AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2025 (11) TMI 780
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....II Kolkata Bench, in CA number 1763 (KB) 2019 in CP IB number 446 KB of 2017 where by the IA No. 1763 of 2019 moved by the appellant has been rejected. 2. Necessary facts required for disposal of the instant appeal are that the appellant is Government of West Bengal company and a Planning Authority appointed by the state government with a mandate to provide larger supply of developed land for development of New Town, Kolkata. The state government after acquiring a large chunk of land came into the ownership and possession of the said and with the object of creating New Town Kolkata and had developed the said land. 3. It is stated that the lease of a piece of land measuring about 3608.87 square metre situated at premise number 7/775 at street number 775 in Newt Rajarhat Town Kolkata under Maouza Noupara District North 24 Parganas under Rajarhat Gopalpur, was granted to Concast Ispat Ltd. for a period of 99 years on a premium of Rs 6,69,02,836/- along with payment of annual lease rent, by lease deed dated September 17, 2012 duly registered at the office of Registrar of Assurances II, Kolkata, with the clear stipulation that the lessee will use the land exclusively for establish....
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....ebtor and immediately a notice was issued by the appellant to the respondent on May 30, 2019, a reply of which was given by the respondent on June 18, 2019 stating that in pursuance of many letters written by the appellant an implied consent may be assumed. 9. It is also stated that subject land is part and parcel of the land required by the State Government for New Town project and belongs to the government of West Bengal and the respondent herein has illegally and arbitrarily claiming the same to belong to the CD in liquidation and have also issued a public advertisement with regard to its sale which could not be done in the background of the fact that no right has been transferred to the CD by an illegal merger scheme. 10. It is further stated that an application bearing IA No.1763 of 2019 for the purpose of seeking necessary directions were moved before the NCLT Kolkata which has been rejected by passing the impugned order and learned Tribunal has committed manifest illegality in rejecting the same. It is prayed that as the lease could not be assigned to the CD by the CIL, no rights in the impugned land has been transferred in favour of CD and this land could not be the p....
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....ppellant and has not considered the fact that lease hold rights could not be transferred to CSPL in violations of terms of the lease deed and without the consent of the appellant and this fact has been Ignored by the tribunal and has not been considered in right perspective. 18. He further submits that the amalgamation of the CIL and the corporate debtor CSPL without seeking consent of the appellant is in violation of the specific terms and conditions of the lease deed and therefore the merger/amalgamation scheme is not having any legal force. Elaborating further it is submitted that the amalgamation deed or any order secured on the basis of such illegal amalgamation deed cannot override the terms and conditions of the lease deed. 19. It is further submitted that learned tribunal failed to understand that any action under section 111 of the Transfer of Property Act (TPA) could only be initiated against the original lessee which in this case was CIL and not the corporate debtor (SPL) and once the original lessee has seized to exist and the amalgamation has been carried out without the consent of the appellant the lease of the land automatically stood determined by operation of....
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....ated 26 November 2015 did not mention the demised land as lease, however, this was rectified by the tribunal by an order dated September 14, 2018. Moreover, in the correspondence made by the appellant, the appellant recognised CSPL as the lessee, in this regard, Ld. counsel has drawn the attention of this tribunal on various communications held between the parties in order to show that the appellant had recognised CSPL to be its lessee. 27. It is further submitted that on noticing that the name of the CSPL had not been reflected as the allottee of the land, the respondent has issued a letter dated 27 May 2019 requesting the appellant to record the name of the CSPL in the list of allottees and it is in response to this letter the appellant for the very first time by its letter dated May 30, 2019 stated that the lease land has not vested in CSPL and the same stood determined with effect from the date of order of amalgamation of CIL with CSPL and this averment was made despite the fact that the order of amalgamation dated November 26, 2015 was rectified by the order of learned adjudicating authority of September 14,, 2018, which upon being communicated to the appellant was neither ....
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....r 26, 2018, and as such the last date for submission of claim would be October 26, 2018, but no claim has been filed by the appellant. 32. It is also submitted that in Czarnikov Group Limited vs Commissioner of Customs Preventive petition number 29614 of 2022 Hon'ble Madras High Court has held that the right of any creditor, whether a financial creditor, operational creditor, secured or unsecured creditor would arise only in the event and upon the condition that claim has been made by the creditor. It is submitted that the appeal as such is liable to be dismissed. 33. We have heard Ld. Counsel for the parties and have perused the record as well as the written submissions submitted by Ld. Counsels for the parties. 34. It is reflected that the lease of the demised land was granted by the appellant in favour of the Concast Ispat Ltd. (CIL) for a period of 99 years upon payment of total lease premium of Rs. 6,69,02,836/- and subject to other conditions mentioned in the lease deed, admeasuring about 3608.67 sq. metres (0.891 acres) vide lease deed dated 17.09.2012 which was duly registered, for establishing the group Corporate House of Concast Ispat Ltd. (CIL). A copy of this l....
