TaxTMI 
TaxTMI 
2026 (7) TMI 926
X X X X Extracts X X X X
X X X X Extracts X X X X
....CL) challenging the impugned orders connected with the insolvency of the same CD and for the sake of convenience both these appeals are being disposed of by passing this common judgment. 2. CA (AT) (Ins) No. 939 of 2024 has been filed by the MADCL under Section 61(1) of the Insolvency and Bankruptcy Code, 2016 (Code) assailing the order dated 13.03.2024, (impugned order) passed by the National Company Law Tribunal, Mumbai Bench, Court-I (Adjudicating Authority) in IA No. 3985/MB/C-I/2023 in CP (IB) No. 1315/MB/C-I/2017 whereby the sale-certificate issued in favour of the Successful Auction Purchaser has been kept on record and certain concessions and reliefs have also been granted by the Ld. Adjudicating Authority. CA (AT) (Ins) No. 1355 of 2023 has been filed by the Appellant-MADCL being aggrieved by the order dated 28.04.2023 passed in IA No. 3985 of 2023, whereby the said IA was disposed of, without considering the IA No. 147 of 2023, which was an intervening application filed by the Appellant. 3. Brief facts necessary for the disposal of aforesaid appeals are that Appellant is a Government Company constituted by the Government of Maharashtra in the year 2002 for a specifi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ted 07.11.2007 the sole object and purpose of the CD was to construct the plan, supply electricity to the appellant and sell the surplus electricity in MIHAN SEZ Area and the Appellant was obliged to provide various facilities to the CD eg. Land on lease, transmission lines at the expense of appellant, free land for rail connectivity, road connectivity, water supply, free land for drainage system and low line areas for bottom ash disposal and the appellant was required to hold 26% of equity in the project company/CD. 9. In view of the above concession agreement appellant leased a land admeasuring 6.2654 hectares situated within the MIHAN SEZ boundary and 35.30 hectares outside the existing MIHAN SEZ boundary on 26.11.2008 and 16.06.2010 in consideration of payable premium @ of Rs. 65 lakhs per hectare in the form of equity shares subject to special conditions for use, enjoyment and lease hold rights in the aforesaid land. 10. The appellant had also entered into a shareholder's agreement with Abhijeet Infrastructure Ltd., Abhijeet Infra Ltd. and Abhijeet MADC Nagpur Energy Pvt. Ltd. on 02.04.2009. 11. The CD/Project Company was admitted into Corporate Insolvency Resolution ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....appellant also filed IA No. 468 of 2024 seeking setting aside the sale of the undertaking of the CD on slump sale basis and also with regard to the legal entity of the CD on standalone basis. The Ld. Adjudicating Authority disposed of the IA No. 3985 of 2023 filed by the liquidator by passing the impugned order dated 13.03.2024 and aggrieved by the same CA (AT) (Ins) No. 939 of 2024 has been preferred by the appellant. 17. Ld. Counsel for the Appellant submits that it was neither arrayed as the party in IA No. 2504 of 2020 and when he filed an intervention application bearing IA No. 147 of 2023 the same was not decided, while Ld. Adjudicating Authority vide order dated 13.01.2023, had specifically directed clubbing of IA No. 2504 of 2020 and IA No. 147 of 2023 and both these applications were being listed together, however on 28.04.2023 IA No. 2504 of 2020 was allowed and the application of the appellant i.e. IA No. 147 of 2023 was adjourned to other date and the same became infructuous after passing of the impugned order. 18. It is further submitted that the impugned order dated 28.04.2023 is self-contradictory as vide order dated 12.09.2023 the liquidation process was exten....
