TaxTMI 
TaxTMI 
2022 (9) TMI 1343
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Lease Property or continuation of the lease arrangement in relation to the Lease Property shall be subject to strict compliance with the Agreement and the express approval of the Applicant herein; and iii. Direct Respondent No. 1 and Respondent No. 2 to refrain from taking any action in relation to the Lease Property; iv. Pass any other orders/directions that this Hon'ble Tribunal may deem fit in the facts and circumstances of the matter. The submissions of the Applicant are herein below: 2. That, on August 12, 2010, a lease cum sale agreement ("Agreement") was entered into between the Applicant herein and the Corporate Debtor wherein the Corporate Debtor was allotted Survey No. 225 (P), 226(P), 229(P), 237(P), 238(P) and 239(P) of Allyabad Blcok-II, Industrial Area of Allyabad village, Allyabad Hobli, Bijapur Taluk, Bijapur District admeasuring 100 acres ("Lease Property") by the Applicant on the lease for the setting up of an industrial project. The lease period stipulated under the Agreement was 10 years expiring on August 11, 2020. 3. That under the terms of the Agreement, the Corporate Debtor herein was required to implement the project and utilize the allotted land wi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ble Tribunal, nor was it informed of any such proceedings till the time of admission of Corporate Debtor into CIRP as per the provisions of the IB Code. 9. That, on May 09, 2020, the COC in the 2nd meeting approved the appointment of Respondent No. 1 herein as the resolution professional. Thereafter, an order was passed by this Hon'ble Tribunal in an application filed by the COC under Section 22 (3) of the Code approving the same. 10. That, on September 16, 2021 thereafter, the Applicant herein issued a notice under Section 34B of the KIAD Act read with clause 14 of the Agreement to the Respondent No. 1 directing the Corporate Debtor to remedy the breaches caused by it in relation to the Agreement within 120 days from the receipt of said notice. 11. In the said notice, it was stated by the Applicant herein that the Corporate Debtor had failed to implement the project and utilize the land fully for the purpose for which it was leased under the terms of agreement after a lapse of more than 11 year from the date of handling over the possession of land. 12. That, on October 08, 2021, in response to the Applicant's notice dated September 16, 2021, the Respondent No. 1 sent an email ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the construction as required. The lessor had called for a joint survey on 18th October 2016 for approval of revised building plans and even at that time the lessor had not raised any contention regarding underutilisation of the area of the land as alleged in the notice. Even otherwise the notice dated 16th September 2021 is an attempt to somehow wiggle out from its obligation to execute the sale deed. The same is contrary to the intent of the "The Karnataka Industrial Areas Development Act, 1966" and in the intent of the lease cum sale agreement. Para. 13. It is also important to note that vide letter dated 16 September 2021, Applicant gave 120 days to the Corporate Debtor to rectify and remedy the alleged breach which itself is bad in law. Nevertheless, it is evident that the Respondent is still beating around the bush and avoiding the quintessential question and the main issue revolving around the sale price which they ought to fix and then convey the title of the subject land upon payment by the Corporate Debtor. It is this issue which is a bottleneck in the present corporate insolvency and resolution process while the Respondent is now seeking an investment certificate for ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... establish a State-ofthe- Art Sewage treatment plant to produce tertiary treated water that will be reused for greenbelt/landscaping as required under clause 1.7 of the Environmental Management Plan which itself consumes an area of appro. 20 acres on the subject land even before commission the plant for operation as per clause 10 of the said approval letter inter-alia amongst other requirements to leave open space in view of air pollution and water pollution control requirements. The said mandatory requirement on the part of the Corporate Debtor to leave space for water harvesting and water effluent treatment has been conveniently ignored by the Applicant while considering the total land utilised by the Corporate Debtor. The Corporate Debtor is also required to: Para. 16.1 In terms of clause 1.7 "Environment management during Operation" requires Corporate Debtor to "develop green belt" i.e. maintain open space, garden area etc. with specific species to reduce SPM levels. The same has been explained in detail under para 1.8 "Greenbelt Development" of the said Environmental Management Plan. Para. 16.2 In terms of clause 1.5 of the Environment Management Plan submitted to