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.... as applicable in New Town, Kolkata failing which the Lessor shall have the liberty to cancel the offer/Lease Agreement/Lease Deed and Lessor shall be entitled to re- enter into or upon the said land on refund of the payment of original premium made by the Lessee and resume possession thereof and the same shall thereafter vest with Lessor as in their former estate. (xi) The Lessee shall not sub-divide or sublet or sub-lease the demised land/building constructed thereon/or any part thereof or the structure constructed thereon. (xii) The Lessee shall obtain necessary prior approval from appropriate authorities for establishing the intended project as required under Law for the time being in force and shall also go on complying with all the terms and conditions of such clearances throughout the period or lease. (xiii) the Lessee shall not assign, alienate or transfer the demised land or any part thereof and/or the structure erected thereon. However, in case of Lessees inability to continue the lease for the unexpired time period of the lease, the Lessor shall have the right of pre-emption and upon the exercise of this right the building constructed by the Le....
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....roperty in the schedule of assets of the amalgamation order, which stood transferred to the CSPL, vide amalgamation order dated 26.11.2015, the matter was discussed in a meeting held between the Counsels of the appellant corporation with Mr. Chetan Jain, Senior Vice President of the Project of the CD and in this meeting Mr. Jain was advised to arrange for a rectification of the amalgamation order and it is thereafter the amendment/rectification application appears to have been moved by the CSPL before NCLT, Kolkata, which was rejected on 06.04.2017 apparently for want of jurisdiction. However, an appeal being CA (AT) (Ins) No. 186 of 2017 was preferred against this order and this Appellate Tribunal vide order dated 14.07.2017 disposed of the same by remanding the matter back to the NCLT and it is thereafter another application appears to have been moved by the CSPL before NCLT which was ultimately allowed vide order dated 14.09.2018 and in this way the order dated 26.11.2015 approving the merger scheme was rectified/corrected and impugned land was included in Part-I of Schedule B of the amalgamation order under the short description of the lease hold properties. Aforesaid letter of....
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....ion which appears to have been undertaken on the advice given by the Counsels of the Appellant Corporation in a meeting held between the Counsels of the Corporation and Senior Vice President of the CSPL and at no stage any objection to the inclusion of this lease property in the amalgamation order has been raised by the appellant. So now it cannot be claimed by the appellant that the lease property has not been transferred to the CD/CSPL with its consent. Thus it is crystal clear that the consent of the appellant to include the lease property in the list of the properties of amalgamation order, which were transferred to the CSPL, was not express but was implied and it could not be said that the leasehold property has been transferred, without the consent of the appellant. 41. Ld. Counsel for the Respondent has submitted that the Tribunal is not having any jurisdiction to adjudicate so far as the validity of the amalgamation order/merger scheme is concerned, while Ld. Counsel for the Appellant has submitted that NCLT as well as this Appellate Tribunal is having jurisdiction to adjudicate on the legality and propriety of the amalgamation order as the lease property could not have ....
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....er: - "28-A. However further question remains whether the Court has jurisdiction like an appellate authority to minutely scrutinizes the scheme and to arrive at an independent conclusion whether the scheme should be permitted to go through or not when the majority of the creditors or members or their respective classes have approved the scheme as required by Section 391 Sub- section (2). On this aspect the nature of compromise or arrangement between the company and the creditors and members has to be kept in view. It is the commercial wisdom of the parties to the scheme who have taken and informed decision about the usefulness and propriety of the scheme by supporting it by the requisite majority vote that has to be kept in view by the Court. The Court certainly would not act as a court of appeal and sit in judgment over the informed view of the concerned parties to the compromise as the same would be in the realm of corporate and commercial wisdom of the concerned parties. The Court has neither the expertise nor the jurisdiction to delve deep into the commercial wisdom exercised by the creditors and members of the company who have ratified the Scheme by the requi....
