Back
2024 Supreme(Online)(NCLAT) 791
NATIONAL COMPANY LAW APPELLATE TRIBUNAL
Justice Ashok Bhushan (Chairperson) , Hon'ble Mr. Barun Mitra (Member (Technical)) , Hon'ble Mr. Arun Baroka (Member (Technical)) ,
Lords Social Welfare Association (Home Buyers Association) Successful Resolution Applicant of Kindle Developers Pvt. Ltd. – Appellant
Versus
1. New Okhla Industrial Development Authority – Respondent
506/ND/2024 COMPANY APPEAL(AT)(INS)
Mr. Surendra Kumar, Mr. Aditya Nayyar, Ms. Aishwarya Prasad, Mr. Niraj Chamyal, Mr. Rachit Mittal, Mr. Aishvary Vikram, Mr. Lucky Sharma
The court affirmed that a lease cancellation prior to insolvency proceedings precludes the asset from being included in the resolution plan, emphasizing the lack of assent for continued possession.
Headnote:(A) Transfer of Property Act, 1882 - Section 116 - Insolvency and Bankruptcy Code, 2016 - Section 33(1) - Cancellation of lease - The Adjudicating Authority excluded Plot No. SC-01/D1, Sector 79 Noida from the Resolution Plan due to prior cancellation of lease for non-payment of dues - The Corporate Debtor's claim of holding over was rejected as no assent from NOIDA was established - The lease was cancelled on 13.08.2015, prior to the commencement of CIRP on 09.03.2018, thus the plot could not be part of the Resolution Plan. (Paras 11, 26, 29, 36)
(B) Corporate Insolvency Resolution Process - The Corporate Debtor's failure to pay dues led to cancellation of lease, and the Adjudicating Authority's findings were upheld, leading to the Corporate Debtor's liquidation. (Paras 54, 56)
Facts of the case:
The Corporate Debtor defaulted on lease payments for Plot No. SC-01/D1, leading to cancellation by NOIDA on 13.08.2015. The CIRP commenced on 09.03.2018, and the Adjudicating Authority later excluded the plot from the Resolution Plan.
Findings of Court:
The plot was not an asset of the Corporate Debtor due to the cancellation of the lease prior to CIRP.
Issues: Whether the Corporate Debtor retained any rights over the plot post-cancellation of the lease.
Ratio Decidendi: The court held that the Corporate Debtor could not claim rights under Section 116 of the Transfer of Property Act as there was no assent from NOIDA for continued possession after lease cancellation.
Result: Appeals dismissed; the Corporate Debtor is to be liquidated.
J U D G M E N T
(18th September, 2024)
Ashok Bhushan, J.
These two Appeals have been filed against the same order dated
11.01.2024 passed by the Adjudicating Authority (National Company Law Tribunal), New Delhi Bench, Court II in IA No. 1592 of 2019 filed by the New Okhla Industrial Development Authority (hereinafter referred to as “NOIDA”)- Respondent No.1 herein. By the application, the Adjudicating Authority vide impugned order has allowed IA No. 1592 of 2019 and excluded the Plot No. SC-01/ D1, Sector 79 Noida from Resolution Plan submitted in the CIRP of the Corporate Debtor.
2. Brief facts of the case necessary to be noticed for deciding these Appeals are:-
2.1. NOIDA executed a Lease Deed dated 24.10.2011 in favour of Kindle Developers Pvt. Ltd., the Corporate Debtor herein allotting Plot No. SC-01/ D1, Sector 79 Noida. A Correction Deed dated 19.10.2012 was issued correcting the lease area. Allotment was made on premium of Rs.120.75 Cr. out of which 10% was paid and balance 90% was to be paid by lessee in the manner provided in the Lease Deed along with the interest @ 11% per annum. By Correction Deed, the area of plot SC-01/ D1 was to be read as 40,000 sq. mtr. The Corporate Debtor committed default in payment of lease rent and interest as per the terms and conditions of the Lease Deed. NOIDA by order dated 13.08.2015 cancelled the Lease Deed on account of non-payment of due amount towards instalments in respect of the commercial/ sports city Plot No. SC-01/ D1, Sector 79 Noida. Prior to the cancellation of the Lease Deed, notice was also issued on 27.01.2015 requesting the Corporate Debtor to deposit the due amount. After cancellation of the Lease, the Corporate Debtor vide letter dated 14.06.2016 prayed for restoration of the plot. The CIRP against the Corporate Debtor commenced vide order dated 09.03.2018. In the CIRP of the Corporate Debtor, the Adjudicating Authority vide order dated 08.11.2019 while issuing notice to the NOIDA, directed the NOIDA to conduct an inspection of site and submit a report. On 02.12.2019, I.A No. 1592 of 2019 was filed by the NOIDA praying for exclusion of Plot No. SC-01/ D1, Sector 79 Noida from the Resolution Plan. A Resolution Plan in the CIRP of the Corporate Debtor was submitted which included the plot in question which came to be approved by the CoC on 04.12.2019. The Adjudicating Authority vide order dated 20.02.2020 noticed the application IA No. 1592 of 2019 filed by the NOIDA apprising the Bench that the lease has already been cancelled and substratum of the Corporate Debtor’s project is no more available and the plan has been approved by the CoC on the basis of the land belongs to the Corporate Debtor. The Adjudicating Authority observed that despite knowing the lease has been cancelled, Director/ Shareholders continued to accumulate money by thereby duping several investors. The Adjudicating Authority declined to consider the Resolution Plan and directed the Directors of the Corporate Debtor to file an Affidavit on their personal assets including all their moveable and immovable assets. The Resolution Professional filed Company Appeal (AT) (Insolvency) No. 605 of 2020 challenging the order dated 20.02.2020. This Tribunal held that the Appeal not maintainable, however, the Appeal was disposed of with direction to the Adjudicating Authority that it shall accord consideration to the matter in the light of the application filed before it which is pending consideration and after taking interests of all stakeholders. Subsequent to the order passed by this Tribunal, the Adjudicating Authority passed an order on 12.10.2020 under which the NOIDA proceeded to pass an order on the application filed by the Corporate Debtor for restoration of the plot. The application for restoration was rejected by the NOIDA vide letter dated 10.11.2020. In the order dated 27.07.2020, this Appellate Tribunal while deciding Company Appeal (AT) (Insolvency) No. 605 of 2020 has observed that the Adjudicating Aut
