2022 (8) TMI 1091 - HC - Insolvency and Bankruptcy

Avoidance of rent - Creation of third party rights Rohtas Projects Limited without complying with the terms and conditions agreed upon vide agreement - the issue of rent is pending before the NCLT in proceedings under Section 66 - HELD THAT - As of now the proceedings are pending under Section 66 of the IBC 2016 in respect to the rent of the premises in question before the NCLT as has already been noticed while mentioning the submissions of the rival parties hereinabove and prima facie the dispute does appear to be of a civil nature. Whether the proceedings are maintainable before the NCLT or not is an issue to be raised by the private opposite parties before NCLT. The dispute is essentially regarding rent for the period 2018 and thereafter, which is precisely the issue pending before the NCLT. It is a moot point as to how far element of criminality is involved in the matter if the dispute can be raised before other forums as per law and has been raised as claimed by the petitioner. Therefore, while investigation shall go on and the petitioner shall appear before the investigating officer to get his statement recorded, it is opined that the petitioner shall not be arrested in Case Crime No.0514 of 2022, under Sections 352, 406, 420, 447, 506 I.P.C., Police Station-Gomti Nagar, Lucknow, subject to his co-operation in the investigation - The investigating officer shall also take into consideration as to whether it is primarily a civil dispute and whether any criminal offence is made out against the petitioner in this regard or not. Let pleadings be exchanged between the parties within eight weeks - List immediately thereafter.

Issues:
Quashing of FIR for offenses under IPC, Possession of premises, Non-payment of rent, Proceedings under Insolvency and Bankruptcy Code, Civil dispute vs. criminal offense, Maintainability of application under Section 66 of IBC, Rights of private opposite parties, Arbitration proceedings, Arrest in the criminal case.

Quashing of FIR for offenses under IPC:
The petitioner sought to quash the FIR dated 03.08.2022, alleging offenses under Sections 352, 406, 420, 477, 506 IPC registered at Police Station-Gomti Nagar, Lucknow. The petitioner's counsel argued that the dispute primarily involved civil matters related to possession and rent, with the FIR being a coercive tactic to pressurize the petitioner. The High Court opined that the dispute appeared to be of a civil nature, and the criminality aspect needed further examination. The petitioner was directed to cooperate with the investigation, and the investigating officer was instructed to assess if any criminal offense was established.

Possession of premises:
The petitioner had an agreement with a company regarding the premises in question, and the petitioner had always been in possession of the said premises. The counsel for the petitioner contended that the private opposite parties had no legal right to the premises as the agreements executed were in violation of the terms agreed upon. The private opposite parties claimed rights over the premises based on a sale deed executed by the company. The High Court noted the ongoing dispute regarding possession and rent, which was subject to proceedings before the NCLT.

Non-payment of rent:
The issue of non-payment of rent was intertwined with the possession dispute. The petitioner had initiated proceedings under the Insolvency and Bankruptcy Code, 2016, which concluded with subsequent applications seeking directions on rent payments. The private opposite parties claimed entitlement to rent based on a sale deed, while the petitioner alleged violations of the original agreement terms. The High Court observed that the rent dispute was central to the ongoing proceedings before the NCLT and required further examination.

Proceedings under Insolvency and Bankruptcy Code:
The petitioner's actions under the Insolvency and Bankruptcy Code, 2016, were highlighted as relevant to the rent dispute. The Resolution Professional had filed applications seeking directions on rent payments, with contentions raised by both parties regarding the validity of the sale deeds and rights over the premises. The High Court acknowledged the pending proceedings under the IBC and emphasized the need to address the rent issue through appropriate legal forums.

Civil dispute vs. criminal offense:
The core debate revolved around whether the dispute was primarily civil in nature or involved criminal elements justifying the FIR. The petitioner argued that the FIR was a coercive measure related to a civil rent dispute pending before the NCLT. The High Court opined that the matter appeared to be civil, and the criminal aspect required further scrutiny. The court directed the petitioner to cooperate with the investigation while assessing the potential criminality of the case.

Maintainability of application under Section 66 of IBC:
The maintainability of the application under Section 66 of the Insolvency and Bankruptcy Code was contested. The private opposite parties argued that the main proceedings under the Code had concluded, rendering the Section 66 application irrelevant. However, the petitioner's counsel presented records indicating ongoing proceedings and contentions before the NCLT. The High Court noted the pending nature of the proceedings and emphasized that the NCLT was the appropriate forum to raise issues of maintainability.

Rights of private opposite parties:
The private opposite parties claimed legal rights over the premises based on a sale deed executed by the company. The petitioner contended that the sale deed violated the original agreement terms and was subject to challenge before the NCLT. The High Court acknowledged the conflicting claims and highlighted the need for a comprehensive examination of the rights of the private opposite parties in the ongoing legal proceedings.

Arbitration proceedings:
Arbitration proceedings initiated by the private opposite parties were mentioned, with subsequent discontinuation due to the NCLT proceedings. The validity of the arbitrator's decision to halt proceedings was disputed, with the petitioner's counsel asserting the legality of the discontinuation. The High Court noted the arbitration history as part of the broader legal context surrounding the possession and rent disputes.

Arrest in the criminal case:
The High Court directed the petitioner to cooperate with the investigation without facing arrest in the criminal case, subject to the petitioner's cooperation. The investigating officer was instructed to evaluate the civil nature of the dispute and the possibility of recording the petitioner's statement through video conferencing due to the petitioner's overseas location. The court emphasized the need for further investigation while maintaining the petitioner's liberty pending additional legal proceedings.

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