Supreme Court - Daily Orders
Abhilash Lal vs Harsh Ghangurde on 29 March, 2023
CA 2405/2023
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
Civil Appeal No 2405 of 2023
(Arising out of SLP (C) No 4201 of 2023)
Abhilash Lal Appellant
Versus
Harsh Ghangurde and Others Respondents
ORDER
1 Leave granted.
2 This appeal arises from the orders of a Division Bench of the High Court of Andhra Pradesh dated 16 February 2023 as clarified on 2 March 2023. 3 On 12 July 2004, Sevenhills Healthcare Private Limited 1 was put into possession of land belonging to the Municipal Corporation of Greater Mumbai 2, situated at Survey Nos 155 (pt), 156 (pt), 162(pt) to 168 (pt) and Survey No 208 of Municipal K/East Ward at village Marol, Andheri (East). An agreement was 1 “SHPL” Signature Not Verified 2 “MCGM” Digitally signed by CHETAN KUMAR Date: 2023.04.12 19:10:07 IST Reason: Page 1 of 10 CA 2405/2023 entered into between SHPL and MCGM by which the former was permitted to construct and operate a hospital as part of a public-private partnership. 4 On 23 January 2018, MCGM issued a notice to show cause to SHPL alleging a breach of the terms of the agreement.
5 On 13 March 2018, the Corporate Insolvency Resolution Process 3 was initiated against SHPL on an application filed by Axis Bank Limited under the Insolvency and Bankruptcy Code4 2016. The appellant was appointed as Interim Resolution Professional and was later confirmed as the Resolution Professional of SHPL. The Committee of Creditors5 approved the Resolution Plan submitted by a resolution applicant. MCGM sought the rejection of the Resolution Plan and the liquidation of SHPL on the ground that (i) the plan could not have dealt with land belonging to the municipal corporation without its prior approval under Sections 92 and 92-A of the Mumbai Municipal Corporation Act 6 1988; and (ii) the contract agreement was terminated and no lease was ever executed in respect of the land belonging to MCGM in favour of SHPL.
6 On 26 July 2019, the National Company Law Tribunal 7 at Hyderabad approved the Resolution Plan. MCGM carried the matter in appeal. The National Company 3 “CIRP” 4 “IBC” 5 “CoC” 6 “MMC Act” 7 “NCLT” Page 2 of 10 CA 2405/2023 Law Appellate Tribunal8 disposed of the appeal on 7 August 2019. 7 MCGM challenged the order of the NCLAT before this Court in Civil Appeal 6350 of 20199.
8 By its judgment dated 15 November 2019, this Court allowed the appeal and set aside both the order of the NCLAT and the approval granted to the Resolution Plan on the ground that the prior approval of MCGM was necessary under Sections 92 and 92-A of the MMC Act before the Resolution Plan could be approved. This Court held thus:
“In the opinion of this Court, Section 238 cannot be read as overriding MCGM's right—indeed its public duty—to control and regulate how its properties are to be dealt with. That exists in Sections 92 and 92-A of the MMC Act. This Court is of the opinion that Section 238 could be of importance when the properties and assets are of a debtor and not when a third party like MCGM is involved. Therefore, in the absence of approval in terms of Sections 92 and 92-A of the MMC Act, the adjudicating authority could not have overridden MCGM's objections and enabled the creation of a fresh interest in respect of its properties and lands. No doubt, the resolution plans talk of seeking MCGM's approval; they also acknowledge the liabilities of the corporate debtor; equally, however, there are proposals which envision the creation of charge or securities in respect of MCGM's properties. Nevertheless, the authorities under the Code could not have precluded the control that MCGM undoubtedly has, under law, to deal with its properties and the land in question, which undeniably are public properties. The resolution plan, therefore, would be a serious impediment to MCGM's independent plans to ensure that public health amenities are developed in the manner it chooses, and for which fresh approval under the MMC Act may be forthcoming for a separate scheme formulated by that corporation (MCGM).” 8 “NCLAT” 9 “Municipal Corporation of Greater Mumbai vs Abhilash Lal and Others” Page 3 of 10 CA 2405/2023
9 Moreover, this Court held that the terms of the contract remained an agreement to enter into a lease and did not per se confer any right or interest, save and except that if MCGM were to fail to register the lease, it could be sued for specific performance of the agreement. Upon the outbreak of the Covid-19 pandemic, the CIRP of SHPL was extended from time to time. MCGM has utilized the hospital at Mumbai as a dedicated Covid-19 treatment facility. 10 On 6 January 2023, the appellant issued Form G and an Invitation of Expression of Interest10. At that stage, the first respondent instituted a Public Interest Litigation11 before the High Court of Andhra Pradesh seeking suspension of the CIRP and quashing of the IEOI. An order was passed by the High Court on 9 February 2023 issuing notice. The appellant and the CoC filed preliminary affidavits in reply challenging the maintainability of the PIL and the locus of the first respondent. MCGM has also filed a reply.