KSPCB,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ore this Hon'ble Adjudicating Authority which is merely with an intent to waste judicial time. I reserve the right to rely on such other documents and correspondences in case necessary during the course of the proceedings. Para. 18 The respondent No. 1 as far as paragraph no. 19 is concerned, the contents are denied in toto and are clearly contrary to the facts as is evident from record. Without prejudice, it is submitted that as per the available records of the Corporate Debtor, a detailed report shows utilisation of land to the extent of 86.68 acres out of the 100 acres of land and also bears the pictures of site. Even if one were to consider the report forming part of the Application itself, it is evident that in spite of their architect computing the area such as Garden 1, Garden 2, Garden 3, Tree Plantation park and buffer zone which works out to 19.17 acres, the Applicant has deliberately not considered the said area and thereafter alleges that the Corporate Debtor has underutilised the land and the utilisation is only to the extent of 30.91% which ought to have been a minimum of 50% as per the Applicant. Applicant has clearly ignored the applicable laws and regulations un....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Respondent No. 1 submits that, as far as paragraph No. 20 B is concerned, the contents only goes to reinforce the contention of the Respondent that the sole intent of the Applicant is to derail the resolution plan process and thereby jeopardise not only the interest of stakeholders but especially creates a threat on the employment of over 300 workmen who would lose their livelihood if the resolution plan approval process fails. It is also relevant to note that the subject land is at a farfetched rural area and the workmen have no other alternative options for securing their jobs. Hence while there is claim or dispute that the Applicant is the owner of the subject land, it is clear that the Applicant wants to derail the process as it is neither extending the lease period nor has come forward with an estimated sale amount so as to enable the prospective Resolution Applicant to consider the same and ensure that the Corporate Debtor is revived. The Applicant is also in violation of the terms of the allotment itself which gave the right to the lessee i.e. the Corporate Debtor in the present case to buy out the subject land from the Applicant upon completion of two years of commencement....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... asset of the Corporate Debtor in the Resolution Plan. The Applicant/KIADB is seeking declaration from this tribunal that the lease property is not an asset of the Corporate Debtor and also to restrain the Resolution Professional and the Corporate Debtor from taking any action in relation to the lease property. 20. In order to decide the above controversy, it is important to carefully examine the following clauses in the terms and conditions of the registered Lease Deed. "Clause 1(c) - The conveyance of the Schedule Property is on lease for a period of TEN years. Clause 10(2) - The lessee shall utilize not less than 50% of the schedule property and in accordance with the proposals furnished by the lessee to the lessor in the application for allotment of land and project report submitted to SHLCC/ SLSWCC/ DLSWCC/ Allotment Committee. Clause 11(3) - In case the lessee/allottee goes into liquidation or winding up proceedings without implementing the project fully, the lease-cum-sale agreement shall stand terminated. Clause 12(i) - The original applicant/ partners/ promoter directors/ shareholders shall continue to hold a minimum of 51% interest/shareholdings in the lessee'....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t is very clear from the careful reading of the above clauses in the terms and conditions that the above registered Lease Deed is not a mere Lease Deed and is a registered Lease-Cum-Sale-Agreement under which the Corporate Debtor has already acquired possessory legal rights under the registered document. It is also very clear from the above terms that the Lessee has a right to ask for extension of the lease or for purchasing the above property with absolute rights at the price determined by the Corporation. In fact, the Corporate Debtor has already requested the Applicant/KIADB to fix the price of the land that was allotted to them by means of letter dated 18.10.2016 so as to obtain Sale Deed by them for which the Applicant/KIADB vide their letter dated 28.11.2016 informed the Corporate Debtor that the board of the Applicant/KIADB has not yet fixed the final price to the said industrial area and hence the Sale Deed cannot be considered at this stage. Of course, the Applicant/KIADB also issued notice under Section 34 B of KIAD Act of 1966 to the Resolution Professional to remedy the alleged breaches said to have been committed by the Corporate Debtor in their notice. 22. Therefore,....