Ram Ratan Modi (Rp Of Duncans Industries ... vs Merico Agro Industries Private Limited

[Arising out of Order dated 21.04.2022 passed by the Adjudicating Authority (National Company Law Tribunal), Kolkata Bench in IA No.1111/KB/2021]

In the matter of:

Ram Ratan Modi ....Appellant Resolution Professional of Duncans Industries Ltd. Vs.

Sammelan Tea and Beverages Pvt. Ltd. & Ors. ...Respondents For Appellant: Mr. Gautam Narayan and Mr. Amit Kasera, Advocates.

For Respondents: Mrs. Maninder Acharya and Mr. Amitesh Banerjee, Sr. Advocates with Ms. Madhumita Bhattacharjee, Advocates for State of West Bengal. Ms. Shreya Garg, Advocate. Mr. Amar Dave, Sr. Advocate with Mr. Ashok Kumar Jain, Advocates for UNIGLOBLE/ Applicant. Mr. Jishnu Saha Sr. Advocate with Mr. Usha Nath Banerjee, Mr. Avishek Guha, Mr. Soumya Dutta, Mr. Ishaan Saha and Mr. Siddhant Upmanyu, Advocates for R1. Mr. Ajay Gaggar and Mr. Shreedhar Gaggar, Advocates for SBI.

Company Appeal (AT) (Insolvency) No. 628 of 2022

[Arising out of Order dated 09.05.2022 passed by the Adjudicating Authority (National Company Law Tribunal), Kolkata Bench in IA No.415/KB/2021]

In the matter of:

Ram Ratan Modi ....Appellant Resolution Professional of Duncans Industries Ltd. Vs.

Merico Agro Industries Pvt. Ltd. & Ors. ...Respondents 2

For Appellant: Mr. Gautam Narayan and Mr. Amit Kasera, Advocates.

For Respondents: Mrs. Maninder Acharya and Mr. Amitesh Banerjee, Sr. Advocates with Ms. Madhumita Bhattacharjee, Advocates for State of West Bengal. Ms. Shreya Garg, Advocate. Mr. Amar Dave, Sr. Advocate with Mr. Ashok Kumar Jain, Advocates for UNIGLOBLE/ Applicant. Mr. Jishnu Saha Sr. Advocate with Mr. Usha Nath Banerjee, Mr. Avishek Guha, Mr. Soumya Dutta, Mr. Ishaan Saha and Mr. Siddhant Upmanyu, Advocates for R1.

Company Appeal (AT) (Insolvency) No. 754 of 2022

[Arising out of Order dated 09.05.2022 passed by the Adjudicating Authority (National Company Law Tribunal), Kolkata Bench in IA No.665/KB/2021]

In the matter of:

Ram Ratan Modi ....Appellant Resolution Professional of Duncans Industries Ltd. Vs.

Sammelan Tea and Beverages Pvt. Ltd. & Ors. ...Respondents For Appellant: Mr. Gautam Narayan and Mr. Amit Kasera, Advocates.

For Respondents: Mrs. Maninder Acharya and Mr. Amitesh Banerjee, Sr. Advocates with Ms. Madhumita Bhattacharjee, Advocates for State of West Bengal. Ms. Shreya Garg, Advocate. Mr. Amar Dave, Sr. Advocate with Mr. Ashok Kumar Jain, Advocates for UNIGLOBLE/ Applicant. Mr. Jishnu Saha Sr. Advocate with Mr. Usha Nath Banerjee, Mr. Avishek Guha, Mr. Soumya Dutta, Mr. Ishaan Saha and Mr. Siddhant Upmanyu, Advocates for R1.

Company Appeal (AT) (Insolvency) No. 672 of 2021

[Arising out of Order dated 28.05.2021 passed by the Adjudicating Authority (National Company Law Tribunal), Kolkata Bench in IA No.1256/KB/2020] 3

In the matter of:

Ram Ratan Modi Resolution Professional of Duncans ....Appellant Industries Ltd. Vs.

Merico Agro Industries Pvt. Ltd. ...Respondent For Appellant: Mr. Gautam Narayan and Mr. Amit Kasera, Advocates.

For Respondent: Mrs. Maninder Acharya and Mr. Amitesh Banerjee, Sr. Advocates with Ms. Madhumita Bhattacharjee, Advocates for State of West Bengal. Ms. Shreya Garg, Advocate. Mr. Amar Dave, Sr. Advocate with Mr. Ashok Kumar Jain, Advocates for UNIGLOBLE/ Applicant. Mr. Jishnu Saha Sr. Advocate with Mr. Usha Nath Banerjee, Mr. Avishek Guha, Mr. Soumya Dutta, Mr. Ishaan Saha and Mr. Siddhant Upmanyu, Advocates for R1.

Company Appeal (AT) (Insolvency) No. 907 of 2022

[Arising out of Order dated 18.07.2022 passed by the Adjudicating Authority (National Company Law Tribunal), Kolkata Bench in IA No.109/KB/2022]

In the matter of:

Ram Ratan Modi ....Appellant Resolution Professional of Duncans Industries Ltd. Vs.

Merico Agro Industries Pvt. Ltd. & Ors. ...Respondents For Appellant: Mr. Gautam Narayan and Mr. Amit Kasera, Advocates.

For Respondents: Mrs. Maninder Acharya and Mr. Amitesh Banerjee, Sr. Advocates with Ms. Madhumita Bhattacharjee, Advocates for State of West Bengal. Ms. Shreya Garg, Advocate. Mr. Amar Dave, Sr. Advocate with Mr. Ashok Kumar Jain, Advocates for UNIGLOBLE/ Applicant. Mr. Jishnu Saha Sr. Advocate with Mr. Usha Nath Banerjee, Mr. Avishek Guha, Mr. Soumya Dutta, Mr. Ishaan Saha and Mr. Siddhant Upmanyu, Advocates for R1. 4

JUDGMENT

(2nd August, 2024)

Ashok Bhushan, J.

These Appeals have been filed by Ram Ratan Modi, Resolution

Professional of Duncans Industries Ltd.- (Corporate Debtor) challenging

various orders passed by the Adjudicating Authority (National Company Law

Tribunal), Kolkata Bench in different IAs filed by the Resolution Professional

in CP (IB) No.184/KB/2018. By the different IAs filed, the Resolution

Professional has sought possession of various Tea Gardens claiming to be

assets of the Corporate Debtor which applications by different orders passed

by the Adjudicating Authority have been rejected. Aggrieved by those orders,

these Appeals have been filed.

2. Company Appeal (AT) (Insolvency) No.672 of 2021 has been filed by the

Resolution Professional challenging the order dated 28.05.2021 passed by the

Adjudicating Authority in IA No.1256/KB/2020 by which application the

Resolution Professional prayed for direction to take possession of Hantapara,

Garganda, Tulsipara and Dumchipara Tea Estates which application came to

be rejected by the impugned order dated 28.05.2021.

3. Company Appeal (AT) (Insolvency) No.593 of 2022 has been filed by the

Resolution Professional challenging the order dated 21.04.2022 passed by the

Adjudicating Authority in IA No.1111/KB/2021. The Resolution Professional

by the said IA No.1111/KB/2021 prayed for various directions including the 5

direction to evict the Respondent No.1 from Nagaisuree and Kilcott Tea

Gardens (two Tea Estates) and to handover the possession of the above two

tea estates. The Adjudicating Authority by the impugned order dated

21.04.2022 rejected the application.

4. Company Appeal (AT) (Insolvency) No.628 of 2022 has been filed by the

Resolution Professional challenging the order dated 09.05.2022 passed by the

Adjudicating Authority by which order IA No.415/KB/2021 filed by the

Resolution Professional seeking a direction to handover the possession,

operation and management of the Birpara Tea Garden has been rejected.

5. Company Appeal (AT) (Insolvency) No.754 of 2022 has been filed by the

Resolution Professional challenging the order dated 09.05.2022 passed by the

Adjudicating Authority by which order IA No.665/KB/2021 filed by the

Resolution Professional for handing over the possession of the Bagracote Tea

Estate has been rejected.

6. Company Appeal (AT) (Insolvency) No.907 of 2022 has been filed by the

Resolution Professional challenging the order dated 18.07.2022 passed by the

Adjudicating Authority by which order IA No.109/KB/2022 filed by the

Resolution Professional for taking possession of Rungli Rungliot Tea Garden

has been rejected.

7. All the orders which are impugned in these Appeals arises out of the

same CIRP initiated against the Corporate Debtor in CP (IB)

No.184/KB/2018, hence Appeals have been heard together. 6

8. Before we notice respective submissions of the Counsel for the parties,

we need to notice the background facts and sequence of the events which are

relevant for consideration of the issues which have arisen in these Appeals.

9. The West Bengal Estates Acquisition Act, 1953 provided for the State

acquisition of estates, of rights of intermediaries therein and of certain Rights

of raiyats and under raiyats [and of the rights of certain persons in lands

comprised in estates.]. The estates acquired under the Act also included the

land comprised in a Tea Garden, by virtue of Section 6(3) in the case of land

comprised in a tea-garden, the lessee shall be entitled to retain only so much

of such land as, in the opinion of the State Government, is required for the

tea-garden, as the case may be. The State Government provided lease hold

rights under the West Bengal Estates Acquisition Rules, 1954 as amended

from time to time. In the present Appeals, Nine Tea Gardens which includes

Bagracote in IV Division are under consideration. The State executed leases

in favour of several entities for 30 years. Name of Tea Estates with name of

lessee, date of execution of lease deed and date of expiry are extracted in

following table:-

Name of Tea Name of Date of Effective Date of Estates Lessee Execution From Expiry Garganda Lankapara 19.07.1974 20.09.1965 19.09.1995 Tea Co. Ltd. Dhumchipara Birpara Tea 06.12.1975 13.09.1974 12.09.2004 Co Ltd. Huntapara Duncan Agro 25.11.1980 03.12.1974 02.12.2004 Industries Ltd. Tulsipara Lankapara 26.02.1980 18.04.1974 17.04.2004 Tea Co. Ltd. & Duncan Agro Industries Ltd. 7

Birpara Birpara Tea 25.11.1980 27.06.1978 26.06.2008 Co. Ltd. Bagracote I Bagracote Tea 19.02.1973 22.05.1968 22.05.1998 Co Ltd. Bagracote II Bagracote Tea 11.10.1974 04.08.1970 04.08.2000 Co Ltd. Bagracote III Duncan Agro 27.02.1980 24.02.1976 24.02.2006 & IV Industries Ltd. Runglee- Birpara Tea 24.08.1973 09.02.1970 08.02.2000 Rungliot Co. Ltd. Kilcott Birpara Tea 22.08.1065 24.08.1965 21.08.1995 Co. Ltd. Nagaisuree Birpara Tea 30.01.1975 31.10.1972 30.10.2002 Co. Ltd.

10. With regard to three Tea Estates namely Garganda, Kilcott and

Bagracote I, there has been a renewal of lease with which renewal the State

has certain objections. The entities in whose favour different leases were

granted by the Government of West Bengal, as noted above, merged into the

Corporate Debtor- Duncans Industries Ltd. from time to time. All the above

Tea Gardens were under the management of Duncans Industries Ltd., the

Corporate Debtor. Ministry of Commerce and Industry received various

representations regarding the Tea Gardens of West Bengal, in particular the

Tea Gardens managed by the Corporate Debtor. Tea Board submitted a report

to the Central Government. Ministry of Commerce and Industry issued a

Notification dated 28.01.2016 in exercise of powers conferred under Section

16E of the Tea Act, 1953 authorising the Tea Board to take over the

management and control of the Seven Tea Estates as noted in the Notification.

Notification dated 28.01.2016 is as follows:-

8

"MINISTRY OF COMMERCE AND INDUSTRY (Department of Commerce)

NOTIFICATION

New Delhi, the 28th January, 2016

S.O. 260(E)-Whereas attention of the Central Government has been drawn through various representations to the deteriorating condition of the tea gardens of West Bengal, in particular the tea gardens * and managed by M/s Duncan Industries Ltd.

And whereas, the Tea Board under direction of the Central Government caused inspection of all the seven gardens owned by M/s Duncan Industries Ltd. and submitted a report;

And whereas, a report on the status of stressed tea gardens in West Bengal was also received from the Stare Government of West Bengal;

And whereas, the situation of the said ten gardens has been assessed by the Central Government on basis of the report of the Tea Board and the State Government of West Bengal and consultations with the stakeholders of tea sector.

And whereas, the Central Government is of the considered opinion that the tea gardens as listed below are being managed in a manner highly detrimental to the tea Industry and to public interest:

(i) Birpara Tea Estate (ii) Garganda Tea Estate (iii) Lankapara Tea Estate (iv) Tulsipara Tea Estate (v) Huntapara Tea Estate (vi) Dhumchipara Tea Estate (vii) Demdima Tea Estate

Now, therefore, in exercise of powers conferred by sub-section (1) of section 16B of the Tea Act, 1953 (29 of 1953), the Central Government hereby authorises the Tea Board to take immediate steps to take over the management and the control of the above seven tea estates as per the provisions of Chapter IIIA of the Tea Act, 1953.

[F. No. T-22015/1/2016-Plant(A)] 9

RAJANI RANJAN RASHMI, Addl. Secy."

11. The Corporate Debtor challenged the Notification dated 28.01.2016

before the High Court of Calcutta by means of Writ Petition No 1897 (W) of

2016 which writ petition came to be dismissed by Learned Single Judge of the

Calcutta High Court on 15.03.2016 upholding the Notification. The Corporate

Debtor filed an Appeal in the High Court being M.A.T No. 562 of 2016

challenging the order of the Learned Single Judge. Division Bench noted the

submissions of the parties and directed for interim management under which

the Writ Petitioners were to run the gardens in a prudent businessman like

manner after keeping the Tea Board informed. After the interim order of the

Division Bench of the Calcutta High Court dated 20.09.2016, the Corporate

Debtor entered into an agreement with 'Merico Agro Industries Pvt. Ltd.'

permitting the 'Merico Agro Industries Pvt. Ltd.' to operate Hantapara,

Garganda and Tulsipara Tea Gardens for five years. By another agreement

entered on 19.08.2019, Corporate Debtor permitted 'Merico Agro Industries

Pvt. Ltd.' to operate Dumchipara Tea Garden for 10 years. The Corporate

Debtor had obtained various financial facilities from the Financial Creditors

including the State Bank of India and has executed various documents in

favour of Financial Creditors including mortgage dated 09.10.2013. There

being default committed by the Corporate Debtor in repayment of the financial

facilities, Financial Creditors jointly filed an application being CP (IB)

No.184/KB/2018- "Sangita Fiscal Services Pvt. Ltd. & Ors. vs. Duncans

Industries Ltd." under Section 7 which application was admitted by the

Adjudicating Authority vide order dated 05.03.2020. The IRP made a public 10

announcement. IRP was appointed as Resolution Professional by CoC.