X X X X Extracts X X X X
X X X X Extracts X X X X
....l from the appropriate authority. In this regard Rule 11 (7) of the SEZ Rules, 2006 has been highlighted. 24. It is further submitted that any alteration in the terms of the concession agreement cannot be made without the consent of the appellant and the CD could not mortgage, assign or change its right or leasehold interest and obligations in the project, in favour of any third party, in absence of any approval of the appellant. In this regard the law laid down by the Hon'ble Supreme Court in Jaypee Kensington Boulevard Apartments Welfare Association vs. NBCC (India) Ltd., (2022) 1 SCC 401 and BHEL vs. Anil Goyal, (2020) SCC Online NCLAT 618 has been highlighted. 25. It is further submitted that Section 238 of the Code cannot override Appellants ownership rights. Reliance is placed on KV Jayaprakash vs. State Bank of India and Anr., CA (AT) (Ins) No. 362 of 2022 and Embassy Property Developments Pvt. Ltd. vs. State of Karnataka and Ors., (2020) 13 SCC 308. 26. It is vehemently submitted that if the impugned order is not set aside the Respondent no. 2/Auction Purchaser which is an unrelated third party would become the project company without fulfilling any condition as su....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ppellant shall not be interfered. 33. It is further submitted that with regard to the land leased by the appellant the liquidator has only sold lease hold rights vested in with the CD which has constituted part of the liquidation estate and moreover the appellant participated in the liquidation process by filing claims amounting to Rs. 412,271,985/- as unsecured financial creditor and Rs. 8,661,384,438/- as operational creditor which was rejected by the liquidator on the ground that amount constituted merely an investment by the appellant while the claim as an operational creditor has been treated as only a contingent claim and aggrieved by the same the appellant approached the Ld. Adjudicating Authority and the decision of the liquidator was upheld and since no appeal was preferred against that order of Ld. Adjudicating Authority, the said order has attained finality. 34. It is further submitted that the sale of the legal entity of the CD as a shell is in accordance with law, because after the undertaking of the CD was sold, only the CD as a shell was left and there is no illegality in selling the same. Reliance has been placed on RK Industries (Unit-II) LLP vs. HR Commercia....
X X X X Extracts X X X X
X X X X Extracts X X X X
....l debt but the appellant consciously chosen not to terminate the agreement and now it cannot contend its entitlement to the benefits allegedly existed before the commencement of the liquidation. 41. It is further submitted that the Respondent No. 2 is not seeking any rights higher than vested in the CD and the project shall stand remitted to appellant at the end of the concession term and this has been clarified by the impugned order also and therefore the appellant as of now, is not having any cause of action. 42. It is also submitted that Ld. Adjudicating Authority has correctly applied the Principle of clean slate while considering the reliefs sought by Respondent No. 2. Reliance in this regard has been held on M/s Shivshakti Interglobe Exports Pvt. Ltd. vs. M/s KTC Foods Pvt. Ltd., CA (AT) (Ins) No. 650 of 2020, Jas Amrit Designers Pvt. Ltd. vs. Gianchand Narang, CA (AT) (Ins) No. 258 of 2023 and Shri Karshini Alloys Pvt. Ltd. vs. Ramakrishnan Sadasivan liquidator, CA (AT) (CH) (Ins) Nos. 438 and 443 of 2022. 43. It is vehemently submitted that the appellant is not the aggrieved person as the impugned order does not extinguish the rights of the appellant enshrined in B....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... enable the establishment of 20 MW generator set and transmissions and distribution system in the MIHAN SEZ the CD/ lessee by its letter dated 05.03.2008 requested the appellant to lease out 6.2654-hectare land in MIHAN SEZ Area in consideration of premium of Rs. 65 lakhs per hectare and an indenture of lease was executed on 26.11.2008. Subsequently lease deed with regard to the land measuring 35.03 hectare was also executed on 16.06.2010. Appellant- MADC in between entered into a shareholders agreement with Abhijeet Infrastructure Ltd. and Abhijeet Infra Ltd. as well as with Abhijeet MADC Nagpur Energy Pvt. Ltd. (AMNEPL)/CD. 50. It is also reflected that vide notification dated 03.03.2010 issued under the SEZ Act, 2005 the Appellant as developer of MIHAN SEZ was granted the status of deemed distribution licensee. Appellant appears to have approached the Maharashtra Electricity Regulatory Commission for procurement of 4 to 9 MW for further period of one year from 01.09.2017 to 31.08.2018 and the same was approved vide order dated 04.08.2017. 