2025 (3) TMI 910 - AT - IBC

Jurisdiction of National Company Law Appellate Tribunal (NCLAT) to adjudicate the dispute regarding the handover of maintenance from YG Estates to the Supernova Apartment Owners Association under the Insolvency and Bankruptcy Code (IBC) 2016 - validity and enforceability of the registered association of apartment owners under the Uttar Pradesh Apartment (Promotion of Construction Ownership and Maintenance) Act 2010 - HELD THAT - The present is a case where CIRP has been commenced against the corporate debtor by order of the NCLT dated 12.06.2024. It is an admitted position that project in question i.e. Supernova project is the project of the corporate debtor. CIRP having been commenced the project is clearly in the purview of the CIRP and assets of the corporate debtor. In the interim order which we have passed on 03.07.2024 we have directed however the ongoing project maybe continued under the supervision of the IRP and IRP shall be extended all cooperation by the corporate debtor its officers and employees in carrying out the construction . The YG Estates is an agency appointed by corporate debtor for carrying out the maintenance. Entitlement of YG Estates to carry out the maintenance flow from Agreement executed by corporate debtor in its favour which Agreement was prior to commencement of the insolvency. After insolvency commencement date the management of the corporate debtor stands suspended and it is the IRP who is entitled to carry on and manage the operation of the corporate director. When the Supernova project (East and West) are part of the assets of the corporate debtor for which maintenance agencies is the YG Estates it does not appeal to the reason that management of said project including the its maintenance is beyond the purview of the IRP - Against the corporate debtor insolvency resolution process has commenced and the IRP being in charge of all affairs of the corporate debtor including its assets including Supernova projects IRP has jurisdiction to look into the maintenance. It is on the record that IRP after receiving complaints from the association has already issued show cause notice to the YG Estates and IRP has also clearly supported the association insofar as handing over the maintenance by the association is concerned. The provisions of Uttar Pradesh Apartment (Promotion of Construction Ownership and Maintenance) Act 2010 which contains the statutory obligation on the promoter and apartment owners to form an association. Section 14(2) clearly provides that it shall be the joint responsibility of the promoter to form an association and it is the promoter to get the association registered - the association having been registered and the registration of association still being valid it is not open for the YG Estates to contend that registration of association is not in accordance with the law. The issue with regard to non-fulfilment of the necessary conditions for registration of association cannot be allowed to be raised in this proceeding nor can it be examined in these applications. When the association has been registered it has to be presumed that registration was made after compliance of all necessary requirement. YG Estates has no right to resist the handing over of maintenance to the association. Association having been formed and its registration being current it has all rights and obligations as contained in UP Act 2010. YG Estates is nothing but an agency appointed by corporate debtor cannot resist the handover of the maintenance to the association. Conclusion - i) Tribunal has jurisdiction u/s 60(5)(c) of the IBC to adjudicate issues related to the maintenance of the corporate debtor s assets during the CIRP. ii) A registered association under the Uttar Pradesh Apartment Act 2010 has the right to take over maintenance from a maintenance agency appointed by the corporate debtor. iii) YG Estates is directed to hand over maintenance to the association within seven days affirming the association s statutory rights. Appeal disposed off.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment include:

• Whether the National Company Law Appellate Tribunal (NCLAT) has jurisdiction to adjudicate the dispute regarding the handover of maintenance from YG Estates to the Supernova Apartment Owners Association under the Insolvency and Bankruptcy Code (IBC), 2016.
• The validity and enforceability of the registered association of apartment owners under the Uttar Pradesh Apartment (Promotion of Construction, Ownership and Maintenance) Act, 2010, and its right to take over maintenance from YG Estates.
• The obligations of YG Estates under the Maintenance Agreement with the corporate debtor and whether it can resist the handover of maintenance to the association.
• Resolution of outstanding financial liabilities between YG Estates and the association/homebuyers.

2. ISSUE-WISE DETAILED ANALYSIS

Jurisdiction of NCLAT under IBC

• Relevant legal framework and precedents: The Tribunal examined the scope of Section 60(5)(c) of the IBC, which provides NCLT/NCLAT with broad jurisdiction to adjudicate questions of law or fact arising out of or in relation to the insolvency resolution process.
• Court's interpretation and reasoning: The Tribunal held that the maintenance of the Supernova project, being an asset of the corporate debtor, falls within the purview of the CIRP and thus under the jurisdiction of the IRP and the Tribunal.
• Application of law to facts: The Tribunal rejected arguments that the issue was purely contractual and outside the IBC's scope, emphasizing that the maintenance of the project impacts the corporate debtor's assets and insolvency process.

Validity and Rights of the Association

• Relevant legal framework: The Uttar Pradesh Apartment (Promotion of Construction, Ownership and Maintenance) Act, 2010, particularly Section 14, mandates the formation of an association for apartment owners, which assumes management responsibilities upon registration.
• Court's interpretation and reasoning: The Tribunal recognized the association as validly registered under the 2010 Act and entitled to take over maintenance, dismissing objections regarding the percentage of units handed over.
• Conclusions: The Tribunal concluded that the association's registration and rights are valid, and YG Estates cannot refuse to hand over maintenance.

Obligations of YG Estates and Handover of Maintenance

• Relevant legal framework: The Maintenance Agreement between YG Estates and the corporate debtor, and the statutory obligations under the 2010 Act.
• Court's interpretation and reasoning: The Tribunal found that YG Estates, as an agency appointed by the corporate debtor, must comply with statutory obligations to transfer maintenance to the registered association.
• Application of law to facts: The Tribunal emphasized that the agreement and statutory provisions mandate the handover of maintenance.
• Conclusions: YG Estates was directed to hand over maintenance to the association within seven days.

Resolution of Financial Liabilities

• Key evidence and findings: Disputes over outstanding dues and advance payments between YG Estates and homebuyers were noted.
• Court's interpretation and reasoning: The Tribunal declined to resolve these financial disputes within the current proceedings, directing parties to present claims to the IRP for resolution.
• Conclusions: The Tribunal granted liberty to YG Estates and the association to approach the IRP for settlement of accounts.

3. SIGNIFICANT HOLDINGS

• The Tribunal held that it has jurisdiction under Section 60(5)(c) of the IBC to adjudicate issues related to the maintenance of the corporate debtor's assets during the CIRP.
• The Tribunal established that a registered association under the Uttar Pradesh Apartment Act, 2010, has the right to take over maintenance from a maintenance agency appointed by the corporate debtor.
• The Tribunal directed YG Estates to hand over maintenance to the association within seven days, affirming the association's statutory rights.
• The Tribunal allowed financial disputes to be addressed by the IRP, emphasizing the IRP's role in managing the corporate debtor's affairs during insolvency.