TMI Blog2022 (3) TMI 600X X X X Extracts X X X X X X X X Extracts X X X X ..... ure R-3 which refers to the Project namely i.e., Victory Ace , the Registration Date being 18/03/2019 and the signing Competent Authority being NOIDA Authority . It is seen that the Appellant/NOIDA had extended permissions for the Building Plans; that the Project Victory Ace is registered under UPRERA which establishes that all copies of approvals and Commencement Certificate from the Competent Authority were submitted in compliance of Section 4(2) of RERA Act, 2016. Keeping in view these reasons, the stand taken by the Appellant that they were not in knowledge of the Group Housing Scheme at Plot H-02, Sector 143 NOIDA, is unsustainable. JDA is a valid contract in the eyes of law or not? - HELD THAT:- The material on record establishes that all details of the Project were in public domain and therefore the stand of the Appellant that they had absolutely no knowledge about the Project, holds no water. It is also seen from the record that the Project commencement date was 2012 and the completion date was 2019. There is no documentary evidence filed by the Appellant showing any sort of objection raised by them for this 7 year period - A perusal of the JDA shows that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The development rights construe Property of the Corporate Debtor and hence the Resolution Professional has duly performed his duties as per Section 18(1)(a)(iii) and has taken control and custody of the assets of the Corporate Debtor mentioned in the Balance Sheet in compliance of the provisions of Section 18(1)(f) and resultantly there are no deficiency of service on behalf of the RP. The appeal is dismissed. - COMPANY APPEAL (AT) (INSOLVENCY) No. 288 of 2021 - - - Dated:- 8-3-2022 - [Justice Anant Bijay Singh] Member (Judicial) And [Ms. Shreesha Merla] Member (Technical) For the Appellant : Mr. Sanjiv Sen, Sr. Advocate alongwith Mr. Sourav Roy, Mr. Kaushal Sharma and Mr. Prabudh Singh, Advocates. For the Respondent No. 1: Mr. Abhijeet Sinha, Mr. Palash Singh and Mr. Milan Singh Negi, Advocates for RP/R-1. For the Respondent No. 2: Mr. Prithu Garg Mr. Yudhveer Singh Rawal, Advocates for Caveator/R-2. JUDGEMENT [Per; Shreesha Merla, Member (T)] 1. Challenge in this Company Appeal Insolvency No. 288 of 2021 is to the Common Impugned Order dated 02/03/2021 passed by the Learned Adjudicating Authority (National Company Law Tribunal, Divisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authority cannot be asked to become member of CoC. However, the facts of present case are different from those of the above case. In the instant case, the Applicant is seeking participation of NOIDA authority in CIRP to ensure that the said process could go on without any hindrance and objection from any quarter, since NOIDA is a necessary party being owner (Lessor) of the land upon which CD is constructing the project in terms of JDA entered into with Logix (the Lessee). In any case, even otherwise, when NOIDA becomes part of COC to the extent of its dues against CD in terms of JDA, the same shall be protected in terms of the Claim, which it may file before Resolution Professional. 20. To sum up, we take a holistic view of the entire matter and deem it fit to protect the interests of homebuyers in terms of objective of the Code. Therefore, we are of the considered opinion that under the given facts and circumstances, NOIDA Authority is directed ton lodge its due claim with Resolution Professional as per law and participate in the CIRP process through duly Authorised person and attend all future CoC meetings participate in the discussions/ negotiations on the Resolution Plans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said Lease Deed and in case of contravention of the same, the lease could have been cancelled by the Appellant herein. The Learned Counsel drew our attention to Clause 12 of the Lease Deed which refers to Cancellation . After the signing of the said Lease Deed, the lessee entered into a Joint Development Agreement (JDA) on 08/03/2013 with M/s. Dream Procon Pvt. Ltd. ( Corporate Debtor ), whereby the lessee illegally sub-divided the subject premises and transferred the sub-divided area of 6,00,000 sq. ft. of FSI to the Corporate Debtor , portraying itself as the owner of the said premises. As per Clause 2 of the JDA, the lessee illegally transferred certain development rights in the demised premises to the Corporate Debtor . These development rights included right to develop, market and sell 6,00,000 sq. ft. of Floor a Spare Index (FSI) in the subject premises. It is vehemently contended that the JDA was signed by the lessee in a clandestine manner without obtaining any prior approval from the Appellant herein. Clause 3 of the JDA stipulated the Corporate Debtor to pay an amount of ₹ 70,04,00,000/- to the lessee as a non-refundable Security Deposit, for which the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Learned Counsel vehemently contended that it was only at this time that the Appellant became aware of the existence of the JDA, the Agreement to sell and the GPA. IA 5050 of 2020 dated 12/11/2020 was preferred by the