2021 (9) TMI 1330 - HC - Insolvency and Bankruptcy

Inaction of the 2nd respondent in not withdrawing the request for listing of the property - Vires of prohibitory list under Section 22(A) of the Registration Act, 1908 - violation of Articles 14 and 21 of the Constitution of India - HELD THAT - Having regard to the decision of the Supreme Court in Ghanashyam Mishra and Sons Private Limited 2021 (4) TMI 613 - SUPREME COURT , since in the instant case as the dues of the 2nd respondent are not part of the resolution plan (as can be seen from para F(i) of the Resolution Plan dated 26.06.2019) which was approved by NCLT, the dues of the 2nd respondent automatically stood extinguished - Consequently, there is no authority for the 2nd respondent to continue to insist that the properties of the petitioner cannot be alienated, and the request made by the 2nd respondent on 10.11.2014 and 18.03.2015 requesting the 3rd and 4th respondents not to permit registrations cannot operate and would be non est in law. As regards the sole defence of the Revenue department that the subject land is an agricultural land and the person to register the property is the concerned Tahsildar of Farooqnagar and not any of the respondents, the said plea is without any merit. Along with the reply affidavit, the petitioner has filed several documents showing that the petitioner company was manufacturing iron and steel; that there was a factory located in the said property and Exs. P12 to P16 show the existence of the same. Thus the land ceased to be agricultural land long before the introduction of A.P. Agricultural Land (Conversion for Non-Agricultural Purposes) Act, 2006 - The Revenue department cannot be blind to the existence of the factory in the subject property and if it had failed to amend its revenue records suitably, it cannot put blame on the petitioner for the same. The request of the 2nd respondent for listing of the property of the petitioner situated in Sy. No. 394 of Raikul Village and Sy. Nos. 49/E and 50/E of Annaram Village of Farooqnagar Mandal, Mahaboobnagar in the prohibited list under Section 22(A) of the Registration Act, 1908 is declared as illegal and violative of Articles 14 and 21 of the Constitution of India and also the provisions of the IBC, 2016 and the consequential proceedings dated 10.11.2014 and 18.03.2015 issued by the 2nd respondent are also declared as null and void and of no effect - Petition allowed.

Summary

Issues Involved:
Challenge to inaction of 2nd respondent in withdrawing property listing in prohibitory list under Registration Act, 1908; Validity of proceedings initiated by 2nd respondent; Extinction of debts due to 2nd respondent post approval of resolution plan by NCLT; Binding effect of resolution plan on government authorities; Classification of subject land as agricultural land and registration authority.

Analysis:
1. The petitioner challenged the inaction of the 2nd respondent in not withdrawing the property listing in the prohibitory list under Section 22(A) of the Registration Act, 1908, claiming it to be illegal and violative of constitutional rights. The petitioner sought to declare the proceedings initiated by the 2nd respondent null and void.

2. The petitioner's company faced insolvency proceedings under the Insolvency and Bankruptcy Code, 2016 (IBC), and a resolution plan was approved by the NCLT, transferring management to a new entity. The petitioner argued that post-approval of the resolution plan, all debts due to the 2nd respondent, a part of the State Government, should be extinguished as per Section 238 of the IBC, overriding any other law.

3. The Government Pleader for Commercial Tax representing the 2nd respondent contended that the resolution plan approved by NCLT did not waive statutory obligations, as mentioned in the NCLT order. However, an amendment to Section 31(1) of the IBC made the resolution plan binding on government authorities to whom dues are owed, including statutory dues.

4. The court relied on the Supreme Court's decision in a similar case to conclude that since the 2nd respondent's dues were not part of the resolution plan, they stood extinguished. The court held that the 2nd respondent had no authority to prevent alienation of the petitioner's properties, declaring the actions of the 2nd respondent as illegal and void.

5. Additionally, the court addressed the Revenue department's defense regarding the classification of the subject land as agricultural. The court found the defense meritless, noting evidence provided by the petitioner regarding the industrial nature of the property. The court directed the respondents to consider any alienation documents without objections from the 2nd respondent, if lawful.

6. In conclusion, the court allowed the writ petition, declared the actions of the 2nd respondent as illegal, and directed the respondents to process any alienation requests from the petitioner without hindrance. The court closed pending petitions and awarded no costs in the matter.