2022 (9) TMI 1295 - AT - Insolvency and Bankruptcy

Handing over possession of an asset of immovable property belonging to the Corporate Debtor to IRP - HELD THAT - The Agreement to Sell, which is relied by the Appellant dated 30.12.2019 contemplated sale of the immovable property of the Corporate Debtor for a consideration of Rs.1.70 crores. In the Agreement, the Appellant claimed to have paid Rs.30 lakhs. There is no proof by the Appellant for making payment of balance amount of Rs.1.40 crores. The Leave and License Agreement, which is relied by the Appellant dated 30.12.2019 is an unregistered document, where the Corporate Debtor claims to have granted the permission to the Licensee to occupy the property together with building till the time Licensor and Licensee execute the Sale Deed - The Leave and Licensee Agreement is thus admittedly without any consideration. The present is a case where ownership of the asset is not denied even by the Appellant. The submission, which has now been pressed by the learned Counsel for the Appellant is that Adjudicating Authority has no jurisdiction to entertain the Application - The Leave and License Agreement under which the Appellant is occupying the assets could not have been cancelled by the Adjudicating Authority, nor the Leave and License could be disregarded by the Adjudicating Authority by directing the Resolution Professional to take possession of the assets. Whether the Appellant has any right to resist for taking possession of the assets by the IRP? - HELD THAT - The Leave and License Agreement was executed without any consideration. Clause 2 of the Leave and License Agreement clearly contemplated that Licensor shall not charge any License Fee from the Licensee, for grant of Leave and License of the said premises. Section 25 of the Contract Act, 1872 provides that Agreement without consideration are void, unless it is in writing and registered - The present is a case where Leave and License Agreement was executed without any consideration and the document, which has been relied by the Appellant is an unregistered document. Thus, it is not saved by exception as carved out in Section 25, sub-section (1). The document is a void document, which shall not give any right to the Appellant to resist taking up the possession by the RP of the assets belonging to the Corporate Debtor. The Adjudicating Authority has not committed any error in directing the Appellant to handover the possession of the assets belonging to the Corporate Debtor - Appeal dismissed.

Summary

Issues:
- Jurisdiction of Adjudicating Authority to pass order
- Validity of Leave and License Agreement
- Obligations of Interim Resolution Professional (IRP)
- Appellant's right to resist possession by IRP

Jurisdiction of Adjudicating Authority:
The appeal was filed against an order passed by the National Company Law Tribunal, Kolkata, directing the Appellant to hand over possession of immovable property belonging to the Corporate Debtor. The Appellant challenged the jurisdiction of the Adjudicating Authority, claiming it cannot function as a Civil Court and that the Application filed by the IRP was not maintainable. The Appellant argued they were in possession of the property based on a Leave and License Agreement. The Respondent, representing the Resolution Professional, contended that the Appellant had no right to continue possession as the Agreement was void and unregistered, and the property was mortgaged to banks.

Validity of Leave and License Agreement:
The Appellant relied on a Leave and License Agreement executed without consideration, claiming permission to occupy the property. However, the Agreement was found to be void under Section 25 of the Contract Act, as it lacked consideration and was unregistered. The Adjudicating Authority was mandated to take control of assets owned by the Corporate Debtor, as per Section 18(1)(f) of the Insolvency and Bankruptcy Code, 2016, even though the Appellant acknowledged the ownership of the property by the Corporate Debtor.

Obligations of Interim Resolution Professional (IRP):
The IRP's duty, as per the IBC, includes taking control and custody of assets owned by the Corporate Debtor. In this case, the IRP sought possession of the property in question, which the Adjudicating Authority directed the Appellant to hand over within a specified timeframe. The Appellant's resistance based on the Leave and License Agreement lacking consideration was not deemed valid, given the statutory obligations of the IRP.

Appellant's right to resist possession by IRP:
The Appellant's defense against surrendering possession was primarily based on the Leave and License Agreement, which was found to be void due to lack of consideration and non-registration. The Adjudicating Authority upheld the order for the Appellant to hand over possession of the property to the Resolution Professional, emphasizing the statutory duties of the IRP and dismissing the appeal, stating there was no merit. The judgment highlighted the legal principles governing agreements without consideration and the IRP's authority to take control of Corporate Debtor's assets.

This detailed analysis of the judgment covers the issues of jurisdiction, validity of agreements, statutory obligations, and the Appellant's right to resist possession, providing a comprehensive understanding of the legal reasoning behind the decision.