TaxTMI 
TaxTMI 
2023 (12) TMI 1147
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....ration terminating the Development Agreement and Supplemental Agreement and Power of Attorney executed between Kolkata Municipal Corporation and 'Bengal Shelter Housing Development Limited'- Respondent No.1. 2. Brief facts necessary to be noticed for deciding this Appeal are: 2.1. 'Kolkata Municipal Corporation' is a statutory body governed under Kolkata Municipal Corporation Act, 1981. There were premises known as College Street Market consisting of land about 13 bighas with a two storied brick built building and structures thereon which had municipal market consisting of different shops. Kolkata Municipal Corporation decided to improve the College Street Market premises for which purpose a Development Agreement was executed on 24.02.2006 between the 'Kolkata Municipal Corporation' and 'Bengal Shelter Housing Development Limited'- Respondent No.1 herein. Agreement contains various terms and conditions for carrying out development. A Supplemental Agreement was also executed on 12.06.2006 between the 'Kolkata Municipal Corporation' and 'Bengal Shelter Housing Development Limited' providing for certain Supplemental terms and conditions between the parties. On 01.01.2007, the Scheme....
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....hat a CIRP is ongoing with respect to the Corporate Debtor in which Resolution Plan has been submitted. By an order dated 17.01.2022, Appellant cancelled the Development Agreement by an order of the same date. Appellant issued notice to the Respondent No.1 to take over the College Street Market Premises in consequence of the Development Agreement being terminated and resumed the property. The Resolution Applicant- Respondent No.3 filed an IA No.138 of 2022 before the Adjudicating Authority in which application Respondent No.3 prayed for following reliefs:- "a. Declaration that the said two letters bearing Nos. CM (M)/L/057/2021-22 and CM (M)/L/059/2021- 22 both dated 17th January 2022 terminating the said Development Agreement and Supplemental Agreement and Power of Attorney and calling upon the Respondent No. 2 to hand over possession of the said property are illegal, null and void; b. Declaration that the forceful physical possession of the said Property by the Kolkata Municipal Corporation is illegal, null and void: c. Order quashing and setting aside the said two letters bearing Nos. CM (M)/L/057/2021-22 and CM (M)/L/059/2021-22 both dated 17th January 2022 terminating ....
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....ate the said Development Agreement and Supplemental Agreement and Power of Attorney and intended to call upon the Respondent No. 2 to hand over possession of the said property, are declared a nullity; b. The possession of the said property shall rest with the RP till the approval/rejection of the Resolution Plan by this Adjudicating Authority; c. Respondent No. 3 is restrained from taking any further coercive action with regard to the sale, encumbrance, transfer, development or alienation of the said Property in any manner whatsoever, till the approval/rejection of the Resolution Plan by this Adjudicating Authority, or without the leave of the Adjudicating Authority." 2.4. Aggrieved by the impugned order, this Appeal has been filed by the Kolkata Municipal Corporation. 3. We have heard Learned Counsel for the Appellant, Counsel appearing for Respondent Nos. 1 to 3 and Counsel appearing for Resolution Professional. 4. Learned Counsel for the Appellant challenging the impugned order submits that the Adjudicating Authority erroneously set aside the order dated 17.01.2022 issued by the Appellant cancelling the Development Agreement with Respondent No.1. It is submitted that t....
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....been interfered with by the Adjudicating Authority. Termination was in accordance with the Development Agreement dated 24.02.2006 and could not have been quashed. Termination was also not affected by Section 14 of the IBC. The Corporate Debtor had no interest in the premises and premises were owned by Appellant. When the premises were owned by the Appellant, the Moratorium was not applicable. Corporate Debtor entered into unlawful possession of the premises on the basis of illegal and unauthorised assignment by the Respondent No.1 without consent of the Appellant. 5. Learned Counsel appearing for the Respondent Nos.1 to 3 supporting the order impugned submits that under the Development Agreement and Supplemental Agreement, the Respondent No.1 was fully entitled to part with its development rights and assignment in favour by Respondent No.1 was not illegal. Respondent No.2 having assigned the development rights, Respondent No.2 was proceeded to carry out the process. It is submitted that under the Agreement between the Appellant and the Respondent No.1, 70% of the constructed shops were to be allotted to Respondent No.1 and only 30% were to be given to the Appellant. Shops construc....
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....prehensive Market Complex either by itself and/or by other contractors appointed by it and/or in any other manner it considered fit and proper. None of the Contractors and/or the persons engaged in connection therewith shall have any claim of any nature whatsoever against KMC and Bengal Shelter shall be solely responsible for payment of all amounts, including compensation for injuries to such workman and/or other persons engaged by them and/or due for anything done by Bengal Shelter in pursuance hereof." 9. Agreement in clause 9 (c) of the Development Agreement further provides that on completion of the project, it is KMC who shall execute lease deed(s). Clause 9(c) is as follows: - "9. BENGAL SHELTER AND KMC BOTH HEREBY AGREE UNDERTAKE AND DECLARE AS FOLLOWS:- c) On completion of the Project and at the request of Bengal Shelter KMC shall execute lease Deed(s) in favour of the end-users of stalls, spaces and/or units to be allotted-retained, as the case may be, out of the Bengal Shelter's Allocation and such Leases shall be for a period of 30 years with an option for period or periods, as any by agreed between KMC and Bengal Shelter provided however the and were will be ....
