In the matter of Kindle Developers Private Limited

The present IA No. 1592 of 2019 is filed by the New Okhla Industrial Development Authority (hereinafter referred to as the ‘Applicant’/or ‘Noida Authority’) under Section 60(5) of IBC, 2016, seeking the following reliefs: “i) Allow the present application; ii) Direct to the Respondent/Resolution Professional for exclusion of Plot No. SC-01/D1, Sector 79, Noida from the resolution plan in view of the cancellation dated 13.08.2015 iii) Pass such other order/directions as this Hon'ble Bench may deem fit and proper in the facts and circumstances of the case.” 2. To put the facts succinctly, the underlying main Petition CP (IB)- 470/ND/2017 was filed by Sh. Amit Kumar Malik against the Corporate Debtor namely, M/s Kindle Developers Private Limited under Section 7 of IBC, 2016, which was admitted vide Order dated 09.03.2018 of this Adjudicating Authority and the Corporate Insolvency Resolution Process (CIRP) in respect of the Corporate Debtor (CD) was initiated. The Corporate Debtor at present is represented by Mr. Kashi Viswanathan Sivaraman, Resolution Professional.

3. The main grievance espoused by the Applicant / Noida Authority is that the Respondent/RP has included the property namely, Plot No. SC-01/D1, Sector 79 in the Resolution Plan (hereinafter referred to as the “Project Land”), the lease of which was cancelled by the Applicant on 13.08.2015 i.e., before the initiation of the CIR Process of the CD.

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4. Ld. Counsel for the applicant/ Noida Authority through its pleadings as well as during the hearing brought the Order dated 20.02.2020 passed in the present IA No. 1592 of 2019 by this Adjudicating Authority to the attention of the Bench emphasizing the highlighted portion, which reads thus:

“CA. 1592/2019 has been filed by the Noida Authority. Ld. Counsel has apprised this Bench that the lease of the land, being the substratum of the Corporate Debtor's project has been cancelled vide this letter dated 31.03.2015 for want of deposit of necessary lease rent/charges in terms of the allotment. It is also pointed out that the resolution plan has been approved by the CoC on the basis that the land belongs to the Corporate Debtor. We fail to understand how a resolution plan can be considered by this bench when the lease of the allotted land has already been cancelled by Noida Authority way back in 2015 itself. Notwithstanding fact that a resolution plan cannot be considered for want of having a stratum, Ld. Counsel for the shareholders has submitted that the entire adjudication has to be considered de novo in the light of Pioneer Judgment. We are constrained to observe that despite knowing that the lease had been cancelled by Noida Authority, the Directors/Shareholder continued to accumulate money thereafter by duping several investors who nurtured the fond hope of getting a roof over their head and invested their lifetime's money. The Corporate Debtor knew that no project could be implemented or flats constructed and delivered when there was no land. This is considered cheating the unsuspecting allottees. The R.P is directed to look into this matter and file a proper complaint with the EOW Cell of the Delhi Police………….” (Emphasis added)

IA. No. 1592/ND/2019 in (IB)-470/(ND)/2017

5. It was further informed that the aforesaid order was challenged by the Respondent/RP by filing a Company Appeal (AT) (Insolvency) No. 605 of 2020 in which, the relevant extracts of the order dated 27.07.2020 passed by the Hon’ble NCLAT’s reads thus:

“2. On bare perusal of the impugned order, it emerges that the Adjudicating Authority declined to consider the Resolution Plan as the Noida Authority alleged that it had cancelled the lease for want of deposit of lease rent/ charges in terms of the allotment. Learned counsel for the Appellant referred to reply provided in response to a RTI query which shows that the amount of rent was outstanding. But there is nothing in the letter to show that the lease was subsisting or had been cancelled. Thus, on the strength of this reply alone it cannot be held that the lease was subsisting. …… 5. In the given circumstances, we find that the instant appeal is not maintainable as no final decision has been taken by the Adjudicating Authority in regard to approval of the Resolution Plan and matter has been adjourned for further consideration. We dispose of this appeal with direction that the Adjudicating Authority shall accord consideration to the matter in the light of the application filed before it which is pending consideration and after taking interests of all stakeholders into consideration. The Adjudicating Authority will record a clear finding in regard to cancellation/ subsistence of the lease after providing opportunity and hearing all concerned parties before passing order in regard to approval or otherwise of the Resolution Plan. It is expected that the Adjudicating Authority will accord top priority to the matter keeping in view the timelines and decide the matter expeditiously. The Appeal is disposed off with aforesaid direction.” (Emphasis added)

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6. On perusal of the order (ibid), it is observed that the Hon’ble NCLAT had directed this Adjudicating Authority to give a clear finding regarding the cancellation/ subsistence of the lease after providing an opportunity and hearing all concerned parties. Accordingly, this Tribunal granted various opportunities to all concerned and heard the matter on a regular basis.