11 The High Court by its order dated 16 February 2023, posted the case on 23 February 2023 and directed that in the meantime, there shall be an interim stay on Form G and the IEOI. This order was clarified by the High Court on 2 March 2023 to the extent that the last date for the submission of expression of interest would stand extended till the next date of hearing. 10 “IEOI” 11 “PIL” Page 4 of 10 CA 2405/2023 12 On 17 March 2023, MCGM filed an application under Section 60(5) of the IBC before the NCLT, seeking a declaration that the…Hospital cannot be considered as an asset of the Corporate Debtor, and would accordingly, stand excluded from the corporate insolvency resolution process of the Corporate Debtor.” 13 These proceedings have been instituted by the Resolution Professional for challenging the very maintainability of the PIL which has been instituted by the first respondent.
14 Mr K V Viswanathan, senior counsel appearing on behalf of the appellant submits that: (i) a hierarchy of remedies is provided by the terms of the IBC 2016; (ii) the High Court was in serious error in entertaining a PIL and staying the IEOI; and (iii) MCGM has, in any event, taken recourse to its remedies under Section 60(5) of the IBC, which application is pending before the NCLT. 15 Mr Shyam Divan, senior counsel appearing on behalf of the CoC has supported the submission which has been urged on behalf of the appellant. 16 Mr Neeraj Kishan Kaul, senior counsel appearing on behalf of the MCGM, on the other hand, submits that (i) the judgment of this Court dated 15 November 2019 held that the Resolution Plan could not have been approved without the consent of MCGM, in view of the Sections 92 and 92-A of the MMC Act; (ii) there is a finding of fact that no lease agreement was entered into by MCGM in favour of Page 5 of 10 CA 2405/2023 SHPL; and (iii) hence according to MCGM, the property cannot be included as part of the assets of the Corporate Debtor.
17 Dr Sujay Kantawala, counsel appearing on behalf of the first respondent has, on the other hand, submitted that the purpose of the first respondent in instituting the PIL before the High Court of Andhra Pradesh was to ensure that the hospital which has been a valuable facility for the residents of Mumbai especially during Covid-19 times is duly safeguarded.
18 The narrow issue which falls for consideration before this Court is whether the High Court of Andhra Pradesh was justified in entertaining the PIL and issuing an interim order. Ordinarily, we would have relegated the appellant to pursue the objection to the maintainability of the PIL before the High Court. However, it is evident that this course of action need not be followed for the simple reason that the PIL was a complete abuse of process.
19 The IBC provides forums and remedies. In the exercise of the jurisdiction conferred by Section 60(5), MCGM has moved the NCLT contending that the land in question which is situated at Mumbai cannot be included as a part of the assets of the Corporate Debtor. Since the application is pending before the NCLT, we are not expressing any opinion on it. The provisions of the IBC were invoked for initiating the CIRP in respect of the Corporate Debtor. The first Page 6 of 10 CA 2405/2023 respondent who had evidently no locus in the proceedings chose to move a PIL ostensibly on the ground that he was seeking to safeguard the facility of the hospital for the benefit of the residents of Mumbai. MCGM as the owner of the land is sufficiently seized of the matter and is espousing its rights before the NCLT. In this view of the matter, the High Court should have rejected the PIL at the very threshold. It is apparent that the PIL was only intended to thwart the process which has been initiated under the IBC. The PIL was evidently motivated by extraneous considerations and should have been dismissed. 20 Mr K V Viswanathan, senior counsel has submitted that MCGM had in the meeting of the CoC expressly agreed to support the CIRP. We clarify that we are not expressing any opinion on the merits of the submission, nor shall this order be treated as an acceptance of the submission on behalf of MCGM. 21 Since the limited ambit of these proceedings relates to the recourse which was taken to the jurisdiction under Article 226 of the Constitution by the first respondent, we are not expressing any opinion on the merits of the rights and contentions of the parties in the proceedings which are pending before the NCLT. The judgment of this Court dated 15 November 2019 lays down the governing principles in that regard. MCGM would be at liberty to pursue its application under Section 60(5). We also keep open all the rights and contentions of the Resolution Professional.
