TaxTMI 
TaxTMI 
2025 (7) TMI 1460
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....Sr. Advocate with Mr. Arijit Mazumdar, Ms. Anshula Mazumdar, Advocates for SRA ( SMV Agencies ) . Mr. Rachit Mittal, Mr. Parish Mishra, Mr. Kanishk Raj, Mr. Abhishek Sinha, Advocates for NOIDA Ms. Ridhima Verma, Ms. Aparajita Singh, Advocates for Applicant in IA No. 5864 of 2024 JUDGMENT ASHOK BHUSHAN, J. These appeals have been field challenging the same order dated 24.07.2024 passed by the Adjudicating Authority (National Company Law Tribunal), New Delhi Bench, Court-II in various IAs filed in Company Petition No. (IB)-1248(PB)/2018. The Adjudicating Authority vide the impugned order dated 24.07.2024 issued various directions on different applications including application filed by the Resolution Professional for approval of the Resolution Plan submitted by M/s SMV Agencies Private Limited, which was approved by the Committee of Creditors (CoC) on 22.07.2020. 2. Company Appeal (AT) (Ins.) No.1479 of 2024 has been filed by the Authorised Representative for M/s Granite Gate Properties Private Limited representing the CoC which consist of 100% homebuyers. The CoC had approved the Resolution Plan of M/s SMV Agencies Private Limited on 22.07.2020, for approval of whi....
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....nancial Creditor of the Corporate Debtor which categorization changed as Operational Creditor after judgment of the Hon'ble Supreme Court in Anand Sonbhadra's case. In response to 2nd Form G issued by the Resolution Professional, Expression of Interest (EOI) was expressed and in response to Request for Resolution Plan (RFRP), five Resolution Applicants submitted their resolution plan. The resolution plan was approved of M/s SMV Agencies Private Limited, in which NOIDA voted against the plan. It was on 17.05.2022 that NOIDA was declared Operational Creditor in case of New Okhla Industrial Development Authority Vs. Anand Sonbhadra. Appellant has filed its objections to the Resolution Plan before the Adjudicating Authority. NOIDA also filed an application IA No.2298 of 2021 on 20.05.2021 praying for various reliefs including payment towards water and sewer charges, instalments, re-scheduled instalments and time extension charges during CIRP period. The Adjudicating Authority heard all the applications and passed orders on 24.07.2024 issuing directions. NOIDA aggrieved by the order dated 24.07.2024 has come up in Appeal. In the Appeal, NOIDA prayed for setting aside / modify direction ....
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....and sewer charges as also time extension charges by the Corporate Debtor as CIRP Cost. Shri Tandon submits that payment of two instalments is towards premium of the land which cannot fall within the meaning of CIRP cost. It is submitted that the CIRP Cost is a cost which is incurred in running of the Corporate Debtor as going concern. Instalment of premium of land which fell due during the CIRP period cannot be treated to be CIRP cost. It is submitted that time extension charges are also not leviable as CIRP cost. It is submitted that under the lease deed time extension charges are provided for maximum period of three years and after expiry of maximum period of three years, there is no time extension. It is submitted that as far as water and sewer charges, Resolution Professional himself has submitted that said charges shall be paid treating it to be CIRP cost. Learned counsel for the Appellant submits that said direction issued in Para 79(h) needs to be set aside. Learned counsel for the Appellant relied on judgment of this Tribunal in Company Appeal (AT) (Ins.) No.622 of 2022, Sunil Kumar Agrawal Vs. New Okhla Industrial Development Authority where this Tribunal categorically hel....
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....-CIRP dues. Learned counsel for the Resolution Professional further submitted that the CIRP cost as contemplated under Regulation 31(b) of IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 is CIRP cost which is to offset the loss. The premium instalments were not paid by the Corporate Debtor since 2015, hence, NOIDA cannot claim benefit of Regulation 31(b) of CIRP Regulations, 2016. Two instalments which fell due during the CIRP period are not CIRP cost. Shri Batra submitted that time extension charges cannot be CIRP cost. 7. Shri Rachit Mittal, leaned counsel appearing for the NOIDA refuting the submissions made on behalf of the Appellant in Company Appeal (AT) (Ins.) No.1479 of 2024 submits that NOIDA is aggrieved by the direction issued in Para 79(a) where the Adjudicating Authority has left it to the discretion of the CoC to take a decision as to from what stage CIRP need to be commenced. It is submitted that the CIRP should be resumed from the stage of issuance of Information Memorandum. It is submitted that in the Information Memorandum liquidation cost having been reflected by the Resolution Professional, the said reflection vitiated the confide....
