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2022 (12) TMI 662 - AT - Insolvency and BankruptcyPossession of the property - Claim by third-party - Right of the corporate debtor over the leasehold property - RIICO has taken a stand that the Appellant has no locus standi to file application because RIICO has never entered into an agreement with the Appellant and that the action taken by RIICO was against the Corporate Debtor for the breach of terms and conditions of the lease deed and if the Appellant was aggrieved of loss caused then it may register its claim with the RP but cannot claim its damages from a third party i.e. from RIICO for the breach of contract by the Corporate Debtor HELD THAT - Although, Counsel for the Appellant has vehemently reiterated that the stand taken by the Appellant before the Adjudicating Authority but the fact remains that on 01.12.2015, after the cancellation of the lease deed, the Corporate Debtor had no right or interest in the demised premises much less for the purpose of creating a third-party interest by entering into an agreement of management with the Appellant on 01.04.2017. As a matter of fact, the Appellant is to sink or swim with the Corporate Debtor.
Issues:
1. Dismissal of application under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 against Rajasthan State Industrial and Investment Corporation (RIICO). 2. Allegation of repossession by the Appellant and dispute with RIICO. 3. Locus standi of the Appellant in filing the application. 4. Rights of the Corporate Debtor and actions taken by RIICO post-cancellation of lease deed. 5. Interpretation of Section 14(1)(d) of the Insolvency and Bankruptcy Code, 2016. Analysis: 1. The appeal was filed against the order dismissing an application under Section 60(5) of the Insolvency and Bankruptcy Code, 2016, seeking reliefs against RIICO. The dispute originated from the cancellation of a lease deed by RIICO, leading to subsequent legal actions and possession of the property by secured creditors. The Adjudicating Authority's decision to dismiss the application was upheld by the National Company Law Appellate Tribunal (NCLAT). 2. The Appellant claimed repossession of the property based on a Management Contract Agreement/Lease Agreement with the Corporate Debtor. However, RIICO argued that the Appellant lacked locus standi as no direct agreement existed between them. The NCLAT held that the Appellant's agreement with the Corporate Debtor post-cancellation of the lease did not grant rights to seek repossession from RIICO, emphasizing the lawful possession by RIICO after termination of the lease. 3. The issue of locus standi was crucial in determining the Appellant's legal standing to file the application. RIICO contended that the Appellant's grievances should be directed towards the Corporate Debtor, not RIICO. The NCLAT's decision highlighted that the Appellant's investment and agreement with the Corporate Debtor did not confer rights to claim damages from RIICO, given the circumstances of the lease termination. 4. The judgment emphasized the rights of the Corporate Debtor and the actions taken by RIICO following the cancellation of the lease deed. It clarified that the Appellant's association with the Corporate Debtor did not entitle them to challenge RIICO's possession of the property. The NCLAT underscored the need for proper due diligence before entering agreements post-lease termination. 5. Regarding the interpretation of Section 14(1)(d) of the Insolvency and Bankruptcy Code, 2016, the NCLAT concluded that since the Corporate Debtor was not granted protection under this section, the Appellant's appeal lacked merit. The judgment reiterated the interconnected nature of the Appellant's interests with those of the Corporate Debtor, leading to the dismissal of the appeal. In summary, the NCLAT upheld the Adjudicating Authority's decision, emphasizing the lack of legal standing for the Appellant to seek repossession from RIICO post-cancellation of the lease deed. The judgment highlighted the importance of due diligence in post-lease agreements and clarified the Appellant's association with the Corporate Debtor in determining their rights under the Insolvency and Bankruptcy Code, 2016.
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