7. The Applicant/Noida Authority through its application, written submissions, and its Counsel during the course of the hearing submitted the following in support of its contentions:

7.1 Lease Deed for the property namely, Plot No. SC-01/D1, Sector 79 included in the Resolution Plan was executed between Applicant and Corporate Debtor on 24.10.2011. Since the area and premium of the plot were wrongly mentioned in the Lease Deed, a “Correction Deed” was executed between the Applicant and CD on 19.10.2012. However, due to non-payment of dues, the allotment of the said plot was cancelled vide letter of the Applicant/Noida dated 13.08.2015.

7.2 Thereafter, a request for restoration of the said plot was made after more than 300 days (Ld. Counsel clarified that as per the policy of Noida Authority, a cancelled plot can only be restored in cases where the application for restoration is made within 90 days from the date of cancellation) by the CD vide letter dated 14.06.2016, which was rejected on 10.11.2020, in pursuance to the order dated 12.10.2020 passed by this Tribunal.

7.3 CIRP qua CD commenced vide order dated 09.03.2018. Ld. Counsel for the Applicant/Noida Authority during the course of the hearing pointed out

IA. No. 1592/ND/2019 in (IB)-470/(ND)/2017 that the said order categorically noted that ….“However, as no construction commenced on site, the Noida Authority cancelled the project”....

7.4 Ld. Counsel for the Applicant/Noida further pointed out that the Respondent/RP in CA No. 479/ND/2019 filed on 30.01.2019 in the present C.P. No. (IB)- 470(ND)/2017, while seeking certain reliefs against third parties, itself admitted the fact of cancellation of the allotment of Project land/plot in Para 22 of the said CA.

7.5 Further, this Tribunal vide order dated 08.11.2019, while issuing notice to the Noida Authority/Applicant, directed the Noida Authority to conduct an on-the-spot inspection of the Project and file a report. It was then, the applicant came to know about the involvement of the cancelled plot in the present matter and therefore, filed the present application on 02.12.2019.

7.6 While narrating the sequence, the Applicant/Noida Authority submitted that the Resolution Plan was approved by the Committee of Creditors (‘CoC’) on 04.12.2019. The present application was listed on 20.02.2020, wherein this Tribunal recorded the finding about the cancellation of the land and the matter was adjourned at the request of the allottees, Resolution Professional, and Resolution Applicant to take appropriate steps. Challenging the order dated 20.02.2020, the RP preferred a Company Appeal (AT) (Insolvency) No. 605 of 2020 before the Hon’ble NCLAT, which was disposed of vide order dated 27.07.2020 with a direction to this Adjudicating Authority to record a clear finding in regard to the cancellation/ subsistence of the lease after providing an opportunity and hearing all concerned parties before passing order in regard to approval or otherwise of the Resolution Plan. Accordingly, this IA. No. 1592/ND/2019 in (IB)-470/(ND)/2017

Tribunal vide order dated 19.03.2021, directed the RP and the Flat Buyer’s Association to approach the Noida Authority to resolve the dispute amicably.

7.7 Pursuant to the direction of this Tribunal dated 19.03.2021, an affidavit dated 13.07.2021 was filed by the applicant/Noida Authority before this Tribunal mentioning that a meeting of all concerned was held on 09.04.2021, wherein, it was informed that the applicant/Noida Authority was being provided an amount of Rs. 01 Crore only in the Resolution Plan against its total dues of Rs.140,08,93,530/- as on 30.06.2021. It is further indicated that if the said land if allotted at the present rate, the payable amount will be Rs.484,00,00,000/- being the present value of the land.

7.8 In the backdrop, the applicant/Noida is seeking a direction to the Respondent/Resolution Professional not to include the Plot No. SC-01/D1, Sector 79, Noida in the Resolution Plan as the allotment of the said plot was cancelled vide letter dated 13.08.2015, and the Corporate Debtor has no right in the said property anymore as the same stood vested with the applicant since 13.08.2015.

