TMI Blog2020 (2) TMI 1407X X X X Extracts X X X X X X X X Extracts X X X X ..... ndertaking was in force. More-over, the said sale certificate also was not engrossed on stamp paper and no evidence was led in to prove that the Howrah property was handed over to R2 as attempted to prove on the side of R1. Taking into account the overall factual scenario, and the fact that the possession of the property has not been granted in favour of R3 before the date of declaration of moratorium and since no evidence was led in other than sale certificate to prove that possession was handed over to the R2 and that issuance of sale certificate in favour of R2 being found illegal and issuance of sale certificate in favour of R3 was subsequent to the date of declaration of moratorium, we are of the view that Bankura property as well as Howrah property are the assets of the CD and that R2 and R3 has not obtained any legal ownership or title as claimed by them. In short, R2 and R3 have no right to retain the properties and the property belongs to the Corporate Debtor. As regards the Bankura Property, it was in the possession of the R1 as on the date of declaration of moratorium. That property ought not to have been permitted to be transferred to the purchaser. So RP himself who ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Regulations. - CA(IB) Nos. 1635, 1270, 1697, 1617, 1402/KB/2019 and CP(IB) No. 803/KB/2018 - - - Dated:- 25-2-2020 - Jinan K.R., Member (J) And Harish Chander Suri, Member (T) For the Appellant : Arun Gupta, R.P., Jishnu Choudhoury, Avishek Guha, Atul Surekha, T. Joarder, Advocates, Joy Sana, Sr. Adv., Ajay Choudhary, D.N. Sharma, S. Nigam, S Ahmed, Jishnu Saha, Ishaan Saha, A.K. Awasthi For the Respondent : A. Rao, P. Gandhi, B. Mukherjee, Advocates, Rohit Sharma, PCS, Ankita Dutta, PCS and S. Mukherjee, Advocate ORDER Jinan K.R., Member (J) 1. All the Interim applications i.e CA(IB) 1270/KB/2019, CA (IB) No. 1402/KB/2019, CA(IB) No.1617/KB/2019, CA(IB) No. 1635/ KB/2019 CA(IB) No. 1697/KB/2019, are heard together with the CP.(IB) No. 803/KB/2018 and all the applications are considered together along with the CP for avoiding the repetition of facts and for convenience. 2. Mangturam Noranglal-Operational Creditor filed the application under Section 9 of the Insolvency and, Bankruptcy Code, 2016 (in short IB Code) read with Rule 6 of the Insolvency and Bankruptcy Code ( Application to Adjudicating Authority) Rules, 2016 for initiation of corporate ins ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2) of the Code for extension of period of CIRP by another 90 days by passing a resolution with a majority vote of not less than 66%. However the members of the CoC informed the RP that they did not have any mandate or approval as yet from their appropriate authorities on how to vote on this resolution. 7. It is submitted that both the CoC members were unable to vote and finally no voting could take place on any item placed for voting during the meeting. According to the Ld. RP since he did not receive any approval from the CoC regarding extension of CIRP period, he is not filing any such application for consideration by the Hon'ble Adjudicating Authority under section 12(2) of the IBC, 2016. He further would submit that the CoC agreed that the RP could not file an application for extension of CIRP period under Section 12(2) of IBC, 2016. He also would submit that CoC also informed that in this case when the resolution for approving the extension of CIRP period is not voted upon/ approved by the CoC, then the corporate debtor would likely be liquidated in terms of Section 33(1)(a) of IBC, 2016 by the Adjudicating Authority. 8. The Ld. RP submits that he had informed the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appropriate steps in SA No. 152 of 2019 before the Debts Recovery Tribunal-I, Kolkata and file its report whether the property was disposed of by the PNB during moratorium or not. Directed to repeat notice upon the remaining respondent and filed affidavit of service . 10. CA(IB) No. 1402/KB/2019 was filed by one of the members of the suspended Board of Corporate Debtor objecting to granting of relief as prayed for in CA(IB) No. 1635/ KB/2019 and prayed for allowing following relief: - (a) Interim injunction restraining the Resolution Professional and /or the Punjab National Bank and/or the Committee of Creditors from confirming and/or issuing any sale certificate and/or from executing any deed of conveyance in respect of the said Howrah property more fully and particularly described in paragraph 6 hereof in favour of the Respondent No.4 and /or any other person or entity whatsoever. (b) Any confirmation and /or issuance of sale certificate and/or conveyance done by the Interim Resolution Professional and/or the Punjab National Bank and/or the Committee of Creditors in respect of Howrah property more fully and particularly described in paragraph 6 above be set as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the sale was confirmed before admission of the application under Section 9 of the I B Code. Ld. Counsel for R1 further submitted that the possession also has been handed over to the purchaser in terms of the sale of the said properties. In view of the above said, the application filed by the RP is not tenable and none of the applicants challenge in regards handing over possession to the purchaser respectively by the Bank are unsustainable in the eye of law and Respondent No.4 objection in this regard is devoid of any merits. 