Nisha M. Chandwani vs S. Gopalkrishnan

Per: Shri. Kuldip Kumar Kareer, Member Judicial.

This is an application filed by the Applicant under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 praying for directions to the Respondent, who is the Resolution Professional of the Corporate Debtor, to exclude certain immovable properties from the assets of the Corporate Debtor in the information memorandum, as they were purchased by the Applicant from the Corporate Debtor for adequate consideration prior to the commencement of CIRP.

Capri Global Ltd i.e., the Financial Creditor, had instituted a petition for Corporate Insolvency Resolution Process (‘CIRP’) of the Corporate Debtor u/s 7 of the Code and the same was allowed by the Hon’ble Tribunal on 27^th September, 2019 by way of an admission order as on that date. The Respondent has been appointed as a resolution professional of the Corporate Debtor vide order dated 19th November, 2019.

The Corporate Debtor was in the process of constructing a building known as 'Monarch Brookfields' on Plot bearing No. 3, admeasuring about 9999.81 square meters in sector 20, Kalamboli, Navi Mumbai. The Applicant was desirous of purchasing commercial premises and accordingly approached the Corporate Debtor for the purchase of Commercial Premises in Monarch Brookfields. In pursuance of the negotiations between the Applicant and the Corporate Debtor and after making the payment of earnest monies, the Applicant and the Corporate Debtor entered into the following registered Agreements for Sale:

Under the above registered Agreements for Sale, the Corporate Debtor had agreed to sell and the Applicant had agreed to purchase Shop Nos. 12, 17, 18 to 26 (being the “shops in question”) for consideration of Rs.27,00,000/ (Rupees Twenty-Seven Lakhs only) for each shop. The Applicant has paid the entire consideration as per the terms of the above Agreements for Sale. In pursuance of the payment of the consideration, the Corporate Debtor has issued payment receipts acknowledging the receipt of the consideration for Shop Nos. 12, 17, 18 to 26. Thus, the title with respect to the above mentioned shops stands absolutely transferred in favour of the Applicant and as such the Applicant is absolutely seized and possessed of the abovementioned Shops in the building known as Monarch Brookfields. However, since the Corporate Debtor has not yet obtained occupation certificate with respect to the Building known as Monarch Brookfields, the Applicant has not occupied the same.

In view of the commencement of the Corporate Insolvency Resolution Process with respect to the Corporate Debtor, the Applicant through an advocate addressed a letter dated 16th December, 2019 to the Respondent /Resolution Professional bringing the above facts to the knowledge of the Resolution Professional and further calling upon the calling upon the Resolution Professional to refrain from treating the above shops as assets of the Corporate Debtor. In reply to the above letter, the Respondent addressed an email dated 23rd December, 2019 requisitioning certain documents more particularly set out therein. In reply to the above email, the Applicant addressed a letter dated 30th December, 2019 enclosing therewith all the requisite documents. In reply, the Respondent addressed a letter dated 4th February, 2020 ("Impugned Letter") thereby wrongfully stating that the above mentioned shops are forming part of the assets of the Corporate Debtor for the following alleged reasons:

In the above circumstances, it is submitted that it is just and necessary to set aside the Impugned Letter dated 4th February, 2020 as null and void. It is also just and necessary to direct the Respondent/ Resolution Professional to exclude the abovementioned shops of the Applicant from the assets of the Corporate Debtor.

Hence, this Application.

The Applicant further states that irreparable harm and injury would be caused to the Applicant if the reliefs as prayed for are not granted.

Reply of the Respondent: The Respondent has filed his affidavit in reply dated 06^th October, 2020 and an additional affidavit dated 02^nd February, 2021. The main contentions of the Respondent herein are briefly summarised below:

Rejoinder of the Applicant:

We have heard the Counsel for the parties and have gone through the record.

During the course of arguments, it has been contended by the Counsel for the Applicant that the shops in question were purchased by the Applicant from the Corporate Debtor on the basis of registered sale agreement executed in the year 2012 and the entire sale consideration also stands paid to the Corporate Debtor and nothing remains to be paid. The RP has not challenged the validity of the agreements nor has denied that the entire sale consideration stands paid. Therefore, the shops in question cannot be treated as assets of the Corporate Debtor as for all intents and purposes as the same stands transferred to the Applicant.

