TaxTMI 
TaxTMI 
2021 (4) TMI 352
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....tant appeals have been preferred by two different Appellants viz. M/s. Victory Irons Works Limited (Appellant in Company Appeal (AT)(Ins) No. 508 of 2020) and M/s. Energy Properties Limited (Appellant in Company Appeal (AT) (Ins) No. 377 of 2020 under Section 61 of the Insolvency and Bankruptcy Code, 2016 (in short 'Code') against the Impugned order dated 12.02.2020 passed by the Adjudicating Authority (National Company Law Tribunal, Kolkata Bench) in CA(IB) Nos. 1807/KB/2019 and 146/KB/2020 in CP(IB) No. 372/KB/2018. Since both the appeals have been filed against the same impugned order dated 12.02.2020, the appeals have been clubbed for better appreciation and taking a holistic view. 2. In these two appeals as stated above one appeal - CA(AT)(Ins) No. 508 of 2020 has been filed by M/s. Victory Iron Works Ltd who is the Licensee for an area of 10,000 Sq. ft. on a payment of Rs. 5000/- per month by the Licensor - Avani Towers Pvt. Ltd and Energy Property Pvt Ltd confirming party in terms of Leave and License Agreement dated 11.08.2011. The Appeal - Company Appeal (AT) (Ins) No. 377 of 2020 has been filed by M/s. Energy Properties Pvt Ltd the Original owner of the property who ha....
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....dents cannot obstruct his possession and activities in any manner. Hence, we allow this application i.e. CA(IB) No. 1807/KB/2019. Para 11- CA(IB) No. 146/KB/2020 is filed by one M/s. Victory iron Works Ltd for modification of our order dated 09.01.2020 by that order, we directed all parties to maintain status quo as far as materials lying in above properties, as we were to decide as to who is in rightful possession of those properties. While disposing off CA(IB) No.1807/KB/2019, we held that RP is in legal and rightful possession of the properties. The applicant is affected by order dated 09.01.2020 because admittedly the corporate debtor and Energy Properties Pvt. Ltd. (Respondent in CA(IB) No.1807/KB/2019) put the applicant in possession of 10,000 sq. ft. land to carry on its activities/business. Para 12- In fact, our order dated 09.01.2020 shall not affect the applicant's possession and activities in that piece of land. It is brought to our notice that term of leave and licence agreement dated 11.08.2011 of the applicant is already expired, as it was only for 11 months. Be that as it may, the original owner of the properties i.e. Respondent in CA(IB) No.1807/KB....
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....proximately 10.19 Acres located at Ramrajatala, Howrah. The Corporate Debtor [under Corporate Insolvency Resolution Professional ('CIRP')] was appointed as the Developer to develop the said property under a Development Agreement dated 16.06.2008. The Development Agreement was preceded by a formal Memorandum of Understanding ('MOU') dated 24.01.2008 entered into between the Appellant and the Corporate Debtor. The Appellant has purchased the said property under the sale which took place under the provisions of SARFAESI Act when the said property was sold by UCO Bank. The Appellant had purchased the said property free from all encumbrances. It was also submitted that no development work had ever commenced in the said property which belongs to the Appellant and accordingly it was decided that instead of keeping the said property idle and unutilised for any useful purpose, M/s. Victory Iron Works Limited (Appellant in Company Appeal (AT) (Ins) No. 508 of 2020), as the licensee will be allowed to keep its goods, movables, equipment, build temporary sheds and conduct business from the said land covering in area much more than the area specified in Leave and Licence Agreement. The Corporat....
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....eement shall remain valid and in force till the development and sale is completed in all respects and all obligations of the Parties towards each other are fulfilled and performed. Clause 9.2 - Full Possession: The Owner- Energy Property Pvt. Ltd shall make over khas and vacant possession of the entirety of the Said Land to the Developer- Avani Property Pvt. Ltd, for the purpose of carrying out the obligations of the Developer under this Agreement within 60 days from execution hereof. The Developer shall have the right to remain in possession for doing the various acts necessary for fulfilment of this Agreement." They also submitted that the Corporate Debtor has not completed construction within the stipulated period and hence M/s. Victory Iron Works Limited were allowed subject premises. In view of this the jurisdiction Adjudicating Authority to allow possession of the premises through eviction of the person in actual physical possession is beyond the purview of Adjudicating Authority under the Code. 8. While in Company Appeal (AT) (Ins) No. 508 of 2020, the Appellant has submitted that M/s. Energy Property Pvt. Ltd is the owner of the said property. They have also ....
