TaxTMI 
TaxTMI 
TaxTMI 
2025 (10) TMI 624
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....ate Limited, the corporate debtor. 2. The first application IA(IBC)/415(CHE)/2024 was preferred by the Liquidator, by invoking the provisions contained under Section 32(e)(f) of I & B Code, 2016, to be read with IBBI (Liquidation Process) Regulations, 2016, to be read with Rule 11 of NCLT Rules, 2016. 3. In the said application, the Liquidator had prayed for passing orders (a) to confirm the sale of the Corporate Debtor as a going concern, (b) to declare that the Successful Bidder, is entitled to avail immunity as prescribed under Section 32A and Section 238 of the Code (that is, waiving of all existing liabilities and penalties, removal of attachments and encumbrances etc., if any, which has been made therein by the Statutory Authorities and (c) to direct the Statutory Authorities, involved in the Management of the affairs of the Corporate Debtor, to modify their records by entering the name of the Successful Bidder, as proposed by them. 4. The orders passed on this application, is not the subject matter of challenge at the behest of the Appellant, in the instant Company Appeal. 5. The Second Application being IA(IBC)/1701(CHE)/2023 was also preferred by the Liquidator....
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.... fit and proper in the facts and circumstances of the case and thus render justice." 8. The extraction of the reliefs as prayed for by the Appellant in IA(IBC)/1757(CHE)/2023, becomes relevant, for the reason being that, it has got a direct nexus to the issue, which has been made as a subject matter of challenge in the instant Company Appeal preferred by the Appellant arising from the Impugned Order on IA(IBC)/1701(CHE)/2023. 9. It is made clear at this juncture itself, that the Orders passed on IA(IBC)/ 1757(CHE)/2023 preferred by the Appellant is not a subject matter, which has been put to challenge by the Appellant in the instant Appeal or in any other independent proceedings before this Appellate Tribunal, by any of the parties, who had contested the proceedings before Ld. NCLT. 10. Hence, it will have to be deemed by way of a legal construct that, the Order rendered by the learned Adjudicating Authority on IA(IBC)/1757(CHE)/ 2023 has attained finality qua the Appellant (since being the Applicant to the said Application) and that, he would be bound by the consequences of the said Order, rendered on 27.09.2024, in IA(IBC)/1757(CHE)/2023. 11. The precise facts which e....
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....aluer's Report, he prepared the "Asset Memorandum" of the Corporate Debtor, giving the details of the assets of the Corporate Debtor and took the further steps for the sale of the Corporate Debtor as a going concern through e-auction in the manner provided in Schedule 1 of the Liquidation Process Regulations. 16. It has come on record that the e-auction conducted by the Liquidator on 29.06.2023, 23.08.2023, 11.10.2023 and 27.10.2023 met with no response and that only in the 5th e-auction held on 11.01.2024, after the Reserve Price was reduced as per the Liquidation process regulations to Rs. 43.74 crore, there was a response by a prospective bidder Shri. A.M. Ganesh, who submitted his bid along with EMD being 10% of the reserve price. 17. As he fulfilled all the eligibility requirements, he was declared as the Successful Bidder and letter of intent was issued in his favour and he also paid the balance 15% of the bid amount as per the terms and conditions of the letter of Intent. 18. The Liquidator, during verification of the documents relating to the assets of the CD, found that the original title Deeds of the property of the Corporate Debtor bearing the description of....
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.... reference or an elaborate discussion, that it is the settled law that merely an Agreement for Sale in respect of a property, will not in itself confer a Title over the property which is otherwise claimed by the Liquidator, as to be part of the Liquidation Estate as it stands recorded in the name of the Corporate Debtor. 22. The Appellant has further attempted to carve out a case for retaining the title deeds of the property, contending thereof that on 30.12.2020, he had extended a financial assistance of Rs. 50,00,000/- to the Corporate Debtor, as against the deposit of the Title Deeds of the said property and therefore, he is a Secured creditor of the CD, that he has elected to retain his security interest and has not relinquished the same, and therefore the liquidator cannot force him to relinquish his security interest and hand over the title deeds as demanded by the liquidator. 23. The questions, which emerge for consideration is, as to (i) whether at all, any right would be conferred on the Appellant based on a registered Agreement for Sale dated 30.11.2020, particularly when admittedly no Sale Deed got executed within the time stipulated under the Agreement for Sale in....
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.... sale consideration of an amount of Rs. 45,60,000/-, leaving a balance amount of Rs. 11,60,000/- to be paid, the documents of the said property was handed over by the Corporate Debtor to the Appellant in accordance with the terms contained under Clause 4 of the said Agreement and the sale transaction will be completed within 2 years subject to the satisfaction that, the title of the Vendor is satisfactory and marketable as per the opinion of the legal advisor of the Appellant. However, no action is shown to have been taken by the Appellant to get the sale transaction completed within the stipulated time frame though he was supposed to initiate the process of completion of sale transaction. 27. Further, the Appellant has contended that Subsequent to execution of the agreement to sale, the CD approached him for a loan of Rs. 5000000/- for business purposes and agreed to deposit the original title deeds of the said property, based on which, he extended the said amount as loan to the CD, for which the CD executed an unregistered memorandum of deposit of title deeds (MoDT) on 30.12.2020 and that, it has created an "Equitable Mortgage" in his favour, in lieu of the loan of Rs. 50,00,0....