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.... 729, Karad Urban Cooperative Bank Ltd. vs. Swwapnil Bhingardevay & Ors." submits that when confidentiality is breached by disclosing the liquidation value in the Information Memorandum, from that stage of Information Memorandum the CIRP process is required to be commenced. 8. Shri Abhijeet Sinha, learned counsel appearing for the Successful Resolution Applicant (SRA) submits that the SRA has submitted its plan by which the SRA stands today also. The SRA stands by its commitments. The SRA should be given an opportunity to give Resolution Plan and the CIRP is needed to be commenced only from the stage of Resolution Plan by giving opportunity to the SRA to give revised Resolution Plan as claims have already been crystalized. 9. We have heard learned counsel appearing for the intervener - six homebuyers who had filed IA No.8844 of 2024 as well as learned counsel appearing for the Respondent No.2 in Company Appeal (AT) (Ins.) No.1479 of 2024. It is submitted by learned counsel that Authorized Representative is not adopting any transparent process and all homebuyers are not being informed with regard to steps undertaken by the Authorized Representative. It is submitted that Author....
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.... IA-3926/2023 is allowed and the IA-3325/2020, IA-3025/2022 and IA-3330/2020 stands dismissed as withdrawn. Nevertheless, as has been directed above the project ('I-ring') mentioned in IA-3926/2023 would be treated as asset of CD and would be dealt with in terms of the Resolution Plan." 12. From the submissions of learned counsel for the parties and materials on the record following are issues which arise for consideration in the present appeal: (I) Whether two instalments i.e. 19th and 20th instalment, which fell due after commencement of CIRP can be treated to be CIRP cost and the direction issued by the Adjudicating Authority in Para 79(h) for payment of above two instalments can be sustained? (II) Whether the amount which is payable towards water and sewer charges is CIRP cost? (III) Whether time extension charges as claimed by NOIDA are CIRP cost, which is liable to the paid in the resolution plan? (IV) Whether the Adjudicating Authority while remitting back the resolution plan to CoC could have left it to the discretion of CoC as to whether the CIRP should resume from the stage of preparation of Information Memorandum or from any other s....
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.... of amount was paid at the time of allotment and 90% was to be paid in next 8 years. 19th instalment became payable on 09.06.2019 for an amount of Rs.23,26,12,405/- and 20th instalment became due on 09.12.2019 for Rs.22,10,86,565/-. Thus, two instalments i.e. 19th and 20th instalment became due after commencement of the CIRP period. The NOIDA in its claim, which was filed before the Resolution Professional included the said two instalments i.e. 19th and 20th instalments also, however, the Resolution Professional did not accept the claim pertaining to 19th and 20th instalment. Rest of the claim was admitted. The NOIDA has filed an application being IA No.2298 of 2021 before the Adjudicating Authority, copy of which application has been brought on the record by the appellant in Company Appeal (AT) (Ins.) No.1479 of 2024 by Convenience Compilation. In IA No.2298 of 2021, Noida has prayed for following prayers: "PRAYER In the aforesaid facts and circumstances, it is most humbly and respectfully prayed that this Hon'ble Bench may graciously be pleased to : (a) Direct the Respondent- Resolution Professional not to give effect to the minutes of 21 meeting of....
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....e) shall mean- (a) amounts due to suppliers of essential goods and services under Regulation 32; (b) amounts due to a person whose rights are prejudicially affected on account of the moratorium imposed under section 14(1)(d); (c) expenses incurred on or by the interim resolution professional to the extent ratified under Regulation 33; (d) expenses incurred on or by the resolution professional fixed under Regulation 34; (e) and other costs directly relating to the corporate insolvency resolution process and approved by the committee." 17. Learned counsel for NOIDA has specifically pleaded that the payment of two instalments is covered by Regulation 31(b). It is submitted that the two instalments, which became due to the NOIDA after commencement of CIRP are fully covered by Regulation 31(b) since rights of NOIDA were prejudicially affected on account of the moratorium. Shri Kunal Tandon, learned counsel submits that Regulation 31(b) is not applicable. It is submitted that the Corporate Debtor was not paying the instalments since 2015, hence, there was no occasion of NOIDA being prejudicially affected by moratorium. Shri Tandon has speci....
