TaxTMI 
TaxTMI 
TaxTMI 
2025 (11) TMI 1807
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.... Company Petition (IB) No. 3176/MB/2019. By the impugned order, the Adjudicating Authority has allowed the Liquidator- Respondent No.1 to remove all moveable assets of the Corporate Debtor lying at the leased DKAC premises and restrained the Appellant from obstructing the Liquidator and successful bidder from accessing these moveable assets. Aggrieved by the impugned order, the present appeal has been preferred by the Appellant. 2. Coming to the relevant facts of the case which required to be noticed for deciding the matter before us are as follows: • The Appellant-Reliance Realty Ltd. had leased the DKAC premises (hereinafter referred to as "Leased Premises") alongwith pre-package infrastructure facilities on 27.11.2017 to the Independent T.V. Ltd.- Corporate Debtor to run it's Direct to Home ("DTH" in short) business and for storage of goods/assets following the execution of a Share Purchase Agreement ("SPA" in short) on 27.11.2017 alongwith a Draft Agreement for premise use ("Draft Agreement" in short). An inventory of assets at the leased premises, as of 30.11.2017, had purportedly been prepared. • The Corporate Debtor was required to pay service ch....
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....ructed Appellant to allow inspections of the assets as verification was required before granting approval for removal of the assets. • The Liquidator-Respondent No.1 issued third and fourth e-auction notices on 05.09.2024 and 06.10.2024 under Regulation 32(A) of LPR for sale of the assets of the Corporate Debtor on an "as is where is" and "as is what is" basis lying in the leased premises. • As a sequel to the issue of e-auction Notice, prospective bidders had visited the leased premises for inspection of goods/assets of the Corporate Debtor lying at the premises. On 07.11.2024, the Respondent No.2-M/s Shree Sai Baba Ship Breaking Company emerged as the Successful Auction Purchaser ("SAP" in short) who remitted the full and final payment of Rs. 4,18,54,500/-. • On 08.11.2024, the Appellant issued a notice to Liquidator to vacate the leased premises. • Following declaration of Respondent No.2 as SAP, the Liquidator issued a Sale Certificate and Possession Memo on 10.12.2024 comprising of 1874 units of assets/inventory of the Corporate Debtor for hand over the said assets. • On 16.12.2024 a meeting was held between the ....
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....s in favour of the Corporate Debtor. The Adjudicating Authority had erroneously allowed the Liquidator to remove assets lying at the leased premises which also included the assets owned by the Appellant and its parent company Reliance Communication Limited ("RCL" in short) merely on the presumption that mere possession/legal custody of assets/goods lying at the premises during the CIRP and the liquidation proceedings of the Corporate Debtor is sufficient to establish ownership in favour of the Corporate Debtor. It was also contended that the Adjudicating Authority had disregarded their legitimate objections concerning ownership and possession over the assets belonging to the Appellant. 4. It was contended that the various parties to the SPA had also agreed upon the terms and conditions contained in the Draft Agreement for Premise Use. In terms of the Draft Agreement, the leased premises along with the packaged infrastructural facilities/services were leased to the Corporate Debtor by the Appellant. It has been claimed by the Appellant that they had installed their own assets such a Rack Space, Rack Power, Heating, Ventilation and Air Conditioning (HVAC) Security, Remote Hands an....
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....iable for verifying the title and ownership of the goods/assets. 8. It was vehemently contended that the Liquidator had failed to prepare a list of assets/inventory of the Corporate Debtor prior to the publication of Auction Notice. The Liquidator had also failed to furnish any document to the Appellant regarding the inventory of assets which had been auctioned off to the SAP. In support of their contention, it was submitted that it is settled law that the official liquidator could not have conferred any better title to the property than what the corporate Debtor in liquidation had. The liquidator cannot pass title to a property when it did not possess the title to sell the property as held by the Hon'ble High Court of Calcutta in Jamshedpur Cement Ltd. v Hi-Tech Chemicals Pvt. Ltd., 2011 SCC OnLine Cal 1098. Therefore, the purported sale of the assets in the leased premises to the SAP was void ab initio and cannot be enforced. It was also contended that it was as much the responsibility of the SAP to satisfy themselves of the title and ownership of the goods/assets which had been put under auction and was being sold on "as is where is, as is what is and no recourse basis." It w....