Resolution Professional filed application under Section 19(2) with regard to

Tea Gardens to take control of the records of the gardens. Workers working

in different Tea Gardens filed complaint to the officials of Labour Department

of State of West Bengal that the Corporate Debtor had abandoned the tea

estates and they are not being paid their wages. There were more than 20,000

plantation workers and labourers in 9 Tea Estate. Leases of most of the Tea

Gardens have come to an end. Lease of Tea Garden Kilcott was renewed for

30 years on 15.11.1995. The collector of Jalpaiguri noticing that Salami which

were required to be paid for Kilcott Tea Garden has not been paid. A notice

dated 04.08.2016 was issued to Manager Kilcott Tea Garden by the Collector,

Jalpaiguri asking the management to pay Salami amounting to

Rs.57,25,711/-. Similar demand notice was issued on 10.08.2017 by the

Collector Jalpaiguri to the Corporate Debtor with regard to Bagracote Tea

Garden Division-I which was claim to be renewed on 19.06.1998 for 30 years.

By the notice dated 10.08.2017, Salami of Rs.25,67,000/- was demanded by

the Collector.

12. Due to agitation of plantation workers and labourers meeting was

convened by the Department of Labour in which Labour Commissioner,

Registered Union, workmen and officers of the Tea Board participated and

decision was taken to handover the management of few Tea Gardens to

'Merico Agro Industries Pvt. Ltd.' and Sammelan Tea and Beverages Pvt. Ltd. 11

13. An application was filed by the Resolution Professional being IA

No.1256/KB/2020 where along with other prayers in prayer (a), following was

prayed by the Resolution Professional:-

"a) To Pass an order under Section 19(3) read

with Section 25(2) of the Insolvency and Bankruptcy

Code, 2016 directing the Respondent to comply with

the directions of the Applicant and to extend all

assistance and co-operation to the Applicant as

required by him for taking over possession of the

Hantapara, Garganda, Tulsipara and Dumchipara

tea estates and for carrying out the valuation of the

said tea estates."

14. The application filed by the Resolution Professional was opposed by

'Merico Agro Industries Pvt. Ltd.' which was managing the operation of Tea

Estates Huntapara, Garganda, Tulsipara and Dumchipara. It was pleaded by

the Respondent No.1 that the leases of the aforesaid four estates had long

expired and there is no leasehold rights with the Corporate Debtor, hence,

prayers as made by the Resolution Professional cannot be granted.

Adjudicating Authority after hearing the parties by impugned order dated

28.05.2021 rejected the application.

15. The Resolution Professional filed IA No.1111/KB/2021 for restoration

of the possession of Two Tea Estates namely-- Nagaisuree and Kilcott. The

Resolution Professional pleaded in the application that the possession of 12

Nagaisuree and Kilcott was resumed by Respondent No.1 from 03.11.2021

under certain decision taken by the Labour Department along with the

Registered Union of workers and the District Magistrate. In IA

No.1111/KB/2021, it was pleaded by the Resolution Professional that Kilcott

Tea Estate was leased in favour of the corporate debtor which lease after

expiry of period of 30 years have been renewed by lease deed dated

15.11.1995 and is valid till 23.08.2025. With regard to Nagaisuree Tea estate,

it was pleaded that the lease was granted for 30 years from 30.10.1972 which

was valid till 30.10.2002 and renewal of the lease of Nagaisuree has been

applied on which no decision has yet been taken. It was pleaded that the State

has not rejected the renewal application. Corporate Debtor shall continue to

have lease hold rights. It was further pleaded that the Resolution Professional

has written to all concerned including the workers and management of the

Tea Gardens to extend co-operation. Resolution Professional has also written

to the Addl. Labour Commissioner and the District Magistrate restraining any

party from operating Nagaisuree and Kilcott Tea Gardens. It was pleaded that

the Respondent No.1 with the help of Respondent Nos.2 and 3 i.e. Registered

Union and Management of Tea Gardens is operating the Tea Gardens. In IA

No.1111/KB/2021, following prayers were made by the Resolution

Professional:-

"a) To Pass an order directing the eviction of the Respondent No.1 from the Nagaisuree and Kilcott Tea Estates and to handover the possession, operation and management of the Nagaisuree and Kilcott Tea Estates to the Applicant herein;

13 b) To Pass an order directing the Respondent No.4 to extend all assistance and co-operation to restore the possession, operation and management of the Nagaisuree and Kilcott Tea Estates in favour of the Applicant herein;

c) The Respondent No. 6 of the concerned district be directed to provide necessary help and assistance to the applicant and or to his men servants and agents to forthwith take over position of the said Nagaisuree and Kilcott Tea gardens;

d) The police officers and Respondent No. 6 of the concerned district and the local police station be directed to ensure that the respondent No. 1 and/orit's menservants and agents and/or any third party does not have any access to the said Nagaisuree and Kilcott Tea gardens and is not able to enter or possess or seize the assets thereof or to carry on business with the assets and properties of the said tea gardens being Nagaisuree and Kilcott Tea gardens;

e) The respondent No.4 and 6 and the police authorities of the concerned district / police station be directed to evict the respondent No.1 and/or it's men, servants and agents from the said tea gardens being Nagaisuree and Kilcott Tea gardens;

f) Permanent injunction restraining all statutory authorities concerned not to grant any permission or provide any lease or license or any other manner of authority to the respondent No. 1 and/or to its men servants and agents and or associates and/or sister concerns to assert any possession or right to carry on 14

business over and in respect of the said tea gardens being Nagaisuree and Kilcott Tea gardens;

g) Pass such other/further orders and other reliefs as this Hon'ble Court may deem fit and proper in the facts and circumstances of the present case;"

16. The Adjudicating Authority in IA No.1111/KB/2021 has issued

direction on 03.03.2022 directing the Respondent No.1- 'Sammelan Tea &

Beverages Pvt. Ltd.' to produce the relevant documents entitling them to

occupy the property, like, sale deed, rent deed or any lease deed or any other

documents, if they have in their favour, by way of an affidavit within two

weeks. On 08.03.2022, letter was issued by Principal Secretary, Labour

Department stating that Sammelan Tea & Beverages Pvt. Ltd. had entrusted

to run the two Tea Gardens Killcott and Nagaisuree to mitigate the untold

sufferings of thousands of workers engaged therein and in the best interest of

the tea gardens. Sammelan Tea & Beverages Pvt. Ltd. also filed their Affidavit

before the Adjudicating Authority. Adjudicating Authority after hearing the

parties passed an order on 21.04.2022 rejecting the application. Adjudicating

Authority while rejecting the application held that the lease granted in favour

of the corporate debtor has not been renewed and the Resolution Professional

cannot take possession of the Tea Gardens to which the corporate debtor has

no right. It was held that it was on account of tripartite review meeting held

on 20.12.2021 in respect of Killcott and Nagaisuree in the presence of the

Trade Unions, Additional Labour Commissioner, Deputy Labour

Commissioner, Assistant Labour Commissioner, Malbazaar, and the

Managers of the respective Tea Garden, wherein it is stated that based on a 15

bipartite agreement signed between Sammelan Tea and Beverages Pvt. Ltd.

and the Trade Union of the two Tea Gardens, Sammelan Tea and Beverages

Pvt. Ltd. is in possession of the two Tea Gardens and that the Tea Gardens

started functioning from 03.11.2021 and has been in operation. In

paragraphs 48 to 51 of the judgment following have been observed:-

"48. It is an admitted fact that a similar application had been filed for possession of four tea gardens. The Corporate Debtor is in financial stress and it is of concern whether the Resolution Professional would be able to run these two Tea Estates.

49. The lease given to the Corporate Debtor has not been renewed in favour of the Corporate Debtor hence, it is out of question that the Resolution Professional can take possession of the Tea Gardens to which the Corporate Debtor has no ownership.

50. On perusal of the records it is apparent from the proceedings of the tripartite review meeting held on 20.12.2021 in respect of Killcott Tea Garden and Nagaisuree Tea Garden, in the presence of the Trade Unions, Additional Labour Commissioner, North Benchal Zone Government of West Bengal, Deputy Labour Commissioner, Assistant Labour Commissioner, Malbazaar, and the Managers of the respective Tea Garden, wherein it is stated that based on a bipartite agreement signed between Sammelan Tea and Beverages Pvt. Ltd. and the Trade Union of the two Tea Gardens, Sammelan Tea and Beverages Pvt. Ltd. is in possession of the two Tea Gardens and that 16

the Tea Gardens started functioning from 03 November 2021 and has been in operation.

51. In a letter dated 08 March 2022, the Principal Secretary, Labour Department, Government of West Bengal that Sammelan Tea and Beverages Pvt. Ltd has been entrusted to run the two Tea Gardens under the supervision and guidance of the Labour Department, Government of West Bengal. The letter has been given hereunder for easy reference."

17. In IA No.415/KB/2021 filed by the Resolution Professional, Resolution

Professional has prayed for direction to handover the possession of the

Birpara Tea Estate. Applicant- Resolution Professional has referred to the

Notification dated 28.01.2016 issued by the Ministry of Commerce and

Industry, Government of India and the interim order passed by the Division

Bench of the Calcutta High Court dated 20.09.2016. In IA No. 415/KB/2021

following prayers have been made:-

"a) To Pass an order directing the Respondents to comply with the directions of the Applicant and to extend all assistance and co-operation to the Applicant as required by him for taking over possession of the Birpara Tea estate;

b) To Pass an order directing the Respondents to comply with the directions of the Applicant in collection of information and managing the affairs of the Corporate Debtor and also to deliver all records/statutory records/registers/financial records etc. with respect to the Birpara tea garden to the 17

Applicant regarding facilitation of the Corporate Insolvency Resolution Process within a stipulated time period;

c) Pass such other/further orders and other reliefs as this Hon'ble Court may deem fit and proper in the facts and circumstances of the present case;"

18. It was pleaded by the Resolution Professional in the application that it

came to know that Birpara Tea Estate was setup to start operations under the

new management of M/s. Merico Agro Industries Pvt. Ltd. w.e.f. 16.02.2021.

The Application was opposed by the Respondent No.1. It was pleaded that

Birpara Tea Estate was abandoned by the Corporate Debtor. It was pleaded

that although after the order of the Division Bench of the Calcutta High Court

the management was entrusted to M/s. Merico Agro Industries Pvt. Ltd. with

regard to four Tea Estates i.e. Hantapara, Garganda, Tulsipara and

Dumchipara with the knowledge and concurrence of the State of West Bengal

and the Tea Board, the management of remaining three Tea Estates including

Birpara Tea Estate were not entrusted to any one by the corporate debtor and

the said three Tea Estates for all practical purposes were kept closed. It was

due to the Corporate Debtor not depositing the statutory Provident Fund,

Birpara Tea Estate was abandoned since 06.10.2019 and it was due to the

above reason, a meeting held on 12.02.2021 in the presence of Industry

Department and the Labour Union, at the instance of District Magistrate, it

was decided to entrust the management to M/s. Merico Agro Industries Pvt.

Ltd. who was successfully running other four Tea Gardens. The Adjudicating

Authority after hearing the parties by the impugned order has rejected the IA 18

No.415/KB/2021. Adjudicating Authority held that the applications raising

similar question in IA No.1256/KB/2020 and IA No.1111/KB/2021 has

already been decided. The lease granted in favour of the corporate debtor in

Birpara Tea Estate has not been renewed. Resolution Professional cannot be

directed to give possession of the gardens. With the said observation, the

application was rejected.

19. IA No.665/KB/2021 was filed by the Resolution Professional for

direction to Respondent No.1- 'Sammelan Tea and Beverages Pvt. Ltd.' and

Respondent No.2 to handover the possession, operation and management of

the Bagracote Tea Estate to the Resolution Professional. The lease for

Bagracote Tea Estate was granted by the Bagracote Division-I on 19.02.1973

which came to an end on 22.02.1998. It was pleaded that the lease of

Bagracote Division-I had been renewed on 19.06.1998 w.e.f 20.05.1998. The

lease of Bagracote Divisions- II, III & IV came to end on 04.08.2002 &

24.02.2006. Resolution Professional's case in the application was that after

commencement of the CIRP, Resolution Professional wrote to the manager of

the Bagracote Tea Garden. Resolution Professional further pleaded that when

he visited the Tea Garden on 11.10.2020, it was learnt that erstwhile manager

had abandoned the Tea Gardens and workers of the Tea Estates along with

Registered Union are managing the affairs of the Tea Estates. Resolution

Professional further came to know that the Bagracote Tea Estate is set to start

operation under the new management of 'Sammelan Tea and Beverages Pvt.

Ltd.' w.e.f. 01.07.2021. The Resolution Professional has prayed for direction

to 'Sammelan Tea and Beverages Pvt. Ltd.' to handover the possession, 19

operation and management of the Bagracote Tea Estate to the Resolution

Professional. The application was opposed by the Respondent No.1-

'Sammelan Tea and Beverages Pvt. Ltd.' where it was pleaded that Bagracote

Tea Estate consists of four Divisions i.e. I, II, III & IV and leases of Bagracote

Divisions- I, II, III & IV have already been expired. It is pleaded that with

regard to Bagracote-I, Corporate Debtor is illegally claiming renewal of the

lease from 22.05.1998 without mandated statutory payment of Salami. The

renewal of lease was also not vetted by the Land and Land Reforms

Department as per the Govt. Rules and Procedures. Corporate Debtor was

provided opportunity to pay Salami of Rs.11,23,573/- and penalty of

Rs.25,67,000/- which was not paid by the corporate debtor and the renewal

of lease was treated to be illegal. It was further pleaded that since 2015, the

corporate debtor had abandoned the Bagracote Tea Estate and due to unrest

of the workmen, high-powered meeting was convened on 27.06.2021

consisting of officials of Labour Department, workers, registered union in

which decision was taken to run and manage Bagracote Tea Estate and to

resume operation through Respondent No.1 who resumed the operation from

01.07.2021. Adjudicating Authority heard the application and by order

impugned has rejected the application. In paragraphs 20 to 24 of the

impugned order, following has been observed:-

"20. During the course of hearing it was noticed that, in this application also, the question of law is similar to the one in I.A.(IB) No. 1256/KB/2020 and I.A. (IB) No. 1111/KB/2021. These two applications have already been decided after hearing exhaustive 20

arguments of the learned Senior Counsel. Since the arguments are common and issue involved is conclusively covered by the order passed by this Bench earlier, there is no need to once again give more and more time for hearing the same arguments on behalf of the Resolution Professional and the Respondent No. 1.

21. We have thus briefly heard the learned Senior Counsel for the Applicant and the learned Senior Counsel for Respondent No. 1 and perused the record.

22. Similar applications have been filed by the Resolution Professional for possession of Tea Estates. The only concern is that the Corporate Debtor is in financial stress and whether the Resolution Professional would be able to run these Tea Estates.

23. The lease given to the Corporate Debtor has not been renewed in favour of the Corporate Debtor hence, it is out of question that the Resolution Professional can take possession of the Tea Gardens to which the Corporate Debtor has no ownership.

24. In this view of the matter, the prayers asked for in the present IA cannot be granted. I.A. (IB) No. 665/KB/2021 is, therefore, dismissed, but in the facts of the case, without costs. Liberty to apply is granted if and when the Government of West Bengal takes a decision on the renewal of the lease."

20. IA No.109/KB/2022 was filed by the Resolution Professional seeking a

direction to evict M/s. Merico Agro Industries Pvt. Ltd. from the Rungli

Rungliot Tea Estate and to handover the possession, operation and 21

management of the Rungli Rungliot Tea Estate to the Resolution Professional.

Direction was also sought against Additional Labour Commissioner to extend

all assistance and co-operation to restore the possession, operation and

management of the Rungli Rungliot Tea Estate. The application was opposed

by M/s. Merico Agro Industries Pvt. Ltd. It was pleaded that the lease of 30

years in respect of Rungli Rungliot Tea Estate came to end on 08.02.2000. No

steps were taken to renew the Lease Deed. The Tea Estate is not owned by the

Corporate Debtor nor any right of the corporate debtor exist in the Tea Estate.