8. The Respondent/RP has filed its Reply dated 03.02.2020 and Written Submissions dated 23.08.2023 stating the following:

8.1 As per the Cancellation Letter dated 13.08.2015, the Project Engineer of Noida Authority did not take back the possession after 30 days from the Corporate Debtor nor did the CEO of Noida Authority take proper steps to resume the land as per the provisions of Section 13 and Section 14 of the UP Industrial Area Development Act, 1976 nor did the Accounts Department issue a Forfeiture Letter due to cancellation of the Lease, but kept on IA. No. 1592/ND/2019 in (IB)-470/(ND)/2017 accumulating the Lease Premium and Lease Rental in its books. The Accounts Department was confirming the dues payable on various dates as per the RTI application filed by the Home Buyers.

8.2 Thereafter, the CD vide letter dated 14.06.2016 applied for restoration of Plot No. SC-01/D-1, Sector 79 to Noida Authority. However, there was no response till the commencement of CIRP on 09.03.2018. Finally, Noida Authority rejected the request for restoration of the plot vide letter dated 10.11.2020 when the Moratorium under Section 14 of IBC, 2016 was in place.

8.3 The Corporate Debtor went on to construct the said project even after the cancellation of the Lease Deed/plot dated 13.08.2015 and created third-party rights on the said property by allocating flats to various allottees/ homebuyers, before and after the cancellation of the Lease Deed.

8.4 Further, the said project was also registered with the RERA, UP on 15.08.2017 under Registration Number UPRERAPRJ 10636. Noida Authority did not object to the RERA registration but instead sent a letter to UP RERA on 27.01.2021 to cancel the registration.

8.5 The outstanding amount of Lease rental as of 31.12.2014 was Rs. 16,83,00,983/-, which was not paid by the Corporate Debtor till the date of cancellation on 13.08.2015. Now, the outstanding amount stands at Rs. 140,08,93,530/- as of 30.06.2021, which the Noida Authority is trying to recover from the CD during the CIRP.

8.6 As per the Audited Balance Sheet of CD as of 31.03.2015, the amount collected by the Corporate Debtor from the Home Buyers stood at Rs. 157.03 Crores, which as per the Audited Balance Sheet of 31.03.2017, increased to IA. No. 1592/ND/2019 in (IB)-470/(ND)/2017

Rs. 170.21 Crores. It is submitted by the Respondent that the total number of Home Buyers in the project is 651 as of 31.03.2017.

8.7 Further, post-commencement of CIRP of the Corporate Debtor, the erstwhile IRP sent a letter dated 14.08.2018 to the Applicant/Noida Authority to file its claim before the IRP. However, no steps were taken to file the claim.

8.8 After 05 years of the alleged cancellation, the Applicant at a very belated stage preferred the instant IA to exclude the said plot/Leased Land from the Resolution Plan of the Corporate Debtor that was duly approved by the CoC on 04.12.2019 with a voting percentage of 92.39 %.

8.9 From the initiation of CIRP of the Corporate Debtor, the Moratorium under section 14 of the IBC 2016 has been in force and the CD is prohibited from transferring, encumbering, alienating, or disposing of any legal right or beneficial interest. The Applicant is also prohibited from recovery of any amount from the leased land that is occupied by the Corporate Debtor or in the possession of the Corporate Debtor.

8.10 After the alleged cancellation of the lease deed/plot, the Applicant failed to regain possession of the plot in question to date and has, in fact, given a specific amount due with respect to the same upon an inquiry in the form of an RTI. Such conduct of the Applicant clearly amounts to a tenancy at holding over under the provisions of Section 116 of the Transfer of Property Act, 1882, which reads thus:

“Effect of holding over: If a lessee or under lessee of property remains in possession thereof after the determination of the lease granted to the lessee, and the lessor or his legal representative accepts rent from the IA. No. 1592/ND/2019 in (IB)-470/(ND)/2017 lessee or under-lessee, or otherwise assents to his continuing in possession, the lease is, in the absence of an agreement to the contrary, renewed from year to year, or from month to month, according to the purpose for which the property is leased, as specified in section 106.”

8.11 As regards the possession of the disputed land, the same vests with the CD, and the same has been duly acknowledged by the Applicant in its Affidavit filed in CA 479/ 2019. This Tribunal vide order dated 08.11.2019 directed the Applicant to provide information as regards the status of construction on the disputed property. The Applicant vide its Affidavit had provided the status of construction on the said land.

