TaxTMI 
TaxTMI 
2023 (2) TMI 487
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....ate as under: 3.1 BIOTOR was previously known as Jayant Oils and Derivatives Limited. It was ordered to be liquidated vide order dated 31.12.2018 by the National Company Law Tribunal. The liquidation process accordingly commenced. The liquidator on 09.01.2019 made a public announcement accordingly. The erstwhile company had been allotted land being plot nos.02, Vilayat Industrial Estate, Bharuch, admeasuring 11,89,603 square meters. A license agreement was entered into on 20.01.2007 for development of an SEZ / Industrial Park. A lease agreement was entered into between the parties for a period of 99 years on 12.11.2008. By the impugned orders such lease deed is terminated and so is the license agreement and the petitioner has been ordered to evict the land for non-compliance of the conditions of allotment letter resulting in terminating of license agreement and the lease deed. 3.2 It is the case of the petitioner that the respondent - GIDC was aware of the liquidation proceedings inasmuch as, by communication dated 10.02.2022, the liquidator was informed of the impugned notices. It is also the case of the petitioner that in October 2021, E-mails were exchanged between the res....
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....of Rs.1885/- in the month of March each year. It was further provided in the lease deed that the company defaulted for payment of annual rent of two years, the respondent GIDC could seek return of property under the provisions of the GPP Act. 4.5 The lease deed also permitted the company to create any charge, mortgage, lien or encumbrance against the subject property. He would rely on the relevant conditions of the lease deed and submit that such conditions would indicate that there was a transfer of interest in favour of the company in the subject property. Under the provisions of Section 5 of the Transfer of Properties Act, the company had an interest and therefore, it had a right to transfer absolutely such property and there was nothing on record to show that the petitioner had reserved such termination. 4.6 In Mr.Thakore's submission, the action of the respondent is in violation of the provisions of the Insolvency and Bankruptcy Code, 2016 ('IBC' for short). Since the company was ordered to be liquidated, no suit or a legal proceedings could be initiated under a company. 4.7 Further, section 33(5) of the IBC also bars initiation of proceedings against the corporate....
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....ndicate that in the event the company does not pay the rent, the agreement would be terminated in accordance with the provisions of the GPP Act. 5.3 Before the NCLT as a result of the GIDC's delay in lodging the claims before the Liquidator, the GIDC has made an application for a prayer that approval be granted from the NCLT for taking action against the petitioner under the GPP Act. This was done as when a public announcement was made of liquidation, and an E-mail was addressed to the Liquidator, notices and orders impugned were served through Email to the company. When the E-auction notice was issued by the Liquidator for sale of this property, the NCLT was moved. 5.4 Mr.Joshi would therefore submit that the allotment letter, the license agreement and the lease deed have to be read as a coterminous contract in continuation and in conjunction. The obligations of the lease agreement and the license agreement run concurrently. 5.5 Mr.Joshi would further submit that it is an admitted position that the petitioner has not carried out any development work over the allotted land. The contention of the petitioner therefore that there is violation of principles of natural justice ....
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.... 6.1 He would submit that the Bank which is part of the consortium has sanctioned financial assistance to the company. Such financial assistance was granted against a charge over the assets of the company including a charge over the subject property. In order to create the charge the respondent GIDC had issued a no objection certificate to the bank. He would therefore submit that initiation of the recovery proceedings under the GPP Act without issuing notices to the bank who were having a charge over the subject property is bad. 6.2 Mr.Pahwa would further submit that the lease deed amounts to transfer of title and ownership of the subject property. 6.3 Mr.Pahwa would submit that the interim notice violates the provisions of IBC. As the provisions under Section 33(5) are analogs to the provisions contained in Section 14 of the IBC, any proceedings during the liquidation which has the effect of causing obstruction in conducting such proceedings is contrary to the decision of the Supreme Court in case of Arun Kumar Jagatramka v. Jindal Steel and Power Limited reported in 2021 SCC OnLine SC 220. He would also rely on a decision in case of Sundresh Bhatt, Liquidator of ABG Ship....
