2024 (6) TMI 349 - AT - Insolvency and Bankruptcy

Approval of Resolution Plan submitted by Suraksha Realty Limited - treatment of claim filed in CIRP of the Corporate Debtor - disregarding the claim on the ground of pending litigation - challenge to provisions of Resolution Plan dealing with the claims of the YEIDA - secured creditor or not - claim submitted by YEIDA towards additional farmers compensation need consideration - additional compensation to YEIDA is actually 100% payment towards additional farmers compensation or not - amount of claim towards EDC in view of the pleadings of the parties before Adjudicating Authority - claim towards EDC is also a secured claim or not - treatment of claims filed by YEIDA in CIRP of Corporate Debtor - transfer of leasehold rights of Corporate Debtor to the SRA and Assenting Financial Creditor, in the Resolution Plan - need of consent of YEIDA. Whether YEIDA is Secured Creditor of the Corporate Debtor? - HELD THAT - The judgment of the Hon ble Supreme Court in Shakuntla s case delivered on 19.05.2022 made it clear that the farmers whose land was acquired by the appellant are entitled for additional compensation of 64.7% which compensation has to be recovered from the lessee/allottees of the land and in consequence of the said Government Order, demands were issued to the allottees including the Corporate Debtor for payment. As noted above, IRP did not accept the claim on the ground that it is under arbitration. In view of the judgment of the Hon ble Supreme Court in YAMUNA EXPRESSWAY INDUSTRIAL DEVELOPMENT AUTHORITY AND ORS. VERSUS SHAKUNTLA EDUCATION AND WELFARE SOCIETY AND ORS. 2022 (5) TMI 1637 - SUPREME COURT , the issue has been finally determined by the Hon ble Supreme Court which law is binding on all concerned. The appellant s claim filed in the CIRP of the corporate debtor for additional farmers compensation of Rs.1,689 Crores deserves consideration. In the present case, additional farmers compensation payable to the farmers is part of the acquisition cost which as per the provision of the Concession Agreement, is required to be paid by the concessionaire. We, thus, are of the clear opinion that amount of additional compensation payable to the farmers towards additional cost of 64.7% for compensation is secured charge. YEIDA is secured creditor of the corporate debtor with respect to claim of Rs.1,689 Crores towards additional farmers compensation claim. Whether, in event the YEIDA is held to be Secured Creditor, the treatment of claim of YEIDA in the Resolution Plan and in the order of Adjudicating Authority is sustainable? - HELD THAT - Adjudicating Authority failed to notice the provision of Section 13 and 13-A and considered of the claim of the appellant was only as operational creditor. Appellant being secured operational creditor, it is entitled for a different treatment in the resolution plan which is meted out to the other secured creditors. After the order of the Hon ble Supreme Court, this Appellate Tribunal in this appeal drew attention of both the parties to judgment of Greater Noida Industrial Development Authority vs. Prabhjit Singh Soni 2022 (11) TMI 1125 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI , the SRA has come up with without prejudice offer of Rs.1216 Crores payment towards additional farmers compensation which offer is clearly in recognition of the fact that Appellant is a secured creditor. It was held by the Hon ble Supreme Court that NBCC who is Resolution Applicant before the Hon ble Supreme Court in Jaypee Kensington 2021 (3) TMI 1143 - SUPREME COURT case could not extinguish the liability of YEIDA. The observations made by the Hon ble Supreme Court in paragraphs, as noticed above, clearly supports the submission of the appellant. The Adjudicating Authority although noticed the relevant paragraphs of the judgment of the Hon ble Supreme Court in Jaypee Kensington but failed to consider the claim of the Appellant correctly in accordance with law. The order of the Adjudicating Authority considering the treatment of the claim of additional farmers compensation of the YEIDA in the Resolution Plan is unsustainable. Having held that YEIDA is secured creditor, the treatment of YEIDA in the resolution plan and in the order of the Adjudicating Authority is unsustainable. Whether entire claim of Rs.1689 crores submitted by YEIDA towards additional farmers compensation need consideration or in the above amount