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TMI Blog2018 (4) TMI 1818X X X X Extracts X X X X X X X X Extracts X X X X ..... ation dated 09.11.2011 between the same parties and the projects being in progress in the said land, this Bench having already passed an admission order dated 24.07.2017 (in CP 1061/2017 u/s 7 of 1B Code - hereafter called as 'the Code') declaring moratorium u/s 14 of the Code, in pursuance thereof, CIRP being in progress, this Applicant/Resolution Professional sought the reliefs as follows: i. To direct this respondent to refrain from taking over the possession of the said land till the completion of corporate insolvency resolution process subject to the proviso u/s 14 (1) (d) of the Code. ii. To pass an ex-parte ad-interim order directing the Respondent to continue the JDA and the deed of confirmation and modification agreement entered into with the Corporate Debtor till the completion of CIRP subject to the proviso u/s 14 of the Code. 2. To seek the reliefs aforementioned, the line of story RP put forward is that initially declared area of 1,65,805.80 Sq. Mtrs. is revised to cover an area of 1,93,599.90 Sq. Mtrs. (approx. 47 acres) for development by the Corporate Debtor within a timeframe of 60 months from the date of JDA. Considering the business environment and e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Pvt Ltd 12137.20 45,191.32 8 R-7/A-1 Exiting Structure 269.00 63.74 9 R-7/A-2 Exiting Structure 1060.00 63.74 10 R-7/A-3 Free Sale FSI (Yet to be sold) 1794.00 5,777.77 11 R-7/A-4 Preet GruhNirman Pvt Ltd 2503.00 6,393.93 12 R-7/A-5 Gold Finger Realty Investors Pvt Ltd 7,956.00 13 R-7/A-6 Exiting Structure 1473.64 63.74 14 R-7/A-7 720.00 63.74 15 R-7/A-8 1452.00 63.74 16 R-7/A-9 RNA NG Infrastructure & Development 2960.00 12,790.00 17 R-7/A-10 942.00 63.74 18 R-7/B-1 Exiting Structure 3589.00 63.74 19 R-7/B-2 KBJ Developers Ltd 4539.00 13,395.78 20 R-7/B-3 RNA NG Infrastructure & Development 2251.65 7,800.00 21 R-7/B-4 Fist Infra Pvt Ltd 1500.00 2,804.84 22 R-7/B-5 Exiting Structure 3235.00 63.73 23 R-8 Kiyana Ventures LLP 17458.50 65,470.00 24 R-10 Guruashish Construction Pvt Ltd 58,643.98 25 R-11 Proposed Receiving Station 904.50 26 HOSPITAL Handed over to MCGM 2487.60 2,487.60 27 HD/PH Pinky Skyscrapers Real Estate Pvt Ltd 4455.80 8,243.23 28a R-12 Bhumi Shashwat Estate Pvt Ltd 6207.90 11,111,11 28b Free sale FSI (Yet to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r (developer) has in fact not been paid for many years. This due outstanding itself is of Rs. 35crores due to the tenants. MHADA submits that it has not parted with the possession of the land in issue at any point of time, therefore, MHADA being a statutory body, it has to be construed as remained in possession of the same by virtue of ownership (It need not be separately said that the land belonging to government shall not be held as possessed by private people unless possessory right is transferred to such persons and it does not matter as to whether it is in the occupation of somebody or not. It is also an established proposition man coming to the possession of the land/property with consent, cannot claim adverse possession against that land, of course, the period for claiming for adverse possession is not complete). In the agreement itself, the right that accrued to the Corporate Debtor is only limited right of licence, therefore, the Corporate Debtor has not been in exclusive possession at any point of time. MHADA submits that the agreement was entered in contemplation of housing to these 672 tenants. On that promise, the tenants moved out in the year 2008, till date no housin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... side, Sr. Counsel Mr. Navroz Seervai appearing on behalf of RP has taken us through various material papers and to legal propositions to say that the agreement entered between the Corporate Debtor, the Co-operative Society and MHADA is a development agreement on 10.04.2008, wherein it has been mentioned in clause 1.1.4 that corpus fund of Rs. 25crores was to be paid by the developer to the tenants society and in clause 1.1.10 it has been stated that the project shall mean the buildings to be constructed by the developer and handed over to the society for rehousing the tenants and to MHADA in terms of this agreement but shall not mean and include the free sale buildings that the developer is entitled to develop and construct in terms of the agreement and that proposal was approved by the authority on 01.11.2007 for joint development with the society (Tenants society has not been made as party to this proceeding). 10. Apart from this, Sr. Counsel Mr. Navroz Seervai submits that in the deed of conversion and modification executed on 09.11.2011, it has been categorically mentioned that in pursuance of the JDA, the developer has taken possession of the area admeasuring 40 acres and fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ils. The Commencement Certificate for Wings A, B and C is granted up to 17 upper floors and D to G Wings for 18 upper floors. Ril to R13 Free Sale portion. 