TMI Blog2021 (4) TMI 352X X X X Extracts X X X X X X X X Extracts X X X X ..... rate Debtor (In CIRP) is holding the development right and the Development Agreement dated 16.06.2008 has not been terminated before the commencement of CIRP. In all such situations Section 14 of the Code is applicable till it reaches the stage of approval of Resolution Plan or Liquidation. However, the RP is to appropriately disclose the status of the Property in the Information Memorandum and other documents as required in the IBBI (Insolvency Resolution for Corporate Perrons) Regulations, 2016. M/s. Victory Iron works limited - HELD THAT:- They have been provided space of 10,000 sq ft approximately on the said land by virtue of leave and license agreement dated 11.08.2011 and it is their privilege to use the land in terms of same leave and license agreement and this is also not disputed by Corporate Debtor in Resolution through RP. There is no infirmity in the impugned order - Appeal dismissed - decided against appellant. - Company Appeal (AT) (Insolvency) No. 508 of 2020 Company Appeal (AT) (Ins) No. 377 of 2020 - - - Dated:- 8-4-2021 - [Justice Bansi Lal Bhat] Acting Chairperson , [Dr. Ashok Kumar Mishra] Member (Technical) And (Ms Shreesha Merla) Member (Techn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Adjudicating Authority has disposed of both CA(IB) Nos. 1807/KB/2019 and 146/KB/2020 in CP(IB) No. 372/KB/2018 with following orders/ observations: Para 8 From materials on record, it can safely be concluded that till admission of the Corporate Debtor in CIRP, MOU dated 24.01.2008 was not cancelled/ revoked by the Respondents. Hence, the Corporate Debtor remained in possession of the properties for the purpose of their development. Upon Corporate Debtor s admission in CIRP, RP came in possession therein by virtue of statutory provisions under the I B Code, 2016. Hence, respondents cannot disturb/obstruct RP s possession in those properties. Para 9- We make it clear that the judgment in Supreme Court in Embassy Property Development Pvt. Ltd. Vs. State of Karnataka cannot be made applicable herein. We further make it clear that if at all the same is made applicable to the instant that this authority does not have jurisdiction to decide civil rights of the parties, still the same goes against the respondents also. Unless the Respondent cancel/revoke MOU dated 24.01.2008, they cannot claim possession of those properties. Now there above right to do stands foreclosed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rks Ltd., in piece of land in their possession on the basis of leave and licence agreement dated 11.08.2011 until the original owner of the property decided further course of action as far as leave and licence agreement is concerned. Hence, this Applicant i.e. CA(IB) No. 146/KB/20220 stands disposed off. iii. Hence, CA(IB) No.1807/KB/2019 and CA(IB) No. 146/KB/2020 stand disposed off. Let the certified copy of the order be issued upon compliances with requisite formalities. 4. The Appellant in Company Appeal (AT)(Ins) No. 377 of 2020 is aggrieved from the said order as it claims that it is a drastic order by allowing the Applications filed by Resolution Professional ( RP ) of the Corporate Debtor- M/s. Avani Towers Pvt. Ltd whereby and whereunder the Appellant who is the owner of the subject property will be evicted from their own property as the RP has been allowed to take exclusive possession of the said property. 5. The Appellant in Company Appeal (AT)(Ins) No. 508 of 2020 has claimed that the order passed by the Adjudicating Authority has wrongfully and erroneously curtailed the rights of the Appellant in respect of the property. The property is situated at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s by the RP. They have also mentioned that the Development Agreement ( DA ) dated 16.06.2008 vide clause 9.2 provides for the possession for the said land in the manner laid down therein for brevity of clarity the same is reproduced below: Clause 5.2 MOU and Shareholders Agreement: The owner in order to develop the said land executed a MOU dated 24.01.2008 with the Developer where in the broad terms and conditions of Development are provided therein and also executed a Shareholders Agreement of even date whereby 60% of the Shares of the owner were transferred by the Board, of which the Developer holds 40% of the Transferred Shares and 20% of the Transferred Shares are held by Shri R.L.Gaggar of 6, Old Post Office Street Kolkata as security till the completion of the Project. Clause 6.1 Appointment and Acceptance: The Owner hereby appoints the Developer as the developer of the said land and the developer hereby accepts such appointment. By virtue of such appointment, the owner hereby grants and assigns exclusive right to the Developer to build upon and exploit commercially the said land by (1) demolishing the existing structures, if any (2) constructing. The housing c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... property of the Corporate Debtor- M/s.Avani Towers Pvt. Ltd. And have also referred a judgment of earlier attempt of this Group to take over the property in a judgment dated 16.11.2017 passed by Hon ble Calcutta High Court in APO No. 439 of 2017 titled Sesa International Ltd Vs. Avani Projects and Infrastructures Pvt. Ltd Ors, wherein the Hon ble High Court while identifying