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TMI Blog2022 (3) TMI 600X X X X Extracts X X X X X X X X Extracts X X X X ..... 018 filed by 'M/s. Victory Ace Social Welfare Society' (hereinafter referred to as 'Victory Ace') and IA 5050 of 2020 filed by 'New Okhla Industrial Development Authority', (hereinafter referred to as 'NOIDA') respectively. By the Impugned Order, the Adjudicating Authority has allowed the IA filed by the Resolution Professional and dismissed I.A. 5050 of 2020 filed by NOIDA/the Appellant herein, observing as follows: 17. We are further in agreement with the contention of the Applicant/(that through the instrument of JDA, the CD has only right- in-personam against the Lessee i.e., Logix and the said right of CD is limited developing the residential complex for which the allottees paid directly the CD upon various stages of completion of the project. All future FSIs remained with Logix (the original Lessee of the Land). It is clear from terms of JDA that CD has a limited role of undertaking development of residential project acting jointly with Logix. 18. In the present case, it is seen that existence of JDA was in the knowledge of NOIDA and all approvals as required under the Lease Deed have been granted by the said authority. In effect, there has been implied acceptance of the J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esolution Plan sought to be approved by the CoC." 2. Submissions of the Appellant: It is submitted by the Learned Counsel for the Appellant that pursuant to the Group Housing Scheme GH-2011-(I), the Appellant vide Allotment Letter dated 08/04/2021 allotted an area of 1,00,090 sq. mtrs. to the consortium of Companies headed by M/s. Logix Soft-tel Pvt. Ltd. for the purpose of developing a Group Housing Project. Thereafter as per the site plan prepared by the Engineering Department, in partial modification of the Allotment Letter, the revised area of 1,00,080.98 sq. mtrs., was informed to the consortium of Companies. Vide another letter dated 08/06/2011, the name of M/s. Logix City Developers Pvt. Ltd., (hereinafter referred to as 'Logix') was specified as the Special Purpose Company (SPC) for entering into a Lease Agreement. Subsequently, a Lease Deed was entered into for a period of 90 years, as per which terms, the lessee was liable to pay a lease premium of Rs. 2,35,69,07,079/-. An amount of Rs. 23,56,90,707.90/- was paid by the lessee at the time of signing of the Lease Deed and the remaining amount was to be paid by the lessee in 16 half yearly instalments commencing from 07/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Clause 4 of the JDA, the 'Corporate Debtor' agreed to pay the lease premium and the interest proportionate to its FSI share of 6,00,000 sq. ft. in the premises to the Appellant herein. As per Clause 1.1 of the JDA an amount of Rs. 42,96,00,000/- was to be paid by the 'Corporate Debtor' to the Appellant herein towards it share of the amount. As per Clause 9 of the JDA, the lessee wrongfully represented to the 'Corporate Debtor' that it has all the authority and legal rights to engage in the transaction contemplated in the said JDA. The JDA tantamounts to a transfer under the said Lease Deed. The Agreement to sell entered into between the lessee and the 'Corporate Debtor' is non-est in law as the lessee has no ownership rights whatsoever in the subject premises. Pursuant to the execution of the JDA, the lessee executed the General Power of Attorney (GPA) dated 23/10/2013 authorising the 'Corporate Debtor' to construct, develop and sell 516 units/flats proposed to be built on the said premises. The lessee authorised the 'Corporate Debtor' to execute a Tripartite Agreement, NOC and permissions to mortgage the land/flats in favour of the allottee/bank. The Appellant, lessee and M/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the 'Corporate Debtor' to the Appellant. The advertisements were issued by the various unknown parties such as 'Victory Infra Projects Private Limited', where even the basic details were not mentioned. Even in the sub-Lease Deed executed between the lessee, the Appellant and M/s. Docile Buildtech Pvt. Ltd. on 20/09/2019, which sub-divided the subject premises into three different portions the lessee made no disclosure whatsoever about the existence of the said JDA, GPA and Agreement to sell. Learned Counsel placed reliance on the Judgements of the Hon'ble Supreme Court in 'Hotel Queen Road Pvt. Ltd.' Vs. 'Union of India & Ors.', (2015) SCC DEL 9807 in which it was held that the right of ownership over a property in case of lease is not determined on the basis of the duration of the lease and a lease, even if for 99 years does not confer any 'ownership rights' on the lessee. Learned Counsel also placed reliance on the Judgement of the Hon'ble Supreme Court in 'Mohd. Noor & Ors.' Vs. 