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2022 (10) TMI 144
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....astructure corporation Limited ("APIICL") for allotment of land for installing a power plant in the District of Nellore, Andhra Pradesh. The APIICL upon considering the request Corporate Debtor allotted 938.90 acres of land situated at Thamminapatnam and Momidi respectively to the Corporate between 2009 to 2011. That APIICL and the Corporate Debtor had executed agreement for sale of land in respect of 140.19 acres situated Village Thamminapatnam on 22.07.2010 and on 16.07.2011 in respect of land admeasuring 207.58 acres situated at Thamminapatnam and Momidi. That apart from the two parcel of land APIICL did not register any parcel of land that had been allotted to the Corporate Debtor. b. That the Applicants herein who are the owners and in continuance possession of the land admeasuring 40.23 acres, by carryout agriculture activities of on the said land. As soon as the Applicants came to know about the fact that the APIICL mistakenly had allotted their above to the Corporate Debtor, for setting up of power project, the Applicant filed a Writ Petition WP(C) Nos. 32019, 32245 of 2010 before the Hon'ble High Court of Andhra Pradesh, seeking the relief of writ of mandamus ....
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....orate Debtor has been requested to return the aforementioned land to which the Corporate Debtor was ready and willing to give back the land that have been taken over, however has requested the APIICL to allot/substitute land in return of the land belonging to the Applicants or to repay the amounts that have been paid by the Corporate Debtor. That APIICL without following the directions issued from time to time by its officers as well as the competent authority had failed to release the aforementioned land in favour of the Applicants in timely manner. h. While it was so, the Corporate Debtor had undergone CIRP proceedings by the order of this Tribunal in CP No. 184/7/HDB/2019 dated 07.11.2019 and moratorium has been implemented. The Resolution Professional despite being made aware of the fact that the aforementioned lands have been mistakenly given to the Corporate Debtor. That the legal department of APIICL has also issued a letter dated 08.06.2020, directing the Resolution Professional to release the land belonging to the Applicants as the same are third party land and do not form part of the moratorium. However, the Corporate Debtor did not take any step to release the a....
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.... decided the said Writ Petitions against APIICL and had directed to resume the lands and redeliver the same to the Applicants. Therefore, because of this and other reasons which were beyond the reasonable control of the Corporate Debtor there was delay in the progress of the project. The erstwhile vice president of the Corporate Debtor also stated that the Corporate Debtor would honour the directions of the Hon'ble Andhra Pradesh High Court but requested APIICL to explore possibility of allotting same extent of land in the neighbouring area to the Corporate Debtor given its obligations to fulfill the project requirements. e. That APIICL is a proper and necessary party as APIICL is the one that had allotted the Disputed Lands to the Corporate Debtor. This amounts to non-joinder of parties and the Application is liable to be dismissed on this ground. APIICL which has failed to release the Disputed Lands to the Applicants and has not abided by the directions of the Hon'ble Andhra Pradesh High Court. Therefore, it would be necessary for APIICL to be impleaded in the present Application in order to provided reasoning for the same. i. It is APIICL which has been....
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....set of the Corporate Debtor and therefore the Resolution Professional is not empowered under the Code to surrender the Disputed Lands to the Applicants despite the Order. Section 14 of the Code categorically prohibits the Resolution Professional from transferring or disposing off any of the assets of the Corporate Debtor during the CIRP period. iv. It is stated that Hon'ble Supreme Court in the matter of M/s. Embassy Property Developments Pvt. Ltd. vs. State of Karnataka & Ors. [ (2020) 13 SCC 308] has held that 'The right under Section 14(1)(d) of the Code is the right not to be dispossessed of a property which is in the possession of the Corporate Debtor during the moratorium period.' and the same was also informed to APIICL by the Resolution Professional vide Moratorium Letter dated 10.07.2020. Therefore, the claim of the Applicants/APIICL that as the Transferred Lands are lands belonging to third parties the same would not fall under moratorium is misconceived and against settled principles of law. h. The RP is duty bound to protect the value of the Corporate Debtor: i. The RP has duty under the Code to protect and preserve the va....
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....tion and spent on the Disputed Lands along with interest at 24% per annum from the date of the agreements of sale for the lands including the Disputed Lands. 4. Counsel for the Applicants has also filed written submissions, reiterating the oral submissions made inter-alia stating as under: a) That the Corporate Debtor vide his letter dated 25.05.2020 replied to the letter of APIICL dated 08.06.2020 stating that the management affairs and to take custody and control of the assets of the Corporate Debtor vest with the Resolution Professional ("RP"). b) That further, the Corporate Debtor requested APIICL to grant some time to seek approval of the CoC and NCLT, Hyderabad for surrendering the subject lands. c) That the plea taken by the Corporate Debtor is twofold: a. The APIICL should be made a party to the present application, without which the issue raised in the application cannot be properly addressed to; i. That the Corporate Debtor did not challenge the order passed by the Hon'ble High Court of Andhra Pradesh in the aforementioned writ petitions and rather accepted the order and undertook to comply the same by releasing the subj....
