AI Drafter 
TaxTMI 
TaxTMI 
2021 (11) TMI 121
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....8.06.2004 and an Addendum thereto dated 10.12.2004 (together the Agreement) was executed between the Applicant, the Corporate Debtor (Shree Ram Urban Infrastructure Limited) and Vijay Infrastructure Technologies Pvt. Ltd. (VIT, a sister concern of the Corporate Debtor) for inter alia the sale, transfer, assignment and conveyance of the Property bearing C.S. Nos. 289 (Part), 1548 (Part), 1549(Part) and 1550, now bearing new Cadastral Survey No. 1/289, identified as Plot No. 5A of Lower Parel Division admeasuring 20,955.40 sq. mts. along with three 12 metre wide accesses (The Decreed Property). b. It is submitted that in 2004, the Applicant paid a sum of Rs. 30,00,00,000/- (Rupees Thirty Crores only) to the Corporate Debtor towards the sale consideration for transfer of the Decreed Property. However, in 2005, the Corporate Debtor sought to resile from the Agreement and did not complete the sale transaction pursuant to which the Applicant referred the dispute to Arbitration for inter alia specific performance of the said Agreement and the transfer of the Decreed Property with all rights under the said Agreement to the Applicant. c. It is submitted that between 2005 t....
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....ismissed by the Division Bench of the Hon'ble Bombay High Court on 11.10.2018 upholding the Ld. Single Judge's Order and Judgment and the Award. h. Thereafter, on 12.10.2018, the Applicant through its Advocates addressed a letter to the Corporate Debtor through the Provisional Liquidator calling upon the Corporate Debtor to comply with the Award and also offered to pay balance sale consideration of Rs. 75,30,00,000/- on execution of the conveyance and other required documents. i. The Provisional Liquidator on behalf of the Corporate Debtor on 30.04.2019 filed a Special Leave Petition (SLP) (C) No. 012495 of 2020 before the Hon'ble Supreme Court challenging the Division Bench order of the Hon'ble Bombay High Court dated 11.10.2018. j. During the pendency of the said SLP, ad interim protective orders were passed by the Hon'ble Bombay High Court in Company Application No. 249 of 2019 filed by the Applicant, directing the survey and demarcation of the three 12-metre-wide accesses to the Decreed Property. k. Further, a Petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 (the Code) was filed by SREI Equipment Financ....
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....reed Property had been put before the Committee of Creditors (CoC), that the Decreed Property would not form part of the Corporate Insolvency Resolution Process (CIRP) and also acknowledged that the amount of Rs. 75,30,00,000/- (Rupees Seventy-Five Crore Thirty Lakh Only) was the entitlement of the Corporate Debtor in relation to the Decreed Property. The R1 further stated that the Applicant's offer to pay the balance consideration on execution of the Conveyance Documents and transfer of possession would be beneficial to the CIRP and the creditors of the Corporate Debtor and part of such balance consideration could be utilised to reimburse R2 whereupon the custody of all the assets would be available from the R2 and the Decreed Property will be handed over to the Applicant. p. On 19.07.2021, R2 filed the Official Liquidator's report No. 42 of 2021 inter alia stating that the portion of the boundary wall at the Decreed Property had collapsed and that the immediate remedial measures were required to be taken. As R1 & R2 expressed their lack of requisite funds to protect the Decreed Property, on 28.07.2021, the Hon'ble Bombay High Court passed an order in the said....
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....sement of expenses from the common pool as per the Orders dated 28 November 2019, 23 January 2020 and 28 July, 2021 and (ii) the balance sum to Respondent No. 1; c. This Hon'ble Tribunal be pleased to direct and authorize Respondent No. 1 jointly with the Applicant to apply to the Hon'ble Bombay High Court for orders and directions in the said I.A. No. 243 of 2021 or by fresh application, including to direct Respondent No. 2 to comply with the orders of the Hon'ble Bombay High Court by removal of construction materials, equipment, sheds, porta cabins etc. lying on the Decreed Property and directions to remove the obstruction on the Applicant's sight of way on one of the three 12 metre-wide accesses to the Decreed Property; d. For ad interim and interim reliefs in terms of prayers (a), (b) and (c) above; e. For such further orders and directions as the circumstances may warrant in the interest of Justice. 4. R1 has filed Reply to the Application and has stated as below:- i. Section 14 of the Code while prohibiting sale of assets and continuation of execution proceedings during the CIRP, on a purposive construction ought not to m....
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....t the Respondent No. 1 RP has opposed the prayer of the Applicant on the ground that vide order 06.11.2019 the CIR Process has been initiated in respect of the Corporate Debtor and as a consequence of that the moratorium under Section 14 has come into force. Further the Section 14(1)(b) of IBC, 2016 prohibits transfer or sale of assets during the CIRP and Section 14(1)(a) prohibits the continuation of proceedings against the Corporate Debtor. 6. Therefore the issue which emerges for our consideration is that "whether the RP can be directed to Execute the conveyance deed in respect of property in question as prayed by the Applicant or the RP can be directed to join in the execution of the conveyance deed and other required documents to sell, transfer, convey and assign the decreed property to the applicant in the pending Execution Application No. 134 of 2017 before the Hon'ble High Court of Bombay in spite of enforcement of moratorium?" 7. To decide the aforesaid issue, it is necessary to visit the contents of Section 14(1)(a) and (b) of IBC 2016. The contents of the same are reproduced below- "14. Moratorium. - (1) Subject to provisions of sub-sections (....
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....were passed to handover the physical possession of the Decreed property to the Applicants. This also reflects that the Corporate Debtor was only an occupier of the property in question and not the owner, in other words, the Decreed property is in the possession of the Corporate Debtor but held in Custodia Legis viz in the custody of the Court and presently held in trust of the Applicant i.e., in a constructive trust from the time of the execution of Agreement to sell, till the such time the delivery of the Decreed property in favour of the Applicant. Hence, the Decreed property stands excluded from the estate of the corporate Debtor. This analysis on the trust is based upon Explanation (a) to Section 18 of the Code. 11. Therefore, in our view the Property in question cannot be considered as an asset of the Corporate Debtor where the court of competent Jurisdiction has directed to transfer the title in favour of the Applicant. Here, it is worthwhile referring to the Judgement of this Tribunal in the matter of M/s. Schweitzer Systemtek India Private Limited vs Phoenix ARC Private Limited T.C.P. no. 1059/2017 dated 03.07.2017 wherein the following was observed on the applicability ....
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.... intention to preserve the assets of the Corporate Debtor. The moratorium cannot be used as a shield by the Corporate Debtor to make its illegal acts as legal. 14. Therefore, in our view the bar under Section 14(1)(a) shall not be applicable here and the moratorium enforced shall nowhere come in way of the Applicant for executing the Arbitral award. Since the property in question has already been declared that it is not the asset of the Corporate Debtor, therefore, any proceeding which does not concern the asset of the Corporate Debtor can be continued against the Corporate Debtor. 15. Since, the execution proceeding is already sub-judice before the Hon'ble High Court of Bombay and this Adjudicating Authority has already held that the moratorium shall not come in between the proceedings which does not relates to the Assets of the Corporate Debtor. 16. We also pay attention to Section 29 of the Code read with Regulation 36 of the Insolvency and Bankruptcy Board of India (Insolvency and Regulation Process of Corporate Persons) Regulations 2016, wherein the RP is bound to disclose in the proposed Information Memorandum, the details of all the material litigations and ongo....