13. The Ld. Sr. Counsel appearing for the suspended Board of Director submits that Resolution Professional failed to take steps to take possession of the valuable assets of the Corporate Debtor and failed in discharging his duties Under Sections 17, 18, 20 and 25 of the Code. It is alleged that the Resolution Professional in collusion with Respondent No.1/ the Punjab National Bank had not taken possession of the Howrah and Bankura properties of the Corporate Debtor and enabled the Punjab National Bank to hand over possession of the property to the auction purchasers illegally in violation of the moratorium declared in this CP and that R1 in violation o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and issued sale certificate by R1 in violation of the undertaking and handed over possession of the properties in violation of the undertaking as well as the moratorium declared in this case on 20.08.2019. He further would submit that vide order dated 29.10.2019 the RP was directed to take back possession of the properties and also directed to take necessary steps to prosecute the case before the DRT, but failed to take back possession and to prosecute the case and thereby SA was dismissed for want of prosecution. 17. Ld. counsel for R1 attempted to convince us that there is nothing illegal or irregular or violation of moratorium in continuing the process for sale initiated by the R1 as the sale proceedings were not stayed by the DRT and that sale was concluded before the date of declaration of moratorium and therefore both the said properties are outside the purview of the assets of the Corporate Debtor as on 20.08.2019. According to her, the Punjab National Bank (R1) has declared the account of the Corporate Debtor as NPA and proceeded to enforce its security interest against its two properties, one at Howrah and another at Bankura under section 13(4) SARFAESI Act, 2002 and to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o.2 herein. The Bankura property which was purchased by Respondent No.3 was sold prior to the declaration of moratorium in IA No. 636/2019 and S.A. No. 152/2019 make it abundantly clear that there were no directions on the Resolution Professional to take steps to take possession of the Bankura property, which was conclusively sold to Respondent No.3 herein, who is bona fide purchaser for value without notice of the then impending corporate insolvency resolution process. 22. According to him the sale of the Bankura property was confirmed in favour of the Respondent No.3 by letter dated 19th August, 2019 before the admission of corporate insolvency resolution process against the corporate debtor company by the order of the Tribunal dated 20th August, 2019. The sale certificate in respect of the Bankura property having been issued on 3rd September, 2019 does not and cannot bring into question, the concluded sale of the Bankura property of Respondent No.3. The Respondent No.3 became the absolute owner of the Bankura property and that pursuant to the valid concluded, and unimpeachable sale of the said property in favour of Respondent No.3 as per provisions of the SARFAESI Act, 2002, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rule 9(9) further indicates that the authorised officer delivers the property to the purchaser free from encumbrances known to the secured creditor on deposit of any amount as specified in sub-rule(7). Sub-rule (7) is attracted when the immovable property is sold subject to any encumbrances. In such instances, the authorised officer may allow the purchaser to deposit the money required to discharge the encumbrances and interest due thereon and additional amount if any to meet the necessary expenses. Certificate of sale issued under Rule 9(6) shall specifically mention whether the purchaser has purchased the immovable secured asset fee from any encumbrances known to the secured creditor or not. 26. Analyzing the above said Rules, the Ld. Sr. Counsel for R3 attempted to convince us that notice of confirmation of sale itself amounts to transfer of title/ownership. To stress his said argument, he also relied upon judgments of the Hon'ble Supreme Court reported in (2007) 5 SCC 755 in the case of U.P. Power Corporation Ltd. Another Vs. Bijli Mazdoor Sangh and others; Shakeena and Another vs. Bank of India and others reported in 2019 SCC OnLine SC1059 and Municipal Corporation o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s prohibited and therefore both properties are to be restored to the original status as on the date of declaration and thus the property would fall in the liquidation estate as the Corporate Debtor is ordered to be liquidated. To stress his said argument, he relied upon one decisions of National Company Law Tribunal, Mumbai Bench in the case of State Bank of India vs. Calyx Chemicals Pharmaceuticals Ltd. in I.A. No. 33, C.P. (IB) No. 1554(MB)/2017 dated October 11, 2018; and one decision of NCLT, Chennai Bench in the case of G.Gunasekaran RP v. Thiagarajan Murugesan dated July 17, 2019; and one case of Hon'ble NCLAT, New Delhi in the Case of Encore Asset Reconstruction Company (P)Ltd. V. Ms. Charu Sandeep Desai in CA(AT) (Insolvency) No. 719 of 2018 dated May 14, 2019. 