51. The CD/Project Company was admitted into CIRP vide order dated 06.10.2017 passed by the NCLT in CP No. 1315 of 2017 under Section 7 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n the intervention application no. 678 of 2018 following order was passed in the liquidation initiation order: "9. That on Intervention Application 678/2018 moved by MADC, for there being consensus between the RP and Counsel appearing on behalf of MADC regarding the rights of MADC, the Liquidator, while dealing with liquidation of the assets of the company, shall not interfere or deal with the pre-existing rights of MADC and shall continue to manage switch yard and the transmission line as stated in the order dated 4.8.2017 passed by MERC and the Concession Agreement dated 7.11.2007 and shall carry out liquidation of the Corporate Debtor subject to the rights of MADC". Thus a clear direction was given to the liquidator also to carry out liquidation subject to the rights of the Appellant- MADC. 55. It is further reflected that the undertaking of AMNEPL/CD was sold by way of slump sale to Respondent no. 2 vide public auction dated 21.10.2020 and the legal entity of the CD was auctioned and sold to Respondent No. 2 and in this regard sale certificates dated 19.12.2020 and 21.12.2020 were executed and sale agreement was also executed on 24.12.2020. 56. It was on 26.12....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ADC filed IA No. 121 of 2024 before us in CA (AT) (Ins) No. 1355 of 2023 and vide order dated 08.01.2024, the same was disposed of with the observation that any action taken in pursuance of Ld. Adjudicating Authority's order dated 28.04.2023 shall abide by the result of CA (AT) (Ins) No. 1355 of 2023. However, Ld. Adjudicating Authority disposed of IA No. 3985 of 2023 by passing order dated 13.03.2024 which has been assailed by the appellant in CA (AT) (Ins) No. 939 of 2024 and by passing this order various reliefs have been granted to Respondent No. 2 however certain observations with regard to the rights of the appellant - MADC have also been made in following terms: "19. We have heard the rival submissions of both sides and perused the record. It is observed that the Applicant does not seek to acquire better rights than those vested with the Corporate Debtor. Moreover, the Applicant is aware that the project company will be remitted back to MADC after completion of the term and does not seek to evade the stipulations contained in the agreements. Further, as far as the contention of the Respondent No.2 qua dilution of shareholding of 26% in Corporate Debtor is concerned ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....these observations have become final, so far as Respondents are concerned to the extent of transfer of facility by Respondent No. 2, in the manner obligated for CD and the project would be remitted back to the appellant after the end of the term and admission of the Respondent no. 2 has also been recorded in para no. 22 that it does not seek to acquire any better right than that of CD. 61. The first contention of the appellant is that IA No. 147 of 2023, which was filed in IA No. 2504 of 2020, when were clubbed together should have been disposed of simultaneously, while by passing impugned order in CA (AT) (Ins) no. 1355 of 2023 the IA No. 2504 of 2020 was allowed and completion of sale process and liquidation process was taken on record and IA No. 147 of 2023 of the appellant was kept pending which, as said earlier, was subsequently withdrawn and it is stated by appellant that by passing order dated 13.01.2023, the same had become infructuous. 62. We notice that the IA No. 2504 of 2020 was moved by the Respondent No. 1-liquidator for taking on record the completion of the sale process whereby all the assets forming part of the liquidation estate including the legal entity of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the appellant could only be filed on 09.01.2024. Therefore, till 28.04.2023 the appellant has not challenged any of the sale process. It is also reflected that IA No. 468 of 2024 is stated to have been adjourned sine die by the Ld. Adjudicating Authority vide order dated 10.04.2024. 68. Therefore, having regard to the reliefs claimed/sought by the Appellant in IA No. 147 of 2023 whereby no effective remedy was claimed pertaining to the cancellation of sale process or sale certificate or sale deed, no prejudice appears to have been caused to the appellant in keeping the IA No. 147 of 2023 pending and keeping on record the completion of sale and liquidation process, which in our understanding was purely a ministerial act and in absence of any challenge to the sale process, no effective relief could have been granted to the appellant. However, it would have been in the fittest of things if IA No. 147 of 2023 would have been disposed of by Ld. Adjudicating Authority along with IA No. 2504 of 2020. 