8.12 The Hon'ble NCLAT in the matter of Aditi Bezurbha Vs. Mr. Kamalesh Kumar Singhania & Anr. in CA (AT) (Ins) No. 1468 of 2019 held that the lands that were admittedly in 'possession' of the corporate debtor till the time the CIRP started and moratorium was imposed will continue to remain in the possession of the corporate debtor. Further, the lands that are in 'possession' of the corporate debtor at the time of the beginning of the moratorium remain in the possession of the corporate debtor/ RP through the CIRP period. Moreover, the development agreements which are central to the success of the CIRP are not liable to be terminated.

8.13 Further, in the matter of TATA Consultancy Services Limited Versus Vishal Ghisulal Jain, Resolution Professional, SK Wheels Private Limited [Civil Appeal 3045 of 2021, the Hon'ble Supreme Court held thus:

"28. While in the present case, the second issue formulated by this Court has no bearing, we would like to issue a note of caution to the NCLT and IA. No. 1592/ND/2019 in (IB)-470/(ND)/2017

NCLAT regarding interference with a party's contractual right to terminate a contract. Even if the contractual dispute arises in relation to the insolvency, a party can be restrained from terminating the contract only if it is central to the success of the CIRP. Crucially, the termination of the contract should result in the corporate death of the Corporate Debtor.”

8.14 Inaction on the part of the Applicant after the alleged termination vide letter dated 13.08.2015 and non-enforcement of cancellation in letter and spirit by the officials of Noida Authority resulted in the creation of third-party rights over the said property in favour of the innocent homebuyers. The innocent homebuyers have been paying the installments due to the Corporate Debtor, based on the demand letters made by the Corporate Debtor, which is evident from the balances outstanding against the amount received from the home buyers as per the Audited Balance Sheet dated 31.03.2015 and 31.03.2017.

9. The Applicant/Noida Authority, through its Written Submissions dated 28.08.2023, has given the following rebuttal to the arguments made by the Respondent/RP:

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10. During the hearing, the SRA also joined the arguments and supported the case of the RP. The contentions raised by the SRA and the Rebuttal given by the Applicant/Noida Authority, through its Written Submissions dated 28.08.2023, are reproduced below:

IA. No. 1592/ND/2019 in (IB)-470/(ND)/2017

IA. No. 1592/ND/2019 in (IB)-470/(ND)/2017

11. We heard the submissions of the parties and perused the documents placed by them on record. The Applicant/Noida Authority has submitted that- (a) Due to non-payment of dues by the ex-management, the allotment of the Project land/plot was cancelled, much before commencement of the CIRP, vide letter dated 13.08.2015 of Noida Authority addressed to the CD. Hence, the fact of cancellation of the plot was well within the knowledge of the Corporate Debtor herein.

(b) Further, the Admission (CIRP) order of this Tribunal dated 09.03.2018 itself noted that the Noida Authority cancelled the plot/project land, hence it was well within the knowledge of IRP/RP too.

(c) Moreover, the present RP has been aware of the fact of the cancellation of the Project Land by Noida, as evidenced by Para 22 of C.A. No. 479 of 2019 filed by the RP itself against G.S. Buildwell Pvt. Ltd. & Ors., which reads thus:

“22. It is submitted that the NOIDA Authority cancelled the allotment of the Land vide its notification dated 13.08.2015 for non-payment of the amount due and in accordance with the provisions of the Lease Deed between NOIDA and the Corporate Debtor, the allotment was cancelled and the deposit amount was forfeited. It is submitted that as the land allotment has been cancelled, the Corporate Debtor lost its title as 'lessee' and the ensuing rights thereof and therefore the Respondent Company and/ or the Respondents have no good title over the land on which the constructions/ development work has taken place. A copy of the cancellation notification dated 13.08.2015 is annexed as Annexure 7.” (Emphasis Supplied)

IA. No. 1592/ND/2019 in (IB)-470/(ND)/2017 (d) Further, the Applicant/Noida Authority in its Written Submissions has given the following instances of averments in IA-3202 of 2020 filed by RP, where he himself admitted the fact of cancellation of the lease deed of the Project Land:

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12. Further, it is observed from the record that the Corporate Debtor, vide their letter dated 14.06.2016 (i.e., before the initiation of CIRP) addressed to AGM (Commercial) Noida, the CD itself through its Director had applied for the restoration of the cancelled Lease/plot. The contents of the said letter dated 14.06.2016 reads thus:

13. Accordingly vide order dated 09.09.2020, this Adjudicating Authority directed the Ld. Counsel for the Applicant/Noida Authority to place on record the decision taken by the Noida Authority on the Representation of the Corporate Debtor dated 14.06.2016. In response,

IA. No. 1592/ND/2019 in (IB)-470/(ND)/2017 vide affidavit dated 28.09.2020 filed on behalf of the Applicant/Noida Authority, the following was averred:

14. All these pleadings and documents reflect that the lease of Plot No. GH-SC-01/D-1, Sector 79, Noida was cancelled by the Noida Authority vide letter dated 13.08.2015, much before the commencement of CIRP. Though the Corporate debtor, through the then/Ex-management applied after a gap of 305 days to the Noida Authority for the Restoration of the Lease Deed on 14.06.2016, however, there is nothing produced or placed on IA. No. 1592/ND/2019 in (IB)-470/(ND)/2017 record by the Respondent/RP/or anyone else during the hearing that the Lease Deed of the said plot was restored to the CD. Rather, it has ben brought on record by the Noida Authority that the request for restoration of the lease deed was rejected on 10.11.2020.

15. However, in the interest of justice, while hearing the present IA, this Adjudicating Authority vide order dated 12.10.2020 directed the Noida Authority to place on record within 4 weeks the decision on the Representation dated 14.06.2016 made (by CD through its ex-management) for restoration of the Lease Deed/plot, after giving due opportunity of hearing to the Respondent/RP of the CD and SRA. The order dated 12.10.2020 reads thus:

IA. No. 1592/ND/2019 in (IB)-470/(ND)/2017

16. In compliance with the aforesaid directions, the Applicant/Noida Authority considered the Representation of the CD dated 14.06.2020 seeking restoration of the lease deed/plot, and CEO Noida herself vide letter dated 10.11.2020 communicated the decision of rejection on the representation of the CD dated 14.06.2016 (regarding the restoration of allotment/plot) to the Respondent/RP. We find that the letter dated 10.11.2020 of the CEO Noida Authority placed by the Applicant on record is quite a detailed and self-contained one. The concluding paragraph of the Applicant/Noida’s letter reads thus:

“In view of the foregoing reasons and taking into consideration the violation of the terms of the lease-deed dated 24.10.2011 and the correction-deed dated 19.10.2012, the representation regarding the restoration of allotment dated 14.06.2016 made by M/s Kindle Developers Pvt. Ltd. is hereby rejected. The present decision is being made in compliance of the order dated 12.10.2020 passed by Hon'ble NCLT, New Delhi.”

(Emphasis added)

17. However, during the further hearings of the IA particularly those held on 19.03.2021 and 20.09.2021, it was brought on record that since the project involved 696 allottees/homebuyers in the project, who had invested an amount of Rs. 158 Crore so far, on the collective request of all the parties, a liberty in terms of one more opportunity was granted to the respondent/RP and Flat Buyer’s Association to settle the matter with the Noida Authority. Even as late as on 15.05.2023, Ld. Counsel for the SRA sought an IA. No. 1592/ND/2019 in (IB)-470/(ND)/2017 adjournment on the grounds that the SRA, being a group of allottees/homebuyers, is exploring a solution qua the Noida Authority. Accordingly, this Adjudicating authority on request of all the parties including Noida authority, allowed liberty to sit together and resolve the matter amicably. In response, the Applicant/ Noida authority vide affidavit dated 28.10.2021 averred the following:

IA. No. 1592/ND/2019 in (IB)-470/(ND)/2017

18. Thus, what emerged from the Affidavit dated 28.10.2021 (ibid) and submissions made by the Ld. Counsel for the Noida authority during the subsequent hearing is that whereas the Noida Authority maintained that the allotment of the project plot was cancelled on 13.08.2015 and if it is restored, the amount payable by 30.06.2021 came to Rs.140,08,93,530/-, RP and RA maintained that nothing more than Rs. 01 Crore can be provided by the Resolution Applicant in the Resolution Plan. Ld Counsel representing Noida Authority further stated that the present value of the land, if allotted at the current rates, is Rs.484 Crore.

19. Since despite several opportunities, RP, CoC, and the SRA (a group of allottees/homebuyers), failed to reach any settlement qua the Nodia Authority, the matter was finally heard on merits. We heard the Ld. Counsel for the Applicant/Noida Authority, Ld. Counsel appearing for Respondent/RP and Ld. Counsel appearing for the SRA at considerable length.