Since 2014, the Corporate Debtor had mismanaged the Tea Estate and

virtually abandoned. Workers claim towards their wages, bonus, provident

fund, gratuity were due. Till March, 2021, provident fund dues were more

than Rs.78,00,000/- on account of workers' unrest, authorities convened

meeting in the office of Commissioner and after the high-powered meeting, a

decision was taken to give the operation of Tea Estate to Respondent No.1

who started functioning. The Resolution Professional has no right. The

Adjudicating Authority rejected the application holding that the lease given to

the corporate debtor has not been renewed which has come to an end. The

Corporate Debtor or the Resolution Professional has no legal right over the

Tea Gardens on which lease has not been renewed. Resolution Professional

cannot take possession of Tea Garden and Application was rejected.

21. Challenging the orders passed by the Adjudicating Authority aforesaid

appeals have been filed by the Resolution Professional. 22

22. We have heard Shri Ramji Srinivasan, Learned Senior Advocate with

Shri Gautam Narayan and Shri Amit Kasera, Advocates for the Appellant.

Mrs. Maninder Acharya, Learned Senior Advocate with Ms. Madhumita

Bhattacharjee have appeared for State of West Bengal. Shri Jishnu Saha,

Learned Senior Advocate has appeared for Sammelan Tea and Beverages Pvt.

Ltd. and Merico Agro Industries Pvt. Ltd. Shri Ajay Gaggar and Shri

Shreedhar Gaggar, Learned Advocates have appeared for State Bank of India,

Intervenor. Shri Amar Dave, Learned Senior Advocate with Shri Ashok Kumar

Jain, Advocate has appeared for Uniglobal Papers Private Limited, Intervenor.

23. Learned counsel for the Appellant's submissions are common to all the

appeals except some additional submissions advanced in Company Appeal

(AT) (Ins.) No. 672 of 2022, which we shall additionally notice. Learned

counsel for the Appellant submits that the Adjudicating Authority committed

error in rejecting the application filed by the Resolution Professional for taking

possession of the tea gardens which were leased to the Corporate Debtor. It

is submitted that with regard to all tea gardens whose lease has expired

application for renewal was filed by the Corporate Debtor which never came

to be decided i.e. either rejected or allowed. It is submitted that with regard

to Kilcott Tea Estate the lease deed stands renewed by lease deed dated

15.11.1995, which is valid till 23.08.2025. In respect to Bagrakote Tea

Division-I renewal has been granted which is operative till 21.05.2028. When

renewal has already been applied, the Corporate Debtor was entitled to

continue in possession of the tea gardens and the possession of the Corporate

Debtor cannot be said to be possession of trespasser or unauthorized person. 23

The Adjudicating Authority did not notice the renewal of the lease of Kilcott

and Bagrakote Tea Division-I. The contention of the State of West Bengal that

renewal is not in accordance with law and it is improper renewal has to be

rejected since at no stage the State of West Bengal has taken any step to

cancel the renewal of lease. The lease deed of renewal having been executed,

the State of West Bengal cannot be heard in saying that the renewal is not

proper since the Corporate Debtor has not paid salami. The Adjudicating

Authority has overlooked the undisputed position that the possession,

management and control of the tea estates continued to vest with the

Corporate Debtor and after commencement of the moratorium under Section

14 of the I&B Code on 05.03.2020, the possession of tea gardens cannot be

taken by Sammelan and Merico (Respondent No.1 herein). Manager

appointed by the Corporate Debtor functioned in tea gardens and the

management was entrusted by the Labour Department of the State of West

Bengal to the Sammelan and Merico subsequent to the commencement of

CIRP. The Corporate Debtor had invested huge amounts on the tea estates

over decades such as residential and office buildings, equipment, plant and

machinery which cannot be illegally usurped by the Respondent No.1. The

leasehold right is an intangible asset of the Corporate Debtor and Resolution

Professional is empowered under Section 18(f) of the Code to take control and

custody of any asset over which the Corporate Debtor has the right. The

possession of tea gardens was taken in violation of Section 14 of the I&B Code,

which required to be reversed. The Adjudicating Authority has relied on order

dated 28.05.2021 passed in IA No.1256 of 2020 while rejecting subsequent

application filed by the Resolution Professional whereas IA No.1256 of 2020 24

pertain to possession of four tea gardens, possession of which were handed

over to the Merico prior to initiation of CIRP and the order dated 28.05.2021

passed by the Adjudicating Authority in IA No.1256 of 2020 was clearly

distinguishable. The leases which were granted to the Corporate Debtor were

heritable, transferable and provided for a deemed and automatic renewal for

a further period of 30 years. Renewal applications were made prior to expiry

of the lease period. The submissions of the State of West Bengal that

nonpayment of salami invalidates the valid and continuing renewal of the

lease deeds granted in favor of the Corporate Debtor are entirely devoid of

merit. There is no legal basis to the claim of Sammelan and Merico to the tea

gardens. The Adjudicating Authority on 03.03.2022 had directed the

Respondent No. 1 to submit documents in regard to its right to tea gardens.

No documents could be produced by Respondent No.1 which can entitle it to

take over two tea estates during the period of moratorium. The Adjudicating

Authority wrongly relied on letter dated 08.03.2022 issued by Principal

Secretary, Labour Department. When the tea gardens were in possession and

control of the Corporate Debtor/Resolution Professional, no authority vested

in Principal Secretary, Labour Department to handover the possession of the

tea gardens to Respondent No. 1. Tea gardens have been given on lease by

the Lessor i.e. Land & Land Reforms Department of Government of West

Bengal and authority, if any, for handing over is vested in Land & Land

Reforms Department. No proceedings were initiated by Land & Land Reforms

Department to enter into possession of the tea gardens. It is submitted that

in the CIRP of the Corporate Debtor, the Successful Resolution Applicant i.e.

Uniglobal Papers Private Limited has submitted resolution plan which has 25

been approved by the Committee of Creditors on 24.02.2022 and the

application filed by the Resolution Professional for approval of Resolution Plan

is pending consideration before the Adjudicating Authority. It is further

submitted that the assets are mortgaged with the State Bank of India and

other Financial Creditors. In support of Company Appeal (AT) (Ins.) No.672

of 2021, learned counsel for the Appellant submits that possession of four tea

gardens namely Hantapara, Garganda, Tulsipara and Dumchipara were given

to Merico by the Corporate Debtor after the interim order of the Calcutta High

Court dated 20.09.2016 as an interim arrangement which possession were

handed over in the year 2018 and 2019 and in pursuance of the agreement

given by the Corporate Debtor, the Merico was in the management and

possession of four tea gardens. The Respondent No.1 when refused to extend

cooperation to the Appellant to handover the possession of tea gardens, the

Appellant filed IA No.1256 of 2020 seeking direction to handover the

possession of the four tea gardens. It is submitted that the Adjudicating

Authority has committed error in rejecting the application observing that the

tea gardens did not belong to the Corporate Debtor and lease in favour of the

Corporate debtor has not been renewed. It is submitted that the Merico being

agent of the Corporate Debtor was entrusted management by the Corporate

Debtor itself under the agreement, The Resolution Professional was entitled

to take possession of four tea gardens. Without possession of tea gardens by

the Resolution Professional, CIRP process cannot proceed and culminate in

to resolution. Lease in respect to Garganda tea estate was renewed on

08.11.1996 which is valid till 18.09.2026. The Adjudicating Authority failed

to appreciate the clear import of the submissions made by the Appellant 26

regarding the agreement entered into between the Corporate Debtor and the

Respondent. Learned counsel for the Appellant submits that the Appellant in

the Information Memorandum has already given the details of leases

regarding different tea gardens and the Information Memorandum also

noticed that the State of West Bengal is claiming that renewal of lease with

regard to two tea gardens is not in accordance with law. Learned counsel for

the Appellant in support of his submissions has relied on judgments of this

Tribunal and Hon'ble Supreme Court which we shall notice while considering

submissions in detail.

24. Mrs. Maninder Acharya, learned senior counsel appearing for State of

West Bengal refuting the submissions of learned counsel for the Appellant

contends that the Corporate Debtor had no right to any of the tea gardens

after expiry of lease which was initially granted by the State of West Bengal.

It is submitted that the claim of the Appellant of renewal of the lease of tea

estates Kilcott, Bagracote and Garganda is also misleading and incorrect.

Renewal of lease could not have been made without pre-deposit of salami,

which is statutory requirement. The renewal of three tea gardens is in breach

of the mandate of Rule 4 read with Schedule F of the West Bengal Estate

Acquisition Act & Rules 1954. Execution of renewal of above three tea estates

was not approved by Land & Land Reforms Department of State of West

Bengal. It is submitted that for post approval of the renewal a demand notice

was issued to the Corporate Debtor to deposit salami which having not been

deposited, there is no approval of the State of West Bengal. All the tea gardens

were closed and abandoned by the Corporate Debtor since 2015. There was 27

no electricity or water in the tea gardens. Twenty Thousand workers have

been working in the tea gardens and the State Government had intervened to

protect the interest of poor workers and after detailed enquiry it was decided

to reopen tea estates. The Respondent No.1 paid huge amount for restoration

of electricity. The Corporate Debtor who abandoned the tea gardens cannot

claim any right in any of the tea gardens. It is submitted that except above

three tea gardens, lease of all tea gardens came to end decades ago. There is

no concept of automatic renewal of lease granted by the State. No renewal

having been granted by the State, Corporate Debtor cannot claim any right in

the tea gardens. Corporate Debtor was provided opportunity to mend the

gross breach by paying the amount of salami with respect to the tea estates

namely Kilcott, Bagracote and Garganda for post facto approval to enter into

a fresh lease which opportunity was not availed by the Corporate Debtor and

no salami having been paid inspite of demand notice, the renewal of the above

three tea gardens cannot be held to be valid conferring any right to the

Corporate Debtor. Corporate Debtor had never challenged the steps taken by

the State demanding payment of salami, hence, the renewal is of no avail.

Order passed by the Adjudicating Authority is well reasoned order which does

not warrant any interference by this Tribunal.

25. Learned counsel for the Respondent No.1 refuting the submission of

learned counsel for the Appellant submits that tea estates which are subject

matter of these appeals are not assets of the Corporate Debtor of which the

Resolution Professional can seek to exercise any control under Section 18(1)(f)

of the Code. All the tea gardens belong to State of West Bengal who is sole 28

and absolute owner in terms of the provisions of West Bengal Estate

Acquisition Act & Rules 1954. All the leases have expired prior to

commencement of the CIRP, which estates does not constitute assets of the

Corporate Debtor. Purported renewal of lease deed of Kilcott, Bagracote and

Garganda tea estates in view of the Corporate Debtor being in breach of

statutory provisions of West Bengal Estate Acquisition Act & Rules 1954,

cannot be read to be valid renewal. Information Memorandum itself mention

that with regard to Garganda and Bagracote-I that: "as per Land department

of GoWB, Kolkata, renewal are not done properly". With regard to Kilcott, in

reference to renewal dated 15.11.1995, District Magistrate & Collector,

Jalpaiguri issued letter dated 04.08.2016 to the Corporate Debtor to deposit

the salami which having not been deposited no valid renewal can be claimed.

The submission of the Resolution Professional that there shall be deemed

automatic renewal as per terms of the lease is wholly incorrect and not in

accordance with law. There can be no question of any deemed renewal of the

leases in favour of the Corporate Debtor nor any such clause is contained in

the lease deed. Renewal granted in favour of the Corporate Debtor with regard

to Kilcott, Bagracote and Garganda are void and inoperative, the Corporate

Debtor having not complied with the statutory requirement of renewal of the

lease. The submission of the Appellant that the State could not have re-

entered possession of the tea estates without taking steps for resumption of

lease is incorrect as the concept of resumption of lease can only be utilized

during currency of the lease according to the procedure prescribed in the

Rules but when the lease has already expired there is no occasion to take

steps for resumption of lease as per the provisions of the Act and Rules. The 29

submission of the Appellant that Corporate Debtor has been dis-possessed

during subsistence of moratorium is also incorrect. As the leases of tea

estates stood determined by efflux of time prior to commencement of CIRP,

the said asset could not constitute assets of the Corporate Debtor.

Moratorium did not in any way interdict the State's right to re-enter

possession of the said tea estates upon determination of the leases granted to

the Corporate Debtor by efflux of time. It is further submitted that the

Corporate Debtor since 2015 has abandoned several tea estates leaving

thousands of works in pathetic and deplorable condition. Four tea estates

namely Dhumchipara, Tulsipara, Hantapara, Garganda were handed over to

Merico Agro Industries Pvt. Ltd. after interim order passed by Calcutta High

Court on 20.09.2016, in which tea estates, Corporate Debtor has no

subsisting right. Central Government after having issued notification has

directed the Tea Board to take possession and by issuance of notification the

Directors and Promoters of the Corporate Debtor shall be treated to vacate

their possession. The State of West Bengal, seeing the success of four tea

gardens which were given to Merico prior to commencement of CIRP has

entrusted Merico and Sammelan to run and manage the tea gardens to

mitigate the suffering of the workers.

26. We have also heard learned counsel appearing for the State Bank of

India, who has filed IA No.3712 of 2022 in Company Appeal (AT) (Ins.) No.593

of 2022. The application is filed by State Bank of India and Asset

Reconstruction Company (India) Ltd. The Applicants have extended financial

facilities to the Corporate Debtor. The Applicants support the Appellants' 30

contention and pray that order dated 21.04.2022 passed by the Adjudicating

Authority be set aside, it was further submitted that Nagaisuree and Kilcott

tea gardens along with leasehold rights were mortgaged to the State Bank of

India.

27. We have heard Shri Amar Dave, learned counsel appearing of the

Intervenor - Uniglobal Papers Private Limited, who claim to be the Successful

Resolution Applicant in the CIRP of the Corporate Debtor. It is submitted by

learned counsel that the State of West Bengal has filed an application i.e. IA

No.8/KB/2023 seeking exclusion of the tea estates belonging to the State

from the purview of the CIRP of the Corporate Debtor, which application has

been rejected on 26.04.2024, against which the State has filed an appeal,

which is pending consideration.

28. Learned counsel appearing for the Respondent No.1 has opposed the IA

filed by the State Bank of India as well as IA filed by Uniglobal Papers Private

Limited. It is submitted that the Corporate Debtor cease to have any right in

the tea gardens so no valid security interest can be created in favour of State

Bank of India in Nagaisuree and Kilcott tea gardens. It is submitted that the

mortgage dated 09.10.2013 relied by the State Bank of India shall not give

any benefit to the State Bank of India owing to non-payment of salami with

regard to Nagaisuree and Kilcott tea gardens, which is claimed to be renewed.

