TaxTMI 
TaxTMI 
TaxTMI 
2026 (3) TMI 205
X X X X Extracts X X X X
X X X X Extracts X X X X
....hallenging the same order dated 14.03.2024 passed by National Company Law Tribunal, Division Bench, Court No.II, Kolkata in IA (IB) No.1345/KB/2022, Intervention Petition (IBC) No.21/KB/2022; Intervention Petition (IBC) No.15/KB/2022; Intervention Petition (IBC) No.23/KB/2022; and I.A. (IB) No.923/KB/2022 in C.P. (IB) No.1782/KB/2019. The Adjudicating Authority disposed of all IAs by the said order. Aggrieved by which order these two sets of Appeal(s), one by Committee of Creditors of Jupitar Spun Pipes and Casting Pvt. Ltd. and other by Resolution Professional ("RP") of Jupitar Spun Pipes and Casting Pvt. Ltd. of the CD have been filed. 2. Notices were issued in the Appeal(s) on 17.05.2024, on which date an interim order was also passed directing that no further steps shall be taken by the CoC and RP in pursuance of the impugned order. Replies have been filed by the Respondents, to which rejoinder affidavits have also been filed. 3. We need to first notice background facts giving rise to these Appeal(s): (i) The State of Bihar in the year 1961 acquired land from a Company Gayday Iron and Steel Company Ltd. ("Gayday") situated at Hazaribag, Bihar (presently known as ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....avour of MAPL, could not be executed. (ix) In the year 2005, the BSIDC took fresh initiative to reopen the factory and approached the State of Bihar, who gave consent to run the unit on the lease. The BSIDC approached the Magadh. (x) The CD claims to have obtained lease of land admeasuring 344.915 acres together with plant and machinery on 24.09.2007 from BSIDC and Magadh on consideration of Rs. 16 crores with Rs. 1 lakh yearly lease rent. An amount of Rs. 10 lakhs advance lease rent was also claimed to be given. (xi) On the basis of the Lease Deed dated 24.09.2007, the CD approached the State Bank of India ("SBI"), Kolkata. The SBI by order dated 24.12.2007 sanctioned credit facilities to the CD. On 04.01.2008, the CD claimed to have executed a Mortgage Deed of the entire land and assets in favour of the SBI. (xii) There being certain issues regarding payment of stamp duty, the Conveyance Deed by the Official Liquidator in favour of BSIDC could be executed only on 17.07.2009, by which Deed, the Official Liquidator conveyed the entire property with plant and machinery, in favour of BSIDC. The said Conveyance Deed was registered on 06.09.2011. BSI....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... owner of the asset and RP be directed not to take any steps in connection with the property. The RP filed an IA (IB)923/KB/2022 for approval of the Resolution Plan. Magadh filed an IA(IB)1345/KB/2022 seeking declaration that Magadh is the owner of the assets. Another IVNP.(IB) No.23/KB/2022 was filed by Shanti Ranjan Paul on 09.11.2022. Another IVNP.(IB)No.21/KB/2022 was also filed by Agile seeking to intervene in Plan approval application and in both the applications filed by BSIDC and Magadh. (xvii) The Adjudicating Authority by the impugned order held that Lease Deed dated 24.09.2007 claimed by the CD, does not inspire confidence. The Lease Deed casts a doubt, whether it is forged or fabricated document. The Adjudicating Authority held that issue relating to forged and fabrication, cannot be decided in summary proceedings. It was further observed that original lease dated 24.09.2007 was not produced before the Adjudicating Authority. It was held that Deed dated 24.09.2007 mention about upfront payment of Rs. 16 crores, but no evidence of payment of upfront payment of Rs. 16 crores or yearly payment of lease rent have been produced before the Adjudicating Authority. The....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., but the BSIDC being successful auction purchaser, it had right to lease out the assets, which it did to the CD on 24.09.2007. On 05.03.2012, the BSIDC has conveyed the assets to Magadh and stamp duty for registration of Deed on 05.03.2012 was paid by the CD, which is reflected in the Financial Statement of the CD. It is submitted that the CD having committed the default, the SBI has initiated proceeding to take possession of the assets of the CD under the SARFAESI Act. It is submitted that challenging the order passed by Deputy Commissioner dated 20.02.2017, Magadh filed a Writ Petition in Jharkhand High Court, which was dismissed on 11.06.2019, leaving it open to Magadh to initiate any action. However, till date, no action has been initiated by the Magadh. It is submitted that Adjudicating Authority, who has no jurisdiction to entertain any argument of fraud or forgery, has gone beyond its jurisdiction in observing that Lease Deed dated 24.09.2007 is forged Deed. The Adjudicating Authority has no jurisdiction to enter into the question of fraud and forgery, which is not in the purview of Adjudicating Authority. The Adjudicating Authority has assumed the jurisdiction of the Civil....