20. The Respondent/RP as well as the SRA mainly contended that since the Noida Authority did not take possession of the plot/project land back from the Corporate Debtor, the Lease Deed of Plot No. SC-01/D-1, Sector 79, Noida is deemed to have continued. To corroborate their submissions they, in a nutshell, stated the following:

a) The Project Engineer of Noida Authority did not take back possession of the aforementioned plot from the Corporate Debtor after 30 days of the cancellation nor did the CEO of Noida Authority take proper steps to take back land as per the provisions of Section 13 and Section 14 of the UP Industrial Area Development Act, 1976 nor did the IA. No. 1592/ND/2019 in (IB)-470/(ND)/2017

Accounts Department issue a Forfeiture Letter due to cancellation of the Lease, rather kept on accumulating the Lease Premium and Lease Rental in its books and confirmed the dues payable on various dates as per reply to the RTI application filed by the Home Buyers.

b) The project was registered with the RERA, UP on 15.08.2017 with Registration Number UPRERAPRJ10636 and the Noida Authority did not object to the RERA registration, instead sent a letter to UP RERA on 27.01.2021 to cancel the registration to UPRERA.

c) Since even after the alleged cancellation of the lease deed, the Applicant failed to regain the possession of the land in question till date, and has given a specific amount due in response to an RTI enquiry, such conduct of the Applicant amounts to a tenancy at holding under the provisions of Section 116 of the Transfer of Property Act, 1882.

21. We would like to examine each of these objections raised by the Respondent/RP. As regards the “RTI Reply” received by the homebuyers from the Accounts Department of Noida, it is noticed from the record that the Hon’ble NCLAT vide Judgement dated 27.07.2020 in Company Appeal (AT) (Insolvency) No. 6050 of 2020, had noted the following finding:

“2. On bare perusal of the impugned order, it emerges that the Adjudicating Authority declined to consider the Resolution Plan as the Noida Authority alleged that it had cancelled the lease for want of deposit of lease rent/ charges in terms of the allotment. Learned counsel for the Appellant referred to reply provided in response to a RTI query which shows that the amount of rent was outstanding. But there is nothing in the letter to show that the lease was subsisting or IA. No. 1592/ND/2019 in (IB)-470/(ND)/2017 had been cancelled. Thus, on the strength of this reply alone it cannot be held that the lease was subsisting.”

(Emphasis Added)

22. Given the aforesaid observation/finding of the Hon’ble NCLAT on the issue of “the reply received under RTI”, we find no merit in the RP’s contention that based on the RTI’s reply, the lease of the allotted plot was still subsisting with CD.

23. As regards the contention of the Respondent/RP that Noida Authority did not take back possession of the plot in question from the Corporate Debtor after 30 days of the cancellation, Ld. Counsel for the Applicant/Noida Authority, during the hearing, referred to the last paragraph of the cancellation letter dated 13.08.2015 by which the Corporate Debtor viz., M/s Kindle Developers Pvt. Ltd. was asked to hand over the possession of the land to the concerned Project Engineer of Noida and not the vice versa. Moreover, even if we consider the issue in the context of the Limitation Act 1963, the Limitation for obtaining possession of immovable property is 12 years, and the limitation for the Government is 30 years by virtue of Article 112 of the Limitation Act, 1963. Hence, in our considered view, the Noida Authority is still eligible to take over the possession of the plot in question that was cancelled by them on 13.08.2015.

24. Further, the RP has relied upon the judgment of Hon'ble NCLAT passed in the matter of “Aditi Bezurbha Vs. Mr. Kamalesh Kumar Singhania & Anr.”- CA (AT) (Ins) No. 1468 of 2019 to demonstrate that the lands, that were admittedly in 'possession' of the Corporate Debtor till the time the CIRP IA. No. 1592/ND/2019 in (IB)-470/(ND)/2017 started and moratorium was imposed, will continue to remain in the possession of the CD. It is further contended by the RP that the Applicant/Noida Authority is barred from taking possession of the property by virtue of Section 14(1)(d) of IBC, 2016.

25. In this context, we consider it worthwhile to refer to the Judgment of Hon’ble NCLAT, passed on a later date, in the matter of “Neesa Leisure Limited Vs Rajasthan State Industrial and Investment Corporation”, Company Appeal (AT) (Ins.) No. 510 of 2022, dated 07.12.2022, wherein the Hon’ble NCLAT held the following: “13. In the case of Rajendra K. Bhutta (Supra), the application under Section 7 was admitted on 24.07.2017 and notice of termination was issued on 12.01.2018. The Appellant wherein filed an application before the NCLT to restrain MHADA from taking over possession till completion of the CIRP, on the ground that recovery of possession shall be in derogation of the moratorium imposed under Section 14 of the Code but the said application was dismissed. Further, NCLAT also dismissed the appeal holding that it cannot be treated to be the asset of the Corporate Debtor for the application of provisions of Section 14(1)(d) of the Code. The Hon’ble Supreme Court, however, allowed the appeal.