Opposing the application filed by the Successful Resolution Applicant, it is

submitted that the tea gardens not being estate of the Corporate Debtor, there

is no occasion for the Resolution Professional to take possession. No right

can be claimed in the tea gardens whose lease has already expired. 31

29. Learned counsel appearing for the State of West Bengal with respect to

the order passed on 26.04.2024 in IA No.8/KB/2023 submits that appeals

have already been filed, which are pending consideration, hence, order dated

26.04.2024 has no bearing in the issues which are raised in the present

appeals. The application of the State for keeping the tea gardens out of the

CIRP has been rejected, which is matter to be considered in the appeal filed

by the State against the said order. Learned counsel for the State of West

Bengal has further submitted that the Resolution Professional has not

impleaded the State of West Bengal in any of the applications where as the

State of West Bengal was owner of the tea gardens and instead of impleading

the State of West Bengal, Resolution Professional has prayed for giving the

Resolution Professional the possession of assets and it is only in these appeals

the State of West Bengal has been impleaded and has filed counter affidavit.

30. Learned counsel for the State of West Bengal as well as learned counsel

appearing for the Respondent No.1 has relied on various judgments of Hon'ble

Supreme Court and this Tribunal, which shall be referred to when we shall

consider the submissions in detail.

31. We have considered the submissions of learned counsel for the parties

and perused the record.

32. In the appeals before us under consideration are nine tea estates. The

State of West Bengal in its counter affidavit filed on behalf of Respondent No.5

and 7 has given the details of respective leases with expiry details in Para 5

of the Counter Affidavit, which table is as follows:

32

"RESPECTIVE LEASES WITH EXPIRY DATES

Name of Tea Name of Lessee Date of Effective Date of Estates Execution From Expiry Garganda Lankapara Tea 19.07.1974 20.09.1965 19.09.1995 Co. Ltd.

Dhumchipara Birpara Tea Co. 06.12.1975 13.09.1974 12.09.2004 Ltd.

Huntapara Duncan Agro 25.11.1980 03.12.1974 02.12.2004 Industries Ltd.

Tulsipara Lankapara Tea 26.02.1980 18.04.1974 17.04.2004 Co. Ltd. & Duncan Agro Industries Ltd.

Birpara Birpara Tea Co. 25.11.1980 27.06.1978 26.06.2008 Ltd.

Bagracote I Bagracote Tea 19.02.1973 22.05.1968 22.05.1998 Co. Ltd.

Bagracote II Bagracote Tea 11.10.1974 04.08.1970 04.08.2020 Co. Ltd.

Bagracote III Duncans Agro 27.02.1980 24.02.1976 24.02.2006 & IV Industries Ltd.

Runglee- Birpara Tea Co. 24.08.1973 09.02.1970 08.02.2000 Rungliot Ltd.

Kilcott Birpara Tea Co. 22.08.1965 24.08.1965 21.08.1995 Ltd.

Nagaisuree Birpara Tea Co. 30.01.1975 31.10.1972 30.10.2002 Ltd.

33. Information Memorandum was prepared by the Resolution

Professional, which Information Memorandum has also been brought on the

record. Information Memorandum also notices the nine tea gardens and the 33

date of validity of the lease deeds. It is useful to extract the status of tea

estates as reflected in the Information Memorandum, which is as follows:

"Status of Leasehold Tea Estates:-

Tea Estates Valid upto

Birpara 26.06.2008

Lankapara 21.06.2006

Dumchipara 12.09.2004

Hantapara 02.12.2004

Nagaisuree 30.10.2002

Gungaram 06.08.2008**

Garganda 18.09.2026

Tulsipara 17.04.2004

Kilcott 23.08.2025*

Bagracote III & IV 31.03.2011

Runglee 08.02.2000

Marybong 08.02.2000

Bagracote-I 22.05.2028

Bagracote-II 03.08.2000

* As per land department of GoWB Kolkata these lease renewals are not done properly.

** The lease renewal agreement registration executed on 02nd September, 2020 for 30 years."

34. Information Memorandum also captures that renewal of leases of

Kilcott, Bagracote and Garganda was not done properly. Leases of other six

tea gardens namely Birpara expired on 26.06.2018, Lankapara expired on

21.06.2006, Dumchipara expired on 12.09.2004, Hantapara expired on 34

02.12.2004, Nagaisuree expired on 30.10.2002, Gungaram expired on

06.08.2008, Tulsipara expired on 17.04.2004, Bagracote-II expired on

03.08.2000, Bagracote-III & IV expired on 31.03.2011, Nagaisuree expired on

30.10.2002.

35. When we look into the application which were filed by the Resolution

Professional praying for handing over the possession of different tea gardens,

the names of the tea estates, date of expiry of the lease (except those with

regard to whom dispute of renewal is there) and number of application is

noticed in the following tabular form:

"1. Details of the appeals filed under section 61 of IBC, 2016 arising out of impugned orders in the applications as given below:

CA (AT) Impugned Impugned In respect of Lease (Ins.) order dated order passed in Tea Estate expired on No. 593 OF 21.04.2022 I.A. (IB) No. Kilcott 21.08.1995 2022 1111/KB/2021 Nagaisuree 30.10.2002 754 OF 09.05.2022 I.A. (IB) No. Bagracote 22.05.1998 2022 665/KB/2021 672 OF 09.05.2022 I.A. (IB) No. Dhumchipara 12.09.2004 2021 1256/KB/2021 Tulsipara 17.04.2004 Hantapara 02.12.2004 Garganda 19.09.1995 628 OF 09.05.2022 I.A. (IB) No. Birapara 26.06.2008 2022 415/KB/2021 907 OF 18.07.2022 I.A. (IB) No. Rungliot 08.02.2002 2022 109/KB/2022

36. Thus, in these appeals we are concerned about the above tea gardens.

With regard to expiry of leases of six tea gardens, there is no dispute between 35

the parties that leases have expired. The Appellants' case is that renewal

applications were filed for those six tea gardens on which no decision has

been taken and with regard to three tea gardens i.e. Kilcott, Bagracote and

Garganda issue of renewal of lease has been raised. Both the parties have

advances rival submissions with regard to renewal. From the submission of

learned counsel for the parties and materials on record following are issues

which arise of consideration:

1. Whether the Corporate Debtor has lease hold right in the Tea Gardens,

which are assets of the Corporate Debtor which need to be taken control

by the Resolution Professional under Section 18(f) and Section 25 of the

I&B Code?

2. Whether with regard to those Tea Gardens where period of lease has

come to an end before commencement of the CIRP and application for

renewal has been filed by the Corporate Debtor, the lease shall be

deemed to be renewed since no decision has yet been taken by the State

of West Bengal either accepting or rejecting the application?

3. Whether renewal of the lease deed of Kilcott Tea Estate w.e.f.

15.11.1995 till 23.08.2025 has to be treated to be valid renewal,

similarly, renewal of lease deed of Garganda w.e.f. 08.11.1996 to

18.09.2026 has to be treated as valid renewal and renewal of lease deed

of Bagrakote Tea Division-I dated 19.06.1998 has to be treated as a

valid renewal?

36 4. Whether non-payment of Salami as required to be paid as per West

Bengal Estate Acquisition Rules 1954 by the Corporate Debtor while

execution of renewal of lease deed shall make the renewal void and

inoperative?

5. Whether order dated 28.05.2021 passed by the Adjudicating Authority

in IA No.1256/KB/2020 rejecting the application with regard to four

Tea Gardens - Dhumchipara, Garganda, Tulsipara and Hantapara

deserve to be set aside?

6. Whether the Adjudicating Authority committed error in relying on order

dated 28.05.2021 in IA No.1256/KB/2020 while deciding the

subsequent applications filed by the Resolution Professional for taking

possession of different Tea Estates?

7. Whether possession taken by the Sammelan and Marico subsequent to

order dated 05.03.2020 is in violation of provisions of Section 14 of the

I&B Code with respect to Tea Gardens except the four Tea Gardens

which were subject matter of IA No.1256/KB/2020.

8. Whether Appellants are entitled to be handed over the possession of all

the Tea Estates for which applications were filed?

9. Relief, if any, to which Appellant may be entitled?

37 Question No. 1 37. Whether the Leasehold Rights in the Tea Gardens are Assets of the

Corporate Debtor, which need to be taken control by the Resolution

Professional (`RP') under Section 18(f) of the IBC Code?

38. Section 18(1) enumerates the duties of the Interim Resolution

Professional (`IRP'). Section 18(1)(f) is as follows:

"18. Duties of interim resolution professional.--

(1) The interim resolution professional shall perform the following duties, namely:--

.....

(f) take control and custody of any asset over which the corporate debtor has ownership rights as recorded in the balance sheet of the corporate debtor, or with information utility or the depository of securities or any other registry that records the ownership of assets including--

(i) assets over which the corporate debtor has ownership rights which may be located in a foreign country;

(ii) assets that may or may not be in possession of the corporate debtor;

(iii) tangible assets, whether movable or immovable;

(iv) intangible assets including intellectual property;

(v) securities including shares held in any subsidiary of the corporate debtor, financial instruments, insurance policies;

(vi) assets subject to the determination of ownership by a court or authority;"

39. Clause (f) provides that IRP to take control and custody of Assets over

which the Corporate Debtor has an Ownership Rights as recorded in the

Balance Sheet of the Corporate Debtor. The Tea Gardens which have been

leased out to the Corporate Debtor are Tea Garden which are owned by the

State of West Bengal. The Corporate Debtor does not have any Ownership 38

Right in the Tea Garden hence the main sub-Clause (f) of Section 18 does not

cover the Tea Garden. However, the definition in Section 18 (f) is inclusive

definition which is apparent in the expression "including" occurring in the

end of sub-Section (f) and sub-Clause (iv) refers to Intangible Assets including

Intellectual Property. The Leasehold Rights are Intangible Assets, which is

now a settled proposition of law.

40. Learned Counsel for the Appellant has relied on the Judgment of the

Hon'ble Supreme Court in the matter of `Victory Iron Works Ltd.' Vs.

`Jitendra Lohia & Anr.' in (2023) 7 SCC 227. The Hon'ble Supreme Court

in above case had occasion to consider right to develop an immovable

property. It was held by the Hon'ble Supreme Court that the Development

Rights created in favour of the Corporate Debtor are assets, within meaning

of expression Section 3(27) of the IBC. Section 3(27) of the IBC defines

property which is an inclusive liquidation, provides as follows:

"3. Definitions.--In this Code, unless the context otherwise requires,--

(27) "property" includes money, goods, actionable claims, land and every description of property situated in India or outside India and every description of interest including present or future or vested or contingent interest arising out of, or incidental to, property;"

41. Section 3(27) expressly includes "every description of interest arising

out of, or incidental to property". Section 18(1) also contains an explanation

providing that term "Asset" shall not include, as enumerated in explanation.

Explanation to Section 18(1) is as follows:

39

"18. Duties of interim resolution professional.-- The interim resolution professional shall perform the following duties, namely:--

..........

Explanation.--For the purposes of this [section], the term "assets" shall not include the following, namely:--

(a) assets owned by a third party in possession of the corporate debtor held under trust or under contractual arrangements including bailment;

(b) assets of any Indian or foreign subsidiary of the corporate debtor; and

(c) such other assets as may be notified by the Central Government in consultation with any financial sector regulator.

42. The present is the case where Tea Gardens are owned by State of West

Bengal and the Corporate Debtor claimed possession by virtue of Contractual

Arrangement i.e., Lease Arrangement. In the present case, thus whether by

virtue of explanation to Section 18(1) of the IBC, Tea Gardens had to be

excluded from the definition of Assets is a question to be answered. Section

25 provides for duties of the Resolution Professional. Section 25(1) & (2)(a)

provides as follows:

"25. Duties of resolution professional.--(1) It shall be the duty of the resolution professional to preserve and protect the assets of the corporate debtor, including the continued business operations of the corporate debtor. (2) For the purposes of sub-section (1), the resolution professional shall undertake the following actions, namely:--

(a) take immediate custody and control of all the assets of the corporate debtor, including the business records of the corporate debtor;"

43. The Hon'ble Supreme Court has held that explanation in Section 18

does not extend to Section 25 in `Victory Iron Works Ltd.' (Supra). One of

the questions framed in Paragraphs 16.1(1) & 16.2(2) is as follows: 40

"16.1. (1) What is the nature of the right or interest that the corporate debtor has over the property in question, for the purpose of deciding the inclusion of the same in the information memorandum prepared by the resolution professional under Regulation 36 of the Regulations?; and 16.2. (2) Whether NCLT and Nclat have exercised a jurisdiction not vested in them in law by seeking to recover/protect the possession of the corporate debtor?"

44. In Para 42, the Hon'ble Supreme Court ultimately held after considering

the several other statutes came to conclusion that Development Rights

created in favour of the Corporate Debtor constitutes Property within meaning

of Section 3(27). In Paragraph 38 of the Hon'ble Supreme Court while

answering Question No. 1, laid down as follows:

"38. From the sequence of events narrated above and the terms and conditions contained in the agreements entered into by the parties, it is more clear than a crystal that a bundle of rights and interests were created in favour of the corporate debtor, over the immovable property in question. The creation of these bundle of rights and interests was actually for a valid consideration. But for the payment of such consideration, Energy Properties would not even have become the owner of the property in dispute. Therefore, the development rights created in favour of the corporate debtor constitute "property" within the meaning of the expression under Section 3(27) IBC. At the cost of repetition, it must be recapitulated that the definition of the expression "property" under Section 3(27) includes "every description of interest, including present or future or vested or contingent interest arising out of or incidental to property". Since the expression "asset" in common parlance denotes "property of any kind", the bundle of rights that the corporate debtor has over the property in question would constitute "asset" within the meaning of Section 18(1)(f) and Section 25(2)(a) IBC."

45. We may also notice observations in Paragraph 42, where while

answering Question No. 2 framed in the Judgment of the Hon'ble Supreme 41

Court has also noted the Judgment of the Hon'ble Supreme Court in the

matter of `Embassy Property Developments (P) Ltd.' Vs. `State of

Karnataka' reported in (2020) 13 SCC 308, in the matter of `Gujarat Urja

Vikas Nigam' Vs. `Amit Gupta' reported in (2021) 7 SCC 209 and in the

matter of `Tata Consultancy Services Ltd.' Vs. `SK Wheels (P) Ltd.

(Resolution Professional), reported in (2022) 2 SCC 583.

46. After considering the aforesaid Judgment, the Hon'ble Supreme Court

upheld the decision of the Adjudicating Authority and this Tribunal holding

that possession of the Corporate Debtor of the Property need to be protected.

47. The Judgment of the Hon'ble Supreme Court in `Victory Iron Works

Ltd.' (Supra) clinches the issue which has arisen in this case for

consideration as to whether Leasehold Rights of the Corporate Debtor as

Assets subsisting can be taken by the Resolution Professional in exercise of

his duties under Section 25. The Assets of the Corporate Debtor, including

the Leasehold Rights, which are contemplated to be taken in custody and

controlled by the RP are thus Leasehold Rights which are subsisting on the

date when the Corporate Insolvency Resolution Process, CIRP has

commenced. In the present case, 05.03.2020 is the date of commencement

of the CIRP, thus before taking control and custody of the Assets i.e.,

Leasehold Rights of the Corporate Debtor, it has to be seen as to whether the

Leasehold Rights are subsisting on the date of commencement of the CIRP.

Law mandates taking custody and control of the Assets i.e., the Leasehold

Rights of the Corporate Debtor which are subsisting on the date of

commencement of CIRP.

42

48. The submission which has been advanced by the Learned Counsel for

the Respondent in the present case is not that Leasehold Rights are not

covered by Section 18(1)(f) and Section 25 of the IBC. The submission which

has been advanced by the Respondent is that Leasehold Rights of the

Corporate Debtor had come to an end by efflux of time on the date, when CIRP

commenced, hence the provision of Section 18(1)(f) and Section 25 does not

empower the RP to pray for possession and custody and control of the Assets.

