TaxTMI 
TaxTMI 
2026 (5) TMI 766
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.... valuation of the Corporate Debtor and the Information Memorandum. The Adjudicating Authority by the impugned order has rejected the application. Aggrieved by which order, this appeal has been filed. Brief background facts giving rise to this appeal are: (i) The Appellant entered into a Collaboration Agreement dated 19.06.2010 for development of a commercial complex "Spaze Arrow" in the land owned by the Appellant situated at Village Naurangpur, Dist. Gurugram which falls in Sector 78, Gurugram, Haryana. (ii) Appellant issued a General Power of Attorney and Special Power of Attorney in favour of the Corporate Debtor. (iii) There arose certain dispute between the Appellant and the Corporate Debtor. Appellant issued notice dated 13.12.2018 and 21.12.2018 cancelling the General Power of Attorney and Special Power of Attorney given in favour of the Corporate Debtor. (iv) The Corporate Debtor got the project registered with Haryana Real Estate Regulatory Authority (HARERA), Gurugram and also obtained approval of revised building plan. The Corporate Debtor allotted 147 units to different allottees. (v) Complaints were filed before HARERA, Guru....
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....4 admitted Section 7 application filed by the Allottees. An independent application under Section 7 was filed by the Appellant, which was disposed of on 21.10.2024 giving liberty to the Appellant to approach the Resolution Professional appointed in the order passed under Section 7 application filed by the Allottees. (xiv) An appeal was filed challenging the admission order dated 21.10.2024 by Suspended Director of the Corporate Debtor in which an interim order was passed by this Tribunal to constitute the CoC. (xv) In the 2nd CoC meeting agenda was circulated by the IRP to bifurcate the valuation process by making the valuation of the Project, Spaze Arrow and the unsold inventory. (xvi) There were certain other litigations initiated by Ex-management which are not relevant in the present case. (xvii) On 18.01.2025, the Appellant filed IA 438/2025 seeking direction to the Resolution Professional to exclude the unsold inventory in the project, Spaze Arrow from the valuation of the Corporate Debtor and Information Memorandum and seeking the Resolution Professional to exclude the subject property from the valuation of the assets of the Corporate Debto....
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.... Memorandum which was sent along with Agenda in the notice of the 6th meeting of the CoC. As per the arbitral award, the Corporate Debtor has no right over the subject land. Shri Mitra submitted that the Adjudicating Authority could not have disregarded the binding arbitral award between the parties. 4. Shri Ritin Rai, learned senior counsel appearing for the Resolution Professional submit that the Collaboration Agreement has been treated to be in operation by the HARERA in the order dated 09.02.2022 where direction was given to the Corporate Debtor and the land owner to complete the project. It is submitted that the Appellant filed a counter claim in the arbitration proceeding seeking transfer of the project land in favour of the land owner which counter claim has been rejected. When the similar prayer seeking transfer of land in favour of the Appellant has been rejected by the Arbitral Tribunal, it is not open for the Appellant to contend that the project land to be not included in the Information Memorandum and the assets of the Corporate Debtor. It is submitted that the Corporate Debtor has commenced and completed significant construction prior to the arbitral award. It is s....
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....ic objective of framing and implementation of "Real Estate (Regulation and Development) Act, 2016". In fact, prior to the coming into force of aforesaid legislation, real estate developers were completely non-sensitive towards the interests of allottees. Therefore, the need for a legislation to regulate real estate Sector was felt for establishing an effective mechanism to enforce accountability and for providing expeditious adjudication machinery. Ensuring expeditious completion of incomplete real estate projects in respect of which the committed timelines indicated by the respective developers have expired is also considered by this Authority to be an objective of its constitution. 35. Taking a note of the plight of the allottees and the misery needlessly foisted upon them, this authority is of the view that the construction of the project deserves to be immediately commenced. In order to put an end to the suffering of the allottees the Authority directs the landowner/promoter (i.e., collaborator & the landowner/licensee) to forthwith commence and complete the construction/development of the project." 9. Directions have been issued to both, Corporate Debtor as well as....
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....Tribunal held that Collaboration Agreement is inoperative, therefore, the Corporate Debtor cannot claim any right in the pursuance of the Collaboration Agreement, hence, the project's unsold inventory be excluded from the Information Memorandum and could not have been valued. Learned counsel for the Respondent has also relied on several part of same award dated 14.09.2022 to support his submission that similar prayer was made by the Appellant before the Arbitral Tribunal to restore the land to the Appellant, which was rejected. We need to notice the relevant portion of the Arbitral Award to consider respective submissions of the parties. The claim was filed before the Arbitral Tribunal by the Corporate Debtor. The Arbitral Tribunal has framed 14 issued for consideration, which are as follows: "(i) Whether the Claimant is entitled to an award of specific performance directing Ishan Singh to perform its obligations under the Collaboration Agreement dated 19.06.2010, the 1st Addendum dated 15.06.2011, 2nd Addendum dated 16.01.2012, Supplementary Agreement dated 02.11.2012 and 3rd Addendum dated 16.01.2014, including bearing the cost of service floor? (ii) Whether the....
