2022 (2) TMI 412 - Tri - Insolvency and Bankruptcy

Liquidation of Corporate Debtor - section 60(5) read with section 45 and section 66 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT - Despite the fact that as per clause 9 of the agreement of sale dated September 2, 2016 the respondent is entitled to three car parking spaces, the applicant-liquidator refused to mention the same in the revised agreement of sale to be registered by and between the applicant liquidator on behalf of the corporate debtor and respondent. The fact of dispute in relation to the allotment of car parking space in evident from the e-mail communications between the parties which are annexed to the Interlocutory Application No. 535 of 2021 filed by the respondent herein. Hence, it is evident that the only issue and dispute which stood between the parties was in relation to mentioning of car parking spaces in the agreement. Rest all of the terms and conditions including advances money paid and balance payable were finalized and agreeable to both the parties herein. The respondent herein along with the mentioned cheques had also issued cheques No. 000024 of ₹ 30,50,000, dated February 10, 2021 towards the full and final payment of the balance consideration as mentioned above. However, due to on-going disputes and refusal of the applicant liquidator to insert allotment of 3 car parking space in the revised agreement of sale, the respondent herein was constrained to issue directions to his bank to Stop Payment of said cheque of ₹ 30,50,000 - respondent, therefore, prays that applicant liquidator be hereby directed to register the agreement for sale in favour of the respondent at the earliest. The respondent undertakes to pay the balance consideration of ₹ 30,50,000 (after deducting necessary TDS) on the registration of the agreement. The respondent is directed to deposit balance amount with the liquidator within 15 days. On receipt of balance sale consideration liquidator shall go ahead for execution of sale agreement - If the respondent fails to deposit balance amount within the stipulated time liquidator is directed to take necessary steps for fresh sale of subject property of this application - application disposed off.

Issues Involved:
1. Whether the transaction between the respondent and the corporate debtor is an undervalued transaction under Section 45 of the Insolvency and Bankruptcy Code, 2016.
2. Whether the respondent is illegally holding possession of Unit No. 7.
3. Compliance with previous orders and payment obligations by the respondent.
4. The respondent’s claim for three car parking spaces as per the agreement.

Issue-wise Analysis:

1. Undervalued Transaction under Section 45 of the Insolvency and Bankruptcy Code, 2016:

The applicant, in the capacity of the resolution professional, argued that the transaction involving the sale of Unit No. 7 to the respondent for ?3,78,00,000 was significantly below the prevailing market rates, thus qualifying as an undervalued transaction under Section 45 of the Code. The applicant provided details of other transactions to substantiate this claim. Additionally, the applicant highlighted discrepancies in the unregistered agreement dated September 2, 2016, provided by the respondent. The respondent countered this by asserting that the transaction was conducted in the ordinary course of business and was not undervalued, as the agreed price was higher than the Ready Reckoner price at that time.

2. Illegal Possession of Unit No. 7:

The applicant contended that the respondent had been illegally occupying Unit No. 7 since August 2013 by paying only ?4,50,000, which was reflected as "advances from related parties" in the corporate debtor's balance sheet. The applicant argued that the respondent's possession was based on an unregistered agreement and was fraudulent, aiming to misappropriate the assets of the corporate debtor. The respondent admitted to occupying the unit but claimed it was based on a legitimate letter of allotment dated August 4, 2013, followed by an agreement for sale dated September 2, 2016.

3. Compliance with Previous Orders and Payment Obligations:

The Tribunal had previously directed the respondent to either pay the total consideration of ?3,78,00,000 or pay monthly compensation for occupying the property. The respondent expressed willingness to purchase the unit on an "as is where and whatever it is basis" by paying the balance consideration in installments. However, despite multiple orders and reminders, the respondent delayed the payment and issued a post-dated cheque, which was dishonored. This led to further legal actions, including a demand notice under Section 138 of the Negotiable Instruments Act, 1881.

4. Claim for Three Car Parking Spaces:

The respondent filed an Interlocutory Application seeking the allotment of three car parking spaces as assured in the agreement dated September 2, 2016. The Tribunal rejected this application, stating that the applicant had no power to allot car parking. The respondent argued that the refusal to include the car parking spaces in the revised agreement led to the stoppage of the cheque payment. The Tribunal directed the respondent to pay the balance amount and complete the sale, failing which the liquidator was instructed to proceed with a fresh sale of the property.

Conclusion:

The Tribunal directed the respondent to deposit the balance amount with the liquidator within 15 days and proceed with the execution of the sale agreement. If the respondent fails to comply, the liquidator is authorized to take necessary steps for a fresh sale of the property. The Tribunal disposed of M.A. No. 2894 of 2019 and M.A. No. 642 of 2018 in C.P. No. 1092/MB/C-II/2017 with these observations and directions.

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