2023 (3) TMI 649 - AT - Insolvency and Bankruptcy

Violation of principles of natural justice - Resolution Applicant was a party to the Application or not - legality of Resolution Plan - transfer of development rights and rights of sale to Brys International Pvt. Ltd. by way of Collaboration Agreement is non-est or not - HELD THAT - The Collaboration Agreement transferred the Sale Rights in the land without obtaining the approval of the Noida. The Brys International Pvt. Ltd. in pursuance of the Sale Rights took financial liabilities by allotting units to various Homebuyers. In the CIRP of Brys International Pvt. Ltd. the land which has been leased out could not be made the subject matter of the Resolution Plan nor the leased land could be dealt in the CIRP of Neo Infrastructure Pvt. Ltd. without there being any prior approval of the Noida. The Application was filed by the Noida much before the Resolution Plans came to be considered before the CoC. It is true that one of the prayers in the Application was that Respondent be directed not to consider the composite Resolution Plans which prayer made in the Application still survives and has rightly been considered by the Adjudicating Authority in the impugned order. The submission of the Appellant that Application has become infructuous cannot be accepted. When it has been pointed out before the Adjudicating Authority that the terms of the Lease Deed under which the land was leased out is being violated and the said land is sought to be dealt in the Resolution Plans Adjudicating Authority had every jurisdiction to direct that composite Plan be not considered. There are no substance in the submission raised on behalf of the learned Counsel for the RP that Adjudicating Authority had no jurisdiction in the matter. The submission is wholly unfounded and is uncalled from the RP who is duty bound to ensure that provisions of the Code and Regulations are complied with. When the question that composite Plan submitted by Resolution Applicant for approval does not fulfil the criteria and is not valid or legal the RP cannot be heard in saying that issues be not looked into by Adjudicating Authority. All acts of RP should be to ensure that Resolution Plan submitted in CIRP does not violate any provision of law and is not in contrary to the interest of stake holders. The submission on behalf of learned Counsel for the RP that Adjudicating Authority has no jurisdiction is unfounded submission which need to be strongly rejected. On looking into the facts of the present case it is clear that composite Resolution Plan submitted with regard to two different Corporate Debtors whose CIRP is being conducted by RP simultaneously without there being any order of consolidation of the CIRP and Resolution Applicant has submitted a composite Resolution Plan dependent on each other is nothing but clever device adopted to harm the interest of the stake holders specially Respondent No.1 - there are no error in the impugned order passed by the Adjudicating Authority. Appeal dismissed.

Summary

Issues Involved:
1. Validity of the Application filed by NOIDA.
2. Jurisdiction of the Adjudicating Authority.
3. Compliance with Lease Deed and Sub-Lease Deed terms.
4. Validity of the Composite Resolution Plan.
5. Principles of Natural Justice.

Summary:

1. Validity of the Application filed by NOIDA:
The NOIDA filed an application seeking directions not to accept the composite Resolution Plans for Neo Infrastructure Pvt. Ltd. and Brys International Pvt. Ltd., and to stay the voting on these plans. The Adjudicating Authority allowed the application, concluding that the application was not infructuous even after the CoC approved the Resolution Plans on 28.02.2020. The Authority held that the terms of the Lease Deed were violated and the composite Plan was not permissible.

2. Jurisdiction of the Adjudicating Authority:
The Appellants argued that the Adjudicating Authority exceeded its jurisdiction and that the application was infructuous. The Adjudicating Authority maintained jurisdiction, citing the need to ensure compliance with the Insolvency and Bankruptcy Code (IBC) and the terms of the Lease Deed. The Tribunal referenced the Supreme Court's ruling in Gujarat Urja Vikas Nigam Ltd. vs. Amit Gupta, affirming that the NCLT has jurisdiction over disputes relating to the insolvency of the corporate debtor.

3. Compliance with Lease Deed and Sub-Lease Deed terms:
The NOIDA claimed that Neo Infrastructure Pvt. Ltd. and Brys International Pvt. Ltd. violated the terms of the Lease and Sub-Lease Deeds by transferring development and sales rights without prior approval. The Tribunal noted specific clauses in the Lease Deed requiring such permissions and held that the Collaboration Agreement transferring these rights was void and inoperative without NOIDA's approval.

4. Validity of the Composite Resolution Plan:
The Adjudicating Authority found that the composite Resolution Plan submitted by E-Homes Infrastructure Pvt. Ltd. was not permissible as it combined the CIRP of two separate corporate debtors without an order of consolidation. The Tribunal emphasized that the RP should ensure that Resolution Plans comply with legal provisions and do not harm stakeholders' interests.

5. Principles of Natural Justice:
The Appellants contended that the Resolution Applicant was not a party to the NOIDA's application, violating principles of natural justice. The Tribunal dismissed this argument, noting that the RP, who was responsible for the CIRP and had filed a reply opposing the application, was a party and was heard. The Tribunal concluded that the composite Resolution Plan was a device to harm stakeholders' interests, especially NOIDA.

Conclusion:
The Tribunal upheld the Adjudicating Authority's decision, dismissing the appeals and affirming that the composite Resolution Plan violated the terms of the Lease Deed and was not permissible under the IBC. The Tribunal emphasized the need for compliance with legal provisions and protection of stakeholders' interests.