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.... (xiii) Whether the parties are entitled to interest and if so for what period and at what rate? (xiv) Costs and relief." 14. The claim of the Claimant was not accepted and answers to the issues are contained from page 211 to 221 of the paper book. Ishaan Singh was held entitle to compensation of Rs. 2 Crores from the Corporate Debtor. The Issue No. (xii) was with respect to relief which was claimed by Ishaan Singh, land owner. Relief was in the counter claim filed by Ishaan Singh. Tribunal has noticed that first set of prayers made by Ishaan Singh are declaratory relief to the effect that the Collaboration Agreement and subsequent addenda and supplementary agreement have been terminated lawfully by him. The said relief was noticed and the Arbitral Tribunal took the view that the said Collaboration Agreement and subsequent addenda are still alive. It is useful to notice following part of the 'Discussion on Issue No. (xii)': "Discussion on Issue No. (xii) (xii) Whether the Respondent is entitled to the reliefs claimed in the Counter Claim? Ishan Singh has classified his counter claims in three parts. Part I concerns itself with a situation wh....
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....rection given in paragraph 40 of the decision is relevant. This direction reads: Both the promoter(s) (collaborator & landowner/ licensee) i.e. M/s Spaze Towers Pvt. Ltd. and Sh. Ishaan Singh shall complete the remaining construction/ development works within a stipulated time period as per license/ registration certificate. However, both shall remain jointly and severely liable for the payment of delayed possession charges and refund of amount of their allotted respective share. The inter-se dispute between the landowner and the developer cannot be allowed to prejudice the statutory rights of the innocent allottees to get their real estate units on time. It is quite apparent from the view expressed by the Authority and the direction given that the construction should be completed, it proceeded on the basis that the Collaboration Agreement between the parties and the subsequent addenda and supplementary agreement are still alive." 15. The Arbitral Tribunal also took notice of the order of the HARERA Authority dated 09.02.2022. The Arbitral Tribunal, however, in 'Discussion on Issue No. (xii)' has observed that agreement cannot be operated and no direction can b....
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....to Ishan Singh would be inappropriate during the pendency of the writ petition." 18. From the above it is clear that one of the specific reliefs claimed by the Appellant was with respect to transfer of project land and all related documents, license in the name of Appellant, which was rejected noticing the proceeding of the RERA Authority and pendency of the writ petition in Punjab and Haryana High Court. 19. When we look into the issues framed and the consideration by the Arbitral Tribunal, it is clear that no issue was framed with regard to cancellation of Collaboration Agreement and the only issue was framed with regard to cancellation of power of attorney issued by the Appellant in favour of the Corporate Debtor. The Arbitral Tribunal has also noticed the interim injunction order passed by Additional District Judge in proceeding under Section 9 of the Arbitration and Conciliation Act, 1996, where Ishaan Singh was restraint from cancelling the Collaboration Agreement dated 19.06.2010 and Tribunal has noticed that said injunction continued. It is useful to notice following observation of the Tribunal (at page 150-151 of the paper book): "Through the lawyer's no....
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....ning prior approval of the DG Town & Country Planning, Haryana. The above fact has been noticed in the arbitral award, which is as follows (page 147 of the paper book): "A second addendum dated 16th January, 2012 (registered on 13th March, 2012) was effected to the Collaboration Agreement as a result of clause 16 of the Letter of Intent. 8 This clause required the parties to enter into a fresh agreement in which one of the conditions is that the Collaboration Agreement shall be irrevocable and that no modification or alteration etc. would take place except after obtaining prior approval of the Director-General, Town & Country Planning, Haryana." 21. We have noticed above that HARERA Authority in its order passed on 09.02.2022 has treated the Collaboration Agreement is continuing and issued direction to both land owner and the Corporate Debtor to carry out construction and complete the project. The Arbitral Tribunal has also refused the prayer of the land owner to grant declaration that Collaboration Agreement and subsequent Addendums to the agreement are terminated lawfully by him, which relief was not granted. Although, the Arbitral Tribunal has held the Collaboration ....
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....sisting joint development licence, and the termination sought to recover such occupied property during the moratorium. In the present case, as mentioned earlier, Appellant No. 1 - AA Estates never obtained physical possession. The Society and its members remained in continuous occupation. Termination was effected before the CIRP and was not a recovery during moratorium." (ii) Above was a case where redevelopment of the land was to be taken, which was in possession of the members of the Society, which members never vacated the premises so as to carry out any development. Development Agreement was subject to fulfilment of the condition which were never complied in the above case. 25. As noted above, present is a case where the prayer of the Appellant to declare the development agreement terminated by Appellant was refused by the Arbitral Tribunal. Order of HARERA Authority has also noticed the Collaboration Agreement to be alive and both the land owner and the developer were required to discharge their obligation. Thus, present is not a case where termination of Collaboration Agreement was accepted by any of the Authority. The Arbitral Tribunal held that Collaboration Agr....