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TMI Blog2021 (11) TMI 121X X X X Extracts X X X X X X X X Extracts X X X X ..... (together the Agreement) was executed between the Applicant, the Corporate Debtor (Shree Ram Urban Infrastructure Limited) and Vijay Infrastructure Technologies Pvt. Ltd. (VIT, a sister concern of the Corporate Debtor) for inter alia the sale, transfer, assignment and conveyance of the Property bearing C.S. Nos. 289 (Part), 1548 (Part), 1549(Part) and 1550, now bearing new Cadastral Survey No. 1/289, identified as Plot No. 5A of Lower Parel Division admeasuring 20,955.40 sq. mts. along with three 12 metre wide accesses (The Decreed Property). b. It is submitted that in 2004, the Applicant paid a sum of Rs. 30,00,00,000/- (Rupees Thirty Crores only) to the Corporate Debtor towards the sale consideration for transfer of the Decreed Property. However, in 2005, the Corporate Debtor sought to resile from the Agreement and did not complete the sale transaction pursuant to which the Applicant referred the dispute to Arbitration for inter alia specific performance of the said Agreement and the transfer of the Decreed Property with all rights under the said Agreement to the Applicant. c. It is submitted that between 2005 to 2016, numerous protective orders were passed by the Hon'ble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Ld. Single Judge's Order and Judgment and the Award. h. Thereafter, on 12.10.2018, the Applicant through its Advocates addressed a letter to the Corporate Debtor through the Provisional Liquidator calling upon the Corporate Debtor to comply with the Award and also offered to pay balance sale consideration of Rs. 75,30,00,000/- on execution of the conveyance and other required documents. i. The Provisional Liquidator on behalf of the Corporate Debtor on 30.04.2019 filed a Special Leave Petition (SLP) (C) No. 012495 of 2020 before the Hon'ble Supreme Court challenging the Division Bench order of the Hon'ble Bombay High Court dated 11.10.2018. j. During the pendency of the said SLP, ad interim protective orders were passed by the Hon'ble Bombay High Court in Company Application No. 249 of 2019 filed by the Applicant, directing the survey and demarcation of the three 12-metre-wide accesses to the Decreed Property. k. Further, a Petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 (the Code) was filed by SREI Equipment Finance Limited which was admitted by this Tribunal on 06.11.2019 and the Respondent No. 1 (R1) was appointed as the Interim Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cess (CIRP) and also acknowledged that the amount of Rs. 75,30,00,000/- (Rupees Seventy-Five Crore Thirty Lakh Only) was the entitlement of the Corporate Debtor in relation to the Decreed Property. The R1 further stated that the Applicant's offer to pay the balance consideration on execution of the Conveyance Documents and transfer of possession would be beneficial to the CIRP and the creditors of the Corporate Debtor and part of such balance consideration could be utilised to reimburse R2 whereupon the custody of all the assets would be available from the R2 and the Decreed Property will be handed over to the Applicant. p. On 19.07.2021, R2 filed the Official Liquidator's report No. 42 of 2021 inter alia stating that the portion of the boundary wall at the Decreed Property had collapsed and that the immediate remedial measures were required to be taken. As R1 & R2 expressed their lack of requisite funds to protect the Decreed Property, on 28.07.2021, the Hon'ble Bombay High Court passed an order in the said OL's Report No. 42 of 2021, accepting the offer of the Applicant to take necessary steps to secure the Decreed Property. q. The Applicant thus submits that; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal be pleased to direct and authorize Respondent No. 1 jointly with the Applicant to apply to the Hon'ble Bombay High Court for orders and directions in the said I.A. No. 243 of 2021 or by fresh application, including to direct Respondent No. 2 to comply with the orders of the Hon'ble Bombay High Court by removal of construction materials, equipment, sheds, porta cabins etc. lying on the Decreed Property and directions to remove the obstruction on the Applicant's sight of way on one of the three 12 metre-wide accesses to the Decreed Property; d. For ad interim and interim reliefs in terms of prayers (a), (b) and (c) above; e. For such further orders and directions as the circumstances may warrant in the interest of Justice. 4. R1 has filed Reply to the Application and has stated as below:- i. Section 14 of the Code while prohibiting sale of assets and continuation of execution proceedings during the CIRP, on a purposive construction ought not to mean that the corporate debtor should be denied valuable funds that belong to it and can become available to it by completing a pending transaction pursuant to 'Decree Award upheld by Hon'ble Supreme Court' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nto force. Further the Section 14(1)(b) of IBC, 2016 prohibits transfer or sale of assets during the CIRP and Section 14(1)(a) prohibits the continuation of proceedings against the Corporate Debtor. 6. Therefore the issue which emerges for our consideration is that "whether the RP can be directed to Execute the conveyance deed in respect of property in question as prayed by the Applicant or the RP can be directed to join in the execution of the conveyance deed and other required documents to sell, transfer, convey and assign the decreed property to the applicant in the pending Execution Application No. 134 of 2017 before the Hon'ble High Court of Bombay in spite of enforcement of moratorium?" 7. To decide the aforesaid issue, it is necessary to visit the contents of Section 14(1)(a) and (b) of IBC 2016. The contents of the same are reproduced below- "14. Moratorium. - (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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iz in the custody of the Court and presently held in trust of the Applicant i.e., in a constructive trust from the time of the execution of Agreement to sell, till the such time the delivery of the Decreed property in favour of the Applicant. Hence, the Decreed property stands excluded from the estate of the corporate Debtor. This analysis on the trust is based upon Explanation (a) to Section 18 of the Code. 11. Therefore, in our view the Property in question cannot be considered as an asset of the Corporate Debtor where the court of competent Jurisdiction has directed to transfer the title in favour of the Applicant. Here, it is worthwhile referring to the Judgement of this Tribunal in the matter of M/s. Schweitzer Systemtek India Private Limited vs Phoenix ARC Private Limited T.C.P. no. 1059/2017 dated 03.07.2017 wherein the following was observed on the applicability of moratorium, which was further upheld by the Hon'ble NCLAT in the matter of Alpha & Omega Diagnostics (India) Private Limited Vs Asset Reconstruction Company of India Ltd. & Ors dated 31.07.2017 The relevant extracts of the Judgement of this Tribunal are reproduced below: "8.1 On careful reading I have noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Arbitral award. Since the property in question has already been declared that it is not the asset of the Corporate Debtor, therefore, any proceeding which does not concern the asset of the Corporate Debtor can be continued against the Corporate Debtor. 15. Since, the execution proceeding is already sub-judice before the Hon'ble High Court of Bombay and this Adjudicating Authority has already held that the moratorium shall not come in between the proceedings which does not relates to the Assets of the Corporate Debtor. 16. We also pay attention to Section 29 of the Code read with Regulation 36 of the Insolvency and Bankruptcy Board of India (Insolvency and Regulation Process of Corporate Persons) Regulations 2016, wherein the RP is bound to disclose in the proposed Information Memorandum, the details of all the material litigations and ongoing proceedings of the Corporate Debtor. This means, disclosure would have to be made relating to the Award in favour of the Applicants and the Decree of Specific Performance to receive Rs. 75.30 Crores from the Applicant with regard to the Decreed property in the aforesaid memorandum. Further, any delay in receipt of Balance Sale Conside ..... X X X X Extracts X X X X X X X X Extracts X X X X
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