Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2024 Supreme(Online)(NCLAT) 1421

NATIONAL COMPANY LAW APPELLATE TRIBUNAL
Ashok Bhushan, J
Nilesh Sharma Resolution Professional - Today Homes – Appellant
Versus
Mordhwaj Singh & Ors. – Respondent
Company Appeal (AT) (Insolvency) No. 1691 of 2023 | Company Appeal (AT) (Insolvency) No. 331 of 2024 | Company Appeal (AT) (Insolvency) No. 336 of 2024 | Company Appeal (AT) (Insolvency) No. 337 of 2024

Advocates:
For the Appellants/Petitioners:Mr. Ramji Srinivasan, Sr. Advocate with Mr. Kanishk Khetan, Mr. Ashu Kansal, Mr. Shivam Jaiswal
For the Respondents: Mr. Rajesh Kumar Gautam, Mr. Anant Gautam, Mr. Dinesh Sharma, Ms. Liki, Kushagra Nilesh Sahay
Mr. Sumesh Dhawan, Ms. Priya Singh, Mr. Raghav Dembla
Mr. Nipun Gautam

Development Rights constitute property under the IBC, entitling the Resolution Professional to possession during insolvency proceedings.

Headnote:(A) Insolvency and Bankruptcy Code, 2016 - Sections 18 and 25 - Corporate Debtor's Development Rights - The court held that the Resolution Professional is entitled to possession of the land under dispute since development rights were assigned to the Corporate Debtor and emphasized that the Adjudicating Authority has jurisdiction over such matters. (Paras 60-70)

(B) Possession - The court ruled that the Resolution Professional adequately proved possession of the land for a housing project. The decision of the Adjudicating Authority finding insufficient evidence was overturned. (Paras 60-70)

Facts of the case:
The Appeals arose out of disputes regarding the possession of land measuring 10.81 acres, which was claimed by both the Corporate Debtor and the owners. An interim order initially allowed possession for the Resolution Professional, but subsequent disputes prompted a series of appeals. (Paras 1-4)

Findings of Court:
The court found the owners could not revoke the development rights granted via Power of Attorney before the initiation of the Corporate Insolvency Resolution Process (CIRP). The Adjudicating Authority was competent to determine the issues regarding possession, which were not to be relegated to a Civil Court. (Paras 60-70)

Issues: The court addressed whether the Resolution Professional demonstrated possession of the disputed land and if the Adjudicating Authority had jurisdiction to rule on possession matters related to development rights. (Paras 12-12)

Ratio Decidendi: The Development Rights constituted property under Section 3(27) of the IBC, and the NCLT had the jurisdiction to decide on issues concerning development rights within the CIRP. The assessment of material evidence supported the Resolution Professional's claims to possession. (Paras 60-70)

Result: Appeals allowed; adverse rulings in previous orders regarding possession were overturned, affirming the Resolution Professional's entitlement to possession.

JUDGMENT

(25^th October, 2024) Ashok Bhushan, J.

These four Appeals arises out of the order passed by the Adjudicating Authority (National Company Law Tribunal) New Delhi, Court III in the Corporate Insolvency Resolution Process (CIRP) of the Corporate Debtor- ‘M/s. Today Homes and Infrastructure Pvt. Ltd.’. Company Appeal (AT) (Insolvency) No. 1691 of 2023 and Company Appeal (AT) (Insolvency) No.331 of 2024 have been filed against the common order dated 05.12.2023 passed in IA No.3356 of 2020 and IA No.5001 of 2021. Company Appeal (AT) (Insolvency) No.336 of 2024 and Company Appeal (AT) (Insolvency) No. 337 of 2024 have been filed against the order dated 22.12.2023 passed in IA No. 4876 of 2020 and IA No.987/2021.

2. Company Appeal (AT) (Insolvency) No. 1691 of 2023 and Company Appeal (AT) (Insolvency) No.331 of 2024 arise out of the same facts and events which need to be noted separately whereas facts giving rise to Company Appeal (AT) (Insolvency) No.336 of 2024 and Company Appeal (AT) (Insolvency) No. 337 of 2024 are common and shall be noted separately.

Company Appeal (AT) (Insolvency) No. 1691 of 2023 and Company Appeal (AT) (Insolvency) No. 331 of 2024

3. It shall be sufficient to refer facts and pleadings in Company Appeal (AT) (Insolvency) No. 1691 of 2023 for deciding both the Company Appeal (AT) (Insolvency) No. 1691 of 2023 and Company Appeal (AT) (Insolvency) No.331 of 2024. The Respondents- Mordhwaj Singh, Vikramjit Singh, Ram Narayan Singh and Bhim Singh are owners of agricultural land admeasuring 35.2062 acres situated in village Behrampur, Gurugram, Haryana. The Respondents shall hereinafter referred to as owners. The owners entered into a Development Agreement on 03.03.2007 with New India City Developers Private Limited (hereinafter referred to as ‘Developer’) to develop a group housing project and an Information Technology Park on the said land after obtaining the license/ approval/ sanctions from the appropriate authorities. It was agreed between the parties that 45% of the Group Housing FAR and IT Park FAR was to belong to the owners and 55% to Developer. The Developer was provided full exclusive and unfettered right and control over the development and to sell and transfer its share allocation. A License No.03 of 2009 was issued by Directorate of Town and Country Planning, Haryana on 12.02.2009 in favour of the owners and New India being collaborator granting permission for setting up a Group Housing Colony on 21.637 acres of the said land. Certain disputes arose between the owners and New India, the developer. An application under Section 11 of the Arbitration and Conciliation Act 1996 was preferred by New India before the High Court of Punjab and Haryana. High Court vide its order dated 29.05.2008 appointed a sole arbitrator. In arbitration proceeding, the parties entered into Settlement Agreement and Consent Award dated 05.09.2009 was passed. As per Consent Award, the owner would execute a Power of Attorney in favour of the developer conferring rights for obtaining license in respect of the said entire land parcel. The parties further agreed that the possession of the entire land would vest with the joint receivers till license is obtained with regard to Cyber Park on 12.55 acres of land. On 19.01.2010, the owners executed irrevocable Special Power of Attorney in favour of the developer in order to enable it to approach different authorities for obtaining licences, clearances, approvals etc. On 19.01.2010, the owners executed another irrevocable Special Power of Attorney in favour of the Corporate Debtor with respect to the land which is to be developed for the Group Housing Project and the Cyper Park which Power of Attorney was registered on 20.01.2010. On 30.07.2010, developer entered into an agreement with the corporate debtor whereby for consideration of Rs.40,00,00,000/-, developer assigned all the rights, obligations, responsibilities and interest in the entire Floor Space Index (FSI) totalling to 8,00

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