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TMI Blog2023 (2) TMI 487X X X X Extracts X X X X X X X X Extracts X X X X ..... t of this allotment letter, a license agreement was entered into on 20.01.2007. This license agreement under the relevant clauses also indicated a time bound schedule. The lease deed accordingly was executed on 12.11.2008. It was for a period of 99 years with a relevant date as per the letter of allotment dated 09.01.2007. Clauses 15, 17 and 18 of the lease deed indicate that in the event of non-payment of rent, action will be taken under the GPP Act - the allotment letter, the license agreement and the lease agreement are contracts which have to be read coterminous with each other, in continuation and conjunction. Since the lease agreement is not executed after a certificate of completion of the conditions as stipulated in the license agreement, the contention of learned Senior Advocate Mr.Thakore that the conditions of the lease deed will supersede the license agreement and once the lease agreement is executed, the license agreement stood extinguished is misconceived. Reading the relevant paragraphs in Tata Consultancy Services Limited [ 2021 (11) TMI 798 - SUPREME COURT ] as cited by the respondent, the NCLT can intervene when, it is even the case of the petitioner that there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceedings inasmuch as, by communication dated 10.02.2022, the liquidator was informed of the impugned notices. It is also the case of the petitioner that in October 2021, E-mails were exchanged between the respondent no.1-GIDC and the liquidator and therefore, though the GIDC was aware of the appointment of liquidator, the impugned communications were not addressed to the liquidator. 4. Mr.Mihir Thakore learned Senior Advocate with Mr.Hriday Buch, Mr.Aayush Agarwal and Mr.Bhash Mankad learned advocates for the petitioner has made the following submissions: 4.1 That the impugned notice dated 18.01.2022 is issued without following the principles of natural justice. No opportunity of hearing was given to the company which is now represented by its liquidator. He would submit that though earlier E-mails were addressed to the Liquidator, the impugned notices were sent at the registered address of the company and also issued to the address of the subject property which was an open land having no employee of the company for accepting the notice. No proof of these notices being served was on record and in such circumstances therefore, there was violation of principles of natural j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ince the company was ordered to be liquidated, no suit or a legal proceedings could be initiated under a company. 4.7 Further, section 33(5) of the IBC also bars initiation of proceedings against the corporate debtor where, a liquidation order is passed. 4.8 Mr.Thakore would further submit that the NCLT does not have jurisdiction to adjudicate upon the issues raised in this petition. He would submit that the present dispute falls outside the purview of the IBC and is in the realm of the public law which the NCLT cannot decide. He would submit that the GIDC has proceeded to initiate action under the GPP Act and though the action impugned has an impact on the liquidation proceedings, the same will not fall within the jurisdiction of NCLT. In support of this submission, Mr.Thakore would rely on the following decisions: (A) Embassy Property Development Private Limited v. State of Karnataka and others reported in (2020) 13 SCC 308 (B) Gujarat Urja Vikas Nigam Limited v. Amit Gupta and Others reported in (2021) 7 SCC 209 (C) Tata Consultancy Services Limited v. Vishal Ghisulal Jani reported in (2022) 2 SCC 583 4.9 Lastly submitting, it was pointed out by Mr.Tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... admitted position that the petitioner has not carried out any development work over the allotted land. The contention of the petitioner therefore that there is violation of principles of natural justice is misconceived. Non-grant of hearing has not caused any prejudice to the petitioner in view of the admitted position that no development has been put up over the allotted land. 5.6 In support of his submission he would rely on the decision in case of State of Manipur and others v. Y. Token Singh and others reported in (2007) 5 SCC 65. 5.7 Mr.Joshi would further submit that all notices and orders have been served to the petitioner at the registered address mentioned in the lease deed as well as the plot in question. This has been in compliance of the provisions of the GPP Act. The provisions of the GPP Act overwrites the provisions of the Transfer of Properties Act. He would rely on a decision in case of Cantonment Board v. Church of North India reported in 2012 (12) SCC 573. 5.8 As per Section 36(4)(a)(iv) of the IBC, he would submit that assets which are owned by a third party and which are in possession of the corporate debtor, as per the contractual arrangements which d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Supreme Court in case of Arun Kumar Jagatramka v. Jindal Steel and Power Limited reported in 2021 SCC OnLine SC 220. He would also rely on a decision in case of Sundresh Bhatt, Liquidator of ABG Shipyard v. Central Board of Indirect Taxes and Customs reported in 2023 (1) SCC 472, where the Supreme Court has considered the scheme of the IBC vis-a-vis the Customs Act. 6.4 He relied on the decision of the Supreme Court in the case of Rajendra K. Bhutta v. Maharashtra Housing and Area Development Authority and Another reported in 2020 (13) SCC 208, where the Court has held that it is not open for any authority to take possession of any asset occupied by the corporate debtor during the moratorium period. 