2019 (11) TMI 683 - AT - Insolvency and Bankruptcy

Restraint on Appellant from taking any action in relation to A Wing premises pursuant to the notices - Section 13(4) of the SARFAESI Act - HELD THAT;- The Resolution Professional / Liquidator in its reply has accepted that both A and B Wing premises of Lakshmi Towers do not belong to the Corporate Debtor . However, it is stated that the office of the Corporate Debtor is running from the said premises and it was the employees of the Corporate Debtor who have been evicted persons under Section 13(4) of the SARFAESI Act. Although A and B Wings premises of Lakshmi Towers do not belong to the Corporate Debtor , in view of Section 14(1) (d), the Corporate Debtor cannot be ejected or disturbed from the premises, in question, during the Moratorium - thus the Adjudicating Authority has rightly directed the Appellant to hand over the possession of B Wing premises of Lakshmi Towers and rightly prohibited the Appellant from evicting the Corporate Debtor from A Wing premises of Lakshmi Towers. Who is the owner of A and B Wings premises of Lakshmi Towers? - whether the Appellant has any right over the said property? - HELD THAT - Such questions are not required to be determined in the proceeding under the I B Code - If the Corporate Debtor is saved during the liquidation proceeding pursuant to Section 230 of the Companies Act, 2013 or if it is sold to a third party along with the employees then, in such case, one may move before the Competent Court of law for appropriate decision. Appeal disposed off.

Summary

Issues:
Challenge to order under Insolvency and Bankruptcy Code, 2016 regarding possession of premises and eviction during moratorium.

Analysis:
The Appellant, a 'Financial Creditor' of a related entity of a 'Corporate Debtor,' challenged an order passed by the Adjudicating Authority under the Insolvency and Bankruptcy Code, 2016. The order directed the Appellant to explain why action should not be taken against it concerning the possession of premises. The 'Resolution Professional' sought directions against the Appellant to return possession of certain premises and restrain the Appellant from taking further actions related to other premises. The Adjudicating Authority allowed the application and directed the Appellant to return possession of specific premises and refrain from further actions as per the notices issued under the SARFAESI Act.

The Appellant argued that the premises in question did not belong to the 'Corporate Debtor' and, being third-party property, the moratorium under the I&B Code should not apply. The 'Resolution Professional' acknowledged that the premises did not belong to the 'Corporate Debtor' but stated that the office of the 'Corporate Debtor' operated from there, and employees were evicted by the Appellant. The Liquidator contended that evicting employees obstructed the 'Corporate Debtor' from functioning as a going concern.

Despite the premises not belonging to the 'Corporate Debtor,' the Adjudicating Authority rightly directed the Appellant to return possession of specific premises and prohibited eviction during the moratorium. Ownership disputes over the premises were deemed unnecessary for the I&B Code proceedings. Any resolution regarding the ownership or rights over the premises could be pursued in the appropriate legal forum, especially if the 'Corporate Debtor' is saved during liquidation or sold to a third party. It was clarified that the Liquidator cannot sell the assets of the premises if action is taken under Section 53 of the I&B Code.

Considering the legal position, the Appellant was not required to provide further explanations, and the Adjudicating Authority was instructed to close the matter against the Appellant. The appeal was disposed of without costs.