Whether the appointment of the Corporate Debtor as the developer of the property could be terminated during the pendency of the CIRP – Rajendra M. Ganatra, RP for Sunshine Housing and Infrastructure Pvt. Ltd. Vs. Slum Rehabilitation Authority – NCLT Mumbai Bench
The Hon’ble Court in Hotel Gaudavan [2017] ibclaw.in 09 SC and Rajendra K. Bhutta [2020] ibclaw.in 27 SC have made it clear that no action in respect of any proceedings by any authority against the Corporate Debtor could be continued nor the Corporate Debtor could be divested of any property it its occupation. The termination of the Corporate Debtor as the developer of the property was made during continuation of the CIRP. There is no dispute that R1 was aware of the commencement of insolvency as early as 10.05.2019. Despite such information R1 went on to pass the order terminating the Corporate Debtor as the developer.
That facts and circumstances of the matter at hand taken in light of the statutory provisions under sections 238 & 14 of the Code would indicate that the Code would override all other legislations, be it Central, State, special or general. The Hon’ble Supreme Court in Rajendra K. Bhutta (supra) have in clear terms delineated the extent of this Code and limits of the other Authorities in dealing with a Corporate Debtor under CIRP. The termination of the Corporate Debtor as the developer would essentially result in the property being taken out of its possession. Both of which are prohibited under Section 14(1) of the Code.