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....lants to the impugned orders of the NCLT and NCLAT is that by virtue of the Explanation Under Section 18 of the Code and also by virtue of the judicial pronouncements, the disputes between the Corporate Debtor and the third-party lessee/licensee are not amenable to the jurisdiction of the authorities under the Code. 39. But as rightly pointed out by the learned Counsel for the Resolution Professional, the Explanation Under Section 18 begins with a caveat namely "for the purposes of this Section". Therefore, the exclusion of assets owned by a third-party, but in the possession of the Corporate Debtor held under contractual arrangements, from the definition of the expression "assets", is limited to Section 18. In other words, the Explanation Under Section 18 does not extend to Section 25. 40. It must be mentioned here that the Explanation was originally limited to "the Sub-section" but by Act 26 of 2018, the word "Sub-section" was substituted by the word "section". Therefore, the Explanation Under Section 18 will not provide an escape route for the Appellants. In any case, the bundle of rights and interests created in favour of the Corporate Debtor may even tantamou....
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....on the one hand; and (ii) the other disputes relating to the PPA on the other hand. 44. The decision in Tata Consultancy, rather than helping the Appellants, actually supports the case of the Corporate Debtor. In fact, the decision in Gujarat Urja Vikas Nigam Limited was distinguished in Tata Consultancy (by the very same author), on the ground that if the termination was on an ipso facto Clause i.e., the fact of insolvency itself, then NCLT will have jurisdiction, but that there was no residuary jurisdiction for NCLT, if the termination of a contract is based on grounds unrelated to the insolvency. 45. Thus, none of the decisions relied upon by the Appellants revolve around the rights and interests that a Corporate Debtor has in an immovable property. 46. As a matter of fact, the only decision of this Court which may probably come close to the facts of the present case, is the one in Rajendra K. Bhutta v. Maharashtra Housing and Area Development Authority and Anr. MANU/SC/0226/2020: (2020) 13 SCC 208. In the said case, there was a tripartite joint development agreement entered into between (i) a Society representing a large number of persons occupying 67....
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....y' in Section 3(27) in following manner: - "3. Definition. (27) "property" includes money, goods, actionable claims, land and every description of property situated in India or outside India and every description of interest including present or future or vested or contingent interest arising out of, or incidental to, property;" 18. Corporate Debtor claims leasehold rights by virtue of Registered Lease Deed dated 31.03.2007. Expression 'lease' has been defined in Section 105 of the Transfer of Property Act, 1882, which is as follows: - "105. Lease defined. - A lease of immoveable property is a transfer of a right to enjoy such property, made for a certain time, express or implied, or in perpetuity, in consideration of a price paid or promised, or of money, a share of crops, service or any other thing of value, to be rendered periodically or on specified occasions to the transferor by the transferee, who accepts the transfer on such terms." 19. As per the above definition, lease of the immoveable property is a transfer of a right to enjoy such property, made for a certain express or implied, or in perpetuity, in consideration of a price paid or pr....
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....'Rajendra K. Bhutta' (Supra), we are of the view that 'development rights' construe 'Property' of the 'Corporate Debtor' and hence we hold that the Resolution Professional has duly performed his duties as per Section 18(1)(a)(iii) and has taken control and custody of the assets of the 'Corporate Debtor' mentioned in the Balance Sheet in compliance of the provisions of Section 18(1)(f) and resultantly we do not find any deficiency of service on behalf of the RP." 52. This Appellate Tribunal in New Okhla Industrial Development Authority vs Mr. Amit Agarwal Resolution Professional of Boulevard Projects Pvt. Ltd. decided on 21st October, 2022, relying on the law laid down Hon'ble Supreme Court in 'New Okhla Industrial Development Authority' Vs. 'Anand Sonbhadra' in while considering leasehold rights concluded as under: - "20. We are of the view that the 'Leasehold Rights' is an 'Asset' under 'Intangible Assets' falling within the ambit of Section 18(f)(iv). It is the consistent stand of the Respondent that 'the said Plot is not owned by the 'Corporate Debtor', but it has only Leasehold Rights over it'. We are of the considered view that the Leasehold Rights accrued to the '....
