The Noida authority had terminated the lease deed of the subject ...

Noida authority's pre-CIRP termination of lease upheld; RP's inclusion of cancelled plot in resolution plan inappropriate.

Case Laws     IBC

October 16, 2024

The Noida authority had terminated the lease deed of the subject land prior to the commencement of the Corporate Insolvency Resolution Process (CIRP) of the Corporate Debtor. Despite this, the suspended management wrongfully included the subject plot in the resolution plan, claiming the lease was still subsisting. The Adjudicating Authority correctly held that since the lease was cancelled before CIRP initiation, the Corporate Debtor had lost possession rights, and the moratorium u/s 14 of the Insolvency and Bankruptcy Code (IBC) would not apply. The Resolution Professional (RP) should not have treated the cancelled plot as an asset and included it in the resolution plan without proper verification. The RP's actions, including preparing the Information Memorandum and obtaining Committee of Creditors' approval for the resolution plan containing the cancelled plot, were inappropriate. The RP failed to play a pivotal role in ensuring transparency and accountability during CIRP. The Appellate Tribunal affirmed the Adjudicating Authority's findings regarding the RP's unbecoming and unfair conduct, dismissing the appeal.

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