Gujarat High Court
Biotor Industries Limited (In ... vs Gujarat Industrial Development ... on 24 August, 2023
Author: Sunita Agarwal
Bench: Sunita Agarwal
NEUTRAL CITATION
C/LPA/259/2023 ORDER DATED: 24/08/2023
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/LETTERS PATENT APPEAL NO. 259 of 2023
In R/SPECIAL CIVIL APPLICATION NO. 3688 of 2022
With
CIVIL APPLICATION (FOR STAY) NO. 1 of 2023
In R/LETTERS PATENT APPEAL NO. 259 of 2023
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BIOTOR INDUSTRIES LIMITED (IN LIQUIDATION) REPRESENTED BY
LIQUIDATOR MR. SANJAY KUMAR AGARWAL
Versus
GUJARAT INDUSTRIAL DEVELOPMENT CORPORATION
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Appearance:
MR R. S. SANJANWALA, SR. COUNSEL with MANDEEP SINGH
SALUJA(8791) for the Appellant(s) No. 1
for the Respondent(s) No. 2,3
MR MIHIR JOSHI, SR. COUNSEL with MR RD DAVE(264) for the
Respondent(s) No. 1
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CORAM:HONOURABLE THE CHIEF JUSTICE MRS. JUSTICE
SUNITA AGARWAL
and
HONOURABLE MR. JUSTICE ANIRUDDHA P. MAYEE
Date : 24/08/2023
ORAL ORDER
(PER : HONOURABLE THE CHIEF JUSTICE MRS. JUSTICE SUNITA AGARWAL)
1. This Appeal is directed against the order of the learned Single Judge in dismissing the writ petition which has been filed challenging the order dated 28.12.2021 passed by the Gujarat Industrial Development Corporation ("GIDC" for short), terminating the licence vide order dated 28.12.2021 and the lease deed vide order dated 31.12.2021 as also the notice dated 18.01.2022 under Section 5(1) of the Gujarat Public Premises (Eviction of Unauthorized Occupants) Act, 1972 ["GPP Act" for short].
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2. The petitioner/appellant herein is the Official Liquidator of the company known as Biotor Industries Limited, which is in liquidation as per the order dated 31.12.2018 passed by the National Company Law Tribunal ("NCLT" for short). The proceedings for auction of the notified properties was initiated by the Official Liquidator and the auction was fixed on 05.02.2022. It seems that in the meantime, the proceedings for termination of the licence agreement and the lease deed was initiated by the GIDC, which has resulted in issuance of the notice dated 18.01.2022.
3. Before the Writ Court, the contention of the petitioner was that the order of termination of lease/licence and consequential notice under Section 5(1) of the GPP Act were in violation of the principles of natural justice. No opportunity of hearing was given to the company which was in liquidation and is now represented through the Official Liquidator/appellant herein. The contention, thus, was that even in view of availability of alternative statutory remedy under the GPP Act, the writ petition under Article 226 of the Constitution can be entertained for the act of the respondents being in gross violation of principles of natural justice.
4. Dealing with these aspects of the matter, it was held by the learned Single Judge that the licence agreement and the lease agreement are contracts which have to be read coterminous with each other, in continuation and conjunction. Since the lease agreement is not executed after a certificate of completion of the conditions as stipulated in the licence agreement, the contention of the learned counsel for the petitioner that the conditions of the lease deed will supersede the licence agreement and once the lease agreement is executed, the licence agreement stood extinguished, Page 2 of 7 Downloaded on : Sun Sep 17 02:18:46 IST 2023 NEUTRAL CITATION C/LPA/259/2023 ORDER DATED: 24/08/2023 undefined is misconceived. It was further noted that in the context of undisputed facts, reading of the notice issued under the GPP Act, it is evident that as per the terms of the contract, no development has been carried out as is stipulated thereunder and, therefore, the GIDC was right in invoking the condition of the licence agreement and the deed of lease. It was, thus, held that no fault can be found in the order dated 28.12.2021 passed under the provisions of the GPP Act in termination of the licence agreement. As regards the contention of the petitioner that the procedure has been carried out in violation of principles of natural justice and there was no intimation to the Official Liquidator, it was held that since the notice under Section 4 of the GPP Act has been served on the company, at its registered office and in accordance with the provisions of Section 4 on the property in question, no prejudice can be said to have been caused to the writ petitioner.
5. Proceeding further, on the arguments of the learned counsel for the petitioner that in view of the liquidation proceedings initiated under the liquidation order dated 31.12.2018, by the NCLT, in view of Section 33(5) of the Insolvency and Bankruptcy Code, 2016 ("IBC" fort short), the proceedings under the GPP Act for eviction of the company cannot be sustained, it was noted that as per the concept of lease under Section 105 of the Transfer of Property Act, no title is transferred to the company. The argument on the bar of Section 33(5) of the IBC was, thus, repelled.
6. However, in the conclusion, noticing the fact that the respondent GIDC is before the NCLT by filing an application and in the meantime, the petitioner has also approached the NCLT and that in view of the provisions of Section 60(5)(c) of the IBC, the Page 3 of 7 Downloaded on : Sun Sep 17 02:18:46 IST 2023 NEUTRAL CITATION C/LPA/259/2023 ORDER DATED: 24/08/2023 undefined NCLT will have wide discretion to adjudicate on the question of law and the fact arising from or in relation to the insolvency resolution proceedings, both the petitioner and the respondents are relegated to approach the NCLT. It is observed by the learned Single Judge that in the pending proceedings before the NCLT, they will have right to raise all the contentions raised in the writ petition.