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....n terms of Section 18 of the IBC. The Resolution Professional had also received an e-mail dated 24.07.2020 from the erstwhile management of the Corporate Debtor wherein the ownership of the assets lying in the leased premises was established, basis which Resolution Professional had prepared a list of all the 1874 items, which list was duly countersigned by the erstwhile management of the Corporate Debtor. Furthermore, the financial statement and balance sheet of the Corporate Debtor showed their ownership over these assets. Thus, when liquidation process was initiated, the Liquidator had taken possession of the leased premises in accordance with Section 35 of the IBC and had retained custody of the assets/goods lying therein lawfully throughout the CIRP. Once inventory was found lying in the leased premises and no contrary ownership claims were received, presumption of ownership under Section 36 of the IBC operates in favour of the Liquidator. 12. Submission was pressed that no material has been placed on record by the Appellant to rebut the presumption that the assets/inventories lying in the leased premises in the possession of the Liquidator belonged to the Corporate Debtor a....
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....by them on auction by denying them access to the leased premises. The Adjudicating Authority having noticed that the SAP had paid the full bid amount passed the impugned order correctly directing the Appellant not to obstruct the entry of the Respondents into the leased premises and remove the purchased assets. It was added that no objections had been raised by the Appellant since the inception of insolvency regarding the sale of assets of the goods lying in the leased premises. At no earlier stage, had the Appellant even clearly identified the assets on which it had a claim as an owner. It was pointed out that the Appellant for the first time had raised the issue of proof of ownership of the assets only after the auction sale stood concluded. Hence, the burden of proof to establish ownership of assets therefore clearly fell upon the Appellant which it had failed to prove. The SAP inspite of having made substantial financial investment on account of the consideration paid by them which amount have already been disbursed to the creditors, are being denied access to the auctioned assets which is prejudicially affecting their interests. Such misconduct on the part of the Appellant und....
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.... documents/records pertaining to Reliance Communication Ltd. relating to FY 2017-18 as mentioned in attached letter with this mail. You are requested to provide the information and documents/records as mentioned at the earliest convenience so as to enable us to conduct an audit for the FY 2018-19 & 2019-20 and proceed CIR Proceedings as per the provision of Law. You are requested to provide the information and documents/records as mentioned at the earliest convenience so as to enable us to conduct an audit for the FY 2018-19 & 2019-20 and proceed CIR Proceedings as per the provision of Law. Please find the attachment and provide us the details as earliest." 18. The response email from the RCL dated 28.07.2020 is as reproduced below: "[email protected]<[email protected]> 28 July 2020 at 13:47 To: SACHAN LAW ANALYST LLP <[email protected]> Cc:"Nanavaty,Anish-Ext"<[email protected]>,"Motwani, Mayur"<[email protected]>,[email protected],Ra [email protected],[email protected] om,[email protected],Vinod-VSD <[email protected]>, Anup kumar <cirp.in....
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....y RCL regarding ownership of assets lying in the leased premises. Nor was any other additional input available with them in this regard. 19. It is further the case of the Liquidator that the Resolution Professional during the conduct of CIRP visited the leased premises and prepared a detailed list of assets of the Corporate Debtor of 1874 items which list was duly signed and confirmed by the ex-CEO of the Corporate Debtor. It is also an undisputed fact that the Resolution Professional had taken control and custody of the assets lying in the leased premises as was required of the Resolution Professional in terms of Section 18(1)(f) of the IBC. Till that stage, there is clearly no evidence on record that the Appellant or RCL had raised any objection regarding the ownership of the inventories/assets during the CIRP process. 20. Subsequently when the liquidation process was initiated on 17.03.2023, the Liquidator had again visited the leased premises on a few occasions. It is also an undisputed fact that the Liquidator had issued several public notices of auction starting with the 1st notice on 28.06.2023. The 2nd, 3rd and 4th public notices for e-auction of sale of Corporate Deb....
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....Shah and Mr. Aditya Nair, Ld. Counsel for the Applicant/Liquidator present. Mr. Rishabh Jaisani i/b Shardul Amarchand Mangaldas & Co., Ld. Counsel for the Respondent present. 2. The Counsel for the Liquidator submits that there is no valid rent agreement between the Corporate Debtor and the Respondent. The Respondent is not allowing the Liquidator to visit the premises for inspection of the material there for conducting the auction. For the last three occasions, they sought time for filing reply. Today, both Counsel present. 3. The Bench directs the Liquidator to get the ALV from the local Municipal authority. Based on the ALV, the Liquidator should calculate the rent and pay the same to the Respondent within four weeks. 4. Meanwhile, the Respondent is directed to allow any prospective bidders along with the Liquidator/his authorised representative to inspect the premises for verifying the material stored in the premises of the Respondent. 5. With the above directions, IA-4065/2023 is disposed of. (Emphasis supplied) Thus, from a perusal of the above order, even at this stage of liquidation process, the Appellant did not raise any issue reg....