69. The other grievance of the appellant-MADC appears to be that it is the owner of the project and has only granted exclusive license to CD for operating the project according to the c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of the CD. 71. Respondent No. 2 on the other hand has claimed itself to be a bona fide purchaser who has paid the entire consideration of about 100 crore which is claimed to have been distributed amongst creditors in view of Section 53 of the Code. It is also highlighted by Respondent no. 2 that while disposing of IA No. 3985 of 2023 the Adjudicating Authority expressly protected the rights of the appellant under the BOT arrangement and recorded that the Successful Bidder shall remain bound to transfer the facility in the manner, in which the CD was obliged. 72. It is also submitted that the appellants case is solely premised on 26% shareholding, however under Section 53 of the Code, equity shareholders are ranked last in the waterfall distribution and also that the claim of the appellant filed as secured financial creditor has been rejected by the liquidator and the adjudicating authority which has also attained finality. 73. Respondent no. 2 has also submitted that MADC never terminated concession agreement and thus cannot claim pre-liquidation benefits and also that the Respondent no. 2 does not seek any better rights then those vested in the CD. 74. In rebuttal Ld. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....dules that are part of this Agreement for the Term of this Agreement; • operate and maintain the Transmission and Distribution Network provided by MADC in the MIHAN Area for the Term of this Agreement, • supply electricity to the Consumers in the MIHAN SEZ Area on a priority basis; • sell electricity, over and above the requirement of MIHAN SEZ Area, at any point of time during the Term of this Agreement, to other consumers in the MIHAN Area; • charge to the consumers in the MIHAN Area (both SEZ as well as outside SEZ area) a Tariff for purchase of electricity as per the terms and conditions mentioned in this Agreement for both power supplied from the Facility including any additional units as and when developed; • sell any excess electricity over and above the requirements of MIHAN area (both SEZ as well as outside SEZ area) to third parties at mutually agreeable terms as per applicable rules and regulations. For avoidance of doubt it may be noted that the order of priority of electricity supply by Project Company to customers will be MIHAN SEZ Area followed by MIHAN non SEZ area followed by any third party; ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....reholding of the Project Company to the minimum extent of 26% of the subscribed, paid up and voting equity capital of the Project Company by way of its contribution of Land for the Project, which shall he valued at INR 65 lakhs per hectare, on or before the Financial Closure Date; (b) assist the Project Company, if so requested, to obtain electrical energy for construction and Commissioning, in accordance with Article 7; (c) assist the Project Company in connection with Project Company's negotiation and execution of the Financing Documents; (d) assist the Project Company in obtaining all Consents including, but not limited to, construction, water, air, other environmental, import and transportation permits and licenses; (f) transfer to the Project Company within fifteen (15) Days of this Agreement, free of all encumbrances, against the consideration to be provided by the Project Company, all rights and title of the Project related to: (i) all Consents which are under application or have been obtained from the Government Authority for the Project, and (ii) all studies, designs, specifications and drawings, including but not l....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... after the execution of these presents as per the SHA the LESSOR do hereby admit and acknowledge and acquit, release and discharge the LESSEE from the payment and receipt thereof and every part thereof of the total consideration of Rs. 4,07,25,100/- (Rupees Four Crore Seven Lacs Twenty Five Thousand One Hundred Only) the LESSOR do hereby demise unto and to the use of the LESSEE and the LESSEE do hereby accept, confirm and take on lease all that piece or parcel of the said Land on ground situated lying and being in the processing area of the SEZ at Project MIHAN, all that piece or parcel Land on ground situated, lying in Village 'Dahegaon' in the 'Hingna PS' jurisdiction and the Post office is 'Khapri' within the taluka, District of Nagpur (Rural) admeasuring 6.2654 Hectares equivalent to 62654 Sq. Mtrs. and more particularly described in the First Schedule hereunder written and as shown on the Plan in Annexure 'A' hereto and delineated thereon in red colour boundary line (hereinafter referred to as 'the Demised Land'); 2. GRANT OF DEMISE 2.1 In consideration of the LESSEE agreeing to undertake the responsibilities under the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....in favour of any third party otherwise than in accordance with Article 7 above (h) The LESSEE setting up a title adverse to that of the LESSOR or in a third person or claiming a title absolute in itself. 