Ram Ratan Modi (Resolution ... vs Sammelan Tea And Beverages Pvt. Ltd. & ... on 2 August, 2024

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National Company Law Appellate Tribunal

Ram Ratan Modi (Resolution ... vs Sammelan Tea And Beverages Pvt. Ltd. & ... on 2 August, 2024

These Appeals have been filed by Ram Ratan Modi, Resolution Professional of Duncans Industries Ltd.- (Corporate Debtor) challenging various orders passed by the Adjudicating Authority (National Company Law Tribunal), Kolkata Bench in different IAs filed by the Resolution Professional in CP (IB) No.184/KB/2018. By the different IAs filed, the Resolution Professional has sought possession of various Tea Gardens claiming to be assets of the Corporate Debtor which applications by different orders passed by the Adjudicating Authority have been rejected. Aggrieved by those orders, these Appeals have been filed.

2. Company Appeal (AT) (Insolvency) No.672 of 2021 has been filed by the Resolution Professional challenging the order dated 28.05.2021 passed by the Adjudicating Authority in IA No.1256/KB/2020 by which application the Resolution Professional prayed for direction to take possession of Hantapara, Garganda, Tulsipara and Dumchipara Tea Estates which application came to be rejected by the impugned order dated 28.05.2021.

3. Company Appeal (AT) (Insolvency) No.593 of 2022 has been filed by the Resolution Professional challenging the order dated 21.04.2022 passed by the Adjudicating Authority in IA No.1111/KB/2021. The Resolution Professional by the said IA No.1111/KB/2021 prayed for various directions including the 5 direction to evict the Respondent No.1 from Nagaisuree and Kilcott Tea Gardens (two Tea Estates) and to handover the possession of the above two tea estates. The Adjudicating Authority by the impugned order dated 21.04.2022 rejected the application.

4. Company Appeal (AT) (Insolvency) No.628 of 2022 has been filed by the Resolution Professional challenging the order dated 09.05.2022 passed by the Adjudicating Authority by which order IA No.415/KB/2021 filed by the Resolution Professional seeking a direction to handover the possession, operation and management of the Birpara Tea Garden has been rejected.

5. Company Appeal (AT) (Insolvency) No.754 of 2022 has been filed by the Resolution Professional challenging the order dated 09.05.2022 passed by the Adjudicating Authority by which order IA No.665/KB/2021 filed by the Resolution Professional for handing over the possession of the Bagracote Tea Estate has been rejected.

6. Company Appeal (AT) (Insolvency) No.907 of 2022 has been filed by the Resolution Professional challenging the order dated 18.07.2022 passed by the Adjudicating Authority by which order IA No.109/KB/2022 filed by the Resolution Professional for taking possession of Rungli Rungliot Tea Garden has been rejected.

7. All the orders which are impugned in these Appeals arises out of the same CIRP initiated against the Corporate Debtor in CP (IB) No.184/KB/2018, hence Appeals have been heard together. 6

8. Before we notice respective submissions of the Counsel for the parties, we need to notice the background facts and sequence of the events which are relevant for consideration of the issues which have arisen in these Appeals.

9. The West Bengal Estates Acquisition Act, 1953 provided for the State acquisition of estates, of rights of intermediaries therein and of certain Rights of raiyats and under raiyats [and of the rights of certain persons in lands comprised in estates.]. The estates acquired under the Act also included the land comprised in a Tea Garden, by virtue of Section 6(3) in the case of land comprised in a tea-garden, the lessee shall be entitled to retain only so much of such land as, in the opinion of the State Government, is required for the tea-garden, as the case may be. The State Government provided lease hold rights under the West Bengal Estates Acquisition Rules, 1954 as amended from time to time. In the present Appeals, Nine Tea Gardens which includes Bagracote in IV Division are under consideration. The State executed leases in favour of several entities for 30 years. Name of Tea Estates with name of lessee, date of execution of lease deed and date of expiry are extracted in following table:-

     Name of Tea Name         of     Date     of Effective        Date    of
     Estates     Lessee              Execution From               Expiry
     Garganda    Lankapara           19.07.1974 20.09.1965        19.09.1995
                 Tea Co. Ltd.
     Dhumchipara Birpara    Tea      06.12.1975    13.09.1974     12.09.2004
                 Co Ltd.
     Huntapara   Duncan Agro         25.11.1980    03.12.1974     02.12.2004
                 Industries Ltd.
     Tulsipara   Lankapara           26.02.1980    18.04.1974     17.04.2004
                 Tea Co. Ltd. &
                 Duncan Agro
                 Industries Ltd.
                                         7


      Birpara       Birpara    Tea    25.11.1980   27.06.1978   26.06.2008
                    Co. Ltd.
      Bagracote I   Bagracote Tea     19.02.1973   22.05.1968   22.05.1998
                    Co Ltd.
      Bagracote II  Bagracote Tea     11.10.1974   04.08.1970   04.08.2000
                    Co Ltd.
      Bagracote III Duncan Agro       27.02.1980   24.02.1976   24.02.2006
      & IV          Industries Ltd.
      Runglee-      Birpara    Tea    24.08.1973   09.02.1970   08.02.2000
      Rungliot      Co. Ltd.
      Kilcott       Birpara    Tea    22.08.1065   24.08.1965   21.08.1995
                    Co. Ltd.
      Nagaisuree    Birpara    Tea    30.01.1975   31.10.1972   30.10.2002
                    Co. Ltd.

10. With regard to three Tea Estates namely Garganda, Kilcott and Bagracote I, there has been a renewal of lease with which renewal the State has certain objections. The entities in whose favour different leases were granted by the Government of West Bengal, as noted above, merged into the Corporate Debtor- Duncans Industries Ltd. from time to time. All the above Tea Gardens were under the management of Duncans Industries Ltd., the Corporate Debtor. Ministry of Commerce and Industry received various representations regarding the Tea Gardens of West Bengal, in particular the Tea Gardens managed by the Corporate Debtor. Tea Board submitted a report to the Central Government. Ministry of Commerce and Industry issued a Notification dated 28.01.2016 in exercise of powers conferred under Section 16E of the Tea Act, 1953 authorising the Tea Board to take over the management and control of the Seven Tea Estates as noted in the Notification. Notification dated 28.01.2016 is as follows:-

"MINISTRY OF COMMERCE AND INDUSTRY (Department of Commerce) NOTIFICATION New Delhi, the 28th January, 2016 S.O. 260(E)-Whereas attention of the Central Government has been drawn through various representations to the deteriorating condition of the tea gardens of West Bengal, in particular the tea gardens * and managed by M/s Duncan Industries Ltd.

And whereas, the Tea Board under direction of the Central Government caused inspection of all the seven gardens owned by M/s Duncan Industries Ltd. and submitted a report;

And whereas, a report on the status of stressed tea gardens in West Bengal was also received from the Stare Government of West Bengal;

And whereas, the situation of the said ten gardens has been assessed by the Central Government on basis of the report of the Tea Board and the State Government of West Bengal and consultations with the stakeholders of tea sector.

And whereas, the Central Government is of the considered opinion that the tea gardens as listed below are being managed in a manner highly detrimental to the tea Industry and to public interest:

     (i)     Birpara Tea Estate
     (ii)    Garganda Tea Estate
     (iii)   Lankapara Tea Estate
     (iv)    Tulsipara Tea Estate
     (v)     Huntapara Tea Estate
     (vi)    Dhumchipara Tea Estate
     (vii)   Demdima Tea Estate

Now, therefore, in exercise of powers conferred by sub-section (1) of section 16B of the Tea Act, 1953 (29 of 1953), the Central Government hereby authorises the Tea Board to take immediate steps to take over the management and the control of the above seven tea estates as per the provisions of Chapter IIIA of the Tea Act, 1953.

[F. No. T-22015/1/2016-Plant(A)] 9 RAJANI RANJAN RASHMI, Addl. Secy."

11. The Corporate Debtor challenged the Notification dated 28.01.2016 before the High Court of Calcutta by means of Writ Petition No 1897 (W) of 2016 which writ petition came to be dismissed by Learned Single Judge of the Calcutta High Court on 15.03.2016 upholding the Notification. The Corporate Debtor filed an Appeal in the High Court being M.A.T No. 562 of 2016 challenging the order of the Learned Single Judge. Division Bench noted the submissions of the parties and directed for interim management under which the Writ Petitioners were to run the gardens in a prudent businessman like manner after keeping the Tea Board informed. After the interim order of the Division Bench of the Calcutta High Court dated 20.09.2016, the Corporate Debtor entered into an agreement with 'Merico Agro Industries Pvt. Ltd.' permitting the 'Merico Agro Industries Pvt. Ltd.' to operate Hantapara, Garganda and Tulsipara Tea Gardens for five years. By another agreement entered on 19.08.2019, Corporate Debtor permitted 'Merico Agro Industries Pvt. Ltd.' to operate Dumchipara Tea Garden for 10 years. The Corporate Debtor had obtained various financial facilities from the Financial Creditors including the State Bank of India and has executed various documents in favour of Financial Creditors including mortgage dated 09.10.2013. There being default committed by the Corporate Debtor in repayment of the financial facilities, Financial Creditors jointly filed an application being CP (IB) No.184/KB/2018- "Sangita Fiscal Services Pvt. Ltd. & Ors. vs. Duncans Industries Ltd." under Section 7 which application was admitted by the Adjudicating Authority vide order dated 05.03.2020. The IRP made a public 10 announcement. IRP was appointed as Resolution Professional by CoC. Resolution Professional filed application under Section 19(2) with regard to Tea Gardens to take control of the records of the gardens. Workers working in different Tea Gardens filed complaint to the officials of Labour Department of State of West Bengal that the Corporate Debtor had abandoned the tea estates and they are not being paid their wages. There were more than 20,000 plantation workers and labourers in 9 Tea Estate. Leases of most of the Tea Gardens have come to an end. Lease of Tea Garden Kilcott was renewed for 30 years on 15.11.1995. The collector of Jalpaiguri noticing that Salami which were required to be paid for Kilcott Tea Garden has not been paid. A notice dated 04.08.2016 was issued to Manager Kilcott Tea Garden by the Collector, Jalpaiguri asking the management to pay Salami amounting to Rs.57,25,711/-. Similar demand notice was issued on 10.08.2017 by the Collector Jalpaiguri to the Corporate Debtor with regard to Bagracote Tea Garden Division-I which was claim to be renewed on 19.06.1998 for 30 years. By the notice dated 10.08.2017, Salami of Rs.25,67,000/- was demanded by the Collector.

12. Due to agitation of plantation workers and labourers meeting was convened by the Department of Labour in which Labour Commissioner, Registered Union, workmen and officers of the Tea Board participated and decision was taken to handover the management of few Tea Gardens to 'Merico Agro Industries Pvt. Ltd.' and Sammelan Tea and Beverages Pvt. Ltd. 11

13. An application was filed by the Resolution Professional being IA No.1256/KB/2020 where along with other prayers in prayer (a), following was prayed by the Resolution Professional:-

"a) To Pass an order under Section 19(3) read with Section 25(2) of the Insolvency and Bankruptcy Code, 2016 directing the Respondent to comply with the directions of the Applicant and to extend all assistance and co-operation to the Applicant as required by him for taking over possession of the Hantapara, Garganda, Tulsipara and Dumchipara tea estates and for carrying out the valuation of the said tea estates."

14. The application filed by the Resolution Professional was opposed by 'Merico Agro Industries Pvt. Ltd.' which was managing the operation of Tea Estates Huntapara, Garganda, Tulsipara and Dumchipara. It was pleaded by the Respondent No.1 that the leases of the aforesaid four estates had long expired and there is no leasehold rights with the Corporate Debtor, hence, prayers as made by the Resolution Professional cannot be granted. Adjudicating Authority after hearing the parties by impugned order dated 28.05.2021 rejected the application.

15. The Resolution Professional filed IA No.1111/KB/2021 for restoration of the possession of Two Tea Estates namely-- Nagaisuree and Kilcott. The Resolution Professional pleaded in the application that the possession of 12 Nagaisuree and Kilcott was resumed by Respondent No.1 from 03.11.2021 under certain decision taken by the Labour Department along with the Registered Union of workers and the District Magistrate. In IA No.1111/KB/2021, it was pleaded by the Resolution Professional that Kilcott Tea Estate was leased in favour of the corporate debtor which lease after expiry of period of 30 years have been renewed by lease deed dated 15.11.1995 and is valid till 23.08.2025. With regard to Nagaisuree Tea estate, it was pleaded that the lease was granted for 30 years from 30.10.1972 which was valid till 30.10.2002 and renewal of the lease of Nagaisuree has been applied on which no decision has yet been taken. It was pleaded that the State has not rejected the renewal application. Corporate Debtor shall continue to have lease hold rights. It was further pleaded that the Resolution Professional has written to all concerned including the workers and management of the Tea Gardens to extend co-operation. Resolution Professional has also written to the Addl. Labour Commissioner and the District Magistrate restraining any party from operating Nagaisuree and Kilcott Tea Gardens. It was pleaded that the Respondent No.1 with the help of Respondent Nos.2 and 3 i.e. Registered Union and Management of Tea Gardens is operating the Tea Gardens. In IA No.1111/KB/2021, following prayers were made by the Resolution Professional:-

"a) To Pass an order directing the eviction of the Respondent No.1 from the Nagaisuree and Kilcott Tea Estates and to handover the possession, operation and management of the Nagaisuree and Kilcott Tea Estates to the Applicant herein;

b) To Pass an order directing the Respondent No.4 to extend all assistance and co-operation to restore the possession, operation and management of the Nagaisuree and Kilcott Tea Estates in favour of the Applicant herein;

c) The Respondent No. 6 of the concerned district be directed to provide necessary help and assistance to the applicant and or to his men servants and agents to forthwith take over position of the said Nagaisuree and Kilcott Tea gardens;

d) The police officers and Respondent No. 6 of the concerned district and the local police station be directed to ensure that the respondent No. 1 and/orit's menservants and agents and/or any third party does not have any access to the said Nagaisuree and Kilcott Tea gardens and is not able to enter or possess or seize the assets thereof or to carry on business with the assets and properties of the said tea gardens being Nagaisuree and Kilcott Tea gardens;

e) The respondent No.4 and 6 and the police authorities of the concerned district / police station be directed to evict the respondent No.1 and/or it's men, servants and agents from the said tea gardens being Nagaisuree and Kilcott Tea gardens;

f) Permanent injunction restraining all statutory authorities concerned not to grant any permission or provide any lease or license or any other manner of authority to the respondent No. 1 and/or to its men servants and agents and or associates and/or sister concerns to assert any possession or right to carry on 14 business over and in respect of the said tea gardens being Nagaisuree and Kilcott Tea gardens;

g) Pass such other/further orders and other reliefs as this Hon'ble Court may deem fit and proper in the facts and circumstances of the present case;"

16. The Adjudicating Authority in IA No.1111/KB/2021 has issued direction on 03.03.2022 directing the Respondent No.1- 'Sammelan Tea & Beverages Pvt. Ltd.' to produce the relevant documents entitling them to occupy the property, like, sale deed, rent deed or any lease deed or any other documents, if they have in their favour, by way of an affidavit within two weeks. On 08.03.2022, letter was issued by Principal Secretary, Labour Department stating that Sammelan Tea & Beverages Pvt. Ltd. had entrusted to run the two Tea Gardens Killcott and Nagaisuree to mitigate the untold sufferings of thousands of workers engaged therein and in the best interest of the tea gardens. Sammelan Tea & Beverages Pvt. Ltd. also filed their Affidavit before the Adjudicating Authority. Adjudicating Authority after hearing the parties passed an order on 21.04.2022 rejecting the application. Adjudicating Authority while rejecting the application held that the lease granted in favour of the corporate debtor has not been renewed and the Resolution Professional cannot take possession of the Tea Gardens to which the corporate debtor has no right. It was held that it was on account of tripartite review meeting held on 20.12.2021 in respect of Killcott and Nagaisuree in the presence of the Trade Unions, Additional Labour Commissioner, Deputy Labour Commissioner, Assistant Labour Commissioner, Malbazaar, and the Managers of the respective Tea Garden, wherein it is stated that based on a 15 bipartite agreement signed between Sammelan Tea and Beverages Pvt. Ltd. and the Trade Union of the two Tea Gardens, Sammelan Tea and Beverages Pvt. Ltd. is in possession of the two Tea Gardens and that the Tea Gardens started functioning from 03.11.2021 and has been in operation. In paragraphs 48 to 51 of the judgment following have been observed:-

"48. It is an admitted fact that a similar application had been filed for possession of four tea gardens. The Corporate Debtor is in financial stress and it is of concern whether the Resolution Professional would be able to run these two Tea Estates.

49. The lease given to the Corporate Debtor has not been renewed in favour of the Corporate Debtor hence, it is out of question that the Resolution Professional can take possession of the Tea Gardens to which the Corporate Debtor has no ownership.

50. On perusal of the records it is apparent from the proceedings of the tripartite review meeting held on 20.12.2021 in respect of Killcott Tea Garden and Nagaisuree Tea Garden, in the presence of the Trade Unions, Additional Labour Commissioner, North Benchal Zone Government of West Bengal, Deputy Labour Commissioner, Assistant Labour Commissioner, Malbazaar, and the Managers of the respective Tea Garden, wherein it is stated that based on a bipartite agreement signed between Sammelan Tea and Beverages Pvt. Ltd. and the Trade Union of the two Tea Gardens, Sammelan Tea and Beverages Pvt. Ltd. is in possession of the two Tea Gardens and that 16 the Tea Gardens started functioning from 03 November 2021 and has been in operation.

