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TMI Blog2022 (11) TMI 803X X X X Extracts X X X X X X X X Extracts X X X X ..... against Navneet Gupta, Liquidator of James Hotel (herein referred as "Respondent/Liquidator"). 2. The appellant has prayed to pass an order directing the respondent to accept the claim of Rs. 7,33,372/- submitted by the appellant/ Applicant 3. The brief facts of the case as stated in the application are that i. The CIRP of the corporate debtor was initiated by order dated 27.04.2017. During the CIRP Process no resolution plan was approved by the CoC within the statutory time limit. As no resolution plan has been approved, therefore, the CoC has decided to liquidate the Corporate Debtor in terms of Section 33(2) of the Code. ii. This Adjudicating Authority has passed an order dated 17.10.2018 for liquidation of the Corporate Debtor. The respondent-liquidator has made a public announcement in Form-B dated 24.10.2018 for the submission of the claim and the last date was given as 16.11.2018. iii. The appellant has failed to file the claim within the stipulated time and submitted the claim dated 28.01.2019 to the respondent in Form-E by speed post. The copy of the said claim Form and speed post is attached as Annexure-A1 of the application. iv. The liquidator has rejected t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f his appointment he had to serve two months' notice or give up one month's salary in lieu of his advance notice. The PF, TDS and other deductions from June and July, 2017 salary were deposited to the Income Tax Department and other Authorities on his behalf and the same could be claimed by him. Similarly, the excess amount of Rs. 32,903/- and the interest amount could not have been paid to him as the appointment letter does not provide for the same. The copy of the appointment letter is annexed as Annexure-R2 of the reply. 7. We have heard the learned counsel for the Appellant and the respondent and perused the records carefully. 8. In the present case, the appellant had served as Chief Operating & Financial Officer from 17.02.2014. The terms of the appointment of the appellant are mentioned in the appointment letter dated 17.02.2014 (Annexure R-2 of the reply). It is noted that at point No.2 of the appointment letter, it is categorically mentioned that a two-month's notice or one month's salary is required to be given. The relevant point no.2 of the appointment letter dated 17.02.2014 is reproduced below:- "2. In case your services are terminated, you will be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... avneet Gupta, Liquidator of James Hotel (herein referred to as "Respondent No.1/Liquidator") further, in IA No. 553/2020; Nehru Place Hotels and Real Estates Private Limited is another Respondent (herein referred as "Respondent no. 2/Successful Bidder"). 12. As the learned counsel for the applicant has stated that he has restricted his arguments to the rejoinder filed in CA No. 15 of 2020, only relevant prayers in CA 15/2020 are discussed along with those in IA No. 553/2020. In IA No. 553/2020, it is prayed to revoke the entire auction process and the liquidation of the Corporate Debtor by setting aside the result of the auction dated 03.02.2020 and to declare the sale of the Corporate Debtor as a going concern by the Respondent No. 1 as null and void being violative of Section 54 of the Code. It is further prayed to set aside the sale letter issued by Respondent No. 1- liquidator to Respondent No. 2 pursuant to the e-auction dated 03.02.2020. 13. The background of the case as stated in the applications are as under: i) The CIRP of the corporate debtor was initiated by an order dated 27.04.2017. During the CIRP Process, no resolution plan was approved by the CoC within the stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on estate as per provisions of Section 36(3) read with Section 36(4) of the Code. Section 36(3) and 36(4) makes it clear that the assets owned by the third party shall not be included in the liquidation estate assets and shall not be used for recovery in the liquidation. The land, which has been made part of the liquidation estate by Respondent No. 1, could not have formed part of the liquidation estate. Hence, the sale of the Corporate Debtor vide e-auction dated 03.02.2020 and consequential sale letters issued by Respondent No. 1 are filled with factual inaccuracies and procedural illegalities and irregularities. 