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SUPREME COURT OF INDIA
R.F. NARIMAN, S. RAVINDRA BHAT, V. RAMASUBRAMANIAN, JJ.
Rajendra K. Bhutta - Appellant
Versus
Maharashtra Housing And Area Development Authority And Another - Respondent(s)
Civil Appeal No. 12248 of 2018
Decided on : 19-02-2020.
INSOLVENCY AND BANKRUPTCY CODE, 2016 - SECTION 14(1)(D) - INTERPRETATION - RECOVERY OF PROPERTY BY OWNER OR LESSOR - OCCUPATION - DISTINCTION BETWEEN POSSESSION AND OCCUPATION - APPLICATION OF LATIN MAXIM REDDENDO SINGULA SINGULIS - EFFECT OF MORATORIUM ON JOINT DEVELOPMENT AGREEMENT - SCOPE OF SECTION 238 OF THE CODE.
Fact of the Case:
Corporate Debtor, Guru Ashish Construction Private Limited, entered into a Joint Development Agreement with MHADA and a Society for persons who are displaced and who are to be rehoused in the project for joint development of land. A Loan Agreement was entered into between the Corporate Debtor and Union Bank of India. MHADA issued a termination notice to the Corporate Debtor stating that upon expiry of 30 days from the date of receipt of the notice, the Joint Development Agreement as modified would stand terminated. The NCLT, by order dated 02.04.2018, dismissed the application filed by the Appellant, seeking a direction from the NCLT to restrain MHADA from taking over possession of the land till completion of the CIRP, stating that Section 14(1)(d) of the Code does not cover licenses to enter upon land in pursuance of Joint Development Agreements. The NCLAT, by order dated 14.12.2018, stated that the entire discussion of Section 14(1)(d) would now become academic.
Finding of the Court:
The expression “occupied” has been interpreted in numerous judgments of the Punjab and other Courts in India and it would be tedious as well as unnecessary to refer to all of them. On behalf of the judgment-debtor reference has been made to the interpretation of the terms “occupation” and “occupy” in clause (3) of the Mysore House Rent and Accommodation Control Order in Ratilal Bros. v. The Government of Mysore and another, AIR 1951 Mysore 66 and section 11(3) of the Bihar Buildings (Lease, Rent and Eviction) Control Act, 1947, in Balmukand Khatry v. Hari Narain and others, AIR 1949 Patna 31 and on behalf of the decree-holders reliance was placed on the definition of similar terms in section 7(3) of the Madras Buildings (Lease and Rent Control) Act,1946, as given in Dr.Mohammad Ibrahim v. Syed Ahmed Khan and another, AIR 1950 Mad 556 and in sub-section (5) of section 15 of the East Punjab Urban Rent Restriction Act, 1949, as made in Shakuntla Bawa v. Ram Parkash and others, ILR (1963) 1 Punj 827. These interpretations depend on the particular context in which the terms occur in the relevant statute but what has been observed in most of these cases is that the term “occupation” is of a wider import than the term possession and means something more than legal possession, which may be either actual or constructive.
Issues: Whether Section 14(1)(d) of the Insolvency and Bankruptcy Code, 2016 applies to statutorily freeze “occupation” that may have been handed over under a Joint Development Agreement.
Ratio Decidendi: The expression “occupied by” would mean or be synonymous with being in actual physical possession of or being actually used by, in contra-distinction to the expression “possession”, which would connote possession being either constructive or actual and which, in turn, would include legally being in possession, though factually not being in physical possession.
Final Decision: Appeal allowed; Impugned order of the NCLAT set aside; NCLT directed to dispose of the resolution professional’s application within six weeks.
JUDGMENT :
R.F. Nariman, J.
1. This appeal raises a question as to the correct interpretation of Section 14(1)(d) of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as “the Code”). The facts necessary to appreciate the setting in which this question arises are as follows:
housed in the project for joint development of land, ad measuring about 40 acres), which envisaged re-development insofar as 672 tenements in Siddharth Nagar, Goregaon, Mumbai were concerned.
ii. On 03.03.2008, the Maharashtra State Government granted its approval to the aforesaid Resolution.
iii. On 10.04.2008, a Tripartite Joint Development Agreement (hereinafter referred to as the “Joint Development Agreement”) was entered into between the Society representing persons occupying 672 tenements, MHADA and the Corporate Debtor.
iv. On 25.03.2011, a Loan Agreement was entered into and executed between the Union Bank of India and the Corporate Debtor for a sum of Rs. 200 Crores.
v. On 09.11.2011, a Deed of Modification was entered into between the three parties to the Joint Development Agreement, as after carrying out the survey of the land in question, it was found that certain parcels of land, which were identified with certain city survey numbers, were omitted, as a result of which they were also added, now making the project for a total of 47 acres of land.
vi. As a result of the Corporate Debtor defaulting in repayment of the loan to its financial creditor, namely, the Union Bank of India, an Insolvency Application under Section 7 of the Code, which was filed on 15.05.2017, was admitted on 24.07.2017, appointing an Interim Resolution Professional (i.e. the Appellant before us). A moratorium in terms of Section 14 was also declared by this order.
vii. On 12.01.2018 -after the imposition of the moratorium period under Section 14 of the Code -MHADA issued a termination notice to the Corporate Debtor stating that upon expiry of 30 days from the date of receipt of the notice, the Joint Development Agreement as modified would stand terminated. It was further stated that the Corporate Debtor would have to handover possession to MHADA, which would then enter upon the plot and take possession of the land including all structures thereon.
viii. One hundred and eighty days from the start of the Corporate Insolvency Resolution Process (hereinafter referred to as “the CIRP”) expired on 19.01.2018. The NCLT, by order dated 24.01.2018, extended the CIRP period by ninety days, as is permissible under the Code.
ix. On 01.02.2018, the Appellant filed M.A. No. 96 of 2018, seeking a direction from the NCLT to restrain MHADA from taking over possession of the land till completion of the CIRP, contending that such a recovery of possession was in derogation of the moratorium imposed under Section 14 of the Code. The NCLT, by order dated 02.04.2018, dismissed the aforesaid application, stating that Section 14(1)(d) of the Code does not cover licenses to enter upon land in pursuance of Joint Development Agreements, stating that such licenses would only be ‘personal’ and not interests created in property. An appeal against this order was preferred to the NCLAT.
x. Meanwhile, in a parallel proceeding, on 18.04.2018, the amount of time taken by the NCLT in deciding the application under Section 7 under the Code, being 55 days, was sought to be omitted from the total number of days allowable under the Code. This application was partially granted, excluding 38 out of 55 days. An appeal to the NCLAT proved successful, whereby the NCLAT, by order dated 09.05.2018, allowed the appeal and allo
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