Appellant herein seeking directions to the RP to exclude the said premises from the pool of assets of the Corporate Debtor mainly on the ground that the Agreement was executed by the Lessee in a covert manner without the approval of the Appellant which is against the provisions of the terms entered into between M/s. Logix and the Appellant. Learned Counsel strenuously argued that the Corporate Debtor had no rights over the subject premises as the JDA, GPA and Agreement to sell are non-est in the eyes of law. The asset does not belong to the Corporate Debtor under Section 18 of the Insolvency and Bankruptcy Code, 2016, (hereinafter referred to as the Code ), since the interest was not transferred legally by the lessee to the Corporate Debtor . Approval of the Project by UPRERA would not vest any title to the Corporate Debtor in respect of the subject premises. Learned Counsel also filed Additional Written Submissions reiterating the facts and the su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nct and different from transfer of interest in the property. A licensee or even a tenant may be entitled by law to transfer his interest in the property but that is not a transfer of ownership. For instance, a lessee from a corporation or a local body or even State Government to raise building may have heritable and transferable right but such a person is not an owner and the transfer in such a case of his interest in the property and not the ownership. In Inder Sen and Anr. v. Naubat Singh and Ors. I.L.R. 7 All. 553 it was held that absolute ownership is an aggregate of compendium of rights such as right of possession, the right of enjoying usufruct of the land and so on and so forth. The ownership, therefore, is a sum total of various subordinate rights. The right to transfer the subordinate right either under general law or statutory law does not make it transfer of ownership. Section 6 of the Transfer of Property Act, 1882 permits transfer of any property. It may be transfer of absolute or subordinate right...... 3. Submissions of the first Respondent/Resolution Professional (RP): Learned Counsel for the RP submitted that a Lease Deed was entered into between NOIDA/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ht of the Corporate Debtor . The RP did not create any pool of asset for the CIRP. The JDA is a valid contract and with duly recognises in the recitals that NOIDA is the sole owner of the said plots. M/s. Logix has been recognised as the sole lessee of the said plot. The term Owner assigned to M/s. Logix in the said JDA is merely with a purpose of convenience and does not confer any such title to M/s. Logix. The Corporate Debtor is defined as a Joint Developer in the JDA and as per Clause 2, development right over the FSI of 6,00,000 sq. ft. were granted in favour of the Corporate Debtor and this does not amount to any change in the role of M/s. Logix and assigned under the Lease Deed. The Construction Clause under the Lease Deed provides that the construction shall be as per the Building Plan approved by NOIDA which is strictly being adhered to. The Lease Deed is an admitted document based on which the rights of development, sub-Lease Deed and transfer of plots was exclusively transferred by the Appellant in favour of M/s. Logix. The parties to the JDA have duly ensured that all the terms and conditions laid down by the Appellant and Lease Deed were adhered to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by GPA to carry out construction and marketing of the completion. There is no registered instrument by a payment of stamp duty as would be required if M/s. Logix were to create any form of leasehold interest in favour of the Corporate Debtor . Since the execution of the JDA, the Project is in occupation of the Corporate Debtor and therefore the ratio of the Hon ble Supreme Court in Rajendra K. Bhutta Vs. Maharashtra Housing and Area Development Authority Anr. (2020) 13 SCC 208 in paras 7, 8 and 19 is squarely applicable to the facts of this case. In this decision, it was held that as the development rights constitute the property of the Corporate Debtor and not attempt to dispossess the developer can be made by the landowner/authority during the CIRP in view of Section 14(1)(d) of the Code. This Tribunal in Victory Iron Works Ltd. Vs. Jitendra Lohia, RP of Avani Towers Ltd. Ors., Company Appeal (AT) (Insolvency) No. 507 377 of 2020, has also taken the same view and held that since the development Agreement of the Corporate Debtor was not terminated by the landowner before the commencement of CIRP, the protection under Section 14 of the Code will apply. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o sub-lease portions of land earmarked for group housing, subject to minimum plot size of 10,000 Sqm, and adherence to the planning norms of the Lessor, after prior approval from the Lessor. 2. The Lessee shall sub-lease an*area only once the internal development work such as internal-roads, sewerage, drainage, culverts, water-supply, electricity distribution/transmission lines, street-lighting, etc. in that area is in progress. 3. The Lessee shall have to execute the sub-lease deed in favour of the Sub Lessee in the form and format as prescribed by the Lessor. 