14. We have carefully gone through the aforesaid decision which is in fact not applicable to the facts of this case because in the reported case constructive possession was taken, the Corporate Debtor was admitted into CIRP and moratorium was imposed on 26.04.2019. It has also been observed by the Tribunal that the Corporate Debtor had lost possessory rights more than three years prior to the initiation of IA. No. 1592/ND/2019 in (IB)-470/(ND)/2017 the CIRP. The property of third party, occupied by the Corporate Debtor had been expressly excluded from the purview of term asset.

15. Thus, in view of the aforesaid facts and circumstances, since the demised premises ceased to be the property of the Corporate Debtor much prior to the initiation of CIRP, therefore, it cannot be covered under Section 14 much less 14(1)(d) of the Code.”

26. We have already noted that in the instant case, the Lease Deed of the Plot No. SC-01/D-1, Sector 79, Noida was cancelled on 13.08.2015 i.e., much before the commencement of the CIRP on 09.03.2018. Thus, the CD lost the possessory rights more than two and half years before the initiation of the CIRP. Therefore, the ratio laid down by the Hon’ble NCLAT in “Neesa Leisure Limited” (Supra) is squarely applicable to the facts of the present case. Accordingly, we hold that the benefit of Section 14(1)(d) cannot be granted to the Respondent/RP herein, for a property/project land, which ceased to be an asset of the Corporate Debtor on 13.08.2015 i.e., more than two and half years before the commencement of the CIRP.

27. The next plea raised by the Respondent/RP is that the project was registered with the UP RERA on 15.08.2017 with Registration Number UPRERAPRJ 10636. The Applicant/Noida in this regard has submitted that - “Registration (was) done by the Promoters without information to the applicant and wrong affidavit was given to U.P. RERA for getting the project registered, which reads as under:

IA. No. 1592/ND/2019 in (IB)-470/(ND)/2017 “I. Kindle Developers Pvt. Ltd. have/has legal title to the land on which the development of the proposed project is to be carried out.'”

Further, the RP has himself mentioned in that the Registration with U.P. RERA was done without the intimation to the applicant i.e., Noida Authority".

Thus, what emerges is that the CD/its promoters got the RERA registration of the project done on 15.08.2017 by falsely claiming the legal title over the land whereas the same was cancelled by Noida as back as on 13.08.2015. Even otherwise, the fact of RERA registration of the project ipso facto does not establish that the lease of Plot No. SC-01/D-1, Sector 79 Noida, which was cancelled by Noida Authority vide letter dated 13.08.2015, was subsisting or stood revived. Hence, this plea made by the Respondent/RP does not hold water, rather it is an attempt by the RP to justify the wrong/fraudulent action of the ex-management of the Corporate Debtor.

28. As regards the submission of RP relating to the subsistence of the lease in terms of Section 116 of the Transfer of Property Act (TOPA) 1882 even after the termination of the lease deed, the Applicant/ Noida Authority submitted that it is a disputed fact, which can only be gone into by the Court of Competent Jurisdiction. Further, the Applicant/Noida Authority argued that the lease deed of the project land was terminated before the initiation of CIRP, and the land got vested with the Noida Authority. Ld. Counsel for the Noida Authority further argued that the cancellation of the lease deed was in no way

IA. No. 1592/ND/2019 in (IB)-470/(ND)/2017 related or connected to the insolvency of the CD. In this context, the applicant relied upon the following judgments:

• Embassy Property Developments (P) Ltd Vs. State of Karnataka & Ors. reported in (2020) 13 SCC 308 [Relevant Para 41] • Gujarat Urja Vikas Nigam Limited Vs. Amit Gupta & Ors. reported in (2021) 7 SCC 209 [Relevant Para 69] • Tata Consultancy Services Limited Vs. SK Wheels Private Limited reported in (2022) 2 SCC 583 [Relevant Para 28].

Per Contra, the RP has relied upon Section 116 of the Transfer of Property Act, 1882 to demonstrate that the Lease was still subsisting. From a perusal of Section 116 of TOPA 1882, it is observed that the same is attracted in the case if rent received from the lessee or under-lessee is accepted by the Lessor or the latter otherwise assents to the lessee’s continuing in possession. There is nothing on record, which could demonstrate that the post-cancellation of the Lease deed of Plot No. No. SC-01/D-1, Sector 79 Noida, the Noida Authority was paid any lease rent or there is any written permission/assent of the Noida Authority for restoration/continuation of the said lease.

