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TMI Blog2019 (12) TMI 1350X X X X Extracts X X X X X X X X Extracts X X X X ..... ingra. A consequential prayer is to set aside the sale notice dated 15.05.2019. On that basis, a further prayer has also been made to appoint the valuers for ascertaining the value of the land of the Corporate Debtor in terms of IBBI (Liquidation Process) Regulations, 2016 on the basis that land is industrial in nature and applicable TOD policy of Town & Country Planning, Haryana. The other prayers are to direct the liquidator to pay the cost of the valuers appointed till date. 2. This case has a chequered history. In this case the liquidation order was passed on 26.10.2018 in CA No. 656(PB)/2018 and Mr. Sajeve Bhushan Deora, (the Resolution Professional) was appointed to act as a liquidator of the corporate debtor in terms of the Section 34 (1) of the Code. The directions were issued to the liquidator Mr. Deora to issue public announcement stating that the Corporate Debtor is in liquidation in terms of Regulation 12 of the IBBI (Liquidation Process), Regulations 2016 and a fresh order of moratorium under Section 33(5) of the Code commenced. The view of the RP has also been noticed in the aforesaid order wherein he stated that huge amount is recoverable from related parties to who ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar the cost employed will date in the Liquidation process of the Corporate Debtor; VI. Direct the Liquidator to involve the Applicants for explaining the deliberations with the valuers in relation to the fresh valuations of the land of the Corporate Debtor, VII. Pass any other in the facts and circumstances of the matter 6. After CA No. 501(PB)/2019 along with other applications was disposed of, a copy of the valuation report is conceded to have been received by the applicant on 27.04.2019 and no evidence as directed in the order dated 24.04.2019 was furnished within ten days with regard to the change of land use as was undertaken by the applicant through his counsel. The factual position concerning undertaking is explicit from the order dated 24.04.2019. The order further proceed to observe that if no evidence with regard to the change of land use was produced then the valuers were to proceed with the valuation as per the evidence already on record. As a period of 6 months has expired, the liquidator was obliged to have fresh valuation as per the regulation. The valuation afresh was undertaken by two different valuers. 7. The claim made by the applicant in the present applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vernment and that the FAR allowed by the Haryana Government at the location of the land is 3.5/3.0. A copy of the Transit Oriented Development Policy effective from 09.02.2016 has been placed on record (Annexure 11). Two emails dated 15.05.2019 have also been placed on record (Annexure 12 & 13) which were responded by the applicants. It was requested that till the information was received from MCF, the sale notice dated 15.05.2019 may be stayed. (Annexure 14). The liquidator also shared all the documents which were given to the valuers that included survey plan and letter to MCF seeking clarification on the nature of the land. The liquidator however, has floated the sale notice on "AS IS WHERE IS", "AS IS WHAT IS" AND WHATEVER THERE IS BASIS", without clarifying whether the land is agricultural in nature or industrial. On the basis of letter dated 29.05.2019, the applicant has claimed that as per the record of the property tax, the land of the corporate debtor is industrial. It is further submitted that In that regard, entry in point no. 1 & 4 in the letter dated 29.05.2019 has been relied upon which read thus:- "Point No. 1 As per the record of Property Tax/M/s. Forging Private ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ples to that effect have been quoted as per record of the courts or tribunal which are as under:- "a) That the Financial Creditor issued the Demand Notice dated 22.08.2016 to the Corporate Debtor under Section 13(2) of the SARFAESI Act and claimed outstanding of Rs. 28,37,58,344/- from the Corporate Debtor. In response to the Demand Notice dated 22.08.2016, vide reply dated 24.10.2016, Mr. Sanjay Gambhir, 99% shareholder in the Corporate Debtor, has categorically stated that the mortgaged property (Land in question in the captioned matter) is agricultural land. That relevant from the Reply dated 24.10.2016 is reproduced herein below for the ready reference of this Hon'ble Adjudicating Authority: "That the notice is not maintainable and you cannot proceed against plot measuring 70 Kanal 14 Maria, situated in revenue estate of village Sarai Khawaja, Mathura Road, Tehsil & Dist. Faridahad, Haryana-121003 under SARFAESI Act and cannot enforce security in respect of the said property as the said property is agricultural land in view of Section 31(i) of SARFAESI Act" Copy of the Demand Notice dated 22.08.2016 is annexed herewith and marked as ANNEXURE-1. Copy of the Reply dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is annexed herewith and marked as Annexure-5. The applicant has launched frivolous and cantankerous litigation on one pretext or the other before this Hon'ble Adjudicating Authority and the appellate authorities including the Hon'ble Apex Court and the Applicant has miserably failed in all such attempts. Company Appeal No. 779/2018 filed by the applicant against the liquidation order dated 26.10.2018 was dismissed by the Hon'ble NCLAT vide its order dated 09.01.2019. Further, the Applicant went in appeal before the Hon'ble Supreme Court vide Civil Appeal No. 3363/2019 against the order dated 09.1.2019 of the Hon'ble NCLAT and the said Civil Appeal was dismissed by the Hon'ble Supreme Court vide its order dated 