The question as to whether the Leasehold Rights in the 9 Tea Gardens which

are subject matter of this Appeal subsists, shall be considered when we enter

into the other issues framed in the Appeal and our discussion on the issue is

confined to the legal principal which is advanced before us.

In view of the forgoing discussions, we answer Question No.1 as follows:

"The subsisting Leasehold Rights in the Tea Garden of the Corporate

Debtor are Assets of the Corporate Debtor which need to be taken control by

the RP under Section 18(1)(f) and Section 25 of the IBC".

Question No. 2 49. We have noted above the status of Leasehold Tea Estates in tabular

form as per the details noticed against the 9 Tea States, apart from 3 Tea

Gardens, namely Garganda, Killcott and Bagracote I. The case of the

Appellant is that the leases of other 6 Tea Gardens have not been renewed.

Appellant's case is that Corporate Debtor had filed an Application for renewal

of the said Tea Gardens before the expiry of period of the Lease Deed. It is

also pleaded by the Appellant that State of West Bengal has not rejected the 43

Application for renewal with regard to other 6 Tea Gardens, although it is

submitted by the State that Renewal Application has not been even submitted

by the Corporate Debtor before expiry of the 6 leases. We proceed to examine

the issue on the premise that Corporate Debtor has applied for renewal prior

to expiry of the lease period and the State has not taken any decision on said

Renewal Application.

50. The copy of Lease Deeds which has been executed in favour of the

Corporate Debtor/other entities subsequently merged into the Corporate

Debtor have been brought on the record. One of the Lease Deeds executed in

favour of the Dumchipara Tea Company Ltd. has been brought on record in

the Compilation filed by the State by which Lease was executed for the term

of 30 Years from 19th day of September, 1974. On consideration of yearly rent

of 13,752.43/- payable in two equal instalments on 31st August and 28th

February in each Year. The Lease Deed contains provisions for renewal of the

Lease for further period of 30 Years and successive renewals. Clause 16 of

the Lease Deed provides for renewal in following manner:

"(16) That the Lessee/Lessees shall be entitled to the renewal of this lease for a further period of thirty years and to successive renewals, for, similar, periods, subject to the rules and the terms and, conditions of this lease and to such other terms and conditions as the State Government may from time to time consider it necessary to impose and include in such renewed lease or leases and subject further to such rent as may then be fixed, provided that such additional terms and conditions shall not be inconsistent with the law regulating such lease* and shall not have retrospective effect.

(b) That all arrears of rent costs, lines and other monies payable by the Lessee/Lessees hereunder and all expenses in connection with inspections, survey and measurements may he recovered as a public demand 44

under the Bengal Public Demand Recovery Act or and statutory modification thereof for the time being in force.

(c) That if at any time the lands and hereditaments cease to be used by the Lessee/Lessees as a tea-

garden, the lease shall determine forthwith."

51. The Lease was registered on 25.10.1975 with the sub-Registrar Office,

District Jalpaiguri.

52. Case of the Appellant is that Application for renewal was filed before the

expiry of the term of the Lease. The Clause 16 of the Lease as extracted above

clearly indicates that Lease shall be entitled to renewal for further period of

30 Years subject to the rules and terms and conditions of the Lease and such

other terms and conditions as the State Government may from time to time

consider it necessary to impose and include in such renewed lease or leases.

53. Thus, the Clause itself contemplates that renewal is not automatic nor

Clause 16 contains concept of extension of the Lease. Renewal has to be

made by the State in such terms and conditions as State Government may

impose while renewing the Lease.

54. The submission of the Appellant is that when an Application is filed for

renewal of the Lease, there shall be automatic deemed renewal. The Hon'ble

Supreme Court had laid down in the matter of `Hardesh Ores (P) Ltd.' Vs.

`Hede & Company' reported in (2007) 5 SCC 614, that to give effect to

renewal of the Lease a document has to be executed for renewal of the

Agreement and there is no consent of automatic renewal of the Lease. In

Paragraph 39 of the Judgment, following has been laid down: 45

"39. We are of the view that the respondents are right in contending that enforcement of the negative covenants presupposes the existence of a subsisting agreement. As noticed earlier, the law is well settled that the renewal of an agreement or lease requires execution of a document in accordance with law evidencing the renewal. The grant of renewal is also a fresh grant. In the instant case, the appellant-plaintiff did exercise their option and claimed renewal. The respondents denied their right to claim renewal in express terms and also unequivocally stated that the agreement did not stand renewed as contended by the appellants. Having regard to these facts it must be held that a cause of action accrued to the appellant-plaintiff when their right of renewal was denied by the respondents. This happened in December 2001 and, therefore, within three years from that date they ought to have taken appropriate proceedings to get their right of renewal declared and enforced by a court of law and/or to get a declaration that the agreement stood renewed for a further period of 5 years upon the appellants' exercising their option to claim renewal under the original agreement.

The appellant-plaintiffs have failed to do so. However, the plaint proceeds on the assumption that the original agreement stood renewed including the negative covenants contained in clauses 15 and 20 of the original agreement which authorised only the appellants to extract ore from the mine with an obligation cast on the respondent- defendants not to interfere with the enjoyment of their rights under the agreement. In the facts of this case, in the suit prayer for injunction based on negative covenants could not be asked for unless it was first established that the agreement continued to subsist. The use of the words "during the subsistence of this agreement" in clause 15, and "during the pendency of this indenture" in clause 20 of the agreement is significant. In the absence of a document renewing the original agreement for a further period of 5 years and in the absence of any declaration from a court of law that the original agreement stood renewed automatically upon the appellants exercising their option for grant of renewal, as is the case of the appellants, they cannot be granted relief of injunction, as prayed for in the suit, for the simple reason that there is no subsisting agreement evidenced by a written document or declared by a court.

If there is no such agreement, there is no question of enforcing clauses 15 and 20 thereof. The appellants ought to 46

have prayed for a declaration that their agreement stood renewed automatically on exercise of option for renewal and only on that basis could they have sought an injunction restraining the respondents from interfering with their possession and operation. Having not done so, they cannot be permitted to camouflage the real issue and claim an order of injunction without establishing the subsistence of a valid agreement. In the instant suit as well they could have sought a declaration that the agreement stood renewed automatically but such a claim would have been barred by limitation since more than 3 years had elapsed after a categoric denial of their right claiming renewal or automatic renewal by the respondent- defendants."

55. The Hon'ble Supreme Court in the matter of `State of UP & Ors.' Vs.

`Lal Ji Tandon' reported in (2004) 1 SCC 1 had also dwelt upon difference

between extension and renewal of the Lease. It has been held that when

principal Lease executed between the Parties contained a covenant of renewal

of Lease has to be in accordance with the covenant for renewal contained in

the original Lease and in the case of renewal execution of afresh Deed of Lease

is necessary. In Paragraph 13 of the Judgment, following was laid down:

"13. .....Where the principal lease executed between the parties containing a covenant for renewal, is renewed in accordance with the said covenant, whether the renewed lease shall also contain similar clause for renewal depends on the facts and circumstances of each case, regard being had to the intention of the parties as displayed in the original covenant for renewal and the surrounding circumstances. There is a difference between an extension of lease in accordance with the covenant in that regard contained in the principal lease and renewal of lease, again in accordance with the covenant for renewal contained in the original lease. In the case of extension it is not necessary to have a fresh deed of lease executed, as the extension of lease for the term agreed upon shall be a necessary consequence of the clause for extension. However, option for renewal consistently with the covenant for renewal has to be exercised consistently with the 47

terms thereof and, if exercised, a fresh deed of lease shall have to be executed between the parties....."

56. The Hon'ble High Court of Delhi also had occasion to examine the

concept of the renewal of the Lease in `Kamal Mitra Chenoy & Anr.' Vs.

`M/s. Dunlop India Ltd. & Anr.' 2015 SCC OnLine Del 8195. In the facts

of the above case, the Lessor had not agreed for renewal. The Hon'ble High

Court of Delhi also followed the Judgment of the Hon'ble Supreme Court in

`Hardesh Ores (P) Ltd.' (Supra) held that Lease was never renewed in the

facts of the said case. In Paragraphs 23 to 27, following was laid down:

23. In Shanti Prasad Devi v. Shankar Mahto, (2005) 5 SCC 543 the Agreement contained a renewal clause. Paragraphs 18 and 19 of which read as follows:-

"18. We fully agree with the High Court and the first appellate court below that on expiry of period of lease, mere acceptance of rent for the subsequent months in which the lessee continued to occupy the lease premises cannot be said to be a conduct signifying 'assent' to the continuance of the lessee even after expiry of lease period. To the legal notice seeking renewal of lease, the lessor gave no reply. The agreement of renewal contained in Clause (7) read with Clause (9) required fulfillment of two conditions; first the exercise of option of renewal by the lessee before the expiry of original period of lease and second, fixation of terms and conditions for the renewed period of lease by mutual consent and in absence thereof through the mediation of local Mukhia or Panchas of the village. The aforesaid renewal Clauses (7) & (9) in the agreement of lease clearly fell within the expression 'agreement to the contrary' used in Section 116 of the Transfer of Property Act. Under the aforesaid clauses option to seek renewal was to be exercised before expiry of the lease and on specified conditions.

19. The lessor in the present case had neither expressly nor impliedly agreed for renewal. The renewal as provided in the original contract was required to be obtained by following a specified procedure i.e. on mutually agreed terms or in the alternative through the mediation of Mukhias and 48

Panchas. In the instant case, there is a renewal clause in the contract prescribing a particular period and mode of renewal which was 'an agreement to the contrary' within the meaning of Section 116 of the Transfer of Property Act. In the face of specific Clauses (7) & (9) for seeking renewal there could be no implied renewal by 'holding over' on mere acceptance of the rent offered by the lessee. In the instant case, option of renewal was exercised not in accordance with the terms of renewal clause that is before the expiry of lease. It was exercised after expiry of lease and the lessee continued to remain in use and occupation of the leased premises. The rent offered was accepted by the lessor for the period the lessee overstayed on the leased premises. The lessee, in the above circumstances, could not claim that he was 'holding over' as a lessee within the meaning of Section 116 of the Transfer of Property Act."

24. Hence, the Supreme Court in this case, where renewal was sought after the expiry of the original period of the lease, held the renewal clause not to entitle the lessee for renewal of the lease. The Supreme Court further held that mere expense of the rent does not imply renewal of the lease.

25. Reference may also be had to Hardesh Ores Pvt.

Ltd. v. Hede and Company, 2007 (7) SCALE 348. In that case the Supreme Court held that to give effect to renewal of a Lease, a document has to be executed evidencing renewal of the Agreement and there is no concept of automatic renewal of the Lease by mere exercise of option by the Lessee. Para 25 reads as under:-

"25. Having regard to these decisions we must hold that in order to give effect to the renewal of a lease, a document has to be executed evidencing the renewal of the agreement or lease, as the case may be, and there is no concept of automatic renewal of lease by mere exercise of option by the lessee. It is, therefore, not possible to accept the submission urged on behalf of the appellants- plaintiffs that by mere exercise of option claiming renewal, the lease stood renewed automatically and there was no need for executing a document evidencing renewal of the lease."

26. In the present case, as per the plaintiff no Demand Draft was sent with the aforesaid communication dated 11.8.2012 though the letter mentions so. The 49

defendants have asserted that the Demand Draft was sent. The defendant, however, agrees that the Demand Draft has not been encashed. Hence, there is no acceptance in the present case.

27. Hence, firstly the communication dated 11.08.2012 does not stipulate any communication to renew the Lease Agreement. It merely purports to send rent for a certain period. Further, as per the legal position stated above even if the rent has been sent and accepted by the plaintiff it would not have implied automatic renewal of the lease deed. Further a mere communication to renew the lease does not imply renewal of the Lease-Deed. The alleged attempt to renew is also made after expiry of the Lease Deed and contrary to the renewal clause in the Lease Agreement. I have no hesitation in holding that the lease of the suit property never stood renewed."

57. The law is thus well settled that when original Lease Deed contemplates

the renewal of the Lease, the renewal has to be in accordance with the terms

of renewal as contemplated in the Lease in question. Although, renewal is

contemplated for further period of 30 Years, but the said renewal is hedged

by the rules and terms and conditions of the Lease and such other terms and

conditions as the State Government may from time to time may impose.

58. One more aspect regarding renewal of the Lease needs to be noted. In

West Bengal State Government Acquisition Rules, 1954 by a Notification

dated 01.06.1994, Government of West Bengal has made amendment in

Schedule F by adding Clauses 1A & 1B, which provided that when a Lease of

Tea Garden is determined and the Tea Garden is leased afresh to new Lessee

shall be liable to pay salami @ 15,000 per hectare of the Land Lease. The

Hon'ble Supreme Court had occasion to consider aforesaid Rule in the matter

of `State of West Bengal & Ors.' Vs. `Calculata Mineral Supply Company

Pvt. Ltd. & Anr.' reported in (2015) 8 SCC 655.

50

59. One of the appeals which was before the Hon'ble Supreme Court i.e.,

Civil Appeal No. 2549/2006, in the matter of `Collector, Jalpaiguri and

Anr.' Vs. `Darjeeling Dooars Plantations (Tea) Ltd. & Anr.'. 30 Years

period Lease expired in 1954, and afresh lease was executed on 30.01.1975

in favour of Chulsa Tea Company made effective from 25.03.1968. In the said

Lease Deed, one of the Clauses was similar Clause like Clause 16(a) in the

leases which are under consideration which contained a renewal Clause. The

facts have been noticed by Paragraph 13 of the Judgment, which is as follows:

"13. Clause 16(a) of the lease deed contains a renewal clause according to which the lessee shall be entitled to the renewal of the lease for a further period of thirty years and to successive renewals for similar periods, subject to the rules and the terms and conditions of this lease and also such other terms and conditions as the State Government may from time to time consider it necessary to impose and include in such renewed lease or leases and subject further to such rent as may then be fixed. However, such additional terms and conditions shall not be inconsistent with the law regulating such lease and shall not have retrospective effect."

60. In the above case, the Hon'ble Supreme Court extracted the

amendments made in Schedule F of the West Bengal Estates Acquisition

Rules 1954 in Paragraphs 20, 21 & 22 which are as follows:

"20. In exercise of the power conferred by Section 59 of the Act, the West Bengal Estates Acquisition Rules, 1954 were framed and the same were published in the Official Gazette vide Notification dated 28-5-1954. Rule 4 of the said Rules inter alia provides that the land retained by an intermediary under the provisions of sub-section (1) of Section 6 shall be held by him from the date of vesting on the terms and conditions specified in the Rules. So far as the tea garden is concerned, it has been specifically provided that an intermediary shall hold such land on the terms and conditions set out in Schedule F appended to the Rules.

51 Therefore, for better appreciation, Schedule F and Form 1 for the purpose of granting lease for tea garden have been reproduced here:

"SCHEDULE F [Rule 4]

1. Land comprised in a tea garden retained by an intermediary under sub-section (1), read with sub- section (3), of Section 6 shall be deemed to be held directly under the State from the date of vesting as a tenant [until a lease is granted in Form 1 appended to this schedule, on such terms and conditions as may be specified by the Collector in a summary settlement, and thereafter, on a lease being granted in Form 1 appended to this schedule, on the terms and conditions specified in such lease]. There shall be a lease in Form 1 in respect of each such intermediary, and the same shall be registered and numbered in the office of the Collector.

