Greater Noida Industrial Development ... vs Pramod Agrawal

Greater Noida Industrial Development Authority Plot No. 01, Knowledge Park - 04 Greater Noida, Gautam Budh Nagar Uttar Pradesh - 201308. ...Appellant

Versus

Shri Pramod Agrawal S/o Late Shri K. L. Agrawal, R/o 1102, Orange County, Ex Director of Indrapuram, Ghaziabad, Corporate Debtor Uttar Pradesh. ...Respondent No. 1

Mr. Anil Matta Resolution Professional Primrose Infratech Pvt. Ltd. R/o B-98, Chetak Society, Sector - 09, Rohini, New Delhi - 110085. Respondent No. 2

For Appellant: Mr. U. N. Singh, Advocate. For Respondents: Mr. Mrinal Harshvardhan, Advocate for R-1. Mr. CA Navneet Arora, Mr. Tushar Bhardwaj and Mr. Abhinav Goyal, Advocates with Mr. Anil Matta, RP for R-2. Mr. Anand Verma, Advocate for Intervenor.

ORDER

(Virtual Mode)

21.06.2021: This appeal has been filed by Greater Noida Industrial Development

Authority being aggrieved by impugned order dated 28th February, 2020 filed by

one of the Suspended Directors (Respondent No. 1) of the Corporate Debtor - 'M/s

Cont'd..../ 2

Primrose Infratech Pvt. Ltd.'. While passing the impugned order, the Adjudicating

Authority (National Company Law Tribunal), New Delhi Bench held that the

Greater Noida Industrial Development Authority cannot be treated as having a

financial claim and being aggrieved of such impugned order, the present appeal

has been filed. It is claimed in the appeal and it is argued that the Appellant had

leased the land by Registered Lease Deed dated 29.09.2011 in favour of the

Corporate Debtor. The Lease Deed is at page 141 of the Appeal. The CIRP started

against the Corporate Debtor at the behest of one Operational Creditor - 'VMS

Equipment Pvt. Ltd.'. The Appellant claims that the Appellant had submitted the

claim in Form 'C' before the IRP/RP, as can be seen at page 211 of the Appeal and

the Appellant was treated as Financial Creditor as can be seen from Minutes of 4th

Meeting of CoC (page 66 at 73). The Learned Counsel for the Appellant submitted

that the Respondent No. 1 former Director of Corporate Debtor had filed

CA-1511/2019 to exclude the Appellant as Member of the CoC claiming it was not

a Financial Creditor. The Learned Counsel submitted that this application

(Annexure A-2) has been decided by the Adjudicating Authority without hearing

the Appellant. It is argued that if the Appellant was Member of the CoC, the CoC

did not take any decision by voting to exclude the Appellant from CoC. Reference

is made to Order dated 25th November, 2019 which was passed by the Adjudicating

Authority. Copy of the same has been filed with the Written Submissions by

Respondent No. 2 (Dy. No. 26001 at page 274). The specific order with regard to

CA-1511/2019 is at page 275. The order reads as under:-

Company Appeal (AT) (Insolvency) No. 55 of 2021 3

"CA 1511/2019 has been filed by Ex-Directors impugning the

inclusion of the claim filed by the Greater Noida Authority and the

same be considered as a Financial debt. The decision to this effect

would be taken by the RP who shall put it forth to the COC. Despite

notice to the Greater Noida Authority, no one has appeared on their

behalf. Let affidavit of service be filed."

2. The grievance of Learned Counsel for the Appellant is that as per this order

the Resolution Professional was directed to place the matter before the CoC. The

Learned Counsel then referred to the 6th CoC Meeting (page 295 of the Appeal)

Agenda Item 7 where the order dated 25.11.2019 was noticed and Resolution

Professional conveyed that Appellant's claim could not be treated as Financial

Creditor considering the Indian Accounting Standards and judicial orders referred.

3. The grievance of the Learned Counsel for the Appellant is that the Appellant

had been excluded from CoC on that day and was not allowed to participate. The

Learned Counsel for the Appellant submits that serious prejudice has been caused

to the Appellant because the Resolution Professional do not let the Appellant to

participate in the said CoC meeting as Appellant was Member of the CoC. Learned

Counsel for Respondent No. 1, the Suspended Director who had filed petition (at

Annexure A-2), supported Learned Counsel for the Appellant with regard to the

statement that the impugned order has been passed without hearing the parties

and the Learned Counsel adds that Adjudicating Authority did not pass any

Company Appeal (AT) (Insolvency) No. 55 of 2021 4

direction to delete UCO Bank as Financial Creditor which is also one of the prayers

in CA-1511/2019 which was filed by Respondent No.1.