7. It is argued by the learned counsel for the appellant herein that in view of the finding returned by the learned Single Judge on the validity of the proceedings under the GPP Act, with respect to the act of the respondent GIDC in termination of licence/lease and issuance of notice under Section 5(1) of the GPP Act, nothing remains to be adjudicated before the NCLT. The contention is that the finding returned by the learned Single Judge on the controversy with regard to the legality of the proceedings under the GPP Act will come in the way of the writ petitioner/appellant herein, even though all the contentions and the issues raised in the writ petition have been left open by the learned Single Judge to be agitated before the NCLT. It is further argued that in any case, once the insolvency resolution proceedings had been initiated and the liquidation order was passed, it was not open for the respondent GIDC to terminate the lease/licence and issue notice of eviction to the company, which was under liquidation.
8. In rebuttal, it is argued by the learned counsel appearing for the respondent GIDC that the question as to whether the property in question, which was subject matter of licence/lease executed by the GIDC, would form part of "liquidation estate" as per Section 36 of the IBC, has to be decided by the NCLT in the pending application, in view of the provisions of Section 60(5)(c) of the IBC. The learned Page 4 of 7 Downloaded on : Sun Sep 17 02:18:46 IST 2023 NEUTRAL CITATION C/LPA/259/2023 ORDER DATED: 24/08/2023 undefined Single Judge, therefore, cannot be said to have erred in relegating the parties to approach the NCLT. So far as the claim of the petitioner with regard to the validity of the proceedings under the GPP Act, the contention is that the remedy of appeal against the notice under Section 5(1) of the GPP Act, is to be availed by the respondent, in as much as, the question with regard to the validity of the proceedings under the GPP Act cannot be adjudicated by the NCLT.
9. Taking note of the above submissions, we find that the learned Single Judge while dealing with the arguments of the learned counsel for the petitioner on the maintainability of the writ petition in view of the availability of alternative statutory remedy on the plea of violation of principles of natural justice, has proceeded to record the finding in paragraph 7.4 of the decision that in view of the admitted position that no development has been carried out on the plot in question, and the notice is issued to the company at its registered address and in accordance with the provisions of Section 4 on the property in question, the plea that the procedure has been carried out in violation of principles of natural justice, cannot be entertained.
10. We do not find any infirmity in the said finding returned by the learned Single Judge and that no prejudice is caused to the writ petitioner with the issuance of notice under Section 4 read with Section 5(1) of the GPP Act in as much as, an effective statutory remedy of appeal under the GPP Act is available to the writ petitioner.
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11. It is, however, clarified that, in case, the writ petitioner approaches the competent authority under the GPP Act challenging the action of the respondent GIDC in termination of licence/lease and issuance of consequential notice under Section 5(1) of the GPP Act, any of the findings returned by the learned Single Judge in the order impugned will not come in the way of the writ petitioner/appellant herein.
12. In so far as the proceedings before the NCLT in the pending application, suffice to note that the question as to whether the property in question would form part of "liquidation estate" under Section 36 of the IBC so as to attract the bar of Section 33(5) of IBC is to be determined by the NCLT, by adjudication on the question of law and facts arising out of or in relation to the insolvency resolution or liquidation proceedings of the corporate debtor under the IBC. While determining the said questions, it would be open for the writ petitioner/appellant to raise all possible contentions of law and facts for effective determination of the dispute before the NCLT. It may further be noted that on the question as to whether the property in question forms part of "liquidation estate" under Section 36, the learned Single Judge has not expressed any opinion and the NCLT will not be guided by any of the observations made by the learned Single Judge, if they come in the way of the writ petitioner/appellant.
13. In any case, the proceedings for determination of the disputes both by the competent authority under the GPP Act as also the National Company Law Tribunal (NCLT) under Section 60(5)(c) of the IBC shall be brought to their logical end without being influenced by any of the observations made by the learned Single Judge in the Page 6 of 7 Downloaded on : Sun Sep 17 02:18:46 IST 2023 NEUTRAL CITATION C/LPA/259/2023 ORDER DATED: 24/08/2023 undefined judgment impugned.
14. With the above observations and direction, while modifying the order of the learned Single Judge to the above extent, the Appeal stands disposed of.
15. In order to facilitate the parties to approach the National Company Law Tribunal in the pending proceedings to seek interim protection, we provide that both the parties to the petition/appeal shall maintain status quo for a period of four weeks from today.
16. Further, on the request of the learned counsel for the appellant, it is provided that, in case, the appellant files the appeal before the competent authority under the GPP Act within a period of three weeks from today, the competent authority shall entertain the appeal without raising objection about limitation and shall decide the same on merits.
17. The Civil Application for stay stand disposed of, accordingly.
(SUNITA AGARWAL, CJ ) (ANIRUDDHA P. MAYEE, J.) cmk Page 7 of 7 Downloaded on : Sun Sep 17 02:18:46 IST 2023