M/s. Dynacon Projects Private Limited vs M/s. Today Homes & Infrastructure Private Limited

PER: BACHU VENKAT BALARAM DAS, MEMBER (JUDICIAL)

These applications i.e. IA-3356/2020, IA-3629/2020 and IA-5001/2021 were heard together because of the similarity in the facts and issues involved therein and being disposed of by this common order.

This application has been filed by Mr. Nilesh Sharma, Resolution Professional of M/s. Today Homes & Infrastructure Private Limited, the Corporate Debtor under Section 14 and 25 of the IBC, 2016 read with Regulation 30 of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 seeking directions to the Respondents Nos. 1 to 4, (the erstwhile land owners) to restore the peaceful, vacant and physical possession of the land admeasuring 10.81 acres at Sector 73, Sohna Road, Gurgram, wherein the Corporate Debtor is constructing a group housing project in the name and style of “Canary Greens” to the Applicant/Resolution Professional. The Applicant is also seeking a direction to the local district administration of Gurugram (Respondent Nos. 5 & 6) to assist the Applicant in securing the vacant, physical and peaceful possession of the said land and action against Respondent Nos. 1 to 4 in terms of Section 74 for violating Section 14 of the Code.

The Applicants herein are the erstwhile land owners and Respondent No. 1 to 4 in IA-3356/2020, have filed this application seeking directions from this Adjudicating Authority to modify the ad interim Ex-parte order dated 24.08.2020 passed in IA-3356/2020 in IB-2130/ND/2019.

The Applicants herein, who are claiming to be the land owners of the land ad-measuring 10.81 acres situated in Village Behrampur, Tehsil & District Gurugram in the State of Haryana seeking a direction to the Resolution Professional to exclude the project land ad-measuring 10.81 acres situated in Village Behrampur, from the proposed Resolution Plan.

The facts which are relevant and common for the purposes of determination of the issues involved in these applications are stated as under:

M/s. Dynacon Projects Private Limited, the Operational Creditor filed an application under Section 9 of the IBC, 2016 seeking initiation of Corporate Insolvency Process (CIRP) against M/s. Today Homes & Infrastructure Private Limited, the Corporate Debtor. The Corporate Debtor is engaged in the business of construction and erection of houses and building. This Adjudicating Authority vide order dated 31.10.2019 admitted the said application and initiated CIRP of the Corporate Debtor. Moratorium in terms of Section 14 of IBC was declared with respect to the Corporate Debtor after initiation of CIRP vide order dated 31.10.2019 which is still in force.

Mr. NiIesh Sharma, the Applicant in IA-3356/2020 was appointed as the Resolution Professional of the Corporate Debtor vide order dated 09.01.2020 in terms of Section 22 of IBC.

The Respondent Nos. 1 to 4 are the erstwhile owners of the land admeasuring 35.2062 acres situated in village Behrampur, Gurgram, Haryana ("land"), development rights of which were duly transferred by the said owners in favour of a company namely M/s. New India City Developers Pvt. Ltd. (New India') by way of execution of a Development Agreement dated 03.03.2007 New India by way of an agreement dated 30.07.2010, transferred 8,00,000 sq. ft. of Floor Space Index (FSI) (residential) in favour of the Corporate Debtor out of total land ad-measuring 35.2062 acre for developing/ erecting a housing project on the said land on the consideration mentioned in the said project.

Before proceeding further, it is pertinent to mention the brief background of the case for better appreciation of the case:-