16.04.2019. The applicant challenged the sale notice dated 28.02.2019 issued by the Liquidator of the Corporate Debtor vide CA No. 501/2019 filed before this Hon'ble Adjudicating Authority which was disposed of by this Hon'ble Adjudicating Authority vide its order dated 24.04.2019. Due to the failure of the Applicant to provide further evidence with regard to the issue of conversion of land use from agricultural to industrial, as directed by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oval was received from competent authorities. Therefore, it is urged that the land was never converted from agricultural to industrial land. The aforesaid order was challenged by the applicant before the Hon'ble Appellate Tribunal in Company Appeal (AT) (Insolvency) No. 531 of 2019 and the appeal was allowed to be withdrawn vide order dated 17.05.2019 without any liberty to raise any challenge on the basis of the same issue which was covered by order dated 24.04.2019 passed by us. Therefore, it is urged that the present application is liable to be dismissed at the threshold as the applicant has made an attempt to raise the same issue on valuation and nature of subject property which has already been raised before NCLAT in company appeal referred above. 12. A further case of the financial creditor is that in terms of the order dated 24.04.2019, the liquidator appointed two registered valuers i.e. SCS Consultants of Mr. Anil Saxena and Mr. Sunil Dhingra for ascertaining the fresh value of the assets of the corporate debtor. They submitted their fresh valuation report on 13.05.2019 & 15.05.2019 respectively to the liquidator. The liquidator has accordingly publish the sale notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ms of Rule 26D of Controlled Area Rules, 1965. However, Jamabandi (proprietary record of the land holding) of various years such as 1980-81, 1985-86, 1990-91, 1995-96 and 2000-01 (A-11) have been placed record to show that land was never converted to the industrial land as the applicant did not pay the requisite payment including conversion charges and external development charges. 17. The financial creditor has also controverted the evidence which has now sought to be relied in the form of RTI information given by MCF on the ground that it is incomplete. Only two out of the five queries raised by the applicant were answered by the public information officer and the important information regarding the date of conversion from agricultural to industrial have still not been answered. The document of conversion, agreement, letters and charges paid by the corporate debtor could have been brought on record if those were available. However, the documents dated 16.12.2002 issued by the Commissioner, MCF have now seen the light of the day and have been placed on record which would show the fraudulent intention of the applicant to mislead the Hon'ble Tribunal. Hence to cause delay in di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taking over by the applicant's family. However, crucial statement has been made that the charges payable for change of land use were not paid and a demand of Rs. 8.5 crores was raised which was complied with and presently the charges for conversion to commercial use of the land in question were over Rs. 110 crores. 22. In pursuance of the 5th consultative meeting held on 14.03.2019 (Annexure 9), sale notice was issued and the reserve price of Rs. 52.83 crores was mentioned therein. Accordingly, bids were invited. The aforesaid sale notice was challenged before this tribunal by filing CA No. 501 of 2019. In the aforesaid meeting, the applicant has categorically stated that he did not have any document to show. The documents prior to 1994 were gutted in fire. However, the sale notice was challenged before us by filing CA No. 501 of 2019 and opportunities were granted to the applicant to produce documents to show that there was conversion of land use as is inter alia observed from the order dated 08.04.2019 which reads as under:- "CA-501(PB)/2019:- The prayer made in this application is that the notice of sale concerning land in question dated 28.02.2019 issued by the liquida ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o. 7 under the caption "The plan for liquidation for assets" and the last para at page 152 reads as under:- "Mr. Sanjay Gambhir pointed out that there should be vigilance to be observed that there is no cartelisation in bidding, to which all present agreed. The Representative of India bulls stated that reserve price is high, which was clarified by the Liquidator as an average of values estimated by the 2 valuers appointed earlier. On an enquiry from the Liquidator, Mr. Sanjay Gambhir stated that the subject land and building of the CD was an agricultural land at the time of purchase, which was some time in 1969, and was put to industrial use by the CD. Mr. Sanjay Gambhir further mentioned that his Family took over shareholding of Forging Pvt. Ltd. (In Liquidation) sometime in 1994 (When the CD was under purview of Sick industrial Companies (Special Provisions) Act, 1985 and that no records of the CD prior to the time of their acquisition were available with them as the same had been lost in fire. He further mentioned that the subject land building of CD was in use for an industrial activity both prior to and after take-over of the CD by his Family. He further mentioned that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ord and the liquidator was to proceed with the auction in accordance with the liquidation process regulations. However, no evidence before liquidator/valuers was produced by the applicant. That order was challenged before Hon'ble NCLAT and it was dismissed as withdrawn on 17.05.2019. The order dated 24.04.2019 attained finality and was required to comply with in letter and spirit. 