TaxTMI 
TaxTMI 
2026 (7) TMI 106
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..... The facts and sequence of events of the present case reveal a glaring example of continuance of unlawful and illegal possession by the judgement deter, "the Corporate Debtor in the present case is continuing illegal / unlawful possession of immovable property consisting two storied building and other structures together with 14 bigha land in District Howrah for last 48 years after leasehold right held in favour of the Corporate Debtor for 21 years came to end on 31.12.1978." We need to notice brief facts and sequence of events giving rise to this appeal: i. Appellant is a registered society within meaning of Societies Registration Act, 1860. Appellant is owner of two storied building and other structures together with a land containing in area of 14 bigha situated at 30, Goshala Road in Mauza Lillooah Thana Bally in the district of Howrah, State of West Bengal. Appellant executed a lease deed dated 05.01.1958 in favour of R.S. Iron Industries Private Limited for the above building and land for a period of 21 years at a monthly rent of Rs. 675/-. The lease came to an end on 31.12.1978. Even after lease came to an end, the company did not handover the possession of the ass....
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....nt dated 21.05.2005. In the objection the Company/Corporate Debtor has pleaded vesting of the land with the State of West Bengal which objection were rejected by the Trial Court by order dated 21.02.2014. viii. The Company filed an O.A. No. 1081 of 2014 before the West Bengal Land Reforms and Tenancy Tribunal praying that decree obtained by the Appellant against the Company be declared as nullity, which having been obtained without disclosing the vesting of land in the State of West Bengal. The West Bengal Land Reforms and Tenancy Tribunal by its order dated 02.05.2014 held the decree of eviction passed against the Company, which was upheld upto the Hon'ble Supreme Court, as nullity. Appellant challenged the order dated 02.05.2014 before the High Court by filing WPLRT No. 160 of 2014. ix. The WPA No. 7588 of 2001 filed by the Appellant challenging the vesting proceeding was disposed of on 02.08.2022 by the High Court with liberty to the Appellant to approach the West Bengal Land Reforms and Tenancy Tribunal. In TA No. 01 of 2022, the Appellant filed a MA No. 1240 of 2022 where the West Bengal Land Reforms and Tenancy Tribunal vide its order dated 12.05.2023 grante....
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....to grant the prayer of the Appellant to exclude the property from CIRP of the Corporate Debtor. The Adjudicating Authority, however, directed the Resolution Professional to admit the claim as operational debt to the extent of contractual rent payable under the original lease deed. Aggrieved by the order dated 22.01.2026, this appeal has been filed. 2. We have heard Shri Abhijeet Sinha, learned senior counsel appearing for the Appellant. Shri Shaunak Mitra, learned counsel has appeared for the Resolution Professional. Shri Krishnan Venugopal, learned senior counsel has appeared for the Respondent No. 2 (Successful Resolution Applicant). 3. Shri Abhijeet Sinha, learned senior counsel for the Appellant submits that the immovable property admeasuring approx 14 bigha at 30, Goshala Road in Mauza Lillooah Thana Bally in the district Howrah is owned by the Appellant. Leasehold right granted in favour of the Corporate Debtor on 05.01.1958 for 21 years came to an end on 31.12.1978 and the Corporate Debtor having not handed over the possession, Suit was filed by the Appellant before Civil Court for eviction of the Corporate Debtor, which Suit was decreed by the Trial Court on 21.05.200....
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....lant who is owner of the asset of the immovable property has already initiated proceeding against the State of West Bengal questioning illegal vesting where an order of status quo has already been passed by Land Reforms and Tenancy Tribunal, which status quo is between Appellant and the State of West Bengal and the Corporate Debtor has nothing to do with status quo granted by West Bengal Land Reforms and Tenancy Tribunal on 12.05.2023. The Corporate Debtor whose lease came to an end on 31.12.1978 and is continuing illegal possession has no jurisdiction to file an application before the Land Reforms and Tenancy Tribunal. The application which was filed by the Corporate Debtor before Land Reforms and Tenancy Tribunal where an order dated 02.05.2014 was passed declaring the eviction decree as nullity has already been set aside by the High Court by judgment and order dated 14.09.2023. The Corporate Debtor has no right to file application before Land Reforms and Tenancy Tribunal or make an application with respect to issue of vesting of land in the State of West Bengal. Order dated 12.05.2023 passed by the High Court protect the Appellant as owner of the property against the action of S....