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....der this agreement to any third party without the prior approval in writing of the other party." 13. Supplemental Agreement contains certain modifications of the Development Agreement. Clause 3(ii) of the Supplemental Agreement is as follows:- "3. In further modification of Bengal Shelter's Rights under the Principal Development Agreement:- xxx xxx xxx (ii) Bengal Shelter shall be entitled to Aise necessary finance for construction of Comprehensive Market Complex including finance from the authorised financial institutions, Banke, Corporate houses or such other bodies for development of the land by construction of the Comprehensive Market Complex as per the terms of the Development Agreement and for that purpose, to create mortgage or any other lien over College Street Market Complex or any part thereof, gave and except the area to be allotted to KMC or its nominee or nominees, in favour of the Banks, financial institutions or other bodies without however creating any financial liability for the KMC or affecting its right, title, interest in the said College Street Market Premises and for that purpose Bengal Shelter shall at all times keep the KMC indemnified and harm....
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....reover, owner of the space under your allocation i.e. 70% of the built up space is also KMC. In fact, KMC is supposed to lease out the said space and to receive lease rent against the same. Delay in completion of the Project has meant that KMC is losing out on revenue from such lease rent. 3. That the KMC has accepted the enormity of delays in pertinent issues on its part. However, the KMC has only stated that even if certain delays are taken to be reasonable, these could have caused a delay of around three years or so and cannot in any way explain the tremendous delay of eleven years. 4. That several issues were notified to the KMC through numerous letters but the KMC either miserably failed or preferred to be deaf and blind even against encroachment of principal pathways etc. However, such claims made by you are vague and trivial. Encroachment of passages is not in any way linked to the delay in construction of the Project. 5. That reluctance of KMC to perform its part of the Agreement led to the delay and such delay beyond your control caused stress with bankers, financiers, suppliers and investors. Some of sub-contractors, your financiers and creditors moved to t....
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.... party without obtaining prior consent of other party. Here the case of the Respondent No.2 is that the Respondent No.2 has received an assignment from the Respondent No.1 dated 06.03.2008 and it was the Corporate Debtor came into possession of the premises by virtue of assignment dated 06.03.2008. Assignment in favour of Respondent No.2 i.e. Corporate Debtor by the Appellant was clearly contrary to the Development Agreement where there was clear prohibition without approval of the other party. No consent or permission was obtained from Kolkata Municipal Corporation by Respondent No.1 for assignment the development right in favour of the Respondent No.2. We are of the view that on the basis of assignment dated 06.03.2008 as claimed by Respondent No.3, no right could flow in the Respondent No.2 regarding the premises neither any developmental rights nor any ownership rights. It was Respondent No.1 who has unlawfully gave the possession of the premises to Respondent No.2 and Respondent No.2 was clearly in unlawful possession of the premises. 17. From the materials on record, it is clear that the Appellant who was owner of the premises and only right for development of the premises w....
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....ained 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;]" 18. From the facts as noticed above, it is clear that the Kolkata Municipal Corporation who is owner of the premises by Development Agreement gave right of development of the premises to the Respondent No.1 and Respondent No.1 has unauthorisedly without prior approval of the Appellant as alleged Assignment Agreement dated 06.03.2008 has given to the Corporate Debtor. The possession of the premises has to be of Respondent No.1 who was given possession by the Appellant. In event, the Respondent No.1 illegally transferred the possession to Respondent No.2 contrary to the De....
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....ncluding intellectual property; (v) securities including shares held in any subsidiary of the corporate debtor, financial instruments, insurance policies; (vi) assets subject to the determination of ownership by a court or authority;" 20. In the present case, assets i.e. premises are owned by the Appellant and there was no contractual arrangement between the Appellant and the Corporate Debtor with regard to premises in question. The assets clearly were not the assets of the Corporate Debtor on which IRP can take possession. It is only the assets on which IRP can take possession on which the Moratorium under Section 14(1)(d) shall be applicable. Moratorium cannot be applicable with regard to assets which are not the assets of the Corporate Debtor. 21. The Adjudicating Authority in its impugned order had held the assignment agreement dated 06.03.2008 as lawful and valid. The Assignment Agreement dated 06.03.2008 is on the record which assignment was not made by the Respondent No.1 after obtaining consent of the Appellant and it was clearly in breach of clause 13(b) of the Development Agreement which prohibits both the parties from parting with any of its rights and obligatio....