(1-A)-(1-B)***

2. The first lease shall be given from the date of the order under sub-section (3) of Section 6 or from the date of the determination of the rent under Section 42, whichever is later."

21. By the Notification dated 1-6-1994 issued by the Government of West Bengal, Land and Land Reforms Department, an amendment has been brought in Schedule F to the said Rules discussed hereinabove.

By the said notification, two paragraphs being Clauses (1-A) and (1-B) were inserted, which are reproduced hereunder:

"(1-A) When the lease of a tea garden is determined and the tea garden is leased afresh to a new lessee, the latter shall be liable to pay salami @ Rs 15,000 per hectare of the land leased out.

(1-B) In case of a transfer of the leasehold interest, except by way of inheritance, the transferee shall not be liable to pay salami during the unexpired period of the lease. On the expiry of the transferred lease, he shall be liable to pay salami @ Rs 15,000 per hectare of the land leased out before the lease is further renewed."

22. In Clause 13, sub-clause (dd) was also inserted, which is quoted hereinbelow:

"(dd) That the transferee, other than by inheritance, shall be required to enter into a fresh lease on payment of salami at the rate laid down 52

in Clause (1-B) of Schedule F within three months of expiry of the unexpired period of lease."

61. In the case before the Hon'ble Supreme Court, the Lessee approach the

Collector for renewal and the request of the grant of Lease was considered and

Government issued a letter directing for payment of salami of Rs. 15,000/-

per hectare which was challenged by the Lessee before the Land Reforms and

Tenancy Tribunal and thereafter before the Hon'ble High Court of Calcutta.

The Hon'ble High Court of Calcutta had allowed the Writ Petition and quashed

the Order of the Land Reforms and Tenancy Tribunal which had rejected the

prayer of the Lessee to declare Notification 01.06.1994 as illegal.

62. The Hon'ble Supreme Court upheld the amendments by which Clauses

1A & 1B was inserted. The Hon'ble Supreme Court set aside the Judgment

of the Hon'ble High Court and held that the renewal of the Lease can be

granted as per Clause 16(a) of the Lease Deed, subject to rules and demand

of salami was in accordance with law. In Paragraphs 30 to 33, following was

held:

"30. As noticed above, the State Government by notification dated 1.6.1994 brought amendment in the Rules by incorporating two more conditions i.e. paragraph 1A and 1B. As per the additional condition, in case of fresh lease granted by the State in respect of tea garden, the lessee shall be liable to pay salami at the rate of Rs. 15,000/- per hectare of the land leased out. However, paragraph 1-B made it clear that in case of transfer of leasehold interest, the transferee shall not be liable to pay salami during the unexpired period of lease, but after the expiry of the existing period of lease the transferee shall be liable to pay salami at the rate of Rs. 15,000/- per hectare before the lease is further renewed.

31. Admittedly, before the expiry of the lease in question in 1998, the respondent/transferee stepped into the shoes of the original lessee in the year 1990.

53 In 1994, by notification dated 1.6.1994, an amendment was brought in Schedule F of the Rules, as discussed hereinabove, in terms of clause I-B. Therefore, the respondent shall not be liable to pay salami during the unexpired period of lease up to 1998. The State Government has rightly not made any claim for salami for the unexpired period of lease, but for the fresh renewal of lease after 1998 which is a fresh grant. The demand of salami by State Government for according sanction for renewal of lease cannot and shall not by any stretch of imagination be held to be retrospective.

32. In the case of State of U.P. vs. Lalji Tandon, (2004) 1 SCC 1, this Court while considering the renewal clause in the lease deed observed:

"13. In India, a lease may be in perpetuity. Neither the Transfer of Property Act nor the general law abhors a lease in perpetuity. (Mulla on the Transfer of Property Act, 9th Edn., 1999, p. 1011.) Where a covenant for renewal exists, its exercise is, of course, a unilateral act of the lessee, and the consent of the lessor is unnecessary. (Baker v. Merckel, also Mulla, ibid., p.1204.) Where the principal lease executed between the parties containing a covenant for renewal, is renewed in accordance with the said covenant, whether the renewed lease shall also contain similar clause for renewal depends on the facts and circumstances of each case, regard being had to the intention of the parties as displayed in the original covenant for renewal and the surrounding circumstances. There is a difference between an extension of lease in accordance with the covenant in that regard contained in the principal lease and renewal of lease, again in accordance with the covenant for renewal contained in the original lease. In the case of extension it is not necessary to have a fresh deed of lease executed, as the extension of lease for the term agreed upon shall be a necessary consequence of the clause for extension. However, option for renewal consistently with the covenant for renewal has to be exercised consistently with the terms thereof and, if exercised, a fresh deed of lease shall have to be executed between the parties. Failing the execution of a fresh deed of lease, another lease for a fixed term shall not come into existence though the principal lease in spite of the expiry of the term thereof may continue by holding over for 54

year by year or month by month, as the case may be."

33. In the case of Gajraj Singh & ors. vs. State Transport Appellate Tribunal & ors., (1997) 1 SCC 650, this Court while considering the term renewal of lease or licence contained in document, observed that "grant of renewal is a fresh grant though it breathes life into the operation of the previous lease or licence granted as per existing appropriate provisions of the Act, rules or orders or acts intra vires or as per the law in operation as on the date of renewal".

63. The Hon'ble Supreme Court ultimately held that the Lessee was liable

to pay salami and demand made by Collector was justified. The Judgment of

the Hon'ble Supreme Court had upheld the amendment in Schedule F of West

Bengal Estates Acquisition Rule 1954 with effect from 01.06.1994, providing

for payment of salami for renewal of the Lease. It is relevant to notice that in

the Order of the Adjudicating Authority 28.05.2021, rejecting I.A.

1256/KB/2020 filed by the RP, submission on behalf of the RP was made that

leases were not renewed due to demand of salami imposed by State for

renewal of the Agreement. Adjudicating Authority in Paragraph 2.15 noticed

the submission of the Learned Counsel for the Appellant and has also noted

the challenge to the West Bengal Estates Acquisition Rules 1954, amendment

to Schedule F. Para 2.15 in the order of the Adjudicating Authority is as

follows:

"2.15. Mr. Joy Saha submits that the lease deed with respect to the other three gardens were could not be renewed due to the demand of salami imposed by the state for renewal of lease agreements. This demand of salami was challenged before the Hon'ble Calcutta High Court in WP (LRT) No.288/2005, which held in favour of the tea garden owners, holding that salami cannot be imposed for the purpose of renewal of a lease which had been executed prior to the coming into effect of the amendment to Schedule 'F'. Form I under rule 4 of the West Bengal Estates Acquisition Rules, 55

1954 (WBEA Rules), since the amendment does not have retrospective effect. Based on this decision, the corporate debtor filed CA No.2569/2006 before the West Bengal Land Reforms & Tenancy Tribunal opposing the demand of salami. In the meantime, upon the appeal filed by the State Government before the Hon'ble Supreme Court, the decision of the Hon'ble Calcutta High Court was reversed. CA No.2569/2006 filed before the West Bengal Land Reforms & Tenancy Tribunal came to be dismissed for default in October 2019."

64. The above also clearly indicates that the renewal was not granted to the

leases whose terms had expired on account of demand of salami for renewal

of the Lease which it appears was not paid. In any view of the matter, leases

of 6 Tea Gardens, namely Dumchipara, Hantapara, Tulsipara, Garganda and

Birpara had come to an end on 12.09.2004, 02.12.2004, 17.04.2004,

19.09.1995 and 26.06.2008 respectively.

65. Leases are Bagracote Division II came to an end on 04.08.2000.

Bagracote III & IV came to an end on 24.07.2006 and Rungli Rungliot came

to an end on 08.02.2000 and Nagaisuree came to an end on 30.10.2002. The

leases of above Tea Garden States were not renewed.

66. In view of the aforesaid discussions, we are of the view that on the

ground that Application for renewal has been filed by the Corporate Debtor,

the leases of the aforesaid Tea Garden shall not be treated as deemed to be

renewed and leases of the aforesaid Tea Gardens shall be treated to have

expired before commencement of the CIRP.

In view of the above, we answered Question No. 2 in following manner:

"The leases of Tea Gardens whose period of Lease have come to an end

before commencement of the CIRP, there shall be no automatic or deemed 56

renewal of the leases even though Applications have been filed for renewal of

the leases and no decision was communicated by the State."

Issue Nos. 3 and 4 67. From the Information Memorandum published by RP as extracted

above, there were only three Tea Gardens, whose lease was valid beyond

05.03.2020, i.e., on the date of initiation of CIRP. As per Information

Memorandum, leases of following Tea Estates were valid:

Sl. No. Tea Estate Valid upto

1. Garganda 08.09.2026

2. Kilcott 23.08.2025

3. Bagarcote Div. I 22.05.2028

68. Against above three Tea Estates, there was asterisk put in the

Information memorandum, which asterisk reads - "as per Land Department

of Government of West Bengal, Kolkatta, Lease renewal are not done properly".

69. The period of other leases had come to an end much before 05.03.2020.

The submission advanced by learned Counsel for the Appellant is that

renewal have been granted with the aforesaid three Tea Estates by execution

of Registered Renewal Lease Deed, hence, the above three Tea Estates are

clearly assets of the Corporate Debtor and the RP was entitled to take

possession of above three Tea Estates. From the pleadings of the parties, it 57

is clear that insofar as Tea Estate of Garganda, the possession of the said Tea

Estate was handed over by Corporate Debtor itself by Bipartite Agreement in

favour of Merico much before initiation of CIRP. With regard to Tea Estate of

Kilcott, it is pleaded that the possession of this Tea Estate was taken on

03.11.2021 and handed to Sammelan Tea and Beverages Pvt. Ltd.

("Sammelan Tea"). With regard to Tea Estate of Bagarcote-I, possession was

taken on 1st July, 2021 and handed over to Sammelan Tea. Bone of

contention between the parties is with regard to leases renewals. The State

of West Bengal Land Department has filed a counter affidavit in the Appeal(s)

on behalf of Respondent Nos.5 and 7 in Company Appeal (AT) (Insolvency)

No.593 of 2022, specifically pleading that renewal of the leases of three Tea

Estates namely Kilcott, Bagarcote-I and Garganda were not properly renewed

and hence, no legal right could be claimed by the RP, nor any right can be

demanded in these three Tea Gardens.

70. Before we come to the rival contentions of the parties, with regard to

renewal of these three Tea Gardens, it is relevant to notice the original Lease

Deed and the renewed Lease Deed. The terms and conditions of original Lease

Deed as well as renewed Lease Deed being almost similar, it is sufficient to

notice the Lease Deed pertaining to Kilcott. The Lease Deed dated 22.01.1973

was executed for 30 years with effect from 24.08.1965 in favour of Kilcott Tea

Company. The original Lease Deed has been filed in Company Appeal (AT)

(Insolvency) No.593 of 2022. The Lease Deed was executed by Deputy

Commissioner of West Bengal, Jalpaiguri in favour of Kilcott Tea Co. Ltd. 58

owner of Kilcott Tea Garden. It is useful to notice opening part of the Lease

Deed, which provides as follows:

"THIS INDENTURE made this Twenty Second day of January, One Thousand Nine Hundred and Seventy Three BETWEEN Killcott Tea Co. Ltd. Owner of Killcott Tea Garden registered under the Indian Companies Act. having its, Registered Office at 31, Netaji Subhas Raod, Calcutta-700001, hereinafter called the "LESSEE" (which expression shall unless excluded by or repugnant to the context be deemed to include its successors and assign, of the One Part.

AND THE GOVERNOR OF THE STATE OF WEST BENGAL hereafter referred to as the "GOVERNOR" (which expression shall include his successors in office and assigns) of the Other Part.

WHETHER the LESSEE was/were seized and possessed of the land and hereditaments described in the Schedule "A" hereunder written paying revenue payable in respect of the said land hereditaments to the Government of West Bengal hereinafter referred to as the "Government").

AND WHEREAS the Government of Notification under Section 4 of the West Bengal Estates Acquisition Act, 1953, vested in the State of West Bengal the land and hereditaments mentioned and described in Schedule "A" here from all encumbrances AND WHEREAS under sub- section 6 of the said Act the State Government has issued and order allowing the LESSEE to retain out of the lands of Schedule "A" the lands mentioned and described in Schedule "B" hereunder.

AND WHEREAS under sub-section (2 of section 42 of the West Bengal Estates Acquisition Act, 1958, Rs.9,152.56 (Rupees Nine Thousand One Hundred Fifty Two and Paisa Fifty Six only was assessed as the rent payable by the Lessee annually for the part of the land and hereditaments described in Schedule "A" herein written allowed to be retained under Sub-section 3 of section 6 of the said Act."

59 71. As per Form-1, Schedule-F, the lease was for period of 30 years from

from 24th day of August, 1965, which is clearly mentioned in the Lease Deed

itself. The Lease Deed was on yearly rent of Rs.9152 and paisa 56 payable in

two equal instalments on or before 31st August and 28th February in each and

every year. The above Lease Deed was for 30 years from 24.08.1965. Lease

Deed of Kilcott Tea Garden was renewed by Indenture made on 15.11.1995

in favour of M/s. Duncans Industries Limited (the Corporate Debtor). It is

useful to extract the Form-1, Schedule-F of the Indenture dated 15.11.1995,

which is as follows:

"TYPED COPY Original Form I (Schedule F)

[Lease for tea garden retained under Sub-section (1) road with sub- section (3) of section 6 of the West Bengal Estates Acquisition Act 1953]

This indenture made this 15th day of November, one thousand nine hundred and ninety five between the governor of the state of West Bengal herein after called the LESSOR (which expression where not repugnant to the context shall include here successors in office and assigns) of the ONE PART.

a) ___________________________ son of ___________________ residing at _________________________ hereinafter called the LESSEE (which expression shall unless excluded by or repugnant to the context be deemed to include his heirs, executors administrators representatives and assigns) of the OTHER PART.

a. In case of an individual.

b. And ________________ son of _____________ residing at _________________ and ______________ son of ___________________ residing at _______________ carrying on business in co-partnership under the name and style of at hereinafter called the lessees (which 60

expression shall unless excluded by or repugnant to the context be deemed to include their respective heirs, executors, administrators, representatives and permitted assigns and/or the partners for the time being of the said firm of _______________ and their respective heirs, executors, administrators, successors and permitted assigns) of the OTHER PART _____________________________.

b. In case of partnership firm.

c. And M/S Duncans Industries Ltd. other of Kilcott T.G. a company registered under the Indian Companies Act having its registered office at No.31, Netaji Subhas Road, Kolkata-1 hereinafter called the LESSEE (which expression shall unless excluded by or repugnant to the context be deemed to include its successors and assigns) of the OTHER PART as tenant under Schedule F of Rules 4 of West Bengal Estates Acquisition Rules 1954.

WITNESSETH that in consideration of the rent and Salami Covenants and conditions hereinafter reserved and contained and on the part of the lessee to be paid observed and performed the lessors doth hereby grant and demise unto the Lessee/Lessees the lands and hereditaments described in schedule I subject to the reservation Specified in schedule II for a term of thirty years from the 24th day of August, 1995 yielding and paying thereof the clear yearly rent of Rs. 13,180.00 (Rupees Thirteen Thousand One Hundred Eighty) only without any deduction payable in two equal instalments on or/before

(a) 30th June and 31st December (b) 31 August and 28th February in each and every year.

