E.C. John vs Jitender Kumar Jain & Ors

E.C. John ...Appellant

Versus

Jitender Kumar Jain & Ors. ...Respondents

For Appellant: Shri Ghanshyam Singh and Shri Om Prakash, Advocates

For Respondents: Shri Sukumar Pattjoshi, Sr. Advocate Shri Ravinder Rawat, Advocate (R-1) Shri Jitender Jain, Liquidator of Roofit

ORDER

(Virtual Mode)

1.09.2020 Heard learned Counsel for the Appellant. This Appeal has

been filed by the Appellant being aggrieved by the Order dated 24th January,

2020 passed by learned NCLT in MA No.282 of 2020 filed by Liquidator in

C.P.(IB)-1055/(MB)/2017. By the said Order, the Application of Liquidator

was accepted and the Appellant who claimed to be in possession of part of

property of the Corporate Debtor on the strength of a letter dated 17 th August,

2002 (Annexure A-2) was directed not to disturb the possession of the

Liquidator or to create obstruction. By the same Impugned Order, the

Adjudicating Authority (National Company Law Tribunal, Mumbai Bench)

quashed Civil Suit No.251/2019 on the file of Civil Court, Junior Division,

Wada District Palghar, Maharashtra, and inter alia directed Police to arrest

Appellant for threatening and obstructing Liquidator. 2

2. The Appellant claims that by Annexure A-2 (Page - 34) letter dated 17th

August, 2002 was issued by Vinod Gurbux Motwani. Appellant claimed that

by such letter, Vinod Motwani who was Director to the Corporate Debtor had

handed over possession of the part of the property of Corporate Debtor to the

Appellant and thus, since 17th August, 2002, he has been in possession.

Appellant claims that the School and Teachers quarters and staff quarters

including that of factory were handed over by the Trustee to undertake

education and charitable activities in furtherance of objective of the Motwani

Education Trust. It is stated that Appellant has also constructed a wall

around the property. The learned Counsel for the Appellant states that the

Appellant has even paid property tax and thus, he claims that the Appellant

is entitled to protect his possession.

3. The copy of MA filed by the Liquidator is at Annexure A-14 and

Liquidator pointed out that CIRP process was initiated with regard to Roofit

Industry Ltd. on 28th June, 2017 and that even the Respondent No.1 had sent

Expression of Interest to purchase property. It is stated that the Liquidator

was appointed on 22nd January, 2018 and when the Liquidator visited the

property, he came to know that the wall has been constructed to let the

Appellant and Gurbuk Gyanchand Motwani use the property. The Liquidator

claimed that he had asked the Appellant and other Respondents (to the MA

filed before the Adjudicating Authority) not the trespass on the property of the

Corporate Debtor. The Liquidator also claimed that this Appellant had even

sent e-mail showing interest in part of the property but the same did not

materialize and the property came to be e -auctioned to third party on 27th

November, 2019. Thereafter, it is stated that Respondent No.1 filed Civil Suit Company Appeal (AT) (Ins) No.249 of 2020 3

seeking injunction against the Corporate Debtor with respect to the Wada

property and the Liquidator received Summons from Civil Court on 20th

January, 2020. Thus, he moved the Application against the Appellant and

others claiming that Civil Court has no jurisdiction in view of provision of

Sections 33(5), 60(5), 63(3), 231 and 238 of Insolvency and Bankruptcy Code,

2016 (IBC - in short) and sought reliefs that Respondent No.1 (present

Appellant) should remove goods from the Wada property and he should also

be directed to pay rent for using the property. Further reliefs were sought to

protect the property, by asking Police to act on his Complaint.

4. The Application came to be allowed by the Impugned Order. We asked

the learned Counsel for the Appellant as to what is Appellant's status in law

to be on the property. The Counsel stated that he was on the part of proper ty

of Corporate Debtor on the strength of letter dated 17 th August, 2002. He

states that the possession is with him. However, when we see this letter, it

only appears to be stating that the possession was being handed over to the

Appellant and his proposed organisation "for management of the school". The

letter also states that formal Memorandum of Understanding and/or

Agreement will be entered shortly. However, no such documents are there and

this document which has surfaced after the CIRP proceedings even if read to

the best advantage of the Appellant, would only mean that the Appellant is

being given possession to manage school. A person coming on property to

manage the school would require to show legal status so as to avoid Liquidator

taking action when the property is in liquidation. In law, possession would

require two elements - one, 'corpus' and the other is 'animus'. Even if corpus

is there, but animus to hold property by way of a confirmed right or title does Company Appeal (AT) (Ins) No.249 of 2020 4

not appear to be there. Merely being on property does not give title. The letter

is not based on any resolution of Trust. The Appellant does not show that he

is in possession as owner or tenant, or licensee as such. Only giving property

to manage school at the place would not be sufficient for the Appellant, to

claim possession, when the Corporate Debtor goes in liquidation.

5. We do not find any error in the Impugned Order where it directs that

the Appellant will not disturb or obstruct the possession of Liquidator with

regard to the property concerned. However, it appears to us that the direction

passed by the Adjudicating Authority quashing Civil Suit, is not legal. The

Adjudicating Authority referred to Section 33(5). Section 33(5) of IBC reads as

under:-

"(5) Subject to section 52, when a liquidation order has been passed, no suit or other legal proceeding shall be instituted by or against the corporate debtor:

Provided that a suit or other legal proceeding may be instituted by the liquidator, on behalf of the corporate debtor, with the prior approval of the Adjudicating Authority."

6. Even if such bar is there, it is not appropriate for the Adjudicating

Authority to quash the concerned suit which is filed in the Civil Court. It

would be for the Liquidator to move the concerned Civil Court pointing out

the provision of IBC or to move the District Court in the hierarchy for quashing

of the Suit concerned.

7. As regards the argument of the learned Counsel for the Appellant that

the Liquidator has in the MA claimed rent in the prayer and so the Liquidator

accepts that the Appellant should be treated as person liable to pay rent. What

Company Appeal (AT) (Ins) No.249 of 2020 5

appears from the records and facts is that the Liquidator claimed that the

Appellant should pay the rent "for use of the Wada property". This is more

saying that mesne profits should be paid. Such claim by liquidator does not

create right of lessor or lessee. One cannot cling to such words to create a title

as such.

8. For the above reasons, we partly allow the Appeal. The direction in the

Impugned Order quashing the Civil Suit No.251 of 2019 on the file of Civil

Court, Junior Division, Wada District Palghar, Maharashtra is set aside. The

Liquidator would be at liberty to move Civil Court concerned or move the

District Court as may be advised for appropriate relief.

9. The learned Counsel for the Appellant has argued that the Impugned

Order directs that the Appellant should be arrested by the Police. The

direction appears to have been given because the Appellant had threatened

the Liquidator with life and obstructed him. We substitute the direction that

the Appellant should be arrested by directing that the Police concerned should

take suitable action as per law.

Rest of the Impugned Order we maintain. With such directions, the

present Appeal stands disposed of.

[Justice A.I.S. Cheema] Member (Judicial)

(Dr. Ashok Kumar Mishra) Member (Technical) /rs/md Company Appeal (AT) (Ins) No.249 of 2020