TaxTMI 
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2025 (7) TMI 1460
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....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 which resolution an IA was filed by the Resolution Pr....
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....onal 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 issued in Para 79(a) of the impugned order. The reliefs prayed by the NOIDA in t....
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....s 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 held that the payment of land premium which fell due during CIRP period cannot be treated to be CIRP Cost an....
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....lated 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 confidentiality of the liquidation cost, vitiating the entire process. Shri Mittal submits that two instalments whic....
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....s 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 Authorized Representative has filed the appeal without proper authority. The conduct of Authorized Representative is ag....
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....-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 stage or the present SRA should be given opportunity to submit revised Resolution Plan after forensic audit and fresh valuation of the assets of the CD? 13. We need to first notice the submissions raised by counsel fo....
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....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 Committee of Creditors dated 20.04.2021; (b) Direct the Respondent not to hand over the possession of the apartments/ flats/ units in violation to the provisions of Section 13 of the Uttar Pradesh Apartment (Promotion of Construction, Owner....
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....fied 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 specifically placed reliance on judgment of this Tribunal in "Company Appeal (AT) (Ins.) No.622 of 2022, Sunil Kumar Agrawal Vs. New Okhla Industrial Development Authority", decided on 12.01.2023. We need to notice the said judgment in some detail. The above appeal was filed by the Resolution Professional challenging the order of the Adjudicating Authority ....
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.....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 Appellant has submitted that the Adjudicating Authority has erred in applying explanation of Section 14(1)(d) of the Code for the purpose of allowing the application of Respondent because the said explanation is not applicable at all. In this regard, it is submitted that Section 14(1)(d) provides that after the declaration of moratorium, the recovery of any property by an owner or lessor ....
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....ered 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 only placed on Regulation 31(b) of the CIRP Regulations, 2016. The above submission of the NOIDA cannot be accepted. Regulation 31(b) also refers to Section 14(1)(d), hence, it does gives applicability of Section 14(1)(d). The rights of NOIDA can be said to be prejudicially affected, hence, claim can fall under 31(b). Explanation having been added after Section 14(1) w.e.f. 28.12.2019, the said explanation was ....
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....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 No. II is answered accordingly. ISSUE NO. III 27. As noted above, there are two lease deeds executed in favour of the Corporate Debtor dated 30.12.2008 and 29.12.2009 in Sector 100 and Sector 110 of Noida on which projects namely Lotus Bolevard (Sector 100) and Lotus Panache (Sector 110) are under construction. Both the lease deeds provide for time extension for construction. We need to notice the relevant clauses of the lease deed which provide for time ext....
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....ransmission 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 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. III) 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 there to. The lessee shall be required to complete the construction of Group Housing pocket on allotted plot as per schedule from the date of execution of lease deed as per t....
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....ase 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.A.R. earmarked for commercial/Institutional use would be admissible but the allottee /lessee may utilize the same for residential use as per their convenience. 6. The allottee/ lessee may implement the project in maximum five phases and the occupancy certificate/completion certificate shall be issued by the LESSOR phase wise accordingly enabling them to do phase-wise marketing." 29. The period for completion of construction with respect to lease deed dated 30.12.2008 is eight years from the date of execution of lease deed and for lease deed dated 29.12.2009 it shall be seven years from the date of execution of lease deed. After the expiry of eight and seven years, respectively, extension of time....
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....s 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, the resolution professional may appoint a third registered valuer for an asset class for submitting an estimate of the value computed in the manner provided in clause (a). Explanation.- For the purpose of clause (b), (i) "asset class" means the definition provided under the Companies (Registered Valuers and Valuation) Rules, 2017; (ii) "significantly different" means a difference of twenty-five per cent. in liquidation value under an asset class and the same shall be calculated as (L1-L2)/L1, where, L1= higher valuation of liquidation value L2= lower valuation of liquidation value.] (c) the average of the two closest estimates of a value shall be considered the fair value or the liquidation value, as the case may be. 4[(2)....
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....an 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 holds that the CIRP suffered from material irregularities and the resolution plan approved suffers from feasibility and viability. But then the operative portion of the impugned order' does not take the findings on other issues to their logical end. For instance, the Tribunal holds that the advertisement inviting expression of interest itself was defective and that there was breach of confidentiality inasmuch as the liquidation value appears to have been leaked out. These findings should have taken the Appellate Tribunal 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. NCLAT did not do so. In the operative portion, NCLAT merely remanded the matter back to the adjudicating authority w....
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.... 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 which Resolution Plan cannot be approved and the plan was remitted to the CoC. 37. In the present case, the CIRP period has already came to an end before approval of resolution plan and the Adjudicating Authority has granted 60 days' period from 19.06.2020 which came to an end on 18.08.2020. The resolution plan being approved by the CoC on 22.07.2020, before expiry of said period, application for approval of resolution plan was filed by the Resolution Professional, which remained pending before the Adjudicating Authority till 24.07.2024, when impugned order was passed. There were several applications before the Adjudicating Authority including objection by NOIDA. Four years' period elapsed during pendency of the proceeding before NCLT for approval of plan. When the CIRP period has already came to an end and the Adjudicating Authority has remit....
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.... 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 Applicants to submit the Resolution Plan, within a period of thirty (30) days. The CoC will proceed to consider the Resolution Plan and take final decision within period of 90 days from the date of this order." 40. The period during which the applications remained pending before the Adjudicating Authority and decided on 24.07.2024 and the period during which the Appeals against the said order remained pending before this Tribunal need to be excluded from the CIRP period, which is hereby excluded. Further extension of 90 days is granted for completion of entire process of the CIRP. Issue No. IV is answered accordingly. 41. In view of the foregoing discussion and conclusions, both the appeals are disposed of in following manner: (i) Para 79(a) of the impugned order dated 24.07.2024 is modified to the following extent: a) The Resolution Plan stands remitted ba....