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.... (i) that there is surrender of Title Deed by the Corporate Debtor to the Appellant, as per Clause 4 of the registered Agreement for Sale; (ii) that there is nothing on record to show that, at any point of time, the Sale Deed, was ever attempted to be executed by the Corporate Debtor, prior to the Corporate Debtor being put to CIRP and therefore, the title still continues to be vested with the Corporate Debtor; (iii) that the Agreement for Sale in itself, under the provisions of Registration Act does not confer any valid title over the Property and therefore, the property will have to be a part of the Liquidation Estate; (iv) that the MoDT of 30.12.2020, which has been sought to be made as the basis for acquiring the title deeds of the said property cannot be used to establish ownership over the said property because 1) it is an unregistered document; 2) it specifically contemplated creation of an '' Equitable Mortgage", which required to be registered as per Section 17 of the Registration Act and it has not been done; 3) there is no evidence on record, which could be extracted from the Books of Accounts of the Corp....
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....rar may, on an application, allow such registration to be made within a further period of sixty days after payment of such ad valorem fees as may be prescribed.] Provided also that any subsequent registration of a charge shall not prejudice any right acquired in respect of any property before the charge is actually registered: 2[Provided also that this section shall not apply to such charges as may be prescribed in consultation with the Reserve Bank of India.] (2) Where a charge is registered with the Registrar under sub-section (1), he shall issue a certificate of registration of such charge in such form and in such manner as may be prescribed to the company and, as the case may be, to the person in whose favour the charge is created. (3) Notwithstanding anything contained in any other law for the time being in force, no charge created by a company shall be taken into account by the liquidator 3[appointed under this Act or the Insolvency and Bankruptcy Code, 2016 (31 of 2016), as the case may be,] or any other creditor unless it is duly registered under sub-section (1) and a certificate of registration of such charge is given by the Registrar un....
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....ocuments shall be registered, if the property to which they relate is situate in a district in which, and if they have been executed on or after the date on which, Act No. XVI of 1864, or the Indian Registration Act, 1866, or the Indian Registration Act, 1871, or the Indian Registration Act, 1877, or this Act came or comes into force, namely:-- (a) instruments of gift of immovable property; (b) other non-testamentary instruments which purport or operate to create, declare, assign, limit or extinguish, whether in present or in future, any right, title or interest, whether vested or contingent, of the value of one hundred rupees and upwards, to or in immovable property; (c) non-testamentary instruments which acknowledge the receipt or payment of any consideration on account of the creation, declaration, assignment, limitation or extinction of any such right, title or interest; and (d) leases of immovable property from year to year, or for any term exceeding one year, or reserving a yearly rent; 1[(e) non-testamentary instruments transferring or assigning any decree or order of a Court or any award when such decree or order or award purport....
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....ree or order expressed to be made on a compromise and comprising immovable property other than that which is the subject-matter of the suit or proceeding]; or (vii) any grant of immovable property by 7[Government]; or (viii) any instrument of partition made by a Revenue- Officer; or (ix) any order granting a loan or instrument of collateral security granted under the Land Improvement Act, 1871, or the Land Improvement Loans Act, 1883; or (x) any order granting a loan under the Agriculturists, Loans Act, 1884, or instrument for securing the repayment of a loan made under that Act; or 8[(xa) any order made under the Charitable Endowments Act, 1890 (6 of 1890), vesting any property in a Treasurer of Charitable Endowments or divesting any such Treasurer of any property; or] (xi) any endorsement on a mortgage-deed acknowledging the payment of the whole or any part of the mortgage- money, and any other receipt for payment of money due under a mortgage when the receipt does not purport to extinguish the mortgage; or (xii) any certificate of sale granted to the purchaser of any property sold by public auction by a Civil or Reve....
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....documents of Title Deed as it was mentioned in the Agreement for Sale dated 30.11.2020, does not appear to suffer from any apparent vices. Since the MoDT dated 30.12.2020, which in accordance with sub-section (3) of Section 77, to be read in accordance with the State Amendment of Tamil Nadu of 2012, under Section 17 of the Registration Act of 1908 was necessarily required to be registered and it has not been done, the Appellant does not have a right to retain the documents of the Title Deed, which are said to have been handed over to the Appellant on the basis of a document, which cannot otherwise be read in evidence in accordance with the restrictions and stipulations imposed by Section 49 of the Registration Act, 1908, which creates an embargo that an un-registered document cannot be read in evidence. 40. Another remarkable feature requiring to be considered by us is that, though the entire process of the Corporate Debtor, being first admitted into CIRP and then into liquidation was in the knowledge of the Appellant, because he filed his response to the notice issued by the Liquidator, he did not file any claim with the Liquidator, despite of knowledge of notice of invitation ....
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....ated 30.12.2020. 46. Even otherwise also, this Appellate Tribunal is of the view that, in the absence of any reference to the alleged loan of Rs. 50 lakh in the Books of Accounts of the CD and in absence of compliance to the provisions of section 17 of Registration Act read with provisions of the State Amendment as contained therein, by not registering the MoDT and in the absence of any proof of having entered into any financial transaction as claimed, no defence as such on part of the Appellant justifying the retention of the title deeds of the subject property would be acceptable to be sustained in the eyes of law. 47. Yet another aspect which requires consideration is that, the Appellant himself has not put a challenge to the Order passed on IA (IBC) / 1757 (CHE) / 2023, as preferred in IBA / 870 / 2020 for the relief claimed. 48. Under the above circumstances, the claim of the Appellant could be summarized to be flowing from the registered Agreement for Sale dated 30.11.2020 and from the un-registered MoDT dated 30.12.2020. Both these documents had disclosed surrender of Title Deed in favour of the Appellant. 49. But, the Agreement for Sale in itself, will not confe....