2024 (4) TMI 439 - AT - Insolvency and Bankruptcy

GNIDA is Secured Creditor or not - Submissions raised by the Resolution Professional objecting to the claim of the GNIDA as Secured Creditor was noticed and dealt by the Adjudicating Authority in the impugned order - Section 13 and 13-A of UPIAD Act are inconsistent with Section 238 of I B Code or not - HELD THAT - CIRP commenced on 30.05.2019, claims were invited, the claim was set up by the Appellant as Financial Creditor, which was rejected and Appellant was treated as Operational Creditor. CoC approved the plan which was presented before the Adjudicating Authority and was approved by the Adjudicating Authority on 04.08.2020. Appellant after coming to know that plan has been approved has filed I.A. No.344 of 2021 questioning the Resolution Plan and decision of the Resolution Professional to treat the Appellant as Operational Creditor. The submission of the Appellant that Section 13-A was inserted in the Act subsequent to lease having been granted to the Corporate Debtor does not in any manner affect the claim of the Respondent No.1 as Secured Creditor. Section 13-A was inserted by U.P. Act 10 of 2016 in The Uttar Pradesh Industrial Area Development Act, 1976 - Any dues of the Authority is a charge as per Section 13-A over the property. The Corporate Debtor has not paid the dues of Respondent GNIDA, which has been brought before the Adjudicating Authority by means of an application giving all relevant details. In the present case, the Adjudicating Authority returned finding that Resolution Professional in its affidavit dated 05.05.2023 has admitted that the Corporate Debtor has committed a default in payment of lease rentals prior to the commencement of CIRP. The submission advanced by the Resolution Professional that charge has not been created under Section 77 of Companies Act has already been dealt and rightly rejected. Present is a case where charge on the assets of the Corporate Debtor was created by virtue of law i.e. Section 13-A and registration of charge under Section 77-78 of Companies Act is inconsequential. We, thus, endorse the above view taken by the Adjudicating Authority that non-registration of charge in favour of Greater Noida Authority was inconsequential. The Adjudicating Authority being aware that lease rentals are due on the Corporate Debtor also directed the parties to file affidavit. Judgment of Hon ble Supreme Court in State Tax Officer vs. Rainbow Paper Ltd. 2022 (9) TMI 317 - SUPREME COURT relying on Section 48 of Gujrat Vat Tax Act held that charge to be statutory, which judgment also fully supports the submission of counsel for the Respondent. The decision of the Adjudicating Authority declaring the Greater Noida Industrial Development Authority as Secured Operational Creditor does not warrant any interference in this appeal - appeal dismissed.

Summary

Issues Involved:
1. Whether the Greater Noida Industrial Development Authority (GNIDA) is a Secured Operational Creditor.
2. Whether the Resolution Plan should be rejected due to the claim of GNIDA.

Summary:

Issue 1: Whether GNIDA is a Secured Operational Creditor

The Adjudicating Authority disposed of I.A. No.4869 of 2022 filed by GNIDA, holding GNIDA to be treated as a Secured Operational Creditor. The Resolution Professional of the Corporate Debtor, M/s Primrose Infratech Private Limited, challenged this order. The Adjudicating Authority concluded that GNIDA is "a secured creditor" in terms of Section 3(30) of IBC 2016, and the "charge" of GNIDA has been created by virtue of law u/s 13 and 13A of the Uttar Pradesh Industrial Area Development (UPIAD) Act 1976. The Authority also found no inconsistency between the provisions of the UPIAD Act and IBC 2016.

The Resolution Professional argued that GNIDA is not a Secured Creditor, asserting that Section 13-A was enforced five years after the Lease Deed was executed and that GNIDA did not register its charge with the Registrar of Companies. However, the Adjudicating Authority rejected these contentions, emphasizing that the charge in favor of GNIDA was created by virtue of law and that registration under Section 77-78 of the Companies Act is inconsequential.

The Tribunal referred to the Supreme Court's judgment in "Greater Noida Industrial Development Authority vs. Prabhjit Singh Soni & Anr.," which affirmed GNIDA as a Secured Operational Creditor. The Supreme Court held that non-placement of GNIDA in the class of Secured Creditors affected its interest and that a statutory charge was created on the assets of the Corporate Debtor by virtue of Section 13-A of the UPIAD Act.

Issue 2: Whether the Resolution Plan should be rejected due to the claim of GNIDA

GNIDA filed I.A. No.4869 of 2023 seeking to reject the Resolution Plan and direct the Resolution Professional to serve a copy of the application for approval of the Resolution Plan upon GNIDA. The Adjudicating Authority, in its order, found that the Corporate Debtor had committed a default in payment of lease rentals prior to the commencement of CIRP, qualifying as a default u/s 13 of the UPIAD Act. The Authority held that any amount payable to GNIDA constitutes a charge over the property u/s 13-A.

The Supreme Court's judgment in "Greater Noida Industrial Development Authority vs. Prabhjit Singh Soni & Anr." also supported the rejection of the Resolution Plan. The Supreme Court found that the Resolution Plan did not meet the requirements of Section 30(2) of the IBC read with Regulations 37 and 38 of the CIRP Regulations, 2016, as it failed to acknowledge the claim made by GNIDA and did not place GNIDA in the category of a secured creditor. The Supreme Court set aside the orders approving the Resolution Plan and directed re-submission after satisfying the parameters set out by the Code.

Conclusion:

The Tribunal upheld the order dated 24.07.2023 passed in I.A. No.4869 of 2022, declaring GNIDA as a Secured Operational Creditor. Consequently, Company Appeal (AT) (Ins.) No.1147 of 2023 was dismissed. The order dated 30.08.2023 in I.A. No.4588 of 2023, based on the earlier order, was also upheld. Both appeals were dismissed.