And the Lessee/Lessees to the intent that the obligation may continue throughout period of the demise doth/do hereby agree and covenant and agree with the lessor as follows:-

1. That the lessee/lessees shall pay-

(a) The said rent at the times and in the manner aforesaid.

(b) All arrear rents, if any, at the above rate at the times and in the manner as the State Government may direct and 61

(c) Other rates, taxes and assessments that are now, or may at any time hereafter be, assessed charged or imposed on the said demised land and hereiditaments, against proper receipts from the collector for the amounts paid No.payment shall be recognised by the lessors without such receipts.

(1A) When the lease of a tea garden is determined and the tea garden is leased afresh to a new lessee, the later shall be liable to pay salami at the rate of Rs. 15,000.00 per hectare of the land leased out.

(1B) In case of a transfer of the leasehold interest, except by way of inheritance, the transferee shall not be liable to pay salami during the unexp9ired period of the lease on the expiry of the transferred/lease he shall be liable to pay salami at the rate of Rs.15,000.00 per hectare of the land leased out before the lease is further renewed.

2. That the lessee/lessees shall himself/themselves/reside in or near to the said demised lands and hereditaments in case the lessee/lessees be unable to so reside in the said demised lands and hereditaments he/they/it shall appoint a manager or agent full powers to act on behalf of the lessee/lessees in all matters relating to the management of the said land and hereditaments and in observation of the terms, conditions and covenants herein on the part of the Lessee contained.

3. That the lessee/lessees shall register the name of the said manager or agent for the time being in the District Collector's Office.

4.1(a) That the lessee/lessees shall at all times observe and confirm to the relevant provisions of the West Bengal Estate Acquisition Rules for the time being in force.

1(b) That in respect of land comprised in a forest the Lessee/Lessees shall be subject to the control and supervision of the State Government

c. That if, at any time, the collector is of the opinion that the state of boundary marks or lines is such that a re-survey of the area is necessary he may direct such re-survey to be made and may recover from the Lessee/Lessees the costs of such re-survey.

62

8. That if on any such re-survey or otherwise, it shall be found that the Lessee/Lessees is/are in possession of lands in excess of the said lands and hereditaments, the lessors shall be entitled forthwith to recover possession of such excess area and the lessee shall forthwith deliver over possession of the same. The lessor may however allow the lessee to continue in occupation of such excess area in this demise and the lessee in such case shall be bound and liable to pay, in addition to the rent therein reserved such rent for the excess area as may be determined by the Collector in accordance with the principle laid down in section 42 of the West Bengal Estate Acquisition Act 1953 (Act 1 of 1954). The rent so determined for the excess area shall be payable from the date of granting or renewal of the lease or from the date from which the land is proved to have been occupied by the lessee.

9. That Lessee/Lessees shall at all times allow the Officers of the Government of West Bengal authorised on that behalf free and undisturbed access to the said lands and hereditaments for purposes of inspection, survey and otherwise.

10. That the Lessee/Lessees shall in such form as may from time to time be prescribed by the said Government furnish the collector with full information as to births and deaths in the lands and hereinditaments and as sot the progress of cultivation outturn of tea.

11. That the Lessee/Lessees shall furnish proper and suitable accommodation for the residence of chaukidars, if ay be found necessary to be appointed in such gardens to carry out the duties imposed under the West Bengal Panchayat Act, 1956.

12. That the Lessee/Lessees shall not sub-let the said land and hereditaments of any part thereof.

Provided that lands comprised in the said lands and hereditaments may be licensed out for growing cardamom thereon. So, however, that in respect of any land so licensed out the lesseee shall pay rent at the rate of fifteen rupees per acre but shall not realised from he licensee any fees exceeding by more than twenty five per cent, the amount of rent so payable by him."

63

Yearly rent was fixed as Rs.13,180 payable in two equal instalments.

72. We have also noticed that West Bengal Estate Acquisition Rules 1954,

Form-1, Schedule-F was amended by the Notification issued by the State of

West Bengal on 01.06.1994, by which Clauses 1-A and 1-B- were inserted,

which are to the following effect:

"(1-A) When the lease of a tea garden is determined and the tea garden is leased afresh to a new lessee, the latter shall be liable to pay salami @ Rs 15,000 per hectare of the land leased out. (1-B) In case of a transfer of the leasehold interest, except by way of inheritance, the transferee shall not be liable to pay salami during the unexpired period of the lease. On the expiry of the transferred lease, he shall be liable to pay salami @ Rs 15,000 per hectare of the land leased out before the lease is further renewed."

Another Clauses (dd) was inserted, which is as follows:

"(dd) That the transferee, other than by inheritance, shall be required to enter into a fresh lease on payment of salami at the rate laid down in Clause (1-B) of Schedule F within three months of expiry of the unexpired period of lease."

73. When we look into the renewal Indenture dated 15.11.1995, the

expression 'rent' and 'Salami' both have been used. However in the relevant

Clause only yearly rent of Rs.13,180/- was filled up and no amount of Salami

was entered in the terms and conditions of the lease payable by the Corporate

Debtor. Whereas, as per Notification dated 01.06.1994, when the lease of Tea

Garden is determined and leased afresh to a new lessee, the latter was liable

to pay Salami @ Rs.15,000 per hectare of the land leased out. In case of 64

transfer of the leasehold interest, on the expiry of the transferred lease, the

transferee shall be liable to pay Salami @ Rs.15,000 per hectare on the land

leased. In the present case, it is noticed that earlier lease executed on

22.01.1973 was in favour of Kilcott Tea Company, whereas the renewal was

done in favour of M/s Duncans Industries Ltd., the Corporate Debtor. The

Corporate Debtor had claimed that Kilcott Tea Co. has merged into the

Corporate Debtor. Be that as it may, the objection, which has been taken by

the State with regard to validity of the lease has been specifically pleaded in

counter affidavit filed in Company Appeal (AT) (Insolvency) No.593 of 2022 on

behalf of Respondent Nos.5 and 7. The State pleaded in the counter affidavit

that all the leases of nine tea gardens, came to an end and terminated by

efflux of time, prior to commencement of CIRP, i.e., on 5th March, 2020. In

paragraph 6 of the counter affidavit, in the tablur form, lease that expired and

dates has been mentioned and in paragraph-8, it was pleaded that leasehold

interest in all the Tea Gardens has come to an end. Paragraphs 6 and 8 of

the counter affidavit are as follows:

"6. That the particulars of the leases for 30 years, in respect of the aforesaid Tea Estates granted by the Government of West Bengal, to the Corporate Debtor and its merged companies are set out hereunder:

RESPECTIVE LEASES WITH EXPIRY DATES

Name of Name of Date of Effective Date of Tea Estates Lessee Execution From Expiry Garganda Lankapara 19.07.1974 20.09.1995 19.09.1995 Tea Co.

Ltd.

Dhumchipara Bipara Tea 06.12.1975 13.09.1974 12.09.2004 Co Ltd.

65 Huntapara Duncan 25.11.1980 03.12.1974 02.12.2004 Agro Industries Ltd.

Tulsipara Lankapara 26.02.1980 18.04.1974 17.04.2004 Tea Co. Ltd. & Duncan Agro Industries Ltd. Birpara Birpara 25.11.1980 27.06.1978 26.06.2008 Tea Co. Ltd. Bagracote I Bagracote 19.02.1973 22.05.1968 22.05.1998 Tea Co Ltd Bagracote II Bagracote 11.10.1974 04.08.1970 04.08.2020 Tea Co Ltd Bagracote III Duncans 27.02.1980 24.02.1976 24.02.2006 Agro & IV Industries Ltd Runglee- Birpara 24.08.1973 09.02.1970 08.02.2000 Rungliot Tea Co. Ltd. Kilcott Birpara 22.08.1065 24.08.1965 21.08.1995 Tea Co. Ltd. Nagisuree Birpara 30.01.1975 31.10.1972 30.10.2022 Tea Co. Ltd

8. That it is most humbly submitted that from the aforesaid Table it shall be apparent that the leasehold interest in respect of each of the aforesaid Tea Estates granted by the Government of West Bengal in favour of the Corporate Debtor, stood terminated by efflux of time long prior to commencement of corporate insolvency resolution process against the Corporate Debtor on 5th March, 2020."

74. With regard to renewal of the lease of Kilcott Tea Estate, in paragraph

11(g), (h) and (i), following pleadings have been made by the State of West

Bengal:

66

"g. That it is most respectfully submitted that in IA.(IB)No. 1111/KB of 2021, the Resolution Professional had also alleged that the Corporate Debtor had obtained a purported renewal of the lease on 15 November 1995 in respect of the 'Kilcott Tea Estate' which averment is similarly false and contrary to the records.

h. As far as alleged claim of a purported renewal of lease on 15th November, 1995 in respect of Kilcott Tea Estate following determination of the lease on 23rd August, 1995, it is stated that the said purported execution was also ex-facie contrary to law in force and in gross breach of the mandated statutory provisions as embodied in Rule 4 read with Schedule F of the 'West Bengal Estate Acquisition Act & Rules 1954.

i. That it most humbly submitted that the said purported execution related to 'Kilcott' was never approved by the Land and Land Reforms Department of the Government of West Bengal, which alone is the approving authority for grant and/or renewal of any leasehold right of the Government Owned land in the State of West Bengal. Even then, after the said clandestine illegal execution was detected contrary to the Statutory provisions, by a Notice dated 4th August, 2016 the Corporate Debtor was provided with opportunity to mend the gross breach by paying the compulsive defaulted amount of "Salami" of Rs. 57,25,711/ with respect to the Kilcott Tea Estate for post facto approval, within one month and to enter into a fresh appropriate valid Lease in respect of the said Tea Garden. The Corporate Debtor willfully failed and neglected to do so. Neither the said Notice nor the invalidation of the purported renewal of lease so obtained illegally and malafide was challenged by the Corporate Debtor knowing fully well that there had been factual noncompliance of the statutory preconditions and as such purported renewal of Lease in respect of the Kilcott Tea Estate so obtained was void, illegal and unenforceable. A copy of the letter dated 4th August, 2016 issued by the District Magistrate & Collector, Jalpaiguri, is annexed hereto and marked as ANNEXURE R- 2"

67 75. Thus, the plea, which was taken by the State is that the renewal of

lease is ex-facie contrary to law in force and in gross breach of the mandated

statutory provisions as embodied in Rule 4 read with Schedule F of the West

Bengal Estate Acquisition Act & Rules 1954. It was further pleaded that office

of District Magistrate and Collector, Jalpaiguri has issued a notice to the

Manager, Kilcott Tea Garden to pay an amount of Rs.57,25,711 towards

required Salami. The copy of the letter dated 04.08.2016, which was written

to the Manager, Kilcott Tea Garden by District Magistrate & Collecotr,

Jalpaiguri as annexed in the counter affidavit is as follows:

"OFFICE OF THE DISTRICT MAGISTRATE & COLLECTOR, JALPAIGURI (TOUZISECTION) Memo No. 253/1(2)/TZ Dated 04.08.2016 To The Manager, Kilcott Ten Garden, P.O. & P.S. Matelli, Dist. Jalpaiguri-735223 SUB: Demand Notice for payment of Salami, REF: This Office Memo No. 294/TZ, dated 28/08/2015 Whereas, the Government in the Land and Land Reforms Department decided that post facto approval would be accorded for renewal of lease of an area of 1572.06 acres (636.19 hectares) of land comprised in Kilcott Tea Garden for a period of Thirty (30) years in favour of M/S Duncans Industries Ltd. Subject to payment of Salami at the concessional rate of Rs. 9000/- per hectare.

And

Whereas, pursuant to the Order passed on 06.05.2015 by the Hon'ble Supreme Court of India in Civil Appeal No. 2546/2006 with Civil Appeal No. 2548/2006 on the above subject and as per the G.O. No. 3610LR, Dated 09.12.2004, it has been decided that for entering into fresh lease the present applicant, being the transferee has to pay Salami.

68 And

Whereas, in pursuant of G.O. No. 2232(3)-LP/3T-13/02GE(M) Pt.if. dated 03.08.2015 of the Secretary to the Government of West Bengal, Land and Land Reforms Department the Salami is to be paid at a time.

And

Whereas, after the judgment of the Hon'ble Supreme Court there is no bar to demand Salami.

In view of the above, it is found from the office record that the required Salami amounting to Rs. 57,25,711/- (Rupees Fifty seven lakh Twenty five thousand seven hundred and Eleven) only not deposited by his end till date. Hence, it is once again directed to the management of Kilcott Tea Garden to pay the Salami amounting Rs. 57,25,711/- (Rupees Fifty seven lakh Twenty five thousand seven hundred and Eleven) only within one month from the date of receipt of this letter.

This may be treated as "URGENT"

Sd/-

For District Magistrate & Collector Jalpaiguri Memo No. 253/1(2)/TZ Dated 04.08.2016"

76. We have also noticed the relevant Clause 1-A and 1-B as inserted by

Notification dated 01.06.1994 were set aside by the Calcutta High Court vide

its judgment reported in 2006 SCC OnLine Cal 570, which judgment was

challenged by Collector, Jalpaiguri by way of an Appeal in the Hon'ble

Supreme Court and the Hon'ble Supreme Court delivered its judgment on

May 06, 2015, in Civil Appeal No.2548 of 2006 in the matter of State of

West Bengal and Ors. vs. Calcutta Minerals Supply Co. Pvt. Ltd. and

Anr.; and Civil Appeal No.2549 of 2006 in the matter of Collector,

Jalpaiguri and another vs. Darjeeling Dooars Plantations (Tea) Ltd. and

another, by which judgment, the judgment of the Calcutta High Court was 69

set aside and Notification dated 01.06.1994 was upheld. It was held that the

State Government was entitled to claim Salami.

77. In the facts of the present case, we have already noticed Clause 16(a)

of the original Lease Deed, which provided that at the time of renewal of the

lease, the State is entitled to renew the lease on such terms and conditions

as it may determined. For ready reference, Clause 16A is extracted below:

(16) (a) That the Lessee/ Lessees shall be entitled to the renewal of this lease for a further period of thirty years and to successive renewals, for, similar, periods, subject to the rules and the terms and, conditions of this lease and to such other terms and conditions as the State Government may from time to time consider it necessary to impose and include in such renewed lease or leases and subject to further to such rent as may then be fixed, provided that such additional terms and conditions shall not be inconsistent with the law regulating such lease* and shall not have retrospective effect."

78. Thus, at the time of renewal, it was open for the State to put terms and

conditions and renewal could have been granted on such terms and

conditions as the State Government may from time to time consider it

necessary to impose. Admittedly, at the time of renewal, which was dated

15.11.1995, the Notification dated 01.06.1994 was already enforced, adding

Clause 1-A and 1-B in the Form-1, requiring payment of Salami of

Rs.15,000/- per hectare at the time of execution of lease. However, in the

renewed Lease Deed, as extracted above dated 15.11.1995, it is clear that

although expression Salami has been used in the Lease Deed, but no amount

of Salami was mentioned and only rent was mentioned, which was @

Rs.13,180 per annum. It is further relevant to notice that renewed Lease 70

Deed was executed on behalf of State by Additional District Magistrate &

Additional Collector, Jalpaiguri, which contains following:

"Signed for and on behalf of the Governor of West Bengal by in the presence of"

79. Thus, the execution of Lease by Additional District Magistrate and

Additional Collector, Jalpaiguri was on behalf of the Governor, who was

competent to execute the lease. Earlier, original leases were also executed by

District Authority of similar designation.