The Respondents herein have contended that the Development Agreement dated 03.03.2007 was signed by M/s. New India City Developers Private Limited and the present Respondents whereas the Corporate Debtor i.e., M/s. Today Homes & Infrastructure Private Limited was not a party to the said Development Agreement. As per the said Development Agreement dated 03.03.2007, the rights of ownership of the part of the land of the present Respondents was to accrue in favor of M/s. New India City Developers Private Limited only upon fulfilling the obligations casted upon it. However, M/s. New India city Developers did not fulfil its obligations and breached the terms of Development Agreement dated 03.03.2007, and therefore the Arbitral Tribunal passed an award on 09.12.2017 in favour of the Respondents wherein the liability of M/s. New India City Developers towards the Respondents herein was fixed approximately to the tune of Rs. 160 Crores including statutory dues to be paid to the Directorate of Town and Country Planning Haryana. This award was passed much prior to the initiation of the present CIRP. Further, the Respondents herein also initiated execution proceedings bearing CIS No. EXE 312/2019 against M/s. New India City Developers Private Limited on the basis of the Arbitration Award dated 09.12.2017 much prior to the initiation of the present CIRP proceedings which are pending before Ld. Additional District Judge-Cum-Presiding Judge Special Commercial Court Gurugram.

M/s. New India City Developers Private Limited, challenged the said award dated 09.12.2017 by filing objections under Section 34 of the Arbitration and Conciliation Act, 1996 which were rejected by the Special Commercial Court, Gurugram, vide order dated 06.02.2020. The Respondents herein submitted that they were not parties to the Agreement dated 30.07.2010 executed between M/s. New India City Developers and M/s. Today Homes & Infrastructure Private Limited and therefore, it is not binding upon them.

It is submitted that the said Power of Attorney dated 19.01.2010 was revoked by these Respondents vide Registered Deed No. 489 dated 30.08.2019 and the said revocation was published in newspapers on 28.09.2019.

The said revocation of Power of Attorney was challenged by the Corporate Debtor i.e. M/s. Today Homes & Infrastructure Private Limited before the Civil Judge, Gurugram vide Civil Suit No. 3694/2019 which was dismissed for default on 17.03.2020 and the application for restoration of the suit is still pending before the Civil Court.

The Respondents herein have also denied the fact that the Applicant has taken over the possession (physical or constructive) of the land in question and prayed for dismissal of this application.

These applications were listed on 29.08.2023 seeking clarification and the following order was passed:-

In compliance with the said order, the Resolution Professional as well as the land owners filed affidavit clarifying issues raised by this Adjudicating Authority.

The issue wise reply given by the Resolution Professional to the queries raised by this Adjudicating Authority is mentioned in brief which is as follows:

With respect to the first issue, the Resolution Professional has submitted that he took physical possession of the Canary Greens Project Land and Mr. Deepak Bansal, IRP after being appointed as RP of the Corporate Debtor. However, he was dispossessed from the project land on 11.08.2020 by the land owners.

Therefore, the RP filed IA No. 3356/2020, wherein this Tribunal vide order dated 24.08.2020 directed the Ld. District Magistrate, Gurugram and Commissioner of Police, Gurugram to ensure that the land owners do not interfere in the peaceful possession of the RP and also directed them to provide protection and assistance to the RP. In compliance with the said directions, the possession of the project land was handed over back to the RP on 02.09.2020 and a letter dated 02.09.2020 was written by the RP to the Local District Administration/concerned Police Station intimating them about taking over the possession of the said project land. A copy of the said letter dated 02.09.2020 has been placed on record. The RP has also submitted that IA-347/2020 for initiating contempt proceedings against the land owners for violating the directions passed by this Tribunal in its order dated 24.08.2020 and causing hindrance in the possession of the project land which is pending adjudication before this Adjudicating Authority.

With respect to the second issue, the RP has submitted that Civil Suit No. 3694 of 2019 filed before the Civil Judge, Senior Division Gurugram was dismissed for default on 17.03.2020 and thereafter the RP filed an application bearing APP. No. 20/2020 seeking restoration of the suit which is pending.

With respect to the third issue, the RP has submitted that Execution Petition No. 312/2019 filed by the land owners before the District Court Gurugram, seeking execution of the Arbitral Award dated 09.12.2017 titled as M/s. New India City Developers Private Limited vs. Shri Mordhwaj Singh and Ors., is pending .