51. In a letter dated 08 March 2022, the Principal Secretary, Labour Department, Government of West Bengal that Sammelan Tea and Beverages Pvt. Ltd has been entrusted to run the two Tea Gardens under the supervision and guidance of the Labour Department, Government of West Bengal. The letter has been given hereunder for easy reference."

17. In IA No.415/KB/2021 filed by the Resolution Professional, Resolution Professional has prayed for direction to handover the possession of the Birpara Tea Estate. Applicant- Resolution Professional has referred to the Notification dated 28.01.2016 issued by the Ministry of Commerce and Industry, Government of India and the interim order passed by the Division Bench of the Calcutta High Court dated 20.09.2016. In IA No. 415/KB/2021 following prayers have been made:-

"a) To Pass an order directing the Respondents to comply with the directions of the Applicant and to extend all assistance and co-operation to the Applicant as required by him for taking over possession of the Birpara Tea estate;

b) To Pass an order directing the Respondents to comply with the directions of the Applicant in collection of information and managing the affairs of the Corporate Debtor and also to deliver all records/statutory records/registers/financial records etc. with respect to the Birpara tea garden to the 17 Applicant regarding facilitation of the Corporate Insolvency Resolution Process within a stipulated time period;

c) Pass such other/further orders and other reliefs as this Hon'ble Court may deem fit and proper in the facts and circumstances of the present case;"

18. It was pleaded by the Resolution Professional in the application that it came to know that Birpara Tea Estate was setup to start operations under the new management of M/s. Merico Agro Industries Pvt. Ltd. w.e.f. 16.02.2021. The Application was opposed by the Respondent No.1. It was pleaded that Birpara Tea Estate was abandoned by the Corporate Debtor. It was pleaded that although after the order of the Division Bench of the Calcutta High Court the management was entrusted to M/s. Merico Agro Industries Pvt. Ltd. with regard to four Tea Estates i.e. Hantapara, Garganda, Tulsipara and Dumchipara with the knowledge and concurrence of the State of West Bengal and the Tea Board, the management of remaining three Tea Estates including Birpara Tea Estate were not entrusted to any one by the corporate debtor and the said three Tea Estates for all practical purposes were kept closed. It was due to the Corporate Debtor not depositing the statutory Provident Fund, Birpara Tea Estate was abandoned since 06.10.2019 and it was due to the above reason, a meeting held on 12.02.2021 in the presence of Industry Department and the Labour Union, at the instance of District Magistrate, it was decided to entrust the management to M/s. Merico Agro Industries Pvt. Ltd. who was successfully running other four Tea Gardens. The Adjudicating Authority after hearing the parties by the impugned order has rejected the IA 18 No.415/KB/2021. Adjudicating Authority held that the applications raising similar question in IA No.1256/KB/2020 and IA No.1111/KB/2021 has already been decided. The lease granted in favour of the corporate debtor in Birpara Tea Estate has not been renewed. Resolution Professional cannot be directed to give possession of the gardens. With the said observation, the application was rejected.

19. IA No.665/KB/2021 was filed by the Resolution Professional for direction to Respondent No.1- 'Sammelan Tea and Beverages Pvt. Ltd.' and Respondent No.2 to handover the possession, operation and management of the Bagracote Tea Estate to the Resolution Professional. The lease for Bagracote Tea Estate was granted by the Bagracote Division-I on 19.02.1973 which came to an end on 22.02.1998. It was pleaded that the lease of Bagracote Division-I had been renewed on 19.06.1998 w.e.f 20.05.1998. The lease of Bagracote Divisions- II, III & IV came to end on 04.08.2002 & 24.02.2006. Resolution Professional's case in the application was that after commencement of the CIRP, Resolution Professional wrote to the manager of the Bagracote Tea Garden. Resolution Professional further pleaded that when he visited the Tea Garden on 11.10.2020, it was learnt that erstwhile manager had abandoned the Tea Gardens and workers of the Tea Estates along with Registered Union are managing the affairs of the Tea Estates. Resolution Professional further came to know that the Bagracote Tea Estate is set to start operation under the new management of 'Sammelan Tea and Beverages Pvt. Ltd.' w.e.f. 01.07.2021. The Resolution Professional has prayed for direction to 'Sammelan Tea and Beverages Pvt. Ltd.' to handover the possession, 19 operation and management of the Bagracote Tea Estate to the Resolution Professional. The application was opposed by the Respondent No.1- 'Sammelan Tea and Beverages Pvt. Ltd.' where it was pleaded that Bagracote Tea Estate consists of four Divisions i.e. I, II, III & IV and leases of Bagracote Divisions- I, II, III & IV have already been expired. It is pleaded that with regard to Bagracote-I, Corporate Debtor is illegally claiming renewal of the lease from 22.05.1998 without mandated statutory payment of Salami. The renewal of lease was also not vetted by the Land and Land Reforms Department as per the Govt. Rules and Procedures. Corporate Debtor was provided opportunity to pay Salami of Rs.11,23,573/- and penalty of Rs.25,67,000/- which was not paid by the corporate debtor and the renewal of lease was treated to be illegal. It was further pleaded that since 2015, the corporate debtor had abandoned the Bagracote Tea Estate and due to unrest of the workmen, high-powered meeting was convened on 27.06.2021 consisting of officials of Labour Department, workers, registered union in which decision was taken to run and manage Bagracote Tea Estate and to resume operation through Respondent No.1 who resumed the operation from 01.07.2021. Adjudicating Authority heard the application and by order impugned has rejected the application. In paragraphs 20 to 24 of the impugned order, following has been observed:-

"20. During the course of hearing it was noticed that, in this application also, the question of law is similar to the one in I.A.(IB) No. 1256/KB/2020 and I.A. (IB) No. 1111/KB/2021. These two applications have already been decided after hearing exhaustive 20 arguments of the learned Senior Counsel. Since the arguments are common and issue involved is conclusively covered by the order passed by this Bench earlier, there is no need to once again give more and more time for hearing the same arguments on behalf of the Resolution Professional and the Respondent No. 1.

21. We have thus briefly heard the learned Senior Counsel for the Applicant and the learned Senior Counsel for Respondent No. 1 and perused the record.

22. Similar applications have been filed by the Resolution Professional for possession of Tea Estates. The only concern is that the Corporate Debtor is in financial stress and whether the Resolution Professional would be able to run these Tea Estates.

23. The lease given to the Corporate Debtor has not been renewed in favour of the Corporate Debtor hence, it is out of question that the Resolution Professional can take possession of the Tea Gardens to which the Corporate Debtor has no ownership.

24. In this view of the matter, the prayers asked for in the present IA cannot be granted. I.A. (IB) No. 665/KB/2021 is, therefore, dismissed, but in the facts of the case, without costs. Liberty to apply is granted if and when the Government of West Bengal takes a decision on the renewal of the lease."

20. IA No.109/KB/2022 was filed by the Resolution Professional seeking a direction to evict M/s. Merico Agro Industries Pvt. Ltd. from the Rungli Rungliot Tea Estate and to handover the possession, operation and 21 management of the Rungli Rungliot Tea Estate to the Resolution Professional. Direction was also sought against Additional Labour Commissioner to extend all assistance and co-operation to restore the possession, operation and management of the Rungli Rungliot Tea Estate. The application was opposed by M/s. Merico Agro Industries Pvt. Ltd. It was pleaded that the lease of 30 years in respect of Rungli Rungliot Tea Estate came to end on 08.02.2000. No steps were taken to renew the Lease Deed. The Tea Estate is not owned by the Corporate Debtor nor any right of the corporate debtor exist in the Tea Estate. Since 2014, the Corporate Debtor had mismanaged the Tea Estate and virtually abandoned. Workers claim towards their wages, bonus, provident fund, gratuity were due. Till March, 2021, provident fund dues were more than Rs.78,00,000/- on account of workers' unrest, authorities convened meeting in the office of Commissioner and after the high-powered meeting, a decision was taken to give the operation of Tea Estate to Respondent No.1 who started functioning. The Resolution Professional has no right. The Adjudicating Authority rejected the application holding that the lease given to the corporate debtor has not been renewed which has come to an end. The Corporate Debtor or the Resolution Professional has no legal right over the Tea Gardens on which lease has not been renewed. Resolution Professional cannot take possession of Tea Garden and Application was rejected.

21. Challenging the orders passed by the Adjudicating Authority aforesaid appeals have been filed by the Resolution Professional. 22

22. We have heard Shri Ramji Srinivasan, Learned Senior Advocate with Shri Gautam Narayan and Shri Amit Kasera, Advocates for the Appellant. Mrs. Maninder Acharya, Learned Senior Advocate with Ms. Madhumita Bhattacharjee have appeared for State of West Bengal. Shri Jishnu Saha, Learned Senior Advocate has appeared for Sammelan Tea and Beverages Pvt. Ltd. and Merico Agro Industries Pvt. Ltd. Shri Ajay Gaggar and Shri Shreedhar Gaggar, Learned Advocates have appeared for State Bank of India, Intervenor. Shri Amar Dave, Learned Senior Advocate with Shri Ashok Kumar Jain, Advocate has appeared for Uniglobal Papers Private Limited, Intervenor.

23. Learned counsel for the Appellant's submissions are common to all the appeals except some additional submissions advanced in Company Appeal (AT) (Ins.) No. 672 of 2022, which we shall additionally notice. Learned counsel for the Appellant submits that the Adjudicating Authority committed error in rejecting the application filed by the Resolution Professional for taking possession of the tea gardens which were leased to the Corporate Debtor. It is submitted that with regard to all tea gardens whose lease has expired application for renewal was filed by the Corporate Debtor which never came to be decided i.e. either rejected or allowed. It is submitted that with regard to Kilcott Tea Estate the lease deed stands renewed by lease deed dated 15.11.1995, which is valid till 23.08.2025. In respect to Bagrakote Tea Division-I renewal has been granted which is operative till 21.05.2028. When renewal has already been applied, the Corporate Debtor was entitled to continue in possession of the tea gardens and the possession of the Corporate Debtor cannot be said to be possession of trespasser or unauthorized person. 23 The Adjudicating Authority did not notice the renewal of the lease of Kilcott and Bagrakote Tea Division-I. The contention of the State of West Bengal that renewal is not in accordance with law and it is improper renewal has to be rejected since at no stage the State of West Bengal has taken any step to cancel the renewal of lease. The lease deed of renewal having been executed, the State of West Bengal cannot be heard in saying that the renewal is not proper since the Corporate Debtor has not paid salami. The Adjudicating Authority has overlooked the undisputed position that the possession, management and control of the tea estates continued to vest with the Corporate Debtor and after commencement of the moratorium under Section 14 of the I&B Code on 05.03.2020, the possession of tea gardens cannot be taken by Sammelan and Merico (Respondent No.1 herein). Manager appointed by the Corporate Debtor functioned in tea gardens and the management was entrusted by the Labour Department of the State of West Bengal to the Sammelan and Merico subsequent to the commencement of CIRP. The Corporate Debtor had invested huge amounts on the tea estates over decades such as residential and office buildings, equipment, plant and machinery which cannot be illegally usurped by the Respondent No.1. The leasehold right is an intangible asset of the Corporate Debtor and Resolution Professional is empowered under Section 18(f) of the Code to take control and custody of any asset over which the Corporate Debtor has the right. The possession of tea gardens was taken in violation of Section 14 of the I&B Code, which required to be reversed. The Adjudicating Authority has relied on order dated 28.05.2021 passed in IA No.1256 of 2020 while rejecting subsequent application filed by the Resolution Professional whereas IA No.1256 of 2020 24 pertain to possession of four tea gardens, possession of which were handed over to the Merico prior to initiation of CIRP and the order dated 28.05.2021 passed by the Adjudicating Authority in IA No.1256 of 2020 was clearly distinguishable. The leases which were granted to the Corporate Debtor were heritable, transferable and provided for a deemed and automatic renewal for a further period of 30 years. Renewal applications were made prior to expiry of the lease period. The submissions of the State of West Bengal that nonpayment of salami invalidates the valid and continuing renewal of the lease deeds granted in favor of the Corporate Debtor are entirely devoid of merit. There is no legal basis to the claim of Sammelan and Merico to the tea gardens. The Adjudicating Authority on 03.03.2022 had directed the Respondent No. 1 to submit documents in regard to its right to tea gardens. No documents could be produced by Respondent No.1 which can entitle it to take over two tea estates during the period of moratorium. The Adjudicating Authority wrongly relied on letter dated 08.03.2022 issued by Principal Secretary, Labour Department. When the tea gardens were in possession and control of the Corporate Debtor/Resolution Professional, no authority vested in Principal Secretary, Labour Department to handover the possession of the tea gardens to Respondent No. 1. Tea gardens have been given on lease by the Lessor i.e. Land & Land Reforms Department of Government of West Bengal and authority, if any, for handing over is vested in Land & Land Reforms Department. No proceedings were initiated by Land & Land Reforms Department to enter into possession of the tea gardens. It is submitted that in the CIRP of the Corporate Debtor, the Successful Resolution Applicant i.e. Uniglobal Papers Private Limited has submitted resolution plan which has 25 been approved by the Committee of Creditors on 24.02.2022 and the application filed by the Resolution Professional for approval of Resolution Plan is pending consideration before the Adjudicating Authority. It is further submitted that the assets are mortgaged with the State Bank of India and other Financial Creditors. In support of Company Appeal (AT) (Ins.) No.672 of 2021, learned counsel for the Appellant submits that possession of four tea gardens namely Hantapara, Garganda, Tulsipara and Dumchipara were given to Merico by the Corporate Debtor after the interim order of the Calcutta High Court dated 20.09.2016 as an interim arrangement which possession were handed over in the year 2018 and 2019 and in pursuance of the agreement given by the Corporate Debtor, the Merico was in the management and possession of four tea gardens. The Respondent No.1 when refused to extend cooperation to the Appellant to handover the possession of tea gardens, the Appellant filed IA No.1256 of 2020 seeking direction to handover the possession of the four tea gardens. It is submitted that the Adjudicating Authority has committed error in rejecting the application observing that the tea gardens did not belong to the Corporate Debtor and lease in favour of the Corporate debtor has not been renewed. It is submitted that the Merico being agent of the Corporate Debtor was entrusted management by the Corporate Debtor itself under the agreement, The Resolution Professional was entitled to take possession of four tea gardens. Without possession of tea gardens by the Resolution Professional, CIRP process cannot proceed and culminate in to resolution. Lease in respect to Garganda tea estate was renewed on 08.11.1996 which is valid till 18.09.2026. The Adjudicating Authority failed to appreciate the clear import of the submissions made by the Appellant 26 regarding the agreement entered into between the Corporate Debtor and the Respondent. Learned counsel for the Appellant submits that the Appellant in the Information Memorandum has already given the details of leases regarding different tea gardens and the Information Memorandum also noticed that the State of West Bengal is claiming that renewal of lease with regard to two tea gardens is not in accordance with law. Learned counsel for the Appellant in support of his submissions has relied on judgments of this Tribunal and Hon'ble Supreme Court which we shall notice while considering submissions in detail.

24. Mrs. Maninder Acharya, learned senior counsel appearing for State of West Bengal refuting the submissions of learned counsel for the Appellant contends that the Corporate Debtor had no right to any of the tea gardens after expiry of lease which was initially granted by the State of West Bengal. It is submitted that the claim of the Appellant of renewal of the lease of tea estates Kilcott, Bagracote and Garganda is also misleading and incorrect. Renewal of lease could not have been made without pre-deposit of salami, which is statutory requirement. The renewal of three tea gardens is in breach of the mandate of Rule 4 read with Schedule F of the West Bengal Estate Acquisition Act & Rules 1954. Execution of renewal of above three tea estates was not approved by Land & Land Reforms Department of State of West Bengal. It is submitted that for post approval of the renewal a demand notice was issued to the Corporate Debtor to deposit salami which having not been deposited, there is no approval of the State of West Bengal. All the tea gardens were closed and abandoned by the Corporate Debtor since 2015. There was 27 no electricity or water in the tea gardens. Twenty Thousand workers have been working in the tea gardens and the State Government had intervened to protect the interest of poor workers and after detailed enquiry it was decided to reopen tea estates. The Respondent No.1 paid huge amount for restoration of electricity. The Corporate Debtor who abandoned the tea gardens cannot claim any right in any of the tea gardens. It is submitted that except above three tea gardens, lease of all tea gardens came to end decades ago. There is no concept of automatic renewal of lease granted by the State. No renewal having been granted by the State, Corporate Debtor cannot claim any right in the tea gardens. Corporate Debtor was provided opportunity to mend the gross breach by paying the amount of salami with respect to the tea estates namely Kilcott, Bagracote and Garganda for post facto approval to enter into a fresh lease which opportunity was not availed by the Corporate Debtor and no salami having been paid inspite of demand notice, the renewal of the above three tea gardens cannot be held to be valid conferring any right to the Corporate Debtor. Corporate Debtor had never challenged the steps taken by the State demanding payment of salami, hence, the renewal is of no avail. Order passed by the Adjudicating Authority is well reasoned order which does not warrant any interference by this Tribunal.

