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TMI Blog2024 (4) TMI 969X X X X Extracts X X X X X X X X Extracts X X X X ..... Bench, Court-II) in I.A. No. 2990 of 2023 in CP (IB) 527/MB/2022. By the Impugned Order, the Adjudicating Authority dismissed the I.A. No. 2990 of 2023 filed by the Appellant seeking the setting aside of the notice dated 29.03.2023 served upon them by the Respondent - Resolution Professional wanting to inspect and access certain premises belonging to the Appellant. Aggrieved by this impugned order, the present appeal has been preferred by the Appellant. 2. Giving the factual matrix of the present matter, Ms Jayna Kothari, the Learned Senior Counsel for the Appellant submitted that the Appellant is the registered owner of 'Regent Point' building at Bangalore (hereinafter referred to as 'subject property'). A lease deed had been entered into by the Appellant with M/s Food World Super Markets Pvt Ltd (hereinafter referred to as 'FWSL') on 19.07.2018 leasing out the subject property. The period of lease was deemed to have commenced on 01.06.2018 for a duration of 3 years and 5 months. The lease deed of the subject property had been allegedly assigned by FWSL to Future Retail Ltd (hereinafter referred to as 'FRL') by a Deed of Assignment dated 06.08.2018. After FRL was subsequently ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idly assigned to the Corporate Debtor in terms of Clause 14.7 of the Deed of Assignment. The said Deed of Assignment clearly noted that the Appellant had provided NOC to the assignment of rights by the FSWL under the Lease Deed to the Corporate Debtor. Further, as per the data/information received by the RP from the erstwhile management of the Corporate Debtor, the subject property was in the possession of the Corporate Debtor and this is substantiated by the fact that three active employees on the pay roll of the Corporate Debtor were mapped to the store of the Corporate Debtor located at the subject property. The RP had therefore rightly issued a notice on 29.03.2023 to the Appellant requesting for their cooperation in accessing the subject property and inspecting the inventory/assets/stock of the Corporate Debtor lying thereupon so as to ensure protection thereof as this was required to be done by the RP in the discharge of his statutory responsibilities in terms of the IBC. Given this background, the Adjudicating Authority had rightly rejected the IA No. 2990/2023 filed by the Appellant seeking withdrawal of the inspection notice issued of the RP. 5. We have heard the Learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commencement of Lease, Possession and Renewal 2.1 The Period of lease shall be for a period of 3 Years 5 Months and deemed to have commenced from 01.06.2018 and expiring on 14.11.2021. The Possession of the Schedule Premises is given to the Lessee after fulfilling all the obligations. The lease may be renewed after expiry of the lease period specified herein at the option of both the parties on mutually accepted terms. Any extension of the Lease after expiry of the lease period shall be through a Lease deed executed between the parties herein. If no terms are agreed upon the lease period shall stand automatically expired at the end of the lease period. 14.7 It is agreed between the parties that the Lessee shall have exclusive right to transfer/assign its leasehold rights and all obligations under this agreement to M/s. Future Retail Limited ("FRL"), a company incorporated under the Companies Act, 1956, to operate and continue the business of running a supermarkets/retail outlet under its brand name of its choiceor any subsidiary/holding/affiliate/group company/companies of "FRL" or to any Third Party company/ies/organization/s of the Lessee (hereinafter referred to as the "tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Lease Deed in favour of FRL had taken place. At this stage, we would like to advert attention to the reply letter of the Appellant dated 09.05.2023 which is as follows: 09.05.2023 "To, Mr. Vijaykumar V. Iyer Resolution Professional for Future Retail Limited Dear Mr. Iyer, Subject: Reply to your notice dated 29.03.2023 in regard to the Corporate Insolvency Resolution Process of Future Retail Limited received on 03.04.2023. Under the instructions and on behalf of my Clients (1) Mrs. Durdana Aabid Ali (2) Mrs. Arjumand Seema Muqtadir, and (3) Dr. Syed Muhammad Ali, all having their permanent address at Flat No. 301, Fortune Heights, Shantinagar, Hyderabad - 500028 (Clients"), we address you as follows: 1. My Clients had entered into a Lease Deed with M/s Food World Supermarkets Private Limited ("Food World") on 19.07.2018, As per the said Lease Deed, their property bearing Unit No. G-001, on the Ground Floor of the building known as the "REGENT POINT" constructed on the property being Municipal No. 6, Shirdi Saibaba Mandir Road measuring 5000 square feet ("Leased Premises") was given on lease to Food World for a period of 3 years and 5 months, which ended ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng that their Lease Deed was with FWSL and not with FRL-Corporate Debtor and that they were not a party to the assignment of the lease. When the Appellant have denied that they had given their NOC to the Deed of Assignment and they are not even signatories to the said Deed, the onus of proof lay on the Corporate Debtor to show if any NOC was given by the Appellant. However, there is no such proof which has been placed on record. We are of the clear view that the assignment of the lease was disputed by the Appellant. 15. This brings us to the question as to whether the lease deed was extended and whether the possession was with the Corporate Debtor or with the Appellant. It is the case of the Appellant that the Lease Deed in respect of the subject property with FWSL had already expired prior to the commencement of CIRP. From the terms of the lease deed, it is undisputed that the period of lease was deemed to have commenced on 01.06.2018 for a duration of 3 years and 5 months. This period of lease in terms of the lease deed came to an end on 14.11.2021. 