7. Having considered the submissions made by the learned advocates for the respective parties, the issues that deserves consideration are; (I) Whether the lease agreement has to be read in isolation as canvassed by the learned counsel for the petitioner and whether such termination is in violation of the principles of natural justice? (II) The other issue that needs consideration is whether the issues raised in this petition can be considered by the NCLT in the applicati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... carried out as stipulated thereunder and therefore, GIDC was right in invoking the condition of the license agreement and the deed of lease. On this count therefore, no fault can be found in the order dated 28.12.2021 passed under the provisions of the GPP Act on termination of the license agreement. 7.4 The contention on behalf of the petitioner that the procedure has been carried out in violation of principles of natural justice is also misconceived merely because the liquidator has addressed an E-mail would not in effect render it necessary for the impugned notices to be served on the liquidator. In accordance with the provisions of Section 4 of the GPP Act, the notices have been served on the company, at its registered office and in accordance with the provisions of Section 4 on the property in question. In view of the admitted position of fact, that no development has been carried out on the plot in question, in light of the decision of the Supreme Court in case of Y.Token Singh and Ors. (supra) no prejudice is caused to the petitioner. 7.5 The concept of lease, in the perception of the petitioner, since it being a lease for a period of 99 years would transfer title is m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant called upon the Corporate Debtor to remedy this default within 30 days from the date of receipt of the said notice, failing which the appellant stated that it shall terminate the PPA by issuing a termination notice; and 21.2 The basis of the Second Notice is that under Article 9.2.1(a) of the PPA, there was a default in the operation and maintenance of the Plant. Once again, the appellant called upon the Corporate Debtor to remedy the O M default within 90 days from the receipt of the notice, failing which the appellant stated that it shall terminate the PPA by issuing a termination notice. 22. The first respondent issued his replies to both the notices on 10 May 2019. The replies are summarized below: 22.1 The reply to the First Notice states that the Corporate Debtor s PPA with the appellant is its only PPA, and hence they are heavily dependent on it for reaching a resolution under the IBC. In case the appellant terminates the PPA, prospective resolution applicants (PRAs) who had submitted their expression interest for the Corporate Debtor might not submit a resolution plan, which would eventually lead to liquidation of the Corporate Debtor, defeating the ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sub- Section (j) of Section 12 of the National Human Rights Commission Act, 1993 which confers (2020) 8 SCC 531; hereinafter referred to as Satish Kumar Gupta Ibid, para 69 (2010) 14 SCC 209 PART I NHRC with ―such other functions as it may consider necessary for the promotion of human rights. While construing the provision, this Court held that:― 45 .It is not necessary that each and every case relating to the violation of human rights will fit squarely within the four corners of Section 12 of the 1993 Act for invoking the jurisdiction of the NHRC. One must accept that human rights are not edicts inscribed on a rock. They are made and unmade on the crucible of experience and through reversible process of human struggle for freedom. They admit of a certain degree of fluidity. Categories of human rights, being of infinite variety, are never really closed. That is why the residuary clause in Sub-section (j) has been so widely worded to take care of situations not covered by Sub- sections (a) to (i) of Section 12 of the 1993 Act. 46. The jurisdiction of NHRC thus stands enlarged by Section 12(j) of the 1993 Act, to take necessary action for the protection of hu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... due to Government: Where these Rules do not make any specific provision for the collection of any duty, or of any deficiency in duty if the duty has for any reason been shortlevied, or of any other sum of any kind payable to the Central Government under the Act or these Rules, such duty, deficiency in duty or sum shall, on a written demand made by the proper officer, be paid to such person and at such time and place, as the proper officer may specify. 15. The points of difference between the above two Rules were that (i) whereas Rule 10 applied to cases of short levy through inadvertence, error, collusion or misconstruction on the part of an officer, or through misstatement as to the quantity, description or value of the excisable goods-on the part of the owner Rule 10-A which was a residuary clause applied to those cases which were not covered by Rule 10 and that (ii) whereas under Rule 10, the deficit amount could not be collected after the expiry of three months from the date on which the duty or charge was paid or adjusted in the owners account-current or from the date of making the refund, Rule 10- A did not contain any such period of limitation. (emphasis suppli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can be considered by attracting the provisions of Section 465 of the Code. The aforesaid provision cannot be applied to a patent defect of jurisdiction. Then again it is not a case of reversing the sentence or order passed by a Court of competent jurisdiction but is a case where only a particular item of evidence has been taken out of consideration as that evidence of the socalled approver has been held by