LiquSale-Disputed Properties or land /Title/deed/

Whether leasehold rights granted to Corporate Debtor by virtue of Registered Lease Deed is an ‘asset’ within the meaning of Section 18(f) of IBC or the said land be excluded from CIRP of Corporate Debtor – Shristi Infrastructure Development Corporation Ltd. Vs. Avishek Gupta, RP Sarga Hotel Pvt. Ltd. and Anr. – NCLAT New Delhi

Hon’ble NCLAT held that the leasehold rights which are owned by the Corporate Debtor consists of right to enjoy the immoveable property by virtue of Registered Lease Deed dated 31.03.2007. Explanation (a) to Section 18 of IBC does not come into way of the Corporate Debtor in enjoying the leasehold rights i.e. enjoyment of the property by virtue of Registered Lease Deed. We, thus, do not find any substance in the submission of the Appellant that the leasehold rights should be excluded from the assets of the corporate debtor. The leasehold rights which was granted to the Corporate Debtor by virtue of Registered Lease Deed dated 31.03.2007 is right to enjoy the property and erect building of the land is a right which is an ‘asset’ within the meaning of Section 18(f) and the said asset is owned by the corporate debtor by virtue of Registered Lease Deed.

Whether leasehold rights granted to Corporate Debtor by virtue of Registered Lease Deed is an ‘asset’ within the meaning of Section 18(f) of IBC or the said land be excluded from CIRP of Corporate Debtor – Shristi Infrastructure Development Corporation Ltd. Vs. Avishek Gupta, RP Sarga Hotel Pvt. Ltd. and Anr. – NCLAT New Delhi Read Post »

The rights of State Land Development Authorities on assets cannot be overridden by provisions of IBC, 2016 and any transfer to Successful Resolution Applicant/Successful Auction Purchaser has to be in accordance with the terms and conditions of the original allotment or lease deed or policy of the Authority | The Clean Slate Principle will not apply where prior demand – SEL Manufacturing Company Ltd. Vs. Punjab Small Industries & Export Corporation Ltd. – NCLAT New Delhi

In this important case, Hon’ble NCLAT held that the ‘clean slate principle’ will not apply to the factual matrix of the present case, where there was prior demand from public sector land authority which was also not disclosed during CIRP to the IRP or the CoC.

The Hon’ble Bench also held that the rights of the Public Sector/ State Land Development Authorities on assets owned by them cannot be overridden by provisions of IBC, 2016 and any transfer to the successful Auction Purchaser or Successful Resolution Applicant has to be in accordance with the terms and conditions of the original allotment or lease deed or policy of the Authority.

The rights of State Land Development Authorities on assets cannot be overridden by provisions of IBC, 2016 and any transfer to Successful Resolution Applicant/Successful Auction Purchaser has to be in accordance with the terms and conditions of the original allotment or lease deed or policy of the Authority | The Clean Slate Principle will not apply where prior demand – SEL Manufacturing Company Ltd. Vs. Punjab Small Industries & Export Corporation Ltd. – NCLAT New Delhi Read Post »

Whether Adjudicating Authority (NCLT) has jurisdiction on issue in regard to the title of property of Corporate Debtor – Ramesh Singh Rawat Vs. SPG Global Distribution Pvt. Ltd. – NCLAT New Delhi

In this case, the issue is in regard to the title of the property of the Corporate Debtor which is in CIRP and as per Section 60(5)(c) of the Code the question of fact as to whether the asset of the Corporate Debtor is the property of the Appellant on account of the agreement or is the property of the Corporate Debtor in CIRP is a question relating to the insolvency resolution.

Hon’ble NCLAT held that Section 60(5) of IBC provides the power to the Adjudicating Authority which can be invoked to entertain or dispose of any claim made by or against the corporate debtor or corporate person, including claims by or against any of its subsidiaries situated in India; and also any question of priorities or any question of law or facts, arising out of or in relation to the insolvency resolution or liquidation proceedings of the corporate debtor or corporate person under this Code. Section 238 of the Code creates an overriding effect which provides that the provisions of this Code shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law.

