TaxTMI 
TaxTMI 
2024 (8) TMI 1413
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....d Mr. Siddhant Upmanyu, Advocates for R1. Mr. Ajay Gaggar and Mr. Shreedhar Gaggar, Advocates for SBI. JUDGMENT Ashok Bhushan, J. These Appeals have been filed by Ram Ratan Modi, Resolution Professional of Duncans Industries Ltd.- (Corporate Debtor) challenging various orders passed by the Adjudicating Authority (National Company Law Tribunal), Kolkata Bench in different IAs filed by the Resolution Professional in CP (IB) No.184/KB/2018. By the different IAs filed, the Resolution Professional has sought possession of various Tea Gardens claiming to be assets of the Corporate Debtor which applications by different orders passed by the Adjudicating Authority have been rejected. Aggrieved by those orders, these Appeals have been filed. 2. Company Appeal (AT) (Insolvency) No.672 of 2021 has been filed by the Resolution Professional challenging the order dated 28.05.2021 passed by the Adjudicating Authority in IA No.1256/KB/2020 by which application the Resolution Professional prayed for direction to take possession of Hantapara, Garganda, Tulsipara and Dumchipara Tea Estates which application came to be rejected by the impugned order dated 28.05.2021. 3. Company Appea....
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....tled to retain only so much of such land as, in the opinion of the State Government, is required for the tea-garden, as the case may be. The State Government provided lease hold rights under the West Bengal Estates Acquisition Rules, 1954 as amended from time to time. In the present Appeals, Nine Tea Gardens which includes Bagracote in IV Division are under consideration. The State executed leases in favour of several entities for 30 years. Name of Tea Estates with name of lessee, date of execution of lease deed and date of expiry are extracted in following table:- Name of Tea Estates Name of Lessee Date of Execution Effective From Date of Expiry Garganda Lankapara Tea Co. Ltd. 19.07.1974 20.09.1965 19.09.1995 Dhumchipara Birpara Tea Co Ltd. 06.12.1975 13.09.1974 12.09.2004 Huntapara Duncan Agro Industries Ltd. 25.11.1980 03.12.1974 02.12.2004 Tulsipara Lankapara Tea Co. Ltd. & Duncan Agro Industries Ltd. 26.02.1980 18.04.1974 17.04.2004 Birpara Birpara Tea Co. Ltd. 25.11.1980 27.06.1978 26.06.2008 Bagracote I Bagracote Tea Co Ltd. 19.02.1973 22.05.1968 22.05.1998 Bagracote I....
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....ernment is of the considered opinion that the tea gardens as listed below are being managed in a manner highly detrimental to the tea Industry and to public interest: (i) Birpara Tea Estate (ii) Garganda Tea Estate (iii) Lankapara Tea Estate (iv) Tulsipara Tea Estate (v) Huntapara Tea Estate (vi) Dhumchipara Tea Estate (vii) Demdima Tea Estate Now, therefore, in exercise of powers conferred by sub-section (1) of section 16B of the Tea Act, 1953 (29 of 1953), the Central Government hereby authorises the Tea Board to take immediate steps to take over the management and the control of the above seven tea estates as per the provisions of Chapter IIIA of the Tea Act, 1953. 11. The Corporate Debtor challenged the Notification dated 28.01.2016 before the High Court of Calcutta by means of Writ Petition No 1897 (W) of 2016 which writ petition came to be dismissed by Learned Single Judge of the Calcutta High Court on 15.03.2016 upholding the Notification. The Corporate Debtor filed an Appeal in the High Court being M.A.T No. 562 of 2016 challenging the order of the Learned Single Judge. Division Bench noted the submi....
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.....25,67,000/- was demanded by the Collector. 12. Due to agitation of plantation workers and labourers meeting was convened by the Department of Labour in which Labour Commissioner, Registered Union, workmen and officers of the Tea Board participated and decision was taken to handover the management of few Tea Gardens to 'Merico Agro Industries Pvt. Ltd.' and Sammelan Tea and Beverages Pvt. Ltd. 13. An application was filed by the Resolution Professional being IA No.1256/KB/2020 where along with other prayers in prayer (a), following was prayed by the Resolution Professional:- "a) To Pass an order under Section 19(3) read with Section 25(2) of the Insolvency and Bankruptcy Code, 2016 directing the Respondent to comply with the directions of the Applicant and to extend all assistance and co-operation to the Applicant as required by him for taking over possession of the Hantapara, Garganda, Tulsipara and Dumchipara tea estates and for carrying out the valuation of the said tea estates." 14. The application filed by the Resolution Professional was opposed by 'Merico Agro Industries Pvt. Ltd.' which was managing the operation of Tea Estates Huntapara, Garganda, Tulsipar....
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....the Nagaisuree and Kilcott Tea Estates in favour of the Applicant herein; c) The Respondent No. 6 of the concerned district be directed to provide necessary help and assistance to the applicant and or to his men servants and agents to forthwith take over position of the said Nagaisuree and Kilcott Tea gardens; d) The police officers and Respondent No. 6 of the concerned district and the local police station be directed to ensure that the respondent No. 1 and/orit's menservants and agents and/or any third party does not have any access to the said Nagaisuree and Kilcott Tea gardens and is not able to enter or possess or seize the assets thereof or to carry on business with the assets and properties of the said tea gardens being Nagaisuree and Kilcott Tea gardens; e) The respondent No.4 and 6 and the police authorities of the concerned district / police station be directed to evict the respondent No.1 and/or it's men, servants and agents from the said tea gardens being Nagaisuree and Kilcott Tea gardens; f) Permanent injunction restraining all statutory authorities concerned not to grant any permission or provide any lease or license or any....