deduction of Rs.330 crores pertaining to land parcels of 1537 acres already sub-leased by Corporate Debtor to third parties and Rs.143 crores, pertaining to 744.6 acres land arranged from NOIDA, where farmers compensation already paid to farmers need to be done? - Whether without prejudice offer dated 18.04.2024 of SRA proposing 100% payment of additional compensation to YEIDA is actually 100% payment towards additional farmers compensation? - HELD THAT - The amount of Rs.330 Crores which is liable to be paid for the land which has been transferred to third party, liability of corporate debtor cannot be forsaken on the ground that it has sub-leased to third party. As per Concession Agreement, it was the liability of concessionaire to pay the acquisition cost. The deduction of Rs.330 crores in the amount of claim of Rs.1689 Crores filed by the appellant cannot be permitted. Now coming to another limb of submission with regard to Rs.143 crores in relation to land arranged from the Noida Authority. Counsel for the SRA submitted that Rs.143 crore is the amount which pertains to the land arranged from the Noida for which Noida has made the payment of additional compensation to the farmers, hence, the said amount cannot be recovered. Appellant in its reply has stated that Noida has demanded Rs.247 crores from the Appellant towards the amount of additional compensation. Reference of the letter dated 23.01.2014 has been made in reply filed by the appellant to the additional affidavit. Even if the amount is paid by the Noida towards additional farmers compensation, the same can always be asked from the appellant to reimburse, hence, the amount of Rs.143 crores also cannot be deducted from the claim of Rs.1,689 crores. The amount proposed by the SRA of Rs.1216 Crores thus, cannot be held to be 100% payment of additional compensation to YEIDA towards additional farmers compensation. The entire claim of Rs.1,689 Crores submitted by YEIDA towards the additional farmers compensation need consideration and amount of Rs.330 Crores pertaining to land parcels already sub-leased by the corporate debtor to third party and an amount of Rs.143 crores pertaining to land arranged from Noida need no deduction. Thus, appellant s claim of Rs.1689 crores towards additional farmers compensation need consideration - Without prejudice offer dated 18.04.2024 offering to make amount of Rs.1216 crores cannot be held to be 100% payment of additional compensation claim of YEIDA. What is the amount of claim towards EDC in view of the pleadings of the parties before Adjudicating Authority and in this Appeal? - HELD THAT - From the additional affidavit filed by the appellant itself, it is clear that total EDCs claim of the appellant after reconciliation is Rs.529.91 crores whereas the IRP has admitted only Rs.409.6 crores. Insofar as EDCs claim as contained in the additional affidavit, there is no disagreement between the parties. In addition to the aforesaid Rs.529.91 crores, it has been pleaded by the appellant that EDCs for land parcels at Tappal and Agra may be payable by Suraksha as per the provisions of Concession Agreement and in terms of the undertaking given by it in the rejoinder dated 03.05.2024 as and when external development work is carried out at Tappal and Agra - Total amount of EDCs claimed as reviewed and reconciled by the appellant is Rs.529.91 crores subject to payment by EDCs towards land parcels at Tappal and Agra, as and when external development work is carried out at Tappal and Agra. Whether claim towards EDC is also a secured claim under 1976 Act and needs to be dealt in the Resolution Plan as secured claim? - HELD THAT - There can be no doubt that EDC charges are not a tax or a fee under the 1976 Act. The expression fee or tax levied under the 1976 Act has to be given meaning. Because for non-payment of any fee or tax levied under the Act, imposition of penalty is contemplated. Section 13 contemplate imposition of penalty to the extent of sum not exceeding the amount that is to be recovered from the transferee or occupier. Section 13 being a penal provision has to be strictly construed. Thus penalty can be imposed only for any fee or tax levied under the 1976 Act. The Appellant has not brought any material on record to indicate that EDC are fee levied under the Act. Rather, the case of the Appellant is that EDC is payable as per the Concession Agreement. Any amount payable under the Concession Agreement, which