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f 2025 in the Appeal seeking permission to produce original Lease Deed, which has been allowed vide order dated 08.08.2025, the very basis of the impugned order passed by Adjudicating Authority that original Lease Deed has not been filed is knocked out. The registered document being on the record, presumption of its execution and enforceability has to be drawn. The RP has filed an RTI application on 17.10.2022 before the Sub-Registrar, Kodarma, who has replied vide letter dated 17.11.2022 that there is entry in the Register of execution of Lease Deed, but the volume containing the original Lease Deed is missing, for which steps for lodging FIR is being taken. The land was always in possession of the CD and Magadh has leased the land to the CD on 24.09.2007 and CD has started manufacturing on the land and has obtained various licenses for operation. The Adjudicating Authority having found it lack jurisdiction to examine the question of fraud and forgery, it could not have been proceeded to hold that lease dated 24.09.2007 is forged document. Ultimate finding of the Adjudicating Authority that Financial Creditor has extended loan on the basis of forged document is contrary to own fin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....led to execute as per the statements made in the Deed itself. Further the Lease Deed mentions that upfront payment of Rs. 16 crores and advance lease rent of Rs. 10 lakhs have been paid by different cheques, but no amount was ever received towards the upfront payment of Rs. 16 crores and lease rent by the BSIDC, nor any materials have been placed by the CD or RP to prove any payment to the BSIDC. It was all manipulation of Managing Director of the CD - Nabarun Bhattacharjee, who is claiming a forged Deed for leasehold rights, has duped the officials of SBI by obtaining huge amount on a Deed which is forged. It is submitted that BSIDC has earlier entered into an Agreement with one Machineries and Allied Products Pvt. Ltd. to lease out the land @ Rs. 45.50 lakhs and although certain amount was paid by MAPPL, but the full amount was not paid, due to which the registered Lease Deed, could not be executed. The BSIDC has approached the Magadh in the year 2005 for reviving the plant. It is submitted that the BSIDC has executed the Deed of Conveyance in favour of Magadh of the entire land on 05.03.2012. The payment of stamp duty by CD for the Lease Deed dated 05.03.2012 cannot be said to b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....007 has taken both civil and criminal action. The Magadh has registered the crime being FIR No.276 of 2021 with Jaynagar Police Station District Kodarma, Jharkhand against the officials of the CD and the SBI. Magadh has also filed an Appeal against the order dated 03.11.2021 in this Appellate Tribunal being Company Appeal (AT) (Ins.) No.45 of 2022, which was permitted to be withdrawn with liberty to Magadh to file an application in the proceedings initiated by the SBI. The RP has neither informed the real owner of the asset, nor had verified from the real owners about the rights of the CD. It was Magadh, who was throughout in possession of the asset and when possession was taken by the SBI officials at that time employees of the Magadh were very well there in the factory premises. 10. Shri Sajeve Deora, learned Counsel appearing for Shri Shanti Ranjan Paul, who is Respondent No.3 in Company Appeal (AT) (Ins.) No.950-954 of 2024 and Respondent No.5 in Company Appeal (AT) (Ins.) No.955-959 of 2024 refuting the submissions of learned Counsel for the Appellant(s) submits that CD has no right in the asset. The Lease Deed dated 24.09.2007 was never executed by BSIDC and Magadh. There ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... was admitted. It is submitted that infact BSIDC has executed Lease Deed dated 12.09.2006 in favour of Machineries and Allied Products Pvt. Ltd., who was selected in an auction conducted by BSIDC. On 12.09.2006, the CD also claiming a Lease Deed in its favour by BSIDC and mortgage, which is another example of forgery and fraud. The Balance Sheet of the Magadh contains the reference of lease to MAPPL on 12.09.2006. The amount of Rs. 1,18,75,860/- which has been claimed to be paid by the CD to Magadh for registration of document on 05.03.2012 is investment by CD in the Magadh and cannot give any right to the CD. It is submitted that the SBI, who has 96% of vote share in the CoC, did not conduct any proper verification of the Lease Deed dated 24.09.2007 and at no point of time the SBI and its officials enquired from the owner of the assets, i.e. BSIDC and Magadh. The SBI has violated the RBI Guidelines regarding acceptance of security. The Adjudicating Authority has rightly passed the impugned order, which needs no interference. 11. We have considered the submissions of learned Counsel for the parties and have perused the records. The learned Counsel for the Appellant in Company Ap....
