2021 (2) TMI 254 - Tri - Insolvency and Bankruptcy

Physical possession of the mortgaged leasehold land of the Corporate Debtor into the Liquidation Estate of the Corporate Debtor - whether the leasehold land of the Corporate Debtor can be scheduled into the Liquidation Estate of the Corporate Debtor? - Whether the mortgaged land can be added into the Liquidation Estate of the Corporate Debtor? Whether the Respondents herein who are Financial Creditors who hold the property in question due to the fact that the property is pledged with them by the Corporate Debtor can be directed to be physically handed over to the Resolution Professional? - HELD THAT - Since the Resolution Professional has to conclude the proceedings, it is highly necessary to get the possession of the property, as it is the duty of the Resolution Professional to dispose of the Liquidation Assets of the Corporate Debtor if necessary, to settle the claims of all claimants including the Financial Creditors. Since, the Building/ hospital is situated in the very same land having 16.55 Ares, no purpose will be served without getting the hospital property also into the Liquidation Assets - Moreover, the 1st Respondent Union Bank of India has no objection in handing over the possession and the 2nd Respondent Meenanchil East Urban Co-operative Bank Limited even though objected to; they have conditionally agreed to hand over possession, provided their interest is well secured. There is no doubt that the Liquidator will consider all the claims and make payments to each person/authority, as per the Regulations/ Rules. Hence, the 2nd Respondent s apprehension cannot be sustained. Both Respondents are directed to hand over the physical possession of the mortgaged leasehold land of the Corporate Debtor (both Express Lease Implied Lease lands used by the Corporate Debtor) to the Applicant in order to use as the Liquidation Estate of the Corporate Debtor - the Applicant is also allowed to add the mortgaged land (Express Lease-100.16 Ares Implies Lease- 78.45 Ares) into the Liquidation Estate of the Corporate Debtor - Liquidator is directed to strictly follow the procedures to take over the property in question, as per the Regulations.

Issues Involved:
1. Whether the leasehold land of the Corporate Debtor can be scheduled into the Liquidation Estate of the Corporate Debtor.
2. Whether the mortgaged land can be added into the Liquidation Estate of the Corporate Debtor.
3. Whether the assets of the Guarantor can be subjected to Liquidation.

Issue-Wise Detailed Analysis:

1. Leasehold Land Inclusion in Liquidation Estate:

The Applicant, Liquidator of the Corporate Debtor, sought directions for the Respondents to hand over the physical possession of the mortgaged leasehold land into the Liquidation Estate. The leasehold land, mortgaged to Respondent No. 1, was used for constructing a hospital. Another land inside the hospital premises, owned by the Promoters/Directors, was used for hospital utility services without an express lease agreement but mortgaged to Respondent No. 2. The Applicant argued that the land and building are inseparable and should be sold together to realize better value for stakeholders. Respondent No. 1 agreed to surrender possession, while Respondent No. 2 expressed concerns but conditionally agreed to release the property if their claims were prioritized under Section 53(b) of the Insolvency and Bankruptcy Code (IBC), 2016.

2. Mortgaged Land Inclusion in Liquidation Estate:

The Applicant contended that the mortgaged land should be included in the Liquidation Estate to ensure better realizable value and to settle claims of all stakeholders. The Respondents, as secured creditors, held the mortgaged properties as security for loans. Respondent No. 2 questioned the maintainability of the application, arguing that proceedings were not initiated against the Personal Guarantors under Section 60(2) of the IBC, 2016, and claimed that the application was bad for non-joinder of necessary parties. However, they conditionally agreed to release the property under strict orders of the Tribunal, provided their claims were protected.

3. Assets of the Guarantor Subjected to Liquidation:

The Tribunal referred to the decision in Punjab National Bank Vs. Vindhya Vasini Industries Limited, which clarified that the assets of the Guarantor could be subjected to Liquidation under Section 60(2) of the IBC, 2016. The Tribunal also considered the judgment in V. Ramakrishnan Vs. M/s. Veesons Energy Systems Private Limited, where it was held that the moratorium under the IBC would apply to the property of the Corporate Debtor and the Personal Guarantor. The Tribunal concluded that the Liquidator must take possession of the property to dispose of the Liquidation Assets and settle claims, including those of the Financial Creditors.

Findings and Directions:

The Tribunal allowed the application with the following directions:
1. Both Respondents were directed to hand over the physical possession of the mortgaged leasehold land to the Applicant for use as the Liquidation Estate of the Corporate Debtor.
2. The Applicant was allowed to add the mortgaged land into the Liquidation Estate.
3. The Liquidator was directed to follow the procedures as per the Regulations to take over the property.
4. The order was to be implemented immediately upon receipt, within two weeks.

The Tribunal emphasized that the Liquidator would consider all claims and make payments as per the Regulations/Rules, ensuring the interests of the Respondents were protected.

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