Mr. Anand Sonbhadra vs M/s. Arham Escon Pvt. Ltd. & Anr.

Jarat Kumar Jain: J.

The Appeal is filed against the order dated 23.09.2019 passed by the Ld. Adjudicating Authority (National Company Law Tribunal, New Delhi Bench) in CA No. 113 of 2019 in CP (IB) No. 1059/ND/2018, whereby the Learned Adjudicating Authority dismissed the Application under Section 60(5) (c) of Insolvency and Bankruptcy Code, 2016 (IBC)filed by the Resolution Professional (RP) of Corporate Debtor M/s Shubhkamna Buildtech Pvt. Ltd

Brief facts of this case are that Shubhkamna Buildtech Pvt. Ltd. (Corporate Debtor) was incorporated in the year 2006 with its registered office at New Delhi. It is engaged, inter alia, in the business of real estate as a builder and developer of several real estate projects. Vide lease deed dated 04.04.2011 a plot No. GH-02A, Sector 01, Greater Noida, admeasuring 32,296 sq. mts. (the Site) was allotted to Corporate Debtor for a period of 90 years by Greater Noida Industrial Development Authority (GNIDA/R-2). Pursuant to the lease deed Corporate Debtor took possession of the site and commenced construction and development of its project, Shubhkamna City, as per the plans approved by GNIDA. The Corporate Debtor collected booking amounts against the flats from about 800 homebuyers and allotted the flats to them in Towers. Subsequently, on 27.09.2016 the Tripartite Registered Agreement was executed between Corporate Debtor, Arham Escon Pvt. Ltd. (R-1) and Greater Noida Authority (R-2) and a portion of the site i.e. 10,627.229 sq.mt. was sub-leased to Arham Escon for construction and development of its projects.

Concord Infrastructure Pvt. Ltd. filed an application (CP No. IB-1059/ND/2018) under Section 9 of the IBC against the Corporate Debtor the same was admitted by the Adjudicating Authority vide order dated 26.11.2018 and Mrs. Harkamal Hora Arora was appointed as IRP. Thereafter, vide order dated 18.02.2019 Mr. Anand Sonbhadra was appointed as RP.

During the course of conducting CIRP, the RP (Appellant herein) received a letter dated 18.03.2019 from the Arham Escon (R-1) that while sub leasing the said plot the Corporate Debtor represented that the said plot is free from all encumbrances and third party claims/rights. However, Arham Escon had received several complaints from Homebuyers informing that the Corporate Debtor allotted the flats to be made in tower Nos. 5,6,7 & 7A located at the sub-leased plot, as per the plans approved by GNIDA. Therefore, Arham Escon directed the RP to take legal action against the ex-management of the Corporate Debtor.

According to the RP during the CIRP, he has received aggregated claims amounting to Rs. 18,49,82,170/- from the 161 homebuyers who were allotted flats in towers nos. 5, 6, 7 and 7A. As per plan approved by GNIDA, these towers are proposed to be constructed on sub-leased plot.

It is pointed out by the RP that sub-lease was granted on the basis of fraudulent, misrepresentation of facts with the intention to deprive the original allottees of their rights over the towers 5,6,7 &7A of the Shubhkamna City Project. Thus, the sub-lease deed is void ab initio. Therefore, the possession of sub-leased portion be restored to the RP so it may be included in the CIRP.

After receiving aforesaid letter of R-1 dated 18.03.2019 and claim from 161 allottees, RP filed an application under Section 60(5) (c) of IBC against M/s Arham Escon Pvt. Ltd. (R-1) and GNIDA(R-2) before the Adjudicating Authority for the following reliefs:

The Respondents resisted the Application that relief claimed in the Application is beyond the jurisdiction of Adjudicating Authority however the same can be agitated before the Civil Court. Apart from this, Section 46 of IBC mandates that the transaction which is beyond two years cannot be looked into by the IRP/RP. The Sub-lease granted in favour of R-1 by a registered instrument, after paying lease rent to the lessor i.e. GNIDA (R-2). There is no element of fraud brought on record. The RP has not disclosed on what basis claiming the rights over sub-lease plot. RP has not filed any document in support of relief sought in the Application. It is also pointed out that pursuance of the Sub-lease the R-1 had obtained No Objection Certificate (NOC) for high clearance from Airport Authority of India and the certificate with respect of building byelaws from Registered Architect, Planner, Valuer and Landscape, Interior. The R-1 had obtained term loan of Rs. 50 Crores by mortgaging the said plot with Kotak Mahindra investment with the permission of GNIDA. Hence, the Application be dismissed.

After hearing Learned Counsel for the parties, Ld. Adjudicating Authority vide impugned order dismissed the application. Being aggrieved with this order the Appellant (RP) has filed this Appeal.