falls under Section 13 alone has to be treated to be amount, for default of which proceedings under Section 13A can be initiated. Claim towards EDC of the Appellant is not a secured claim under the provisions of 1976 Act and does not need to be dealt in the Resolution Plan as a secured claim. Whether for treatment of claims filed by YEIDA in CIRP of Corporate Debtor, consent of YEIDA is required for proposing a payment to YEIDA in the Resolution Plan? - Whether for transfer of leasehold rights of Corporate Debtor to the SRA and Assenting Financial Creditor, in the Resolution Plan, consent of YEIDA is necessary? - HELD THAT - The Resolution Plan in the present case, does not contemplate transfer of land to SRA and Assenting Financial Creditors. Information Memorandum clearly contemplate that Corporate Debtor has only lease hold rights in the land. Owner of the land is still the Appellant, whose ownership of land cannot be extinguished with in any manner in the Resolution Plan. Under the Resolution Plan only rights and assets of Corporate Debtor can be dealt with. The Corporate Debtor, who has only lease hold rights cannot transfer any higher rights to any other person, including the SRA and Financial Creditors - in the present case, no clause of Concession Agreement is being tinkered with by the Resolution Applicant, so as to require consent of YEIDA. The Resolution Plan deals with the claim of Creditors as per CIRP Regulations and Resolution Plan only deals with lease hold rights, which Corporate Debtor has in the land in question. For treatment of claim of YEIDA in the CIRP of Corporate Debtor and for payment to YEIDA in the Resolution Plan, consent of YEIDA is not required - For transfer of lease hold rights of Corporate Debtor to SRA or Assenting Financial Creditors in the Resolution Plan, consent of YEIDA is not necessary. What relief the Appellant is entitled in this Appeal? - HELD THAT - The Appellant, who is also a secured Operational Creditor to the extent of Rs.1689 crores, is also entitled for payment of same percentage of amount, which has been offered to the Financial Creditors. Towards additional farmers compensation, the Appellant is entitled for 79% of its claim, i.e., 79% of Rs.1689 crores, which comes to Rs.1334.31 crores. The SRA has already offered to make payment of Rs.1216 crores. Thus, the SRA has to bear additional amount of Rs.118.31 crores. The entitlement of Appellant being secured creditor is thus, clearly to amount of Rs.1334.31 crores. The SRA has already given an offer to bear Rs.1216 crores, ends of justice will be served in issuing direction to SRA to make payment of Rs.118.31 crores in addition to Rs.1216 crores already offered by it. The timeline proposed for payment of Rs.1216 crores in the offer of SRA is payment in priority over Financial Creditor, since, Financial Creditors are not being paid the amount in priority to the Operational Creditor. The submission of the Appellant that entire payment should be paid at once by the SRA, cannot be accepted. It is already noticed that stakeholders are awaiting for their claims to be considered, including those Homebuyers and there has been prolonged litigations on different issues and the Resolution Plan could be approved only by impugned order dated 07.03.2023. To put finality to the process and by accepting the claim of Appellant as secured Operational Creditor towards amount of Rs.1689 crores and directing payment of amount equivalent, which has been given to the secured Financial Creditor, ends of justice will be served in paving a way forward for implementation of the Resolution Plan. Conclusion - The impugned order passed by Adjudicating Authority insofar as it deals with claim of the Appellant of Rs.1689 crores of additional farmers compensation is set aside. The rest of the impugned order approving the Resolution Plan is upheld - The Successful Resolution Applicant, i.e., Respondent No.2 is directed to make payment to the Appellant of its secured operational debt of Rs.1689 crores in ratio of 79%, which have been paid to other secured creditors, which amount comes to Rs.1334.31 crores - The SRA in its offer dated 18.04.2024 has already undertaken to make payment of Rs.1216 crores towards additional farmers compensation in the timeline as indicated in the offer dated 18.04.2024. Let the SRA make the payment of Rs.1216 crores as per its offer in the time line as indicated therein. Appeal disposed off.

