Kerala High Court
M K Resely vs Union Bank Of India on 22 April, 2022
Author: N.Nagaresh
Bench: N.Nagaresh
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE N.NAGARESH
FRIDAY, THE 22ND DAY OF APRIL 2022 / 2ND VAISAKHA, 1944
WP(C) NO. 2832 OF 2022
PETITIONERS:
1 M K RESELY
AGED 47 YEARS
S/O M.S. KOCHUTHAMPI
MURICKOLLI HOUSE, NADACKA PO
ERATTUPETTA VILLAGE KOTTAYAM DISTRICT.
PIN- 686 124
2 M.K.FAISAL
S/O M.S. KOCHUTHAMPI
MURICKOLLI HOUSE, NADACKA PO
ERATTUPETTA VILLAGE KOTTAYAM DISTRICT.
PIN- 686 124
3 M K ANAS
S/O M.S. KOCHUTHAMPI
MURICKOLLI HOUSE, NADACKA PO
ERATTUPETTA VILLAGE KOTTAYAM DISTRICT.
PIN- 686 124
4 ANCY MOL
MURICKOLLI HOUSE, NADACKA PO
ERATTUPETTA VILLAGE KOTTAYAM DISTRICT.
PIN- 686 124
5 AMINA S
MURICKOLLI HOUSE, NADACKA PO
ERATTUPETTA VILLAGE KOTTAYAM DISTRICT.
PIN- 686 124
6 DR MOHAMMED ISMAIL
SON OF M.K MOHMAMMED ALI,
MADAVANA, PATHAIKKARA, PERINTHALMANNA,
MALAPURAM DISTRICT
KERALA 679322
7 M K NABEEL
MURIKKOLIL HOUSE,NADACKAL P.O.
ERATTUPETTA VILLAGE, KOTTAYAM, KERALA,
PIN 686124
W.P.(C) No.2832/2022
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8 SHAILA ISMAIL
MADAVANA HOUSE, PATHIAKKARA P.O.
PERINTHALMANNA, MALAPPURAM, KERALA 679322
BY ADVS.
S.EASWARAN
P.MURALEEDHARAN (IRIMPANAM)
K.V.RAJESWARI
V.K.PEERMOHAMED KHAN
RESPONDENTS:
1 UNION BANK OF INDIA
ERATTUPETTA BRANCH,
1ST FLOOR,PARAANAL ARCADE,
ARUVITHARA, SD MEENACHIL,
ERATTUPETTA P.O., KOTTAYAM - 686121
2 MEENACHIL EAST CO-OPERATIVE BANK
NO.4266,POONJAR, POONJAR ,
THEKKEKARA PO. KOTTAYAM DISTRICT 686582
REPRESENTED BY ITS CHIEF MANAGER
3 C.A.MAHALINGAM SURESH KUMAR
LIQUIDATOR OF MS.RAIHAN HEALTHCARE PRIVATE
LIMITED,
MS.SPP & CO., CHARTERED ACCOUNTANTS,
NO.27/9,NIVEDH VIKAS, PANKAJA MILL ROAD,
PUIYAKULAM, COIMBATORE - 641045
4 NATIONAL COMPANY LAW TRIBUNAL
COMPANY LAW BHAVAN,
KAKKANAD KOCHI- 682030
REPRESENTED BY ITS REGISTRAR
BY ADVS.
S.SREEKUMAR (SR.)
MANOJ RAMASWAMY
JOSEPH GEORGE
A.G.SATHYANARAYANA
THIS WRIT PETITION (CIVIL) HAVING COME UP FOR
ADMISSION ON 22.04.2022, THE COURT ON THE SAME DAY
DELIVERED THE FOLLOWING:
W.P.(C) No.2832/2022
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N. NAGARESH, J.
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W.P.(C) No.2832 of 2022
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Dated this the 22nd day of April, 2022
JUDGMENT
~~~~~~~~~ The petitioners, who have mortgaged their properties to secure the dues of M/s.Raihan Health Care Private Limited, have approached this Court seeking to quash Ext.P14 order of the National Company Law Tribunal, Kochi and to declare that properties of the petitioners included in Ext.P1 application stated to have been mortgaged to 1st and and 2nd respondents as guarantors, are not liable to be included in the Liquidation Estate of the Company M/s.Raihan Health Care Private Limited.
2. The Company M/s.Raihan Health Care Private Limited obtained credit facilities from the 1 st respondent- Union Bank of India and the 2 nd respondent-Meenachil East W.P.(C) No.2832/2022 :4: Urban Co-operative Bank Limited. The petitioners mortgaged their properties to the Banks as guarantors.