'Mohd. Ibrahim & Ors.' (1994) 5 SCC 562 enunciating the concept of ownership of the immovable property and drew our attention to para 5 which reads as follows: "5. Austin in his book of Jurispru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; that the JDA recognised NOIDA as the 'owner' of the plot; that the 'Corporate Debtor' in pursuance of the Lease Deed and JDA, commenced construction of the Group Housing Project in the name and style of 'Victory Ace' and the said Project was duly registered under UPRERA; that while the Project was under construction, CIRP was commenced on 06/09/2019; during the CIRP as the CoC and RP were looking to consider the Resolution Plan, it was felt that NOIDA has certain claims arising out of the lease premium payable and in order to balance the interest of all stakeholders, 'Victory Ace Society' (Homebuyers Association) having 234 allottees, preferred IA 4583 of 2020. A representation dated 23/10/2020 was issued by the RP to NOIDA with a request to participate in the CIRP of the 'Corporate Debtor'. In response to the said representation, NOIDA vide communication dated 06/11/2020, denied to participate in the CIRP on the basis that the JDA was non-est in law. NOIDA also informed that they have no contractual relationship with the 'Corporate Debtor' and preferred an IA Application 5050 of 2020 with a prayer that the said premises should not be included as an asset of the 'Corporate Debt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nded that Resolution Plan submitted by the second Respondent has been approved by the CoC on 07/05/2021 by over 90% votes and despite the fact that the Appellant had not filed its claim, the second Respondent in the Resolution Plan allocated a sum of Rs. 10 Crs./- towards the dues payable under the Lease Deed while leaving it open to the Appellant to recover its remaining dues, if any, to M/s. Logix. The Learned Counsel relied on the Judgements of the Hon'ble Supreme Court in 'Bikram Chatterjee & Ors.' Vs. 'Union of India', (2019) 19 SCC 161 in support of his case. 4. Submissions of the second Respondent/'Victory Ace Welfare Society': The Project was formerly registered with UPRERA and the Building Plans were prepared and submitted to the Appellant and also approved by the Appellant. All details about the Project were always in public domain and well within the knowledge of the Appellant. Further, in terms of the JDA, the 'Corporate Debtor' was liable to pay proportionate lease premium and rent to the Appellant, which the 'Corporate Debtor' duly paid and the Appellant accepted these payments from time to time. It was only based on the approvals given by the Appellant that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Logix and the 'Corporate Debtor' have clearly represented that the Appellant is the 'owner' of the plot and M/s. Logix is only a 'lessee' of the plot. The Appellant has not chosen to file their 'Claim' despite a representation and direction but instead decided to contest the validity of the JDA on vexatious ground. On 31/05/2021, the Appellant has issued a letter stating that it is in the process of filing the claim before the RP. Hence, the Appeal has adopted as contradictory stand inasmuch as of one in it has denied the rights of the 'Corporate Debtor' in the Project land and on the other hand it has sought permission to file its claim before the RP. The Resolution Plan submitted by the second Respondent has been accepted by the CoC and is pending approval before the Adjudicating Authority. An amount of Rs. 10 Crs./- was allocated to the Appellant towards its dues and is also entitled to recover the dues from M/s. Logix. 80% of the construction has been completed and the rights of over 500 buyers hangs in balance on account of the stand taken by the Appellant. The Appellant being a statutory authority is under the legal duty and obligation to protect the interest and r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as contemplated under the aforenoted Clause before sub-leasing portion of the land to the 'Corporate Debtor' for development of the Housing Project. It is also the case of the Appellant that they had no knowledge about the existence of the said JDA, GPA and Agreement to sell. At this juncture, it is relevant to reproduce the 'CONSTRUCTION' Clause as stipulated in the Lease Deed dated 08/06/2011: "CONSTRUCTION 1. The Lessee is required to submit building plan together with the master plan showing the phases for execution of the project for approval within 6 months from the date of possession and shall start construction within 12 months from the date of possession. Date of execution of lease deed(s) shall be treated as the date of possession. The Lessee/Sub-lessee(s) shall be required to complete the construction of group housing pockets on allotted plot as per approved layout plan and get the completion/occupancy certificate issued from Building Cell Department of the LESSOR in maximum 5 phases within a period of 7 years from the date of execution of the lease deed(s). The lessee/Sub-lessee(s) shall be required to complete the construction of minimum 15% of the total F.A.R. of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... int Development Agreement dated 08/03/2013, the 'Corporate Debtor' came into the occupation of the Project land. It is also seen from the record that the 'Corporate Debtor' rightly advertised the Project on Print and Digital Media. The material on record establishes that all details of the Project were in public domain and therefore the stand of the Appellant that they had absolutely no knowledge about the Project, holds no water. It is also seen from the record that the Project commencement date was 2012 and the completion date was 2019. There is no documentary evidence filed by the Appellant showing any sort of objection raised by them for this 7 year period. 