With respect to the fourth issue, the RP has submitted that the Development Rights as obtained by New India vide Agreement dated. 03.03.2007 and Consent Award dated. 05.09.2009 were duly transferred by New India in favour of the Corporate Debtor herein in respect of 8,00,000 sq. ft. (arising out of 10.81 acres of land approximately) vide Agreement dated 30.07.2010, Addendum to Agreement dated 16.09.2010 and second Addendum to Agreement dated 29.03.2011 for a consideration of Rs. 120 Crores discharged by the Corporate Debtor by issuance of its equity shares. As per the said Agreements all the liabilities were to be borne by New India only.

The Corporate Debtor in terms of the Development Agreement duly advertised its Housing Projects consisting of 583 units in 8 towers. In terms of the Development Agreement, the Corporate Debtor paid consideration of Rs. 120,00,00,000/- (Rupees One Hundred and Twenty Crores Only) to New India in the form of its equity shares. The same is duly corroborated by Agreement dated 30.07.2010, addendums to agreement dated 16.09.2010 and 29.03.2011 between the Corporate Debtor and New India. The said Agreements are attached with the IA No. 3356/2020.

With respect to the fifth issue, the Erstwhile owners of the land transferred development rights in total land admeasuring 35.2062 acres situated in village Behrampur, Gurugram, Haryana (Land') in favour of New India City Developers Pvt. Ltd. by way of a Development Agreement dated 03.03.2007 and a registered Power of Attorney dated 19.01.2010.

The Respondent Nos. 1 to 4 i.e., the land owners also filed an affidavit with respect to the queries raised by this Adjudicating Authority vide order dated 29.08.2023.

In view of the clarifications given by the Resolution Professional and the Respondent Nos. 1 to 4, the land owners and the various contentions raised by the parties, the following issues emerged for consideration by this Adjudicating Authority.

In the above backdrop of facts and debates, the following issues emerge for consideration by this Adjudicating Authority.

Whether the Development Agreement entered into between the land owners and New India gives right to the New India to develop the land without having any right title over the disputed land.

Whether the alleged irrevocable Power of Attorney executed by Respondent No. 1 to 4 in favour of New India & M/s. Today Homes & Infrastructure Private Limited can be acted upon and considered to be valid despite the fact that the land owners i.e. (Respondent No. 1 to 4) have revoked the said Power of Attorney vide Registered Deed No. 489 dated 30.08.2019.

Whether the Resolution Professional has the actual possession of the land in question.

Mr. Saurabh Kripal, Learned Senior Counsel submitted that the landowners (Respondent Nos. 1 to 4) executed Development Agreement in favour of the New India City Developers Private Limited on 03.03.2007 for developing the said land in question giving absolute right to New India to develop, sell/transfer etc. on the said land of 10.81 acres. Thus, the landowners were left with no right in the land after entering into the said Development Agreement. Mr. Kripal, Learned Senior Counsel referred to various clauses of the Development Agreement which are:

Clause-e of the Development Agreement reads as follows:

Clause-1 of the said agreement reads as follows:

Clause-7 of the Development Agreement provides for right to sub-contract, the said clause is extracted below:

Mr. Saurabh Kripal, Learned Senior Counsel appearing for the Resolution Professional has submitted that the said development rights were duly transferred by New India in favour of the Corporate Debtor for the land admeasuring 10.81 acres approximately vide agreement dated 30.07.2010, Addendum to agreement dated 29.03.2011 for a consideration of Rs. 120 crores discharged by the Corporate Debtor by issuance of its equity shares. The right to develop the abovementioned 10.81 acres of land by the Corporate Debtor wherein the project Canary Greens is being developed was coupled with a duly executed irrevocable Power of Attorney dated 19.01.2010 as entered between the Land Owners and the Corporate Debtor.

Mr. Kripal, Learned Senior Counsel has also submitted that, the Corporate Debtor in terms of the Development Agreement duly advertised its housing projects consisting of 583 units in 8 towers. By virtue of the said Development Agreement, right to develop the said subject land including right to transfer the said development including proportionate share in the land was transferred to the Corporate Debtor due to which, the said right is now a “property” of the Corporate Debtor as per Section 3(27) of the Code.