25. Learned counsel for the Respondent No.1 refuting the submission of learned counsel for the Appellant submits that tea estates which are subject matter of these appeals are not assets of the Corporate Debtor of which the Resolution Professional can seek to exercise any control under Section 18(1)(f) of the Code. All the tea gardens belong to State of West Bengal who is sole 28 and absolute owner in terms of the provisions of West Bengal Estate Acquisition Act & Rules 1954. All the leases have expired prior to commencement of the CIRP, which estates does not constitute assets of the Corporate Debtor. Purported renewal of lease deed of Kilcott, Bagracote and Garganda tea estates in view of the Corporate Debtor being in breach of statutory provisions of West Bengal Estate Acquisition Act & Rules 1954, cannot be read to be valid renewal. Information Memorandum itself mention that with regard to Garganda and Bagracote-I that: "as per Land department of GoWB, Kolkata, renewal are not done properly". With regard to Kilcott, in reference to renewal dated 15.11.1995, District Magistrate & Collector, Jalpaiguri issued letter dated 04.08.2016 to the Corporate Debtor to deposit the salami which having not been deposited no valid renewal can be claimed. The submission of the Resolution Professional that there shall be deemed automatic renewal as per terms of the lease is wholly incorrect and not in accordance with law. There can be no question of any deemed renewal of the leases in favour of the Corporate Debtor nor any such clause is contained in the lease deed. Renewal granted in favour of the Corporate Debtor with regard to Kilcott, Bagracote and Garganda are void and inoperative, the Corporate Debtor having not complied with the statutory requirement of renewal of the lease. The submission of the Appellant that the State could not have re- entered possession of the tea estates without taking steps for resumption of lease is incorrect as the concept of resumption of lease can only be utilized during currency of the lease according to the procedure prescribed in the Rules but when the lease has already expired there is no occasion to take steps for resumption of lease as per the provisions of the Act and Rules. The 29 submission of the Appellant that Corporate Debtor has been dis-possessed during subsistence of moratorium is also incorrect. As the leases of tea estates stood determined by efflux of time prior to commencement of CIRP, the said asset could not constitute assets of the Corporate Debtor. Moratorium did not in any way interdict the State's right to re-enter possession of the said tea estates upon determination of the leases granted to the Corporate Debtor by efflux of time. It is further submitted that the Corporate Debtor since 2015 has abandoned several tea estates leaving thousands of works in pathetic and deplorable condition. Four tea estates namely Dhumchipara, Tulsipara, Hantapara, Garganda were handed over to Merico Agro Industries Pvt. Ltd. after interim order passed by Calcutta High Court on 20.09.2016, in which tea estates, Corporate Debtor has no subsisting right. Central Government after having issued notification has directed the Tea Board to take possession and by issuance of notification the Directors and Promoters of the Corporate Debtor shall be treated to vacate their possession. The State of West Bengal, seeing the success of four tea gardens which were given to Merico prior to commencement of CIRP has entrusted Merico and Sammelan to run and manage the tea gardens to mitigate the suffering of the workers.

26. We have also heard learned counsel appearing for the State Bank of India, who has filed IA No.3712 of 2022 in Company Appeal (AT) (Ins.) No.593 of 2022. The application is filed by State Bank of India and Asset Reconstruction Company (India) Ltd. The Applicants have extended financial facilities to the Corporate Debtor. The Applicants support the Appellants' 30 contention and pray that order dated 21.04.2022 passed by the Adjudicating Authority be set aside, it was further submitted that Nagaisuree and Kilcott tea gardens along with leasehold rights were mortgaged to the State Bank of India.

27. We have heard Shri Amar Dave, learned counsel appearing of the Intervenor - Uniglobal Papers Private Limited, who claim to be the Successful Resolution Applicant in the CIRP of the Corporate Debtor. It is submitted by learned counsel that the State of West Bengal has filed an application i.e. IA No.8/KB/2023 seeking exclusion of the tea estates belonging to the State from the purview of the CIRP of the Corporate Debtor, which application has been rejected on 26.04.2024, against which the State has filed an appeal, which is pending consideration.

28. Learned counsel appearing for the Respondent No.1 has opposed the IA filed by the State Bank of India as well as IA filed by Uniglobal Papers Private Limited. It is submitted that the Corporate Debtor cease to have any right in the tea gardens so no valid security interest can be created in favour of State Bank of India in Nagaisuree and Kilcott tea gardens. It is submitted that the mortgage dated 09.10.2013 relied by the State Bank of India shall not give any benefit to the State Bank of India owing to non-payment of salami with regard to Nagaisuree and Kilcott tea gardens, which is claimed to be renewed. Opposing the application filed by the Successful Resolution Applicant, it is submitted that the tea gardens not being estate of the Corporate Debtor, there is no occasion for the Resolution Professional to take possession. No right can be claimed in the tea gardens whose lease has already expired. 31

29. Learned counsel appearing for the State of West Bengal with respect to the order passed on 26.04.2024 in IA No.8/KB/2023 submits that appeals have already been filed, which are pending consideration, hence, order dated 26.04.2024 has no bearing in the issues which are raised in the present appeals. The application of the State for keeping the tea gardens out of the CIRP has been rejected, which is matter to be considered in the appeal filed by the State against the said order. Learned counsel for the State of West Bengal has further submitted that the Resolution Professional has not impleaded the State of West Bengal in any of the applications where as the State of West Bengal was owner of the tea gardens and instead of impleading the State of West Bengal, Resolution Professional has prayed for giving the Resolution Professional the possession of assets and it is only in these appeals the State of West Bengal has been impleaded and has filed counter affidavit.

30. Learned counsel for the State of West Bengal as well as learned counsel appearing for the Respondent No.1 has relied on various judgments of Hon'ble Supreme Court and this Tribunal, which shall be referred to when we shall consider the submissions in detail.

31. We have considered the submissions of learned counsel for the parties and perused the record.

32. In the appeals before us under consideration are nine tea estates. The State of West Bengal in its counter affidavit filed on behalf of Respondent No.5 and 7 has given the details of respective leases with expiry details in Para 5 of the Counter Affidavit, which table is as follows:

"RESPECTIVE LEASES WITH EXPIRY DATES Name of Tea Name of Lessee Date of Effective Date of Estates Execution From Expiry Garganda Lankapara Tea 19.07.1974 20.09.1965 19.09.1995 Co. Ltd.

Dhumchipara Birpara Tea Co. 06.12.1975 13.09.1974 12.09.2004 Ltd.

Huntapara Duncan Agro 25.11.1980 03.12.1974 02.12.2004 Industries Ltd.


Tulsipara         Lankapara Tea 26.02.1980 18.04.1974 17.04.2004
                  Co.     Ltd.    &
                  Duncan       Agro
                  Industries Ltd.

Birpara           Birpara Tea Co. 25.11.1980 27.06.1978 26.06.2008
                  Ltd.

Bagracote I       Bagracote   Tea 19.02.1973 22.05.1968 22.05.1998
                  Co. Ltd.

Bagracote II      Bagracote   Tea 11.10.1974 04.08.1970 04.08.2020
                  Co. Ltd.

Bagracote      III Duncans      Agro 27.02.1980 24.02.1976 24.02.2006
& IV               Industries Ltd.

Runglee-          Birpara Tea Co. 24.08.1973 09.02.1970 08.02.2000
Rungliot          Ltd.

Kilcott           Birpara Tea Co. 22.08.1965 24.08.1965 21.08.1995
                  Ltd.

Nagaisuree        Birpara Tea Co. 30.01.1975 31.10.1972 30.10.2002
                  Ltd.



33.   Information    Memorandum     was   prepared   by     the    Resolution

Professional, which Information Memorandum has also been brought on the record. Information Memorandum also notices the nine tea gardens and the 33 date of validity of the lease deeds. It is useful to extract the status of tea estates as reflected in the Information Memorandum, which is as follows:

"Status of Leasehold Tea Estates:-

                   Tea Estates                 Valid upto

             Birpara                          26.06.2008

             Lankapara                        21.06.2006

             Dumchipara                       12.09.2004

             Hantapara                        02.12.2004

             Nagaisuree                       30.10.2002

             Gungaram                         06.08.2008**

             Garganda                         18.09.2026

             Tulsipara                        17.04.2004

             Kilcott                          23.08.2025*

             Bagracote III & IV               31.03.2011

             Runglee                          08.02.2000

             Marybong                         08.02.2000

             Bagracote-I                      22.05.2028

             Bagracote-II                     03.08.2000

* As per land department of GoWB Kolkata these lease renewals are not done properly.

** The lease renewal agreement registration executed on 02nd September, 2020 for 30 years."

34. Information Memorandum also captures that renewal of leases of Kilcott, Bagracote and Garganda was not done properly. Leases of other six tea gardens namely Birpara expired on 26.06.2018, Lankapara expired on 21.06.2006, Dumchipara expired on 12.09.2004, Hantapara expired on 34 02.12.2004, Nagaisuree expired on 30.10.2002, Gungaram expired on 06.08.2008, Tulsipara expired on 17.04.2004, Bagracote-II expired on 03.08.2000, Bagracote-III & IV expired on 31.03.2011, Nagaisuree expired on 30.10.2002.

35. When we look into the application which were filed by the Resolution Professional praying for handing over the possession of different tea gardens, the names of the tea estates, date of expiry of the lease (except those with regard to whom dispute of renewal is there) and number of application is noticed in the following tabular form:

"1. Details of the appeals filed under section 61 of IBC, 2016 arising out of impugned orders in the applications as given below:

      CA (AT)   Impugned    Impugned        In respect of Lease
      (Ins.)    order dated order passed in Tea Estate    expired on
      No.
      593 OF    21.04.2022    I.A. (IB) No.     Kilcott          21.08.1995
      2022                    1111/KB/2021      Nagaisuree       30.10.2002
      754 OF    09.05.2022    I.A. (IB) No.     Bagracote        22.05.1998
      2022                    665/KB/2021
      672 OF    09.05.2022    I.A. (IB) No. Dhumchipara          12.09.2004
      2021                    1256/KB/2021  Tulsipara            17.04.2004
                                            Hantapara            02.12.2004
                                            Garganda             19.09.1995
      628 OF 09.05.2022       I.A. (IB) No. Birapara             26.06.2008
      2022                    415/KB/2021
      907 OF 18.07.2022       I.A. (IB) No. Rungliot             08.02.2002
      2022                    109/KB/2022

36. Thus, in these appeals we are concerned about the above tea gardens.

With regard to expiry of leases of six tea gardens, there is no dispute between 35 the parties that leases have expired. The Appellants' case is that renewal applications were filed for those six tea gardens on which no decision has been taken and with regard to three tea gardens i.e. Kilcott, Bagracote and Garganda issue of renewal of lease has been raised. Both the parties have advances rival submissions with regard to renewal. From the submission of learned counsel for the parties and materials on record following are issues which arise of consideration:

1. Whether the Corporate Debtor has lease hold right in the Tea Gardens, which are assets of the Corporate Debtor which need to be taken control by the Resolution Professional under Section 18(f) and Section 25 of the I&B Code?

2. Whether with regard to those Tea Gardens where period of lease has come to an end before commencement of the CIRP and application for renewal has been filed by the Corporate Debtor, the lease shall be deemed to be renewed since no decision has yet been taken by the State of West Bengal either accepting or rejecting the application?

3. Whether renewal of the lease deed of Kilcott Tea Estate w.e.f.

15.11.1995 till 23.08.2025 has to be treated to be valid renewal, similarly, renewal of lease deed of Garganda w.e.f. 08.11.1996 to 18.09.2026 has to be treated as valid renewal and renewal of lease deed of Bagrakote Tea Division-I dated 19.06.1998 has to be treated as a valid renewal?

4. Whether non-payment of Salami as required to be paid as per West Bengal Estate Acquisition Rules 1954 by the Corporate Debtor while execution of renewal of lease deed shall make the renewal void and inoperative?

5. Whether order dated 28.05.2021 passed by the Adjudicating Authority in IA No.1256/KB/2020 rejecting the application with regard to four Tea Gardens - Dhumchipara, Garganda, Tulsipara and Hantapara deserve to be set aside?

6. Whether the Adjudicating Authority committed error in relying on order dated 28.05.2021 in IA No.1256/KB/2020 while deciding the subsequent applications filed by the Resolution Professional for taking possession of different Tea Estates?

7. Whether possession taken by the Sammelan and Marico subsequent to order dated 05.03.2020 is in violation of provisions of Section 14 of the I&B Code with respect to Tea Gardens except the four Tea Gardens which were subject matter of IA No.1256/KB/2020.

8. Whether Appellants are entitled to be handed over the possession of all the Tea Estates for which applications were filed?

9. Relief, if any, to which Appellant may be entitled?

37 Question No. 1

37. Whether the Leasehold Rights in the Tea Gardens are Assets of the Corporate Debtor, which need to be taken control by the Resolution Professional (`RP') under Section 18(f) of the IBC Code?

38. Section 18(1) enumerates the duties of the Interim Resolution Professional (`IRP'). Section 18(1)(f) is as follows:

"18. Duties of interim resolution professional.--

(1) The interim resolution professional shall perform the following duties, namely:--

.....

(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;

(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;"

39. Clause (f) provides that IRP to take control and custody of Assets over which the Corporate Debtor has an Ownership Rights as recorded in the Balance Sheet of the Corporate Debtor. The Tea Gardens which have been leased out to the Corporate Debtor are Tea Garden which are owned by the State of West Bengal. The Corporate Debtor does not have any Ownership 38 Right in the Tea Garden hence the main sub-Clause (f) of Section 18 does not cover the Tea Garden. However, the definition in Section 18 (f) is inclusive definition which is apparent in the expression "including" occurring in the end of sub-Section (f) and sub-Clause (iv) refers to Intangible Assets including Intellectual Property. The Leasehold Rights are Intangible Assets, which is now a settled proposition of law.

40. Learned Counsel for the Appellant has relied on the Judgment of the Hon'ble Supreme Court in the matter of `Victory Iron Works Ltd.' Vs. `Jitendra Lohia & Anr.' in (2023) 7 SCC 227. The Hon'ble Supreme Court in above case had occasion to consider right to develop an immovable property. It was held by the Hon'ble Supreme Court that the Development Rights created in favour of the Corporate Debtor are assets, within meaning of expression Section 3(27) of the IBC. Section 3(27) of the IBC defines property which is an inclusive liquidation, provides as follows:

"3. Definitions.--In this Code, unless the context otherwise requires,--

(27) "property" includes money, goods, actionable claims, land and every description of property situated in India or outside India and every description of interest including present or future or vested or contingent interest arising out of, or incidental to, property;"

41. Section 3(27) expressly includes "every description of interest arising out of, or incidental to property". Section 18(1) also contains an explanation providing that term "Asset" shall not include, as enumerated in explanation. Explanation to Section 18(1) is as follows:

"18. Duties of interim resolution professional.-- The interim resolution professional shall perform the following duties, namely:--

..........

Explanation.--For the purposes of this [section], the term "assets" shall not include the following, namely:--

(a) assets owned by a third party in possession of the corporate debtor held under trust or under contractual arrangements including bailment;

(b) assets of any Indian or foreign subsidiary of the corporate debtor; and

(c) such other assets as may be notified by the Central Government in consultation with any financial sector regulator.

42. The present is the case where Tea Gardens are owned by State of West Bengal and the Corporate Debtor claimed possession by virtue of Contractual Arrangement i.e., Lease Arrangement. In the present case, thus whether by virtue of explanation to Section 18(1) of the IBC, Tea Gardens had to be excluded from the definition of Assets is a question to be answered. Section 25 provides for duties of the Resolution Professional. Section 25(1) & (2)(a) provides as follows:

"25. Duties of resolution professional.--(1) It shall be the duty of the resolution professional to preserve and protect the assets of the corporate debtor, including the continued business operations of the corporate debtor. (2) For the purposes of sub-section (1), the resolution professional shall undertake the following actions, namely:--

(a) take immediate custody and control of all the assets of the corporate debtor, including the business records of the corporate debtor;"

43. The Hon'ble Supreme Court has held that explanation in Section 18 does not extend to Section 25 in `Victory Iron Works Ltd.' (Supra). One of the questions framed in Paragraphs 16.1(1) & 16.2(2) is as follows: 40

"16.1. (1) What is the nature of the right or interest that the corporate debtor has over the property in question, for the purpose of deciding the inclusion of the same in the information memorandum prepared by the resolution professional under Regulation 36 of the Regulations?; and 16.2. (2) Whether NCLT and Nclat have exercised a jurisdiction not vested in them in law by seeking to recover/protect the possession of the corporate debtor?"

44. In Para 42, the Hon'ble Supreme Court ultimately held after considering the several other statutes came to conclusion that Development Rights created in favour of the Corporate Debtor constitutes Property within meaning of Section 3(27). In Paragraph 38 of the Hon'ble Supreme Court while answering Question No. 1, laid down as follows:

"38. From the sequence of events narrated above and the terms and conditions contained in the agreements entered into by the parties, it is more clear than a crystal that a bundle of rights and interests were created in favour of the corporate debtor, over the immovable property in question. The creation of these bundle of rights and interests was actually for a valid consideration. But for the payment of such consideration, Energy Properties would not even have become the owner of the property in dispute. Therefore, the development rights created in favour of the corporate debtor constitute "property" within the meaning of the expression under Section 3(27) IBC. At the cost of repetition, it must be recapitulated that the definition of the expression "property" under Section 3(27) includes "every description of interest, including present or future or vested or contingent interest arising out of or incidental to property". Since the expression "asset" in common parlance denotes "property of any kind", the bundle of rights that the corporate debtor has over the property in question would constitute "asset" within the meaning of Section 18(1)(f) and Section 25(2)(a) IBC."