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....is in financial stress and it is of concern whether the Resolution Professional would be able to run these two Tea Estates. 49. The lease given to the Corporate Debtor has not been renewed in favour of the Corporate Debtor hence, it is out of question that the Resolution Professional can take possession of the Tea Gardens to which the Corporate Debtor has no ownership. 50. On perusal of the records it is apparent from the proceedings of the tripartite review meeting held on 20.12.2021 in respect of Killcott Tea Garden and Nagaisuree Tea Garden, in the presence of the Trade Unions, Additional Labour Commissioner, North Benchal Zone Government of West Bengal, Deputy Labour Commissioner, Assistant Labour Commissioner, Malbazaar, and the Managers of the respective Tea Garden, wherein it is stated that based on a bipartite agreement signed between Sammelan Tea and Beverages Pvt. Ltd. and the Trade Union of the two Tea Gardens, Sammelan Tea and Beverages Pvt. Ltd. is in possession of the two Tea Gardens and that the Tea Gardens started functioning from 03 November 2021 and has been in operation. 51. In a letter dated 08 March 2022, the Principal Secretary, Labo....
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....e said three Tea Estates for all practical purposes were kept closed. It was due to the Corporate Debtor not depositing the statutory Provident Fund, Birpara Tea Estate was abandoned since 06.10.2019 and it was due to the above reason, a meeting held on 12.02.2021 in the presence of Industry Department and the Labour Union, at the instance of District Magistrate, it was decided to entrust the management to M/s. Merico Agro Industries Pvt. Ltd. who was successfully running other four Tea Gardens. The Adjudicating Authority after hearing the parties by the impugned order has rejected the IA No.415/KB/2021. Adjudicating Authority held that the applications raising similar question in IA No.1256/KB/2020 and IA No.1111/KB/2021 has already been decided. The lease granted in favour of the corporate debtor in Birpara Tea Estate has not been renewed. Resolution Professional cannot be directed to give possession of the gardens. With the said observation, the application was rejected. 19. IA No.665/KB/2021 was filed by the Resolution Professional for direction to Respondent No.1- 'Sammelan Tea and Beverages Pvt. Ltd.' and Respondent No.2 to handover the possession, operation and management....
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....cation and by order impugned has rejected the application. In paragraphs 20 to 24 of the impugned order, following has been observed:- "20. During the course of hearing it was noticed that, in this application also, the question of law is similar to the one in I.A.(IB) No. 1256/KB/2020 and I.A. (IB) No. 1111/KB/2021. These two applications have already been decided after hearing exhaustive arguments of the learned Senior Counsel. Since the arguments are common and issue involved is conclusively covered by the order passed by this Bench earlier, there is no need to once again give more and more time for hearing the same arguments on behalf of the Resolution Professional and the Respondent No. 1. 21. We have thus briefly heard the learned Senior Counsel for the Applicant and the learned Senior Counsel for Respondent No. 1 and perused the record. 22. Similar applications have been filed by the Resolution Professional for possession of Tea Estates. The only concern is that the Corporate Debtor is in financial stress and whether the Resolution Professional would be able to run these Tea Estates. 23. The lease given to the Corporate Debtor has not been....
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....ocate with Shri Gautam Narayan and Shri Amit Kasera, Advocates for the Appellant. Mrs. Maninder Acharya, Learned Senior Advocate with Ms. Madhumita Bhattacharjee have appeared for State of West Bengal. Shri Jishnu Saha, Learned Senior Advocate has appeared for Sammelan Tea and Beverages Pvt. Ltd. and Merico Agro Industries Pvt. Ltd. Shri Ajay Gaggar and Shri Shreedhar Gaggar, Learned Advocates have appeared for State Bank of India, Intervenor. Shri Amar Dave, Learned Senior Advocate with Shri Ashok Kumar Jain, Advocate has appeared for Uniglobal Papers Private Limited, Intervenor. 23. Learned counsel for the Appellant's submissions are common to all the appeals except some additional submissions advanced in Company Appeal (AT) (Ins.) No. 672 of 2022, which we shall additionally notice. Learned counsel for the Appellant submits that the Adjudicating Authority committed error in rejecting the application filed by the Resolution Professional for taking possession of the tea gardens which were leased to the Corporate Debtor. It is submitted that with regard to all tea gardens whose lease has expired application for renewal was filed by the Corporate Debtor which never came to be dec....
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....possession of which were handed over to the Merico prior to initiation of CIRP and the order dated 28.05.2021 passed by the Adjudicating Authority in IA No.1256 of 2020 was clearly distinguishable. The leases which were granted to the Corporate Debtor were heritable, transferable and provided for a deemed and automatic renewal for a further period of 30 years. Renewal applications were made prior to expiry of the lease period. The submissions of the State of West Bengal that nonpayment of salami invalidates the valid and continuing renewal of the lease deeds granted in favor of the Corporate Debtor are entirely devoid of merit. There is no legal basis to the claim of Sammelan and Merico to the tea gardens. The Adjudicating Authority on 03.03.2022 had directed the Respondent No. 1 to submit documents in regard to its right to tea gardens. No documents could be produced by Respondent No.1 which can entitle it to take over two tea estates during the period of moratorium. The Adjudicating Authority wrongly relied on letter dated 08.03.2022 issued by Principal Secretary, Labour Department. When the tea gardens were in possession and control of the Corporate Debtor/Resolution Professiona....
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....appreciate the clear import of the submissions made by the Appellant regarding the agreement entered into between the Corporate Debtor and the Respondent. Learned counsel for the Appellant submits that the Appellant in the Information Memorandum has already given the details of leases regarding different tea gardens and the Information Memorandum also noticed that the State of West Bengal is claiming that renewal of lease with regard to two tea gardens is not in accordance with law. Learned counsel for the Appellant in support of his submissions has relied on judgments of this Tribunal and Hon'ble Supreme Court which we shall notice while considering submissions in detail. 24. Mrs. Maninder Acharya, learned senior counsel appearing for State of West Bengal refuting the submissions of learned counsel for the Appellant contends that the Corporate Debtor had no right to any of the tea gardens after expiry of lease which was initially granted by the State of West Bengal. It is submitted that the claim of the Appellant of renewal of the lease of tea estates Kilcott, Bagracote and Garganda is also misleading and incorrect. Renewal of lease could not have been made without pre-deposit ....