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....ls exchanged on 07.02.2024 and 08.06.2024 between the Appellant and the Liquidator wherein the Liquidator has stated that inspection of assets lying in leased premises be allowed by the Appellant as liquidation is a time bound process. Both the emails are reproduced below: "Anup kumar <[email protected]> 7 February 2024 at 13:06 To: Vinay Maheshwari <[email protected]> Dear sir In reference to our previous mail, I further call upon you to please allow liquidator team and valuer to visit and for inspection of assets lying in demised premises being the liquidation is time bound process from delaying the matter value of assets deteriorate day by day which are not befeinited to anyone. ...... Meantime it is requested that you allow the liquidator team and valuer to verify the assets lying in the said premises, it is further noted that denial of access to liquidator team to verify the assets is a matter of creating obstruction in liquidation proceeding without lawful means. so please allow and inform us accordingly." Anup kumar <[email protected]> 8 June 2024 at 19....
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....owever, the facts in that case were different as it involved assignment of lease for which prior permission had to be given by a statutory body which requisite permission was amiss. 28. Coming to the basis on which the Appellant has claimed that they need not to prove ownership of the assets lying in the leased premises is the SPA dated 27.11.2017 and Schedule 6 thereof containing the Draft Agreement. When we look at the SPA, which is placed at page 191 of Appeal Paper Book, we find that it is a signed document but the Appellant is not a signatory therein. This fact that the Appellant was not a party to the SPA is an admitted and uncontested fact. We are therefore persuaded to agree with the Respondent No. 1 that if any party should actually have been aggrieved by the impugned order, it should have been the RCL which was the signatory to the SPA but is currently in liquidation. It has been submitted by the Respondent No.1 that though RCL is currently in liquidation, the Liquidator-Respondent No.1 has not received any intimation from the Liquidator of the RCL in this regard claiming ownership of the assets lying in the leased premises. 29. This brings us to the Draft Agreement....
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....nt per month DTH building 46050 RENT 60 27,62,998 CAM 8.88 4,08,907 Dish (IDC 2 roof) 1550 68,750 Total 32,40,655 • Rent escalation:- rentals will be escalated by 15% every 3 years. II. Common area maintenance (CAM) cost break up • Building specific charges, i.e. sub leasing, property tax are factored on the super built up area only, 46,050 sq.ft. • Annual escalation of CAM is @ 10% due to inflation and minimum wage escalations. S. No Cost line item Per sq ft cost 1 Security 0.61 2 External housekeeping 0.48 3 Medical Centre 0.24 4 Medical Centre 0.61 5 Technical 0.61 6 Wartsila (DG) 1.05 7 HVAC 0.82 8 Concent to operate (MCB) 0.23 9 MIDC Sub leasing charge 1.73 10 NMMC Property Tax 1.25 11 MIDC Water charges 0.43 12 Total 8.07 13 Misc expenses 0.81 CAM chargeable 8.88 31. When we look at the Draft Agreement, we find that there are no signatures of executants thereto. Besides being an unsigned ....
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.... placed before the Adjudicating Authority. Further, on a pointed query made by this Bench, the invoices mentioned in the SAP record to establish proof of ownership of assets have admittedly not been placed alongwith SAP records before this Hon'ble Tribunal. 33. This brings us to the impugned order passed by the Adjudicating Authority. The relevant excerpts of the impugned order is as reproduced below: "9.11 It is not in dispute that the Corporate Debtor was occupying the Navi Mumbai Premises on the Insolvency Commencement Date and the Liquidation Commencement Date. Further, the site visit reports dated 11.03.2020, 16.03.2022 and 13.06.2023 are countered only to the extent that those contain only a mere tabulation of all 1874 units/inventory lying at the Navi Mumbai Premises, and it cannot be substituted as proof of ownership of the Corporate Debtor over all such units. The Navi Mumbai Premises have been under lock and key during the CIRP and Liquidation processes, and in the possession and control of the Applicant. Thus, it is evident that the Applicant, as liquidator, holds legal custody of the assets lying at Navi Mumbai Premises. In such a scenario, in a dispute over....