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2019 (8) TMI 1600 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT - The Code empowers the Resolution Professional to take control and custody of any property which the Corporate Debtor has the complete ownership of, this power of the Resolution Professional extends to properties which are a party of the court proceedings. Herein, it is important to note that the suit filed by the Applicant is merely to decide possession and seeking mesne profits. The Applicant has not disputed the ownership neither in his application nor in the notice sent by him - Therefore, in accordance with the code, since the Corporate Debtor has been authorised and empowered to take possession of the said Shed, the same must be granted to the Resolution Professional. Although, we would like to make it clear that this in manner would affect the merits of the Special suit which is still pending before the Special Civil Judge Goa. It is pertinent to note here that, the moot point behind the Resolution Professional seeking possession of the Shed is to help the company. Therefore, if the arguments of the Applicant are given any weightage, and the Shed is not given in the possession of the Resolution Professional the same would cause heavy prejudice to the Petitioner and defeat the purpose of the Code - It is also brought to our notice that the time period of moratorium is now over and no result has come out it. Thereafter, a Miscellaneous Petition was filed by the Petitioner for liquidation. Therefore, subject to admission of application, the possession of the said Shed will pass on to the Liquidator once he/she is appointed as per the orders of the court. Application dismissed.
Issues Involved:
1. Legality of possession of the Shed by the Applicant. 2. Powers and duties of the Interim Resolution Professional (IRP) under the Insolvency and Bankruptcy Code (IBC). 3. Impact of pending civil litigation on the IRP's ability to take possession. 4. Liquidation proceedings of the Corporate Debtor. Issue-wise Detailed Analysis: 1. Legality of Possession of the Shed by the Applicant: The Applicant claimed he was not in illegal occupation of the Shed and had been occupying it under an Agreement dated 28th January 1997 with the Petitioner. He contended that he was an erstwhile employee of the Petitioner and had been using the Shed for his own business since 1993. Disputes regarding rent payments arose in 2006/2007, leading to a Special Civil Suit in 2009, which is still sub judice. The Applicant argued that since the issue of possession was pending before the Civil Court, the IRP should refrain from acting on his letter demanding possession of the Shed. 2. Powers and Duties of the Interim Resolution Professional (IRP) under the Insolvency and Bankruptcy Code (IBC): The IRP argued that under Section 18 of the IBC, he is empowered to take control and custody of any asset over which the Corporate Debtor has ownership rights, including assets under litigation. The IRP emphasized his duty to manage the assets of the Corporate Debtor and argued that the Applicant's claim of lien on the Shed, pending in Civil Court, did not prejudice his rights under the Code. 3. Impact of Pending Civil Litigation on the IRP's Ability to Take Possession: The Tribunal noted that Section 18 of the IBC allows the IRP to take control of assets owned by the Corporate Debtor, even if they are part of court proceedings. The Tribunal found that the Applicant had not disputed the ownership of the Shed, only the possession. Therefore, the IRP was authorized to take possession of the Shed. However, one member disagreed, stating that the IRP could only take symbolic possession and not physical possession while the matter was sub judice. The dissenting opinion highlighted that the IRP could not dispossess the Applicant without due process of law and a court order. 4. Liquidation Proceedings of the Corporate Debtor: The Corporate Insolvency Resolution Process (CIRP) was initiated against the Corporate Debtor on 11.12.2018. The RP was appointed and confirmed by the Committee of Creditors (CoC). Despite efforts to invite claims and expressions of interest, no resolution plan was received. Consequently, the CoC resolved to liquidate the Corporate Debtor. The Tribunal ordered the liquidation of the Corporate Debtor under Section 33 of the IBC, appointing the RP as the Liquidator and directing the initiation of the liquidation process as per the Code and relevant regulations. Conclusion: The Tribunal authorized the IRP to take possession of the Shed, emphasizing the IRP's powers under the IBC. However, the dissenting opinion argued against dispossessing the Applicant without a court order. The Tribunal ordered the liquidation of the Corporate Debtor due to the absence of a resolution plan, appointing the RP as the Liquidator and directing the commencement of the liquidation process.
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