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....LT/204 dated 09/01/2007 & a corrigendum order No.GIDC/DM/(CG)ANK/ALT/PLT/65 dated 26-4-2007 & corrigendum letter No.GIDC/DM/(CG)ANK/ALT/DHJ/1927 dated 26/3/2008. The terms and conditions of the above mentioned letters will form part of this Lease Deed." 7.2 What is therefore evident is that the allotment letter, the license agreement and the lease agreement are contracts which have to be read coterminous with each other, in continuation and conjunction. Since the lease agreement is not executed after a certificate of completion of the conditions as stipulated in the license agreement, the contention of learned Senior Advocate Mr.Thakore that the conditions of the lease deed will supersede the license agreement and once the lease agreement is executed, the license agreement stood extinguished is misconceived. 7.3 Reading of the impugned notice under the provisions of the GPP Act when read in context of the undisputed facts, indicate that as per the terms of the contract, no development has been carried out as stipulated thereunder and therefore, GIDC was right in invoking the condition of the license agreement and the deed of lease. On this count therefore, no fault can be fou....
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....er read as under: (I) Embassy Property Development Private Limited vs. State of Karnataka and Others reported in (2020) 13 SCC 308 (II) Gujarat Urja Bikas Nigam Limited vs. Amit Gupta and Others reported in (2021) 7 SCC 209 (III) Tata Consultancy Services Limited vs. Vishal Ghisulal Jani reported in (2022) 2 SCC 583 7.8 The counsel for the respondent too would rely on the decision in case of Gujarat Urja (supra) and Tata Consultancy Services Limited (supra) in support of his submission that the NCLT has rightly been approached. He would rely on paras 21 to 24 and 84 to 91 of Gujarat Urja (supra) which read as under: "D Termination of the PPA 21 The appellant issued two notices of default to the Corporate Debtor on 1 May 2019, which were received by the first respondent on 8 May 2019: 21.1 The basis of the First Notice is that under Article 9.2.1(e) of the PPA, the Corporate Debtor undergoing CIRP under the IBC amounts to an ‗event of default'. The appellant called upon the Corporate Debtor to remedy this default within 30 days from the date of receipt of the said notice, failing which the appellant stated that it sh....
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....nd respondents filed applications under Section 60(5) of the IBC before the NCLT in regard to the Notices issued by the appellant to the Corporate Debtor, and sought an injunction restraining the appellant from terminating the PPA. By an interim order dated 31 May 2019, NCLT restrained the appellant from terminating the PPA till the next date of hearing. ... 84. The respondents have relied upon the decision of this Court in Committee of Creditors of Essar Steel India Limited vs Satish Kumar Gupta57, where this Court held that section 60(5)(c) of the IBC ―is in the nature of residuary jurisdiction vested in the NCLT so that NCLT may decide all questions of law or fact arising out of or in relation to insolvency or liquidation under the Code. 85. At this stage we may visit some of the precedents emanating from this court where a statutory conferment of residuary powers has been analyzed. A two-judge Bench of this Court discussed the contours of the residuary power in Remdeo Chauhan vs Bani Kant Das59, while interpreting sub- Section (j) of Section 12 of the National Human Rights Commission Act, 1993 which confers (2020) 8 SCC 531; hereinafter referred....
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....ven if there was any short levy, the proper Rule applicable to its case was Rule 10 and not Rule 10- A. Rule 10 and Rule 10-A of the Rules during the relevant period ran as follows : 10. Recovery of duties or charges shortlevied, or erroneously refunded: When duties or charges have been short-levied through inadvertence, error, collusion or misconstruction on the part of an officer, or through misstatement as to the quantity, description or value of such goods on the part of the owner, or when any such duty or charge, after having been levied/has been owing to any such cause, erroneously refunded, the person chargeable with the duty or charge, so short-levied, or to whom such refund has been erroneously made, shall pay the deficiency or pay the amount paid to him in excess, as the case may be, on written demand by the proper officer being made within three months from the date, on which the duty or charge was paid or adjusted in the owner's account-current, if any, or from the date of making the refund. 10-A. Residuary powers for recovery of sums due to Government: Where these Rules do not make any specific provision for the collection of any duty, or....
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....n or irregularity committed by a Court of competent jurisdiction in course of trial through accident or inadvertence, or even an illegality consisting in the infraction of any provisions of law. The sole object of the Section is to secure justice by preventing the invalidation of a trial already held, on the ground of technical breaches of any provisions in the Code causing no prejudice to the accused. But by no stretch of imagination the aforesaid provisions can be attracted to a situation where a Court having no jurisdiction under the Code does something or passes an order in contravention of the mandatory provisions of the Code. In view of our interpretation already made, that after a criminal proceeding is committed to a Court of Sessions it is only the Court of Sessions which has the jurisdiction to tender pardon to an accused and the Chief Judicial Magistrate does (1997) 11 SCC 720 ―CrPC PART I not possess any such jurisdiction, it would be impossible to hold that such tender of pardon by the Chief Judicial Magistrate can be accepted and the evidence of the approver thereafter can be considered by attracting the provisions of Section 465 of the Code. The aforesaid provi....