Summary

Issues Involved:
1. Whether YEIDA is a Secured Creditor of the Corporate Debtor.
2. Whether the treatment of YEIDA's claim in the Resolution Plan and Adjudicating Authority's order is sustainable if YEIDA is held to be a Secured Creditor.
3. Whether YEIDA's claim of Rs.1689 crores needed consideration in CIRP.
4. Whether the entire claim of Rs.1689 crores submitted by YEIDA towards additional farmers' compensation needs consideration or if deductions are necessary.
5. Whether the 'without prejudice' offer dated 18.04.2024 by SRA proposing 100% payment of additional compensation to YEIDA is actually 100%.
6. What is the amount of claim towards EDC.
7. Whether the claim towards EDC is a secured claim under the 1976 Act.
8. Whether YEIDA's consent is required for proposing a payment in the Resolution Plan.
9. Whether YEIDA's consent is necessary for the transfer of leasehold rights to SRA and Assenting Financial Creditors.
10. What relief the Appellant is entitled to in this Appeal.

Summary:

Issue 1: Whether YEIDA is a Secured Creditor of the Corporate Debtor
YEIDA is a secured creditor of the corporate debtor with respect to the claim of Rs.1689 crores towards additional farmers' compensation claim. This is supported by Section 13 and 13-A of the 1976 Act, which states that any amount payable to the Authority constitutes a charge over the property.

Issue 2: Whether the treatment of YEIDA's claim in the Resolution Plan and Adjudicating Authority's order is sustainable if YEIDA is held to be a Secured Creditor
Adjudicating Authority failed to consider YEIDA as a secured creditor and treated it only as an operational creditor. The treatment of YEIDA in the Resolution Plan and the order of the Adjudicating Authority is unsustainable. YEIDA, being a secured creditor, is entitled to different treatment in the Resolution Plan similar to other secured creditors.

Issue 3: Whether YEIDA's claim of Rs.1689 crores needed consideration in CIRP
The claim submitted by YEIDA in CIRP of the corporate debtor of Rs.1689 crores needed consideration, and IRP erred in disregarding the claim on the ground of pending litigation.

Issue 4: Whether the entire claim of Rs.1689 crores submitted by YEIDA towards additional farmers' compensation needs consideration or if deductions are necessary
The entire claim of Rs.1689 crores submitted by YEIDA towards additional farmers' compensation needs consideration. The amount of Rs.330 crores pertaining to land parcels already sub-leased by the corporate debtor to third parties and Rs.143 crores pertaining to land arranged from NOIDA need no deduction.

Issue 5: Whether the 'without prejudice' offer dated 18.04.2024 by SRA proposing 100% payment of additional compensation to YEIDA is actually 100%
The 'without prejudice' offer dated 18.04.2024 offering to make an amount of Rs.1216 crores cannot be held to be 100% payment of additional compensation claim of YEIDA.

Issue 6: What is the amount of claim towards EDC
Total amount of EDC claimed as reviewed and reconciled by the appellant is Rs.529.91 crores, subject to payment by EDCs towards land parcels at Tappal and Agra, as and when external development work is carried out at Tappal and Agra.

Issue 7: Whether the claim towards EDC is a secured claim under the 1976 Act
Claim towards EDC of the Appellant is not a secured claim under the provisions of the 1976 Act and does not need to be dealt in the Resolution Plan as a secured claim.

Issue 8: Whether YEIDA's consent is required for proposing a payment in the Resolution Plan
For treatment of the claim of YEIDA in the CIRP of the Corporate Debtor and for payment to YEIDA in the Resolution Plan, consent of YEIDA is not required.

Issue 9: Whether YEIDA's consent is necessary for the transfer of leasehold rights to SRA and Assenting Financial Creditors
For transfer of leasehold rights of Corporate Debtor to SRA or Assenting Financial Creditors in the Resolution Plan, consent of YEIDA is not necessary.

Issue 10: What relief the Appellant is entitled to in this Appeal
The impugned order passed by Adjudicating Authority insofar as it deals with the claim of the Appellant of Rs.1689 crores of additional farmers' compensation is set aside. The rest of the impugned order approving the Resolution Plan is upheld. The Successful Resolution Applicant is directed to make payment to the Appellant of its secured operational debt of Rs.1689 crores in the ratio of 79%, which amounts to Rs.1334.31 crores. The SRA in its offer dated 18.04.2024 has already undertaken to make payment of Rs.1216 crores towards additional farmers' compensation in the timeline as indicated in the offer. The additional amount of Rs.118.31 crores, required to be paid to make its payment equivalent to the payment given to other secured creditors, should also be paid as per the timeline indicated in the offer. The Resolution Plan approved as above shall be implemented by SRA in accordance with law.