45. We may also notice observations in Paragraph 42, where while answering Question No. 2 framed in the Judgment of the Hon'ble Supreme 41 Court has also noted the Judgment of the Hon'ble Supreme Court in the matter of `Embassy Property Developments (P) Ltd.' Vs. `State of Karnataka' reported in (2020) 13 SCC 308, in the matter of `Gujarat Urja Vikas Nigam' Vs. `Amit Gupta' reported in (2021) 7 SCC 209 and in the matter of `Tata Consultancy Services Ltd.' Vs. `SK Wheels (P) Ltd. (Resolution Professional), reported in (2022) 2 SCC 583.

46. After considering the aforesaid Judgment, the Hon'ble Supreme Court upheld the decision of the Adjudicating Authority and this Tribunal holding that possession of the Corporate Debtor of the Property need to be protected.

47. The Judgment of the Hon'ble Supreme Court in `Victory Iron Works Ltd.' (Supra) clinches the issue which has arisen in this case for consideration as to whether Leasehold Rights of the Corporate Debtor as Assets subsisting can be taken by the Resolution Professional in exercise of his duties under Section 25. The Assets of the Corporate Debtor, including the Leasehold Rights, which are contemplated to be taken in custody and controlled by the RP are thus Leasehold Rights which are subsisting on the date when the Corporate Insolvency Resolution Process, CIRP has commenced. In the present case, 05.03.2020 is the date of commencement of the CIRP, thus before taking control and custody of the Assets i.e., Leasehold Rights of the Corporate Debtor, it has to be seen as to whether the Leasehold Rights are subsisting on the date of commencement of the CIRP. Law mandates taking custody and control of the Assets i.e., the Leasehold Rights of the Corporate Debtor which are subsisting on the date of commencement of CIRP.

48. The submission which has been advanced by the Learned Counsel for the Respondent in the present case is not that Leasehold Rights are not covered by Section 18(1)(f) and Section 25 of the IBC. The submission which has been advanced by the Respondent is that Leasehold Rights of the Corporate Debtor had come to an end by efflux of time on the date, when CIRP commenced, hence the provision of Section 18(1)(f) and Section 25 does not empower the RP to pray for possession and custody and control of the Assets. The question as to whether the Leasehold Rights in the 9 Tea Gardens which are subject matter of this Appeal subsists, shall be considered when we enter into the other issues framed in the Appeal and our discussion on the issue is confined to the legal principal which is advanced before us.

In view of the forgoing discussions, we answer Question No.1 as follows:

"The subsisting Leasehold Rights in the Tea Garden of the Corporate Debtor are Assets of the Corporate Debtor which need to be taken control by the RP under Section 18(1)(f) and Section 25 of the IBC".

Question No. 2

49. We have noted above the status of Leasehold Tea Estates in tabular form as per the details noticed against the 9 Tea States, apart from 3 Tea Gardens, namely Garganda, Killcott and Bagracote I. The case of the Appellant is that the leases of other 6 Tea Gardens have not been renewed. Appellant's case is that Corporate Debtor had filed an Application for renewal of the said Tea Gardens before the expiry of period of the Lease Deed. It is also pleaded by the Appellant that State of West Bengal has not rejected the 43 Application for renewal with regard to other 6 Tea Gardens, although it is submitted by the State that Renewal Application has not been even submitted by the Corporate Debtor before expiry of the 6 leases. We proceed to examine the issue on the premise that Corporate Debtor has applied for renewal prior to expiry of the lease period and the State has not taken any decision on said Renewal Application.

50. The copy of Lease Deeds which has been executed in favour of the Corporate Debtor/other entities subsequently merged into the Corporate Debtor have been brought on the record. One of the Lease Deeds executed in favour of the Dumchipara Tea Company Ltd. has been brought on record in the Compilation filed by the State by which Lease was executed for the term of 30 Years from 19th day of September, 1974. On consideration of yearly rent of 13,752.43/- payable in two equal instalments on 31st August and 28th February in each Year. The Lease Deed contains provisions for renewal of the Lease for further period of 30 Years and successive renewals. Clause 16 of the Lease Deed provides for renewal in following manner:

"(16) That the Lessee/Lessees shall be entitled to the renewal of this lease for a further period of thirty years and to successive renewals, for, similar, periods, subject to the rules and the terms and, conditions of this lease and to such other terms and conditions as the State Government may from time to time consider it necessary to impose and include in such renewed lease or leases and subject further to such rent as may then be fixed, provided that such additional terms and conditions shall not be inconsistent with the law regulating such lease* and shall not have retrospective effect.

(b) That all arrears of rent costs, lines and other monies payable by the Lessee/Lessees hereunder and all expenses in connection with inspections, survey and measurements may he recovered as a public demand 44 under the Bengal Public Demand Recovery Act or and statutory modification thereof for the time being in force.

(c) That if at any time the lands and hereditaments cease to be used by the Lessee/Lessees as a tea-

garden, the lease shall determine forthwith."

51. The Lease was registered on 25.10.1975 with the sub-Registrar Office, District Jalpaiguri.

52. Case of the Appellant is that Application for renewal was filed before the expiry of the term of the Lease. The Clause 16 of the Lease as extracted above clearly indicates that Lease shall be entitled to renewal for further period of 30 Years subject to the rules and terms and conditions of the Lease and such other terms and conditions as the State Government may from time to time consider it necessary to impose and include in such renewed lease or leases.

53. Thus, the Clause itself contemplates that renewal is not automatic nor Clause 16 contains concept of extension of the Lease. Renewal has to be made by the State in such terms and conditions as State Government may impose while renewing the Lease.

54. The submission of the Appellant is that when an Application is filed for renewal of the Lease, there shall be automatic deemed renewal. The Hon'ble Supreme Court had laid down in the matter of `Hardesh Ores (P) Ltd.' Vs. `Hede & Company' reported in (2007) 5 SCC 614, that to give effect to renewal of the Lease a document has to be executed for renewal of the Agreement and there is no consent of automatic renewal of the Lease. In Paragraph 39 of the Judgment, following has been laid down: 45

"39. We are of the view that the respondents are right in contending that enforcement of the negative covenants presupposes the existence of a subsisting agreement. As noticed earlier, the law is well settled that the renewal of an agreement or lease requires execution of a document in accordance with law evidencing the renewal. The grant of renewal is also a fresh grant. In the instant case, the appellant-plaintiff did exercise their option and claimed renewal. The respondents denied their right to claim renewal in express terms and also unequivocally stated that the agreement did not stand renewed as contended by the appellants. Having regard to these facts it must be held that a cause of action accrued to the appellant-plaintiff when their right of renewal was denied by the respondents. This happened in December 2001 and, therefore, within three years from that date they ought to have taken appropriate proceedings to get their right of renewal declared and enforced by a court of law and/or to get a declaration that the agreement stood renewed for a further period of 5 years upon the appellants' exercising their option to claim renewal under the original agreement. The appellant-plaintiffs have failed to do so. However, the plaint proceeds on the assumption that the original agreement stood renewed including the negative covenants contained in clauses 15 and 20 of the original agreement which authorised only the appellants to extract ore from the mine with an obligation cast on the respondent- defendants not to interfere with the enjoyment of their rights under the agreement. In the facts of this case, in the suit prayer for injunction based on negative covenants could not be asked for unless it was first established that the agreement continued to subsist. The use of the words "during the subsistence of this agreement" in clause 15, and "during the pendency of this indenture" in clause 20 of the agreement is significant. In the absence of a document renewing the original agreement for a further period of 5 years and in the absence of any declaration from a court of law that the original agreement stood renewed automatically upon the appellants exercising their option for grant of renewal, as is the case of the appellants, they cannot be granted relief of injunction, as prayed for in the suit, for the simple reason that there is no subsisting agreement evidenced by a written document or declared by a court. If there is no such agreement, there is no question of enforcing clauses 15 and 20 thereof. The appellants ought to 46 have prayed for a declaration that their agreement stood renewed automatically on exercise of option for renewal and only on that basis could they have sought an injunction restraining the respondents from interfering with their possession and operation. Having not done so, they cannot be permitted to camouflage the real issue and claim an order of injunction without establishing the subsistence of a valid agreement. In the instant suit as well they could have sought a declaration that the agreement stood renewed automatically but such a claim would have been barred by limitation since more than 3 years had elapsed after a categoric denial of their right claiming renewal or automatic renewal by the respondent- defendants."

55. The Hon'ble Supreme Court in the matter of `State of UP & Ors.' Vs. `Lal Ji Tandon' reported in (2004) 1 SCC 1 had also dwelt upon difference between extension and renewal of the Lease. It has been held that when principal Lease executed between the Parties contained a covenant of renewal of Lease has to be in accordance with the covenant for renewal contained in the original Lease and in the case of renewal execution of afresh Deed of Lease is necessary. In Paragraph 13 of the Judgment, following was laid down:

"13. .....Where the principal lease executed between the parties containing a covenant for renewal, is renewed in accordance with the said covenant, whether the renewed lease shall also contain similar clause for renewal depends on the facts and circumstances of each case, regard being had to the intention of the parties as displayed in the original covenant for renewal and the surrounding circumstances. There is a difference between an extension of lease in accordance with the covenant in that regard contained in the principal lease and renewal of lease, again in accordance with the covenant for renewal contained in the original lease. In the case of extension it is not necessary to have a fresh deed of lease executed, as the extension of lease for the term agreed upon shall be a necessary consequence of the clause for extension. However, option for renewal consistently with the covenant for renewal has to be exercised consistently with the 47 terms thereof and, if exercised, a fresh deed of lease shall have to be executed between the parties....."

56. The Hon'ble High Court of Delhi also had occasion to examine the concept of the renewal of the Lease in `Kamal Mitra Chenoy & Anr.' Vs. `M/s. Dunlop India Ltd. & Anr.' 2015 SCC OnLine Del 8195. In the facts of the above case, the Lessor had not agreed for renewal. The Hon'ble High Court of Delhi also followed the Judgment of the Hon'ble Supreme Court in `Hardesh Ores (P) Ltd.' (Supra) held that Lease was never renewed in the facts of the said case. In Paragraphs 23 to 27, following was laid down:

23. In Shanti Prasad Devi v. Shankar Mahto, (2005) 5 SCC 543 the Agreement contained a renewal clause. Paragraphs 18 and 19 of which read as follows:-

"18. We fully agree with the High Court and the first appellate court below that on expiry of period of lease, mere acceptance of rent for the subsequent months in which the lessee continued to occupy the lease premises cannot be said to be a conduct signifying 'assent' to the continuance of the lessee even after expiry of lease period. To the legal notice seeking renewal of lease, the lessor gave no reply. The agreement of renewal contained in Clause (7) read with Clause (9) required fulfillment of two conditions; first the exercise of option of renewal by the lessee before the expiry of original period of lease and second, fixation of terms and conditions for the renewed period of lease by mutual consent and in absence thereof through the mediation of local Mukhia or Panchas of the village. The aforesaid renewal Clauses (7) & (9) in the agreement of lease clearly fell within the expression 'agreement to the contrary' used in Section 116 of the Transfer of Property Act. Under the aforesaid clauses option to seek renewal was to be exercised before expiry of the lease and on specified conditions.

19. The lessor in the present case had neither expressly nor impliedly agreed for renewal. The renewal as provided in the original contract was required to be obtained by following a specified procedure i.e. on mutually agreed terms or in the alternative through the mediation of Mukhias and 48 Panchas. In the instant case, there is a renewal clause in the contract prescribing a particular period and mode of renewal which was 'an agreement to the contrary' within the meaning of Section 116 of the Transfer of Property Act. In the face of specific Clauses (7) & (9) for seeking renewal there could be no implied renewal by 'holding over' on mere acceptance of the rent offered by the lessee. In the instant case, option of renewal was exercised not in accordance with the terms of renewal clause that is before the expiry of lease. It was exercised after expiry of lease and the lessee continued to remain in use and occupation of the leased premises. The rent offered was accepted by the lessor for the period the lessee overstayed on the leased premises. The lessee, in the above circumstances, could not claim that he was 'holding over' as a lessee within the meaning of Section 116 of the Transfer of Property Act."

24. Hence, the Supreme Court in this case, where renewal was sought after the expiry of the original period of the lease, held the renewal clause not to entitle the lessee for renewal of the lease. The Supreme Court further held that mere expense of the rent does not imply renewal of the lease.

25. Reference may also be had to Hardesh Ores Pvt.

Ltd. v. Hede and Company, 2007 (7) SCALE 348. In that case the Supreme Court held that to give effect to renewal of a Lease, a document has to be executed evidencing renewal of the Agreement and there is no concept of automatic renewal of the Lease by mere exercise of option by the Lessee. Para 25 reads as under:-

"25. Having regard to these decisions we must hold that in order to give effect to the renewal of a lease, a document has to be executed evidencing the renewal of the agreement or lease, as the case may be, and there is no concept of automatic renewal of lease by mere exercise of option by the lessee. It is, therefore, not possible to accept the submission urged on behalf of the appellants- plaintiffs that by mere exercise of option claiming renewal, the lease stood renewed automatically and there was no need for executing a document evidencing renewal of the lease."

26. In the present case, as per the plaintiff no Demand Draft was sent with the aforesaid communication dated 11.8.2012 though the letter mentions so. The 49 defendants have asserted that the Demand Draft was sent. The defendant, however, agrees that the Demand Draft has not been encashed. Hence, there is no acceptance in the present case.

27. Hence, firstly the communication dated 11.08.2012 does not stipulate any communication to renew the Lease Agreement. It merely purports to send rent for a certain period. Further, as per the legal position stated above even if the rent has been sent and accepted by the plaintiff it would not have implied automatic renewal of the lease deed. Further a mere communication to renew the lease does not imply renewal of the Lease-Deed. The alleged attempt to renew is also made after expiry of the Lease Deed and contrary to the renewal clause in the Lease Agreement. I have no hesitation in holding that the lease of the suit property never stood renewed."

57. The law is thus well settled that when original Lease Deed contemplates the renewal of the Lease, the renewal has to be in accordance with the terms of renewal as contemplated in the Lease in question. Although, renewal is contemplated for further period of 30 Years, but the said renewal is hedged by the rules and terms and conditions of the Lease and such other terms and conditions as the State Government may from time to time may impose.

58. One more aspect regarding renewal of the Lease needs to be noted. In West Bengal State Government Acquisition Rules, 1954 by a Notification dated 01.06.1994, Government of West Bengal has made amendment in Schedule F by adding Clauses 1A & 1B, which provided that when a Lease of Tea Garden is determined and the Tea Garden is leased afresh to new Lessee shall be liable to pay salami @ 15,000 per hectare of the Land Lease. The Hon'ble Supreme Court had occasion to consider aforesaid Rule in the matter of `State of West Bengal & Ors.' Vs. `Calculata Mineral Supply Company Pvt. Ltd. & Anr.' reported in (2015) 8 SCC 655.

59. One of the appeals which was before the Hon'ble Supreme Court i.e., Civil Appeal No. 2549/2006, in the matter of `Collector, Jalpaiguri and Anr.' Vs. `Darjeeling Dooars Plantations (Tea) Ltd. & Anr.'. 30 Years period Lease expired in 1954, and afresh lease was executed on 30.01.1975 in favour of Chulsa Tea Company made effective from 25.03.1968. In the said Lease Deed, one of the Clauses was similar Clause like Clause 16(a) in the leases which are under consideration which contained a renewal Clause. The facts have been noticed by Paragraph 13 of the Judgment, which is as follows:

"13. Clause 16(a) of the lease deed contains a renewal clause according to which the lessee shall be entitled to the renewal of the lease for a further period of thirty years and to successive renewals for similar periods, subject to the rules and the terms and conditions of this lease and also such other terms and conditions as the State Government may from time to time consider it necessary to impose and include in such renewed lease or leases and subject further to such rent as may then be fixed. However, such additional terms and conditions shall not be inconsistent with the law regulating such lease and shall not have retrospective effect."

60. In the above case, the Hon'ble Supreme Court extracted the amendments made in Schedule F of the West Bengal Estates Acquisition Rules 1954 in Paragraphs 20, 21 & 22 which are as follows:

"20. In exercise of the power conferred by Section 59 of the Act, the West Bengal Estates Acquisition Rules, 1954 were framed and the same were published in the Official Gazette vide Notification dated 28-5-1954. Rule 4 of the said Rules inter alia provides that the land retained by an intermediary under the provisions of sub-section (1) of Section 6 shall be held by him from the date of vesting on the terms and conditions specified in the Rules. So far as the tea garden is concerned, it has been specifically provided that an intermediary shall hold such land on the terms and conditions set out in Schedule F appended to the Rules.

Therefore, for better appreciation, Schedule F and Form 1 for the purpose of granting lease for tea garden have been reproduced here:

"SCHEDULE F [Rule 4]

1. Land comprised in a tea garden retained by an intermediary under sub-section (1), read with sub- section (3), of Section 6 shall be deemed to be held directly under the State from the date of vesting as a tenant [until a lease is granted in Form 1 appended to this schedule, on such terms and conditions as may be specified by the Collector in a summary settlement, and thereafter, on a lease being granted in Form 1 appended to this schedule, on the terms and conditions specified in such lease]. There shall be a lease in Form 1 in respect of each such intermediary, and the same shall be registered and numbered in the office of the Collector.

(1-A)-(1-B)***

2. The first lease shall be given from the date of the order under sub-section (3) of Section 6 or from the date of the determination of the rent under Section 42, whichever is later."

21. By the Notification dated 1-6-1994 issued by the Government of West Bengal, Land and Land Reforms Department, an amendment has been brought in Schedule F to the said Rules discussed hereinabove.

By the said notification, two paragraphs being Clauses (1-A) and (1-B) were inserted, which are reproduced hereunder:

"(1-A) When the lease of a tea garden is determined and the tea garden is leased afresh to a new lessee, the latter shall be liable to pay salami @ Rs 15,000 per hectare of the land leased out.