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....hat the property stood vested in State of West Bengal, hence, the Appellant cannot claim ownership of the property. Denial of admission of the claim of the Appellant as arrears of the lease rent is in accordance with the law, First Appellate Court having remanded the question of determination of mesne profits before the Trial Court, till said determination is made, no claim can be admitted. Appellant has concealed proceedings regarding vesting of land in the eviction proceeding. 5. Shri Krishnan Venugopal, learned senior counsel appearing for the Successful Resolution Applicant submitted that prayer made in the application I.A. (IB) No. 198/KB/2025 by the Appellant to exclude the subject land from the pool of assets of the Corporate Debtor has become infructuous. In the approved Resolution Plan, the SRA has only undertaken to diligently proceed and prosecute the litigations/proceedings with respect to the property on behalf of the Corporate Debtor and to abide by the final decision/outcome of such litigation which includes appeals, revision, review or like proceedings. In the approved resolution plan the rights of Appellant are duly protected. The CIRP proceeding having come to ....
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....Iron Industries Pvt. Ltd. for a period of 21 years w.e.f. 01.01.1958. The period of 21 years came to an end on 31.12.1978, when the leasehold rights in favour of the Corporate Debtor came to an end, the Corporate Debtor having not handed over possession of the property to the Appellant, the Appellant filed Suit for eviction in the Court of Civil Judge (Senior Division) 1st Court, Howrah being Title Suit No. 101 of 2004, Calcutta Pinjrapole Society vs. R.S. Iron Industries Private Limited. In the Suit which came to be decreed by the Trial Court by the judgment and decree dated 21.05.2005, the Trial Court decreeing the Suit directed as follows: "That the suit be and the same is decreed on contest with costs. The plff. do get a decree of ejectment and recovery of khas possession of the suit schedule property from the defdt. Within six months from the date of the order. The defdt is sume directed to vacate possession of the suit schedule property within the said period failing which the plff shall be at liberty to execute the decree in accordance with the law. The plff. do also gets a decree for mesne profit at a rate of Rs. 700/- per month from January, 1979 till get....
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....btor. The Corporate Debtor has not claimed any ownership right in the immovable property rather has relied only on the leasehold right granted by lease deed dated 05.01.1958. 12. Decree of eviction in favour of the Appellant having been affirmed upto the Hon'ble Supreme Court, we fail to see any justification in the observation made by the Adjudicating Authority in the impugned order regarding ownership of the property of the Appellant. In Para 6.3 following has been observed by the Adjudicating Authority: "6.3..... Further, the ownership of the said property is in dispute and adjudication is still pending before the competent forum according to the facts and circumstances presented before us." 13. Further in Para 6.6, the Adjudicating Authority observed that the Applicant failed to place on record any cogent documentary evidence, such as a registered sale deed, deed of conveyance, or any other title document, substantiate its claim to ownership. The above observation made by the Adjudicating Authority are wholly erroneous and not appropriate. In the CIRP of the Corporate Debtor where the Corporate Debtor has claimed only leasehold right, which leasehold right alread....
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....nd synthesizing the submission as to expected for seeable threat of dispossession consequent injury thereto, we find applicant has a bonafide contention. ln view of the urgency of the situation and as an exceptional measure we feel applicants need a cool whiff of preventive order to preserve the nature, character and possession of the property as particularised in this proceeding otherwise if the appellant made to wait till the disposal of injunction petition, which will be heard after filing of affidavit-in-opposition and reply by the parties, then appellant may have to face disastrous consequence as it is under imminent threat of dispossession. ln such event, delay may defeat the object and purpose of injunction and make this proceeding infructuous. So absolutely for a limited period we direct a rule of injunction be issued at once asking the parties to maintain complete status quo as its stands today in respect of the property as involved in this proceeding till next date." 15. As far as the order which was obtained by the Corporate Debtor dated 02.05.2014 from the Land Reforms and Tenancy Tribunal, the said order has already been set aside by the High Court vide its....
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.... was owner of the assets/immovable property and observation made in the impugned order regarding ownership of the Appellant are misplaced and unsustainable. We, thus, hold that Appellant is owner/landlord of the assets qua Corporate Debtor and the issue of status of the Appellant and Corporate Debtor has become final in the eviction decree confirmed upto the Hon'ble Supreme Court. Question No. (ii) 18. The order dated 12.05.2023 was passed by the West Bengal Land Reforms and Tenancy Tribunal on an application filed by the Appellant with respect to the proceeding TA No. 01 of 2022 pertaining to vesting of the land in the State. Interim order was passed on 12.05.2023, as extracted above. Order dated 12.05.2023 was between the parties who were relevant i.e. owner of the asset and State of West Bengal, who is claiming vesting of the land to the State under Land Reforms Act, 1955. The issue between the Appellant and the State of West Bengal pending in said TA No. 01 of 2022 in which MA No. 1240 of 2022 was filed in which interim injunction was passed in favour of the Appellant to protect the interest of the Appellant. Status quo which was directed by order dated 12.05.2023 is stat....