15. The respondent has filed its reply vide Diary No.465 dated 17.01.2020, wherein, it is stated that prior to the initiation of the auction process by the liquidator, the corporate debtor has claimed that the property in question does not belong to it. The valuation of the property was conducted by the valuers in February, 2019 and subsequently, on November, 2019 by appointing valuers duly registered with the IBBI. These valuers carried out the valuation process following all norms as prescribed under law. The Collector Rate as stated by the applicant is for the freeho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the leasehold property cannot be included in the liquidation estates as per Section 36(4) of the Code is not tenable. It is also pointed out that prior to the initiation of the auction process, the Corporate Debtor has never claimed that the property in question does not belong to it nor did the Chandigarh administration ever opposed the auction of the property in question or its validity/legality. 17. The respondent-liquidator has also relied upon the following judgments: a) R. Kempraj Vs. Messrs Barton Son and Co., (1969) 2 SCC 594. b) Pradeep Oil Corporation Vs Municipal Corporation of Delhi & Anr, (2011) 5 SCC 270. c) Vali Pattabhirama Rao & Anr Vs Sri Ramanuja Ginning Factory & Rice., AIR 1984 AP 176 [DB]. d) Swadesh Ranjan Sinha Vs Haradeb Banerjee., (1991) 4 SCC 572. e) Commissioner Income Tax, 1262 Bombay & Ors. Vs Podar Cement Pvt. Ltd. & Ors. (1997) 5 SCC 482. f) Mysore Minerals Ltd., M.G. Road, Bangalore Vs. Commissioner of Income Tax, Karnataka, Bangalore., (1999) 7 SCC 106. 18. We have heard the learned counsel for the Applicant and the respondents and perused the records carefully. 19. The main issue raised by the applicant in these two applications for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "Assets" are mentioned as "Sale of James Hotels Limited, Corporate Debtor as a going concern along with all assets including leasehold land ad-measuring 9602 Sq. Yards, having 138 rooms, plant and machinery and other current assets including fixed deposit (lien free) worth Rs. 11 Crores (approx)" and the block is mentioned as 'Five Star Equivalent property as a going concern'". The terms and conditions of the E-auction further clarify that the "E-auction is being held on "AS IS WHERE IS WHATEVER THERE IS AND WITHOUT RECOURSE BASIS". 23. In common parlance, a going concern sale means selling on "as is where is basis" that allows the Liquidator to sell the business of the company under Liquidation. A going concern is always considered a better resolution of the Corporate Debtor than permitting part sale. However, there is no definition as such for 'going concern' either in the Code or in the Regulations. The Insolvency Law Committee in the report dated 26.03.2018 (Para 8.1 of the Report) examined the term "going concern" as "The phrase 'as a going concern' imply that the Corporate Debtor would be functional as it would have been prior to the initiation of CIRP, other than the restr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de, it relied on Explanation 32(1) of the Income Tax Act, 1961, which defines Tangible and Intangible Assets. Reliance has also placed on the definition of 'Intangible Assets' as defined by the Indian Accounting Standard ('IAS') . 28. After analysing threadbare the relevant provisions, the Hon'ble NCLAT observed that "we are of the considered view that the 'Leasehold Right' is an Intangible Asset of the 'Corporate Debtor' and that the Resolution Professional is empowered under Section 18(f) of the Code to take control and custody of any Asset over which the 'Corporate Debtor' has the 'Ownership Right'. We clarify that the Asset in the instant case are 'Leasehold Rights' and not the 'Plot' per-se. We are also conscious of the fact that substantial development and construction activity was carried on the subject Plot. Pursuant to the Lease Deed, the 'Corporate Debtor' had spent considerable amount of Financial Resources to develop the said Plot and there is no denial by the Appellant that they had in CA No.1101/PB/2019 taken a stand that 'all risks and rewards incidental to ownership' of the subject Plot was transferred to the 'Corporate Debtor' under the said Lease Deed." 29. In t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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