the nexus and malafides of Sesa International and the Avani Group promoters i.e. Mr. Anirudh Daga, recorded as under: 27.The action instituted by the plaintiff, the disingenuous manner in which its petition before the interlocutory court was fashioned, the unworthy interlocutory prayers that it carried to the court and the timing of the institution of the suit and the ex parte order that it obtained, reveal a dark side of the legal system. There is no doubt that the process of this court was abused to obtain an undeserving order a couple of days before the summer vacation to inflict maximum prejudice on parties against whom the plaintiff has no claim or the semblance of any cause of action. It was a vicious plan devised in the name of the plaintiff to aid the third defendant and his virtually bankrupt fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... affront to the system and almost mocking at the court. The manner in which the plaintiff has conducted the matter is an insult to the intellect and borders on taunting the court at its perceived impotence to deal with such maladroit litigants and their representatives. The complexity of the plot hatched on behalf of the third defendant in the name of the plaintiff is such that it could not have emanated from Old Post Office Street and had to have its origin in some more up-market address. There is a limit to the court's endurance to such antics and it is time that a spade is called exactly what it is. 38. The extent of the complicity between the plaintiff or the Bagri in control thereof and third defendant Daga is stark in the plaintiff disowning the order passed by the interlocutory court by which the residual rights of the first defendant in respect of a particular property have been attached . In the above judgment, the Hon ble High Court has clearly highlighted the malafide nexus of Sesa International and the Avni Group. It may be noted that with similar intentions, Sesa International had initiated the CIRP of the Corporate Debtor (a group company of Avani Gro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowing the prayers sought in CA(IB) No.1807/KB/2019 and further wrongly passing directions in respect of the rights of the Appellant over the said property. 9. Respondent No.2 M/s. Energy Properties Pvt. Ltd has submitted in CA(AT)(Ins) No. 508 of 2020 that it is supporting the cause of the Appellant as it is also similarly aggrieved from the same impugned order dated 12.02.2020. It is also stated by them that M/s. Victory Irons Works Limited is in the actual physical possession of the subject property since 2011 and they were carrying on their business in the subject property also since 2011 and the Corporate Debtor (under CIRP) was having the knowledge of the same. However, the Respondent No.2 - M/s. Energy Properties Pvt. Ltd is accepting that the Development Agreement dated 16.06.2008 was not terminated before the commencement of CIRP. They are also challenging that inspite of Corporate Debtor (under CIRP) having been with the Development Agreement has not done anything for the last 11 years and has virtually abandoned the Development Agreement and forgone its rights of Developers. M/s. Energy Properties Pvt. Ltd is the owner of the Property and hence the impugned order cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive development right in respect of the entirety of the said property and the right subsist even as on date. In the preamble of the Memorandum of Recording Possession made on 24th June, 2010 between Energy Properties Pvt. Ltd -R2 and Avain Properties Pvt. Ltd Corporate Debtor ( in CIRP) speaks of as follows: Clause A.- the Developer and Landlord have formed a company under the name and style of Energy Properties Pvt Ltd (hereinafter referred to as the Company) who had purchased and acquired all that the various places and parcels of land containing by estimation 10.19 acres (more or less) (Hereinafter referred to as the Ramrajatolla Property) which formerly belonged to Shree Gobindo Glass works Ltd, a Company under the control and management of the landlord. Clause 1.- It is hereby recorded confirmed and declared that the entirety of the said Ramrajatolla property has been delivered by the Landlord to the Developer to be exclusively held by Developer in terms of Development Agreement dated 16.06.2008 and in terms of the Shareholders Agreement dated 24.01.2008. 11. In Company Appeal (AT)(Ins) No. 377 of 2020, the RP has submitted that the Corporate Debtor has impo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs of Energy Properties, two directors were to be nominated by Corporate Debtor who held voting rights. Evidently, no resolution was voted upon for filing of the present Appeal. Therefore, in absence of any valid board resolution, the Appeal filed by the Energy Properties is without any valid authorization and hence liable to be dismissed. The RP has further submitted that as per Leave and License Agreement dated 11.08.2011 a portion of property was granted to Victory iron works Ltd for a term of 11 months. Admittedly the License Agreement has expired on 18.07.2012 and has not been renewed and/or extended thereafter. Therefore, any occupation of any portion of the property by Victory Iron is illegal and amount to encroachment and/or trespass. Despite the admitted fact that Victory iron is in illegal