Even otherwise, as we have already noted, the Lease Deed of the Plot No. SC- 01/D-1, Sector 79, Noida was cancelled on 13.08.2015 more than two and half years before the initiation of the CIRP. The CD/ Ex Management also applied for restoration of the said plot vide their letter dated 14.06.2016, which too, was much before the commencement of the CIRP. Hence, the question of deemed subsistence of the lease deed of the plot in question has

IA. No. 1592/ND/2019 in (IB)-470/(ND)/2017 not arisen or has no relation with the commencement of CIRP Proceedings of the Corporate Debtor.

Since (a) neither there is any evidence of payment of lease rent by the CD post-cancellation of the Lease deed of Plot No. No. SC-01/D-1, Sector 79 Noida, to the Noida Authority; (b) nor there is any written permission by the Noida Authority for restoration or continuation of the lease deed of the said plot; and (c) nor the issue about the deemed continuation of the Lease deed had arisen out of the Insolvency Proceedings, hence Section 116 of TOPA 1882 does not help the case of the Respondent/RP.

29. In a nutshell, as the Lease deed of the “project land” was cancelled by the Applicant/Noida Authority vide letter dated 13.08.2015 and after the indulgence of this Tribunal, the Representation of the CD dated 14.06.2016 was also considered at the level of CEO Noida and rejected vide their letter dated 10.11.2020, the lease deed of the said plot cannot be deemed to have continued. Moreover, despite ample opportunities in the interest of justice granted by this Adjudicating Authority to the Respondent/RP, CoC (mainly comprising of Home Buyers), and SRA, they failed to arrive at any settlement qua the Noida Authority regarding the restoration of the Lease deed of the said “project land” in the name of the CD. Hence, in compliance with the directions of the Hon’ble NCLAT passed in Company Appeal (AT) (Insolvency) No. 605 of 2020 vide order dated 27.07.2020, we have no other option but to conclude that there is nothing placed or produced on record by the Respondent/RP, COC, SRA, or anyone else, which could depict that the lease of project plot is in existence post-13.08.2015.

IA. No. 1592/ND/2019 in (IB)-470/(ND)/2017

Even otherwise, though the RP is claiming to have possession over the cancelled plot of the project, he has failed to bring any evidence on record in support of payment of any land dues or lease rentals of the Project Plot to the NOIDA Authority. In other words, the lease deed or allotment of the “Project Plot No. GH-SC-01/D-1, Sector 79 Noida” stood cancelled with effect from 13.08.2015. In view of the above, the property situated at Plot No. SC-01/D1, Sector 79, Noida cannot be made part of the Resolution Plan of the Corporate Debtor and accordingly, the Respondent/RP is directed to exclude the same from the Resolution Plan. Ordered accordingly.

30. However, before parting with the order, we observe that this is a classic case where, not only the ex-Directors/promoters, despite being fully aware of the cancellation of the “project land” by the Noida Authority as back as on 13.08.2015 (much before the commencement of the CIRP) due to non-payments of land dues by them, continued to accumulate money thereby duping the homebuyers, who nurtured the hope of getting a roof over their head and invested their hard earned life savings but also the IRP/RP too, (despite being fully conscious of the fact of cancellation of the “project land” as evident from the CIRP order dated 09.03.2018, RP’s own averments in C.A. No. 479 of 2019 filed by him against G.S. Buildwell Pvt. Ltd. & Ors., and also, in IA-3202 of 2020), continued to take all actions including preparation of Information Memorandum (IM), projecting the cancelled “project plot” as the asset of the Corporate Debtor, inviting EOIs and getting approval of a Resolution Plan from the COC as if the said plot existed with the Corporate Debtor. IA. No. 1592/ND/2019 in (IB)-470/(ND)/2017

31. It is, however, again made clear that we have passed the present order pursuant to the directions passed by the Hon’ble NCLAT in Company Appeal (AT) (Insolvency) No. 605 of 2020, and have given finding regarding cancellation/subsistence of lease only. Nevertheless, this order shall not be construed to create any third-party interest in any manner. Since the orders dated 13.08.2015 and 10.11.2020 of Noida Authority are reportedly under challenge, we direct the parties to abide by the order that may be passed in Writ-C No. 26400 of 2023 by the Hon’ble High Court of Allahabad.

32. IA. NO. 1592/(ND)/2019, is allowed accordingly.

Sd/- Sd/- (L. N. GUPTA) (ASHOK KUMAR BHARDWAJ) MEMBER (T) MEMBER (J)

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