us to be not a legal evidence since pardon had been tendered by a Court of incompetent jurisdiction. In our opinion, to such a situation the provisions of Section 465 cannot be attracted at all. It is true, that procedures are intended to subserve the ends of justice and undue emphasis on mere technicalities which are not vital or important may frustrate the ends of justice. The Courts, therefore, are required to consider the gravity of irregularity and whether the same has caused a failure of justice. To tender pardon by a Chief Judicial Magistrate cannot be held to be a mere case of irregularity nor can it be said that there has been no failure of justice. It is a case of total lack of jurisdiction, and consequently the follow up action on account of such an order of a Magistr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contains a provision which either runs counter to Section 4 or expressly excludes the application of Section 4, to that extent Section 4 would become inapplicable. Counsel for the respondent strongly relied on the provisions of Section 53 which runs thus: 53. Avoidance of voluntary transfer.- Any transfer of property not being a transfer made before and in consideration of marriage or made in favour of a purchaser or incumbrancer in good faith and for valuable consideration shall, if the transferor is adjudged insolvent on a petition presented within two years after the date of the transfer, be voidable as against the receiver and may be annulled by the Court. (emphasis supplied) It is relevant to note that unlike Section 4 of the PIA, Section 60(5)(c) of the IBC is not subject to other provisions of the statute. Hence, Section 60(5)(c) of the IBC has been worded more expansively than Section 4 of the PIA. 89 In respect of the interplay between Sections 53 and 4 of the PIA, in Johri Lal Soni (supra), this Court further held: 4. It was submitted that the effect of Section 53 of the Act clearly is that it bars the jurisdiction of the Insolvency Court to determ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 60(5)(c) of the IBC. This Court held that an insolvency court was empowered to consider the validity of void transfers under Section 4 of the PIA, which did not explicitly fall under Section 53 of the PIA. However, this Court s decision was premised on the finding that Section 53 of the PIA only dealt with voidable transfers. This Court noted that the jurisdiction of an insolvency court will be restricted in matters where a voidable transfer has taken place beyond the time-limit stipulated under Section 53 within which the transfer could be annulled by the court. Hence, in the name of exercising a residuary jurisdiction, a court cannot cloak itself with jurisdiction which is contrary to the provisions of a statute. However, at the same time, as held by this Court in Johri Lal Soni (supra), an interpretation which renders the objective of a residuary jurisdiction nugatory cannot be upheld by this Court. A fine line has to be drawn between ensuring that a residuary jurisdiction is not rendered otiose due to an excessively restrictive interpretation, as well as, guarding against usurpation of power by a court or a tribunal not vested in it. 91 The residuary jurisdiction of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n by this Court in Gujarat Urja (supra). In any event, the intervention by the NCLT and NCLAT cannot be characterized as the re-writing of the contract between the parties. The NCLT and NCLAT are vested with the responsibility of preserving the Corporate Debtor s survival and can intervene if an action by a third party can cut the legs out from under the CIRP. 26. Admittedly, the appellant is neither supplying any goods or services to the Corporate Debtor in terms of Section 14 (2) nor is it recovering any property that is in possession or occupation of the Corporate Debtor as the owner or lessor of such property as envisioned under Section 14 (1) (d). It is availing of the services of the Corporate Debtor and is using the property that has been leased to it by the Corporate Debtor. Thus, Section 14 is indeed not applicable to the present 20 case. However, in Gujarat Urja (supra) it was held that the NCLT s jurisdiction is not limited by Section 14 in terms of the grounds of judicial intervention envisaged under the IBC. It can exercise its residuary jurisdiction under Section 60(5)(c) to adjudicate on questions of law and fact that relate to or arise during an insolv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion to the insolvency resolution or liquidation proceedings of the corporate debtor or corporate person under this Code. 7.13 The reading of the provision indicates that the National Company Law Tribunal shall have a jurisdiction to entertain or dispose of any question arising out of or in relation to insolvency resolution. 7.14While in the case of Gujarat Urja (supra) and Tata Consultancy Services Limited (supra) the contract was central to the success of CIRP. Reading paras 84 to 91 of the judgment in Gujarat Urja (supra), what is evident is that the residuary jurisdiction of NCLT under Section 60(5)(c) of the IBC provides a wide discretion to adjudicate questions of law or fact arising from or in relation to the insolvency resolution proceedings. Reading the relevant paragraphs in Tata Consultancy Services Limited (supra) as cited by the respondent, the NCLT can intervene when, it is even the case of the petitioner that there is an embargo under the IBC. In the application filed by the respondent which is pending before the NCLT, it is open for the petitioner to take all the contentions raised in this petition. The residuary jurisdiction of the Tribunal therefore to dec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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