On the other hand, the Counsel for the RP has argued that the shops in question cannot be treated as the property of the Applicant merely on the basis of the sale agreements as till date no conveyance deed has been executed in favour of the Applicant. The Counsel for the RP has further contended that even the occupancy certificate has also not been issued by the concerned authority i.e. RERA and therefore, physical possession cannot be said to be with the Applicant. The Counsel for the RP has further contended that as per the changed approved plan, there is no provision in the building for any commercial space/unit and therefore, the very legitimacy of the shops in question is under dispute. Apart from that, the Applicant cannot treat herself to be the absolute owner of the shops in question in the absence of any conveyance deed which was admittedly never executed in her favour. The Counsel for the RP has prayed for the dismissal of the Applicant.

We have weighed the contention raised by the Counsel for the parties and have gone through the records.

By way of this IA the applicant is seeking exclusion of Shops No. 12,17,18 to 26 which are the part of buildings are known as Monarch Brookfields out of the assets of the Corporate Debtor on the ground that the applicant has purchased the shop from the Corporate Debtor on the basis of registered agreements for sale, as disclosed para 3.3 of I.A. and the entire consideration in respect of the shops also stands already paid at the rate of rupees 27 lakhs per shop. These facts have not been disputed by the RP.

The primary objection raised by the IRP is that with the execution of sale agreements in question, the title cannot be said to have been conveyed to the applicant nor she can claim to have become the owner of the shops. The Counsel for the RP has further contended that the physical possession is also not with the applicant as the occupancy certificate has also not been issued yet in respect of the shops in question. The Counsel for the RP has further contended that even otherwise in the approved site plan of the building in question, there does not exist any commercial units and therefore, the shops in question cannot be said to the property of the applicant as the very construction of the shops is illegal and the applicant cannot be possibly conferred with any right so far as the shops in question are concerned. The Counsel for the RP has prayed for the dismissal of the application.

Having thoughtfully considered the contentions raised on behalf of the RP, we are of the considered view that merely because no conveyance deed executed in respect of the shops in question, it cannot be said that the applicant has no right in the same. More so, when it is not disputed that the registered sale agreements were executed in favour of the applicant in respect of the shops and the entire sale consideration also stands paid. Once the entire sale consideration was received and the registered documents were executed, it was incumbent upon the Corporate Debtor to have executed the conveyance deed subject of course to completion of some other formalities. If the conveyance deed was not executed, it was due to something which was required to be done on the part of the Corporate Debtor. Therefore, the Corporate Debtor cannot be allowed to take advantage of its own wrongs to defeat the valuable rights of the applicant.

It has been pointed out that the occupancy certificate in respect of shops has not been issued and therefore, the applicant cannot be said to be in possession of the same. Here again, it needs to be observed that it was duty of the Corporate Debtor to have obtained the occupancy certificate and if it was not obtained, the Applicant cannot be penalized for something which is attributable to the Corporate Debtor.

It has also been argued by the RP that the plan approved by CIDCO does not provide for any commercial units and it provide only for residential unit which means that the very construction of the shop is illegal beyond the approved license/permission given by CIDCO. Even this contention raised by the applicant is not tenable. In this connection, a reference can be made to the commencement certificate issued by the CIDCO on 05.04.2011 which is annexed in the rejoinder filed by the applicant which shows that there are 264 residential units and 26 commercial units. A further reference can be made to letter dated 18.10.2011 addressed to the Corporate Debtor wherein there is reference to 26 commercial shops. In this connection, a further reference can be made to Exhibit (D), annexed with the rejoinder, again issued by Maharashtra Coastal Zone Management Authority dated 05.02.2013 wherein there is also reference to as many as 336 residential units and 26 commercial units. In addition to this, the Counsel for the Applicant has referred to Exhibit (G) attached with the rejoinder which is a document submitted to CIDCO and, in this document also, there is a reference to 264 residential units and 26 commercial units. The Counsel for the Applicant has further referred to possession letter dated 23.09.2016 issued by the Corporate Debtor to the Applicant wherein it is mentioned that the peaceful and vacant possession of the shops from the ground floor in Monarch Brookfields has been handed over to the applicant upon receipt of the agreed sale consideration. In the given facts and circumstances of the case, we are of the considered view since the entire sale consideration in respect of shops in question stood paid to the Corporate Debtor long back and the possession was also delivered, merely because the conveyance deed has not been executed on account of the fact that the occupancy certificate has not been issued due to some issues pending with regard to the approval of the CIDCO, it cannot be said that the shops in question are liable to the treated as properties/assets of the Corporate Debtor.

As a result of the above discussion, we deem it appropriate to allow the application and accordingly, we allow I.A. No. 2226 of 2020 on the terms stated hereunder:

a. The Resolution Professional of the Corporate Debtor shall exclude the shops in question from the assets of the Corporate Debtor;

b. This IA is accordingly disposed of to the extent indicated above.