12.6 Subject to the provisions of this Lease Deed, the LESSEE shall not. except in accordance with the terms of this Lease Deed, assign any of its rights or obligations as such LESSEE, except with the prior written consent of the LESSOR 12.7 No variation of this Lease Deed shall be binding on either party unless such variation is in writing and signed by both parties. Lease Deed b/w. MADC and AMNEPL for land admeasuring 35.03 Ha. dated 16.06.2010. Q. AND WHEREAS upon the joint survey of the said Land it is agreed between the LESSOR and the LESSEE, that the lease of the said Land shall be for a term of thirty (33) years from effective date and LESSEE shall pay the agreed premium rate of Rs. 65,00,000/- (Rupees Sixty-Five Lakh Only) per Hectare for the total land admeasuring 35.03 Hectares amounting to aggregate premium of Rs. 22,76,95,000 (Rupees-Twenty-Two Crore Seventy-Six Lakh Ninety-Five Thousand Only) as set out therein and that the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....2 of Annexure 'A' hereto and reiterated thereon in red colour boundary line (hereinafter referred to as 'the Demised Land) 5. LEASE PERIOD: The lease period shall be 33 years and commence from the effective date which is 7th January, 2009. (s) Surrender of the Demised Land: At the expiration or sooner determination of the said term quietly to deliver unto the LESSOR the Demised Land and all Buildings, structures, Plants and Equipments then standing thereon at no cost to the LESSOR (u) Lease or Assignment: - Lease or assignment of the demised land under this lease is not permitted. 16.6 Subject to the provisions of this Lease Deed, the LESSEE shall not, except in accordance with the terms of this Lease Deed, assign any of its rights or obligations as such LESSEE, 16.7 No variation of this Lease Deed shall be binding on either party unless such variation is in writing and signed by both parties. Shareholders Agreement between MADC, Abhijeet Infrastructure Ltd., Abhijeet Infra Ltd. and Abhijeet MADC Nagpur Energy Pvt. Ltd. 2.2 On the effective date: (iii) MADC shall enter into a Lease Deed for the Conc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....einafter referred to as "MADC Shares") upto the completion of 45 days from the COD and AIL shall hold not less than 51% of the issued Capital ("AIL Shares") upto a period of two (2) years from Commercial Operation Date (COD) and Alnl. /other shareholders shall hold the balance portion of the Issued Capital. ("AInL Shares"). On the date of COD and within 45 days from the date of finalization of 'Total Project Cost, AIL shall hold not less than 26% of the issued and Subscribed Capital and MADC shall have right to hold upto 26% of the Issued and subscribed Capital. Any amount required to be brought in for completion of the Facility, beyond the paid up equity share capital as mentioned hereinabove, shall be contributed by AlL/Alnl through 18% Compulsorily Convertible Preference Shares (CCPS). No dividend shall be accrued or paid on CCPS till the COD. The CCPS shall be converted into equity shares within a period of 90 days from the date of COD. (d) The land contribution of MADC, while considered as equity shall be first recognised in the books of the Company as "share application money". Proportionate to the equity contribution by the other shareholders AlnL and AIL, in ac....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... on the next business day succeeding the holiday. If at the adjourned meeting as well, a valid quorum is not constituted; the Directors present shall constitute a valid quorum (provided however that such quorum shall not be entitled to vote on a Reserved Matter, without the presence of Director nominated by MADC or the written consent of MADC). 