possession of the portion of property. Victory Iron has preferred the Appeal with malafide intent to mislead this Tribunal and seek the reliefs which Victory Iron is otherwise not entitled to. It is well settled that one cannot take advantage of its own wrong. It is also noteworthy that in cases where the corporate debtor is engaged in development of the property, the possessory and dev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Schedule. The liberties, powers and privileges reserved to the Government, despite the grant, are indicated in Part-IV. This Part-IV entitles the Government to work on other minerals (other than iron ore and red oxide) on the same land, even during the subsistence of the lease. Therefore, what was granted to the Corporate Debtor was not an exclusive possession of the area in question, so as to enable the Resolution Professional to invoke Section 14 (1) (d). Section 14 (1) (d) may have no application to situations of this nature. Para 47- Therefore, in fine, our answer to the first question would be that NCLT did not have jurisdiction to entertain an application against the Government of Karnataka for a direction to execute Supplemental Lease Deeds for the extension of the mining lease. Since NCLT chose to exercise a jurisdiction not vested in it in law, the High Court of Karnataka was justified in entertaining the writ petition, on the basis that NCLT was coram non judice. Para 54- The upshot of the above discussion is that though NCLT and NCLAT would have jurisdiction to enquire into questions of fraud, they would not have jurisdiction to adjudicate upon disputes su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be demolished. Recovery would necessarily go with what was parted by the corporate debtor, and for this one has to go to the next expression contained in the said sub-section. Para 17- Regard being had to the aforesaid authorities, it is clear that when recovery of property is to be made by an owner under Section 14(1)(d), such recovery would be of property that is occupied by a corporate debtor. Para 24. The conspectus of the aforesaid judgments would show that the expression occupied by would mean or be synonymous with being in actual physical possession of or being actually used by, in contra-distinction to the expression possession , which would connote possession being either constructive or actual and which, in turn, would include legally being in possession, though factually not being in physical possession. Since it is clear that the Joint Development Agreement read with the Deed of Modification has granted a license to the developer (Corporate Debtor) to enter upon the property, with a view to do all the things that are mentioned in it, there can be no gain saying that after such entry, the property would be occupied by the developer. Indeed, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the Board, beyond repairs; and to reconstruct or to get reconstructed new buildings thereon for the purpose of housing as many occupiers of those properties as possible, and for providing alternative accommodation to other affected occupiers; 79. Power of Board to undertake building repairs, building reconstruction and occupiers housing and rehabilitation schemes. (1) The Authority may, on such terms and conditions as it may think fit to impose, entrust to the Board the framing and execution of schemes for building repairs or for reconstruction of buildings or for housing and rehabilitation of, dishoused occupiers, whether provided by this Act or not, and the Board shall thereupon undertake the framing and execution of such schemes as if it had been provided for by this Act. (2) The Board may, on such terms and conditions as may be agreed upon and with the previous approval of the Authority- (a) hand over the execution under its own supervision of any building repairs scheme, building reconstruction scheme, or dishoused occupier s housing scheme to a Municipal Corporation or to a co-operative society or to any other agency recognized for the purpose by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing moratorium period. (2A) Where the interim resolution professional or resolution professional, as the case may be, considers the supply of goods or services critical to protect and preserve the value of the corporate debtor and manage the operations or such corporate debtor as a going concern, then the supply of such goods or services shall not be terminated, suspended or interrupted during the period of moratorium, except where such corporate debtor has not paid dues arising from such supply during the moratorium period or in such circumstances as may be Specified. (3) The provisions of sub-section (1) shall not apply to- (a) such transactions, agreements or other arrangements as may be notified by the Central Government in consultation with any financial sector regulator or any other authority; (b) a surety in a contract of guarantee to a corporate debtor. (4) The order of moratorium shall have effect from the date of such order till the completion of the corporate insolvency resolution process: Provided that where at any time during the corporate insolvency resolution process period, if the Adjudicating Authority approves the resolution pla ..... X X X X Extracts X X X X X X X X Extracts X X X X
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