9911796707
TMI Blog2021 (5) TMI 947X X X X Extracts X X X X X X X X Extracts X X X X ..... dustrial Estate, Goregaon Mulund Link Road, Goregaon (East), Mumbai - 400063 aggregating to 11300.05 sq. mtr. (approx.) has been in occupation of various dwellers who had hutments/shanties thereon. These dwellers were the members of R3. ii) This property has been declared as 'slum area' under Notification No. SAA/MALAD/13 dated 15.10.1977 under the Maharashtra Slum Areas (Improvement, Clearance and Redevelopment) Act, 1971 (hereinafter referred to as the MSA Act). iii) R3 in its General Body Meeting on 27.09.2010 resolved to appoint the Corporate Debtor as the developer to undertake redevelopment work on the aforesaid property under the Slum Rehabilitation Scheme (SRS). Pursuant thereto R3 entered into a Development Agreement with the Corporate Debtor on 27.10.2010 under the Development Control Regulations for Greater Bombay, 1991 (DC Regulations) and also executed a Power of Attorney (PoA) on the same day in favour of the Corporate Debtor. These documents however could not be registered. Accordingly, the General Body of R3 on 16.09.2013 resolved to execute the fresh Development Agreement and PoA in line with the earlier Development Agreement. Accordingly, the Developme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all not be taken basing on the complaint made by some of the slum dwellers. x) The hearing was conducted on 10.04.2019 in view of the letter and the R1 directed the Corporate Debtor to pay the arrears of rent on or before 25.04.2019. The Corporate Debtor on 26.04.2019 explained the circumstances under which it has not been able to comply with the payment of rent and the situation was beyond its control. It also informed R1 that an order for admission of the Company Petition was imminent and there was a possibility that the Resolution Plan for the Corporate Debtor which when approved would take the development work on site ahead. Meanwhile on 08.05.2019, the Company Petition was admitted and the Corporate Debtor went into CIRP. xi) Consequently, the moratorium under Section 14 came into effect and the Applicant was appointed as Interim Resolution Professional (IRP). Subsequently his appointment as RP was also approved by this Tribunal. xii) The Applicant by letter dated 10.05.2019 informed the R1 as to the commencement of CIRP and declaration of moratorium. He requested R1 not to take any coercive action in furtherance to the notice dated 19.03.2019. He also sought an audience ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted in making payment of rent to the eligible slum dwellers and inordinately delayed the construction of the buildings. The Authority accordingly was competent under Section 13(2) of the MSA Act to terminate the appointment of the Corporate Debtor as the developer. The order dated 17.07.2019 was passed on hearing both the sides and is appealable under Section 35 of the said Act. The Applicant accordingly could not seek protection from this Authority without exhausting the remedies available under the Act and challenge the legality and validity of the order. This Authority is not competent to decide the legality and validity of the order. The order cannot be held to be illegal, inoperative and void by this Authority. The Application accordingly is liable to be dismissed. 6. R3 in its reply submitted that this Application is not maintainable and the relief sought thereunder cannot be granted. The averments of the Application have been refuted and denied. It is submitted that the Application proceeds on an incorrect understanding of the MSA Act. R1 has the right over the property declared as a 'slum area' to ensure the redevelopment and rehabilitation of the residents therein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e same was registered on 30.09.2013. R1 on 16.11.2010 appointed the Corporate Debtor as a developer in respect of SRS on the property. R1 granted necessary permission and letter of intent for construction of Composite Buildings nos. 1 & 2 on 17.12.2011 and issued commencement certificate on 01.08.2012. b. R1 also issued a revised letter of intent on 04.08.2016 for grant of 3,840 F.S.I. (Floor Space Index). The Corporate Debtor entered into an agreement with the slum dwellers for construction. There is also no dispute that the Corporate Debtor defaulted in payment of the rent to beneficiaries of the scheme and completion of the development scheme in time. R1 issued show cause notice dated 26.02.2019 basing on the complaints made by some of the beneficiaries seeking reasons as to why action under Section 13(2) of the MSA Act would not be taken. c. During the hearing on 10.04.2019 on the notice, the Corporate Debtor was directed to pay the rents on or before 25.04.2019. The Corporate Debtor obviously could not pay the rent by that date and on 26.04.2019 submitted its reasons explaining its inability to raise funds. The Corporate Debtor went into CIRP on 08.05.2019. As on that date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... professional, as the case may be, considers the supply of goods or services critical to protect and preserve the value of the corporate debtor and manage the operations of such corporate debtor as a going concern, then the supply of such goods or services shall not be terminated, suspended or interrupted during the period of moratorium, except where such corporate debtor has not paid dues arising from such supply during the moratorium period or in such circumstances as may be specified.] [(3) The provisions of sub-section (1) shall not apply to-- [(a) such transactions, agreements or other arrangement as may be notified by the Central Government in consultation with any financial sector regulator or any other authority;] (b) a surety in a contract of guarantee to a corporate debtor.] (4) The order of moratorium shall have effect from the date of such order till the completion of the corporate insolvency resolution process: Provided that where at any time during the corporate insolvency resolution process period, if the Adjudicating Authority approves the resolution plan under sub-section (1) of section 31 or passes an order for liquidation of corporate debtor under secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with contained in any other law for the time being in force or any instrument having effect by virtue of any such law." 15. The Hon'ble Supreme Court in Rajendra K. Bhutta v. Maharashtra Housing and Area Development Authority & Another: (2020) 13 SCC 208 has held that: "However, when it comes to any clash between the MHADA Act and the Insolvency Code, on the plain terms of Section 238 of the Insolvency Code, the Code must prevail. This is for the very good reason that when a moratorium is spoken of by Section 14 of the Code, the idea is that, to alleviate corporate sickness, a statutory status quo is pronounced under Section 14 the moment a petition is admitted under Section 7of the Code, so that the insolvency resolution process may proceed unhindered by any of the obstacles that would otherwise be caused and that are dealt with by Section 14." 16. The Hon'ble Apex Court therein with regard to Section 14 of the Code held as under: ".... 14. A bare reading of Section 14(1)(d) of the Code would make it clear that it does not deal with any of the assets or legal right or beneficial interest in such assets of the corporate debtor. For this reason, any reference to Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... K. Bhutta (supra) have made it clear that no action in respect of any proceedings by any authority against the Corporate Debtor could be continued nor the Corporate Debtor could be divested of any property it its occupation. The termination of the Corporate Debtor as the developer of the property was made during continuation of the CIRP. There is no dispute that R1 was aware of the commencement of insolvency as early as 10.05.2019. Despite such information R1 went on to pass the order terminating the Corporate Debtor as the developer. 18. That facts and circumstances of the matter at hand taken in light of the statutory provisions under sections 238 & 14 of the Code would indicate that the Code would override all other legislations, be it Central, State, special or general. 19. The Hon'ble Supreme Court in Rajendra K. Bhutta (supra) have in clear terms delineated the extent of this Code and limits of the other Authorities in dealing with a Corporate Debtor under CIRP. The termination of the Corporate Debtor as the developer would essentially result in the property being taken out of its possession. Both of which are prohibited under Section 14(1) of the Code. Therefore, the o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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