X X X X Extracts X X X X
X X X X Extracts X X X X
....alcutta High Court for necessary orders in respect of lot No. 4. The appeal is allowed in terms of this Order. There will be no order as to costs. We cannot, however, part with this case without saying that we are unable to understand that the learned single Judge of the High Court should have felt driven to confess to a feeling of "some difficulty in properly appreciating" the order passed by this Court. There was no occasion for the High Court to consider the context or necessity of the order passed by us since, by express language, all that we had asked the High Court to do was to hold the sale and send a report to us as to the bids received by it." 13. There is also material on record that Official Liquidator between 21.03.1983 to 23.03.1983 through his authorized representative visited the premises and handed over the possession to the BSIDC of the land, asset and machinery. However, Deed of Conveyance by Official Liquidator could be executed in favour of BSIDC only on 17.07.2009. It has been stated on behalf of the BSIDC that delay in execution of Conveyance Deed was on account of certain issues pertaining to the payment of stamp duty, where BSIDC claimed....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ding, plant and machinery to BSIDC between 21.03.1983 and 23.03.1983. (iv) The BSIDC along with private co-promoter incorporated Magadh Spun Pipe Ltd. on 21.01.1985. The BSIDC entrusted the land, building, plant and machinery to Magadh, of which possession was obtained from Official Liquidator. The Magadh was put in possession. (v) The Official Liquidator executed the Conveyance Deed of the land, plant and machinery in favour of the BSIDC on 17.07.2009, which was registered on 06.09.2011. (vi) The BSIDC transferred all its share held in Magadh to CD in the year 2011 for the amount of Rs. 3.2 crores. (vii) On 05.03.2012, the BSIDC transferred its rights, title and interest of BSIDC on the said property to Magadh by Conveyance Deed dated 05.03.2012. (viii) The CD paid a stamp duty of Rs. 1,18,75,860/- for Conveyance Deed dated 05.03.2012, which was treated as investment in the Magadh by the CD. (ix) The Magadh, who had become absolute owner of the land, plant and machinery by Conveyance Deed dated 05.03.2012 has reflected the same in its Balance Sheet ending on 31.03.2012 and has also referred certain facts pertaining to land, pla....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t as at 31.03.2012 is as under- Rent Receivable (As per Agreement) Actual Rent Received Differences Interest Period Amount (Rs.) Period Amount (Rs.) Amount (Rs.) Period Amount (Rs.) 2006- 07 2,275,000.00 2006-07 2006-07 10,700,000.00 1,516,000.00 2006- 07 32,693.00 A 2,275,000.00 12,216,000.00 (9,941,999.00) 32,693.00 2007- 08 4,550,000.00 2007-08 300,000.00 2007- 08 112,382.00 B 4,550,000.00 300,000.00 4,250,000.00 112,382.00 2008- 09 4,550,000.00 2008-09 200,000.00 2008- 09 41,693.00 C 4,550,000.00 200,000.00 4,350,000.00 41,693.00 A+B+C 11,375,00.00 12,716,000.00 - 186,768.00 2009- 10 4,550,000.00 2009-10 2,997,778.00 2009- 10 103,646.00 D 4,550,000.00 2,997,778.00 1,552,222.00 103,646.00 A+B+C+ D 16,925,000.00 15,713,778.00 - 290,414.00 2010- 11 4,550,000.00 2010-11 2,100,000.00 2010- 11 316,834.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e last paragraph of the judgment of the High Court dated 11.06.2019, which is as follows: "Coming to the factual aspects involved in this case, it is admitted case of the petitioner that fraud has been committed by mortgaging the property in question by virtue of fake Lease Deed, said to have been executed on 24.07.2007 and therefore, the same, according to the petitioner, is a forged one, but the aforesaid Lease Deed is forged or not, a declaration is required to be given by appreciating the various factual aspects which is not proper to be done by this Court by exercising the power conferred under Article 226 of the Constitution of India, considering the fact that the Forum is available under Section 17 of the Act, 2002 and therefore, keeping the various pronouncements into consideration, as referred hereinabove, it is the considered view of this Court that this case is not falling under the exception to interfere with the impugned order keeping the object and aim of the SARFAESI