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....ond defendant has demonstrated by referring to another suit on similar lines filed by a sister concern of the plaintiff herein and also controlled by Shankar Lal Bagri, from which it is evident that Shankar Lal Bagri and third defendant Anirudh Daga are acquainted with each other and go back some distance in time. 29. It is difficult to accept that a sum of Rs. 21 crore would be paid by one commercial entity to another without any document being executed in support thereof. Indeed, as the second defendant has emphasised, that money was received by the first defendant from the plaintiff in the middle of the year 2014 proves nothing at all, even qua the first defendant. The story attempted to be sold by the plaintiff to the court is that after payment of a total amount of Rs. 21 crore between March, 2014 and August 1, 2014, by November 15, 2014 the first defendant agreed to refund the payment at a high rate of interest of 18 per cent per annum and also unilaterally offered to pay Rs. 8 crore by way of compensation. The purported letter of November 15, 2014, doubtless, would not appear in the records of the second defendant though the third defendant as a director of the seco....
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....Avani Group, the Respondent No.1 malafidely preferred an application being CA(IB) No. 1807/KB/2019, under Section 60 of the Code seeking directions to the Appellant herein to not obstruct the Resolution Professional from taking possession of the said property and further to direct the local administration to assist the RP in taking possession of the said property. On hearing the said application on interim reliefs, on 09.01.2020, the Adjudicating Authority directed the parties to maintain status quo in so far as the site and the material lying thereon was concerned. It is noteworthy that while passing the said status quo order, the Adjudicating Authority recorded as under: "Since the question whether property under dispute is the assets of the corporate debtor is involved, where parties have counter-stakes, we direct all parties to maintain status quo as far as the site and the material lying thereon. Matter to appear on 20.01.2020 for further consideration" In view of the above status quo order of the Adjudicating Authority, the RP while taking undue advantage of the said order, attempted to intermeddle and interfere in the day to day business affairs of the Appella....
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....nly valuable right and an "Intangible Asset" belonging to the Corporate Debtor. They have also submitted that if the benefit of such rights and interest are not protected, the Corporate Debtor will be forced to go into liquation while will be contrary to the objectives and spirit of Code. The RP has also stated that the Corporate Debtor (in CIRP) has all along been in possession of the subject property pursuant to the Development Agreement executed between the Appellant and the Corporate Debtor and have also asserted that the Development Agreement is subsisting and has not been terminated. It has also been stated by the RP that M/s. Victory Iron Works Pvt. Ltd - Appellant in CA(AT) (Ins) 508 of 2020 is wrongly claiming to be a licensee though the licence agreement executed in its favour expired way back in the year 2012 and the Appellant has no existing right to be in possession of any part of the said property. The Agreement with the Appellant stood expired in the year 2012 and no rights can be claimed by the Appellant on the basis thereof or otherwise in relation to the subject property. Moreover, the Appellant was given a licence only to the extent of approx. 10,000 sq. ft. on t....
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....d. The term of the Development Agreement was till the Development, sale and until completion of all obligations of the parties towards each other accordingly the Corporate Debtor was handed over full and exclusive possession of the property which was also recorded in the MOU dated 24.06.2010. Section 25(2)(a) of the Code the RP is duty bound to take control of the assets of the Corporate Debtor and such assets include all the tangible and intangible assets including possessory and development right. It was also stated by the counsel of the RP stated that the property was acquired by Energy Property Pvt ltd in an auction by UCO Bank. For acquiring the property, the Energy Property Pvt Ltd - Appellant has approached the Corporate Debtor seeking financial assistance and purchase of the property and CD (Under CIRP) has paid an amount of Rs. 2.7 Crore directly to UCO for on behalf of the Energy Property Pvt Ltd for acquisition of property and a sale certificate was issued in favour of Energy Properties Pvt. Ltd on 29.01.2008 in addition thereto CD (under CIRP) has also advanced a sum of Rs. 9.3 Crore for liquidation of all liabilities and obtaining vacant possession of the property. It ....