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....rim Resolution Professional is obliged to take control and custody of any assets over which Corporate Debtor has ownership right. Section 18(1)(f) is as follows: "18. The interim resolution professional shall perform the following duties, namely:- ....x.....x.....x.... (f) take control and custody of any asset over which the corporate debtor has ownership rights as recorded in the balance sheet of the corporate debtor, or with information utility or the depository of securities or any other registry that records the ownership of assets including- (i) assets over which the corporate debtor has ownership rights which may be located in a foreign country; (ii) assets that may or may not be in possession of the corporate debtor; (iii) tangible assets, whether movable or immovable; (iv) intangible assets including intellectual property; (v) securities including shares held in any subsidiary of the corporate debtor, financial instruments, insurance policies; (vi) assets subject to the determination of ownership by a court or authority;" 22. Explanation to Section 18(1) provides that the term "assets" shall....
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....interests created in favour of the Corporate Debtor. The Hon'ble Supreme Court held that right was created in favour of the Corporate Debtor within the meaning of Section 3(27). In Para 38 following was laid down: "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 out of or incidental to property". Since the expression "asset" in comm....
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....he Appellant has relied on the judgment of the Hon'ble Supreme Court in "(2005) 1 SCC 705, Atma Ram Properties Ltd. vs. Federal Motors (P) Ltd.". The Hon'ble Supreme Court in the above case had occasion to consider the status of a tenant against whom eviction decree has been passed. The judgment of Madhya Pradesh High Court holding that on passing of decree of eviction the possession of the tenant becomes unlawful has been affirmed. In Para 11 of the judgment following was laid down: "11. Under the general law, and in cases where the tenancy is governed only by the provisions of the Transfer of Property Act, 1882, once the tenancy comes to an end by determination of lease under Section 111 of the Transfer of Property Act, the right of the tenant to continue in possession of the premises comes to an end and for any period thereafter, for which he continues to occupy the premises, he becomes liable to pay damages for use and occupation at the rate at which the landlord could have let out the premises on being vacated by the tenant. In the case of Chander Kali Bai the tenancy premises were situated in the State of Madhya Pradesh and the provisions of the M.P. Accommodation Co....
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....of the Madhya Pradesh High Court in Kikabhai Abdul Hussain case but distinguished it by observing that the law laid down in Kikabhai Abdul Hussain cases was not applicable to the case before it in view of the definition of "tenant" as contained in the M.P. Act and the provisions which came up for consideration of the High Court in Kikabhai Abdul Hussain cases were different." 30. Further the Hon'ble Supreme Court in "(1977) 4 SCC 1953, Shyam Sharan Vs. Sheoji Bhai & Anr." held that the tenant continuing in occupation of the tenancy premises after the termination of tenancy is an unauthorised and wrongful possession. To the same effect is another judgment of Hon'ble Supreme Court in "(2022) 18 SCC 233, Heera Traders vs. Kamla Jain", where the Hon'ble Supreme Court tin Para 69 has laid down that a decree of eviction having been passed, the tenant ceases to be tenant and he would become an unauthorised occupant. Further in Para 86 and 89 following was laid down: "86. In the case of a contractual tenant, upon the expiry of the lease, he is under the Transfer of Property Act and, in accordance with the contract, duty-bound to vacate the premises and deliver possession to the....
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....take possession of any asset which is owned by a third party which are in possession of the Corporate Debtor under trust or under contractual arrangements including bailment. On the date when CIRP commenced no contractual arrangement was continuing on which the Corporate Debtor could have permitted to be in possession. No law including I&B Code could be said to promote illegality. Unauthorised possession and illegal occupancy cannot be recognised in CIRP nor could be made subject of CIRP process. 34. We have already noticed that both the Hon'ble Supreme Court and Calcutta High Court in their judgment, as noted above, has directed the eviction of the Corporate Debtor through execution proceeding. Calcutta High Court on 18.09.2023 has directed for handing over possession within six months, however, on 24.04.2024, CIRP commenced in which property was also included by the Resolution Professional. The Resolution Professional's submission that it has not treated as property of the Corporate Debtor is wholly erroneous and incorrect. When the Resolution Professional has included the said property in the CIRP process and has offered possession of the property to go to the SRA, it cannot ....
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....e judgment of this Tribunal, Para 17 of order of the Adjudicating Authority was noted. Para 9 and 10 of the judgment is as follows: "9. In Paragraph 17 of the judgement, Adjudicating Authority directed as follows: "17. Having considered the overall facts and circumstances, we are of the view that the disputes raised by the Applicant, insofar as they relate to the ownership of the disputed Chhatarpur property which is already sub-judice before the Hon'ble High Court of Delhi, cannot be adjudicated by this Adjudicating Authority in exercise of jurisdiction under the Code and require determination before the appropriate civil forum. The Applicant, in the present Application, has not sought any adjudication on the validity of the sale deed as such, but has confined the relief to a direction for exclusion of the said property from the scope and ambit of the Resolution Plan. It is further noted that upon approval of the Resolution Plan by this Adjudicating Authority, the management and control of the Corporate Debtor shall vest in the Successful Resolution Applicant, who has undertaken to pursue and continue the pending litigation concerning the said disputed property a....