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.... "4. We now proceed to interpret the provisions of s.4 itself, the relevant part of which may be extracted thus: "4. Power of Court to decide all questions arising in insolvency. - (1) Subject to the provisions of this Act, the Court shall have full power to decide all questions whether of title or priority, or of any nature whatsoever and whether involving matters of law or of fact, which may arise in any case of insolvency coming within the cognizance of the Court, or which the Court may deem it expedient or necessary to decide for the purpose of doing complete justice or making a complete distribution of property in any such case." It would be seen that the section has been couched in the widest possible terms and confers complete and full powers on the Insolvency Court to decide all questions of title or priority, or of any nature whatsoever, which may arise in any case of insolvency. The only restriction which is contained in Section 4 is that these powers are subject to the other provisions of the Act. In other words, the position is that where any other section of the Act contains a provision which either runs counter to Section 4 or expressly excl....
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....l settled that a voidable transfer is otherwise a valid transaction and continues to be good until it is avoided by the party aggrieved. For instance, transfers executed by the transferor to delay or defraud his creditors may be avoided under Section 53 of the Transfer of Property Act. Similarly transfers made under coercion, fraud or undue influence may be avoided by the party defrauded. It is only such transfers which, if they take place beyond two years of the date of transfer, cannot be enquired into by the Court by virtue of Section 53 of the Act. This appears to us to be the plain and simple interpretation of the combined reading of Sections 4 and 53 of the Act. Indeed, if a different interpretation is given, it will render the entire object of the section [4] nugatory, because the Court would be powerless to set at naught transfers which are patently void, merely because they had been made at a particular point of time. (emphasis supplied) 90 The decision in Johri Lal Soni (supra) gave an expansive interpretation to the powers of an insolvency court under Section 4 of the PIA, which is similar to Section 60(5)(c) of the IBC. This Court held that an insolven....
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.... (supra) read as under: "22. Clause 12 (d) of the Facilities Agreement provides that any dispute between the parties relating to the agreement could be the subject matter of arbitration. However, the Facilities Agreement being an 'instrument' under Section 238 of the IBC can be overridden by the provisions of the IBC. In terms of Section 238 and the law laid down by this Court, the existence of a clause for referring the dispute between parties to arbitration does not oust the jurisdiction of the NCLT to exercise its residuary powers under Section 60(5)(c) to adjudicate disputes relating to the insolvency of the Corporate Debtor. ... 24. It was also urged on behalf of the appellant that the NCLT and NCLAT have re-written the agreement changing its nature from a determinable contract to a non-terminable contract overlooking the mandate of Section 1412 of the Specific Relief Act 1963. It is a settled position of law that IBC is a complete code and Section 238 overrides all other laws. The NCLT in its residuary jurisdiction is empowered to stay the termination of the agreement if it satisfies the criteria laid down by this Court in Gujarat Urja (supra). In a....
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....l (India) Ltd. (CoC) v. Satish Kumar Gupta, (2020) 8 SCC 531 : (2021) 2 SCC (Civ) 443]." 7.10 It is in this context that what is evident is that it is the case of the petitioner that the property in question is under the protective umbrella of Tata Consultancy Services Limited (supra). Alternatively, when it comes to contesting the jurisdiction invoked by the GIDC it is their case that the NCLT will have no jurisdiction as the contract and the termination thereof is not a ground related to insolvency and therefore NCLT cannot be approached under Section 60(5)(c) of the IBC. 7.11 In this context, Section 36(4)(a)(iv) indicates that contractual arrangement which do not stipulate transfer of title are not included in the liquidation estate assets and shall not be used to recovery in the liquidation. 7.12 Section 60(5)(c) of the IBC reads as under: "60(5) Notwithstanding anything to the contrary contained in any other law for the time being in force, the National Company Law Tribunal shall have jurisdiction to entertain or dispose of- ... (c) any question of priorities or any question of law or facts, arising out of or in relation to the insolvency r....