(1-B) In case of a transfer of the leasehold interest, except by way of inheritance, the transferee shall not be liable to pay salami during the unexpired period of the lease. On the expiry of the transferred lease, he shall be liable to pay salami @ Rs 15,000 per hectare of the land leased out before the lease is further renewed."

22. In Clause 13, sub-clause (dd) was also inserted, which is quoted hereinbelow:

"(dd) That the transferee, other than by inheritance, shall be required to enter into a fresh lease on payment of salami at the rate laid down 52 in Clause (1-B) of Schedule F within three months of expiry of the unexpired period of lease."

61. In the case before the Hon'ble Supreme Court, the Lessee approach the Collector for renewal and the request of the grant of Lease was considered and Government issued a letter directing for payment of salami of Rs. 15,000/- per hectare which was challenged by the Lessee before the Land Reforms and Tenancy Tribunal and thereafter before the Hon'ble High Court of Calcutta. The Hon'ble High Court of Calcutta had allowed the Writ Petition and quashed the Order of the Land Reforms and Tenancy Tribunal which had rejected the prayer of the Lessee to declare Notification 01.06.1994 as illegal.

62. The Hon'ble Supreme Court upheld the amendments by which Clauses 1A & 1B was inserted. The Hon'ble Supreme Court set aside the Judgment of the Hon'ble High Court and held that the renewal of the Lease can be granted as per Clause 16(a) of the Lease Deed, subject to rules and demand of salami was in accordance with law. In Paragraphs 30 to 33, following was held:

"30. As noticed above, the State Government by notification dated 1.6.1994 brought amendment in the Rules by incorporating two more conditions i.e. paragraph 1A and 1B. As per the additional condition, in case of fresh lease granted by the State in respect of tea garden, the lessee shall be liable to pay salami at the rate of Rs. 15,000/- per hectare of the land leased out. However, paragraph 1-B made it clear that in case of transfer of leasehold interest, the transferee shall not be liable to pay salami during the unexpired period of lease, but after the expiry of the existing period of lease the transferee shall be liable to pay salami at the rate of Rs. 15,000/- per hectare before the lease is further renewed.

31. Admittedly, before the expiry of the lease in question in 1998, the respondent/transferee stepped into the shoes of the original lessee in the year 1990.

In 1994, by notification dated 1.6.1994, an amendment was brought in Schedule F of the Rules, as discussed hereinabove, in terms of clause I-B. Therefore, the respondent shall not be liable to pay salami during the unexpired period of lease up to 1998. The State Government has rightly not made any claim for salami for the unexpired period of lease, but for the fresh renewal of lease after 1998 which is a fresh grant. The demand of salami by State Government for according sanction for renewal of lease cannot and shall not by any stretch of imagination be held to be retrospective.

32. In the case of State of U.P. vs. Lalji Tandon, (2004) 1 SCC 1, this Court while considering the renewal clause in the lease deed observed:

"13. In India, a lease may be in perpetuity. Neither the Transfer of Property Act nor the general law abhors a lease in perpetuity. (Mulla on the Transfer of Property Act, 9th Edn., 1999, p. 1011.) Where a covenant for renewal exists, its exercise is, of course, a unilateral act of the lessee, and the consent of the lessor is unnecessary. (Baker v. Merckel, also Mulla, ibid., p.1204.) Where the principal lease executed between the parties containing a covenant for renewal, is renewed in accordance with the said covenant, whether the renewed lease shall also contain similar clause for renewal depends on the facts and circumstances of each case, regard being had to the intention of the parties as displayed in the original covenant for renewal and the surrounding circumstances. There is a difference between an extension of lease in accordance with the covenant in that regard contained in the principal lease and renewal of lease, again in accordance with the covenant for renewal contained in the original lease. In the case of extension it is not necessary to have a fresh deed of lease executed, as the extension of lease for the term agreed upon shall be a necessary consequence of the clause for extension. However, option for renewal consistently with the covenant for renewal has to be exercised consistently with the terms thereof and, if exercised, a fresh deed of lease shall have to be executed between the parties. Failing the execution of a fresh deed of lease, another lease for a fixed term shall not come into existence though the principal lease in spite of the expiry of the term thereof may continue by holding over for 54 year by year or month by month, as the case may be."

33. In the case of Gajraj Singh & ors. vs. State Transport Appellate Tribunal & ors., (1997) 1 SCC 650, this Court while considering the term renewal of lease or licence contained in document, observed that "grant of renewal is a fresh grant though it breathes life into the operation of the previous lease or licence granted as per existing appropriate provisions of the Act, rules or orders or acts intra vires or as per the law in operation as on the date of renewal".

63. The Hon'ble Supreme Court ultimately held that the Lessee was liable to pay salami and demand made by Collector was justified. The Judgment of the Hon'ble Supreme Court had upheld the amendment in Schedule F of West Bengal Estates Acquisition Rule 1954 with effect from 01.06.1994, providing for payment of salami for renewal of the Lease. It is relevant to notice that in the Order of the Adjudicating Authority 28.05.2021, rejecting I.A. 1256/KB/2020 filed by the RP, submission on behalf of the RP was made that leases were not renewed due to demand of salami imposed by State for renewal of the Agreement. Adjudicating Authority in Paragraph 2.15 noticed the submission of the Learned Counsel for the Appellant and has also noted the challenge to the West Bengal Estates Acquisition Rules 1954, amendment to Schedule F. Para 2.15 in the order of the Adjudicating Authority is as follows:

"2.15. Mr. Joy Saha submits that the lease deed with respect to the other three gardens were could not be renewed due to the demand of salami imposed by the state for renewal of lease agreements. This demand of salami was challenged before the Hon'ble Calcutta High Court in WP (LRT) No.288/2005, which held in favour of the tea garden owners, holding that salami cannot be imposed for the purpose of renewal of a lease which had been executed prior to the coming into effect of the amendment to Schedule 'F'. Form I under rule 4 of the West Bengal Estates Acquisition Rules, 55 1954 (WBEA Rules), since the amendment does not have retrospective effect. Based on this decision, the corporate debtor filed CA No.2569/2006 before the West Bengal Land Reforms & Tenancy Tribunal opposing the demand of salami. In the meantime, upon the appeal filed by the State Government before the Hon'ble Supreme Court, the decision of the Hon'ble Calcutta High Court was reversed. CA No.2569/2006 filed before the West Bengal Land Reforms & Tenancy Tribunal came to be dismissed for default in October 2019."

64. The above also clearly indicates that the renewal was not granted to the leases whose terms had expired on account of demand of salami for renewal of the Lease which it appears was not paid. In any view of the matter, leases of 6 Tea Gardens, namely Dumchipara, Hantapara, Tulsipara, Garganda and Birpara had come to an end on 12.09.2004, 02.12.2004, 17.04.2004, 19.09.1995 and 26.06.2008 respectively.

65. Leases are Bagracote Division II came to an end on 04.08.2000. Bagracote III & IV came to an end on 24.07.2006 and Rungli Rungliot came to an end on 08.02.2000 and Nagaisuree came to an end on 30.10.2002. The leases of above Tea Garden States were not renewed.

66. In view of the aforesaid discussions, we are of the view that on the ground that Application for renewal has been filed by the Corporate Debtor, the leases of the aforesaid Tea Garden shall not be treated as deemed to be renewed and leases of the aforesaid Tea Gardens shall be treated to have expired before commencement of the CIRP.

In view of the above, we answered Question No. 2 in following manner:

"The leases of Tea Gardens whose period of Lease have come to an end before commencement of the CIRP, there shall be no automatic or deemed 56 renewal of the leases even though Applications have been filed for renewal of the leases and no decision was communicated by the State."

Issue Nos. 3 and 4

67. From the Information Memorandum published by RP as extracted above, there were only three Tea Gardens, whose lease was valid beyond 05.03.2020, i.e., on the date of initiation of CIRP. As per Information Memorandum, leases of following Tea Estates were valid:

             Sl. No.       Tea Estate        Valid upto


             1.        Garganda              08.09.2026

             2.        Kilcott               23.08.2025

             3.        Bagarcote Div. I      22.05.2028

68. Against above three Tea Estates, there was asterisk put in the Information memorandum, which asterisk reads - "as per Land Department of Government of West Bengal, Kolkatta, Lease renewal are not done properly".

69. The period of other leases had come to an end much before 05.03.2020. The submission advanced by learned Counsel for the Appellant is that renewal have been granted with the aforesaid three Tea Estates by execution of Registered Renewal Lease Deed, hence, the above three Tea Estates are clearly assets of the Corporate Debtor and the RP was entitled to take possession of above three Tea Estates. From the pleadings of the parties, it 57 is clear that insofar as Tea Estate of Garganda, the possession of the said Tea Estate was handed over by Corporate Debtor itself by Bipartite Agreement in favour of Merico much before initiation of CIRP. With regard to Tea Estate of Kilcott, it is pleaded that the possession of this Tea Estate was taken on 03.11.2021 and handed to Sammelan Tea and Beverages Pvt. Ltd. ("Sammelan Tea"). With regard to Tea Estate of Bagarcote-I, possession was taken on 1st July, 2021 and handed over to Sammelan Tea. Bone of contention between the parties is with regard to leases renewals. The State of West Bengal Land Department has filed a counter affidavit in the Appeal(s) on behalf of Respondent Nos.5 and 7 in Company Appeal (AT) (Insolvency) No.593 of 2022, specifically pleading that renewal of the leases of three Tea Estates namely Kilcott, Bagarcote-I and Garganda were not properly renewed and hence, no legal right could be claimed by the RP, nor any right can be demanded in these three Tea Gardens.

70. Before we come to the rival contentions of the parties, with regard to renewal of these three Tea Gardens, it is relevant to notice the original Lease Deed and the renewed Lease Deed. The terms and conditions of original Lease Deed as well as renewed Lease Deed being almost similar, it is sufficient to notice the Lease Deed pertaining to Kilcott. The Lease Deed dated 22.01.1973 was executed for 30 years with effect from 24.08.1965 in favour of Kilcott Tea Company. The original Lease Deed has been filed in Company Appeal (AT) (Insolvency) No.593 of 2022. The Lease Deed was executed by Deputy Commissioner of West Bengal, Jalpaiguri in favour of Kilcott Tea Co. Ltd. 58 owner of Kilcott Tea Garden. It is useful to notice opening part of the Lease Deed, which provides as follows:

"THIS INDENTURE made this Twenty Second day of January, One Thousand Nine Hundred and Seventy Three BETWEEN Killcott Tea Co. Ltd. Owner of Killcott Tea Garden registered under the Indian Companies Act. having its, Registered Office at 31, Netaji Subhas Raod, Calcutta-700001, hereinafter called the "LESSEE" (which expression shall unless excluded by or repugnant to the context be deemed to include its successors and assign, of the One Part.

AND THE GOVERNOR OF THE STATE OF WEST BENGAL hereafter referred to as the "GOVERNOR" (which expression shall include his successors in office and assigns) of the Other Part.

WHETHER the LESSEE was/were seized and possessed of the land and hereditaments described in the Schedule "A" hereunder written paying revenue payable in respect of the said land hereditaments to the Government of West Bengal hereinafter referred to as the "Government").

AND WHEREAS the Government of Notification under Section 4 of the West Bengal Estates Acquisition Act, 1953, vested in the State of West Bengal the land and hereditaments mentioned and described in Schedule "A" here from all encumbrances AND WHEREAS under sub- section 6 of the said Act the State Government has issued and order allowing the LESSEE to retain out of the lands of Schedule "A" the lands mentioned and described in Schedule "B" hereunder.

AND WHEREAS under sub-section (2 of section 42 of the West Bengal Estates Acquisition Act, 1958, Rs.9,152.56 (Rupees Nine Thousand One Hundred Fifty Two and Paisa Fifty Six only was assessed as the rent payable by the Lessee annually for the part of the land and hereditaments described in Schedule "A" herein written allowed to be retained under Sub-section 3 of section 6 of the said Act."

71. As per Form-1, Schedule-F, the lease was for period of 30 years from from 24th day of August, 1965, which is clearly mentioned in the Lease Deed itself. The Lease Deed was on yearly rent of Rs.9152 and paisa 56 payable in two equal instalments on or before 31st August and 28th February in each and every year. The above Lease Deed was for 30 years from 24.08.1965. Lease Deed of Kilcott Tea Garden was renewed by Indenture made on 15.11.1995 in favour of M/s. Duncans Industries Limited (the Corporate Debtor). It is useful to extract the Form-1, Schedule-F of the Indenture dated 15.11.1995, which is as follows:

"TYPED COPY Original Form I (Schedule F) [Lease for tea garden retained under Sub-section (1) road with sub- section (3) of section 6 of the West Bengal Estates Acquisition Act 1953] This indenture made this 15th day of November, one thousand nine hundred and ninety five between the governor of the state of West Bengal herein after called the LESSOR (which expression where not repugnant to the context shall include here successors in office and assigns) of the ONE PART.

a) ___________________________ son of ___________________ residing at _________________________ hereinafter called the LESSEE (which expression shall unless excluded by or repugnant to the context be deemed to include his heirs, executors administrators representatives and assigns) of the OTHER PART.

a. In case of an individual.

b. And ________________ son of _____________ residing at _________________ and ______________ son of ___________________ residing at _______________ carrying on business in co-partnership under the name and style of at hereinafter called the lessees (which 60 expression shall unless excluded by or repugnant to the context be deemed to include their respective heirs, executors, administrators, representatives and permitted assigns and/or the partners for the time being of the said firm of _______________ and their respective heirs, executors, administrators, successors and permitted assigns) of the OTHER PART _____________________________.

b. In case of partnership firm.

c. And M/S Duncans Industries Ltd. other of Kilcott T.G. a company registered under the Indian Companies Act having its registered office at No.31, Netaji Subhas Road, Kolkata-1 hereinafter called the LESSEE (which expression shall unless excluded by or repugnant to the context be deemed to include its successors and assigns) of the OTHER PART as tenant under Schedule F of Rules 4 of West Bengal Estates Acquisition Rules 1954.

WITNESSETH that in consideration of the rent and Salami Covenants and conditions hereinafter reserved and contained and on the part of the lessee to be paid observed and performed the lessors doth hereby grant and demise unto the Lessee/Lessees the lands and hereditaments described in schedule I subject to the reservation Specified in schedule II for a term of thirty years from the 24th day of August, 1995 yielding and paying thereof the clear yearly rent of Rs. 13,180.00 (Rupees Thirteen Thousand One Hundred Eighty) only without any deduction payable in two equal instalments on or/before

(a) 30th June and 31st December (b) 31 August and 28th February in each and every year.

And the Lessee/Lessees to the intent that the obligation may continue throughout period of the demise doth/do hereby agree and covenant and agree with the lessor as follows:-

1. That the lessee/lessees shall pay-

(a) The said rent at the times and in the manner aforesaid.

(b) All arrear rents, if any, at the above rate at the times and in the manner as the State Government may direct and 61

(c) Other rates, taxes and assessments that are now, or may at any time hereafter be, assessed charged or imposed on the said demised land and hereiditaments, against proper receipts from the collector for the amounts paid No.payment shall be recognised by the lessors without such receipts.

(1A) When the lease of a tea garden is determined and the tea garden is leased afresh to a new lessee, the later shall be liable to pay salami at the rate of Rs. 15,000.00 per hectare of the land leased out.

(1B) In case of a transfer of the leasehold interest, except by way of inheritance, the transferee shall not be liable to pay salami during the unexp9ired period of the lease on the expiry of the transferred/lease he shall be liable to pay salami at the rate of Rs.15,000.00 per hectare of the land leased out before the lease is further renewed.

2. That the lessee/lessees shall himself/themselves/reside in or near to the said demised lands and hereditaments in case the lessee/lessees be unable to so reside in the said demised lands and hereditaments he/they/it shall appoint a manager or agent full powers to act on behalf of the lessee/lessees in all matters relating to the management of the said land and hereditaments and in observation of the terms, conditions and covenants herein on the part of the Lessee contained.

3. That the lessee/lessees shall register the name of the said manager or agent for the time being in the District Collector's Office. 4.1(a) That the lessee/lessees shall at all times observe and confirm to the relevant provisions of the West Bengal Estate Acquisition Rules for the time being in force.

1(b) That in respect of land comprised in a forest the Lessee/Lessees shall be subject to the control and supervision of the State Government c. That if, at any time, the collector is of the opinion that the state of boundary marks or lines is such that a re-survey of the area is necessary he may direct such re-survey to be made and may recover from the Lessee/Lessees the costs of such re-survey.

8. That if on any such re-survey or otherwise, it shall be found that the Lessee/Lessees is/are in possession of lands in excess of the said lands and hereditaments, the lessors shall be entitled forthwith to recover possession of such excess area and the lessee shall forthwith deliver over possession of the same. The lessor may however allow the lessee to continue in occupation of such excess area in this demise and the lessee in such case shall be bound and liable to pay, in addition to the rent therein reserved such rent for the excess area as may be determined by the Collector in accordance with the principle laid down in section 42 of the West Bengal Estate Acquisition Act 1953 (Act 1 of 1954). The rent so determined for the excess area shall be payable from the date of granting or renewal of the lease or from the date from which the land is proved to have been occupied by the lessee.

9. That Lessee/Lessees shall at all times allow the Officers of the Government of West Bengal authorised on that behalf free and undisturbed access to the said lands and hereditaments for purposes of inspection, survey and otherwise.

10. That the Lessee/Lessees shall in such form as may from time to time be prescribed by the said Government furnish the collector with full information as to births and deaths in the lands and hereinditaments and as sot the progress of cultivation outturn of tea.

