2019 (2) TMI 603 - AT - Insolvency and Bankruptcy

Applying Moratorium in terms of Section 14(1)(d) of I&B Code on the land of Maharashtra Housing and Area Development Authority - asset of the Corporate Debtor for application of provisions of Section 14(1) (d) of the I&B Code - land in question originally belonged to Bombay Housing & Area Development Board which was vested in the Maharashtra Housing and Area Development Authority in the year 1966 pursuant to Maharashtra Housing and Area Development Authority Act 1966 with all rights liabilities and obligations Held that - On perusal of record we find that pursuant to the Joint Development Agreement the land of the Maharashtra Housing and Area Development Authority was handed over to the Corporate Debtor and except for development work the Corporate Debtor has not accrued any right over the land in question. The land belongs to the Maharashtra Housing and Area Development Authority which has not formally transferred it in favour of the Corporate Debtor . Hence it cannot be treated to be the asset of the Corporate Debtor for application of provisions of Section 14(1) (d) of the I&B Code . This apart as we find that 270 days period has already lapsed on 19th April 2018 and the period of Moratorium in any case come to an end the question raised has become academic. We find no merit in this appeal. It is accordingly dismissed.

Summary

Issues:
Application of 'Moratorium' under Section 14(1)(d) of the Insolvency and Bankruptcy Code, 2016 on land belonging to Maharashtra Housing and Area Development Authority.

Analysis:
The appeal was filed by the Resolution Professional against the order rejecting the application for applying 'Moratorium' on the land in question. The land was originally owned by Bombay Housing & Area Development Board, later vested in Maharashtra Housing and Area Development Authority. A Joint Development Agreement was executed for construction work, and a loan facility was taken from Union Bank of India. Disputes arose leading to a suit filed in the High Court, and eventually, the Corporate Debtor defaulted on loan repayment. The Maharashtra Housing and Area Development Authority terminated the agreement, leading to the Resolution Professional seeking to apply 'Moratorium' under the I&B Code.

The Adjudicating Authority rejected the application for amendment, refusing to apply Section 14(1)(d) of the I&B Code to the property belonging to Maharashtra Housing and Area Development Authority. The Resolution Professional argued that the Corporate Debtor had rights over the land based on agreements, while the Respondent contended that no such rights existed as the Corporate Debtor was only a developer who had sold its rights.

Upon review, it was found that the land had not been formally transferred to the Corporate Debtor, and except for development work, no rights had accrued to the Corporate Debtor. As the 270-day period of Corporate Insolvency Resolution Process had lapsed, and the 'Moratorium' period had ended, the issue was deemed academic. The appeal was dismissed on grounds of lack of merit, with no costs awarded.