4. On execution of such sub-lease deed(s), the sub-lessee(s) will be bound to comply with the provisions of payment of proportionate share of the lease premium, lease rent and all other charges payable to the Lessor in the proportionate share of the land area so sub-leased. Any default on the part of such sub-lessee to fully implement the terms and conditions of the lease deed /sub-lease deed/ scheme shall not be automatically considered as default of the Lessee. The Lessor shall be entitled to take any action against the sub-lessee as well, including cancellation of the sub-lease and forfeiture of the premium ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpetent Authority being NOIDA Authority . It is relevant to note that the original start date is given as 15/10/2012 and the proposed completion date is 31/12/2019. The said document is not denied by NOIDA. It is pertinent to note that NOIDA has extended permission to this Project on 08/01/2014. For better understanding of the permissions accorded by NOIDA on 08/01/2014, the relevant document is being reproduced as hereunder: 10. It is seen that the Appellant/NOIDA had extended permissions for the Building Plans; that the Project Victory Ace is registered under UPRERA which establishes that all copies of approvals and Commencement Certificate from the Competent Authority were submitted in compliance of Section 4(2) of RERA Act, 2016. Keeping in view these reasons, we are of the view that the stand taken by the Appellant that they were not in knowledge of the Group Housing Scheme at Plot H-02, Sector 143 NOIDA, is unsustainable. 11. Now this Tribunal addresses to the contention of the Appellant that the JDA is not a valid contract in the eyes of law. In terms of the Lease Deed, M/s. Logix was entitled to sub-divide the plot into smaller plots and not less than 10, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view that the issue raised by the Appellant regarding the usage of the word Owner with reference to M/s. Logix in the JDA, is misconceived. 15. Section 3(27) of the Code reads as follows: 3(27) property includes money, goods, actionable claims, land and every description of property situated in India or outside India and every description of interest including present or future or vested or contingent interest arising out of, or incidental to, property; 16. The Hon ble in Rajendra K. Bhutta Vs. Maharashtra Housing and Area Development Authority Anr. (2020) 13 SCC 208 in paras 18 and 19 observed as follows: 18. 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 ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Appellant/NOIDA. It is clearly specified that even if the change is a material one, the Joint Developer shall not have the liberty to change the nature of development of the Project or amend the construction plans, duly approved by NOIDA . 20. Having accepted the lease premium amounts towards lease premium and lease rentals under the Lease Deed and benefited therefrom, the Appellant cannot now turn around and say that they are completely unaware of the Project or that the JDA is non-est in the eyes of the law. 21. Additionally, we do not find any substantial reasons given by the Appellant to have not exercised their rights to cancel the Lease Deed in view of their stand that M/s. Logix had sub-leased the property without their approval and in contravention of Clause 5 of the Lease Deed. Clause No. 12 clearly mentions that the lessee/sub-lessee shall not be allowed to change his role otherwise the lease/sub-lease can be cancelled and the entire amount deposited shall be forfeited. There is no whisper with respect to any steps taken by the Appellant to cancel the Lease Deed. It is beyond comprehension as to how the Appellant/NOIDA could have overlooked this factual scenario ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deficiency of service on behalf of the RP. 25. The Hon ble Supreme Court in Ebix Singapore Pvt. Ltd. Vs. Committee of Creditors of Educomp Solutions Ltd. Anr. , [2021 SCC OnLine SC 707] in its concluding paragraph observed as follows: 202. The residual powers of the Adjudicating Authority under the IBC cannot be exercised to create procedural remedies which have substantive outcomes on the process of insolvency. The framework, as it stands, only enables withdrawals from the CIRP process by following the procedure detailed in Section 12A of the IBC and Regulation 30A of the CIRP Regulations and in the situations recognized in those provisions. Enabling withdrawals or modifications of the Resolution Plan at the behest of the successful Resolution Applicant, once it has been submitted to the Adjudicating Authority after due compliance with the procedural requirements and timelines, would create another tier of negotiations which will be wholly unregulated by the statute. Since the 330 days outer limit of the CIRP under Section 12(3) of the IBC, including judicial proceedings, can be extended only in exceptional circumstances, this open-ended process for further negotiati ..... X X X X Extracts X X X X X X X X Extracts X X X X
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