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2024 Supreme(Online)(NCLAT) 1124
NATIONAL COMPANY LAW APPELLATE TRIBUNAL
Ajai Das Mehrotra, Member (Technical)
SEL Manufacturing Company Ltd. – Appellant
Versus
Punjab Small Industries & Export Corporation Limited – Respondent
Company Appeal (AT) (Insolvency) No. 881/2022 | IA Nos. 2446, 2447 & 2449 of 2022
For the Appellants/Petitioners: Ms. Purti Gupta, Ms. Heena George
For the Respondents: Mr. Anurag Ekka, Mr. Bhupesh Narula
The Court determined that enhanced land cost demands from an operational creditor are valid despite insolvency proceedings, emphasizing adherence to original lease terms and the inapplicability of the 'clean slate principle' in this context.
Headnote:(A) Insolvency and Bankruptcy Code, 2016 - Sections 5(20), 31 - Appeal against order of NCLT regarding demand for enhanced land cost after initiation of CIRP - Appellant claimed 'clean slate principle' applies; however, it failed to inform about prior demand and pending litigation concerning lease - The court found that the demand is valid and not part of CIRP. (Paras 11-22)
(B) Clean Slate Principle - New management cannot be burdened with previous liabilities unlisted in approved resolution plan - Conditions of original allotment and lease deed must be adhered to during transfer of leasehold rights. (Paras 12, 20, 21)
(C) Moratorium - Recovery actions against the lessee are restrained during CIRP but not afterwards. (Paras 28, 30)
Facts of the case:
Appellant initiated against by the NCLT concerning lease demand raised before insolvency proceedings; no prior claims filed during CIRP.
Findings of Court:
Demand raised is valid; permission required for lease transfer without compliance to original terms.
Issues: Whether operational creditor can raise belated claims post-CIRP and the applicability of the 'clean slate principle'.
Ratio Decidendi: The court emphasized nature of public authority's claims, affirmed that enhanced land costs must be paid before transfer rights, and reaffirmed that previously unmentioned claims remain valid post-CIRP.
Result: Appeal dismissed with all IAs closed.
| Table of Content |
|---|
| 1. initial appeal and background context. (Para 1 , 3 , 4) |
| 2. arguments regarding unpaid dues and creditor classifications. (Para 5 , 7 , 8 , 10) |
| 3. analysis of applicability of clean slate principle. (Para 12 , 14 , 21) |
| 4. judicial precedents governing resolution processes. (Para 19) |
JUDGMENT
(Hybrid Mode)
(20.03.2024)
[Per: Ajai Das Mehrotra, Member (Technical)]
1. The present appeal has been filed by M/s SEL Manufacturing Company Limited (hereinafter called the ‘Appellant’) against the order dated 03.06.2022 of National Company Law Tribunal, Chandigarh passed in IA No. 598 of 2021 in CP(IB) No. 114/Chd/Pb/2017.
2. The appellant has filed IA No.2447/2022 seeking Condonation of Delay of 07 days in filing the present appeal. Cause shown is sufficient. The delay of 07 days is condoned. IA No.2447 of 2022 is disposed of accordingly.
3. Briefly stated the facts of this case are that a Lease Deed dated 22.12.2008 was executed between the appellant and Punjab Small Industries & Export Corporation Limited (hereinafter called the ‘Respondent’) with respect to Plot No.256-57, Phase- VIII, Focal Point, Ludhiana for a period of 99 years.
4. Insolvency proceedings were initiated against the appellant vide order dated 11.04.2018. The public announcement was made by the Insolvency Resolution Professional (IRP) and claims were invited. No claim was filed by the respondent before the Resolution Professional during the CIRP proceedings. The resolution plan submitted by Consortium of Arr Ess Industries Private Limited and Leading Edge Commercial FZE (hereinafter referred as Successful Resolution Applicant or SRA), was approved by the Adjudicating Authority on 10.02.2021. On 05.03.2021, the respondent issued a demand notice pertaining to Plot No. 256-57, Phase-VIII, Focal Point, Ludhiana (hereinafter called the ‘subject plot’) whereby it claimed an amount of Rs.1,12,97,128/-. The demand was raised in term of Clause 2(iii) of the Allotment Letter dated 01.12.1995 and Clause 2(i) of the Lease Deed dated 22.12.2008.
5. In the oral arguments and the written submissions, the appellant has submitted that the subject plot forms a part of the resolution plan and has to be sold to pay the creditors. The appellant had filed IA No. 598 of 2021 before National Company Law Tribunal, Chandigarh seeking quashing of the said demand, which was dismissed vide impugned order dated 03.06.2022. The appellant submitted that they have furnished demand draft of Rs.1,05,34,414/- to the respondent (without prejudice to the legal rights and contentions of the Company) on 27.06.2022, which was returned by the respondent on the premise that the Amnesty Scheme under which the amount is being paid had expired. The respondent vide communication dated 27.06.2022 have enhanced the demand to Rs.2,17,74,283/-.
6. The main prayers sought in this appeal are to set aside the impugned order, to quash the demand notice dated 05.03.2022 and 27.06.2022 and to direct the respondent to issue ‘No Objection Certificate’ (NOC) for the subject plot.
7. The appellant has submitted that respondent is an Operational Creditor as per Section 5 (20) of Insolvency and Bankruptcy Code, 2016 (hereinafter called IBC, 2016); that it had not filed any claim during the CIRP, therefore, it cannot be permitted to raise belated claims at this stage; that the demand raised by the respondent does not form part of the approved resolution plan and it is not sustainable in the eyes of law as the past dues stand extinguished as per Clause–6 of the approved resolution plan; that the successful resolution applicant (hereinafter called SRA) cannot be saddled with fresh liabilities; that resolution plan is binding on all the stakeholders under Section 31of IBC, 2016; that the Operational Creditors are being paid 3% of the verified claims and at best 3% of the claim amount can be paid to the respondent like other Operational Creditors. The appellant relied upon the following judgments in support of its contentions:
(
