Naxpar Pharma Private Limited vs Sanjai Kumar Gupta on 27 September, 2022

[Cites 2, Cited by 0]

National Company Law Appellate Tribunal

Naxpar Pharma Private Limited vs Sanjai Kumar Gupta on 27 September, 2022

This Appeal has been filed against the order dated 25.04.2022 passed by National Company Law Tribunal, Kolkata Bench, Kolkata in IA No.48/KB/2022 filed by the then Interim Resolution Professional ("IRP"), Shri Kuldeep Verma. The Appellant, who claims to be in possession of an asset of immovable property belonging to the Corporate Debtor, aggrieved Company Appeal (AT) (Insolvency) No. 824 of 2022 1 by impugned order, by which direction was issued to handover possession, has come up in this Appeal.

2. Brief facts of the case for deciding this Appeal are:

(i) An Application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as the "Code") was filed by the ICICI Bank Limited against Stone India Limited ("Corporate Debtor"), which Application was admitted by the Adjudicating Authority vide its order dated 09.11.2021.

Mr. Kuldeep Verma was appointed as an IRP.

(ii) In pursuance of the order dated 09.11.2021, public announcement was made by the IRP on 12.11.2021. Assets of the Corporate Debtor were spread over several part of the country. An IA No.48/KB/2022 on 13.01.2022 was filed by the IRP impleading the Appellant and seeking a direction to restore the possession of immovable property situated at Baddi, State of Himachal Pradesh. A reply was filed by the Appellant to IA No.48/KB/2022.

(iii) The Adjudicating Authority after hearing the parties passed an interim order in IA No.48/KB/2022 directing the Respondent to handover possession of the property to the IRP within a period of two weeks from the date of passing of the order. The Appellant aggrieved by the order has come up in this Appeal.

Company Appeal (AT) (Insolvency) No. 824 of 2022 2

3. We have heard Shri Rahul Parasrampuria, Authorised Representative of the Appellant and Shri Rishav Banerjee, learned Counsel for the Respondent.

4. The Authorised Representative of the Appellant, challenging the impugned order submitted that the Adjudicating Authority has no jurisdiction to pass the impugned order. It is submitted that the Adjudicating Authority cannot function as a Civil Court. The Application filed by the IRP before the Adjudicating Authority was not maintainable. The impugned order is unreasoned order without giving an opportunity to the Appellant. The Appellant is in possession of immovable property in pursuance of Leave and License Agreement dated 30.12.2019 executed by the Corporate Debtor. The Appellant had earlier obtained Agreement to Sell dated 20.08.2019 for land measuring 8 Bigha 02 Biswas land situated at Tehsil Baddi, District-Salon, Himachal Pradesh. An amount of Rs.5,00,000/- was paid as earnest money. Agreement contemplated that physical possession shall be handed over to the purchaser at the time of execution and registration of Sale Deed. Further, the Appellant has made payment of an amount of Rs.17.95 lakhs to the vendors of the Corporate Debtor. It is further noticed that the Licensor failed to obtain No Objection Certificate ("NOC") and confirmation of release of original documents of the premises from two Banks within a period of 90 days from the date of signing of the said Agreement for Sale to pay the balance amount, execute sale deed and hand over possession of the License Premises to the Licensee. The License Agreement further contemplated that Licensor shall not charge Company Appeal (AT) (Insolvency) No. 824 of 2022 3 any license fee from the Licensee for grant of Leave and License. Leave and License Agreement further granted permission to the Licensee to use and occupy the said premises.