25. Moreover, there is sufficient evidence showing that the land in question is agricultural land irrespective of its use. The revenue record in the form of Jamabandis has been placed on record and presumption of truth attaches to the Jamabandis under the Punjab Land Revenue Act as applicable to Haryana. The Jamabandis are prepared every four years in order to ascertain the proprietorship of the land. The photocopies of the Jamabandis have been placed on record. A perusal of the revenue record shows that the nature of land is Shamlat and it is in possession of M/s. Forging Pvt. Ltd. (Company in Liquidation). These entries are consistent starting from the year 1980-81 to 2000-01. However for the purposes of the rent, cultivator is stating to be paying rent for the factory. The land which is known as S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he land is being sold on 'AS IS WHERE IS, AS IS WHAT IS AND WHATEVER THERE IS BASIS'. Such a sale notice takes care of the possibility of all the ground realities and therefore the grievance of the applicant, if any, has been remedied. 30. When the application No. 501 of 2019 was decided, we have asked the applicant to arrange any bidder higher than the one, the liquidator has found but the applicant was not able to bring anyone. Had there been any bidder giving higher price than the one before liquidator then the applicant could have easily done that. It is imaginary to argue that the land is worth Rs. 110 crores. 32. Mr. Rakesh Kumar, learned counsel for successful bidder has repeatedly stated before us on every date that the amount of the bid has been deposited as he is the highest bidder. Therefore, we are satisfied that the liquidation process has been conducted in accordance with the provisions of Regulation 35 of the IBBI (Liquidation Process), Regulations, 2016. 33. We may examine the provisions of Regulation 35 of the IBBI (Insolvency Resolution Process for Corporate Persons), Regulations, 2016 (for brevity 'Insolvency Resolution Regulations'). In accord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estimate of value were to be considered as the fair and the liquidation value and the confidentiality of the valuation was to be maintained. There is another set of Regulations known as IBBI (Liquidation Process) Regulations, 2016. 33. In Regulation 35 of the liquidation process regulations, the liquidator is obliged to consider the average of the estimate of the values arrived under Regulation 35 of the Insolvency Resolution Regulations and proceed with the liquidation process. However, the discretion has till been vested with the liquidator to prefer a fresh valuation if so required under the circumstances. The provisions of Regulation 35 of the Liquidation Process Regulations are set out below verbatim to appreciate the liquidation process:- "35. (1) Where the valuation has been conducted under regulation 35 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 or regulation 34 of the Insolvency and Bankruptcy Board of India (Fast Track Insolvency Resolution Process for Corporate Persons) Regulations, 2017, as the case may be, the liquidator shall consider the average of the estimates of the values arrived unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 680/- State Public Information Officer-Cum, Zonal & Taxation Officer" 36. A perusal of the Point No. 1 would show that for the purposes of property tax, the property of the company in liquidation (M/s. Forging Pvt. Ltd.) is industrial. The question would be whether treating the property for the purposes of property tax as industrial would result in accepting the property as such in the absence of its conversion in law to industrial land. It is one thing to say that for the purposes of taxes the property is considered industrial and it is quite an other thing to say that there is no change of land use to industrial from agricultural. It has been seen that the huge charges which are leviable for the change of land use were never paid. A potential bidder cannot be sold the property as Industrial because it continues to be the agricultural land and in order to convert it into industrial or commercial then huge dues are payable to the state authorities. It must be remembered that when land is converted 'Industrial" huge sources provided by the State come under stress which need to be paid. Therefore, we are unable to persuade our self to accept the aforesaid information given und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt is only to delay the liquidation process without any basis and indulge in baseless litigation endlessly. For the conversion of agricultural land to commercial/industrial huge amount is payable and the valuers and the liquidator could not be expected to treat the land commercial in nature. The liquidation order has been passed on 26.10.2018 and sufficient time has already elapsed. The applicant has successfully delayed it but no further delay would be warranted at the instance of the applicant and the application warrants dismissal. 40. The base price of Rs. 52.58 crores is reserve price of the property which is for higher than the circle rate of the agricultural land and the value is much more in demonetisation of development potential of the property. The property was earlier put to e-auction during liquidation in March, 2019 with a reserve price of Rs. 52.83 crores and no bid was received even at the reserve price and the applicant had failed to identify any bidder/buyer whatsoever in spite of the opportunity given vide order dated 08.04.2019 passed in CA No. 501(PB)/2019. 41. Mr. Rakesh Kumar, learned counsel for the highest bidder stated that the whole amount of the highes ..... X X X X Extracts X X X X X X X X Extracts X X X X
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