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....le and absolute owner in terms of the provisions of West Bengal Estate Acquisition Act & Rules 1954. All the leases have expired prior to commencement of the CIRP, which estates does not constitute assets of the Corporate Debtor. Purported renewal of lease deed of Kilcott, Bagracote and Garganda tea estates in view of the Corporate Debtor being in breach of statutory provisions of West Bengal Estate Acquisition Act & Rules 1954, cannot be read to be valid renewal. Information Memorandum itself mention that with regard to Garganda and Bagracote-I that: "as per Land department of GoWB, Kolkata, renewal are not done properly". With regard to Kilcott, in reference to renewal dated 15.11.1995, District Magistrate & Collector, Jalpaiguri issued letter dated 04.08.2016 to the Corporate Debtor to deposit the salami which having not been deposited no valid renewal can be claimed. The submission of the Resolution Professional that there shall be deemed automatic renewal as per terms of the lease is wholly incorrect and not in accordance with law. There can be no question of any deemed renewal of the leases in favour of the Corporate Debtor nor any such clause is contained in the lease deed. ....
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.... that order dated 21.04.2022 passed by the Adjudicating Authority be set aside, it was further submitted that Nagaisuree and Kilcott tea gardens along with leasehold rights were mortgaged to the State Bank of India. 27. We have heard Shri Amar Dave, learned counsel appearing of the Intervenor - Uniglobal Papers Private Limited, who claim to be the Successful Resolution Applicant in the CIRP of the Corporate Debtor. It is submitted by learned counsel that the State of West Bengal has filed an application i.e. IA No.8/KB/2023 seeking exclusion of the tea estates belonging to the State from the purview of the CIRP of the Corporate Debtor, which application has been rejected on 26.04.2024, against which the State has filed an appeal, which is pending consideration. 28. Learned counsel appearing for the Respondent No.1 has opposed the IA filed by the State Bank of India as well as IA filed by Uniglobal Papers Private Limited. It is submitted that the Corporate Debtor cease to have any right in the tea gardens so no valid security interest can be created in favour of State Bank of India in Nagaisuree and Kilcott tea gardens. It is submitted that the mortgage dated 09.10.2013 relied....
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.....1975 13.09.1974 12.09.2004 Huntapara Duncan Agro Industries Ltd. 25.11.1980 03.12.1974 02.12.2004 Tulsipara Lankapara Tea Co. Ltd. & Duncan Agro Industries Ltd. 26.02.1980 18.04.1974 17.04.2004 Birpara Birpara Tea Co. Ltd. 25.11.1980 27.06.1978 26.06.2008 Bagracote I Bagracote Tea Co. Ltd. 19.02.1973 22.05.1968 22.05.1998 Bagracote II Bagracote Tea Co. Ltd. 11.10.1974 04.08.1970 04.08.2020 Bagracote III & IV Duncans Agro Industries Ltd. 27.02.1980 24.02.1976 24.02.2006 Runglee- Rungliot Birpara Tea Co. Ltd. 24.08.1973 09.02.1970 08.02.2000 Kilcott Birpara Tea Co. Ltd. 22.08.1965 24.08.1965 21.08.1995 Nagaisuree Birpara Tea Co. Ltd. 30.01.1975 31.10.1972 30.10.2002 33. Information Memorandum was prepared by the Resolution Professional, which Information Memorandum has also been brought on the record. Information Memorandum also notices the nine tea gardens and the date of validity of the lease deeds.It is useful to extract the status of tea estates as reflected in the Information Memorandum, which is as follows: "Status of Leasehold Tea ....
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....spute between the parties that leases have expired. The Appellants' case is that renewal applications were filed for those six tea gardens on which no decision has been taken and with regard to three tea gardens i.e. Kilcott, Bagracote and Garganda issue of renewal of lease has been raised. Both the parties have advances rival submissions with regard to renewal. From the submission of learned counsel for the parties and materials on record following are issues which arise of consideration: 1. Whether the Corporate Debtor has lease hold right in the Tea Gardens, which are assets of the Corporate Debtor which need to be taken control by the Resolution Professional under Section 18(f) and Section 25 of the I&B Code? 2. Whether with regard to those Tea Gardens where period of lease has come to an end before commencement of the CIRP and application for renewal has been filed by the Corporate Debtor, the lease shall be deemed to be renewed since no decision has yet been taken by the State of West Bengal either accepting or rejecting the application? 3. Whether renewal of the lease deed of Kilcott Tea Estate w.e.f. 15.11.1995 till 23.08.2025 has to be treated to....
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.... debtor; (iii) tangible assets, whether movable or immovable; (iv) intangible assets including 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;" 39. Clause (f) provides that IRP to take control and custody of Assets over which the Corporate Debtor has an Ownership Rights as recorded in the Balance Sheet of the Corporate Debtor. The Tea Gardens which have been leased out to the Corporate Debtor are Tea Garden which are owned by the State of West Bengal. The Corporate Debtor does not have any Ownership Right in the Tea Garden hence the main sub-Clause (f) of Section 18 does not cover the Tea Garden. However, the definition in Section 18 (f) is inclusive definition which is apparent in the expression "including" occurring in the end of sub-Section (f) and sub-Clause (iv) refers to Intangible Assets including Intellectual Property. The Leasehold Rights are Intangible Assets, which is now a settled proposition of law. 40. Learned Counsel for the Appellant has relied on the....