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....e applicants are the owners of the subject lands shown in the balance sheet of the Corporate Debtor and therefore the subject lands of the Applicants are liable to the released without any delay. 5. The Ld. Counsel for Resolution Professional also filed its Written Submissions, reiterating the contentions put forth in the counter. 6. In the light of the contest as above the Points that emerges for consideration by this Adjudicating Authority is: 1. Whether the Corporate Debtor herein is entitled to stall the recovery of the subject land in occupation by the corporate debtor, by the Applicants/Landowners in terms of Section 14(1)(d) of the I & B Code? 2. Whether APIICL is a necessary party to the present application? If so, whether present Application is bad in law for non-joinder of APIICL? 7. We have heard Shri Vadlamani Sheshagiri Rao, Ld. Counsel for the Applicants and Shri Suman Batra, Ld. Counsel for the Respondent, perused the record, written submissions and the case law. 8. Before proceed to decide on the Point above, we refer herein the following facts which are not in controversy:- a. That APIIC, the Writ Petitions (C) Nos. 32019, 322....
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....reated 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 (54 of 2002); (d) the recovery of any property by an owner or lessor where such property is occupied by or in the possession of the corporate debtor. [Explanation.-For the purposes of this sub-section, it is hereby clarified that notwithstanding anything contained in any other law for the time being in force, a licence, permit, registration, quota, concession, clearance or a similar grant or right given by the Central Government, State Government, local authority, sectoral regulator or any other authority constituted under any other law for the time being in force, 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, permit, registration, quota, concession, clearances or a similar grant or right during the moratorium period;] (2) The supply of essential goods or services to the corporate debtor as may be specified shall not be t....
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....as been triggered by State Bank of India and an order of initiation of 'CIRP' and declaring Moratorium against the respondent/Corporate Debtor has been passed by this Adjudicating Authority, vide order in CP No. 184/7/HDB/2019 dated 07.11.2019. The Resolution professional appointed by this Adjudicating Authority took control of the properties of the Corporate Debtor, including the subject property in the backdrop of the order of Hon'ble High Court, supra, and the letter of the District Collector dated 05.05.2017 requesting the Tehsildar, Chillakuru, to implement the order of the Hon'ble High Court of Andhra Pradesh, by handing over the land that had been mistakenly taken over by APIIC to the Applicants. g. According to the Ld. Counsel for the Applicants, the stipulation under Sub-Section 1(d) of 14 of the Bankruptcy Code, not to be dispossessed of a property which is in the possession of the Corporate Debtor during the moratorium period applies provided such possession of the property is lawful. However, in the present case the Corporate Debtor had been holding the properties belonging to the Applicants who are third parties and had never given the said pro....
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....ty which is in the possession of the Corporate Debtor during the moratorium period.' l. Ld. Counsel further submitted that as the subject land has been shown in the balance sheet of the Corporate Debtor the Resolution Professional was well within his jurisdiction to hold the properties for the benefit of the Lenders and other creditors of the corporate debtor. Ld. Counsel submits that the Resolution Professional while denying the plea of the applicants that the subject land has been included in the Expression of Interest (EoI), has pleaded that he had informed the potential bidders about the status of the subject land and that the Resolution Professional intends to abide by the order of the Hon'ble Andhra Pradesh High Court, passed in the Writ Petitions, supra. m. Ld. Counsel further submitted that, the Resolution Professional is willing to hand over the possession of the Transferred Lands to the Applicants, provided the Adjudicating Authority in the interest of justice directs APIICL to either allot the Corporate Debtor a similar land of equivalent value so that the Corporate Debtor may retain its value or direct APIICL to repay the Corporate Debtor the e....
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.... corporate insolvency resolution of the respondent, not only frustrates the order of the Hon'ble High Court, supra, but also enables the respondent/corporate debtor to enrich unjustly, as admittedly the subject lands were delivered to the respondent/corporate debtor mistakenly/wrongly by APIIC, besides results in deprivation of the constitutional right of the Applicants to hold their property. s. In P Mohanraj vs. Shah Brothers Ispat Pvt. Ltd. Civil Appeal No. 10355 OF 2018, Justice Rohinton Fali Nariman, speaking for the Court, expounded upon the object of Section 14 in the following terms; "The object of a moratorium provision such as Section 14 is to see that there is no depletion of a corporate debtor's assets during the insolvency resolution process so that it can be kept running as a going concern during this time, thus maximising value for all stakeholders. The idea is that it facilitates the continued operation of the business of the corporate debtor to allow it breathing space to organise its affairs so that a new management may ultimately take over and bring the corporate debtor out of financial sickness, thus benefiting all stakeholders, which w....