TMI Blog2023 (3) TMI 1388X X X X Extracts X X X X X X X X Extracts X X X X ..... would have the right to cancel the lease and allot the subject land to other applicants. Cognizance has also been taken by the Adjudicating Authority of MP Rules, 2019 providing for automatic cancellation of the lease if the purchaser after purchase of the land fails to get the lease executed in its favor - The Adjudicating Authority has held that ISAPL has thus legally and validly acquired leasehold ownership rights and possession over the subject land directly from the MPIDCL and not from the corporate debtor. Holding that ISAPL is the perpetual lessee of the subject land, the impugned order also notes that this transaction between ISAPL and MPIDCL does not fall within the purview of Sections 43, 49, and 66 of the IBC. It is noticed from the facts of the present case that the corporate debtor in spite of being aware that it was under obligation to get the lease deed of 23.02.2010 executed in its favour, failing which MPIDCL was free to further allot the subject land, never got the lease deed executed by MPIDCL despite lapse of 10 years. Hence, in terms of para 6 of the sale deed, the leasehold right of the corporate debtor over the subject land had clearly lapsed. We do not fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of a potential collusion without material on record is not sufficient to persuade this Bench to record any finding on preferential or fraudulent transaction. The present transaction between MPIDCL and the ISAPL/Respondent No. 1 not being illegal nor suffering from any procedural or material irregularities, we are satisfied with the findings of the Adjudicating Authority that it is not open to the Appellant to unsettle or derail the transaction by raising the bogey of Section 43, 49 and 66 of IBC or to disturb the possession or interfere with the leasehold right of ISAPL. There are no illegality in the impugned order of the Adjudicating Authority which may warrant any interference in the exercise of our appellate jurisdiction. There is no merit in the appeal - appeal dismissed. - Company Appeal (AT)(Insolvency) No. 802 of 2022 - - - Dated:- 21-3-2023 - Justice Ashok Bhushan, Chairperson And Barun Mitra, Member (Technical) For Appellant: Mr. Aishvary Vikram, Ms. Mrinali Prasad, Advocates. For Respondents: Mr. Vijayesh Atre and Ms. Bhakti Vyas, Advocates, Mr. Karthik Sundar, Mr. Abhishek Singh, Mr. Abhishek Chaudhary, Mr. Aalak Kumar, Advocates. JUDGMENT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Corporate Debtor before the Indore Bench of the Hon ble High Court of Madhya Pradesh. The Writ petition was subsequently dismissed as withdrawn on 10.08.2020. The Writ petition and withdrawal application were both filed by suspended management of the Corporate Debtor. A Section 7 petition under IBC was filed against Corporate Debtor on 10.12.2018. The Corporate Debtor was admitted into Corporate Insolvency Resolution Process ( CIRP in short) on 28.07.2020 and subsequently brought under liquidation on 01.10.2021. The Corporate Debtor sold the Tin shed on the subject land on 01.02.2020 to M/s Powerage Towers Limited ( PTL in short) by way of a sale deed for a consideration amount of Rs.7,81,000/. Subsequently, a registered sale deed in respect of the Tin shed on the subject land was executed by PTL with Indore Steel Alloys Private Limited ( ISAPL in short), present Respondent No.1 on 13.11.2020 on payment of consideration of Rs.11,72,220/-. Further the MPIDCL after receiving the transfer charges and other outstanding dues from ISAPL also transferred the leasehold rights in the subject land for the remaining leasehold period to ISAPL/Respondent No.1. IA No. 96/202 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quently admitted by the Adjudicating Authority on 28.07.2020. 5. It is further submitted by Learned Counsel for the Appellant that PTL thereafter entered into a further sale transaction of the Tin shed with the Respondent No.1 for a consideration amount of Rs.40,00,000/-. It has been contended that the very fact that Respondent No.1 had agreed to buy a dilapidated Tin shed at a value of Rs.40,00,000/- which PTL had purchased from the Corporate Debtor for only Rs.7,81,000/- shows that the Respondent No.1 knew well in advance that the sale of the subject land will follow the sale of Tin shed and that the Adjudicating Authority failed to look into this aspect while passing the Impugned Order. Claiming that this was a pointer to the fact that the suspended management abetted and assisted the illegal transfer of the subject land, it was argued that this transaction attracted Sections 43, 45, 49 and 66 of the IBC. 6. Challenging the impugned order, it has been further submitted that the Adjudicating Authority in the Impugned Order had wrongly placed reliance on Clause 6 of the Sale Deed though MPIDCL had never invoked this clause and had never cancelled the lease deed in respect of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le 19(B) that transfer of lease-hold rights would be effective only when MPIDCL executes a lease deed in favour of the new allottee after receiving the entire outstanding dues of the previous allottee. However, as the Corporate Debtor had failed to pay the pending dues, the permission to transfer the subject land automatically lapsed. On the other hand, the Respondent No.1 having executed a separate sale deed with PTL for the Tin shed and having paid the entire demand raised by MPIDCL vide their letter dated 11.11.2020 with respect to leasehold rights of subject land, the MPIDCL had transferred the lease hold rights to the Respondent No.1 for the remaining leasehold period by issuing a modified lease deed in favour of Respondent No.1. 