3. The 1st respondent-Union Bank of India resorted to Insolvency and Bankruptcy Code, 2016 and initiated insolvency proceedings against the Company, approaching the National Company Law Tribunal. The Tribunal appointed the 3rd respondent as Liquidator. The Liquidator informed the Tribunal that landed property of 100.16 Ares mortgaged to the Bank is leasehold land of the Promoters/Directors of the Corporate Debtor. The lease was for a period of 99 years and was intended for construction of a Hospital. The lease deed empowered the Company to mortgage the leasehold land for obtaining advances from financial institutions.
4. Accordingly, the Company mortgaged the land to the Bank. Another 16.55 Ares of land inside the Hospital premises owned by the Promoters/Directors was used for Hospital utility services on implied lease. The said property was mortgaged to the Meenachil Urban Co-operative Bank. On an application filed by the Liquidator seeking to direct W.P.(C) No.2832/2022 :5: both the Banks to handover physical possession of the mortgaged leasehold lands of the corporate debtor for the purpose of including in the Liquidation Estate, both the Banks expressed their willingness to release the property. Thereupon, the Tribunal directed the Banks to handover physical possession of the mortgaged leasehold land of the corporate debtor, to the Liquidator in order to use as Liquidation Estate.
5. The petitioners thereupon approached this Court filing W.P.(C) No.3864/2021 and connected cases. This Court found that the Bank has security interests in the properties involved under two heads. The properties are held by the corporate debtor under a lease agreement which permits the corporate debtor to mortgage their leasehold rights for raising funds. Furthermore, the petitioners are sureties to the loan transactions of the corporate debtor and their title documents in respect of the properties are deposited with the Bank. This Court held that Liquidator can include the leasehold rights in the liquidation estate in view of W.P.(C) No.2832/2022 :6: Section 36(3) of the IBC. This Court doubted whether ownership rights of a property which are still with the petitioners, which stands mortgaged to the Bank can be included in the Liquidation Estate. After considering the facts of the case, this Court disposed of W.P.(C) No.3864/2021 and connected cases setting aside the order of the NCLT impugned therein to the extent it allows the Liquidator to add the mortgaged land of the petitioners into the Liquidation Estate. The NCLT was directed to pass orders afresh on the issue of inclusion of the said land in the Liquidation Estate in the light of the observations made in the judgment, after giving an opportunity of hearing to the petitioners.
6. The NCLT thereafter considered the issue and observed as follows:
21. We have heard the learned counsel appearing on either side and have thoroughly perused the records. As directed by the Hon'ble High Court, the liquidator impleaded the Personal Guarantors of the Corporate Debtor and they filed their counter affidavit and argued elaborately. Their main contention is that the liquidator cannot proceed against their properties, even though they have given to the Corporate Debtor on lease for constructions of the Doctors' quarters in their W.P.(C) No.2832/2022 :7: properties, which forms part of the liquidation estate now decided by the liquidator. On the other hand, the respondents 1 & 2 are agreeable to the proceeding of the liquidation against all the properties mortgaged by the Corporate Debtor.
Second respondent even though stated that they will be proceeding against the Personal Guarantors, till date no steps taken by them against the guarantors. Hence, both parties are in favour of the liquidation proceedings against the Corporate Debtor. The only thing is that the Personal Guarantors are opposing the action taken by the liquidator, which they are not entitled to because they have given on lease their properties to the Corporate Debtor and the Corporate Debtor has been put under liquidation. In such an event, the respondents 3 to 8 are estopped from seeking a relief from this Tribunal, that their properties cannot be treated as properties of the Corporate Debtor, which is proceeded under the IBC. We cannot treat them as 3rd parties, as they were part and parcel of the Corporate Debtor. In view of the fact that they have mortgaged their properties to the Corporate Debtor and the Corporate Debtor is now reached in the stage of Corporate Insolvency Process. The liquidator has rightly proceeded against their properties also for completion of the liquidation process. We do not find any merit in the contention of Respondents 3 to 8.
22. Moreover, since the Resolution Professional has to conclude the proceedings, it is highly necessary to get the possession of the property, as it is the duty of the Resolution Professional to dispose of the Liquidation Assets of the Corporate Debtor, if necessary, to settle the claims of all claimants including the Financial Creditors. Since, the Building/hospital is situated in the very same land having 16.55 Ares, no purpose would be served without getting the hospital property also into the Liquidation Assets. It is also noticed that the 1st Respondent Union Bank of India has no objection in handing over the possession and the 2nd Respondent Meenanchil W.P.(C) No.2832/2022 :8: East Urban Co-operative Bank Limited even though objected to; they have conditionally agreed to hand over possession, provided their interests is well secured. There is no doubt that the Liquidator will consider all the claims and make payments to each person/authority, as per the Regulations/Rules. Hence, the 2nd Respondent's apprehension cannot be sustained.
