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TMI BlogTHE INSOLVENCY AND BANKRUPTCY CODE, 2016 PREVAILS OF THE SPECIAL ECONOMIC ZONE ACT, 2005 AND ITS RULESX X X X Extracts X X X X X X X X Extracts X X X X ..... THE INSOLVENCY AND BANKRUPTCY CODE, 2016 PREVAILS OF THE SPECIAL ECONOMIC ZONE ACT, 2005 AND ITS RULES - By: - Mr. M. GOVINDARAJAN - Corporate Laws / IBC / SEBI - Dated:- 12-11-2024 - In NOIDA SPECIAL ECONOMIC ZONE AUTHORITY VERSUS MANISH AGARWAL ORS. - 2024 (11) TMI 214 - SUPREME COURT , Shree Boomika International Limited was allotted the Plot No. 59-I, measuring 16,100 sq. Meter at Noida Special Economic Zone by the appellant vide a lease deed dated 16.10.1995 for a period of 15 years. The said company defaulted in making payment on lease during the year 1999, to the appellant. There was no use of the said land from the year 2003 2004. This result in financial loss to the Government. The same is also in violation of the provisions of Sp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecial Economic Zone Act and Rules and guidance framed therein. The Appellant has also made a reference to a Public Notice dated 06.02.2018 by the Stressed Assets Stabilization Fund for sale of immovable and movable assets of the Corporate Debtor through an e-auction, fixing the total reserved price at Rs. 09.18 Crores. The appellant, as an operational creditor filed an application before the Adjudicating Authority for the initiation of Corporate Insolvency Resolution Process against Shree Boomika International Limited, the corporate debtor. The said application was admitted by the Adjudicating Authority on 11.07.2019. The Interim Resolution Professional, appointed by the Adjudicating Authority, caused public announcement, collected the clai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ms and formed the Committee of Creditors consisting of only one financial creditor the Stressed Asset Fund IDBI Bank Limited. The appellant, as an operational creditor, filed a claim to the Interim Resolution Professional for a sum of Rs.6,29,18,121/-. The same was admitted by the Interim Resolution Professional. Two valuers conducted the valuation and the average value of the two valuers is arrived at Rs.4.25 crores. The valuers observed that the amount arrived at by them could be collected subject to the fulfilment of Special Economic Zone Rules and the procedure laid down thereof. The Resolution plan was called for by the Resolution Professional. Commodities Trading, as a resolution applicant filed a resolution plan and submitted the sam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e before the Resolution Professional. The same was scrutinized and put up for the approval of the Committee of Creditors. Then the Resolution Professional filed an application before the Adjudicating Authority for the approval of the resolution plan. The Adjudicating Authority allowed the said application and approved the resolution plan on 05.10.2020. The approved plan granted Rs.50 lakhs to the appellant instead of the amount claimed by him. The appellant filed an objection before the Resolution Professional for the entire claim, failed which he has to undergo various legal measures to recover the full amount. Since the same was not adhered to by the Resolution Professional, the appellant filed a petition before the Adjudicating Authority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... challenging the same. The Adjudicating Authority dismissed the petition holding that it was not having jurisdiction to accept the prayer in the application which amount to setting aside of the approved resolution plan. The appellant may file an appeal before the National Company Law Appellate Tribunal ( NCLAT for short). The appellant filed an appeal before the NCLAT challenging the said order which was also dismissed by the NCLAT. The appellant filed the present appeal before the Supreme Court, challenging the order of NCLAT. The appellant submitted the following before the Supreme Court- The appellant was not informed about the auction proceedings initiated by the Resolution Professional which deprived the appellant from participating in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the auction. Once the claim is admitted by the Resolution Professional and indicated in the resolution plan, then the said amount is to be disbursed in entirety prior to the claim of the other claimants. The clause 10.9 of the resolution plan seeking exemption from the SEZ Act and Rules is directly contravention of the provisions of the Act and Rules. The appellant was working under the control of Ministry of Commerce and Industry could not have been commanded relating to its functions by the Resolution Professional. The attempt to by-pass the statutory payment would be unjust enrichment to the Resolution Applicant. No physical verification was done by the valuers. The Supreme Court, in regard to the contention of the appellant on valuers, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... observed that valuation is basically a question of fact. The same could not be interfered if the same is based on relevant material on record. The average of the two closest estimates given by the valuers were taken into consideration as fair value and liquidation value respectively, which were found to be just and reasonable. Since due process appears to have been followed the Supreme Court found no fault requiring interference by it. All the dues, including statutory dues owned by the Central Government, State Government and local authority, which is not the part of the Resolution Plan shall stand extinguished and no proceedings in respect of such dues for the period prior to the date on which the Adjudicating Authority had approved the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Resolution Plan could be pressed into service or continues. These observations will be applicable to the statutory dues and the claims as have been made. In regard to the other claims pertaining to the transfer fees, etc., were not to be interfered with by courts or tribunals as the same stood related to the commercial wisdom of the Committee of Creditors for they being the best persons to determine their interests, and any such interference is non-justiciable except as provided by Section 30(2) of the Code . The Supreme Court did not find no violation of the statue or procedure as also the norms fixed as per the erstwhile decisions of the Supreme Court the Resolution Plan as approved by the Committee of Creditors and the same have been acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epted deserved and has been rightly untouched. The Supreme Court further observed that the financial decisions taken by the Committee of Creditors in regard to the viability while evaluating a resolution plan would prevail. The Supreme Court did not agree with the contentions of the appellant that exemptions from NSEZ payments, including any type of fees or penalty for renewal of sub-lease and/or for transfer charges due with regard to the change of directorship or shareholding in favour of the Resolution Applicant has to be dealt with as per Clause 10.9 of the Resolution Plan cannot be accepted in the light of Section 238 of the Code , which provides for the provisions of Code to have an overriding effect over the other laws. The Supreme C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt further observed that the resolution plan has already been implemented the appellant received the amount of Rs.50 lakhs and accepted the same. The Supreme Court dismissed the appeal filed by the appellant holding that no interference could be made on the order of NCLT and as confirmed by the NCLAT. - Scholarly articles for knowledge sharing authors experts professionals Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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