4. Learned counsel for the Appellant submits that when the Appellant was

excluded from the CoC, the Appellant filed CA-812/2020 (at page 188) and made

a prayer that appropriate orders should be passed with regard to decision by the

RP for declaring the Appellant as Operational Creditor and not Financial Creditor

in the 6th Meeting of the CoC held on 17.12.2019. The Appellant claimed that that

it moved the application to quash and set aside the proceedings and decision taken

in the said meeting dated 17.12.2019. It is argued that this application has not

been heard by the Adjudicating Authority and same is pending for orders.

5. Against this, the Learned Counsel for Respondent No. 2 is submitting that

the Learned Counsel for the Appellant as well as Respondent No. 1 both are not

making correct statement that the Adjudicating Authority had not heard the parties

while passing orders in CA-1511/2021 and passing the impugned order. It is

stated that there were arguments raised by both the parties and their appearances

have been marked in the impugned order and after fully hearing the parties the

impugned order has been passed.

6. We have heard learned counsel for the Appellant even with regard to the

Lease Deed which is at page 141 of the Appeal. Learned Counsel for the Appellant

has submitted that the recitals for the Lease Deed show that the land has been

leased for 99 years with recitals showing that rights incidental to ownership have

Company Appeal (AT) (Insolvency) No. 55 of 2021 5

been given to the Corporate Debtor and it is argued that as per the 'Indian

Accounting Standard' the Lease Deed is required to be categorized as financial

lease. It is argued that the lease transferred all the risks and rewards incidental

to ownership of the underlying asset.

7. We have seen the copy of Indian Accounting Standards filed at page 87 of

the Appeal and classification of Leases at page 98 as well as we have seen copy of

Lease Deed at page 141.

8. The Adjudicating Authority in the impugned order has after considering the

matter before it observed in para 7 (there are two paragraphs marked as 7), which

reads as under:

"7. Keeping In view the citations referred to, this Bench is of the

opinion that the claim of the Greater Noida Authority can

unequivocally be categorised as being an "operational debt". We

therefore do not find any infirmity in the decision of the Resolution

Professional who has deemed it justified to amend and correct the

claim of the Greater Noida Authority from one of "financial claim" to

an "operational debt". Accordingly, the CoC which has been

reconstituted upon amending the aforesaid claim, consisting of

home buyers as financial creditors along with other Financial

Creditors, if any, would be vested with the voting rights to the

exclusion of Greater Noida Authority.

Company Appeal (AT) (Insolvency) No. 55 of 2021 6

7. It is submitted that the Resolution Plan has already been

approved by the CoC and has been submitted before this Bench for

due approval. As the pending objections have been dismissed,

arguments on the Resolution Plan be addressed on the next date.

To come up on 11th March, 2020."

9. The Counsel for Respondent No. 2 submits that Resolution Plan approved is

indeed already before the Adjudicating Authority.

10. Having heard Learned Counsel for both the sides and having gone through

the matter, we record that we have already examined a similar Lease Deed in the

matter of "New Okhla Industrial Development Authority vs. Mr. Anand Sonbhadra

(RP)", Company Appeal (AT) (Ins.) No. 1183/2019 dated 16.04.2021 and such Lease

Deed was threadbare discussed by us in that matter. We have already in that

matter held that such Lease Deed (as in the present one) does not constitute the

Financial Lease. For similar reasons we do not find that Appellant is able to show

Financial Lease in its favour. Rewards incidental to ownership of the underlying

asset-land were not transferred, in the Lease Deed if contents are considered

reading the same with Indian Accounting Standards.

11. In the present matter, the Appellant was earlier treated as Financial Creditor

for the dues claimed by Appellant but later on the Appellant has been treated as

Operational Creditor. (In this Appeal we are not dealing with issue if such lease

constitutes, even operational debt). Order dated 25.11.2019 of the Adjudicating

Company Appeal (AT) (Insolvency) No. 55 of 2021 7

Authority directed the Resolution Professional to consider if debt of Appellant is a

Financial Debt and place it before CoC. He did this in 6th CoC Meeting. On the

face of it the Lease Deed does not appear to be Financial Lease. As the Resolution

Plan is stated to be already approved, when it appears that the Appellant is not a

Financial Creditor, we do not wish to go into the technicalities of the manner in

which it was excluded from the CoC. The Learned Counsel for Respondent No. 1

is claiming that CA-1511/2019 was not heard. The grievance appears to be

because orders with regard to excluding UCO Bank was not passed. The

Respondent No. 1 does not appear to have filed any appeal against the impugned

order in that regard and thus we would not give much indulgence to Respondent

No. 1.

12. We do not find that there is any substance in this appeal. The appeal is

dismissed. No orders as to cost.

[Justice A.I.S. Cheema] The Officiating Chairperson

[Dr. Alok Srivastava] Member (Technical) Archana/gc.

Company Appeal (AT) (Insolvency) No. 55 of 2021