TaxTMI 
TaxTMI 
2021 (4) TMI 588
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....11.2019 issued by the Respondent as null and void and to restrain the Respondent from taking any steps in further of the said notice dated 8.11.2019; b. To direct the Respondent to restrain from terminating the lease agreement dated 21.1.2015 till the completion of the corporate insolvency resolution process or to take any further step in this respect; c. To direct the Respondent to extend their co-operation in concluding the corporate insolvency resolution process in terms of the Insolvency and Bankruptcy Code, 2016; d. Till the disposal of this MA, to pass an order directing and injuncting the Respondent from taking possession of the said leasehold land till such time this MA is disposed of; e. For interim and ad interim orders in terms of prayers (1) to (3) above". 2. The Counsel for the Applicant submits that: a. Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor was initiated by order dated 11.03.2019 of this Tribunal on a petition filed by an Operational Creditor. The Applicant herein was confirmed as Resolution Professional (RP) by order dated 10.05.2019 of this Tribunal. b. The resolution process is under progress. A Resolution Pl....
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....ated and an officer of the R1 would come on 14.11.2019 to take possession of demised land. l. The Counsel for the Applicant submits that while the CIRP is going on, the moratorium provided under Section 14 would be effective. The R1 is prohibited under Section 14(1) of the Code from recovering or taking over possession of the property in occupation or possession of the Corporate Debtor. The notice dated 08.11.2019 is invalid and illegal. Thus, deserves to be set aside. m. On the strength of the non obstante clause provided in Section 238 of the Code, it is submitted that the Code has an overriding effect on any other law for the time being in force. The MIDC Act being inconsistent with the provisions of the Code would not have precedence. n. The value of leasehold land is substantial and thus huge value has been attributed to it by the Successful Resolution Applicant in the Resolution Plan, pending approval before this Bench. o. If R1 is permitted to terminate the lease agreement and take back the possession of the leasehold land, the entire resolution process will become unstable and chaotic thereby rendering the entire CIRP futile and unsuccessful. That would defeat t....
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.... action of termination of lease deed and repossessing the subject plot should not be taken. On 29.01.2019, R1 issued notice to DHFCL and R2 on the same subject. e. R2 challenged the notice in the Writ Petition before the Bombay High Court and the Writ Petition was dismissed. f. Now the leasehold rights of the land are with R2 in view of the assignment by DHFCL in favour of R2. As the leasehold right of the subject plot was transferred to R2 on 20.01.2018, the question of moratorium being applied to the subject plot does not arise. This position was also fortified by the order of the Hon'ble Bombay High Court dated 04.11.2019 passed in the referred Writ Petition. g. This Application is not maintainable. The decision to terminate the lease and/or repossessing the plot is a decision which falls outside the purview of the Code and is in the public law domain and the decision can only be called in question in a court vested with power of judicial review over administrative action. This Tribunal not being a Civil Court and being one under special statue to discharge specific functions does not have the power of judicial review over administrative action. To buttress this point, R1 ....
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....d into question only in a superior court which is vested with the power of judicial review over administrative action. The NCLT, being a creature of a special statute to discharge certain specific functions, cannot be elevated to the status of a superior court having the power of judicial review over administrative action. ... 29. The NCLT is not even a Civil Court, which has jurisdiction by virtue of Section 9 of the Code of Civil Procedure to try all suits of a civil nature excepting suits, of which their cognizance is either expressly or impliedly barred. Therefore NCLT can exercise only such powers within the contours of jurisdiction as prescribed by the statute, the law in respect of which, it is called upon to administer. Hence, let us now see the jurisdiction and powers conferred upon NCLT. ... 37. ... The only provision which can probably throw light on this question would be Sub-section (5) of Section 60, as it speaks about the jurisdiction of the NCLT. Clause (c) of Sub-section (5) of Section 60 is very broad in its sweep, in that it speaks about any question of law or fact, arising out of or in relation to insolvency resolution. But a decision taken by the go....
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.... of building and executing works and until grant of lease, the Corporate Debtor would be deemed to be a mere licensee. j. If the Corporate Debtor failed to build and complete construction within specified time in terms of the Lease Deed, R1 shall have power to resume the possession of the plot and the agreement shall cease and terminate. The Development Control Regulation prescribed by R1 will be applicable. The Corporate Debtor failed to comply with the covenants and stipulations regarding construction within the prescribed time limit under the allotment order. Thus, a Show Cause Notice was issued to the Corporate Debtor (lessee) on 01/11/2018, which is prior to the commencement of CIRP. To which no reply was filed by the Corporate Debtor. k. The Lease Agreement stood terminated and the lease stood determined as per clause 4(b) thereof. It is submitted that the termination is valid. In support of such proposition, R1 relied upon the judgement dated 30th November 2018 passed by the Hon'ble NCLAT in the case of Monnet Ispat & Energy Ltd. v. Government of India, Ministry of Coal [Company Appeal (AT) (Insolvency) No. 26 of 2018] wherein it was held that: "3. After initiation ....