12. A perusal of the JDA shows that the Agreement only creates development rights in favour of the 'Corporate Debtor' which is authorised by a GPA to carry out construction and sale of the flats. There is no leasehold interest created in favour of the 'Corporate Debtor'. There is no Clause in the Lease Deed which prevents M/s. Logix from transferring development rights or creating a sub-lease right to a third party. 13. Adverting to the submissions of the Learned Counsel for the Appellant that M/s. Logix has represented it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e have seen how, in the facts of this case, we are not concerned with the assets of the corporate debtor, least of all the assets of MHADA. The limited question before us is as to whether Section 14(1)(d) of the Code will apply to statutorily freeze 'Occupation' that may have been handed over under a Joint Development Agreement. 19. Likewise, the recent judgment Sushil Kumar Agarwal (supra) deals with specific performance and whether a Development Agreement may be specifically performed. The ratio of that judgment appears to be that where Development Agreements create an interest in property, they may be specifically performed, but not otherwise. As we have pointed out herein above, it is clear that Section 14(1)(d) of the Insolvency & Bankruptcy Code, when it speaks about recovery of property "occupied', does not refer to rights or interests created in property but only actual physical occupation of the property. For this reason also, this judgment is wholly distinguishable." 17. It is clear from the provisions of this Section that the development rights vested in the 'Corporate Debtor' is a proprietary right and the rights under JDA fall within the definition of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Lease Deed reads as hereunder: "12. The Lessee/sub-lessee shall not be allowed to change his role, otherwise the lease/sub-lease shall be cancelled and entire money deposited shall be forfeited." 22. At the cost of repetition there are no substantial reasons given by the Appellant for not having exercised their legal right in invoking Clause 12 of the Lease Deed and cancelling the Agreement. 23. We are also conscious of the fact that the Appellant NOIDA has challenged the Order passed by the Adjudicating Authority inter alia directing the Appellant to participate in the CIRP of the 'Corporate Debtor' and submit its claim before the RP. It is the case of the Resolution Applicant/second Respondent that the Appellant/NOIDA had taken a contradictory stand in its stay Application seeking a direction to the RP not to close its right to lodge its claim against the 'Corporate Debtor' till the final disposal of the Appeal. Further, vide letter dated 31/05/2021 addressed to the second Respondent NOIDA had stated that action was being taken to file the 'Claim' before the RP. The Learned Counsel for the second Respondent argued that this was an inconsistent stand being taken by NOI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CoC and submission to the Adjudicating Authority, irrespective of the content of the terms envisaged by the Resolution Plan, when unregulated by statutory timelines could occur after a lapse of time, as is the case in the present three appeals before us. Permitting such a course of action would either result in a down-graded resolution amount of the Corporate Debtor and/or a delayed liquidation with depreciated assets which frustrates the core aim of the IBC." 26. Though the aforenoted para speaks of withdrawals and modifications of 'Plans' submitted by the Resolution Applicants, the stress placed on the importance of timelines to be adhered to cannot be undermined. The Adjudicating Authority has allowed IA 4538 of 2020 filed by M/s. Victory Ace Social Welfare Society seeking a direction to NOIDA to participate in the CIRP Proceedings. This Application was allowed by the Adjudicating Authority with a direction to NOIDA to lodge its due 'Claim' with the RP as per law and participate in the CIRP Process through a duly authorised person and attend all the meetings. However, NOIDA preferred this Appeal seeking to set aside the Common Impugned Order dated 02/03/2021, instead of exercis ..... 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