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2021 (4) TMI 352 - AT - Insolvency and BankruptcyWrongful and erroneous curtailment of the rights of the Appellant in respect of the property - seeking physical possession post CIRP commencement - HELD THAT - There are certain facts which are very clear from the deliberation of submissions including the pleadings by the parties that M/s. Energy Properties Pvt ltd is the owner of the property and the Corporate Debtor (in CIRP) is a Developer of the Property in terms of the Development Agreement dated 16.06.2008 and they will be governed by inter - se agreements. Here the Adjudicating Authority has not gone into the issue of ownership of the property, he has restricted its role as provided in Section 14 of the Code vide Section 14(1)(d) including its explanations. It is also undisputed fact that the Corporate Debtor (In CIRP) is holding the development right and the Development Agreement dated 16.06.2008 has not been terminated before the commencement of CIRP. In all such situations Section 14 of the Code is applicable till it reaches the stage of approval of Resolution Plan or Liquidation. However, the RP is to appropriately disclose the status of the Property in the Information Memorandum and other documents as required in the IBBI (Insolvency Resolution for Corporate Perrons) Regulations, 2016. M/s. Victory Iron works limited - HELD THAT - They have been provided space of 10,000 sq ft approximately on the said land by virtue of leave and license agreement dated 11.08.2011 and it is their privilege to use the land in terms of same leave and license agreement and this is also not disputed by Corporate Debtor in Resolution through RP. There is no infirmity in the impugned order - Appeal dismissed - decided against appellant.
Issues Involved:
1. Validity of the Development Agreement and possession rights. 2. Applicability of Section 14 of the Insolvency and Bankruptcy Code, 2016. 3. Jurisdiction of the Adjudicating Authority. 4. Rights of the licensee (Victory Iron Works Ltd). 5. Allegations of malafide intentions and collusion. Issue-wise Detailed Analysis: 1. Validity of the Development Agreement and possession rights: The appeals were filed by M/s. Victory Iron Works Limited and M/s. Energy Properties Limited against the impugned order dated 12.02.2020 by the National Company Law Tribunal (NCLT), Kolkata Bench. The Development Agreement dated 16.06.2008 between Energy Properties Pvt. Ltd and Avani Towers Pvt. Ltd (Corporate Debtor) was central to the dispute. The agreement granted Avani Towers the right to develop the property, which remained valid and enforceable until the development and sale were completed. The Memorandum of Understanding (MoU) dated 24.01.2008 also outlined terms for the development and possession of the property. 2. Applicability of Section 14 of the Insolvency and Bankruptcy Code, 2016: The Adjudicating Authority ruled that the Corporate Debtor remained in possession of the properties for development purposes until the commencement of the Corporate Insolvency Resolution Process (CIRP). Upon admission into CIRP, the Resolution Professional (RP) took possession by virtue of statutory provisions under the I&B Code, 2016. The respondents could not disturb or obstruct the RP's possession. The judgment clarified that the moratorium under Section 14 of the Code applied, preventing the respondents from claiming possession unless the MoU was canceled or revoked, which had not occurred before the CIRP commencement. 3. Jurisdiction of the Adjudicating Authority: The judgment referenced the Supreme Court's decision in Embassy Property Development Pvt. Ltd. Vs. State of Karnataka, stating it was not applicable to this case. The NCLT held jurisdiction to decide on the possession and development rights of the Corporate Debtor, as these were considered intangible assets crucial for the CIRP. The authority to decide civil rights of the parties was limited to the context of the I&B Code. 4. Rights of the licensee (Victory Iron Works Ltd): Victory Iron Works Ltd had a Leave and License Agreement dated 11.08.2011, allowing them to use 10,000 sq. ft. of the property. The NCLT's order dated 09.01.2020 directed all parties to maintain the status quo regarding the materials on the property. The term of the license agreement had expired, and the original owner, Energy Properties Pvt. Ltd, was to decide on the further course of action. The judgment clarified that the RP and Corporate Debtor had no say over this piece of land, and Victory Iron Works Ltd could continue its business activities until further decisions by the property owner. 5. Allegations of malafide intentions and collusion: The appellants alleged that Sesa International and Avani Group promoters had malafide intentions to take control of the property through the CIRP. The judgment referenced a previous High Court decision highlighting the collusion between Sesa International and Avani Group. The RP's application for exclusive possession was seen as part of this alleged scheme. However, the NCLT concluded that the RP's actions were necessary to protect the Corporate Debtor's development rights and ensure a positive outcome for the CIRP. Conclusion: The appeals were dismissed, and the impugned order dated 12.02.2020 was upheld. The NCLT's decision to allow the RP to take possession of the property for CIRP purposes was deemed appropriate. The rights of Victory Iron Works Ltd to use the specified land were preserved until further decisions by the original property owner. The judgment emphasized the importance of adhering to the provisions of the I&B Code and maintaining the status quo during the CIRP.
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