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2020 (8) TMI 397 - AT - Insolvency and BankruptcyValuation - Liquidation of Corporate Debtor - allegation that the Reserve price of ₹ 52.83 Crores has been kept at a dismal low - valuation is challenged on the ground that valuers have proceeded on the basis of wrong assumption that the land in question is Agricultural in nature, whereas, it is an industrial land - Whether the valuation and consequential Sale Notice is in accordance with the provisions of Regulation 35(3) (4) of the IBBI (Liquidation Process) Regulation, 2016? HELD THAT - Conversion of land from agriculture to any other use is governed by the Punjab Scheduled Road and Controlled Areas Restriction of Unregulated Development Rules, 1965. Rules 26 (D) states that there is condition to be fulfilled prior to conversion which includes, payment of development charges for External Development Works. Rule 26 (E) states that only upon the fulfillment of condition of Rule 26(D) permission will be granted for change of land use. Company under Liquidation received notice from the MCF dated 16.12.2002 in which it is mentioned that the permission for change of land use for setting up an industrial unit for land in question is allowed, in accordance with the condition of CLU II Agreement executed on 24.10.1978 as per requirement of Rule 26(D) of Controlled Area Rule, 1965. In the notice there was a demand of ₹ 1,21,80,505/- for the amount of External Development Charges. The Company under Liquidation was required to pay this amount within 30 days. Admittedly, no such amount of EDC has been paid to the MCF. Therefore, as per Rules land use was not changed from agriculture to industrial - the land in question is Agricultural land though in past, it was used as industrial land however, as per Rules use of land was not changed. It cannot be said that valuers have determined the valuation of the land in question on the basis that use of land in question is Agricultural. It is also argued that as per the Circle Rate of the agriculture land the valuation of the land in question is amounting to ₹ 99 Crores, no such evidence is placed on record. However, while deciding earlier Application of the Appellant the Ld. Adjudicating Authority directed the Appellant to produce evidence in this regard before the Liquidator but, the Appellant was not able to produce any evidence and produced any bidder with better price. In the Sale Notice nothing is mentioned which prejudices the prudent bidder for bidding. It is pertinent to note that the Ld. Adjudicating Authority while deciding the objections granted an opportunity to the Appellant, to produce any person who is prepared to purchase the land in question at price higher than the Reserve price. He may also file his bid before the Liquidator before the closing date. In terms and conditions of the direction the Appellant was not able to produce any bidder with better price. The land in question was earlier put to e-auction during Liquidation in March, 2019 with Reserve price of ₹ 52.83 Crores and no bid was received even at a Reserve price and the Applicant had failed to identify any bidder/buyer whatsoever, inspite of opportunity given vide order dated 08.04.2019 passed in CA No. 501 (PB)/2019 - there is no substance in the objections raised in these Appeals, in regard to valuation of land and Sale Notice. Appeal dismissed.
Issues Involved:
1. Challenge to the valuation of the land. 2. Nature and use of the land (agricultural vs. industrial). 3. Jurisdiction of the Adjudicating Authority. 4. Validity of the sale notice. 5. Allegations of delay tactics by the Appellant. 6. Imposition of costs on the Appellant. Issue-wise Detailed Analysis: 1. Challenge to the valuation of the land: The Appellant argued that the valuation of the land was based on an incorrect assumption that the land was agricultural, whereas it was industrial. The Appellant presented various documents, including a possession memo, a loan sanction letter, and receipts from the Municipal Corporation, Faridabad (MCF), to support the claim that the land had been used for industrial purposes. However, the Liquidator and Respondents countered that the land was still classified as agricultural due to non-payment of External Development Charges (EDC), as required for conversion under the Punjab Scheduled Road and Controlled Areas Restriction of Unregulated Development Rules, 1965. The valuation reports by Mr. Anil Kumar Saxena and Mr. Sunil Dhingra considered the land as agricultural but noted its past industrial use. The Tribunal found that the valuation was conducted as per the rules and regulations, and the Appellant failed to produce any evidence or higher bidder to challenge the valuation effectively. 2. Nature and use of the land (agricultural vs. industrial): The Tribunal examined whether the land was agricultural or industrial. The Appellant argued that the land had always been used for industrial purposes and presented supporting documents. However, the Respondents and Liquidator maintained that the land was agricultural due to non-payment of EDC, and no official change of land use had been granted. The Tribunal found that the land was indeed agricultural, as per the rules, despite its past industrial use. This conclusion was supported by communications from the District Town Planner and admissions by the Appellant and other stakeholders. 3. Jurisdiction of the Adjudicating Authority: The Appellant contended that the Adjudicating Authority did not have the jurisdiction to determine the nature of the land. However, the Tribunal clarified that the Adjudicating Authority did not determine the nature of the land but only addressed the objections regarding the valuation and sale notice. The Tribunal found no merit in the jurisdictional objection raised by the Appellant. 4. Validity of the sale notice: The Appellant argued that the sale notice was ambiguous and did not clearly state the nature and use of the land. The Respondents countered that the sale notice was clear and provided all necessary information. The Tribunal found that the sale notice was valid and contained all material facts. It also noted that the sale was conducted on an "AS IS WHERE IS" basis, and the Appellant had failed to produce any higher bidder despite being given the opportunity. 5. Allegations of delay tactics by the Appellant: The Respondents and Liquidator argued that the Appellant was engaging in delay tactics to hinder the liquidation process. The Tribunal agreed, noting that the Appellant had previously failed to produce any evidence or higher bidder and was indulging in baseless litigation. The Tribunal found that the Appellant's actions were intended to delay the liquidation process without any valid basis. 6. Imposition of costs on the Appellant: The Adjudicating Authority imposed a cost of ?50,000 on the Appellant for delaying the liquidation process. The Tribunal upheld this decision, finding that the Appellant's actions were without basis and constituted an abuse of the judicial process. The Tribunal found no grounds to interfere with the imposition of costs. Conclusion: The Tribunal dismissed the appeals, finding no merit in the objections raised by the Appellant regarding the valuation of the land, the nature and use of the land, the jurisdiction of the Adjudicating Authority, and the validity of the sale notice. The Tribunal also upheld the imposition of costs on the Appellant for delaying the liquidation process.
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