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Judgment
(Hybrid Mode)
Driven perhaps by an element of over-anxiety, the Telangana Housing Board has preferred this appeal. The appellant herein had preferred an application to intervene in the proceedings of a Section 7 petition instituted by the 1st respondent against the 2nd respondent which is pending adjudication and it came to be dismissed vide the impugned order dated 09.03.2026,
The brief facts are that sometime in 2006, the then Andhra Pradesh Housing Board and the 2nd respondent had entered into an agreement to develop certain lands of the Housing Board and that there arose certain serious disputes between the two which eventually landed before an Arbitration Tribunal.
The Tribunal, vide its order dated 21.07.2024, inter alia, has held that the ownership of the land concerned rests with the Housing Board, which now goes by the name Telangana Housing Board. In between, there were quite a few suspense-filled moments with the investigating agencies and the Enforcement Directorates stepping in, but for the present they are mere distractions.
The crux of the issue is that the 1st respondent has instituted a petition under Section 7 of the I & B Code, 2016 against the 2nd respondent, and justly anxious that the advantage that the appellant had obtained under the Arbitral Award might be in jeopardy, it moved the learned Adjudicating Authority with its application to intervene.
The learned Adjudicating Authority vide its impugned order has taken note of the entire contractual relationship between the appellant and the 2nd respondent, of the changes the contractual relationship had undergone over time and of how the dispute landed before the Arbitral Tribunal as well as the challenge to be award so made before the Commercial Court, etc. In this context, the following paragraphs of the order are extracted hereunder: -
From the findings of the Arbitral Tribunal, particularly under Issue Nos. 8(a) and 10, it is evident that the title in respect of the project land vests exclusively with the Telangana Housing Board and that the Corporate Debtor/ M/s. Indu Eastern Province Projects Pvt. Ltd. cannot claim any proprietary right over the same. The resumption of 8.008 acres by the Housing Board pursuant to the termination has also been effectuated and recorded under Panchanama dated 29.11.2024. The said award, though under challenge before the Commercial Court, continues to be in operation as on date."
In the aforesaid background, it is clear that the Applicant/Telangana Housing Board is admittedly not a party to the Construction and Marketing Agreement dated 19.06.2017, which forms the basis of the claim of the Financial Creditor in the Section 7 Petition. The Applicant seeks impleadment in C.P. (IB) No. 290/7/HDB/2022 contending that the said agreement entered into between M/s. Indu Eastern Province Projects Pvt. Ltd. and M/s. Koncept Nirman Pvt. Ltd. (Respondent No. 1) is illegal, void ab initio and in violation of the Development Agreement1 and that the Corporate Debtor had no authority to create or assign any rights in respect of the project land without the consent of the Housing Board."
Eventually, the Tribunal has held that the appellant may not have a locus standi to intervene in a matter where the battle lines are drawn essentially between the financial creditor and the corporate debtor. This order is now under challenge.
We have the advantage of hearing Mr. S. Rahul Reddy, Special Government Pleader for the Appellant and Mr. Duvva Pavan Kumar, learned counsel for the 1st respondent. The Special Government Pleader who appeared for the appellant narrated the facts that has have been detailed in the impugned order and added that the land belonging to the housing board is now on wager as between the 2nd respondent and one of its back-end contracting party which pose a serious threat to the title of the housing board to the land in question.
Mr. Duvva Pavan Kumar, learned counsel for the 1st respondent, on the other side submits that in a petition under Sec. 7 the Tribunal is only required to ascertain the existence of debt and default and not concerned about third party rights to certain perceived assets of the corporate debtor.
We consider that, notwithstanding the anxiety of the appellant, it has approached the Tribunal one stage too early. Much depends on the outcome of the petition filed under Sec. 7, and only if it is admitted the appellant's anxiety may have a just cause to get triggered.
Keeping all the rights of the appellant open, we are constrained to concur with the order of the learned Adjudicating Authority.
The appellant is free to take out such a plea at the appropriate time if the 2nd respondent is drawn into CIRP.
Subject to the above observations, we dismiss this appeal. No costs.