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....e assets of the corporate debtor, including the continued business operations of the corporate debtor. (2) For the purposes of sub-section (1), the resolution professional shall undertake the following actions, namely:- (a) take immediate custody and control of all the assets of the corporate debtor, including the business records of the corporate debtor;" 43. The Hon'ble Supreme Court has held that explanation in Section 18 does not extend to Section 25 in `Victory Iron Works Ltd.' (Supra). One of the questions framed in Paragraphs 16.1(1) & 16.2(2) is as follows: "16.1. (1) What is the nature of the right or interest that the corporate debtor has over the property in question, for the purpose of deciding the inclusion of the same in the information memorandum prepared by the resolution professional under Regulation 36 of the Regulations?; and 16.2. (2) Whether NCLT and Nclat have exercised a jurisdiction not vested in them in law by seeking to recover/protect the possession of the corporate debtor?" 44. In Para 42, the Hon'ble Supreme Court ultimately held after considering the several other statutes came to conclusion that Development Ri....
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....n be taken by the Resolution Professional in exercise of his duties under Section 25. The Assets of the Corporate Debtor, including the Leasehold Rights, which are contemplated to be taken in custody and controlled by the RP are thus Leasehold Rights which are subsisting on the date when the Corporate Insolvency Resolution Process, CIRP has commenced. In the present case, 05.03.2020 is the date of commencement of the CIRP, thus before taking control and custody of the Assets i.e., Leasehold Rights of the Corporate Debtor, it has to be seen as to whether the Leasehold Rights are subsisting on the date of commencement of the CIRP. Law mandates taking custody and control of the Assets i.e., the Leasehold Rights of the Corporate Debtor which are subsisting on the date of commencement of CIRP. 48. The submission which has been advanced by the Learned Counsel for the Respondent in the present case is not that Leasehold Rights are not covered by Section 18(1)(f) and Section 25 of the IBC. The submission which has been advanced by the Respondent is that Leasehold Rights of the Corporate Debtor had come to an end by efflux of time on the date, when CIRP commenced, hence the provision of ....
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....Lessee/Lessees shall be entitled to the renewal of this lease for a further period of thirty years and to successive renewals, for, similar, periods, subject to the rules and the terms and, conditions of this lease and to such other terms and conditions as the State Government may from time to time consider it necessary to impose and include in such renewed lease or leases and subject further to such rent as may then be fixed, provided that such additional terms and conditions shall not be inconsistent with the law regulating such lease* and shall not have retrospective effect. (b) That all arrears of rent costs, lines and other monies payable by the Lessee/Lessees hereunder and all expenses in connection with inspections, survey and measurements may he recovered as a public demand under the Bengal Public Demand Recovery Act or and statutory modification thereof for the time being in force. (c) That if at any time the lands and hereditaments cease to be used by the Lessee/Lessees as a tea- garden, the lease shall determine forthwith." 51. The Lease was registered on 25.10.1975 with the sub-Registrar Office, District Jalpaiguri. 52. Case of the Appellant is t....
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....t-plaintiffs have failed to do so. However, the plaint proceeds on the assumption that the original agreement stood renewed including the negative covenants contained in clauses 15 and 20 of the original agreement which authorised only the appellants to extract ore from the mine with an obligation cast on the respondent- defendants not to interfere with the enjoyment of their rights under the agreement. In the facts of this case, in the suit prayer for injunction based on negative covenants could not be asked for unless it was first established that the agreement continued to subsist. The use of the words "during the subsistence of this agreement" in clause 15, and "during the pendency of this indenture" in clause 20 of the agreement is significant. In the absence of a document renewing the original agreement for a further period of 5 years and in the absence of any declaration from a court of law that the original agreement stood renewed automatically upon the appellants exercising their option for grant of renewal, as is the case of the appellants, they cannot be granted relief of injunction, as prayed for in the suit, for the simple reason that there is no subsisting agreement e....
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....thereof and, if exercised, a fresh deed of lease shall have to be executed between the parties....." 56. The Hon'ble High Court of Delhi also had occasion to examine the concept of the renewal of the Lease in `Kamal Mitra Chenoy & Anr.' Vs. `M/s. Dunlop India Ltd. & Anr.' 2015 SCC OnLine Del 8195. In the facts of the above case, the Lessor had not agreed for renewal. The Hon'ble High Court of Delhi also followed the Judgment of the Hon'ble Supreme Court in `Hardesh Ores (P) Ltd.' (Supra) held that Lease was never renewed in the facts of the said case. In Paragraphs 23 to 27, following was laid down: 23. In Shanti Prasad Devi v. Shankar Mahto, (2005) 5 SCC 543 the Agreement contained a renewal clause. Paragraphs 18 and 19 of which read as follows:- "18. We fully agree with the High Court and the first appellate court below that on expiry of period of lease, mere acceptance of rent for the subsequent months in which the lessee continued to occupy the lease premises cannot be said to be a conduct signifying 'assent' to the continuance of the lessee even after expiry of lease period. To the legal notice seeking renewal of lease, the lessor gave no reply. The agreem....
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....f a Lease, a document has to be executed evidencing renewal of the Agreement and there is no concept of automatic renewal of the Lease by mere exercise of option by the Lessee. Para 25 reads as under:- "25. Having regard to these decisions we must hold that in order to give effect to the renewal of a lease, a document has to be executed evidencing the renewal of the agreement or lease, as the case may be, and there is no concept of automatic renewal of lease by mere exercise of option by the lessee. It is, therefore, not possible to accept the submission urged on behalf of the appellants- plaintiffs that by mere exercise of option claiming renewal, the lease stood renewed automatically and there was no need for executing a document evidencing renewal of the lease." 26. In the present case, as per the plaintiff no Demand Draft was sent with the aforesaid communication dated 11.8.2012 though the letter mentions so. The defendants have asserted that the Demand Draft was sent. The defendant, however, agrees that the Demand Draft has not been encashed. Hence, there is no acceptance in the present case. 27. Hence, firstly the communication dated 11.08.2012 does....