5. The learned Counsel for the Respondent appearing for Resolution Professional refuting the submissions made on behalf of the Appellant submits that the Appellant has no right to continue in the possession of the assets belonging and owned by the Corporate Debtor. It is submitted that the Appellant claims right to possession on the basis of Leave and License Agreement, which is claimed to be executed on 30.12.2019 without any consideration. The Leave and License Agreement is void since it was executed without consideration and further, the document is unregistered document. The property is mortgaged to two Banks. The Appellant is exercising illegal physical control on the premises located at Baddi, State of Himachal Pradesh, for which an Application was filed by the then IRP. The ownership of Corporate Debtor is admitted by the Appellant. The Agreement to Sell never fructified into any Sale Deed. The appellant is obliged to handover the possession of the property to the IRP/RP, which is owned by the Corporate Debtor

6. We have considered the submission of the learned Counsel for the parties and have perused the record.

7. The Agreement to Sell, which is relied by the Appellant dated 30.12.2019 contemplated sale of the immovable property of the Corporate Debtor for a consideration of Rs.1.70 crores. In the Agreement, the Appellant claimed to have paid Rs.30 lakhs. There is no proof by the Company Appeal (AT) (Insolvency) No. 824 of 2022 4 Appellant for making payment of balance amount of Rs.1.40 crores. The Leave and License Agreement, which is relied by the Appellant dated 30.12.2019 is an unregistered document, where the Corporate Debtor claims to have granted the permission to the Licensee to occupy the property together with building till the time Licensor and Licensee execute the Sale Deed. Clause 2 of the Agreement, which is relevant provides:

"2. That it is agreed by and between the parties that the Licensor shall not charge any License Fee from the Licensee, for grant of Leave & License said Licensed Premises."

8. The Leave and Licensee Agreement is thus admittedly without any consideration. Section 18 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as the "IBC") enumerates the duties of the IRP. Section 18, sub-section (1), sub-clause (f) provides:

"18(1)(f) take control and custody of any asset over which the corporate debtor has ownership rights as recorded in the balance sheet of the corporate debtor, or with information utility or the depository of securities or any other registry that records the ownership of assets including -

(i) assets over which the corporate debtor has ownership rights which may be located in a foreign country;

(ii) assets that may or may not be in possession of the corporate debtor;

(iii) tangible assets, whether movable or immovable;

Company Appeal (AT) (Insolvency) No. 824 of 2022 5

(iv) intangible assets including intellectual property;

(v) securities including shares held in any subsidiary of the corporate debtor, financial instruments, insurance policies;

(vi) assets subject to the determination of ownership by a court or authority;"

9. It was thus obligation of IRP to take control and custody of all assets on which Corporate Debtor has ownership right. The present is a case where ownership of the asset is not denied even by the Appellant. The submission, which has now been pressed by the learned Counsel for the Appellant is that Adjudicating Authority has no jurisdiction to entertain the Application, i.e., IA No.48/KB/2022 nor has jurisdiction to pass any order. The Leave and License Agreement under which the Appellant is occupying the assets could not have been cancelled by the Adjudicating Authority, nor the Leave and License could be disregarded by the Adjudicating Authority by directing the Resolution Professional to take possession of the assets.

10. The learned Counsel for the Appellant has relied on the judgment of the Hon'ble Supreme Court in Embassy Property Developments Private Limited vs. State of Karnataka and Others - (2020) 13 SCC 308. In the case before the Hon'ble Supreme Court the Corporate Debtor held a mining lease granted by Government of Karnataka, which was to expire on 25.05.2018. Notice for premature termination had already been issued by the Government of Karnataka on the allegation of violation of statutory Rules and the terms and conditions of the lease deed. Interim Resolution Company Appeal (AT) (Insolvency) No. 824 of 2022 6 Professional had filed a Writ Petition in the High Court of Karnataka seeking a declaration that the mining lease should be deemed to be valid upto 31.03.2020. During the pendency of the Writ Petition, Government of Karnataka rejected the proposal for deemed extension on the ground that Corporate Debtor had contravened the provisions of Rule. The Writ Petition was withdrawn with liberty to file a fresh Writ Petition. The Resolution Professional instead of filing Writ Petition filed an Application before NCLT, Chennai praying for setting aside the order of the Government of Karnataka and seeking a declaration that the lease should be deemed to be valid up to 31.03.2020. The NCLT Chennai allowed the Application and directed the Government of Karnataka to execute supplemental lease deed in favour of the Corporate Debtor for a period up to 31.03.2020. The said order was challenged before the High Court and the High Court set aside the order of the NCLT and remanded the matter to NCLT for fresh consideration of the Application. The NCLT again passed an order on 03.05.2019 allowing the Application. A Writ Petition was again filed in the High Court in which an interim order was passed, staying the order of NCLT, which was challenged before the Hon'ble Supreme Court. In the above background Hon'ble Supreme Court in the above case held that the Adjudicating Authority had no jurisdiction to pass the impugned direction. In paragraph 46, the Hon'ble Supreme Court recorded its conclusion in following words:

"46. Therefore, in fine, our answer to the first question would be that NCLT did not have jurisdiction to entertain an application against the Government of Company Appeal (AT) (Insolvency) No. 824 of 2022 7 Karnataka for a direction to execute supplemental lease deeds for the extension of the mining lease. Since NCLT chose to exercise a jurisdiction not vested in it in law, the High Court of Karnataka was justified in entertaining the writ petition, on the basis that NCLT was coram non judice."

11. The judgment of the Embassy Property Developments Private Limited (supra) has no application in the facts of the present case. In the preset case, the only direction issued by the NCLT is that Appellant to handover the possession of the property to the RP within two weeks of the assets, which belonged to the Corporate Debtor. As noted above, under Section 18(1)(f), it is statutory obligation of the IRP to take control of all assets of the Corporate Debtor.

12. The next question to be considered is as to whether the Appellant has any right to resist for taking possession of the assets by the IRP. The defence, which has been taken before us on behalf of the Appellant is on the Leave and License Agreement dated 30.12.2019. As noted above, the Leave and License Agreement was executed without any consideration. Clause 2 of the Leave and License Agreement clearly contemplated that Licensor shall not charge any License Fee from the Licensee, for grant of Leave and License of the said premises. Section 25 of the Contract Act, 1872 provides that Agreement without consideration are void, unless it is in writing and registered. Section 25 of the Contract Act is as follows:

"25. Agreement without consideration, void, unless it is in writing and registered or is a promise to compensate for something done or is a promise Company Appeal (AT) (Insolvency) No. 824 of 2022 8 to pay a debt barred by limitation law.--An agreement made without consideration is void, unless--

(1) it is expressed in writing and registered under the law for the time being in force for the registration of 1 [documents], and is made on account of natural love and affection between parties standing in a near relation to each other; or unless (2) it is a promise to compensate, wholly or in part, a person who has already voluntarily done something for the promisor, or something which the promisor was legally compellable to do; or unless;

(3) it is a promise, made in writing and signed by the person to be charged therewith, or by his agent generally or specially authorized in that behalf, to pay wholly or in part a debt of which the creditor might have enforced payment but for the law for the limitation of suits.

In any of these cases, such an agreement is a contract.

Explanation 1.--Nothing in this section shall affect the validity, as between the donor and donee, of any gift actually made.

Explanation 2.--An agreement to which the consent of the promisor is freely given is not void merely because the consideration is inadequate; but the inadequacy of the consideration may be taken into account by the Court in determining the question whether the consent of the promisor was freely given."

13. The present is a case where Leave and License Agreement was executed without any consideration and the document, which has been relied by the Appellant is an unregistered document. Thus, it is not saved Company Appeal (AT) (Insolvency) No. 824 of 2022 9 by exception as carved out in Section 25, sub-section (1). The document is a void document, which shall not give any right to the Appellant to resist taking up the possession by the RP of the assets belonging to the Corporate Debtor.

14. We, thus, are satisfied that the Adjudicating Authority has not committed any error in directing the Appellant to handover the possession of the assets belonging to the Corporate Debtor. There is no merit in the Appeal. The Appeal is dismissed. No order as to costs.

[Justice Ashok Bhushan] Chairperson [Barun Mitra] Member (Technical) NEW DELHI 27th September, 2022 Ashwani Company Appeal (AT) (Insolvency) No. 824 of 2022 10

Unlock Advanced Research with PRISMAI

National Company Law Appellate Tribunal