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....g the period 11.10.2019 to 30.06.2021 as per the letter dated 04.06.2021, sent by the Applicant to the Resolution Professional. Therefore, even if we accept the contention of the Resolution Professional that the lease rent does not fall under the categories of supplies to the essential goods and services, but in terms of explanation of Section 14(1) of the IBC 2016 added w.e.f. 28.12.2019, the applicant is entitled to get lease premium amount as well as lease rent arising for the use or continuation of the lease during the moratorium period, failing which the moratorium will not apply for the suspension or termination of lease. In view of the above, as the Resolution Professional has failed to pay the lease premium and lease rent due to the NOIDA Authority, therefore, the respondent is directed to make the payment of the current amount, which is due and payable within 6 months or include the said amount as Insolvency Resolution Process Cost under Regulation 31 of the IBBI (Insolvency Resolution Process of Corporate Person)."" 18. The submission which was made on behalf of the Resolution Professional is noticed in Para 5, which is as follows : "5. Counsel for the Appella....
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....condition for its continuation if there is no default in payment of the dues of such license, permit, registration, quota, concession, clearance or a similar grant or right during the moratorium period. The similar grant or right has to be read in respect of the licence, permit, registration, quota, concession, clearance but it cannot be read as the premium amount or lease rent which has been so ordered by the Adjudicating Authority to be paid by the Appellant to the Respondent. 11. Thus, in view of the aforesaid facts and circumstances, in our considered opinion, the impugned order is patently illegal and deserves to be set aside. Consequently, the appeal is allowed and the impugned order is set aside though without any order as to costs." 21. This Tribunal held in the above judgment that premium amount of lease rent is not covered by explanation to Section 14(1)(d). The said judgment fully supports the submission of Shri Kunal Tandon raised in Company Appeal (AT) (Ins.) No.1479 of 2024. 22. Shri Mittal appearing for NOIDA sought to distinguish judgment of this Tribunal in Sunil Kumar Agrawal stating that NOIDA does not rely on Section 14(1)(d) and the reliance is o....
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....t. We, however, hasten to add that in view of the protection which has been given in Civil Appeal No.901 of 2023, NOIDA is also entitled to similar protection. In case, it is held by the Hon'ble Supreme Court that the lease premium is a CIRP cost, as contemplated in order dated 17.02.2023, the amount of 19th and 20th instalment, as is claimed by the NOIDA, shall be payable by SRA. The resolution plan which shall henceforth be submitted for consideration as per the order of the Adjudicating Authority remitting the resolution plan for consideration, there need to be undertaking to the above effect by the Resolution Applicant who has to pay the aforesaid 19th and 20th instalment, if it is held as CIRP cost in Civil Appeal No.901 of 2023. We, thus answer Issue No. I accordingly. ISSUE NO. II 26. Before us it is not even disputed that amount towards water and sewer charges which is payable in CIRP is CIRP cost. Learned counsel for the Resolution Professional very fairly submitted that the unpaid amount towards water and sewer charges shall be paid. We, thus, hold that water and sewer charges are CIRP cost and unpaid water and sewer charged are liable to be paid as CIRP cost. Issue....
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....ate of execution of Lease Deed/ Possession. 7. 200000-400000 20% Three years from the date of execution of Lease Deed/ Possession. Nine years from the date of execution of Lease Deed/ Possession. 8. Above 400000 15% Three years from the date of execution of Lease Deed/ Possession. Ten years from the date of execution of Lease Deed/ Possession. I) All the peripheral/external development works as may be required to be carried out up to the allotted plot including construction of approach road, drains, culverts, electricity distribution/transmission lines, water supply, sewerage will be provided by the Lessor /Authority. However, all the expenses as may be required to connect these services with the internal system of services of plot shall be Incurred by the Lessee. II) Without prejudice to the Authority's right of cancellation, the extension of time for the completion of Project, can be extended for a maximum period of another three years only with penalty as under: * For first year the penalty shall be 4% of the total premium. * For second year the penalty shall be 5% of the total premium * For third yea....
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..... However, the expenses as may be required to connect thee services with the internal system of services of plot shall be incurred by the Lessee. 3. Without prejudice to the Lessor's right of cancellation, the extension of time for the completion of Project, can be extended for a maximum period of another three years only with penalty as under: * For first year the penalty shall be 4% of the total premium. * For second year the penalty shall be 5% of the total premium * For third year the penalty shall be 6% of the total premium. Extension for more than three years as stated above, will not be permitted under any circumstances. 4. In case the Lessee does not construct building within the time provided including extension granted, if any, for above, the allotment/ lease deed as the case may be, shall be liable to be cancelled. Lessee shall lose all rights to the allotted land and buildings appurtenant thereto. 5. There shall be total liberty at the part of allottee /lessee to decide the size of the flats/ plots (in case of plotted development) or to decide the ratio of the area for flatted/ plotted development. The F....