Page 7 of 10 CA 2405/2023 22 For the above reasons, we allow the appeal. We hold that recourse to the jurisdiction of the High Court under Article 226 of the Constitution in the form of a PIL constituted an abuse of process. The petition before the High Court of Andhra Pradesh, namely, WP (PIL) No 17 of 2023 shall accordingly stand dismissed.
23 Pending applications, if any, stand disposed of.
…......…...….......…………………..CJI.
[Dr Dhananjaya Y Chandrachud] ……....…........……………….…........J. [J B Pardiwala] New Delhi;
March 29, 2023
CKB
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CA 2405/2023
ITEM NO.42 COURT NO.1 SECTION XII-A
S U P R E M E C O U R T O F I N D I A
RECORD OF PROCEEDINGS
Petition(s) for Special Leave to Appeal (C) No.4201/2023 (Arising out of impugned final judgment and order dated 16-02-2023 in WPPIL No.17/2023 passed by the High Court of Andhra Pradesh at Amravati) ABHILASH LAL Petitioner(s) VERSUS HARSH GHANGURDE & ORS. Respondent(s) (With IA No.42714/2023 - EXEMPTION FROM FILING C/C OF THE IMPUGNED JUDGMENT, IA No.43910/2023 - PERMISSION TO FILE ADDITIONAL DOCUMENTS/FACTS/ANNEXURES and IA No.42716/2023 - PERMISSION TO FILE ADDITIONAL DOCUMENTS/FACTS/ANNEXURES) Date : 29-03-2023 These matters were called on for hearing today. CORAM :
HON'BLE THE CHIEF JUSTICE HON'BLE MR. JUSTICE J.B. PARDIWALA For Petitioner(s) Mr. K.V. Viswanathan, Sr. Adv.
Mr. Niranjan Reddy, Sr. Adv.
Mr. Siddharth Ranade, Adv.
Ms. Samrudhi Chothani, Adv.
Ms. Akhila Palem, Adv.
Mr. Syed Jafar Alam, AOR For Respondent(s) Dr. Sujay Kantawala, Adv.
Mr. Swetab Kumar, Adv.
Mr. Akash Kakade, Adv.
Page 9 of 10 CA 2405/2023 Mr. Somanatha Padhan, AOR For R-3 Mr. Neeraj Kishan Kaul, Sr. Adv. Mr. Mukul Rohatgi, Sr. Adv. Mr. Ashish Wad, Adv. Mr. Siddhant Kant, Adv. Mrs. Tamali Wad, Adv. Mr. Sidharth Mahajan, Adv. Mr. Ajeyo Sharma, Adv. Ms. Moulshree, Adv. Mr. Krishan Singhal, Adv. Mr. Sandip Patil, Adv. Mr. Neeraj Kishan Kaul, Sr. Adv. Ms. Namisha Chadha, Adv. M/s. J.S. Wad & Co. For R-4 Mr. Shyam Divan, Sr. Adv. Mr. Shubhabrata Chakraborti, Adv. Ms. Sharmistha Ghosh, Adv. Ms. Jinal Shah, Adv. Ms. Palak Nenwani, Adv. Mr. Hafeez Patanwala, Adv. M/s. Juris Corp.
UPON hearing the counsel the Court made the following O R D E R 1 Leave granted.
2 The appeal is allowed in terms of the signed order.
3 Pending applications, if any, stand disposed of.
(CHETAN KUMAR) (SAROJ KUMARI GAUR)
A.R.-cum-P.S. Assistant Registrar
(Signed order is placed on the file)
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