TMI Blog2021 (5) TMI 947X X X X Extracts X X X X X X X X Extracts X X X X ..... cient to hold that on the date of Insolvency Commencement, the property was occupied by the Corporate Debtor and the Corporate Debtor was in possession thereof. The Hon'ble Supreme Court in RAJENDRA K. BHUTTA VERSUS MAHARASHTRA HOUSING AND AREA DEVELOPMENT AUTHORITY AND ANOTHER [ 2020 (3) TMI 34 - SUPREME COURT] have in clear terms delineated the extent of this Code and limits of the other Authorities in dealing with a Corporate Debtor under CIRP. The termination of the Corporate Debtor as the developer would essentially result in the property being taken out of its possession. Both of which are prohibited under Section 14(1) of the Code. Therefore, the order dated 17.07.2019 being violative of the mandatory provision cannot be held to be valid and operative in law. The issues are answered in the negative - application allowed. - MA No. 3193 of 2019 in C.P. (IB) No. 4733/MB/2018 - - - Dated:- 19-5-2021 - Janab Mohammed Ajmal, Member (J) And V. Nallasenapathy, Member (T) For the Appellant : Ashish Kamat, Vinod Kothari, Priyanka Shah, Suyesha Kakarla and Rashmi Nair, Advocates i/b Apex Law Partners For the Respondents : Anoop Patil, Ashish Pyasi and Dinesh Ja ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Composite building No. 1 2 on the site. The buildings were to contain units for rehabilitation as well as for free sale. By 01.08.2012, R1 issued Commencement Certificate for construction work of the composite buildings up to plinth level. vi) The revised plan submitted by the Corporate Debtor was also approved on 06.08.2016. The Corporate Debtor accordingly commenced construction activity on the land and had completed construction of the compound wall, storm water drainage, four floors of Wing B and part of the plinth of Wing A of the Composite Building No. 1. vii) Initially however there was certain delay in construction on account of non-cooperation from the slum dwellers who refused to vacate their dwellings. The slump in the real estate sector in the mid of FY 2016-17 also contributed to the tardy progress. viii) The Corporate Debtor went into financial difficulties and defaulted in making monthly rent payments to the slum dwellers. Similarly, it also defaulted in its loan repayment. Some of the slum dwellers also complained to the Joint Registrar (JR) of Cooperative Societies, (Eastern and Western Suburbs) concerning non-payment of rent and stoppage of constr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Applicant accordingly came up with the present Application with the following reliefs: a. This Hon'ble Tribunal be pleased to: i) declare the impugned order dated 17 July 2019 of Chief Executive Officer, Slum Rehabilitation Authority as illegal inoperative and void; ii) direct the Respondents to not take any coercive action against the Corporate Debtor till the completion of the Corporate Insolvency Resolution Process of the Corporate Debtor. b. That pending the hearing and final disposal of the present Application, stay the operation of the impugned order dated 17 July 2019 of the Chief Executive Officer, Slum Rehabilitation Authority and direct Respondent No. 1 as well as Respondent No. 3 to not carry out any steps in pursuance of the impugned order; c. For ad interim reliefs in terms of prayer (b) above; d. For such further other reliefs as the nature circumstances of the case may require; and e. For costs of the Application. 4. During the hearing the Respondent No. 2 (R2) did not appear. No relief has been claimed against it. Accordingly, the Applicant did not press this Application against R2. This Tribunal by order dated 15.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vided under Section 13(2) of the MSA Act. The same cannot be questioned. 7. Since the Corporate Debtor has not acquired any right over the immovable property as a developer, the property cannot be classified as its asset. Thus it cannot insist on any exclusive right of redevelopment. The status of the Corporate Debtor being that of a contractor, the Principal i.e. R1 was within its powers to replace the contractor. The order dated 17.07.2019 and the Authority of R1 to pass such an order cannot be faulted. It accordingly would not come within the purview of Section 14 of the Code. There could not possibly be any conflict between the provisions of the Code and MSA Act. It is further stated that even if it is held that the conflict exists between the MSA Act and the Code, the former would prevail, it being a special legislation relating to redevelopment of the slum areas. The latter being a general legislation would have to give way to the provisions of the former legislation. Besides Section 42 of the MSA Act is a bar for this Authority to pass any order against an action taken under the Act. The Applicant had filed a Writ Petition before the Hon'ble Bombay High Court but subs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atorium.- (1) Subject to provisions of sub-sections (2) and (3), on the insolvency commencement date, the Adjudicating Authority shall by order declare moratorium for prohibiting all of the following, namely:- (a) the 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 authority; (b) transferring, encumbering, alienating or disposing off by the corporate debtor any of its assets or any legal right or beneficial interest therein; (c) any action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of its property including any action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002); (d) the recovery of any property by an owner or lessor where such property is occupied by or in the possession of the corporate debtor. [Explanation.-For the purposes of this sub-section, it is hereby clarified that notwithstanding anything contained in any other law for the time being in force, a licenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pute that the property in respect of which the development agreement was executed is not an asset of the Corporate Debtor. The Corporate Debtor only was permitted to develop it in terms of the development agreement. The fact that the Corporate Debtor was the developer in respect of the property and had undertaken certain constructions thereon in pursuance to the development agreement. This would unequivocally indicate that the property was under its occupation as on the ICD. For the purpose of this case, it would thus be sufficient to hold that on the date of Insolvency Commencement, the property was occupied by the Corporate Debtor and the Corporate Debtor was in possession thereof. 12. Upon commencement of CIRP the moratorium came into effect immediately. Section 14(1)(d) of the Code prohibited recovery of any property by an owner or lessor where such property is occupied by or in possession of the Corporate Debtor. Hence no action whatsoever which could lead to recovery of the property could be taken. 13. The Hon'ble Supreme Court in a recent judgment of Alchemist Asset Reconstruction Company Limited v. Hotel Gaudavan Private Limited and Others: (2018) 16 SCC 94, held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arted by the corporate debtor, and for this one has to go to the next expression contained in the said sub-section. ...... 27. The matter had come to this Court after the Adjudicating Authority had approved of a certain resolution plan, unlike in the facts of the present case, and what was clear, on the facts of that case, was that a show cause notice of the Municipal Corporation, which preceded admission of the insolvency resolution process, made it clear that assets of MCGM could not possibly be subsumed within a resolution plan without its approval/permission. It was in this context that this Court, in para 47 of the said judgment, stated that Section 238 of the Code cannot be read as overriding the MCGM's right-indeed its public duty-to control and regulate how its properties are to be dealt with. Properties was referred to in this judgment as referring to assets of the corporate debtor. We have seen how, in the facts of this case, we are not concerned with the assets of the corporate debtor, least of all the assets of MHADA. The limited question before us is as to whether Section 14(1)(d) of the Code will apply to statutorily freeze 'occupation' that ma ..... X X X X Extracts X X X X X X X X Extracts X X X X
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