8.1 Each Shareholder agrees that it shall procure that the Company shall not do or omit to take any actions on any of the following matters without the affirmative vote/written approval of MADC or persons nominated by MADC, -During the construction period and -Beyond the construction period, till MADC's shareholding in the Company is not less than 11 percent. (a) Alteration of the Company's name; (b) Alteration of the Constitutional Documents to the extent the same is inconsistent with the Concession Agreement; (c) Change the Company's Business including whether by opening or closing any business operation, merging or acquiring another entity, reorganising or voluntary winding up; (d) Approval, entering into, revoking or varying any of the Project Agreements which are not app....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... and it is clear that after the stipulated period of 33 years, the project was to return back to the appellant and all the shares hold by the appellant (26%) were also required to be transferred to Abhijeet Infra Ltd. (Project Sponsor) for consideration of the transfer of all the assets of the CD/project company to appellant. Therefore, while receiving back the utility, all 26% of shareholding of the appellant was required to be extinguished and was to be transferred to Abhijieet Infra Ltd. The CD was having right to operate the project on BOT basis and the lease of the two lands was also made by the appellant in favour of it only for 33 years and therefore the CD was obliged to return the land and project to the appellant after the stipulated period. 77. A conjoint reading of lease deeds, shareholders agreement and concession agreement would reveal that the CD was having right to operate the project and to use the lease lands for the period stipulated in the above agreements subject to the covenants mentioned therein. Though the CD was not the owner of the land but it was having leasehold rights in its favour and in our considered opinion, these bundle of rights as contained in....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ession and right to erect building of the land. Thus, by lease, Appellant has acquired a right to enjoy the property. Leasehold rights which has been granted to the Corporate Debtor is property within the meaning of Section 3(27) and has to be treated as an asset for the purposes of Section 18(1)(f). Much reliance has been placed by the Appellant on explanation (a) and what is sought to be contended is that the land under the lease is owned by the Appellant, hence, the possession of the said land ought not to have been taken by the Resolution Professional. The expression 'assets' occurring in explanation (a) has wide meaning which meaning encompasses itself the immoveable land as well as leasehold rights. 20. The leasehold rights which are owned by the Corporate Debtor consists of right to enjoy the immoveable property by virtue of Registered Lease Deed dated 31.03.2007. Explanation (a) does not come into way of the Corporate Debtor in enjoying the leasehold rights i.e. enjoyment of the property by virtue of Registered Lease Deed. We, thus, do not find any substance in the submission of the Appellant that the leasehold rights should be excluded from the assets of the corpo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e Assets' and the ownership is only to the extent of these Leasehold Rights based on which the 'Corporate Debtor' can be continued as 'a Going Concern'. It is also significant to mention that the Appellant has never initiated any proceedings or chosen to exercise their rights to invoke any of the Clauses of the Lease Deed for cancellation of the subject Deed." 53. In Victory Iron Works Ltd. Vs. Jitendra Lohia and Ors., MANU/SC/0229/2023 Hon'ble Supreme Court while considering the nature of leasehold rights opined as under:- "19. Section 3(27) of the IBC defines the word "property" as follows: 3. Definitions. --In this Code, unless the context otherwise requires, -- xxx xxx xxx (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. But the word "asset" is not defined either in Section 3 or in Section 5 or in Section 79 of the Code, though Section 79(14) defines the expression "excluded assets". 22. It may be noticed from Sections 18 and 25 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....perty of any kind", the bundle of rights that the Corporate Debtor has over the property in question would constitute "asset" within the meaning of Section 18(f) and Section 25(2)(a) of IBC. 36. In Sushil Kumar Agarwal (supra), this Court brought out the distinction between different types of Development Agreements, with particular reference to Section 14(3)(c) of the Specific Relief Act, 1963. After summarizing the different types of Development Agreements in paragraph 17 of the decision, this Court held in paragraph 19 as follows: 19. ...An essential incident of ownership of land is the right to exploit the development potential to construct and to deal with the constructed area. In some situations, under a development agreement, an owner may part with such rights to a developer. This in essence is a parting of some of the incidents of ownership of the immovable property... 