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2024 (1) TMI 1323 - Tri - Companies LawLeasehold rights of Corporate Debtor - whether it is unregistered Framework Agreement dated 29th March 2007 or the Original Registered Lease Deed dated 31st March 2007 that will determine the lease hold rights of the Corporate Debtor (SHPL) in regard to the inclusion of the 3.5 acres of land in question to be (subject property) in the Information Memorandum (IM)? - HELD THAT - It is already noted that the said unregistered Framework Agreement has not been referred to in any of the subsequent registered instruments pertaining to the lease in question. Meaning there by that even if there existed an Agreement between the parties to enter into a lease Agreement subsequently with a termination Clause which speaks of right to terminate upon lessee s insolvency the parties may have resiled from their stand later and entered into a Lease Agreement without such termination Clause and further got it modified to include a termination Clause totally different from that of purported previous informal Agreement. The original unregistered Framework Agreement with signatures of parties is perused. It is not required to be impounded for the sole reason that it is an unregistered document expressing an interest to execute a lease deed which neither creates nor extinguishes any right title or interest in the subject property. The Framework Agreement cannot be looked into for the purpose of determining the lease or to ascertain whether the subject property can be made a part of CIRP Process of the Corporate Debtor or to conclude that in terms thereof the lease stood terminated due to initiation of the CIRP against the Corporate Debtor - Applicaton dismissed.
Issues Involved:
1. Whether the unregistered Framework Agreement or the Original Registered Lease Deed determines the leasehold rights of the Corporate Debtor. 2. Whether the subject property can be excluded from the CIRP of the Corporate Debtor. 3. Admissibility and implications of the Framework Agreement. Detailed Analysis: Issue 1: Determination of Leasehold Rights Analysis and Findings: - The Tribunal examined the Framework Agreement dated 29 March 2007 and the Original Registered Lease Deed dated 31 March 2007. - The Framework Agreement was found to be unregistered and not accompanied by delivery of possession or payment, thus not creating a lessor-lessee relationship. - The Registered Lease Deed, executed subsequently, did not initially contain a termination clause, which was later added through a Modification Agreement on 12 September 2008. - The Tribunal noted that the Framework Agreement does not override the Registered Lease Deed, especially since the latter is a formal document executed and registered as per legal requirements. Legal Provisions Considered: - Section 105, 106, 107, and 111 of the Transfer of Property Act, 1882. - Sections 17, 48, and 49 of the Registration Act, 1908. - Section 35 and 36 of the Indian Stamp Act, 1899. Conclusion: - The Registered Lease Deed and its subsequent modification determine the leasehold rights of the Corporate Debtor. The Framework Agreement, being unregistered and not admissible as evidence, cannot be used to determine leasehold rights. Issue 2: Exclusion of Subject Property from CIRP Contentions by SIDCL: - SIDCL argued that the subject property should not be part of the CIRP as the lease over the property is not an asset of the Corporate Debtor. - They claimed the right to terminate the lease under the Framework Agreement. Contentions by RP and CoC: - The RP and CoC contended that the Framework Agreement is unregistered, unstamped, and thus inadmissible. - They emphasized that the Corporate Debtor has valid leasehold rights under the Registered Lease Deed, which are valuable assets forming part of the CIRP. Tribunal's Decision: - The Tribunal held that the unregistered Framework Agreement cannot be used to exclude the subject property from the CIRP. - The leasehold rights under the Registered Lease Deed are valid and part of the CIRP. Conclusion: - The subject property cannot be excluded from the CIRP of the Corporate Debtor based on the unregistered Framework Agreement. Issue 3: Admissibility and Implications of the Framework Agreement Arguments by SIDCL: - SIDCL asserted that the Framework Agreement is binding as it was executed on valid stamp paper and acknowledged by both parties. - They argued that the Framework Agreement should determine the lease terms and termination rights. Arguments by RP and CoC: - The RP and CoC argued that the Framework Agreement is unregistered and thus inadmissible under the Registration Act and the Indian Stamp Act. - They emphasized that only the Registered Lease Deed and its modifications should be considered. Tribunal's Decision: - The Tribunal found the Framework Agreement inadmissible as it is neither registered nor accompanied by delivery of possession or payment. - The Tribunal emphasized that the Registered Lease Deed and its modifications are the valid documents determining the lease terms. Conclusion: - The Framework Agreement is inadmissible and cannot be used to determine lease terms or termination rights. Final Orders: - The application by SIDCL seeking exclusion of the subject property from the CIRP is dismissed. - The Tribunal clarified that the order only determines the admissibility of the Framework Agreement and does not address other claims, which are subject to separate proceedings. - The related application for urgent hearing is also disposed of in light of the main order. Directions: - The Registry is directed to send e-mail copies of the order to all parties and issue urgent certified copies upon compliance with requisite formalities.
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