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....as already been received from the Valuer appointed in pursuance of the impugned order. Regulation 35 of the CIRP Regulations, 2016 which provides for fair value and liquidation value has been amended. Regulation 35 has been substituted w.e.f. 15.02.2024. Regulation 35 is as follows: "Regulation 35: Fair value and Liquidation value. (1) Fair value and liquidation value shall be determined in the following manner:- (a) the two registered valuers appointed under regulation 27 shall submit to the resolution professional an estimate of the fair value and of the liquidation value computed in accordance with internationally accepted valuation standards, after physical verification of the inventory and fixed assets of the corporate debtor; 2[Provided that the resolution professional shall facilitate a meeting wherein registered valuers shall explain the methodology being adopted to arrive at valuation to the members of the committee before computation of estimates.] 3[(b) if the two estimates of a value in an asset class are significantly different, or on receipt of a proposal to appoint a third registered valuer from the committee of creditors,....
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....ormation Memorandum liquidation value was reflected, which has breached the confidentiality, hence, it is necessary that CIRP may commence from the stage of Information Memorandum. Learned counsel for NOIDA relied on judgment of Hon'ble Supreme Court in "(2020) 9 SCC 729, Karad Urban Cooperative Bank Ltd. vs. Swwapnil Bhingardevay & Ors.". In the above case, the NCLT has approved the resolution plan, which order was set aside by NCLAT and the matter was remanded by NCLAT, which order was challenged by the Financial Creditor before the Hon'ble Supreme Court. One of the reason given by NCLAT for interfering with the order of NCLT has been extracted in Para 9.2, which is as follows : "9.2. That inasmuch as the liquidation value mentioned by the successful resolution applicant in its resolution plan tallied exactly with the liquidation value obtained by the resolution professional, there appears to have been a breach of confidentiality, violating Regulation 35(2)." 34. Learned counsel for the NOIDA has relied on Paras 20, 25, 26 and 28, which are as follows: "20. It is true that in the last paragraph of the impugned order, namely, para 14, the Appellate Tribunal ho....
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.... this and the person who raised this point is not on appeal." 36. Ultimately, the Hon'ble Supreme Court allowed the appeal, set aside the order of NCLAT and upheld the approval of the plan. Learned counsel for the NOIDA has relied on observation made by the Hon'ble Supreme Court in Para 20 where Hon'ble Supreme Court has observed that finding given by the Appellate Tribunal should have taken to the point of setting aside the entire process and directing the resolution professional to start the process all over again from the stage of issue of a fresh advertisement, which was not done. The reasons are given by the Hon'ble Supreme court for upholding the Resolution Plan. One of the reason was that liquidation value sought was only Rs.13.53 Crores whereas resolution plan was valued Rs.29.74 Crores. Judgment of NCLAT being set aside, the above judgment cannot be relied by the NOIDA to contend that in a case where liquidation value was reflected in Information Memorandum, it is necessary/mandatory to start the process from the stage of Information Memorandum. The Adjudicating Authority has rightly held that in the Resolution Process there was breach of CIRP Regulation, 2016 due to wh....
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....period of 30 days. In the RFRP, the Resolution Professional shall also include the undertaking with respect to CIRP cost of two installments as indicated above, which shall be liable to be paid as CIRP cost in event it is held by the Hon'ble Supreme Court in Civil Appeal No.901 of 2023 that lease premium is a CIRP cost, which is stipulated in the order of the Hon'ble Supreme Court dated 17.02.2023, as noticed above. The resolution plan need to contain stipulation to the above extent, which may be specifically added in the Request for Resolution Plan. As observed above, the Resolution Professional may issue an Addendum to Information Memorandum to facilitate the Resolution Applicants to submit the Resolution Plan. The Addendum be issued simultaneously with issuing Request for Resolution Plan. 39. We, thus, are of the view that direction issued by the Adjudicating Authority in Para 79(a) needs to be modified. Modified Para 79(a) shall read: "a) The Resolution Plan stands remitted back to the CoC. The CoC to direct the Resolution Professional to issue Request for Resolution Plan to the Resolution Applicants whose names were included in the final list of Resolution Applican....