Whether Adjudicating Authority (NCLT) has jurisdiction on issue in regard to the title of property of Corporate Debtor – Ramesh Singh Rawat Vs. SPG Global Distribution Pvt. Ltd. – NCLAT New Delhi Read Post »

IBC prevails over State Financial Corporation Act, 1951 – Mr. Rajesh Lahila Vs. West Bengal Industrial Development Corporation Ltd. – NCLT Kolkata Bench

Hon’ble NCLT Kolkata Bench holds that:
(i) Section 29(5) of the State Financial Corporation Act contains provisions which makes the Financial Corporation Corporation to be deemed owner of such concern, only for the purposes of initiating suits by or against the concern, and the State Financial Corporation shall sue and be sued in the name of the concern. This in our view is only for the purpose of initiating or defending any suit with reference to the property which has been pledged with the Financial Corporation, and do not make the State Financial Corporation the owner of such properties.
(ii) In this case, the inconsistency arises between Section 18 of the Code and Section 29 of State Financial Corporation Act. While Section 18(f) of the Code, the Code enunciates that any asset recorded the balance sheet of the Corporate Debtor as its assets, and it is the duty of the resolution professional to take custody of such assets of the Corporate Debtor. The explanation to the said Section 18 of Code also provides that assets owned by Corporate Debtor but not in possession of Corporate Debtor will also need to be taken custody whereas Section 29 of State Financial Corporation Act provides that if the borrower fails to owner honour the terms and conditions of the borrowings then the Corporation which has got first charge over the immovable properties of the Corporate Debtor would be entitled to retain and dispose properties pledged.
(iii) Thus, this inconsistency needs to be resolved and the same is resolved by applying Section 238 of Code, which provides that IBC would prevail over any other statute in the case of such inconsistency.

IBC prevails over State Financial Corporation Act, 1951 – Mr. Rajesh Lahila Vs. West Bengal Industrial Development Corporation Ltd. – NCLT Kolkata Bench Read Post »

CIRP Claim filing ‘Form’ is directory, claim must be supported by proof is important | NCLT can recall Resolution Plan approval order passed under Sec. 31(1) of IBC | Claim filed in wrong Form/category would have to be accorded due consideration in the category to which it belongs – Greater Noida Industrial Development Authority Vs. Prabhjit Singh Soni and Anr. – Supreme Court

In this landmark decision, Hon’ble Supreme Court rules that:

(i) Even if a claim submitted by a creditor against the CD is in a Form not as specified in the CIRP Regulations, 2016, the same has to be given due consideration by the IRP or the RP.
(ii) If a claim is submitted by an operational creditor claiming itself as a financial creditor, the claim would have to be accorded due consideration in the category to which it belongs provided it is verifiable.
(iii) The use of the words “a person claiming to be an operational creditor” in the opening part of CIRP Regulation 7, and the words “a person claiming to be a financial creditor” in CIRP Regulation 8, indicate that the category in which the claim is submitted is based on the own understanding of the claimant.
(iv) Once the claim was submitted with proof, it could not have been overlooked merely because it was in a different Form. The Form in which a claim is to be submitted is directory. What is necessary is that the claim must have support from proof.
(v) If any such shortcoming appears in the resolution plan, it may send the resolution plan back to the COC for re-submission after satisfying the parameters so laid down.
(vi) A Court or a Tribunal, in absence of any provision to the contrary, has inherent power to recall an order to secure the ends of justice and/or to prevent abuse of the process of the Court.
(vii) Even in absence of a specific provision empowering the Tribunal to recall its order, the Tribunal has power to recall its order.
(viii) However, such power is to be exercised sparingly, and not as a tool to re-hear the matter.
(ix) The recall application was maintainable notwithstanding that an appeal lay before the NCLAT against the order of approval passed by the Adjudicating Authority.