10. We have duly considered the detailed arguments and submissions advanced by the Learned Counsel for the parties and perused the records carefully. 11. The short point for consideration is whether the transfer of subject land by MPIDCL to Respondent No.1 has been executed in accordance with law and, if so, whether there is any merit in the claim of the Appellant that the transaction was not done in good faith but was a fraudulent and a prefere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revised lease deed before the allotting authority for execution. The allotting officer will execute the revised lease deed within 7 days and hand it over to the authorized person of the unit for registration of the lease deed. The unit will be able to keep the original lease deed and original copy of the modified lease deed with itself after registration and will submit the certified copy to the concerned regional office, MPIDC. If the transferee does not take action within the said time period, the transfer permission will be automatically cancelled. Clause 6 of Sale deed 6. The vendee hereby undertakes that he/she/they shall get the lease of the land (leasehold) transferred in his/her/their name with the respective DIC/MPAKVN within six months from the date of Agreement/Execution and registration of the sale deed, failing which the competent authority viz. DIC/AKVN reserves the right to cancel the erstwhile lease and allot the said land to those applicant, who has requirement of the same without any information to the vendee. The Registration Act, 1908 17. Documents of which registration is compulsory (1) The following documents shall be registe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 23.02.2010 executed in its favour, failing which MPIDCL was free to further allot the subject land, never got the lease deed executed by MPIDCL despite lapse of 10 years. Hence, in terms of para 6 of the sale deed, the leasehold right of the corporate debtor over the subject land had clearly lapsed. We do not find any mala-fide or perversity on the part of Respondent No.6 in their understanding or appreciation of MP Rules and application of Clause 6 of the sale deed executed with the Corporate Debtor. In the given circumstances, MPIDCL being a wholly owned subsidiary of the State Government of Madhya Pradesh and bound by the MP Rules, 2019, there is no error in the findings of the Adjudicating Authority that MPIDCL was fully authorized, being the owner of the subject land, to execute the lease deed in favour of Respondent No.1. 15. Furthermore, a bare reading of the above-cited provisions of the Registration Act, 1908 and the Transfer of Property Act, 1882 shows that any lease of immoveable property for a period exceeding one year can only be made by way of a registered instrument mandatorily. The requirement of execution of lease is not a procedural but a statutory requiremen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d right over the subject land. The corporate debtor at best had only acquired ownership rights over the Tin shed only which it sold to PTL on 01.02.2020. 18. We also note the submission made by the Learned Counsel for the Respondent No. 1 that ISAPL had purchased the Tin shed from PTL on 13.11.2020 for which it had separately paid a consideration amount of Rs. 11,72,220/- only and for taking the subject land on lease it had separately paid Rs. 38,09,748/- to MPIDCL. Thus, having paid the consideration amount to MPIDCL directly and further having entered into a lease deed with MPIDCL on 02.12.2020, Respondent No 1 had legally and validly acquired leasehold ownership rights and possession over the subject land directly from MPIDCL and not from the corporate debtor. We therefore find no reason not to accept the submission of Respondent No.1 on this score. 19. It has also been contended by the Learned Counsel for the Appellant it is not MPIDCL which had cancelled the lease or re-auctioned on its own but it was occasioned by a joint application filed by PTL and ISAPL before MPIDCL. The role of suspended management in aiding, abetting and prompting the transfer of subject land and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Name of the Lessee shall be read as M/s Indore Steel Alloys Private Limited (CIN No. U27017MP2020PTC052214) in place of M/s Patni Carbides Pvt. Ltd. in its record. 2. The lease period shall remain unchanged 22. This brings us to the contention of the Appellant that the exmanagement by not getting the name changed in the lease deed in favour of the Corporate Debtor in 2010 used this fact as a loophole to transfer the leasehold rights in favour of Respondent No.1 and that this amounts to conducting fraudulent transaction. We are not convinced with this line of argument. Liquidators under the IBC are assigned by the Court and are undisputedly vested with sufficient authority to take into custody or control all assets, property, effects and actionable claims of the Corporate Debtor and also collect outstanding receivables including paying off bills and outstanding debts. This includes the authority to commence investigations into the Corporate Debtor s financial affairs for determination of preferential and undervalued transaction as envisaged under Section 35(1)(ℓ) of IBC. The Liquidator has therefore a fiduciary and legal responsibility to the Corporate Deb ..... X X X X Extracts X X X X X X X X Extracts X X X X
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