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2024 (10) TMI 1551 - AT - IBCHanding over of physical possession of the land - Resolution Professional could not place on record the evidence to show that physical possession of the land in question was handed over to him - sufficient materials on record to come to the conclusion that the Resolution Professional/ Corporate Debtor is in possession of area admeasuring 10.81 acres i.e. land in question - possession of subject land in which development rights was claimed by the corporate debtor - adjudication by a Civil Court - exclusion from the CIRP of the Corporate Debtor as prayed by owners - whether the Resolution Professional is in possession or actual possession of the land could have been incidence? HELD THAT - The Development Agreement as amended contemplated in the group housing project 50% shares to the owners and 50% shares to the developer. 50% shares which came to the developer share was 10.81 acres on which project Canary Greens was constructed by the corporate debtor which project was taken possession after initiation of the CIRP by the IRP and thereafter by the Resolution Professional. The Sole Arbitrator in its proceedings dated 12.10.2010 has already noted that the possession has been given to the developer of the said land. Corporate Debtor having commenced the project Canary Greens on the subject land, the possession of the corporate debtor of the project could not have been doubted. The definition under Section 3(27) of the Property is an inclusive definition which obviously includes the Development Rights which was obtained by the Developers from the Owners by Development Agreement dated 03.03.2007 were subsequently assigned to the Corporate Debtor by an Agreement dated 30.07.2010. The Hon ble Supreme Court has clearly laid down in the case of Victory Iron Works Ltd. Vs. Jitendra Lohia Anr. 2023 (3) TMI 699 - SUPREME COURT that Development Rights are Rights which can be taken control by the RP. Hon ble Supreme Court in the above case had occasion to consider provisions of Sections 18, 25 3(27) of the IBC. Hon ble Supreme Court has also examined the jurisdiction of NCLT and NCLAT in cases to grant Orders protecting possession of the Corporate Debtor at instance of RP. It was held by the Hon ble Supreme Court that Development Rights making in favour of the Corporate Debtor constitute Property. The materials on record fully prove that on the land 10.81 acres, the Project Canary Green was constructed which Project was the Project of the Corporate Debtor. Corporate Debtor having Development Right in subject land RP was entitled to have possession and take possession. Thus, the observations of the Adjudicating Authority that the RP was not in possession of the land in question is erroneous and without considering the relevant materials on the record which fully proves that it was Corporate Debtor who was in possession of the Project land and the Project. The observation of the Adjudicating Authority in Order dated 05.12.2023 that the RP could not place on record the evidence to show that physical possession of land in question was handed over to him is unsustainable - There are sufficient materials on record to come to conclusion that RP/Corporate Debtor is in possession of area admeasuring 10.81 acres, i.e., land in question - Adjudicating Authority was competent to decide the question of possession of subject land in which Development Rights was claimed by the Corporate Debtor and subject question was not required to be relegated to be adjudicated by the Civil Court - The subject land i.e.,10.81 acres was not required to be excluded from the CIRP of the Corporate Debtor as prayed by the Owners. Application allowed.
Issues Involved:
1. Whether the observations of the Adjudicating Authority that the Resolution Professional could not place on record evidence of possession are sustainable. 2. Whether there are sufficient materials to conclude that the Resolution Professional/Corporate Debtor is in possession of the land in question. 3. Whether the Adjudicating Authority was competent to decide the question of possession of the subject land. 4. Whether the subject land was required to be excluded from the CIRP of the Corporate Debtor. 5. Reliefs, if any, to which the Appellants are entitled. Issue-wise Detailed Analysis: 1. Observations of the Adjudicating Authority on Possession Evidence: The Adjudicating Authority observed that the Resolution Professional (RP) could not provide evidence showing physical possession of the land. However, the Tribunal found this observation unsustainable, as there was ample evidence, including interim orders and affidavits, indicating that the RP had possession of the land. The RP had been put back in possession following an interim order dated 24.08.2020, which directed the restoration of possession to the RP. 2. Evidence of Possession by Resolution Professional: The Tribunal concluded that there were sufficient materials to prove that the RP/Corporate Debtor was in possession of the land in question. The RP had provided detailed affidavits and documents showing that possession was taken over from the IRP and maintained, except for a brief period when the owners dispossessed them, which was later rectified by the interim order. The project Canary Greens was constructed on the land, further indicating possession by the Corporate Debtor. 3. Competence of Adjudicating Authority to Decide Possession: The Tribunal held that the Adjudicating Authority was competent to decide the issue of possession, as it pertained to the development rights of the Corporate Debtor, which are considered property under Section 3(27) of the IBC. The Tribunal noted that development rights are assets of the Corporate Debtor and fall within the jurisdiction of the Adjudicating Authority to protect under the IBC proceedings. 4. Exclusion of Land from CIRP: The Tribunal ruled that the subject land was not required to be excluded from the CIRP of the Corporate Debtor. The development rights over the land were part of the Corporate Debtor's assets, and the owners' request for exclusion was not justified. The rights were transferred to the Corporate Debtor through valid agreements and were integral to the resolution plan approved by the CoC. 5. Reliefs to Appellants: The Tribunal allowed the appeals filed by the RP, setting aside the orders of the Adjudicating Authority that had disposed of the applications based on erroneous findings. The applications filed by the owners seeking exclusion of the land were rejected. The Tribunal emphasized the need to protect the development rights of the Corporate Debtor as part of the CIRP process. Conclusion: The Tribunal's decision underscores the importance of protecting the development rights of a Corporate Debtor in insolvency proceedings, recognizing them as assets under the IBC. The Tribunal's findings ensure that the CIRP process is not undermined by disputes over possession that are within the purview of the insolvency framework.
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