CIRP Claim filing ‘Form’ is directory, claim must be supported by proof is important | NCLT can recall Resolution Plan approval order passed under Sec. 31(1) of IBC | Claim filed in wrong Form/category would have to be accorded due consideration in the category to which it belongs – Greater Noida Industrial Development Authority Vs. Prabhjit Singh Soni and Anr. – Supreme Court Read Post »

Issue of the Doctrine of Adverse Possession where Successful Buyer purchased the properties of the Corporate Debtor in Liquidation auction – P.G. Sales Corporation Vs. Laxmanbhai Mohanbhai Vegad and Ors. – NCLT Ahmedabad Bench

In this case, a Security Guard stated that he has been staying in the premises in a small room where he has been staying with his family (and has been working as security guard) for last 39 years and the corporate debtor/suspended management used to deduct the rent amount of the room situated at disputed premises. As he has been in peaceful, continuous, uninterrupted and unobstructed possession of room, he is entitled to own the premises on the basis of “The Doctrine of Adverse Possession” and the principles laid down by Hon’ble Supreme Court in various matters.
Hon’ble NCLT Ahmedabad Bench held that:
(i) At that time of confirming sale, the vacant possession of the premises were handed over to the applicant. As the vacant possession is handed over, it means that it was not occupied by any person at that time. After taking vacant possession from the liquidator it was duty of the purchaser to protect his properties. Therefore, now this cause will not fall within the ambit of liquidation process.
(ii) When the vacant possession was given to the applicant, the liquidator is no more responsible in the matter. So also, this Tribunal is not having jurisdiction to entertain the applications which fall outside the ambit of liquidation process.

Issue of the Doctrine of Adverse Possession where Successful Buyer purchased the properties of the Corporate Debtor in Liquidation auction – P.G. Sales Corporation Vs. Laxmanbhai Mohanbhai Vegad and Ors. – NCLT Ahmedabad Bench Read Post »

Section 230 of Companies Act, 2013 which envisages one valuer cannot be the basis to bypass Liquidation Process Regulation 35 | Merely a Corporate Debtor has no valid or any marketable title the property, the value of the property cannot be described as Zero, the Registered Valuers are to value the property | Sharing of Valuation Reports with Potential Resolution Applicants by Liquidator is quite contrary to Liquidation Process Regulation 34(4) – Kineta Global Ltd. in consortium with Power Mech Projects Ltd. Vs. IDBI Bank Ltd. and Ors. – NCLAT Chennai

In this landmark decision, Hon’ble NCLAT holds that:
(i) The requirement of Regulation 35 of the liquidation process Regulations is a separate one from the process mentioned under Section 230 of the Companies Act, 2013 and Section 230 of the Companies Act, 2013 which envisages one valuer cannot be the basis to by pass the Regulation 35 of liquidation process Regulations.
(ii) Section 230 of the Companies Act, 2013 is quite broader and wider in its purview and the Code, 2016
(iii) Merely because in respect of the title of the property, if a Corporate Debtor has no valid or any marketable title, ipso facto, the value of the property cannot be described as Zero. The Registered Valuers are to value the property.
(iv) The Sharing of the Valuation Reports with the Potential Resolution Applicants by the Liquidator is quite contrary to the Regulation 34(4) of the Liquidation Process Regulations.

Section 230 of Companies Act, 2013 which envisages one valuer cannot be the basis to bypass Liquidation Process Regulation 35 | Merely a Corporate Debtor has no valid or any marketable title the property, the value of the property cannot be described as Zero, the Registered Valuers are to value the property | Sharing of Valuation Reports with Potential Resolution Applicants by Liquidator is quite contrary to Liquidation Process Regulation 34(4) – Kineta Global Ltd. in consortium with Power Mech Projects Ltd. Vs. IDBI Bank Ltd. and Ors. – NCLAT Chennai Read Post »

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