37. Therefore, it is not very difficult to conclude, that a bundle of rights and interests were created in favour of the Corporate Debtor, by a series of documents such as (i) the MoU dated 24.01.2008; (ii) the shareholders agreement dated 24.01.2008; (iii) the flow of the c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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) 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 common parlance denotes "property of any kind", the bundle of rights that the corporate debtor has over the property in question would constitute "asset" within the meaning of Section 18(1)(f) and Section 25(2)(a) IBC. 24. The Hon'ble Supreme Court while considering Issue No.2 noticed the ground of attack of the appellants to the impugned orders. In paragraph 41, following was stated: - "Issue 2 41. The main ground of attack of the appellants to the impugned orders of the NCLT and NCLAT is that by virtue of the Explanation under Section 18 of the Code ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ation Memorandum or liquidation estate are the assets of the corporate debtor, goes to the core of the CIRP process and when the inclusion of the said asset is questioned before the Ld. NCLT by the Appellant, Adjudicating Authority or this Appellate Tribunal does not lack jurisdiction in entering into the question and deciding as to whether the leasehold assets are part of the Liquidation Estate of the CD or should be excluded therefrom. Thus keeping in view the above precedents we do not find much force in the submissions of Ld. Counsel for the appellant as well as of respondent and in our considered opinion the leasehold rights in the land which were assigned in favour of the CD by a merger deed is owned by the CD while land is owned by the Appellant and these rights could be transferred and validly held to be the part of the Liquidation Estate of the CD and this issue may validly be considered and adjudicated by the Adjudicating Authority as well as by this Appellate Tribunal. Thus keeping in view the above precedents we do not find force in the submissions of Ld. Counsel for the appellant in terms that leasehold rights occurred in favour of the CD for 33 years in th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ently to liquidation, distribution of proceeds amongst creditors is to be made as per the waterfall mechanism provided under Section 53 of the Code and the claim of the equity shareholders would rank last in the waterfall distribution. 83. In V.V. Krishna Iyer Sons vs. New Era Manufacturing Company Ltd. (1965) 35 Comp Cas 410 it was held as under: "It is contended on behalf of the petitioners (in all seriousness I am assured, and that binds me to serious examination) that the paid up share capital which figures among the liabilities in the balance-sheet should be taken into account in determining the company's solvency and that, if that is done, it will be found that the company's liabilities are in excess of its assets. But, although for balance-sheet purposes, share capital is shown among the liabilities, it is no more a liability of the company than losses, which in a balance-sheet are shown among the assets, is an asset of the company. A company does not owe its members the share money paid by them, and, except when there has been a reduction of share capital (whereupon the excess ceases to be share capital) the members have no right to ask for the return of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ened with past liabilities when it is not mentioned in the 'Sale Notice'. 22. It is no longer Res Integra that while approving a 'Corporate Debtor' sale as a 'going concern' in Liquidation Proceedings without its dissolution in terms of Regulation 32(e) of the Liquidation Process Regulations, 2016, it is essential to see that the 'Corporate Debtor' is not burdened by any past or remaining unpaid outstanding liabilities prior to the sale of the Company as a 'going concern' and after payment of the sale proceeds distributed in accordance with Section 53 of the Code. The Impugned Order in I.A. 889 of 2020 is modified to the extent that the sale of the first Respondent as a 'going concern' is upheld and the direction sought for in prayer (c) & (e) in CA No. 1189 of 2019 seeking extinguishment of past/remaining unpaid outstanding liabilities including contingent liabilities, prior to the sale as a 'going concern', after payment of sale proceeds distributed in accordance with Section 53 of the Code, is allowed. This Appeal is allowed to the extent indicated above". 86. In Jasamrit Designers Pvt. Ltd. vs. Gianchand Narang, CA (AT) (Ins) No. 258 of 2023, it was held by....