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2024 (9) TMI 1093 - AT - IBCCancellation of the lease deed by NOIDA - claim of right within meaning of Section 116 of Transfer of Property Act, 1882 as a tenant holding over - exclusion of Plot No. SC-01/ D1, Sector 79 Noida from Resolution Plan submitted in the CIRP of the Corporate Debtor - HELD THAT - It is clear that at no point of time, neither the Corporate Debtor has paid any rent/instalments after the cancellation of the Plot nor any such amount was accepted by the NOIDA. The other Clause under which case is sought to be covered i.e., or otherwise assent to this continuing in possession. There is nothing on the record to prove that NOIDA at any point of time assented to the continuing of the Corporate Debtor in possession . The right of the Corporate Debtor having come to an end after cancellation of the Plot, it cannot claim any rights nor it can claim itself to be a tenant holding over. Reference made to the Judgment of the Hon ble Supreme Court in the matter of Nand Ram (Dead) through Legal Representatives Vs. Jagdish Prasad through Legal Representative 2020 (3) TMI 1247 - SUPREME COURT , in which case Hon ble Supreme Court came to consider the submissions made on the strength of Section 116 of the Transfer of Property Act, 1882. The Hon ble Supreme Court in the said Judgment has held that after expiry of the lease status of Lessee will be that of tenant of sufferance and not of tenant holding over. In the Judgment of the Hon ble Supreme Court, it was reiterated that it is only ascent of the landlord to the continuance of possession after determination of the tenancy will create new tenancy. There is nothing on record to indicate that NOIDA at any point of time, expressly or impliedly assented to the continuance of Corporate Debtor in possession - no right can be claimed by the Appellant on the principal as contained in Section 116 of the Transfer of Property Act, 1882. In the present case, the mere fact that after cancellation of the lease, Corporate Debtor has made a request for restoration of lease, shall has no effect on the termination of the lease which had already been accomplished by letter dated 13.08.2015. The Corporate Debtor cannot claim any right within meaning of Section 116 of Transfer of Property Act, 1882 as a tenant holding over. It is thus concluded that Plot in question i.e., SC 01/D 1, Sector 79, NOIDA is not part of the assets of the Corporate Debtor and Adjudicating Authority did not commit any error in allowing the Application, I.A. No. 1592/ND/2019 filed by the NOIDA for excluding the Plot in question from the CIRP of the Corporate Debtor - the Order of the Adjudicating Authority, excluding the Plot in question from the CIRP of the Corporate Debtor, upheld. Role of NOIDA with respect to the Project in question - HELD THAT - As per Section 6(1) the object of the authority is to secure the Plan development of the Industrial Development Area. NOIDA has acquired the land for the above purpose and leased out to various entities for planned development - Hon ble Supreme Court had occasion to consider the role of Development Authorities, including NOIDA in respect to the Real Estate Projects with regard to protection of interest of the homebuyers. In Bikram Chatterjee Ors. Vs. Union of India Ors. 2019 (7) TMI 1233 - SUPREME COURT , Hon ble Supreme Court has made several important observations and guidelines with respect to Real Estate Project and duties of the public authorities. When the NOIDA is obliged to monitor the implementation of the Project, it has to take proactive steps with regard to implementation of the Project. Even after cancellation of the Plot on 13.08.2015, no steps have been taken by the NOIDA. The CIRP against the Corporate Debtor commenced only on 09.03.2018, NOIDA had approved the layout and map, it is obliged by the statutory provisions to keep a vigil on the construction done by the Lessee, which had to be in accordance with the Plan and directions issued by NOIDA Authority from time to time. Homebuyers are unsecured Financial Creditor of the Corporate Debtor who do not have any charge on the land. It is only the NOIDA Authority who has charge over assets under Section 13-A of the UP Industrial Area Development Act 1976. Under Section 14, which has been noticed by the Hon ble Supreme Court in the Bikram Chatterjee Ors. NOIDA Authority can cancel the Lease on breach committed by Lessee and resume the site on building and further forfeit the whole on any part of the money which paid in respect thereof. Order dated 11.01.2024 passed by the Adjudicating Authority, allowing I.A. No. 1592/ND/2019 for excluding the Plot SC-01/D-1, Sector 79, NOIDA is upheld - application filed by the RP under Section 30(6) for approval of the Resolution Plan is rejected. Appeal disposed off.
Issues Involved:
1. Validity of the cancellation of the lease deed by NOIDA. 2. Whether the plot in question is an asset of the Corporate Debtor. 3. Applicability of Section 116 of the Transfer of Property Act, 1882. 4. Conduct and role of NOIDA and the Resolution Professional. 5. Impact of the resolution plan and its approval by the CoC. 6. Protection of the interests of homebuyers. Issue-Wise Detailed Analysis: 1. Validity of the Cancellation of the Lease Deed by NOIDA: The lease deed for Plot No. SC-01/D1, Sector 79 Noida was executed on 24.10.2011 and corrected on 19.10.2012. Due to non-payment of lease rent and interest, NOIDA cancelled the lease deed on 13.08.2015. The Corporate Debtor's application for restoration of the plot was rejected by NOIDA on 10.11.2020. The Adjudicating Authority held that the plot is not an asset of the Corporate Debtor as the lease had been cancelled before the commencement of the CIRP on 09.03.2018. 2. Whether the Plot in Question is an Asset of the Corporate Debtor: The Adjudicating Authority observed that the plot in question is not an asset of the Corporate Debtor since the lease was cancelled on 13.08.2015, well before the CIRP commencement. The plot cannot be part of the Resolution Plan of the Corporate Debtor. The Tribunal affirmed these findings, stating that the Corporate Debtor lost its possessory rights more than two and a half years before the CIRP initiation. 3. Applicability of Section 116 of the Transfer of Property Act, 1882: The Corporate Debtor argued that it should be considered a tenant holding over under Section 116 of the Transfer of Property Act, 1882. However, the Tribunal found no evidence that NOIDA accepted rent or assented to the Corporate Debtor's continued possession after the lease cancellation. The Tribunal concluded that the Corporate Debtor could not claim any rights as a tenant holding over. 4. Conduct and Role of NOIDA and the Resolution Professional: The Tribunal noted that NOIDA failed to take prompt action after the lease cancellation and did not inform the homebuyers about the cancellation. The Resolution Professional was criticized for including the cancelled plot in the CIRP and the Resolution Plan, despite knowing about the cancellation. The Tribunal upheld the Adjudicating Authority's observations on the Resolution Professional's conduct and emphasized the need for NOIDA to take proactive steps to protect the interests of homebuyers. 5. Impact of the Resolution Plan and its Approval by the CoC: The Resolution Plan, approved by the CoC on 04.12.2019, included the plot in question, which was later found to be invalid as the plot was not an asset of the Corporate Debtor. Consequently, the application for approval of the Resolution Plan was dismissed. The Tribunal directed the Corporate Debtor to be liquidated under Section 33(1) of the IBC. 6. Protection of the Interests of Homebuyers: The Tribunal acknowledged the plight of the homebuyers who had invested significant amounts in the project. It directed NOIDA to take steps to protect the homebuyers' interests, including taking possession of the assets and ensuring the project's completion, subject to the orders of the High Court in the pending writ petition. Conclusion: The Tribunal upheld the Adjudicating Authority's order excluding the plot from the CIRP of the Corporate Debtor and directed the liquidation of the Corporate Debtor. NOIDA was instructed to take steps to protect the homebuyers' interests and complete the project, subject to the High Court's orders in the pending writ petition.
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