Learned Counsel for the Appellant submitted that the Learned Adjudicating Authority has failed to consider that the ‘Corporate Debtor’ collected booking amounts against the flats pertaining to Tower nos. 5,6, 7 &7A which were supposed to be constructed as per the sanctioned plan on the plot which was sub-leased to R-1. The Corporate Debtor, without returning the booking amounts to such allottees had sub-leased the portion of plot to R-1. After receiving the letter of R-1 dated 18.03.2019 the RP had formed an opinion that ex-management of Corporate Debtor had defrauded such allottees in whose favour rights had already been created prior to the execution of the sub-lease deed dated 27.09.2016. The erstwhile management of CD had not only defrauded the allottees but also misrepresented the R-1 that the said sub-leased plot is free from all encumbrances and third party rights/claims. The agreement executed on the basis of fraudulent misrepresentation of facts is void ab initio as held by the Hon’ble Supreme Court in the case of ‘Bhaurao Dagdu Paralkar vs State of Maharashtra and Ors.’[AIR 2005 SC 3330].

It is also submitted that the sub-lease deed was signed by Mr. Piyush Tiwari on behalf of Corporate Debtor in a capacity of Director. However, as on date of execution he was disqualified and incapacitated to execute any binding contract as per law.

Ld. Adjudicating Authority has not considered that Section 231 of IBC provides that no civil court has jurisdiction to deal with the issue in which the Adjudicating Authority or the IBBI is empowered by or under the IBC. The issue related to CIRP can only be decided by the Adjudicating Authority.

Ld. Adjudicating Authority failed to consider that the look back period as provided under Section 46 of IBC is not applicable to the transactions executed with fraudulent intentions.

Ld. Adjudicating Authority has not considered that as per Section 60(5) (c) of IBC only the Adjudicating Authority has jurisdiction to decide any issue arising out of CIRP. Thus, the impugned order may be set aside and the Appeal be allowed.

Per contra Ld. Sr. Counsel for the Respondent No. 1 submitted that the association of home buyers have filed a Civil Suit against the Corporate Debtor where a factum of transfer of 10,627 sq. mts. in favour of R-1 was recognized. During the pendency of Civil Suit the settlement was arrived at between the members of association and the Corporate Debtor and in terms of settlement the Civil Court has decreed the suit. CIRP of the Corporate Debtor commenced after more than two years from the transfer of land had been effected in favour of R-1. For these reasons, the RP has no locus to file the Application against the R-1.

It is submitted that the portion of plot was transferred under a registered instrument (Tripartite Agreement) and the transfer was effected pursuant to approval of GNIDA in favour of R-1. R-1 had paid a sum of Rs. 13,54,24,341/-to GNIDA under the lease deed. The Tripartite Agreement though nomenclature as a sub-lease was for all intents and purposes, a lease by GNIDA in favour of R-1 with no rights in the said plot remaining with the Corporate Debtor. The Adjudicating Authority cannot cancel such registered instrument.

The Ld. Adjudicating Authority while exercising the jurisdiction under Section 60(5) (c) of the IBC cannot declare a registered sub-lease deed as void ab-initio, the Appeal is misconceived and liable to be dismissed. 18. Ld. Sr. Counsel for the Respondent No. 1 submitted that the RP cannot consider to be a person aggrieved. Therefore, he has no locus to file Appeal under section 61 of the IBC in view of the order passed by this Appellate Tribunal in the case of S. Rajendran v. Jonathan Mourali Darang [2019 SCC Online NCLAT 758]. Ld. Adjudicating Authority after considering the factual as well as legal issues dismissed the Application.

Ld. Counsel appearing on behalf of the Respondent No. 2 adopts the argument advanced by the Ld. Sr. Counsel for the Respondent No. 1 and supports the impugned order.

After hearing Ld. Counsels for the parties, we have minutely examined the pleadings and documents.

The only issue arises for our consideration is whether the Corporate Debtor had sub-leased the portion of the plot to R-1 with an intend to defraud the allottees of Towers No. 5, 6, 7, and 7A?

Firstly, we have considered whether the allottees are aggrieved with the transaction of sub-lease in favour of R-1.

The CIRP initiated on 26.11.2018 and RP was appointed on 18.02.2019. Before that in the month of November, 2016 about 800 allottees of the Corporate Debtor including the allottees of Towers No. 5, 6, 7 & 7A have formed Shubhkamna City Welfare Association (Association) with the aim and object to fight against the Corporate Debtor for their rights. One of the member of the Association collected information from GINDA vide dated 22.03.2017 about the sub-lease which is in favour of R-1. In the month of July, 2017 the Association had filed Civil Suit No.450/2017 against the Corporate Debtor in the Court of Civil Judge Sr. Division Gautam Buddha Nagar Noida seeking the relief of permanent injunction to restrain the Corporate Debtor and its agents from creating third party interest over the five towers which have been built over plot No. GH02 Sector-1 Noida.

