium declared in this CP and that R1 in violation of Moratorium declared in this case and in disobedience of the order of Hon'ble DRT in SA 152 of 2019, completed the sale confirmation and handed over possession of the said properties to the buyers respectively and therefore those properties are to be ordered to be taken back and to be included in the liquidation assets. He argued. 14. According to the Ld. Sr. Counsel for the members of the suspended board of corporate debtor (R4 in CA 1635 of 2019) an order of injunction was in force as against R1, the PNB and that the PNB could not have issued sale certificate while the said order was in force and could not have handed over possession of the properties subsequent to the declaration of moratorium. He relied upon the order of Hon'ble Debt Recovery Tribunal-Ill, Calcutta dated 05/07/2019 in IA 636 of 2019 in S.A. No. 152/2019. The said order is extracted here under:- 15. The said SA was come up again for the consideration on 16.08.2019 before the Hon'ble DRT. On that day the Hon'ble DRT recorded the submission of R....
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.... interest against its two properties, one at Howrah and another at Bankura under section 13(4) SARFAESI Act, 2002 and took possession of the said properties and proceeded with the sale of the properties. She further would submit that sale was confirmed in respect of Howrah property in favour of R2 on 06.07.2019 and sale of Bankura property was confirmed on 16.08.2019 i.e before the date of declaration of moratorium and hence the said properties are at present the properties of R2 and R3 (auction purchasers) and hence cannot be included under the purview of liquidation assets. 18. In support of the above submission on the side of R1 learned Counsel for the RP submits that the Punjab National Bank having taken possession of the secured assets and completed the sale proceedings before the declaration of the moratorium and transferred possession of the said properties to the auction purchasers the then IRP or by the present RP has not taken possession of the disputed property in the case in hand. However no valid explanation is forthcoming as to the non-compliance of the directions issued by this AA by order dated 29th October, 2019. According to the Ld. Counsel for the RP, CA(IB) No ....
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....peachable sale of the said property in favour of Respondent No.3 as per provisions of the SARFAESI Act, 2002, Respondent No. 1 has duly made over possession of the property to Respondent No.3 on 12th September, 2019. Therefore, there is no question of Bankura property being included in the liquidation estate of the corporate debtor or of the Resolution Professional proceeding to obtain a valuation of Bankura property sold to Respondent No.3. 23. Ld. Sr. Counsel appearing for Respondent No.3 relied upon the under mentioned provisions of SARFAESI Act, 2002 for stressing an argument that R1 has followed the procedure to be followed for the sale of the secured assets and issued the sale certificate as per Rule 9 of Security Interest (Enforcement ) Rules, 2002 transferring the ownership in favour of R3 and therefore the said property shall in no way become the assets of the Corporate Debtor as on the date of declaration of the moratorium. 24. According to him in terms of Section 13(4) (a), Secured Creditor has the right to take possession of secured assets of the borrower and recovered the debt by sale of the secured assets. 25. Section 13(6) provides that any transfer of secured ass....
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....nd Another vs. Bank of India and others reported in 2019 SCC OnLine SC1059 and Municipal Corporation of Delhi vs. Pramod Kumat Gupta reported in (1991) 1 SCC 633 and one judgment of Hon'ble High Court of Madras in K. Chidambara Manickam Vs. Shakeena, passed by the ( Madurai Bench) reported in 2008 (1) CTC 660. 27. The above said argument was countered by the Ld. Sr. Counsel for R4. According to him the above said citations related to an issue relating to whether registration is compulsory to complete the sale proceedings under the SARFAESI Act. The Hon'ble Supreme court as Well as Madras High Court have held that to complete the sale as per the provisions of the special enactment is not compulsory. He further submits that the facts in the said case are not at all similar to the facts in the instant case and that application of the moratorium which would be applicable in the sale proceedings in the case in hand does not at all go into in the said decision as it was dealt with before the commencement of the Code and reliance has been placed on Section 14(1) (a) of the I&B Code relates to Moratorium and read as follows:- " 14. Morotorium (1) Subject to provisions of sub-s....
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....en us to paras 4,6,10 & 16 read as under: - "4. The loan had become "Bad" hence declared as "Non-Performing Asset" on 1st December, 2013. As a consequence, 'Dena Bank' initiated proceedings under the "Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002" (SARFAESI Act, 2002" for short) to take physical possession under section 13(4) of the SARFAESI Act, 2002', It is informed that the procedure for obtaining physical possession was duly completed by issuing a Notice under Section 13(2) of 'SARFAESI Act, 2002' and on lapse of 60 days, a notice under section 13(4) of the said Act for taking over the possession. Physical possession was taken over on 13th September, 2017 is an undisputed fact. 6. The 'Moratorium' had commenced on admission of the case w.e.f. 6th February, 2018 pursuant to an application moved by the 'State Bank of India' under Section 7 of the I&B Code'. It was in this background, it was pleaded by 'Dena Bank' that physical possession was taken over before the date of commencement of 'Moratorium'. Therefore, the 'Resolution Professional' should not have ....
