2021 (4) TMI 1075 - Tri - Insolvency and Bankruptcy

Appointment of valuer for ascertaining the value of the land of the corporate debtor (CD) being industrial in nature - HELD THAT - On perusal of this memo dated 14.01.2021, it appears that there are two demands in it. One is about charges over the change of land use (CLU) amounting to ₹ 23,96,30,131; another is Property Fire Tax amounting to ₹ 17,82,443. The point taken into consideration is, this memo was issued only after Honourable Supreme Court upheld the order passed by Honourable NCLAT. With regard to second item, in case it is to collect any property tax, it has to proceed against the successful bidder if any tax is payable after liquidation process is closed, because this applicant has not raised its claim before sale process. The Honourable NCLAT also factually observed that the agriculture land falling into high potential zone is not permitted to allow industrial units to come up. It has further held that the land was sold on as is where is basis. Besides this, Honourable NCLAT has held that no final agreement was entered into for conversion. On the observations above, when the Honourable NCLAT dismissed the Appeal by upholding the order of this Bench stating that the land is agriculture in character, then the appellant before NCLAT approached Honourable Supreme Court, there also it was held that the Supreme Court is not inclined to interfere with the order of NCLAT. It is not that Honourable Supreme Court has not examined the issue after MCF filed an affidavit; it indeed examined the affidavit of MCF, and then only made observation of non-interference, therefore the Honourable Supreme Court has set this issue at rest by giving finality to the order of NCLAT. Once any finality is achieved over any issue, the order that has given finality will be binding on all the interested parties. Here whether the land is to be considered as agricultural or industrial in character has already been decided by NCLT, then by National Company Law Appellate Tribunal and finally by Hon'ble Supreme Court, therefore such order cannot be reopened and examined by this Bench. There are no merit in this application seeking conversion and revaluation of the assets already sold to the successful bidder - application dismissed - List all other pending applications for hearing on 06.04.2021.

Summary

Issues:
1. Municipal Corporation seeking directions against the Liquidator for fresh valuation of land.
2. Historical facts and demands made by the Municipal Corporation.
3. Previous judgments by NCLAT and Supreme Court regarding the nature of the land.
4. Liquidator's submission on Reserve Price and Circle Rate.
5. Final decision on the application seeking conversion and revaluation of assets.

Analysis:
1. The Municipal Corporation Faridabad (MCF) filed an application seeking directions against the Liquidator to accept its claim and conduct fresh valuation of the industrial land of the corporate debtor (CD) as per Regulation 35(2) of IBBI Liquidation Regulations 2016. The MCF demanded payment of External Development Charges (EDC) outstanding since 2002, amounting to ?23,96,30,131 along with interest accrued. The Bench noted that MCF did not raise this demand during the Corporate Insolvency Resolution Process (CIRP) or liquidation until 2021, questioning their awareness of the proceedings.

2. The MCF claimed that due to lockdown, they could not raise the demand earlier, and reported a missing CLU case file in January 2021. However, the Bench highlighted that the MCF's demands were made post the Supreme Court's decision upholding NCLAT's order regarding the land's nature. The MCF's memo demanded EDC and property taxes, raising doubts on the timing and intention behind the demands.

3. Previous judgments by NCLAT and the Supreme Court affirmed the land's agricultural nature, rejecting appeals for fresh valuation. The Bench emphasized that once finality is achieved on an issue by higher courts, it binds all parties, preventing reexamination. The MCF's attempts to challenge the nature of the land were consistently dismissed by the judiciary, establishing the land's classification as agricultural.

4. The Liquidator highlighted the promoter's unsuccessful attempts to challenge the Reserve Price set for the land auction, citing discrepancies between the Reserve Price and Circle Rate. Despite these claims, both NCLAT and the Supreme Court upheld the agricultural classification of the land, emphasizing the 'as is where is' basis of the sale.

5. Ultimately, the Bench dismissed the MCF's application for conversion and revaluation of assets, deeming it misconceived after considering the conclusive judgments by higher courts. The decision emphasized the binding nature of final judgments and the lack of merit in revisiting settled issues. The Bench scheduled pending applications for a hearing on a future date.

This detailed analysis encapsulates the key issues, historical context, judicial decisions, and the final outcome of the judgment delivered by the National Company Law Tribunal, Principal Bench, New Delhi.