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....terference is called for against the impugned order dated 16th January, 2018. The appeal is dismissed. Interim order passed by this Appellate Tribunal on 8th February, 2018 is vacated. It will be open to the Respondent- 'Government of India' to accept any bid and to create third party interest with regard to mines in question which were earlier allotted vide 'Coal Mines Development and Production Agreement' dated 2nd March, 2015 to the 'Corporate Debtor'. ..." l. The plot was conditionally leased to the Corporate Debtor. Upon breach of the conditions, the Corporate Debtor stood divested of the plot. The corporate debtor did not have any subsisting interest in the plot which could have been implicated in the Resolution Plan. To support this proposition, R1 relied on the judgement of Hon'ble Supreme Court in the case of Municipal Corporation of Greater Mumbai v. Abhilash Lal & Ors. reported in [2020] 157 SCL 477 (SC). The relevant portion of the judgement is reproduced below: "33. The show cause notice in this case preceded admission of the insolvency resolution process. In view of the clear conditions stipulated in the contract, MCGM reserved all its rights and its properti....
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....doubt, the resolution plans talk of seeking MCGM's approval; they also acknowledge the liabilities of the corporate debtor; equally, however, there are proposals which envision the creation of charge or securities in respect of MCGM's properties. Nevertheless, the authorities under the Code could not have precluded the control that MCGM undoubtedly has, under law, to deal with its properties and the land in question which undeniably are public properties. The resolution plan therefore, would be a serious impediment to MCGM's independent plans to ensure that public health amenities are developed in the manner it chooses, and for which fresh approval under the MMC Act may be forthcoming for a separate scheme formulated by that corporation (MCGM)." m. The tripartite agreement dated 26/05/2015 provides that if the Corporate Debtor committed breach of any of the covenants therein, MIDC would give DHFCL, notice of 6 months, within which time the breach could be remedied by the Corporate Debtor or DHFCL and failure to remedy the breach would entitle MIDC to re-enter upon and resume possession of the plot. n. DHFCL, on 01.03.2017 took physical possession of the plot from ....
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.... applicable to the facts of the present case. In this judgement, the Supreme Court distinguished its judgement in the case of Municipal Corporation of Greater Mumbai v. Abhilash Lal & Ors. (supra) on the ground that a show-cause notice preceded the admission of the insolvency resolution process which made it clear that the assets of MCGM could not be subsumed within a resolution plan without MCGM's approval. In that case, on a reading of para 1(vii) of the judgement, it is clear that the termination was made and possession was sought to be taken after the declaration of the moratorium. The relevant portions of the judgement in the case of Rajendra K. Bhutta (supra) are as follows: "17. My learned brother S. Ravindra Bhat, J.'s judgment in Municipal Corporation of Greater Mumbai (supra), which has been strongly relied upon by Mr. Dave and Mr. Patil, dealt with an entirely different fact situation, as is clear from paragraphs 32 and 33 of the said judgment, which are set out herein below: 32. A cumulative reading of the stipulations reveals that the contract/agreement contemplates that the lease deed was to be executed after the completion of the project. The contract revea....
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....pied by or be in possession of the corporate debtor, which is not the case in the facts before this Tribunal. y. Therefore, it is submitted that this Application is not maintainable. The Respondent has correctly taken steps to resume the possession of the plot. z. Even as per Explanation to section 14(1)(d) of the Code (introduced w.e.f. 28th December 2019 i.e., after the termination and resumption of possession) makes the intention of the legislature very clear in this regard. It clarifies that during moratorium period, a license, permit, registration, quota, concession, clearance or a similar grant or right granted inter alia by a statutory authority such as MIDC shall not be suspended or terminated on the grounds of insolvency, "subject to the condition that there is no default in payment of current dues arising for the use or continuation of the license or a similar grant or right during moratorium period". In the present case, Plot B-11 was allotted at a concessional rate and the condition that the Corporate Debtor was under an obligation to comply with the construction of factory within the stipulated time (time being of essence). Since the Corporate Debtor has failed t....