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.... (Reply filed in CA No. 1635 of 2019) 9. Date of 2nd CoC meeting 16.10.2019 17 (Reply filed in CA No. 1635 of 2019) 10. Date of filing C.A. No. 1402 of 2019 21.10.2019 11 Date of NCLT Order directing RP to defend DRT proceedings 29.10.2019 12. Date of dismissal of DRT proceedings 26.11.2019 24 (Reply filed by R-2 in C.A. No. 1402 of 2019 PROPERTY IN BANKURA SOLD TO R3 S. No. Particulars Date Page No. 1. Date of Sale Notice 20.7.2019 26 (C.A. No. 1635 of 2019) 2. Date of DRT Interim Order 16.8.2019 72 (Reply filed C.A. No. 1635 of 2019) 3. Date of confirmation of Sale 16.8.2019 26 ( C.A. No. 1635 of 2019) 4. Payment of Skylark 16.8.2019 (C.A. No. 1635 of 2019) i. 1st Tranche 19.8.2019 ii. 2nd Tranche 3.9.2019 iii. 3rd Tranche 27-29 ....
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....to a transfer of title provided possession is given in favour of the purchaser. Here in this case admittedly handing over of possession in respect of Bankura property was subsequent to the date of declaration of the moratorium. 34. At this juncture Ld. Sr. Counsel appearing for R4 submits that both sale certificates are inadmissible for want of engrossing it on stamp paper. Truly both sale certificates are copies on plain paper and no supporting evidence also led in to prove that the Howrah property was handed over on 19.08.2019 itself as attempted to establish on the side of R1. 35. Having heard at length on both sides the only aspect therefore that remains is that possession has not been handed over in favour of R3 prior to the date of declaration of moratorium in order to complete the transfer. That apart, the sale certificate has not so far been engrossed in a stamp paper. In such circumstances, R 3 cannot claim legal title or ownership over the Bankura property. In the said circumstances, we have no hesitation to hold that the Bankura property is the property of the Corporate Debtor as on the date of declaration of moratorium i.e as on 20.08.2019 and R3 has no right to retai....
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.... and Ld. DRT dismissed the SA for want of prosecution. Similarly, as regards the Bankura Property, it was in the possession of the R1 as on the date of declaration of moratorium. That property ought not to have been permitted to be transferred to the purchaser. So RP himself who was duty bound to safeguard the property did not take as much care as was expected at least from a prudent man. However, we are not going deep into the circumstances behind the handing over possession of the disputed property by R1, in the case in hand. The application is liable to be allowed by directing the RP to recover possession back from the auction purchasers and to be listed as liquidation assets and to have valuation of the properties in accordance with provisions of Code, and Regulations. 38. CA(IB) No. 1270/KB/2019 is an application filed by two of the members of the suspended board of directors of the Corporate Debtor, under section 60(5) challenging the inclusion of an operational creditor's claim and its representative in the CoC constituted by the RP. When this application was taken up for hearing, the Ld. Sr. Counsel for the applicant did not press it for hearing. Moreover, the CIRP per....
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....ught out in the case in hand it appears to us that it is fair and just to appoint an independent insolvency professional other than proposed by the PNB. Accordingly the CP as well as the CAs are disposed of as under:- a. The Corporate Debtor namely, Amrit Hatcheries Private Limited is ordered to be liquidated. b. Mr. Bijay Murmuria, Registration No. IBBI/IPA-001/IP-N00007/2016-2017/10026, email bijay_murmuria@ sumedhamanagement. com Mobile No. 9830039390 is appointed as the liquidator. c. Liquidator is directed to issue a public announcement stating that the Corporate Debtor is in liquidation, in one of the leading English newspaper as well as in one vernacular newspaper having wide circulation in the place where the registered office of the Corporate Debtor is situated as per section 33(1)(b)(ii) of the Code read with Reg. 12 (1) of IBBI (Liquidation Process) Regulations, 2016; d. The registry is directed to communicate this order to the Registrar of Companies, West Bengal and to Insolvency and Bankruptcy Board of India (IBBI), New Delhi; e. The order of moratorium passed under section 14 of the Code shall cease to have effect and a fresh moratorium under section 33(5) s....