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2024 Supreme(Online)(NCLAT) 1165
NATIONAL COMPANY LAW APPELLATE TRIBUNAL
M. Venugopal, J
M/s. BHAGYANAGAR HOTELS PRIVATE LIMITED – Appellant
Versus
MR. KRISHNA MOHAN GOLLAMUDI – Respondent
Company Appeal (AT) (CH) (INS) No. 13 of 2024 | IA No. 199 / 2024
For the Appellants/Petitioners: Mr. E. Om Prakash, Mr. Puneet Yadav
For the Respondents: Mr. Avinash Desai, Mr. Amir Bavani
The Tribunal ruled that an entity without a valid lease or exclusive charge over property cannot challenge eviction proceedings in insolvency matters; possession after lease expiry is deemed unlawful.
Headnote:(A) Insolvency and Bankruptcy Code, 2016 - Sections 35, 36 and 60(5) - Impleadment application - A bank sought to be impleaded in a liquidation matter concerning property rights - Court emphasized the necessity of being a proper party in such proceedings, ruling that the petitioner does not have an exclusive charge over the superstructure built on the corporate debtor's land. (Paras 30-38)
(B) Jurisdiction of the Tribunal - The Tribunal established that it has the jurisdiction under the I&B Code to order eviction of a tenant whose lease has expired, highlighting that possession without a valid lease is unlawful. (Paras 7.11-7.14)
(C) Leasehold rights - Arguments regarding the legal status of a tenant following the expiry of the lease and the requirement for a registered instrument to substantiate claims of prolonged occupancy were discussed. (Paras 72-74)
Facts of the case:
A bank applied for impleadment as a second respondent in a corporate liquidation case concerning property disputes with a hotel chain, which maintained its right to the property based on previous financial arrangements and leases.
Findings of Court:
The Tribunal concluded that the bank lacks exclusive rights, as its documentation only established a pari passu charge and that the appellant's possession was unlawful after their lease expired.
Issues: The court addressed whether the bank was a necessary party and if the legal framework allows for its involvement in eviction proceedings.
Ratio Decidendi: The ruling noted that the presence of the bank was not required; the Tribunal's decision to order eviction was lawful irrespective of the bank's claims, underscoring the importance of proper legal standing in eviction matters.
Result: The application for impleadment was dismissed, and the appeal regarding eviction was also dismissed, confirming the direction for the appellant to vacate the premises.
| Table of Content |
|---|
| 1. facts about the parties and jurisdiction (Para 1 , 2 , 3) |
| 2. details of financial obligations and loans (Para 4 , 5 , 6 , 7) |
| 3. claims regarding property ownership and investment (Para 14 , 15 , 16) |
| 4. counterarguments regarding legal rights (Para 18 , 19 , 20) |
| 5. court's observations on legal principles (Para 30 , 31 , 32) |
| 6. legal criteria for necessary parties in court (Para 33 , 34 , 35) |
| 7. court's analysis on lease expiration (Para 36 , 37 , 39) |
| 8. final judgment and decision to dismiss (Para 46 , 48) |
ORDER
(Hybrid Mode)
Justice M. Venugopal, Member (Judicial):
IA No.199/2024 in Comp. App (AT) (CH) (INS) No.13/2024 (Impleadment Application):
Introduction:
The Petitioner / Bank / Intervenor, has filed IA No. 199 / 2024 (under Rule 11 r/w. Rule 31 of NCLAT Rules, 2016) in Comp. App (AT) (CH) (INS) No. 13 / 2024, seeking to `Implead’ in main `Appeal’, as Proposed 2nd Respondent.
2. It is the plea of the Petitioner / Bank / Proposed 2nd Respondent, that the details of `Working Capital Facilities’, sanctioned to the `1st Respondent / Appellant’, is mentioned as under:
Amount Sanctioned:
Term Loan Rs. 24,00,00,000/- SODM Rs. 6,00,00,000/- Bank Guarantee Rs. 1,00,00,000/-
---------------------
Total Rs.31,00,00,000/-
----------------------
Amount Disbursed:
Term Loan Rs. 24,00,00,000/- SODM Rs. 6,00,00,000/- Bank Guarantee Rs. 1,00,00,000/-
---------------------
Total Rs.31,00,00,000/-
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3. According to the Petitioner / Bank (Proposed 2nd Respondent in main `Appeal’), the Working Capital Facilities, were sanctioned to the `1st Respondent / Appellant’, through Letter dated 30.03.2011 (vide Ref. No. RPR/3018/ADV/2011), and that the `1st Respondent / Appellant’, had accepted the terms and conditions of the `Sanction Letter’.
Petitioner / Bank’s Submissions:
4. The Learned Counsel for the Petitioner / Bank / Proposed 2nd Respondent, submits that the `1st Respondent / Appellant’, had entered into a `Composite Hypothecation Agreement’, on 31.03.2011, wherein, they had acknowledged the aforesaid `Loan Liability’, and in consideration of the `Credit Facilities’, the `1st Respondent / Appellant’, had created an `Equitable Mortgage’, over the `Superstructure’, by way of `Deposit of Title Deeds of Immovable Properties’, on the `Land’, standing, in the name of `M/s. Sainath Estate Private Limited’ (under `Liquidation’), backed by `Corporate Guarantee’.
5. The Learned Counsel for the Petitioner / Bank, points out that the `1st Respondent / Corporate Debtor’ and the `Corporate Guarantor’, had executed the `Loan Security Documents’, in confirmation of the `Loan Liability’, which runs as follows:
a). `Composite Hypothecation Agreement’, dated 31.03.2011.
b). `Guarantee Agreement’, being executed by Shri. Kokkirala Preemsagar Rao, Smt. Kokkirala Surekha and Shri. S. Satyanarayana Rao dated 31.03.2011.
c) Corporate Guarantee, as executed by M/s. Sainath Estate Private Limited dated 31.03.2011.
d) Confirmation of Creation of second / subsequent equitable mortgage, executed by M/s. Sainath Estate Private Limited dated 31.03.2011.
e) Acknowledgement of debt for all types of facilities by borrower / sureties, executed by M/s. Bhagyanagar Hotels Private Limited dated 01.03.2017.
f) Acknowledgement of debt for all types of facilities by borrower / sureties, executed by M/s. Bhagyanagar Hotels Private Limited dated 17.12.2019.
g) Acknowledgement of debt for all types of facilities by borrower / sureties, executed by M/s. Bhagyanagar Hotels Private Limited dated 17.06.2021.
h) Acknowledgement of debt for all types of facilities by borrower / sureties, executed by M/s. Bhagyanagar Hotels Private Limited dated 20.01.2022.
i) Acknowledgement of debt for all types of facilities by borrower / sureties, executed by M/s. Bhagyanagar Hotels Private Limited dated 05.12.2023.
j) Acknowledgement of debt for all types of facilities by borrower / sureties, executed by M/s. Bhagyanagar Hotels Private Limited dated 09.12.2023.
6. It is the stand of the Petitioner / Ba