16. Even if we go by the contention of the RP that the assignment of lease deed with FRL- Corporate Debtor did take place, the que ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rporate Debtor into the rigours of CIRP and the Appellant having failed to produce any evidence that the subject property had been vacated by then, it was reasonable for the RP to presume that the subject property remained in possession of the Corporate Debtor on the insolvency commencement date i.e. 19.07.2022. 19. When we take a look at the impugned order, we find that the Adjudicating Authority has also largely relied on the notice dated 24.05.2022 to hold that the subject property was not in the possession of the Appellant. The relevant extracts of the impugned order is as reproduced below: "16. The case of the Applicants in the Petition that the lease period under the Lease Deed expired / completed on 14.11.2021 and Food World peacefully vacated the premises and thereafter the Applicants are in peaceful possession of the Leased Premises. However, the reply dated 09.05.2023 issued by the advocate on behalf of the Applicants stated in para 4 that Food World had stopped paying the rent and were not operating their store nor were they using the Leased Premises and had vacated the same after taking all the equipment, Inventory and fixtures from inside. Therefore, a legal notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the Adjudicating Authority had therefore clearly misconstrued in holding this legal notice served upon the FSWL to be an implicit admission by the Appellant that the Corporate Debtor was in possession of the subject property. If Corporate Debtor was actually in possession and this fact was in the knowledge of the Appellant, it remains unexplained as to what prevented the Appellant from serving this notice upon the Corporate Debtor directly. Further it is the contention of the Appellant that the vacant possession of the subject property was already with the Appellant as FSWL had already vacated the store and cleared all inventory and the legal notice was issued to give a stamp of formality to the vacant possession. In support of their contention, it has been submitted that as per material placed on record at page 157 of the APB, the store located on the subject property was non-operational as per the list of stores of the Corporate Debtor. 21. We also cannot be unmindful of the fact that besides the fact that the assignment of lease is clearly disputed, the original lease term had also expired. There is nothing on record to substantiate that there is any evidence of renewal/exten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he corporate debtor, including information relating to- (i) business operations for the previous two years; (ii) financial and operational payments for the previous two years; (iii) list of assets and liabilities as on the initiation date; and (iv) such other matters as may be specified; (f) take control and custody of any asset over which the corporate debtor has ownership rights as recorded in the balance sheet of the corporate debtor, or with information utility or the depository of securities or any other registry that records the ownership of assets including- (i) assets over which the corporate debtor has ownership rights which may be located in a foreign country ; (ii) assets that may or may not be in possession of the corporate debtor; (iii) tangible assets, whether movable or immovable; (iv) intangible assets including intellectual property; (v) securities including shares held in any subsidiary of the corporate debtor, financial instruments, insurance policies; (vi) assets subject to the determination of ownership by a court or authority; Explanation.- For the purposes of this [section], the term "assets" shall not include the following ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o resolve its insolvency and bring it back from the throes of corporate death. 27. Be that as it may, the IRP/RP as officers of the Court are expected to take decisions depending on the factual matrix of each case but guided purely by the objectives of the IBC while remaining within the four corners of the statutory provisions of IBC. What therefore needs to be seen is whether in the given facts of the case, the RP could have justifiably contended that the subject property was in the possession of the Corporate Debtor and that there was a requirement to carry out inspection of the subject property and assess the stock/assets/inventory of the Corporate Debtor lying therein. 28. The present is a case where CIRP was initiated on 27.02.2022. By virtue of the CIRP order, the IRP/RP was appointed and moratorium had kicked in w.e.f. 27.02.2022. The lease deed in respect of the subject property had been entered into by the Appellant with FSWL on 19.07.2018 for a duration of 3 years and 5 months. The lease deed of the subject property had been allegedly assigned by FWSL to FRL by a purported Deed of Assignment dated 06.08.2018 which is clearly disputed. The lease period between FWSL and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Corporate Debtor's survival as a going concern. 30. It will not be off the mark to state that the RP had hastily served the notice on the Appellant for inspection of the subject property without doing requisite ground work on the Deed of Lease Assignment and without finding out who was in actual occupation of the subject property. Assets owned by a third party in possession of the Corporate Debtor is excluded from the scope of CIRP and moratorium in view of Explanation (a) to Section 18 of the IBC. As the Appellant is a third party and undisputedly the subject property is owned by the Appellant and there is nothing foolproof to show that the Corporate Debtor was in occupation of the same, the subject property clearly fell outside the scope of CIRP and consequently the moratorium. We find that no compelling reasons have been made out before the Adjudicating Authority by the RP to allow access into the subject property and inspection of stock/assets lying therein failing which the CIRP would have been jeopardised. 31. For the foregoing reasons, we allow the appeal and set aside the impugned order dated 05.10.2023 dismissing I.A. No. 2990 of 2023. The RP is directed to forthwit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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