11. That the Lessee/Lessees shall furnish proper and suitable accommodation for the residence of chaukidars, if ay be found necessary to be appointed in such gardens to carry out the duties imposed under the West Bengal Panchayat Act, 1956.

12. That the Lessee/Lessees shall not sub-let the said land and hereditaments of any part thereof.

Provided that lands comprised in the said lands and hereditaments may be licensed out for growing cardamom thereon. So, however, that in respect of any land so licensed out the lesseee shall pay rent at the rate of fifteen rupees per acre but shall not realised from he licensee any fees exceeding by more than twenty five per cent, the amount of rent so payable by him."

Yearly rent was fixed as Rs.13,180 payable in two equal instalments.

72. We have also noticed that West Bengal Estate Acquisition Rules 1954, Form-1, Schedule-F was amended by the Notification issued by the State of West Bengal on 01.06.1994, by which Clauses 1-A and 1-B- were inserted, which are to the following effect:

"(1-A) When the lease of a tea garden is determined and the tea garden is leased afresh to a new lessee, the latter shall be liable to pay salami @ Rs 15,000 per hectare of the land leased out. (1-B) In case of a transfer of the leasehold interest, except by way of inheritance, the transferee shall not be liable to pay salami during the unexpired period of the lease. On the expiry of the transferred lease, he shall be liable to pay salami @ Rs 15,000 per hectare of the land leased out before the lease is further renewed."

Another Clauses (dd) was inserted, which is as follows:

"(dd) That the transferee, other than by inheritance, shall be required to enter into a fresh lease on payment of salami at the rate laid down in Clause (1-B) of Schedule F within three months of expiry of the unexpired period of lease."

73. When we look into the renewal Indenture dated 15.11.1995, the expression 'rent' and 'Salami' both have been used. However in the relevant Clause only yearly rent of Rs.13,180/- was filled up and no amount of Salami was entered in the terms and conditions of the lease payable by the Corporate Debtor. Whereas, as per Notification dated 01.06.1994, when the lease of Tea Garden is determined and leased afresh to a new lessee, the latter was liable to pay Salami @ Rs.15,000 per hectare of the land leased out. In case of 64 transfer of the leasehold interest, on the expiry of the transferred lease, the transferee shall be liable to pay Salami @ Rs.15,000 per hectare on the land leased. In the present case, it is noticed that earlier lease executed on 22.01.1973 was in favour of Kilcott Tea Company, whereas the renewal was done in favour of M/s Duncans Industries Ltd., the Corporate Debtor. The Corporate Debtor had claimed that Kilcott Tea Co. has merged into the Corporate Debtor. Be that as it may, the objection, which has been taken by the State with regard to validity of the lease has been specifically pleaded in counter affidavit filed in Company Appeal (AT) (Insolvency) No.593 of 2022 on behalf of Respondent Nos.5 and 7. The State pleaded in the counter affidavit that all the leases of nine tea gardens, came to an end and terminated by efflux of time, prior to commencement of CIRP, i.e., on 5th March, 2020. In paragraph 6 of the counter affidavit, in the tablur form, lease that expired and dates has been mentioned and in paragraph-8, it was pleaded that leasehold interest in all the Tea Gardens has come to an end. Paragraphs 6 and 8 of the counter affidavit are as follows:

"6. That the particulars of the leases for 30 years, in respect of the aforesaid Tea Estates granted by the Government of West Bengal, to the Corporate Debtor and its merged companies are set out hereunder:

RESPECTIVE LEASES WITH EXPIRY DATES Name of Name of Date of Effective Date of Tea Estates Lessee Execution From Expiry Garganda Lankapara 19.07.1974 20.09.1995 19.09.1995 Tea Co.

Ltd.

Dhumchipara Bipara Tea 06.12.1975 13.09.1974 12.09.2004 Co Ltd.

Huntapara Duncan 25.11.1980 03.12.1974 02.12.2004 Agro Industries Ltd.

                  Tulsipara     Lankapara      26.02.1980   18.04.1974    17.04.2004
                                Tea     Co.
                                Ltd.     &
                                Duncan
                                Agro
                                Industries
                                Ltd.
                   Birpara      Birpara        25.11.1980   27.06.1978    26.06.2008
                                Tea     Co.
                                Ltd.
                 Bagracote I    Bagracote      19.02.1973   22.05.1968    22.05.1998
                                Tea Co Ltd
                 Bagracote II   Bagracote      11.10.1974   04.08.1970    04.08.2020
                                Tea Co Ltd
             Bagracote III      Duncans        27.02.1980   24.02.1976    24.02.2006
                                Agro
                    & IV        Industries
                                Ltd
                  Runglee-      Birpara        24.08.1973   09.02.1970    08.02.2000
                  Rungliot      Tea     Co.
                                Ltd.
                   Kilcott      Birpara        22.08.1065   24.08.1965    21.08.1995
                                Tea     Co.
                                Ltd.
                  Nagisuree     Birpara        30.01.1975   31.10.1972    30.10.2022
                                Tea Co. Ltd

8. That it is most humbly submitted that from the aforesaid Table it shall be apparent that the leasehold interest in respect of each of the aforesaid Tea Estates granted by the Government of West Bengal in favour of the Corporate Debtor, stood terminated by efflux of time long prior to commencement of corporate insolvency resolution process against the Corporate Debtor on 5th March, 2020."

74. With regard to renewal of the lease of Kilcott Tea Estate, in paragraph 11(g), (h) and (i), following pleadings have been made by the State of West Bengal:

"g. That it is most respectfully submitted that in IA.(IB)No. 1111/KB of 2021, the Resolution Professional had also alleged that the Corporate Debtor had obtained a purported renewal of the lease on 15 November 1995 in respect of the 'Kilcott Tea Estate' which averment is similarly false and contrary to the records.

h. As far as alleged claim of a purported renewal of lease on 15th November, 1995 in respect of Kilcott Tea Estate following determination of the lease on 23rd August, 1995, it is stated that the said purported execution was also ex-facie contrary to law in force and in gross breach of the mandated statutory provisions as embodied in Rule 4 read with Schedule F of the 'West Bengal Estate Acquisition Act & Rules 1954.

i. That it most humbly submitted that the said purported execution related to 'Kilcott' was never approved by the Land and Land Reforms Department of the Government of West Bengal, which alone is the approving authority for grant and/or renewal of any leasehold right of the Government Owned land in the State of West Bengal. Even then, after the said clandestine illegal execution was detected contrary to the Statutory provisions, by a Notice dated 4th August, 2016 the Corporate Debtor was provided with opportunity to mend the gross breach by paying the compulsive defaulted amount of "Salami" of Rs. 57,25,711/ with respect to the Kilcott Tea Estate for post facto approval, within one month and to enter into a fresh appropriate valid Lease in respect of the said Tea Garden. The Corporate Debtor willfully failed and neglected to do so. Neither the said Notice nor the invalidation of the purported renewal of lease so obtained illegally and malafide was challenged by the Corporate Debtor knowing fully well that there had been factual noncompliance of the statutory preconditions and as such purported renewal of Lease in respect of the Kilcott Tea Estate so obtained was void, illegal and unenforceable. A copy of the letter dated 4th August, 2016 issued by the District Magistrate & Collector, Jalpaiguri, is annexed hereto and marked as ANNEXURE R- 2"

75. Thus, the plea, which was taken by the State is that the renewal of lease is ex-facie contrary to law in force and in gross breach of the mandated statutory provisions as embodied in Rule 4 read with Schedule F of the West Bengal Estate Acquisition Act & Rules 1954. It was further pleaded that office of District Magistrate and Collector, Jalpaiguri has issued a notice to the Manager, Kilcott Tea Garden to pay an amount of Rs.57,25,711 towards required Salami. The copy of the letter dated 04.08.2016, which was written to the Manager, Kilcott Tea Garden by District Magistrate & Collecotr, Jalpaiguri as annexed in the counter affidavit is as follows:

"OFFICE OF THE DISTRICT MAGISTRATE & COLLECTOR, JALPAIGURI (TOUZISECTION) Memo No. 253/1(2)/TZ Dated 04.08.2016 To The Manager, Kilcott Ten Garden, P.O. & P.S. Matelli, Dist. Jalpaiguri-735223 SUB: Demand Notice for payment of Salami, REF: This Office Memo No. 294/TZ, dated 28/08/2015 Whereas, the Government in the Land and Land Reforms Department decided that post facto approval would be accorded for renewal of lease of an area of 1572.06 acres (636.19 hectares) of land comprised in Kilcott Tea Garden for a period of Thirty (30) years in favour of M/S Duncans Industries Ltd. Subject to payment of Salami at the concessional rate of Rs. 9000/- per hectare.

And Whereas, pursuant to the Order passed on 06.05.2015 by the Hon'ble Supreme Court of India in Civil Appeal No. 2546/2006 with Civil Appeal No. 2548/2006 on the above subject and as per the G.O. No. 3610LR, Dated 09.12.2004, it has been decided that for entering into fresh lease the present applicant, being the transferee has to pay Salami.

And Whereas, in pursuant of G.O. No. 2232(3)-LP/3T-13/02GE(M) Pt.if. dated 03.08.2015 of the Secretary to the Government of West Bengal, Land and Land Reforms Department the Salami is to be paid at a time.

And Whereas, after the judgment of the Hon'ble Supreme Court there is no bar to demand Salami.

In view of the above, it is found from the office record that the required Salami amounting to Rs. 57,25,711/- (Rupees Fifty seven lakh Twenty five thousand seven hundred and Eleven) only not deposited by his end till date. Hence, it is once again directed to the management of Kilcott Tea Garden to pay the Salami amounting Rs. 57,25,711/- (Rupees Fifty seven lakh Twenty five thousand seven hundred and Eleven) only within one month from the date of receipt of this letter.

This may be treated as "URGENT"

Sd/-

                                                 For District Magistrate & Collector
                                                                          Jalpaiguri
            Memo No. 253/1(2)/TZ                             Dated 04.08.2016"

76. We have also noticed the relevant Clause 1-A and 1-B as inserted by Notification dated 01.06.1994 were set aside by the Calcutta High Court vide its judgment reported in 2006 SCC OnLine Cal 570, which judgment was challenged by Collector, Jalpaiguri by way of an Appeal in the Hon'ble Supreme Court and the Hon'ble Supreme Court delivered its judgment on May 06, 2015, in Civil Appeal No.2548 of 2006 in the matter of State of West Bengal and Ors. vs. Calcutta Minerals Supply Co. Pvt. Ltd. and Anr.; and Civil Appeal No.2549 of 2006 in the matter of Collector, Jalpaiguri and another vs. Darjeeling Dooars Plantations (Tea) Ltd. and another, by which judgment, the judgment of the Calcutta High Court was 69 set aside and Notification dated 01.06.1994 was upheld. It was held that the State Government was entitled to claim Salami.

77. In the facts of the present case, we have already noticed Clause 16(a) of the original Lease Deed, which provided that at the time of renewal of the lease, the State is entitled to renew the lease on such terms and conditions as it may determined. For ready reference, Clause 16A is extracted below:

(16) (a) That the Lessee/ Lessees shall be entitled to the renewal of this lease for a further period of thirty years and to successive renewals, for, similar, periods, subject to the rules and the terms and, conditions of this lease and to such other terms and conditions as the State Government may from time to time consider it necessary to impose and include in such renewed lease or leases and subject to further to such rent as may then be fixed, provided that such additional terms and conditions shall not be inconsistent with the law regulating such lease* and shall not have retrospective effect."

78. Thus, at the time of renewal, it was open for the State to put terms and conditions and renewal could have been granted on such terms and conditions as the State Government may from time to time consider it necessary to impose. Admittedly, at the time of renewal, which was dated 15.11.1995, the Notification dated 01.06.1994 was already enforced, adding Clause 1-A and 1-B in the Form-1, requiring payment of Salami of Rs.15,000/- per hectare at the time of execution of lease. However, in the renewed Lease Deed, as extracted above dated 15.11.1995, it is clear that although expression Salami has been used in the Lease Deed, but no amount of Salami was mentioned and only rent was mentioned, which was @ Rs.13,180 per annum. It is further relevant to notice that renewed Lease 70 Deed was executed on behalf of State by Additional District Magistrate & Additional Collector, Jalpaiguri, which contains following:

"Signed for and on behalf of the Governor of West Bengal by in the presence of"

79. Thus, the execution of Lease by Additional District Magistrate and Additional Collector, Jalpaiguri was on behalf of the Governor, who was competent to execute the lease. Earlier, original leases were also executed by District Authority of similar designation.

80. The letter, which has been brought on the record by the State, issued by the District Magistrate & Collector Jalpaiguri, dated 04.08.2016, requiring Salami amount of Rs.57,25,711/- from the Kilcott Tea Garden, which admittedly has not yet been paid. The submission and pleading of the State of West Bengal is that renewal of Lease Deed dated 15.11.1995 is void and inoperative. The renewal Lease Deed was executed on 15.11.1995 by Authority, which was competent to execute the Lease Deed on behalf of the Government of West Bengal, which Lease Deed has also been registered by the Registry Authority. We fail to see that how the Lease Deed, which is executed and registered can be held to be void and inoperative. The submission, which has been advanced by the State of West Bengal is that at the time of execution of renewal of Lease Deed dated 15.11.1995, Salami was required to be realised, for which letter has been issued on 04.08.2016. As observed above, at the time of renewing of Lease Deed, it was open for the State of West Bengal to incorporate such conditions as may deemed fit, including condition of payment of Salami for renewal of the Lease Deed, but 71 in the renewed Lease Deed, no such payment of Salami has been computed or provided for and only amount, which was mentioned in the Lease Deed is towards rent of Rs.13,180/-, as noted above. When the Lease Deed, which was executed on 15.11.1995 was in accordance with the law and cannot be held to be void on the ground non-payment of Salami. Issuing a subsequent letter on 04.08.2016, where demand of Salami has been made, shall not make the execution of the Lease Deed void or inoperative. At best, the State could have asked the lessee of Kilcott Tea Garden to enter into Supplementary Lease Deed, providing for payment of Salami, or take any action as permissible in accordance with law with regard to renewed Lease Deed. Admittedly, the State has not brought any order on the record, cancelling the renewed Lease Deed dated 15.11.1995. When the Lease Deed, which was executed and registered and is not cancelled, we fail to see, how the Lease Deed can be declared void and inoperative. Insofar as payment of Salami by letter dated 04.08.2016 is concerned, it is always open for the State to realise the Salami or to take such other action as per law.

81. Similarly, Lease Deeds with regard to other Tea Gardens namely Garganda was renewed on 08.11.1996 and Bagarcote-I on 19.06.1998, which were to continue till 18.09.2026 (Garganda) and 22.05.1998 (Bagarcote-I). We, thus, are satisfied that by execution of renewal of Lease Deed on behalf of the State of West Bengal in favour of the Corporate Debtor of three different Tea Gardens, namely - Kilcott, Garganda and Bagarcote, the Corporate Debtor has subsisting leasehold rights in the above three Tea Gardens and it cannot be held that the non-payment of Salami, as required to be paid as per State West Bengal Estate Acquisition Rules, 1954 (as Amended), shall make 72 the Lease Deed void and inoperative. Similarly, renewal of Lease Deed of Garganda and Bagarcote-I are also valid renewals and they cannot be held as void and inoperative.

82. In view of the foregoing discussions, we answer Question Nos.3 and 4 in following manner:

Ans. to Question No.3 : Renewal of Lease Deed of Kilcott with effect from 15.11.1995 till 23.08.2025 and renewal of Lease Deed of Garganda, with effect from 08.11.1996 to 08.09.2026 and renewal of Lease Deed of Bagarcote from 19.06.1998 till 22.05.2028 are valid renewals and the Corporate Debtor shall have subsisting leasehold rights in the above Tea Gardens on the date of commencement of CIRP, i.e. 05.03.2020.

Ans. to Question No.4 : Non-payment of Salami as required to be paid as per West Bengal Estate Acquisition Rules, 1954 (as Amended) by the Corporate Debtor by execution of lease of renewal, does not make the renewal void and inoperative, whereas the renewal of Lease Deed also uses expression 'Salami', but it does not provide for payment of any Salami as condition of renewal of lease.

Question No.5.

83. IA No.1256/IB/2020 was filed by RP praying for direction to Respondent to extend all assistance and co-operation to the Applicant as 73 required by him for taking over possession of Hantapara, Garganda, Tulsipara and Dumchipara Tea Estates with certain other prayers. The Application filed by RP was opposed on behalf of Merico Agro Industries Pvt. Ltd., who has been given possession of the above Tea Estates by different Agreements prior to 05.03.2020 and Merico was in possession of the different Tea Estates and was carrying out the operations. The possession of Hantapara and Garganda Tea Estates was handed over to Merico on 29.01.2018, in pursuance of Agreement executed between the Corporate Debtor and the Merico.

84. We have already noticed the Notification issued by the Central Government on 28.01.2016 for taking over control of the management of Tea Gardens by the Tea Board. The Notification was challenged by the Corporate Debtor before the Calcutta High Court by filing a Writ Petition, which was dismissed by Learned Single Judge, against which an Appeal was filed and Division Bench vide order dated 20.09.2016 passed an interim order with object to enable the Gardens to run. The Corporate Debtor was asked to take possession and run the Tea Gardens as a Caretaker. The Corporate Debtor, who could not itself run the Tea Gardens, entered into an Agreement with Merico with respect to Hantapara and Garganda Tea Estates on 29.01.2018 for five years. With respect to Tulsipara, an Agreement was entered on 20.07.2018 and for Dumchipara Tea Estate, an Agreement was entered on 19.08.2019.