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....the renewal of the lease for a further period of thirty years and to successive renewals for similar periods, subject to the rules and the terms and conditions of this lease and also such other terms and conditions as the State Government may from time to time consider it necessary to impose and include in such renewed lease or leases and subject further to such rent as may then be fixed. However, such additional terms and conditions shall not be inconsistent with the law regulating such lease and shall not have retrospective effect." 60. In the above case, the Hon'ble Supreme Court extracted the amendments made in Schedule F of the West Bengal Estates Acquisition Rules 1954 in Paragraphs 20, 21 & 22 which are as follows: "20. In exercise of the power conferred by Section 59 of the Act, the West Bengal Estates Acquisition Rules, 1954 were framed and the same were published in the Official Gazette vide Notification dated 28-5-1954. Rule 4 of the said Rules inter alia provides that the land retained by an intermediary under the provisions of sub-section (1) of Section 6 shall be held by him from the date of vesting on the terms and conditions specified in the Rules. So fa....
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....expiry of the unexpired period of lease." 61. In the case before the Hon'ble Supreme Court, the Lessee approach the Collector for renewal and the request of the grant of Lease was considered and Government issued a letter directing for payment of salami of Rs. 15,000/- per hectare which was challenged by the Lessee before the Land Reforms and Tenancy Tribunal and thereafter before the Hon'ble High Court of Calcutta. The Hon'ble High Court of Calcutta had allowed the Writ Petition and quashed the Order of the Land Reforms and Tenancy Tribunal which had rejected the prayer of the Lessee to declare Notification 01.06.1994 as illegal. 62. The Hon'ble Supreme Court upheld the amendments by which Clauses 1A & 1B was inserted. The Hon'ble Supreme Court set aside the Judgment of the Hon'ble High Court and held that the renewal of the Lease can be granted as per Clause 16(a) of the Lease Deed, subject to rules and demand of salami was in accordance with law. In Paragraphs 30 to 33, following was held: "30. As noticed above, the State Government by notification dated 1.6.1994 brought amendment in the Rules by incorporating two more conditions i.e. paragraph 1A and 1B. As per t....
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.... again in accordance with the covenant for renewal contained in the original lease. In the case of extension it is not necessary to have a fresh deed of lease executed, as the extension of lease for the term agreed upon shall be a necessary consequence of the clause for extension. However, option for renewal consistently with the covenant for renewal has to be exercised consistently with the terms thereof and, if exercised, a fresh deed of lease shall have to be executed between the parties. Failing the execution of a fresh deed of lease, another lease for a fixed term shall not come into existence though the principal lease in spite of the expiry of the term thereof may continue by holding over for year by year or month by month, as the case may be." 33. In the case of Gajraj Singh & ors. vs. State Transport Appellate Tribunal & ors., (1997) 1 SCC 650, this Court while considering the term renewal of lease or licence contained in document, observed that "grant of renewal is a fresh grant though it breathes life into the operation of the previous lease or licence granted as per existing appropriate provisions of the Act, rules or orders or acts intra vires or as per the la....
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....17.04.2004, 19.09.1995 and 26.06.2008 respectively. 65. Leases are Bagracote Division II came to an end on 04.08.2000. Bagracote III & IV came to an end on 24.07.2006 and Rungli Rungliot came to an end on 08.02.2000 and Nagaisuree came to an end on 30.10.2002. The leases of above Tea Garden States were not renewed. 66. In view of the aforesaid discussions, we are of the view that on the ground that Application for renewal has been filed by the Corporate Debtor, the leases of the aforesaid Tea Garden shall not be treated as deemed to be renewed and leases of the aforesaid Tea Gardens shall be treated to have expired before commencement of the CIRP. In view of the above, we answered Question No. 2 in following manner: "The leases of Tea Gardens whose period of Lease have come to an end before commencement of the CIRP, there shall be no automatic or deemed renewal of the leases even though Applications have been filed for renewal of the leases and no decision was communicated by the State." Issue Nos. 3 and 4 67. From the Information Memorandum published by RP as extracted above, there were only three Tea Gardens, whose lease was valid beyond 05.03.2020, ....
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....e original Lease Deed has been filed in Company Appeal (AT) (Insolvency) No.593 of 2022. The Lease Deed was executed by Deputy Commissioner of West Bengal, Jalpaiguri in favour of Kilcott Tea Co. Ltd. owner of Kilcott Tea Garden. It is useful to notice opening part of the Lease Deed, which provides as follows: "THIS INDENTURE made this Twenty Second day of January, One Thousand Nine Hundred and Seventy Three BETWEEN Killcott Tea Co. Ltd. Owner of Killcott Tea Garden registered under the Indian Companies Act. having its, Registered Office at 31, Netaji Subhas Raod, Calcutta-700001, hereinafter called the "LESSEE" (which expression shall unless excluded by or repugnant to the context be deemed to include its successors and assign, of the One Part. AND THE GOVERNOR OF THE STATE OF WEST BENGAL hereafter referred to as the "GOVERNOR" (which expression shall include his successors in office and assigns) of the Other Part. WHETHER the LESSEE was/were seized and possessed of the land and hereditaments described in the Schedule "A" hereunder written paying revenue payable in respect of the said land hereditaments to the Government of West Bengal hereinafter referr....
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....iness in co-partnership under the name and style of at hereinafter called the lessees (which expression shall unless excluded by or repugnant to the context be deemed to include their respective heirs, executors, administrators, representatives and permitted assigns and/or the partners for the time being of the said firm of and their respective heirs, executors, administrators, successors and permitted assigns) of the OTHER PART . b. In case of partnership firm. c. And M/S Duncans Industries Ltd. other of Kilcott T.G. a company registered under the Indian Companies Act having its registered office at No.31, Netaji Subhas Road, Kolkata-1 hereinafter called the LESSEE (which expression shall unless excluded by or repugnant to the context be deemed to include its successors and assigns) of the OTHER PART as tenant under Schedule F of Rules 4 of West Bengal Estates Acquisition Rules 1954. WITNESSETH that in consideration of the rent and Salami Covenants and conditions hereinafter reserved and contained and on the part of the lessee to be paid observed and performed the lessors doth hereby grant and demise unto the Lessee/Lessees the lands and hereditaments de....