Mr. Kripal, Learned Senior Counsel relied upon a judgment passed by the Hon’ble Supreme Court of India in the matter of Victory Iron Works Limited versus Jitendra Lohia and Another, 2023 SCC Online SC 260 and submitted that the Hon’ble Supreme Court has recognized the development rights created in favour of the Corporate Debtor and under Development Agreement. The relevant observations of the Hon’ble Supreme Court are as follows:

He, therefore, submitted that the rights and interest thus created are liable to be protected and such rights are not amenable to termination in terms of Section 202 of the Contract Act.

Mr. Kripal, Learned Senior Counsel also submitted that the Resolution Plan is in consonance with the development rights vested with the Corporate Debtor by virtue of the Power of Attorney dated 19.01.2010 executed by the land owners in favour of the Corporate Debtor which constitute the intangible assets of the Corporate Debtor. Mr. Kripal, Learned Senior Counsel relied upon a judgment passed by NCLAT in the matter of New Okhla Industrial Development Authority versus Amit Agarwal, RP of Boulevard Projects Pvt. Ltd. (Company Appeal (AT) (Ins) No. 305/ 2021 in support of said contention.

He further submitted that the revocation of Power of Attorney dated 19.01.2010 is non-est and bad in-law. Further, Civil Suit bearing No. 3694-209 has been filed before the Civil Judge Senior Judge, Gurugram seeking a decree for declaring that the Power of Attorney dated 19.01.2019 be valid. He further submitted that the Registered Deed executed between two parties cannot be revoked by unilateral registration of deed of revocation by one of the parties.

Be that as it may, the Resolution Applicant/Applicant, in this application has prayed for directing the Respondent No. 1 to 4 (land owners) to restore the peaceful vacant and physical possession of Canary Greens admeasuring 10.81 acres that is the land in question. The Resolution Professional has also prayed for directing the Respondent No. 5 and 6 to assist the Applicant in restoring the peaceful vacant and physical possession of the land in question. We are therefore, required to examine as to whether the Resolution Professional has the possession of the land in question. The Resolution Professional in the present application as well as in the affidavit filed by him pursuant to the order dated 29.08.2020 has submitted that he has got the possession of the land by virtue of the order dated 24.08.2020 passed in IA-3356/2020. However, the Resolution Professional could not place on record any evidence to show that the physical possession of the land in question was handed over to him. Furthermore, the Resolution Professional has filed the present application seeking a direction to Respondent No. 1 to 4 to hand over the possession of the land in question, the Respondent No. 1 to 4, the land owners have also disputed the fact that the possession of the land is with the Resolution Professional. In view of the said position, we are unable to convince ourselves that the possession of the land was handed over to the Resolution Professional and that the Resolution Professional is in possession of the land in question. Furthermore, we feel that the issue of possession has to be decided by a Civil Court having jurisdiction on the basis of oral and documentary evidence and this Adjudicating Authority is not competent to decide the same. We, therefore, cannot grant any relief as prayed for by the Resolution Professional in this application. Since, we are deciding the issue of possession only at this stage, we dot not feel it appropriate to decide the other questions with respect to rights of the Corporate Debtor under the Development Agreement, etc.

The present application i.e. IA-3356/2020 is disposed of accordingly.

This application has been filed by the erstwhile land owners and Respondent No. 1 to 4 in IA-3356/2020, seeking directions from this Adjudicating Authority to modify the ad interim Ex-parte order dated 24.08.2020 passed in IA-3356/2020 in IB-2130/ND/2019 on the ground that the said order was obtained by the Respondents without disclosing complete and correct facts of the case and without affording an opportunity for hearing of the Applicant herein. In view of the order passed in IA-3356/2020, we do not deem it appropriate to pass any order in this application. IA-3629/2020 is disposed of accordingly.

This application has been filed by the Applicants herein, who are claiming to be the land owners of the land ad-measuring 10.81 acres situated in Village Behrampur, Tehsil & District Gurugram in the State of Haryana seeking a direction to the Resolution Professional to exclude the project land ad-measuring 10.81 acres from the proposed Resolution Plan. In view of the order passed in IA-3356/2020, we do not deem it appropriate to pass any order in this application. IA-5001/2021 is disposed of accordingly.