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rovisions of the IBC and the Liquidation Regulations, it is evident that the Liquidator is authorized to sell the immovable and movable property of the Corporate Debtor in liquidation through a public auction or a private contract, either collectively, or in a piecemeal manner. The underlying object of the Statute is to protect and preserve the assets of the Corporate Debtor in liquidation and proceed to sell them at the best possible price. Towards this object, the provisions of the IBC have empowered the Liquidator to go in for a public auction or a private contract as a mode of sale. Besides reporting the progress made, the Liquidator can also apply to the Adjudicating Authority (NCLT) for appropriate orders and directions considered necessary for liquidation of the Corporate Debtor. The Liquidator is permitted to consult the stakeholders who are entitled to distribution of the sale proceeds. However, the proviso to Section 35(2) of the IBC makes it clear that the opinion of the stakeholders would not be binding on the Liquidator. Regulation 8 of the Liquidation Regulations refers to the consultative process with the stakeholders, as specified in Section 35(2) of the IBC and sta....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rcial or business decision taken by the Liquidator for conducting the sale of the movable/immovable assets of the Corporate Debtor in liquidation. The Appellate Authority cannot don the mantle of a supervisory authority for overseeing the validity of the approach of the respondent No.2 - Liquidator in opting for a particular mode of sale of the assets of the Corporate Debtor". 90. Therefore, in our considered opinion, if liquidator after consultation with the creditors has also sold shell legal entity of the CD by public auction the same could not be questioned, as otherwise the fate of the CD was not more than worth dissolution after sale of all its assets. 91. It is also evident that appellant by writing a letter dated 19.03.2021, to the IRP Vinod Kumar Kothari, as he was at that point of time, has also assured cooperation in the Resolution of the CD. 92. We also notice that liquidator has moved an application bearing MA 1343 of 2018 seeking clarification regarding sale of CD as a going concern and Ld. Adjudicating Authority vide order dated 29.11.2018 has disposed of the same by observing that when sale is being made as going concern the acquirer after the transfer of t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nt Pvt. Ltd. vs. State of Karnataka and Ors., (2020) 13 SCC 358, however in our considered opinion the leasehold rights were/are the assets of the CD and we have already held that these rights have been correctly included in the liquidation estate and sold in auction. 97. Section 238 of the Code is also relevant here, which provides as under: 238. Provisions of this Code to override other laws. - The provisions of this Code shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law. 98. In BSE Ltd. vs. Avil Menezes, IPR of Future Corporate Pvt. Ltd., CA (AT) (Ins) No. 1786 of 2025 and 1862 of 2024 decided on 24.03.2026 we held in para no. 71 to 74 as under: "71. Perusal of Section 60(5) of the Code will reveal that it provides power to the Adjudicating Authority which can be invoked to entertain or dispose of any claim made by or against the corporate debtor or corporate person and also any question of priorities or any question of law or facts, arising out of or in relation to the insolvency resolution or liquidation proceedings ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... lease granted by the Government of Karnataka which was to expire on 25.05.2018. A notice for premature termination of the lease was issued on 09.08.2017, on the allegation of violation of the terms and conditions of the lease deed, no order of termination had been passed till the date of initiation of the CIRP. The IRP wrote many letters to various authorities informing them of the commencement of CIRP. and also for seeking the benefit of deemed extension of the lease in terms of Section 8-A (6) of the mines and minerals (development and regulation) Act, 1957. RP also filed a writ petition seeking a declaration that the mining lease should be deemed to be valid up to 31.03.2020 but during the pendency of the writ petition, Government of Karnataka rejected the proposal for deemed extension. The RP thereafter moved an application before the NCLT for setting aside the order of the Government of Karnataka and seeking a declaration that the lease should be deemed to be valid up to 31.03.2020 which was allowed by the NCLT and ultimately the Adjudicating Authority directed the Government of Karnataka to execute the supplement lease deed. In the background of these facts, the Hon'ble Supr....