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....l times observe and confirm to the relevant provisions of the West Bengal Estate Acquisition Rules for the time being in force. 1(b) That in respect of land comprised in a forest the Lessee/Lessees shall be subject to the control and supervision of the State Government c. That if, at any time, the collector is of the opinion that the state of boundary marks or lines is such that a re-survey of the area is necessary he may direct such re-survey to be made and may recover from the Lessee/Lessees the costs of such re-survey. 8. That if on any such re-survey or otherwise, it shall be found that the Lessee/Lessees is/are in possession of lands in excess of the said lands and hereditaments, the lessors shall be entitled forthwith to recover possession of such excess area and the lessee shall forthwith deliver over possession of the same. The lessor may however allow the lessee to continue in occupation of such excess area in this demise and the lessee in such case shall be bound and liable to pay, in addition to the rent therein reserved such rent for the excess area as may be determined by the Collector in accordance with the principle laid down in section 42 ....
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....nother Clauses (dd) was inserted, which is as follows: "(dd) That the transferee, other than by inheritance, shall be required to enter into a fresh lease on payment of salami at the rate laid down in Clause (1-B) of Schedule F within three months of expiry of the unexpired period of lease." 73. When we look into the renewal Indenture dated 15.11.1995, the expression 'rent' and 'Salami' both have been used. However in the relevant Clause only yearly rent of Rs.13,180/- was filled up and no amount of Salami was entered in the terms and conditions of the lease payable by the Corporate Debtor. Whereas, as per Notification dated 01.06.1994, when the lease of Tea Garden is determined and leased afresh to a new lessee, the latter was liable to pay Salami @ Rs.15,000 per hectare of the land leased out. In case of transfer of the leasehold interest, on the expiry of the transferred lease, the transferee shall be liable to pay Salami @ Rs.15,000 per hectare on the land leased. In the present case, it is noticed that earlier lease executed on 22.01.1973 was in favour of Kilcott Tea Company, whereas the renewal was done in favour of M/s Duncans Industries Ltd., the Corporate Debto....
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....t of corporate insolvency resolution process against the Corporate Debtor on 5th March, 2020." 74. With regard to renewal of the lease of Kilcott Tea Estate, in paragraph 11(g), (h) and (i), following pleadings have been made by the State of West Bengal: "g. That it is most respectfully submitted that in IA.(IB)No. 1111/KB of 2021, the Resolution Professional had also alleged that the Corporate Debtor had obtained a purported renewal of the lease on 15 November 1995 in respect of the 'Kilcott Tea Estate' which averment is similarly false and contrary to the records. h. As far as alleged claim of a purported renewal of lease on 15th November, 1995 in respect of Kilcott Tea Estate following determination of the lease on 23rd August, 1995, it is stated that the said purported execution was also ex-facie contrary to law in force and in gross breach of the mandated statutory provisions as embodied in Rule 4 read with Schedule F of the 'West Bengal Estate Acquisition Act & Rules 1954. i. That it most humbly submitted that the said purported execution related to 'Kilcott' was never approved by the Land and Land Reforms Department of the Go....
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....tares) of land comprised in Kilcott Tea Garden for a period of Thirty (30) years in favour of M/S Duncans Industries Ltd. Subject to payment of Salami at the concessional rate of Rs. 9000/- per hectare. And Whereas, pursuant to the Order passed on 06.05.2015 by the Hon'ble Supreme Court of India in Civil Appeal No. 2546/2006 with Civil Appeal No. 2548/2006 on the above subject and as per the G.O. No. 3610LR, Dated 09.12.2004, it has been decided that for entering into fresh lease the present applicant, being the transferee has to pay Salami. And Whereas, in pursuant of G.O. No. 2232(3)-LP/3T-13/02GE(M) Pt.if. dated 03.08.2015 of the Secretary to the Government of West Bengal, Land and Land Reforms Department the Salami is to be paid at a time. And Whereas, after the judgment of the Hon'ble Supreme Court there is no bar to demand Salami. In view of the above, it is found from the office record that the required Salami amounting to Rs. 57,25,711/- (Rupees Fifty seven lakh Twenty five thousand seven hundred and Eleven) only not deposited by his end till date. Hence, it is once again directed to the management of Kilcott Tea Garden to pay th....
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....e Notification dated 01.06.1994 was already enforced, adding Clause 1-A and 1-B in the Form-1, requiring payment of Salami of Rs.15,000/- per hectare at the time of execution of lease. However, in the renewed Lease Deed, as extracted above dated 15.11.1995, it is clear that although expression Salami has been used in the Lease Deed, but no amount of Salami was mentioned and only rent was mentioned, which was @ Rs.13,180 per annum. It is further relevant to notice that renewed Lease Deed was executed on behalf of State by Additional District Magistrate & Additional Collector, Jalpaiguri, which contains following: "Signed for and on behalf of the Governor of West Bengal by in the presence of" 79. Thus, the execution of Lease by Additional District Magistrate and Additional Collector, Jalpaiguri was on behalf of the Governor, who was competent to execute the lease. Earlier, original leases were also executed by District Authority of similar designation. 80. The letter, which has been brought on the record by the State, issued by the District Magistrate & Collector Jalpaiguri, dated 04.08.2016, requiring Salami amount of Rs.57,25,711/- from the Kilcott Tea Garden, which ....