Act, 2002 and also taking into consideration the fact that the Forum is available where even at the stage of Section 14 of the Act, 2002, the issue can be raised. In view of the aforesa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n being INVP. (IBC) No. 23/KB/2023 claiming that Koderma Land was mortgaged to him and the Original Title Deed of Koderma Land was with him. o. Since, the SRA was not a party to any of the applications filed by BSIDCL, MSPL or Shanti Ranjan Paul, on his prayer, the said applications were directed to be served upon the SRA by this Adjudicating Authority by an order dated 11.12.2022. p. The SRA was not aware of any dispute in respect of the Lease Deed or the Koderma Land as nothing was mentioned in the IM published by the RP about any pending litigation or dispute pertaining to the Lease Deed or the Koderma Land. q. The pleadings and documents relied upon by BSIDCL, MSPL and Shanti Ranjan Paul in their respective applications, however, indicate the following: i. The Lease Deed of Koderma Land dated 24th September, 2007 has been signed on behalf of BSIDCL by one "Dashrath Prasad and on behalf of MSPL by one "B.B. Lal". Whereas, the portal maintained by the Ministry of Corporate Affairs, shows that B.B. Lal was never a director of MSPL. ii. The Lease Deed itself indicates that authority to execute was granted to one "A K Srivastava" and one ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... property when a Sale Deed, was executed in its favour by Official Liquidator, which fact is not disputed by any of the parties. Thus if, BSIDCL became owner of the Koderma property in 2009. vii. 05.03.2012: The day when the Sale Deed of 17.07.2009 was registered. e. It is averred by the Corporate Debtor that, in the year 2007, a Lease Deed was purportedly executed by BSIDCL in favour of Magadh Spun Pipe Limited whereas BSIDCL itself earned its title with, execution of Sale Deed Executed on 17.07.2009 by the Official Liquidator, and consequently, no absolute right in the property till 17.07.2009." 22. The Adjudicating Authority after noticing the clauses of the Deed dated 24.09.2007, it has observed that the original Lease Deed was not produced despite repeated opportunities granted. The Adjudicating Authority also held that there is no evidence of any payment of consideration of Rs. 16 crores upfront or yearly payment of lease rent, which is mentioned in the Lease Deed dated 24.09.2007. The said observation has been made in paragraph 16(l). The Adjudicating Authority in paragraph 16(m) observed that circumstances are galore that genuinity of the Lease Deed is ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... be taken for returning any finding of fraud and forgery. The Adjudicating Authority conducts the IBC proceedings in accordance with the IBC and CIRP Regulations and it cannot act as a Civil Court to enter into issues of fraud and forgery, take evidence and return any findings. However, whether an asset, which is claimed by the CD is asset of the CD, is a question, which needs to be considered and answered by the Adjudicating Authority and Adjudicating Authority has ample jurisdiction to decide the issue whether the particular asset, which is claimed by the CD as its asset can be treated to be asset of the CD or not. However, above is with a caveat that while deciding such question, the Adjudicating Authority cannot embark upon the issues pertaining to fraud and forgery. Any document, which is alleged to have been obtained by fraud or manipulation, becomes a voidable document, which requires a declaration to lose its enforceability. However, when a document can be established as void or unenforceable, it does not require any declaration. Thus, the limited jurisdiction, which can be exercised by the Adjudicating Authority is as to whether any document claimed in the proceedings is v....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... and register the Deed of Lease and hand over the assets and properties of MSPL to the Lessee. Following has been noticed in the Lease Deed at page-11: "AND WHEREAS BSIDC in its 299th meeting of the Board of Directors held on 11.09.2006 considered the decision of the Government communicated vide letter No.3299 dated 8.09.2006, the government has no objection of BSIDC proposal sent to the Government pertaining to leasing out of MSPL to the Lessee herein. In the said meeting it was resolved that the assets and properties of MSPL, Hirodih be leased out to the Lessee as per approved draft. It was also resolved that Sri A.K. Srivastava, Chief Manager (Project) and Sri B.B. Lal, Chief Manager (H.O.) were authorised to execute, sign and register the Deed of Lease and hand over the assets and properties of MSPL to the Lessee herein." 