85. Before the Adjudicating Authority in IA No.1256/KB/2020, the case of the RP was that the Corporate Debtor has already applied for renewal of the leases with regard to aforesaid four Tea Gardens and with regard to Garganda 74 Tea Garden, renewal Deed was executed on 08.11.1996, which was valid till 18.09.2026. The pleadings of the RP has been captured by Adjudicating Authority in paragraph 2.14 of the order dated 28.05.2021, which is as follows:

"2.14 The lease with respect to the Garganda Tea Garden was renewed vide deed of lease dated 08.11.1996, and the same is valid till 18.09.2026. Copies of original lease deed dated 19.07.1974, and a copy of the renewed registered deed dated 08.11.1996 are placed on record."

86. The RP claimed rights on the Tea Estates on the ground that renewal for lease had been applied and with regard to Garganda, renewal has already been executed on 08.11.1996. The submission was opposed on behalf of the Merico, who sated that the Applicant/ RP has no right in any of the Tea Gardens and Tea Gardens are owned by the State of West Bengal. Hence, the possession of such Tea Gardens cannot be taken by the RP under Section 18(1)(f) of the Code. The Adjudicating Authority, after considering the submission of both the parties, held that is it not every asset that is required to be taken custody of, but only those assets over which the Corporate Debtor has ownership rights as recorded in the balance sheet. The Adjudicating Authority in paragraph-5.6 noted the date on which leases expired of Tea Gardens. Paragraph 5.6, is as follows:

"5.6 Once the question of ownership is out of the way, we notice certain material facts concerning the lease, in the table below: -

                      Name of the      Lead Deed          Date of          Date on

                      Tea Garden          Date       Commencement           which

                                                                           expired
                                         75


                    Garganda        19.07.1974        20.09.1965       19.09.1995

                    Dumchipara      06.12.1975        13.09.1974       12.09.2004

                    Tulsipara       26.02.1980        18.04.1974       17.04.2004

                    Hantapara       25.11.1980        03.12.1974       02.12.2004

These leases have not been renewed, for reasons that re not really relevant for the present purpose. If they are not renewed, though there may be a provision for renewal of the leases, the gardens cannot really be said to "belong" to the Corporate Debtor."

87. The Adjudicating Authority further observed that leases have not been renewed. The Adjudicating Authority ultimately after considering the submissions, in paragraph 5.16 took the view that Corporate Debtor's financial position re not good and the RP is not in a position run the four Tea Gardens, if it was handed over to him on a platter today. While making the above observation in paragraph 5.16, 5.17, 5.18 and 5.19, the Application came to be rejected. Paragraphs 5.16, 5.17, 5.18 and 5.19 are as follows:

"5.16. Be that as it may, when it is the admitted case of the RP that the corporate debtor's financials are not too good and there is nothing on record to indicate that the financials of the corporate debtor have suddenly been on the upswing - we do not see how the RP would be in a position to run the four tea gardens. The RP is not in any position to run the four tea gardens if it were handed over to him on a platter today.

5.17. A procrustean approach to the CIRP is to be eschewed in favour of a more level-headed one keeping in view natural variation and individuality of the CIRP itself. It has to take into account local circumstances and legitimate expectations. In the present case, until the lease is renewed in favour of Duncans, one cannot see 76 how the RP can even stake a claim for taking over. Merico's occupation of the tea gardens is well within the knowledge of the eventual owner the State of West Bengal, as borne out by the letters forming part of Merico's reply.

5.18. In these circumstances, a mechanical application of the letter of the law will inevitably result in deleterious consequences for the large labour workforce and for the production of tea from the gardens. It will throw into disarray a situation where Merico is apparently doing a fine job of running the four tea gardens and taking good care of the workers. In these times when the covid- 19 pandemic and its second wave is wreaking havoc on the lives of ordinary citizens, such a move would be wholly unnecessary. We hasten to add that the principles enunciated here are not necessarily of universal application, but one borne out of the facts and circumstances obtaining in the present case.

Order 5.19 In this view of the matter, the prayers asked for in the present IA cannot be granted IA No.1256/KB/2020 is, therefore, dismissed, but in the facts of the case, without costs. Liberty to apply is granted if and when the Govt of West Bengal takes a decision on the renewal of the lease."

88. We have carefully read the order of the Adjudicating Authority. Insofar as three Tea Gardens, i.e. Hantapara, Tulsipara and Dumchipara are concerned, there is no dispute that leases of the same have come to an end in the year 2004. But categorical case of the Appellant before the Adjudicating Authority was that lease of Garganda has been renewed by registered lease dated 08.11.1996. The whole analysis, which was made by the Adjudicating Authority in paragraphs 5.1 to 5.18, there is no consideration of renewal lease of Garganda dated 08.11.1996. Even though, the Corporate Debtor was not the owner of the Tea Gardens and it was the 77 State of West Bengal having the rights over the Tea Gardens, but the Corporate Debtor having subsisting leasehold right in Tea Garden at Garganda, the said Tea Garden could have been taken possession, it being the asset of the Corporate Debtor, we have already held that since leasehold right, was with the Corporate Debtor, it was the assets of the Corporate Debtor. We, thus, are of the view that order of Adjudicating Authority dated 28.05.2021, although is liable to be affirmed with regard to rejection of Application, with regard to three Tea Gardens, namely - Dumchipara, Tulsipara and Hantapara, but the Application was not liable to be rejected with regard to Garganda Tea Garden, which lease was renewed by the State of West Bengal by executing a registered renewed Lease Deed dated 08.11.1996. Thus, the order dated 28.05.2201 deserve to be partly set aside, insofar as it related to Tea Garden Garganda. It is held that RP was entitled to take custody and possession of Tea Garden Garganda, whose lease having been renewed on 08.11.1996 and the Corporate Debtor has subsisting right in the Lease Deed till 08.09.2026.

89. In result, the Company Appeal (AT) (Insolvency) No.672 of 2021 deserves to be partly allowed to the above extent.

Question No.6

90. The Adjudicating Authority while rejecting the other Application filed by the RP has relied on its order dated 28.05.2021 passed in IA No.1256/KB/2020 and held that since it has considered similar issues in IA 1256 of 2020, the Application filed by RP for taking custody and control of the other Tea Gardens deserved to be rejected. We may refer to the order of 78 the Adjudicating Authority passed dated 21.04.2022, in IA No.1111/KB/2021, which Application was filed by the RP for taking possession of two Tea Gardens, namely - Kilcott and Nagaisuree Tea Estates. With regard to Kilcott Tea Estate, it was the case of the RP that for Kilcott Tea Estate the lease was executed on 22.01.1973 for 30 years and whose Indenture was again executed on 15.11.1995 for 30 years with effect from 24.08.1995. The said pleadings have been noted in paragraph 5 and 6 of the order dated 21.04.2022, which are as follows:

"5. The Lease with respect to Kilcott Tea Estate was executed on 22.01.1973 for a period of thirty years commencing from 04.08.1963 and an indenture of lease was executed on 15.11.1995 for a term of thirty years on and from 24.08.1995. Hence, the transfer was done while the lease for the Tea Estate was still subsisting.

6. Respondent No. 1 has not only taken over the leasehold lands of the two Tea Estates being Kilcott Tea Co. Ltd. and Nagaisuree Tea Estate, but has also taken possession and control of the other assets and properties of the Corporate Debtor such as building, plant, machinery, equipment, office premises, living quarters etc."

91. The Adjudicating Authority, ultimately after considering the Application of the RP has noticed in the order that similar Application filed for possession of four Tea Gardens, where Adjudicating Authority observed that RP would not be able to run these two Tea Gardens. In paragraph 48 and 49, referring to the order passed in IA No.1256/KB/2020, following have been observed:

"48. It is an admitted fact that a similar application had been filed for possession of four tea gardens. The Corporate Debtor is in 79 financial stress and it is of concern whether the Resolution Professional would be able to run these two Tea Estates.

49. The lease given to the Corporate Debtor has not been renewed in favour of the Corporate Debtor hence, it is out of question that the Resolution Professional can take possession of the Tea Gardens to which the Corporate Debtor has no ownership."

92. The Adjudicating Authority further noticed in paragraphs 50 and 51 that Sammelan Tea and Beverages Pvt. Ltd. has been given possession to run the two Tea Gardens with effect from 03.11.2021. The Adjudicating Authority has also referred to the letter dated 08.03.2022 issued by the Principal Secretary, Labour Department, Government of West Bengal.

93. Similarly, while deciding IA No.415/KB/2021, the Adjudicating Authority relied on order passed in IA No.1256/KB/2020 and held that since arguments are common and issue involved is conclusively covered by the order, observed following in paragraph 22 of the order dated 09.05.2022:

"22. During the course of hearing it was noticed that, in this application also, the question of law is similar to the one in I.A.(IB) No. 1256/KB/2020 and I.A.(IB) No. 1111/KB/2021. These two applications have already been decided after hearing exhaustive arguments of the learned Senior Counsel. Since the arguments are common and issue involved is conclusively covered by the order passed by this Bench earlier, there is no need to once again give more and more time for hearing the same arguments on behalf of the Resolution Professional and the the Respondent No. 1."

94. In IA No.109/KB/2022, which was filed by the RP for taking possession of Rungli Rungliot Tea Garden, which Application also came to be rejected, relying on the order passed in IA No.1256/KB/2020. In paragraph 5 of the 80 order dated 18.07.2022 passed in IA No.109/KB/2022, following has been observed:

"5. Similar applications have been filed by the Resolution Professional for possession of other Tea Gardens. This Adjudicating Authority in I.A. (IB) No. 1256/KB/2018 has given its view and had observed that the only concern is that the Corporate Debtor is in financial stress and whether the Resolution Professional would be able to run these Tea Garden."

95. With regard to another order passed by the Adjudicating Authority in IA No.665/KB/2021, which was filed by the RP for taking possession of Bagarcote Tea Garden, which also came to be rejected on 09.05.2022. In the order dated 09.05.2022, the Adjudicating Authority again relied on order dated 28.05.2021 passed in IA No.1256/KB/2020. In paragraph 20 of the order, following has been observed:

"20. During the course of hearing it was noticed that, in this application also, the question of law is similar to the one in I.A. (IB) No. 1256/KB/2018 and I.A. (IB) No.1111/KB/2021. These two applications have already been decided after hearing exhaustive arguments of the learned Senior Counsel. Since the arguments are common and issue involved is conclusively covered by the order passed by this Bench earlier, there is no need to once again give more and more time for hearing the same arguments on behalf of the Resolution Professional and the Respondent No.1."

96. From the above, it is clear that while rejecting other Applications filed by the RP for taking possession of Tea Gardens, reliance has been made on order dated 28.05.2021 passed in IA No.1256/KB/2020. It is to be noted that the possession of all four Tea Gardens, which was subject matter of IA 81 No.1256/KB/2020 was handed over to the Merico by the Corporate Debtor under Bipartite Agreement and hence, the possession of those four Tea Gardens were handed over prior to initiation of CIRP. It was a distinguishing feature with regard to other Applications, where the RP has pleaded for possession of other Tea Gardens, which have been taken over by Merico and Sammelan, subsequent to initiation of CIRP on 05.03.2020. Further, we have already held that order dated 28.05.2021 passed in IA No.1256/KB/2020 is not sustainable with regard to Tea Garden Garganda and we have partly allowed the Appeal, challenging the order dated 28.05.2021. We have taken the view that Appeal deserves to be partly allowed against the order dated 28.05.2021. Furthermore, there were other grounds in other Applications filed by the RP. There was pleading with regard to renewal of Lease Deeds for two more Tea Gardens, i.e. Bagracote Tea Garden, which was renewed on 22.05.1998 and Kilcott Tea Garden, which was renewed on 15.11.1995 till 23.08.2025. Thus, mechanically relying on the order dated 28.05.2021 in IA No.1256/KB/2020 is not sustainable. While passing the subsequent orders, rejecting the IAs filed by the RP, the Adjudicating Authority was required to consider the Applications. In any view of the matter, we have already considered and held above that the leasehold rights of the Corporate Debtor, subsisting in three Tea Gardens namely - Garganda, Kilcott and Bagarcote. Hence, the Applications filed by the RP, insofar as above three Tea Gardens, deserve to be allowed.

Question No.7

97. One of the submissions, which has been pressed by the learned Counsel for the Appellant is that possession taken by the Sammelan and Merico, subsequent to the order dated 05.03.2020, violates Section 14 of the Code.

98. From the pleadings of State of West Bengal in its counter affidavit filed on behalf of Respondent Nos.5 and 7 in Company Appeal (AT) (Insolvency) Nos.593 of 2022, the State itself has given the dates when possession was handed over to Merico or Sammelan of different Tea Gardens. The possession of Birpara Tea Estate was taken by Merico with effect from 16.12.2021, which is pleaded by the State in paragraph 11(y), which is as follows:

"11(y) That in accordance with the terms agreed upon in the meeting on 12th February 2021, Merico entered into possession and management of the Birpara Tea Estate and reopened the said Tea Estate with effect from 16th February 2021. Since reopening of Birpara Tea Estate under the supervision of the State Authorities, Merico has restored electricity, paying dues and regular wages and entitlements to all the workers to their utmost satisfactions, making regular timely deposits of Provident Funds and other statutory deposits after around a decade and gradually restored normalcy and functioning of the Garden in the best interest of improving the deplorable conditions of thousands of workers and labourers engaged thereat without retrenching any of them. Merico has since installed all necessary machinery and equipment, restored the dilapidated buildings with all necessary replacements and the Tea Garden is functioning as an exemplary Garden. This Deponent craves leave to refer to the Minutes of the Meeting held on 12th February 2021 at the time of hearing."

99. The possession of Runglee Rungliot Tea Estate has been taken by Merico on 24.11.2021, which has been pleaded by State in paragraph 11(dd), which paragraph is as follows:

"11(dd). That it is most respectfully submitted that in compliance of the terms so agreed, Merico took over possession and control of 'Runglee Rungliot Tea Estate' with effect from 24th November 2021 and reopened the Garden, restored the infrastructures situated which were in shambles, cleared all dues to the workers and is regularly paying wages devoid of any default and undertaken necessary process for renovation of the Bunglow which is in deplorable condition due to non-maintenances over decade, reopened the Factory by necessary replacements of plants and Machinery of the Garden, restored electricity and water connections, rejuvenation of the Tea Plants."

100. The possession of Bagracote Tea Estate has been taken by Sammelan with effect from 01.07.2021, which is pleaded in paragraph 11 (ff), which is as follows:

"11(ff) That it is most respectfully submitted that Sammelan Tea, the respondent herein accordingly assumed possession and management of the Bagracote Tea Estate and reopened the Tea Estate with effect from 1st July 2021 in the presence of high Officials of the Govt. of West Bengal, local Political Leaders, Union representatives and thousands of workers and labourers and since then undertaken all necessary process of renovations and repair of the factory, plants and machinery, restoration of Electricity and water connections, rejuvenation of the Tea Garden as a whole and paid dues and is also regularly paying the wages and due entitlements of the workers, without a single retrenchment or default."

101. Further, possession of Nagaisuree and Kilcott Tea Estates were taken by the Sammelan with effect from 03.11.2021, which is pleaded in paragraph 11(ii), which is as follows:

"11(ii) That it is most humbly submitted that in compliance of the terms so agreed, Sammelan Tea took over and reopened both the Nagaisuree and Kilcott Tea Estates with effect from 3rd November, 2021 in the presence of high officials of the Govt. of West Bengal. Since taking over, Sammelan Tea has undertaken all necessary remedial steps, including payment of dues and regular timely payments of all wages and entitlements of the workers to their satisfactions, timely deposits of Statutory payments, replacements of junk equipment, plants and machineries, complete renovations of the buildings. The Tea Estates which were converted into jungles has been restored and rejuvenated."

102. Thus, possession of the above Tea Gardens have been taken subsequent to 05.03.2020. Section 14 of the IBC, on which reliance has been placed by Counsel for the Appellant, provides as follows:

"14. Moratorium. -

(1) Subject to provisions of sub-sections (2) and (3), on the insolvency commencement date, the Adjudicating Authority shall by order declare moratorium for prohibiting all of the following, namely: -

(a) the institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgement, decree or order in any court of law, tribunal, arbitration panel or other authority;

(b) transferring, encumbering, alienating or disposing off by the corporate debtor any of its assets or any legal right or beneficial interest therein;

(c) any action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of its property including any action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002);

(d)the recovery of any property by an owner or lessor where such property is occupied by or in the possession of the corporate debtor.

Explanation.-For the purposes of this sub-section, it is hereby clarified that notwithstanding anything contained in any other law for the time being in force, a licence, permit, registration, quota, concession, clearance or a similar grant or right given by the Central Government, State Government, local authority, sectoral regulator or any other authority constituted under any other law for the time being in force, shall not be suspended or terminated on the grounds of insolvency, subject to the condition that there is no default in payment of current dues arising for the use or continuation of the license or a similar grant or right during moratorium period;

(2) The supply of essential goods or services to the corporate debtor as may be specified shall not be terminated or suspended or interrupted during moratorium period.

(2A) Where the interim resolution professional or resolution professional, as the case may be, considers the supply of goods or services critical to protect and preserve the value of the corporate debtor and manage the operations of such corporate debtor as a going concern, then the supply of such goods or services shall not be terminated, suspended or interrupted during the period of moratorium, except where such corporate debtor has not paid dues arising from such supply during the moratorium period or in such circumstances as may be specified.