13. As to legal proposition, Sr. Counsel Mr. Seervai relied upon the definition of "property" given u/s 3 (27) of the Code to say that property means not only the land but also the interest arising out of, or incidental to, property. Since the possessory right has been given to the Corporate Debtor for development, possession being one of the incidental rights to the property rights, the possession over MHADA land being with the Corporate Debtor, he says, it squarely falls under clause 'd' of section 14(1) of the Code. He further says, since section 238 of the Code has overriding effect upon other laws inconsistent with this Code, this Code will prevail over MHAD Act as well as Specific Relief Act. 14. To which, Sr. Counsel Mr. JanakDwarka Das appearing on behalf of MHADA submits that the licence given for the right of development will not become any kind of interest incidental or arising out of the property, for this right of licence is not a right vested with a property, RP cannot ascribe development right as right ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sought. He further says prayer "A" being consequential to prayer 'B", since it is a well settled proposition that a consequential relief cannot be granted unless final relief is permissible to be granted, to which, he relied upon AIR 1983 SC 172. If the situation is pragmatically assessed, he says, the cost of construction at present has arisen approximately to Rs. 1,400crores, therefore, the little free sale component available on the land is hugely insufficient to raise to which the banks are not ready to provide any further financial assistance for completion of the project. 19. The Corporate Debtor has not been in exclusive possession of the property, since development in question is admittedly for joint development by the society and the Corporate Debtor, it cannot be considered in any sense as an asset of the Corporate Debtor, henceforth he sought for dismissal of this application. 20. On looking at the definition of property u/s 3 (27) of the Code property includes Land and every description of interest including present or future vested or contingent interest arising out of, or incidental to the property. On this point, the legal argument of MHADA is, no doubt land i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or exclusive development by the Corporate Debtor. Therefore, either by law, or by factual matrix, the possession claimed by the corporate debtor is not recognised under law. This is a demur argument on behalf of MHADA, on factual aspect, MHADA submits that JDA and supplementary documents conferring licence upon the corporate debtor has been terminated by MHADA on 12.08.2018. 23. If section 18 is r/w section 25 of the Code, it is evident in section 18 (1) (f) that IRP is endowed with duty to "take control & custody of any assets over which Corporate Debtor has ownership right 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 records, the ownership of assets of the Corporate Debtor which may or may not be in possession of the in the same section, an explanation has been given stating that assets shall not include the assets owned by third party in possession of the Corporate Debtor, held under Trust or under contractual arrangements including bailment. Assuming the agreement of licence is in force, then also the possession alleged to be lying with the Corporate Debtor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l submitting to this Bench to ignore second agreement appears to be not meritorious argument. It is trite law that giving a licence to somebody is a personal right attached to the person in whose favour such right is conferred upon, as to rights attached to the property such as sale, lease, mortgage, will run along with property. In this case only development right has been conferred upon the Corporate Debtor licencing the Corporate Debtor under the respective agreements, therefore, it cannot be understood that Corporate Debtor has any right over the property except to the extent of having personal right in favour of the Corporate Debtor. Possessory right will accrue to a person when property is leased out. If possessory right is transferred, it could be restored to the owner of the property only by two routes, one by voluntary delivery by the person having possessory right or through legal recourse. Here it is evident that there is no document in between the Corporate Debtor, the tenants and MHADA providing any leasehold right or possessory right to this Corporate Debtor. Development right means allowing somebody to make construction, or doing repair work, conferring such right wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is to come to MHADA as well as tenants, it cannot be said that development is in progress in that place. As to free sale component, rightly or wrongly has already been sold to third parties, it cannot be said that this Corporate Debtor has been in possession of that free sale component. The only area said to have been in possession of this Corporate Debtor, if at all the argument of the Applicant's counsel is wholly taken as correct, then also it will be limited to sector RIO regarding which Hon'ble High Court has passed an order on the suit filed by flat purchasers in respect to sector RIO. But this argument does not go well because there is no material before this Bench to say, the Corporate Debtor has possessory right over MHADA land. 27. In view of these reasons, even if termination of JDA by MHADA is not taken into consideration, we don't find any covenant in favour of the Corporate Debtor transferring possessory rights over the property of MHADA to the Corporate Debtor henceforth, this Bench hereby holds that possessory rights has not been transferred to the Corporate Debtor by virtue of the agreements entered in the year 2008 as well as in 2011. 