28. The above indicate that two Officers namely - Shri A.K. Srivastava, Chief Manager (Project) and Shri B.B. Lal, Chief Manager (H.O) were authorised to execute the lease on behalf of BSIDC. Whereas lease dated 24.09.2007 on behalf of BSIDC is executed by one Dashrath Prasad, Special Assistant. It has been brought on record that Dashrath Prasad is....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion in Volum-3, page-453 of Common Convenience Compilation on Form-20B, which was submitted by the Magadh has been brought on the record, which Form-20B mentions the name of Managing Directors as Vijoy Prakash; Shri Manoranjan Prasad Choudhary, Director; Shri Arvind Kumar Srivastava; Director; and Shri Jai Shanker Mishra; Nominee- Director. Shri B.B. Lal was not mentioned as Director. No material has been brought on record to show that B.B. Lal was Director of the Magadh and was entitled to execute the Lease Deed. Further, as noted above, as on 24.09.2007, it was BSIDC who was successful auction purchaser and who was handed over possession by the Official Liquidator in the year 1983 and the BSIDC has incorporated Magadh in the year 1985 and entrusted the assets to Magadh. Magadh had no rights of its own in the assets. Thus, we are satisfied that Lease Deed dated 24.09.2007 was not executed by authorised person on behalf of the BSIDC and the Magadh, hence, no right can be accrued to the CD on the basis of above document dated 24.09.2007. 31. Second issue is with regard to consideration. The Deed dated 24.09.2007 mentions about the upfront payment of Rs. 16 crores and at page-18 o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e Common Convenience Compilation, Vol.1, which is as follows: "STATEMENT OF ACCOUNT CANARA BANK ACCOUNT BRANCH : 19590-SALT LAKE CITY, KOLKATA 70054 DATED 03-03-22 11: 35 35 AM IFSC : CNRB0019998 MICR : 700015144 Account No. : **** Product Name : CURRENT ACCOUNT RURAL-SEMIURBAN Customer ID : **** Customer Name : . JUPITER SPUN PIPES CASTING PVT. LTD. AB 200 SECTOR 1 SALE LAKE SALT LAKE KOLKATA KOLKATA WEST BENGAL IN 700054 Nominee Reference num: - Nominee Name : Account Title : JIPITER SPUN PIPES Person's Name Period: 01-01-2000 TO 03-03-2022 Name Currency: INDIAN RUPEES 33. The said Statement of Account indicates that there were no debit of any of the cheques referred to in the Deed dated 24.09.2007. The Adjudicating Authority in the impugned order has also noticed the submission of the SRA and has observed that RP, who was asked to disclose the financial records of the CD showing payment of consideration, but till date no document has been produced to that effect. Paragraphs 11(g) and 16(l) of the i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eas before initiation of CIRP Magadh has already pleaded that the document dated 24.09.2007 is forged, fabricated and unauthorized. 35. We have already noticed the Balance Sheet of the Magadh ending on 31.03.2012, where details of certain amount for leasing the said asset to Machineries and Allied Products Pvt. Ltd. have been noticed. Transfer of shares in 2011 in favour of the CD by BSIDC has also been noticed. But there is no mention of Lease Deed dated 24.09.2007. Further, both the Conveyance Deed executed by the Official Liquidator to BSIDC and Conveyance Deed executed by BSIDC in favour of Magadh, did not mention the Lease Deed dated 24.09.2007. In totality and circumstances of facts as brought on the record, the Adjudicating Authority rightly was not satisfied about the rights of the CD in the asset in question. The mere fact that SBI relying on the said Deed dated 24.09.2007, sanctioned the financial facilities or disbursed the amount, cannot cloth any additional strength to the Lease Deed dated 24.09.2007. When the Lease Deed dated 24.09.2007 claimed by the CD is unenforceable and void for the reasons indicated above, we are of the view that order of Adjudicating Authori....