During the pendency of Suit, the matter was referred to mediation centre. The parties have come to a settlement on 21.05.2018 before the mediation centre in terms of minutes of meeting dated 30.12.2017. On the basis of the settlement the court has disposed of the Civil Suit. The R-1 has filed the copy of Civil Suit, Judgment and Settlement deed, list of allottees (homebuyers of Shubhkamna City) provided to Association by the Corporate Debtor on 20.02.2017.

The Association in the suit has not claimed any relief for cancellation of sub-lease deed dated 27.09.2016. The Association has pursued its claim only against the Corporate Debtor and not against the R-1. It means the Association is not aggrieved with the transaction of sub-lease in favour of R-1.

Now, we have considered whether the RP has any locus to file Application before Adjudicating Authority.

It is an admitted fact that vide registered instrument (Tripartite Agreement) dated 27.09.2016 a portion of the site i.e. 10,627.229 sq. mts. was sub leased by the Corporate Debtor to the R-1 with the permission of R-2. Though the Tripartite Agreement is titled as sub-leased deed. However, this instrument for all practical purposes is lease deed as in this deed R-1 has no obligation or liability towards Corporate Debtor. R1 has to pay lease rent directly to the R-2.

The RP although pleaded that he has received aggregated claims amounting to Rs. 18,49,82,170/- from 161 allottees of Tower Nos. 5, 6, 7 & 7A. As per sanctioned plan, these Towers are proposed to construct on the portion which was sub leased by the Corporate Debtor. Admittedly, the RP has not filed any list of such allottees and their claim forms. The RP has filed only a letter dated 18.03.2019 received from R-1.

The sum and substance of the aforesaid letter is that according to the R-1, Corporate Debtor has misrepresented that sub-leased plot is free from all encumbrances and third party claims/rights, whereas some allottees are demanding R-1 to allot flats in their favour in accordance with the builder buyer agreement executed by the Corporate Debtor. Therefore, the R-1 directed the RP to take necessary actions against the ex-management of Corporate Debtor and take steps for cancellation of builder buyer agreement and settled the claims of all those allottees.

We have noted that the RP has not pleaded that CoC has directed him to file application, on the other hand, it is submitted that RP himself after receiving the letter from R-1 had formed an opinion that corporate Debtor had defrauded the allottees by sub-leasing the portion of plot to R-1. Therefore, filed the Application.

As the RP has not filed any list of allottees or claim forms, therefore, we hold that the sole basis of filing the Application by the RP is the letter of R-1 dated 18.03.2019.

Now we have examined the contents of the letter. The R-1 in the said letter has not disclosed the name and number of allottees who are demanding R-1 to allot flats on the basis of agreements executed by the Corporate Debtor. The RP has not stated in the Application that after receiving the letter he has verified the contents of the letter. The RP has not filed any claim form and list of such allottees, therefore, the statement of the RP that he has received the claim of 161 allottees, is not correct.

With the aforesaid discussion, we are of the view that the RP has no locus to file the Application.

Admittedly, the transfer of portion of plot by sub-lease was effected on 27.09.2016 whereas CIRP initiated after more than two years i.e. on 26.11.2018. The RP has no ground to doubt the transaction which is more than two years prior to commencement of CIRP. The association has not raised any plea of fraud in transferring the plot by sub-lease to R-1 and the RP has failed to make out a case that the sub-lease was executed for depriving the rights of homebuyers. Therefore, we find no substance in the argument of Ld. Counsel for the Appellant that the sub-lease is actuated by fraud, therefore, no limitation has applicable to such transaction.

As we have already held that before initiation of CIRP, the members of association have arrived at a settlement with the Corporate Debtor and in the suit they have not claimed any reliefs for cancellation of the sub-lease deed dated 27.09.2016. Thus, the plea of RP that he has filed the Application for protecting the rights of homebuyers is not correct.

With the aforesaid discussion, we are of the view that the RP has no locus standi to file the Application before the Adjudicating Authority claiming the relief as shown in Para 7. We find no ground to interfere in the impugned order. Thus, the Appeal is dismissed.

We find that the RP has unnecessarily dragged the Corporate Debtor in litigation. Therefore, we impose the cost of Rs. 50,000/- on the RP. He is directed to deposit the same in the PM CARES Fund within 15 days and compliance affidavit be filed in the registry of this Appellate Tribunal. It is made clear that this cost should not be included in CIRP Costs.