28. The next ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or. May be for this reason alone, this Resolution Professional/Applicant consciously not made tenants or their society as a party to this proceeding. Assuming the argument of the applicant is correct, then also joint possession cannot be called as exclusive possession of the person claiming it. A person in wrongful possession or a person having no right, cannot seek relief more than his entitlement. A person having joint possession cannot get the right of exclusive possession just by showing a provision of law. It is known to everybody; a provision of law will remain abstract as long as it has not been clothed with facts. When law is not fitting in the factual scenario, such law is not applicable to the given facts. When this applicant is not in a position to show that he has an exclusive legal possession over the property, the Resolution Professional/Applicant cannot claim any right u/s 14(1)(c) of the Code saying that possession is vested with the Corporate Debtor. 31. It has been said in many judgments, a trespasser cannot be vacated by using force, it has been a concept developed in criminal law to say that even if anybody is a trespasser, force shall not be used against a tre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnot take out somebody's property and value it for preparing Resolution Plan. It cannot be so. If that is so, there will be so many ramifications and implications by messing up the assets belonging to somebody else as the assets of the Corporate Debtor. To add further to this point, if you see, section 36(4) it is clear that the assets which do not stipulate transfer of title but only use of the assets shall not be included in the liquidation estate. When a property shall not be included as an asset, how such property could be shown as part of the liquidation valueRs. When law clearly say such and such assets shall not be included in the liquidation estate, how this Resolution Professional will get a right to prepare liquidation value basing on an asset that cannot be included in the liquidation estate. It has been made clear u/s 18, 25 and 36 that the Resolution Professional shall not lay his hands on the property belonging to some others. By having a combined reading of section 3(27), section 14, section 18, section 25 and section 36(4)(a)(iv),. the Resolution Professional shall not take into consideration the asset belonging to somebody else as the asset of the Corporate Deb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this section Moratorium prohibits institution of suits or continuation of pending suits or proceedings against the Corporate Debtor including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authorities. The applicant counsel says that the word 'proceedings' mentioned in this clause will cover the termination of the contract by MHADA. But by reading this clause, the word 'proceedings' mentioned in this clause cannot be read different from the entire clause mentioned there. If this clause is read in full, it can be easily understood that proceedings means proceedings either before Court or Tribunal or other authority. If termination of JDA does not require to be a proceeding before an authority, to such action, moratorium is not applicable. It need not be said that there is a doctrine called noscitur a sociis, saying a separate meaning cannot be given out of context, it has to be understood in the context given. For termination of JDA has not been a proceeding before any authority, this termination of a contract, if law permits such termination, will not fall within the ambit of section 14(1)(a). 37. It is also tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ever Operational Creditor makes a claim, for the legislature is conscious of the fact that there could be a possibility of dispute in respect to the items mentioned in the definition of dispute, an additional caveat has been introduced in the cases of Operational Debts stating that wherever a dispute as stated in the definition is in existence before receipt of section 8 notice, such claims shall not be entertained by this Adjudicating Authority. In both the situations, most of the times the defence from the corporate debtor side is only in respect to limitations about the proper documentation and other defences which are procedural in nature. We have to remember in both the situations, there is hardly any occasion to dismiss the petition on the ground that case warrants trial for adjudication of the claim. That's why claims filed under both the sections seem to be admitted by corporate debtor. 40. While dealing with a case under this Code, the impediment that comes to this Bench for deciding such claim is, some other creditor may say that it has filed case before some other court, another creditor may say it has filed case before DRT under SARFAESI, which normally causes dela ..... X X X X Extracts X X X X X X X X Extracts X X X X
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