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....espect of Corporate Debtor(s) who are real estate developers are bound to fail. As in the present case, for effective resolution of the Corporate Debtor, the possessory and development rights entailed under the Development Agreement are required to be protected. 12. We have gone through the various judgments cited by the Appellants and Respondents and our observations applicable to the present appeal of those judgments are follows: a. Embassy Property Developments Pvt. Ltd Vs. State of Karnataka and Ors. In Civil Appeal No. 9170 of 2019. "Para - 46 - A lot of stress was made on the effect of Section 14 of IBC, 2016 on the deemed extension of lease. But we do not think that the moratorium provided for in Section 14 could have any impact upon the right of the Government to refuse the extension of lease. The purpose of moratorium is only to preserve the status quo and not to create a new right. Therefore, nothing turns on Section 14 of IBC, 2016. Even Section 14 (1) (d), of IBC, 2016, which prohibits, during the period of moratorium, the recovery of any property by an owner or lessor where such property is occupied by or in the possession of the corporate debtor, will n....
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....etition and we see no reason to interfere with the decision of the High Court. Therefore, the appeals are dismissed. There will be no order as to costs. b. Rajendra K Bhutta Vs. Maharashtra Housing and Area Development Authority and Anr., in Civil Appeal No. 12248 of 2018 decided on 19.02.2020. "Para XI- On 03.07.2018, the Appellant filed an approved Resolution Plan before the NCLT, Mumbai by way of I.A. No.21433 of 2018. We are informed that this was within the extended period of 55 days so granted by the NCLAT. It may only be mentioned that the Resolution Plan was approved by 86.16% of the Committee of Creditors. Ultimately, the NCLAT, by the impugned order dated 14.12.2018, (after omitting to refer to the order dated 09.05.2018), stated that 270 days are over, as a result of which the entire discussion of Section 14(1)(d) would now become academic. However, it also decided: "14. On perusal of record, we find that pursuant to the 'Joint Development Agreement' the land of the 'Maharashtra Housing and Area Development Authority' was handed over to the 'Corporate Debtor' and 'except for development work' the 'Corporate Debtor' has not accrued any right over the ....
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....f Confirmation and Modification dated 03.11.2011 and Letter dated 18.01.2014 stands terminated and you will not be allowed to enter the property and your authority/license to enter the property or remain thereupon is terminated. MHADA thereupon will not allow you to do anything on or in relation to the property and MHADA shall take possession of all the structures standing at whatever stage they are situated at Goregaon (West) and bearing CTS No ..." It now remains for us to deal with some of the provisions of the MHADA Act as well as some of the judgments cited on behalf of the respondents. MHADA Act, as its preamble states, is an Act to unify, consolidate and amend the laws relating to housing, repairing and reconstructing dangerous buildings and carrying out improvement works in slum areas. By Section 4 of the Act, the Authority, i.e. the MHADA, is to be a corporate body, and is deemed to be a local authority for the purposes of the Act. By Section 5 the Rent Act, or any corresponding laws are not to apply. By Section 66, the Competent Authority is given power to evict persons from premises under certain circumstances. Sections 76 and 79, on which great reliance was placed by Mr....
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....partment owners for the purposes of the Maharashtra Apartment Ownership Act, 1970 (the apartment owners being all such occupiers)." 13. We are also reproducing Section 14 of the 'Code' for ease of convenience: - Section 14: Moratorium; (1) Subject to provisions of sub-sections (2) and (3), on the insolvency commencement date, the Adjudicating Authority shall by order declare moratorium for prohibiting all of the following, namely:- (a) the institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority; (b) transferring, encumbering, alienating or disposing of by the corporate debtor any of its assets or any legal right or beneficial interest therein; (c) any action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of its property including any action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002; (d) the recovery of any property by an owner or lessor where such ....
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....ay be. 14. What we observed from the aforesaid judgments that in case of Embassy Properties (as stated supra) that the Adjudicating Authority did not have jurisdiction to entertain an application against the Govt. of Karnataka for a direction to execute Lease Deeds for extension of mining lease. However, the Adjudicating Authority would have jurisdiction to enquire into question of fraud to adjudicate upon disputes. While in case of 'Rajendra K Bhutta' (as stated supra), it has been made clear that Section 14(1)(d) of the 'Code' does not deal with any of the assets or legal right in such assets of Corporate Debtor but deal with recovery of 'Property'. 15. There are certain facts which are very clear from the deliberation of submissions including the pleadings by the parties that M/s. Energy Properties Pvt ltd is the owner of the property and the Corporate Debtor (in CIRP) is a Developer of the Property in terms of the Development Agreement dated 16.06.2008 and they will be governed by inter - se agreements. Here the Adjudicating Authority has not gone into the issue of ownership of the property, he has restricted its role as provided in Section 14 of the 'Code' vide Section 1....