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....e, the idea is that, to alleviate corporate sickness, a statutory status quo is pronounced under Section 14 the moment a petition is admitted under Section 7 of the Code, so that the insolvency resolution process may proceed unhindered by any of the obstacles that would otherwise be caused and that are dealt with by Section 14." f. The termination/possession notice issued by R1 on 08.11.2019 directly addressed to the Corporate Debtor without even marking a copy to DHFCL or R2 is a clear indication that the possession of the plot is with the Corporate Debtor/Applicant. g. Since the termination of lease and seeking possession by R1 is dated 08.11.2019, R1's claim of taking over possession of the property from R2 is untenable. On the execution of assignment by DHFCL in favour of R2, R2 took possession of the property, thereafter, upon initiation of CIRP, R2 handed over the possession of the property to the Applicant. Even if the possession/symbolic possession is with the secured creditor under the SARFAESI Act, the Debtor is not barred from repaying the debt on any date thereafter and securing its interest in the mortgaged property and re-possessing the same. It is a matter of re....
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....m to possession is disputed and denied. m. The value maximization of the assets of the Corporate Debtor and time bound revival of the Corporate Debtor are the core objects of the Code. If MIDC's purported possession of the said property is allowed to pass the muster of law, it would not only be a gross violation of the due process of law, but also contrary to and in derogation of the object of the Code. The Corporate Debtor's CIRP will be undermined and irretrievably prejudiced. MIDC's claims constitute an interference with the RP's possession, who is an officer of this Hon'ble Tribunal. Thus, the MIDC's action of purported re-possession of the said property should be declared as illegal and the said property should rightfully form a part of the pool of assets available to the Resolution Applicant for successful resolution of the Corporate Debtor. Analysis 8. Ongoing through the pleadings and on hearing the Counsel for the Applicant, Respondents and the SRA the followings are the observations of this Bench: a. The CIRP was initiated on 11.03.2019 and the impugned notice is dated 08.11.2019. The CIRP on the extension being granted came to an end on 06.12.2019. The R1's Show C....
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..... v...... vi.... vii. On 12.01.2018 - after the imposition of the moratorium period Under Section 14 of the Code - MHADA issued a termination notice to the Corporate Debtor stating that upon expiry of 30 days from the date of receipt of the notice, the Joint Development Agreement as modified would stand terminated. It was further stated that the Corporate Debtor would have to hand over possession to MHADA, which would then enter upon the plot and take possession of the land including all structures thereon. viii. One hundred and eighty days from the start of the Corporate Insolvency Resolution Process (hereinafter referred to as "the CIRP") expired on19.01.2018. The NCLT, by order dated 24.01.2018, extended the CIRP period by ninety days, as is permissible under the Code. ix. On 01.02.2018, the Appellant filed M.A. No. 96 of 2018, seeking a direction from the NCLT to restrain MHADA from taking over possession of the land till completion of the CIRP, contending that such a recovery of possession was in derogation of the moratorium imposed Under Section 14 of the Code. The NCLT, by order dated 02.04.2018, dismissed the aforesaid application, stating that Section 14(1)(....
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....e footing. Under Section 14(1)(d) what is referred to is the "recovery of any property". The 'property' in this case consists of land, ad-measuring47 acres, together with structures thereon that had to be demolished. 'Recovery' would necessarily go with what was parted by the corporate debtor, and for this one has to go to the next expression contained in the said Subsection." "11. Regard being had to the aforesaid authorities, it is clear that when recovery of property is to be made by an owner Under Section 14(1)(d), such recovery would be of property that is "occupied by" a corporate debtor." "15. The conspectus of the aforesaid judgments would show that the expression "occupied by" would mean or be synonymous with being in actual physical possession of or being actually used by, in contradistinction to the expression "possession", which would connote possession being either constructive or actual and which, in turn, would include legally being in possession, though factually not being in physical possession. Since it is clear that the Joint Development Agreement read with the Deed of Modification has granted a license to the developer (Corporate Debtor) to....
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....ch has been strongly relied upon by Mr. Dave and Mr. Patil, dealt with an entirely different fact situation, as is clear from paragraphs 32 and 33 of the said judgment, which are set out herein below: 32. A cumulative reading of the stipulations reveals that the contract/agreement contemplates that the lease deed was to be executed after the completion of the project. The contract reveals that (a) the project period was for 60 months starting from the date excluding the monsoon period; (b)by Clauses 5 and 17, Seven Hills could mortgage the property for securing advances from financial institutions for the construction of the project and thereafter towards its working. Such mortgage/charge or interest was subject to approval by MCGM. In the event the contract was to be terminated, it was agreed that MCGM would not in any manner be liable towards the mortgaged amount and all its rights and ownership would continue to vest in it free from encumbrances (Clause 17). 33. The show cause notice in this case preceded admission of the insolvency resolution process. In view of the clear conditions stipulated in the contract, MCGM reserved all its rights and its properties could not have....