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....fter considering the factual matrix of that case came to a conclusion that by executing lease of land in favour of Corporate Debtor a bundle of rights and interests were created in favour of the Corporate Debtor, over the immovable property in question and goes on to held as under: - "35. From the sequence of events narrated above and the terms and conditions contained in the Agreements entered into by the parties, it is more clear than a crystal that a bundle of rights and interests were created in favour of the Corporate Debtor, over the immovable property in question. The creation of these bundle of rights and interests was actually for a valid consideration. But for the payment of such consideration, Energy Properties would not even have become the owner of the property in dispute. Therefore, the development rights created in favour of the Corporate Debtor constitute "property" within the meaning of the expression Under Section 3(27) of IBC. At the cost of repetition, it must be recapitulated that the definition of the expression "property" Under Section 3(27) includes "every description of interest, including present or future or vested or contingent interest arising ....
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.... was owned by other party and Corporate debtor was only possessing the development rights held as under: - "22. Whether an asset is required to be reflected in the Information Memorandum or the asset belong to the Corporate Debtor are the question which arise out of or in relation to the insolvency resolution process. The present is a case where the Corporate Debtor has claimed development rights in the land. It is no more res-integra that the development rights are property within the meaning of Section 3(27) of the IBC. We may refer to the judgment of the Hon'ble Supreme Court in "Victory Iron Works Ltd. vs. Jitendra Lohia & Anr.- (2023) 7 SCC 227" where the Hon'ble Supreme Court had held that the development rights created in favour of the corporate debtor constitute "property" within the meaning of Section 3(27) of the IBC. In paragraph 38 of the judgment, following was laid down: - "38. From the sequence of events narrated above and the terms and conditions contained in the agreements entered into by the parties, it is more clear than a crystal that a bundle of rights and interests were created in favour of the corporate debtor, over the immovable property in....
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....CLT by the Appellant, Adjudicating Authority does not lack jurisdiction in entering into question and deciding as to whether assets are part of the CIRP or it should be excluded. We, thus, are of the view that the above question could be determined by the Adjudicating Authority and parties need not have to be relegated to the Civil Court having jurisdiction, the view of the NCLT to the contrary cannot be approved. Judgment of the Hon'ble Supreme Court in Victory Iron, as noticed above, clearly has held that the NCLT and NCLAT can exercise jurisdiction in the above facts. We, thus, answer Question No.(I) in following manner: The Adjudicating Authority had jurisdiction to enter into as to whether the subject land is asset of the corporate debtor and for decision of the question, the parties were not required to be relegated to the Competent Civil Court having jurisdiction." 56. Thus it is clear from the precedents noted above that the lease hold rights created in favour of the CIL which were transferred to the CSPL by a merger scheme duly approved by the Order of the Hon'ble High Court of Calcutta as rectified by the Tribunal are the assets of the CD and the question,....
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....nership of the property. We have already concluded herein before that the leasehold rights with regard to the leased property are also the assets of the Company in favour of which these lease hold rights have been created by the owner or transferred and these rights could very well be enjoyed and may also be transferred and has been validly transferred to the CSPL/CD by the CIL by virtue of duly approved merger/amalgamation scheme. 58. Now the question arises as to whether these lease hold rights may be included in the liquidation estate of the CD having regard to the bar contained under Section 36 (4) (a) (iv) and could be sold in auction? There is no dispute with regard to the fact that only leasehold rights in the impugned land were transferred by the appellant in favour of the CIL and the same lease hold rights were transferred to the CD/CSPL by merger scheme which was approved by the Hon'ble Calcutta High Court vide order dated 26.11.2015 as rectified by the Tribunal vide order dated 14.09.2018. It also appears to be an admitted position that in the lease deed executed between the appellant and CIL there was a provision in clause (xii) that the lessee (CIL) is not entitl....
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....never initiated any proceedings or chosen to exercise their rights to invoke any of the Clauses of the Lease Deed mentioned above, for cancellation of the subject Lease Deed before the initiation of the CIRP against the CD. In these facts and circumstances the Liquidator, in our view, was legally empowered under the Code to take control and custody of the Asset over which the 'Corporate Debtor' has the 'Ownership Right'. At the cost of repetition, we clarify that the 'Asset' in the instant case are only the 'Leasehold Rights' and not the 'land' per se and the advertisement issued by the Liquidator dated 26.12.2018 would also reveal that it has been clearly mentioned therein that the land in question is a leased land. Therefore, the ownership of lease hold rights is clearly in favour of the CD and could not be said to be owned by any third party and therefore in our considered view the bar contained under section 36(4) (a) (iv) of the Code will not attract in the background of peculiar factual matrix of this case. Thus we don't find any force in this submission of the Ld. counsel for the appellant. 61. We have also noticed that at a belated stage of this appeal i.e. d....