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....f the State of West Bengal in favour of the Corporate Debtor of three different Tea Gardens, namely - Kilcott, Garganda and Bagarcote, the Corporate Debtor has subsisting leasehold rights in the above three Tea Gardens and it cannot be held that the non-payment of Salami, as required to be paid as per State West Bengal Estate Acquisition Rules, 1954 (as Amended), shall make the Lease Deed void and inoperative. Similarly, renewal of Lease Deed of Garganda and Bagarcote-I are also valid renewals and they cannot be held as void and inoperative. 82. In view of the foregoing discussions, we answer Question Nos.3 and 4 in following manner: Ans. to Question No.3 : Renewal of Lease Deed of Kilcott with effect from 15.11.1995 till 23.08.2025 and renewal of Lease Deed of Garganda, with effect from 08.11.1996 to 08.09.2026 and renewal of Lease Deed of Bagarcote from 19.06.1998 till 22.05.2028 are valid renewals and the Corporate Debtor shall have subsisting leasehold rights in the above Tea Gardens on the date of commencement of CIRP, i.e. 05.03.2020. Ans. to Question No.4 : Non-payment of Salami as required to be paid as per West Bengal Estate Acquisiti....
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....pect to the Garganda Tea Garden was renewed vide deed of lease dated 08.11.1996, and the same is valid till 18.09.2026. Copies of original lease deed dated 19.07.1974, and a copy of the renewed registered deed dated 08.11.1996 are placed on record." 86. The RP claimed rights on the Tea Estates on the ground that renewal for lease had been applied and with regard to Garganda, renewal has already been executed on 08.11.1996. The submission was opposed on behalf of the Merico, who sated that the Applicant/ RP has no right in any of the Tea Gardens and Tea Gardens are owned by the State of West Bengal. Hence, the possession of such Tea Gardens cannot be taken by the RP under Section 18(1)(f) of the Code. The Adjudicating Authority, after considering the submission of both the parties, held that is it not every asset that is required to be taken custody of, but only those assets over which the Corporate Debtor has ownership rights as recorded in the balance sheet. The Adjudicating Authority in paragraph-5.6 noted the date on which leases expired of Tea Gardens. Paragraph 5.6, is as follows: "5.6 Once the question of ownership is out of the way, we notice certain material fac....
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....rray a situation where Merico is apparently doing a fine job of running the four tea gardens and taking good care of the workers. In these times when the covid- 19 pandemic and its second wave is wreaking havoc on the lives of ordinary citizens, such a move would be wholly unnecessary. We hasten to add that the principles enunciated here are not necessarily of universal application, but one borne out of the facts and circumstances obtaining in the present case. Order 5.19 In this view of the matter, the prayers asked for in the present IA cannot be granted IA No.1256/KB/2020 is, therefore, dismissed, but in the facts of the case, without costs. Liberty to apply is granted if and when the Govt of West Bengal takes a decision on the renewal of the lease." 88. We have carefully read the order of the Adjudicating Authority. Insofar as three Tea Gardens, i.e. Hantapara, Tulsipara and Dumchipara are concerned, there is no dispute that leases of the same have come to an end in the year 2004. But categorical case of the Appellant before the Adjudicating Authority was that lease of Garganda has been renewed by registered lease dated 08.11.1996. The whole analysis, which....
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....lows: "5. The Lease with respect to Kilcott Tea Estate was executed on 22.01.1973 for a period of thirty years commencing from 04.08.1963 and an indenture of lease was executed on 15.11.1995 for a term of thirty years on and from 24.08.1995. Hence, the transfer was done while the lease for the Tea Estate was still subsisting. 6. Respondent No. 1 has not only taken over the leasehold lands of the two Tea Estates being Kilcott Tea Co. Ltd. and Nagaisuree Tea Estate, but has also taken possession and control of the other assets and properties of the Corporate Debtor such as building, plant, machinery, equipment, office premises, living quarters etc." 91. The Adjudicating Authority, ultimately after considering the Application of the RP has noticed in the order that similar Application filed for possession of four Tea Gardens, where Adjudicating Authority observed that RP would not be able to run these two Tea Gardens. In paragraph 48 and 49, referring to the order passed in IA No.1256/KB/2020, following have been observed: "48. It is an admitted fact that a similar application had been filed for possession of four tea gardens. The Corporate Debtor is in f....
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....ing possession of Bagarcote Tea Garden, which also came to be rejected on 09.05.2022. In the order dated 09.05.2022, the Adjudicating Authority again relied on order dated 28.05.2021 passed in IA No.1256/KB/2020. In paragraph 20 of the order, following has been observed: "20. During the course of hearing it was noticed that, in this application also, the question of law is similar to the one in I.A. (IB) No. 1256/KB/2018 and I.A. (IB) No.1111/KB/2021. These two applications have already been decided after hearing exhaustive arguments of the learned Senior Counsel. Since the arguments are common and issue involved is conclusively covered by the order passed by this Bench earlier, there is no need to once again give more and more time for hearing the same arguments on behalf of the Resolution Professional and the Respondent No.1." 96. From the above, it is clear that while rejecting other Applications filed by the RP for taking possession of Tea Gardens, reliance has been made on order dated 28.05.2021 passed in IA No.1256/KB/2020. It is to be noted that the possession of all four Tea Gardens, which was subject matter of IA No.1256/KB/2020 was handed over to the Merico by....
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....Tea Estate with effect from 16th February 2021. Since reopening of Birpara Tea Estate under the supervision of the State Authorities, Merico has restored electricity, paying dues and regular wages and entitlements to all the workers to their utmost satisfactions, making regular timely deposits of Provident Funds and other statutory deposits after around a decade and gradually restored normalcy and functioning of the Garden in the best interest of improving the deplorable conditions of thousands of workers and labourers engaged thereat without retrenching any of them. Merico has since installed all necessary machinery and equipment, restored the dilapidated buildings with all necessary replacements and the Tea Garden is functioning as an exemplary Garden. This Deponent craves leave to refer to the Minutes of the Meeting held on 12th February 2021 at the time of hearing." 99. The possession of Runglee Rungliot Tea Estate has been taken by Merico on 24.11.2021, which has been pleaded by State in paragraph 11(dd), which paragraph is as follows: "11(dd). That it is most respectfully submitted that in compliance of the terms so agreed, Merico took over possession and control ....