23. Hence, we affirm our order passed on st 1 February, 2021 in MA/76/KOB/2020 and ordered as under:
a. Both Respondents are directed to hand over the physical possession of the mortgaged leasehold land of the Corporate Debtor (both Express Lease & Implied Lease lands used by the Corporate Debtor) to the Applicant in order to use as the Liquidation Estate of the Corporate Debtor.
b. The Applicant is also permitted to add the mortgaged land (Express Lease-100.16 Ares & Implies Lease- 78.45 Ares) into the Liquidation Estate of the Corporate Debtor of the respondents 3 to 8, to the liquidation Estate of the Corporate Debtor.
c. The Liquidator is directed to strictly follow the procedures to take over the property in question, as per the Regulations.
The petitioners challenge the said Ext.P14 order dated 21.01.2022 of the Tribunal.
7. The learned counsel for the petitioners argued that the Tribunal has inherent lack of jurisdiction. Personal properties of the petitioners cannot be included in the liquidation estate since there is a statutory bar under Section 36 of the IBC. The Tribunal has not applied its mind W.P.(C) No.2832/2022 :9: properly. Even after the remand, the Tribunal has chose to affirm its earlier order.
8. The learned counsel argued that Section 36 of the IBC lays down exception as to what all assets which will not form part of the Liquidation Estate. Personal properties of the petitioners cannot form part of the Liquidation Estate. The Liquidator in this case is acting as a real estate agent. The learned counsel further urged that the findings of the Tribunal is contrary to the legislative intent. When there are provisions for separate proceedings for the resolution of debt against the personal guarantors of a corporate debtor, the Liquidator cannot bypass the statutory provisions and include personal assets of the petitioners in the liquidation estate.
9. The learned counsel for the petitioner relied on the judgment of the Apex Court in Embassy Property Developments Private Limited v. State of Karnataka and others [(2020) 13 SCC 308] to contend that when there is lack of jurisdiction in NCLT to include 3 rd party's properties in Liquidation Assets, a writ petition under Article 226 is W.P.(C) No.2832/2022 : 10 : maintainable. The learned counsel also relied on the judgment in Pushpa Shah v. Union of India and others [2019 SCC Online Bom 2019] and argued that when a statutory authority has not acted in accordance with the provisions of enactment in question, exercise of writ jurisdiction is warranted.
10. The 3rd respondent-Liquidator filed a counter affidavit. The 3rd respondent stated that any person aggrieved by the order of the NCLT can prefer an appeal to the NCLAT. Since the petitioners have efficacious alternate remedy, the writ petition is not maintainable. The learned counsel for the 3rd respondent relied on a Division Bench judgment of this Court in Sulochana Gupta and others v. RBG Enterprises Private Limited and others [W.A. No.1083/2020) and a judgment in Ideal Surgicals v. National Company Law Tribunal and others (W.P.(C) No.8257 of 2021) to urge the point.
11. The alleged immovable properties being the assets of the personal guarantors which was mortgaged in W.P.(C) No.2832/2022 : 11 : favour of the financial creditors, the 3rd respondent being a Liquidator is bound to proceed against the properties. The Hon'ble Apex Court has repeatedly held that it is the duty of the RP/Liquidator to maximise the realisation value to the stakeholders of the corporate debtor either through revival or by selling the corporate debtor as a going concern. Major part of the Hospital and its utilities are constructed on the leasehold part of the land. Therefore, sale of land separately by the mortgage holders is not feasible. The writ petition is therefore liable to be dismissed, contended the learned counsel for the 3rd respondent.
12. Heard the learned counsel for the petitioners, the learned Standing Counsel for the 1 st respondent and the learned counsel for the 3rd respondent.
13. This Court finds that against Ext.P14 order of the NCLT, the petitioners have an alternate remedy of appeal to the NCLAT under Section 61 of the IBC. It is true that a writ petition was found maintainable earlier as is seen from Ext.P4 judgment. In Ext.P4 judgment, this Court found that W.P.(C) No.2832/2022 : 12 : the order of the NCLT impugned therein lacks clarity inasmuch as whether what is directed to be included in the liquidation estate is leasehold rights of the corporate debtor or the ownership rights of the petitioners or both. If the ownership rights of the petitioners are included in the liquidation estate that would be against Section 36 of IBC and that would give rise to a cause of action to the petitioners to invoke Article 226 of the Constitution of India, especially when the order is passed without hearing the petitioners.