(3) The provisions of sub-section (1) shall not apply to --

                      (a)   such     transactions,     agreements      or     other
             arrangement      as     may    be   notified   by   the        Central
                                           86

Government in consultation with any financial sector regulator or any other authority;

(b) a surety in a contract of guarantee to a corporate debtor.

(4) The order of moratorium shall have effect from the date of such order till the completion of the corporate insolvency resolution process:

Provided that where at any time during the corporate insolvency resolution process period, if the Adjudicating Authority approves the resolution plan under sub-section (1) of section 31 or passes an order for liquidation of corporate debtor under section 33, the moratorium shall cease to have effect from the date of such approval or liquidation order, as the case may be."

103. Section 14 (1) (d) prohibit recovery of any property by an owner or lessor where such property is occupied by or in the possession of the Corporate Debtor.

104. Learned Counsel for the Appellant has placed reliance on the judgment of Hon'ble Supreme Court in Rajendra K. Bhutta vs. Maharashtra Housing and Area Development Authority and Anr. - (2020) 13 SCC 208. The Hon'ble Supreme Court in the above case had occasion to consider Section 14(1) of the IBC. In the above case, a joint development agreement was executed by Maharashtra Housing and Area Development Authority ("MHADA") with the Corporate Debtor and Goregaon Siddharth Nagar Sahakar Griha Nirman Sanstha Ltd. which had envisaged redevelopment of tenements. The CIRP against the Corporate Debtor commenced on 24.07.2017. The MHADA by notice dated 12.01.2018 issued termination notice, terminating the lease and directing the Corporate Debtor to hand over 87 possession to MHADA, in turn the MHADA shall take possession. An Application was filed before the Adjudicating Authority by the Corporate Debtor restraining the MHADA to take possession, which was rejected by the Adjudicating Authority. The Appeal against the said order was also dismissed by the NCLAT. In the above context, the Hon'ble Supreme Court had occasion to consider applicability of Section 14, sub-section (1). In paragraph 25, the Hon'ble Supreme Court held that after imposition of moratorium under Section 14, statutory status quo is pronounced. In paragraph 25, following was laid down:

"25. There is no doubt whatsoever that important functions relating to repairs and reconstruction of dilapidated buildings are given to MHADA. Equally, there is no doubt that in a given set of circumstances, the Board may, on such terms and conditions as may be agreed upon, and with the previous approval of the Authority, hand over execution of any housing scheme under its own supervision. However, when it comes to any clash between MHADA Act and the Insolvency Code, on the plain terms of Section 238 of the Insolvency Code, the Code must prevail. This is for the very good reason that when a moratorium is spoken of by Section 14 of the Code, the idea is that, to alleviate corporate sickness, a statutory status quo is pronounced under Section 14 the moment a petition is admitted under Section 7 of the Code, so that the insolvency resolution process may proceed unhindered by any of the obstacles that would otherwise be caused and that are dealt with by Section 14. The statutory freeze that has thus been made is, unlike its predecessor in the SICA, 1985 only a limited one, which is expressly limited by Section 31(3) of the Code, to the date of admission of an insolvency petition up to the date that the adjudicating authority either allows a resolution plan to come into effect or states that the corporate debtor must go into the liquidation. For this temporary period, at least, all the things referred to under 88 Section 14 must be strictly observed so that the corporate debtor may finally be put back on its feet albeit with a new management."

105. The learned Counsel for the Appellant has also relied on the judgment of this Tribunal in Maharashtra Industrial Development Corporation vs. Sasntanu T. Ray Resolution Professional and Anr. - (2022) SCC OnLine NCLAT 105. In the above case also, this Tribunal had occasion to consider Section 14. The facts of the case have been noticed in paragraph-1 of the judgment, which are as follows:

"1. This Appeal has been filed against the order dated 12.04.2021 passed by the Adjudicating Authority (National Company Law Tribunal), Mumbai Bench, Court No. I in M.A No. 3691 of 2019. Brief facts of the case giving rise to this Appeal are:-

The Appellant- 'Maharashtra Industrial Development Corporation' allotted Plot No. B-11 to the Corporate Debtor on 23.12.2014. A Lease Agreement was executed between the Appellant and the Corporate Debtor on 20.01.2015 whereunder license was granted in respect of the plot for two years subject to condition that it must complete 20% construction within two years i.e. from 20.01.2015 till 19.01.2017. Tri-partite Agreement was executed between the Corporate Debtor, the Appellant and DHFL, whereunder the Plot was mortgaged to DHFL and loan amount of Rs.7,22,80,214/- was disbursed to the Corporate Debtor. A Notice dated 01.11.2018 was issued by the Appellant to the Corporate Debtor asking it to show cause as to why action as provided in Clause 5(b) (i) of the Agreement to lease should not be taken against it since the Corporate Debtor has not completed the construction work of the factory building. By order dated 11.03.2019, Corporate Insolvency Resolution Process (CIRP) was initiated against the Corporate Debtor on an Application filed by 'Kay Bee Foundry Services Private Limited'- (Operational Creditor). On 29.01.2019, the Appellant had issued a letter to DHFL informing that the Corporate Debtor had committed the breach and the Appellant would be taking possession of the plot. The Respondent No.2- 'Asset 89 Reconstruction Company (India) Limited' assignee of the DHFL filed Writ Petition No. 2470 of 2019 challenging the letter dated 29.01.2019 in the Bombay High Court which petition was dismissed on 04.11.2019 holding that lease was liable to be revoked if the Corporate Debtor had committed default in complying with the terms of the lease. On 08.11.2019, the Appellant issued a Notice to the Corporate Debtor cancelling the Lease Agreement dated 20.01.2015 directing the license holder to vacate the plot. Notice communicated that Authorised Officer will visit the plot on 14.11.2019 to take possession. The Resolution Professional filed an M.A No. 3691 of 2019 before the Adjudicating Authority praying for following reliefs:-

"a. To quash and set aside the notice dated 8.11.2019 issued by the Respondent as null and void and to restrain the Respondent from taking any steps in further of the said notice dated 8.11.2019;

b. To direct the Respondent to restrain from terminating the lease agreement dated 21.1.2015 till the completion of the corporate insolvency resolution process or to take any further step in this respect;

c. To direct the Respondent to extend their co-operation in concluding the corporate insolvency resolution process in terms of the Insolvency and Bankruptcy Code, 2016; d. Till the disposal of this MA, to pass an order directing and injuncting the Respondent from taking possession of the said leasehold land till such time this MA is disposed of. e. For interim and ad interim orders in terms of prayers (1) to (3) above.""

106. The Adjudicating Authority has allowed the prayer (a) in the Application, aggrieved by which order, the Maharashtra Industrial Development Corporation has filed the Appeal. Question of Section 14, came for consideration in the above context. This Tribunal noticed the judgment of the Hon'ble Supreme Court in Rajendra K. Bhutta (supra) and in 90 paragraph 8, two questions were noticed, which arise for consideration. Paragraph 8 of the judgment is as follows:

"8. From the submissions of the Counsel for the parties, following questions arise for consideration in this Appeal are:-

(i) Whether after initiation of CIRP and enforcement of 'Moratorium' under Section 14, the Appellant could have cancelled the lease which was earlier granted in favour of the Corporate Debtor and take possession of the plot in question during CIRP?

(ii) Whether the Adjudicating Authority had no jurisdiction to entertain MA No.3691 of 2019 praying for quashing the Notice dated 08.11.2019?

(iii) Relief, if any, to which the Appellant is entitled in this Appeal?"

107. After considering earlier precedent, this Tribunal concluded that Moratorium having kicked in w.e.f. 11.03.2019, the Appellant could not have taken possession of the leased property by virtue of restrain under Section 14(1)(d). In paragraph 28, 29 and 30, following have been observed:

"28. From the law of the Hon'ble Supreme Court as laid down in "Embassy Property Developments Private Limited" and "Tata Consultancy Services Limited" (supra), the Adjudicating Authority has no jurisdiction to judicial review of any action taken by the Government or Statutory Authority in relation to matters which is in the realm of public law. Thus, in the facts of the present case, the Appellant who had granted a lease to the Corporate Debtor is well within its jurisdiction to take appropriate action on account of breach of conditions by the Corporate Debtor but limited question for consideration is as to whether it has to stay its hand from taking such action during currency of CIRP.

29. After considering the facts on the record and arguments of the parties, we are of the considered opinion that in view of the fact that 91 Moratorium has kicked in w.e.f. 11.03.2019 due to currency of Moratorium, the Appellant could not have taken possession of the leased property by virtue of restrain under Section 14(1)(d). Further continuation or initiation of any other proceeding under Section 14(1)(a) which also prohibited the Appellant to cancel the lease during currency of the Moratorium. Although after CIRP is over, there is no fetter on the right of the Appellant to take proceeding for breach of terms of the lease by the Corporate Debtor.

30. We have noticed that the Adjudicating Authority by its impugned order has allowed the prayer (a) i.e. quash the Notice dated 08.11.2019. The order having passed during the currency of the Moratorium, no exception can be taken to the order passed by the Adjudicating Authority. We however, hasten to add that the quashing of the Notice dated 08.11.2019 does not create any fetter on the rights of the Appellant to pass appropriate order for breach of terms of lease after CIRP is over. The Adjudicating Authority with regard to prayers (b) to

(d) has directed the Appellant not to take any coercive action till the Application for approval of the Resolution Plan is heard by the Adjudicating Authority. The above direction was also to protect the status quo which was existing on the date of initiation of CIRP. We, however, make it clear that as soon as the CIRP is over, the Appellant shall have all powers to take appropriate action."

108. When we look into the facts of the present case, it is clear that the Corporate Debtor has subsisting rights in three Tea Gardens, i.e., Garganda, Kilcott and Bagracote-I as noticed above. Although, possession of Garganda was taken prior to enforcement of moratorium, but possession of Kilcott and Bagaracote was taken respectively on 03.11.2021 and 01.07.2021 as noticed above. The Corporate Debtor has subsisting rights in the above leases of Bagaracote and Kilcott, which were renewed. Hence, after the enforcement of the moratorium on 05.03.2020, the possession of Tea Estates of the Kilcott and Bagaracote could not have been taken. It is true that the State was the 92 owner of Tea Estates and due to suffering of labour, the Department of Labour, Govt. of West Bengal and Labour Commissioner held various meetings to mitigate the sufferings of the labourers, the possession of different gardens were handed over to Sammelan to the aforesaid two Tea Gardens, but moratorium having enforced, taking possession of aforesaid two Tea Gardens is in clear breach of Section 14 (1) (d).

109. With regard to other Tea Gardens whose leases have expired, State was owner of all the Tea Estates and it is a case of the Department that lease of Tea Gardens were not renewed and possession was taken. There being no subsisting right of the Corporate Debtor in the Tea Gardens, except the three Gardens, i.e. Garganda, Kilcott and Bagracote. We do not find any infirmity with regard to handing over possession to Marico and Sammelan for running other Tea Gardens after enforcement of moratorium. Thus, violation of moratorium under Section 14(1)(d) has to confine to two Tea Gardens where the Corporate Debtor has subsisting rights, i.e., Kilcott and Bagracote. Question No.8

110. The question now to be answered as to which Tea Gardens, the Appellant was entitled to be handed over possession for which Applications were filed. As noted above, IA No.1256/KB/2020 was filed for four Tea Gardens. We have already observed that the rejection of the Application, IA No.1256/KB/2020 is not sustainable with regard to Tea Estate of Garganda for which lease was renewed on 08.11.1996 as the Corporate Debtor had 93 subsisting leasehold right in Garganda. Hence, the Application filed by RP, ought not to have been rejected for Tea Garden Garganda.

111. Similarly, we come to IA No.1111/KB/2021, which was filed for possession for Nagaisuree and Kilcott Tea Gardens. We have already held that lease for Kilcott was renewed with effect from 15.11.1995 till 23.08.2025. Hence, the Application, IA No.1111/KB/2021, ought not to have been rejected with regard to Tea Garden Kilcott and the RP was entitled to take possession and custody of Tea Garden Kilcott.

112. Coming to the Application, IA No.665/KB/2021, which was filed for taking possession of Bagracote Tea Estate Div.I, II, III and IV. We have noticed above that with regard to Bagracote Div.I, lease was renewed with effect from 19.06.1998 for 30 years, hence, the Corporate Debtor/ has subsisting right. Thus, the Application, IA No.665/KB/2021, ought not to have been rejected with regard to Bagracote Div.I.

113. In view of the aforesaid discussions, we are of the view that the Company Appeal (AT) (Insolvency) No.672 of 2021 deserved to be partly allowed and set aside the order passed by Adjudicating Authority dated 28.05.2021 in IA No.1256/KB/2020, insofar as Tea Garden Garganda is concerned.

114. Similarly, the Company Appeal (AT) (Insolvency) No.592 of 2022 deserve to be partly allowed by setting aside order dated 21.04.2022 in IA No.1111/KB/2021. Accordingly, we partly set aside order dated 21.04.2021 in IA No.1111/KB/2021 insofar as Tea Garden Kilcott is concerned. 94

115. Company Appeal (AT) (Insolvency) No.754 of 2022 is also deserve to be partly allowed by setting aside order passed by Adjudicating Authority in IA No.665/KB/2021 insofar as Bagracote Div.I Tea Garden is concerned.

116. We may also notice the two Intervention Applications filed in these Appeals - one by State Bank of India being IA No.3712 of 2022 in Company Appeal (AT) (Insolvency) No.593 of 2022, where State Bank of India has pleaded that Adjudicating Authority erred in passing the impugned order in IA No.1111/KB/2021. It was further pleaded by the State Bank of India that Nagaisuree and Kilcott Tea Estates along with leasehold rights, were the Tea Estates, which were mortgaged to the State Bank of India. The Application was also joined by Asset Reconstruction Company (India) Limited, which claim to get assignment from Financial Creditors with respect to various Tea Gardens.

117. In the Appeal(s), which has arisen for consideration before us, need no consideration for the security interest of the Financial Creditors in different Tea Gardens by virtue of mortgage and other financial documents. These are issues, which need to be gone into during CIRP. We, however, observe that security interest can be claimed by Financial Creditors only in the Tea Gardens where leasehold rights of the Corporate Debtor subsist on the date of commencement of the CIRP, i.e., 05.03.2020.

118. Another IA No.1888/2023 filed by Uniglobal Papers Private Limited in Company Appeal (AT) (Insolvency) No.593 of 2022, which claims to be Resolution Applicant, whose Resolution Plan in the CIRP of the Corporate 95 Debtor has been approved by the Committee of Creditors. The Applicant submits that it has submitted the Resolution Plan in consortium with Trade Sea International Pvt. Ltd., which was placed for e-voting and the Plan of the Applicant was approved with 99.20% vote share and the Applicant has been declared Successful Resolution Applicant.

119. The Plan approval Application has been submitted by the RP, which is pending consideration before the Adjudicating Authority. As observed above, the issue in the present Appeal, relates to the Applications filed by the RP for taking possession of Tea Gardens, which we have already considered in these Appeal(s). The issue of Resolution Plan submitted by the Applicant or its credibility are not the issues, which need any consideration in the present Appeal. Hence, no observations need to be made in these Appeal(s) with regard to Resolution Plan submitted by the Applicant. Question No.9

120. In view of the foregoing discussions and conclusions, we held that leasehold rights of the Corporate Debtor subsist in three Tea Gardens, namely

- Garganda, Kilcott and Bagracote, where the lease has been renewed and valid as follows:

              Sl. No.       Tea Estate        Valid upto

              1.        Garganda              08.09.2026

              2.        Kilcott               23.08.2025

              3.        Bagarcote Div. I      22.05.2028
                                           96

121. The orders rejecting the IAs of RP insofar as the aforesaid three Tea Gardens are concerned are unsustainable and deserve to be set aside. In view of the above, all the Appeal(s) are disposed of in following manner:

I. Company Appeal (AT) (Insolvency) No. 672 of 2021 is partly allowed. The order dated 28.05.2021 passed in IA No.1256/KB/2020 is partly allowed, insofar as Garganda Tea Garden is concerned. The order of the Adjudicating Authority with respect to other Tea Gardens, i.e., Hantapara, Tulsipara and Dumchipara is affirmed.

II. Company Appeal (AT) (Insolvency) No.593 of 2022 is partly allowed. Order dated 21.04.2022 in IA No.1111/KB/2021 set aside, insofar it relates to Tea Garden Kilcott. Rest of the order is affirmed.

III. Company Appeal (AT) (Insolvency) No.754 of 2022 is partly allowed. Order dated 09.05.2022 passed in IA No.665/KB/2021, insofar as it relates to Bagracote Div.I is set aside. Rest of the order is affirmed.

IV. Company Appeal (AT) (Insolvency) No.628 of 2022 and Company Appeal (AT) (Insolvency) No.907 of 2022 are dismissed.

V. It is held that Tea Gardens of Garganda, Kilcott and Bagracote are assets of the Corporate Debtor, to which the RP was entitled to be handed over the possession. However, in sequence of the events and facts that these three Tea Gardens having been run by Merico and Sammelan and in the Tea Gardens, thousands of 97 workers are working, we are of the view that ends of justice will be served in holding that RP shall be deemed to be in possession of the aforesaid Tea Gardens and operation of these three Tea Gardens shall henceforth be under the supervision and control of the RP till the CIRP continues.

Parties shall bear their own costs.

[Justice Ashok Bhushan] Chairperson [Barun Mitra] Member (Technical) New Delhi Anjali/Archana/ Himanshu /Ashwani

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National Company Law Appellate Tribunal