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....f the IBC, on which reliance has been placed by Counsel for the Appellant, provides as follows: "14. Moratorium. - (1) Subject to provisions of sub-sections (2) and (3), on the insolvency commencement date, the Adjudicating Authority shall by order declare moratorium for prohibiting all of the following, namely: - (a) the institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgement, decree or order in any court of law, tribunal, arbitration panel or other authority; (b) transferring, encumbering, alienating or disposing off by the corporate debtor any of its assets or any legal right or beneficial interest therein; (c) any action to foreclose, recover or enforce any security interest created 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....
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....or. 104. Learned Counsel for the Appellant has placed reliance on the judgment of Hon'ble Supreme Court in Rajendra K. Bhutta vs. Maharashtra Housing and Area Development Authority and Anr. - (2020) 13 SCC 208. The Hon'ble Supreme Court in the above case had occasion to consider Section 14(1) of the IBC. In the above case, a joint development agreement was executed by Maharashtra Housing and Area Development Authority ("MHADA") with the Corporate Debtor and Goregaon Siddharth Nagar Sahakar Griha Nirman Sanstha Ltd. which had envisaged redevelopment of tenements. The CIRP against the Corporate Debtor commenced on 24.07.2017. The MHADA by notice dated 12.01.2018 issued termination notice, terminating the lease and directing the Corporate Debtor to hand over possession to MHADA, in turn the MHADA shall take possession. An Application was filed before the Adjudicating Authority by the Corporate Debtor restraining the MHADA to take possession, which was rejected by the Adjudicating Authority. The Appeal against the said order was also dismissed by the NCLAT. In the above context, the Hon'ble Supreme Court had occasion to consider applicability of Section 14, sub-section (1). In parag....
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.... The Appellant- 'Maharashtra Industrial Development Corporation' allotted Plot No. B-11 to the Corporate Debtor on 23.12.2014. A Lease Agreement was executed between the Appellant and the Corporate Debtor on 20.01.2015 whereunder license was granted in respect of the plot for two years subject to condition that it must complete 20% construction within two years i.e. from 20.01.2015 till 19.01.2017. Tri-partite Agreement was executed between the Corporate Debtor, the Appellant and DHFL, whereunder the Plot was mortgaged to DHFL and loan amount of Rs.7,22,80,214/- was disbursed to the Corporate Debtor. A Notice dated 01.11.2018 was issued by the Appellant to the Corporate Debtor asking it to show cause as to why action as provided in Clause 5(b) (i) of the Agreement to lease should not be taken against it since the Corporate Debtor has not completed the construction work of the factory building. By order dated 11.03.2019, Corporate Insolvency Resolution Process (CIRP) was initiated against the Corporate Debtor on an Application filed by 'Kay Bee Foundry Services Private Limited'- (Operational Creditor). On 29.01.2019, the Appellant had issued a letter to DHFL informing that the Cor....
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....er Section 14, the Appellant could have cancelled the lease which was earlier granted in favour of the Corporate Debtor and take possession of the plot in question during CIRP? (ii) Whether the Adjudicating Authority had no jurisdiction to entertain MA No.3691 of 2019 praying for quashing the Notice dated 08.11.2019? (iii) Relief, if any, to which the Appellant is entitled in this Appeal?" 107. After considering earlier precedent, this Tribunal concluded that Moratorium having kicked in w.e.f. 11.03.2019, the Appellant could not have taken possession of the leased property by virtue of restrain under Section 14(1)(d). In paragraph 28, 29 and 30, following have been observed: "28. From the law of the Hon'ble Supreme Court as laid down in "Embassy Property Developments Private Limited" and "Tata Consultancy Services Limited" (supra), the Adjudicating Authority has no jurisdiction to judicial review of any action taken by the Government or Statutory Authority in relation to matters which is in the realm of public law. Thus, in the facts of the present case, the Appellant who had granted a lease to the Corporate Debtor is well within its jurisdiction to ta....
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....f Tea Estates of the Kilcott and Bagaracote could not have been taken. It is true that the State was the owner of Tea Estates and due to suffering of labour, the Department of Labour, Govt. of West Bengal and Labour Commissioner held various meetings to mitigate the sufferings of the labourers, the possession of different gardens were handed over to Sammelan to the aforesaid two Tea Gardens, but moratorium having enforced, taking possession of aforesaid two Tea Gardens is in clear breach of Section 14 (1) (d). 109. With regard to other Tea Gardens whose leases have expired, State was owner of all the Tea Estates and it is a case of the Department that lease of Tea Gardens were not renewed and possession was taken. There being no subsisting right of the Corporate Debtor in the Tea Gardens, except the three Gardens, i.e. Garganda, Kilcott and Bagracote. We do not find any infirmity with regard to handing over possession to Marico and Sammelan for running other Tea Gardens after enforcement of moratorium. Thus, violation of moratorium under Section 14(1)(d) has to confine to two Tea Gardens where the Corporate Debtor has subsisting rights, i.e., Kilcott and Bagracote. Question N....
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....nk of India has pleaded that Adjudicating Authority erred in passing the impugned order in IA No.1111/KB/2021. It was further pleaded by the State Bank of India that Nagaisuree and Kilcott Tea Estates along with leasehold rights, were the Tea Estates, which were mortgaged to the State Bank of India. The Application was also joined by Asset Reconstruction Company (India) Limited, which claim to get assignment from Financial Creditors with respect to various Tea Gardens. 117. In the Appeal(s), which has arisen for consideration before us, need no consideration for the security interest of the Financial Creditors in different Tea Gardens by virtue of mortgage and other financial documents. These are issues, which need to be gone into during CIRP. We, however, observe that security interest can be claimed by Financial Creditors only in the Tea Gardens where leasehold rights of the Corporate Debtor subsist on the date of commencement of the CIRP, i.e., 05.03.2020. 118. Another IA No.1888/2023 filed by Uniglobal Papers Private Limited in Company Appeal (AT) (Insolvency) No.593 of 2022, which claims to be Resolution Applicant, whose Resolution Plan in the CIRP of the Corporate Debto....