14. It was under the afore circumstances that this Court entertained W.P.(C) No.3864/2021 and connected cases and directed the Tribunal to pass orders afresh on the issue of inclusion of the land of the petitioners in the liquidation estate. The NCLT considered the matter and passed Ext.P14 order directing the Banks to handover the physical possession of the mortgaged leasehold land of the corporate debtor (both express lease and implied lease lands used by the corporate debtor) to the applicant in order to use as the liquidation estate of the corporate debtor. W.P.(C) No.2832/2022 : 13 :
15. It is therefore evident that what is directed to be included in the Liquidation Estate, is the leasehold rights given to the Bank. Such leasehold rights can be included in the Liquidation Estate. The Tribunal passed the order after hearing the petitioners. In the facts and circumstances of the case, the judgments in Embassy Property Developments Private Limited (Supra) and Pushpa Shah (Supra) are of no assistance to the petitioner.
16. In the afore facts of the case, this Court does not find any reason to entertain a writ petition under Article 226 of the Constitution of India, when the petitioners have alternate remedy of appeal as provided under the IBC.
The writ petition therefore fails and it is dismissed.
Sd/-
N. NAGARESH, JUDGE aks/21.04.2022 W.P.(C) No.2832/2022 : 14 : APPENDIX OF WP(C) 2832/2022 PETITIONER'S EXHIBITS Exhibit P 1 COPY OF MA NO 76 OF 2020 IN IBA 204 OF 2019 ON THE FILES OF NATIONAL COMPANY LAW TRIBUNAL KOCHI Exhibit P 2 COPY OF THE ORDER DATED 1.2.2021 IN MA 76 OF 2020 PASSED BY NATIONAL COMPANY LAW TRIBUNAL KOCHI Exhibit P 3 COPY OF THE JUDGMENT DATED 9.4.2021 IN WP 3864 OF 2021 AND CONNECTED CASE RENDERED BY THIS HON'BLE COURT Exhibit P 4 COPY OF IA NO 138 OF 2021 IN MA 76 OF 2020 IN IBA 240 OF 2019 ON THE FILES OF THE NATIONAL COMPANY LAW TRIBUNAL KOCHI Exhibit P5 COPY OF THE COUNTER AFFIDAVIT FILED BY RESPONDENTS 3 TO 6 IN MA 76 OF 2020 IN IBA 240 OF 2019 ON THE FILES OF NATIONAL COMPANY LAW TRIBUNAL KOCHI Exhibit P6 COPY OF THE COUNTER AFFIDAVIT FILED BY RESPONDENTS 7 AND 8 IN MA NO 76 OF 2020 IN IBA 240 OF 2019 ON THE FILES OF NATIONAL COMPANY LAW TRIBUNAL KOCHI Exhibit P7 COPY OF IA NO 7 OF 2021 IN IBA 240 OF 2019 ON THE FILES OF THE NATIONAL COMPANY LAW TRIBUNAL KOCHI Exhibit P8 COPY OF IA NO 8 OF 2021 IN IBA 240 OF 2019 ON THE FILES OF THE NATIONAL COMPANY LAW TRIBUNAL KOCHI Exhibit P9 COPY OF THE COUNTER AFFIDAVIT FILED BY THE 1ST RESPONDENT IA NO 7 OF 2021 IN IBA 240 OF 2019 ON THE FILES OF NATIONAL COMPANY LAW TRIBUNAL KOCHI Exhibit P10 COPY OF THE COUNTER AFFIDAVIT FILED BY THE 1ST RESPONDENT TO IA 8 OF 2021 IN IBA 240 OF 2019 ON THE FILES OF NATIONAL COMPANY LAW TRIBUNAL KOCHI W.P.(C) No.2832/2022 : 15 : Exhibit P11 COPY OF THE COUNTER AFFIDAVIT FILED BY THE 3RD RESPONDENT HEREIN TO IA 7 OF 2021 IN IBA 240 OF 2019 ON THE FILE OF THE NATIONAL COMPANY LAW TRIBUNAL KOCHI Exhibit P12 COPY OF THE COUNTER AFFIDAVIT FILED BY THE 3RD RESPONDENT HEREIN TO IA 8 OF 2021 IN IBA 240 OF 2019 ON THE FILES OF NATIONAL COMPANY LAW TRIBUNAL KOCHI Exhibit P13 COPY OF THE REJOINDER FILED BY THE PETITIONERS IN IA NO 7 OF 2021 IN IBA 240 OF 2019 ON THE FILES OF NATIONAL COMPANY LAW TRIBUNAL Exhibit P14 COPY OF THE ORDER DATED 21.1.2022 IN MA NO 76 OF 2020 AND CONNECTED CASES IN IBA 240 OF 2019 ON THE FILES OF THE NATIONAL COMPANY LAW TRIBUNAL KOCHI