29. Referring to Encore Asset Reconstruction Company (P)Ltd. referred above the Ld. Sr. Counsel for the R4 submits that taking possession by the bank before the declaration of moratorium also does not confer title or ownership over the secured assets mortgaged by the Corporate Debtor as per Section 13(2) of the SARFAESI Act and taken us to paras 4,6,10 16 read as under: - 4. The loan had become Bad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Date of DRT Interim Order 5.7.2019 31(C.A. No. 1402 of 2019 3. Date of Sale 6.7.2019 31(C.A. No. 1402 of 2019 4. Payment of Haldiram i. 1st Tranche 26.6.2019 16-19 (Reply filed by R-2 in C.A. No. 1402 of 2019) ii. 2nd Tranche 8.7.2019 iii. 3rd Tranche iv. 4th Tranche 20.7.2019 v. 5th Tranche vi. 6th Tranche 25.7.2019 vii. 7th Tranche 29.7.2019 6.8.2019 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ii. 2nd Tranche 3.9.2019 iii. 3rd Tranche 27-29 5. Date of Sale Certificate Not Known 6. Date of CIRP commencement 20.8.2019 7. Date of 1st CoC meeting 17.9.2019 27( Reply filed in CA No. 1635 of 2019 8. Date of 1st CoC meeting 16.10.2019 17 (Reply filed in CA No. 1635 of 2019) 9. Date of filing C.A. No. 1402 of 2019 21.10.2019 10. Date of NCLT Order directing RP to defend DRT proceedings 29.10.2019 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the Howrah property was handed over on 19.08.2019 itself as attempted to establish on the side of R1. 35. Having heard at length on both sides the only aspect therefore that remains is that possession has not been handed over in favour of R3 prior to the date of declaration of moratorium in order to complete the transfer. That apart, the sale certificate has not so far been engrossed in a stamp paper. In such circumstances, R 3 cannot claim legal title or ownership over the Bankura property. In the said circumstances, we have no hesitation to hold that the Bankura property is the property of the Corporate Debtor as on the date of declaration of moratorium i.e as on 20.08.2019 and R3 has no right to retain possession of the said property. 36. In respect of Howrah property, since the R1 was obliged not to conclude the sale as per the undertaking dated 16.08.2019 before the DRT, the issuance of sale certificate and alleged handing over of possession of the Howrah property to R2 become illegal because as on the date of declaration of the moratorium the said undertaking was in force. More-over, the said sale certificate also was not engrossed on stamp paper and no evidence was l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the disputed property by R1, in the case in hand. The application is liable to be allowed by directing the RP to recover possession back from the auction purchasers and to be listed as liquidation assets and to have valuation of the properties in accordance with provisions of Code, and Regulations. 38. CA(IB) No. 1270/KB/2019 is an application filed by two of the members of the suspended board of directors of the Corporate Debtor, under section 60(5) challenging the inclusion of an operational creditor's claim and its representative in the CoC constituted by the RP. When this application was taken up for hearing, the Ld. Sr. Counsel for the applicant did not press it for hearing. Moreover, the CIRP period of 180 days have already expired. The prayer also has become infructuous. Hence the same is liable to be dismissed. 39. CA (IB) No.1617/KB/2019 is an application filed by the RP under section 19 and 70 of the Code alleging non-cooperation from the directors of the suspended board of Corporate Debtor. Since the CIRP period expired on 15.02.2020 has not been extended and RP prays for passing an order of Liquidation for want of resolution plan, we are closing the CA w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is appointed as the liquidator. c. Liquidator is directed to issue a public announcement stating that the Corporate Debtor is in liquidation, in one of the leading English newspaper as well as in one vernacular newspaper having wide circulation in the place where the registered office of the Corporate Debtor is situated as per section 33(1)(b)(ii) of the Code read with Reg. 12 (1) of IBBI (Liquidation Process) Regulations, 2016; d. The registry is directed to communicate this order to the Registrar of Companies, West Bengal and to Insolvency and Bankruptcy Board of India (IBBI), New Delhi; e. The order of moratorium passed under section 14 of the Code shall cease to have effect and a fresh moratorium under section 33(5) shall commence; f. This order is deemed to be a notice of discharge of the officers, employees and the workmen of the Corporate Debtor as per section 33(7) of the Code. g. The liquidator is directed to proceed with the process of liquidation in the manner laid down in Chapter III of the Code. h. Upon proceeding with the liquidation the liquidator shall file a preliminary report as per regulation 5 read with regulation 13 of the IBBI (Li ..... X X X X Extracts X X X X X X X X Extracts X X X X
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