80. The letter, which has been brought on the record by the State, issued

by the District Magistrate & Collector Jalpaiguri, dated 04.08.2016, requiring

Salami amount of Rs.57,25,711/- from the Kilcott Tea Garden, which

admittedly has not yet been paid. The submission and pleading of the State

of West Bengal is that renewal of Lease Deed dated 15.11.1995 is void and

inoperative. The renewal Lease Deed was executed on 15.11.1995 by

Authority, which was competent to execute the Lease Deed on behalf of the

Government of West Bengal, which Lease Deed has also been registered by

the Registry Authority. We fail to see that how the Lease Deed, which is

executed and registered can be held to be void and inoperative. The

submission, which has been advanced by the State of West Bengal is that at

the time of execution of renewal of Lease Deed dated 15.11.1995, Salami was

required to be realised, for which letter has been issued on 04.08.2016. As

observed above, at the time of renewing of Lease Deed, it was open for the

State of West Bengal to incorporate such conditions as may deemed fit,

including condition of payment of Salami for renewal of the Lease Deed, but 71

in the renewed Lease Deed, no such payment of Salami has been computed

or provided for and only amount, which was mentioned in the Lease Deed is

towards rent of Rs.13,180/-, as noted above. When the Lease Deed, which

was executed on 15.11.1995 was in accordance with the law and cannot be

held to be void on the ground non-payment of Salami. Issuing a subsequent

letter on 04.08.2016, where demand of Salami has been made, shall not make

the execution of the Lease Deed void or inoperative. At best, the State could

have asked the lessee of Kilcott Tea Garden to enter into Supplementary Lease

Deed, providing for payment of Salami, or take any action as permissible in

accordance with law with regard to renewed Lease Deed. Admittedly, the

State has not brought any order on the record, cancelling the renewed Lease

Deed dated 15.11.1995. When the Lease Deed, which was executed and

registered and is not cancelled, we fail to see, how the Lease Deed can be

declared void and inoperative. Insofar as payment of Salami by letter dated

04.08.2016 is concerned, it is always open for the State to realise the Salami

or to take such other action as per law.

81. Similarly, Lease Deeds with regard to other Tea Gardens namely

Garganda was renewed on 08.11.1996 and Bagarcote-I on 19.06.1998, which

were to continue till 18.09.2026 (Garganda) and 22.05.1998 (Bagarcote-I).

We, thus, are satisfied that by execution of renewal of Lease Deed on behalf

of the State of West Bengal in favour of the Corporate Debtor of three different

Tea Gardens, namely - Kilcott, Garganda and Bagarcote, the Corporate

Debtor has subsisting leasehold rights in the above three Tea Gardens and it

cannot be held that the non-payment of Salami, as required to be paid as per

State West Bengal Estate Acquisition Rules, 1954 (as Amended), shall make 72

the Lease Deed void and inoperative. Similarly, renewal of Lease Deed of

Garganda and Bagarcote-I are also valid renewals and they cannot be held as

void and inoperative.

82. In view of the foregoing discussions, we answer Question Nos.3 and 4

in following manner:

Ans. to Question No.3 : Renewal of Lease Deed of Kilcott with effect from 15.11.1995 till 23.08.2025 and renewal of Lease Deed of Garganda, with effect from 08.11.1996 to 08.09.2026 and renewal of Lease Deed of Bagarcote from 19.06.1998 till 22.05.2028 are valid renewals and the Corporate Debtor shall have subsisting leasehold rights in the above Tea Gardens on the date of commencement of CIRP, i.e. 05.03.2020.

Ans. to Question No.4 : Non-payment of Salami as required to be paid as per West Bengal Estate Acquisition Rules, 1954 (as Amended) by the Corporate Debtor by execution of lease of renewal, does not make the renewal void and inoperative, whereas the renewal of Lease Deed also uses expression 'Salami', but it does not provide for payment of any Salami as condition of renewal of lease.

Question No.5.

83. IA No.1256/IB/2020 was filed by RP praying for direction to

Respondent to extend all assistance and co-operation to the Applicant as 73

required by him for taking over possession of Hantapara, Garganda, Tulsipara

and Dumchipara Tea Estates with certain other prayers. The Application filed

by RP was opposed on behalf of Merico Agro Industries Pvt. Ltd., who has

been given possession of the above Tea Estates by different Agreements prior

to 05.03.2020 and Merico was in possession of the different Tea Estates and

was carrying out the operations. The possession of Hantapara and Garganda

Tea Estates was handed over to Merico on 29.01.2018, in pursuance of

Agreement executed between the Corporate Debtor and the Merico.

84. We have already noticed the Notification issued by the Central

Government on 28.01.2016 for taking over control of the management of Tea

Gardens by the Tea Board. The Notification was challenged by the Corporate

Debtor before the Calcutta High Court by filing a Writ Petition, which was

dismissed by Learned Single Judge, against which an Appeal was filed and

Division Bench vide order dated 20.09.2016 passed an interim order with

object to enable the Gardens to run. The Corporate Debtor was asked to take

possession and run the Tea Gardens as a Caretaker. The Corporate Debtor,

who could not itself run the Tea Gardens, entered into an Agreement with

Merico with respect to Hantapara and Garganda Tea Estates on 29.01.2018

for five years. With respect to Tulsipara, an Agreement was entered on

20.07.2018 and for Dumchipara Tea Estate, an Agreement was entered on

19.08.2019.

85. Before the Adjudicating Authority in IA No.1256/KB/2020, the case of

the RP was that the Corporate Debtor has already applied for renewal of the

leases with regard to aforesaid four Tea Gardens and with regard to Garganda 74

Tea Garden, renewal Deed was executed on 08.11.1996, which was valid till

18.09.2026. The pleadings of the RP has been captured by Adjudicating

Authority in paragraph 2.14 of the order dated 28.05.2021, which is as

follows:

"2.14 The lease with respect to the Garganda Tea Garden was renewed vide deed of lease dated 08.11.1996, and the same is valid till 18.09.2026. Copies of original lease deed dated 19.07.1974, and a copy of the renewed registered deed dated 08.11.1996 are placed on record."

86. The RP claimed rights on the Tea Estates on the ground that renewal

for lease had been applied and with regard to Garganda, renewal has already

been executed on 08.11.1996. The submission was opposed on behalf of the

Merico, who sated that the Applicant/ RP has no right in any of the Tea

Gardens and Tea Gardens are owned by the State of West Bengal. Hence, the

possession of such Tea Gardens cannot be taken by the RP under Section

18(1)(f) of the Code. The Adjudicating Authority, after considering the

submission of both the parties, held that is it not every asset that is required

to be taken custody of, but only those assets over which the Corporate Debtor

has ownership rights as recorded in the balance sheet. The Adjudicating

Authority in paragraph-5.6 noted the date on which leases expired of Tea

Gardens. Paragraph 5.6, is as follows:

"5.6 Once the question of ownership is out of the way, we notice certain material facts concerning the lease, in the table below: -

Name of the Lead Deed Date of Date on

Tea Garden Date Commencement which

expired 75

Garganda 19.07.1974 20.09.1965 19.09.1995

Dumchipara 06.12.1975 13.09.1974 12.09.2004

Tulsipara 26.02.1980 18.04.1974 17.04.2004

Hantapara 25.11.1980 03.12.1974 02.12.2004

These leases have not been renewed, for reasons that re not really relevant for the present purpose. If they are not renewed, though there may be a provision for renewal of the leases, the gardens cannot really be said to "belong" to the Corporate Debtor."

87. The Adjudicating Authority further observed that leases have not been

renewed. The Adjudicating Authority ultimately after considering the

submissions, in paragraph 5.16 took the view that Corporate Debtor's

financial position re not good and the RP is not in a position run the four Tea

Gardens, if it was handed over to him on a platter today. While making the

above observation in paragraph 5.16, 5.17, 5.18 and 5.19, the Application

came to be rejected. Paragraphs 5.16, 5.17, 5.18 and 5.19 are as follows:

"5.16. Be that as it may, when it is the admitted case of the RP that the corporate debtor's financials are not too good and there is nothing on record to indicate that the financials of the corporate debtor have suddenly been on the upswing - we do not see how the RP would be in a position to run the four tea gardens. The RP is not in any position to run the four tea gardens if it were handed over to him on a platter today.

5.17. A procrustean approach to the CIRP is to be eschewed in favour of a more level-headed one keeping in view natural variation and individuality of the CIRP itself. It has to take into account local circumstances and legitimate expectations. In the present case, until the lease is renewed in favour of Duncans, one cannot see 76

how the RP can even stake a claim for taking over. Merico's occupation of the tea gardens is well within the knowledge of the eventual owner the State of West Bengal, as borne out by the letters forming part of Merico's reply.

5.18. In these circumstances, a mechanical application of the letter of the law will inevitably result in deleterious consequences for the large labour workforce and for the production of tea from the gardens. It will throw into disarray a situation where Merico is apparently doing a fine job of running the four tea gardens and taking good care of the workers. In these times when the covid- 19 pandemic and its second wave is wreaking havoc on the lives of ordinary citizens, such a move would be wholly unnecessary. We hasten to add that the principles enunciated here are not necessarily of universal application, but one borne out of the facts and circumstances obtaining in the present case.

Order

5.19 In this view of the matter, the prayers asked for in the present IA cannot be granted IA No.1256/KB/2020 is, therefore, dismissed, but in the facts of the case, without costs. Liberty to apply is granted if and when the Govt of West Bengal takes a decision on the renewal of the lease."

88. We have carefully read the order of the Adjudicating Authority. Insofar

as three Tea Gardens, i.e. Hantapara, Tulsipara and Dumchipara are

concerned, there is no dispute that leases of the same have come to an end

in the year 2004. But categorical case of the Appellant before the

Adjudicating Authority was that lease of Garganda has been renewed by

registered lease dated 08.11.1996. The whole analysis, which was made by

the Adjudicating Authority in paragraphs 5.1 to 5.18, there is no

consideration of renewal lease of Garganda dated 08.11.1996. Even though,

the Corporate Debtor was not the owner of the Tea Gardens and it was the 77

State of West Bengal having the rights over the Tea Gardens, but the

Corporate Debtor having subsisting leasehold right in Tea Garden at

Garganda, the said Tea Garden could have been taken possession, it being

the asset of the Corporate Debtor, we have already held that since leasehold

right, was with the Corporate Debtor, it was the assets of the Corporate

Debtor. We, thus, are of the view that order of Adjudicating Authority dated

28.05.2021, although is liable to be affirmed with regard to rejection of

Application, with regard to three Tea Gardens, namely - Dumchipara,

Tulsipara and Hantapara, but the Application was not liable to be rejected

with regard to Garganda Tea Garden, which lease was renewed by the State

of West Bengal by executing a registered renewed Lease Deed dated

08.11.1996. Thus, the order dated 28.05.2201 deserve to be partly set aside,

insofar as it related to Tea Garden Garganda. It is held that RP was entitled

to take custody and possession of Tea Garden Garganda, whose lease having

been renewed on 08.11.1996 and the Corporate Debtor has subsisting right

in the Lease Deed till 08.09.2026.

89. In result, the Company Appeal (AT) (Insolvency) No.672 of 2021

deserves to be partly allowed to the above extent.

Question No.6

90. The Adjudicating Authority while rejecting the other Application filed

by the RP has relied on its order dated 28.05.2021 passed in IA

No.1256/KB/2020 and held that since it has considered similar issues in IA

1256 of 2020, the Application filed by RP for taking custody and control of

the other Tea Gardens deserved to be rejected. We may refer to the order of 78

the Adjudicating Authority passed dated 21.04.2022, in IA

No.1111/KB/2021, which Application was filed by the RP for taking

possession of two Tea Gardens, namely - Kilcott and Nagaisuree Tea Estates.

With regard to Kilcott Tea Estate, it was the case of the RP that for Kilcott Tea

Estate the lease was executed on 22.01.1973 for 30 years and whose

Indenture was again executed on 15.11.1995 for 30 years with effect from

24.08.1995. The said pleadings have been noted in paragraph 5 and 6 of the

order dated 21.04.2022, which are as follows:

"5. The Lease with respect to Kilcott Tea Estate was executed on 22.01.1973 for a period of thirty years commencing from 04.08.1963 and an indenture of lease was executed on 15.11.1995 for a term of thirty years on and from 24.08.1995. Hence, the transfer was done while the lease for the Tea Estate was still subsisting.

6. Respondent No. 1 has not only taken over the leasehold lands of the two Tea Estates being Kilcott Tea Co. Ltd. and Nagaisuree Tea Estate, but has also taken possession and control of the other assets and properties of the Corporate Debtor such as building, plant, machinery, equipment, office premises, living quarters etc."

91. The Adjudicating Authority, ultimately after considering the Application

of the RP has noticed in the order that similar Application filed for possession

of four Tea Gardens, where Adjudicating Authority observed that RP would

not be able to run these two Tea Gardens. In paragraph 48 and 49, referring

to the order passed in IA No.1256/KB/2020, following have been observed:

"48. It is an admitted fact that a similar application had been filed for possession of four tea gardens. The Corporate Debtor is in 79

financial stress and it is of concern whether the Resolution Professional would be able to run these two Tea Estates.

49. The lease given to the Corporate Debtor has not been renewed in favour of the Corporate Debtor hence, it is out of question that the Resolution Professional can take possession of the Tea Gardens to which the Corporate Debtor has no ownership."

92. The Adjudicating Authority further noticed in paragraphs 50 and 51

that Sammelan Tea and Beverages Pvt. Ltd. has been given possession to run

the two Tea Gardens with effect from 03.11.2021. The Adjudicating Authority

has also referred to the letter dated 08.03.2022 issued by the Principal

Secretary, Labour Department, Government of West Bengal.

93. Similarly, while deciding IA No.415/KB/2021, the Adjudicating

Authority relied on order passed in IA No.1256/KB/2020 and held that since

arguments are common and issue involved is conclusively covered by the

order, observed following in paragraph 22 of the order dated 09.05.2022:

"22. During the course of hearing it was noticed that, in this application also, the question of law is similar to the one in I.A.(IB) No. 1256/KB/2020 and I.A.(IB) No. 1111/KB/2021. These two applications have already been decided after hearing exhaustive arguments of the learned Senior Counsel. Since the arguments are common and issue involved is conclusively covered by the order passed by this Bench earlier, there is no need to once again give more and more time for hearing the same arguments on behalf of the Resolution Professional and the the Respondent No. 1."

94. In IA No.109/KB/2022, which was filed by the RP for taking possession

of Rungli Rungliot Tea Garden, which Application also came to be rejected,

relying on the order passed in IA No.1256/KB/2020. In paragraph 5 of the 80

order dated 18.07.2022 passed in IA No.109/KB/2022, following has been

observed:

"5. Similar applications have been filed by the Resolution Professional for possession of other Tea Gardens. This Adjudicating Authority in I.A. (IB) No. 1256/KB/2018 has given its view and had observed that the only concern is that the Corporate Debtor is in financial stress and whether the Resolution Professional would be able to run these Tea Garden."

95. With regard to another order passed by the Adjudicating Authority in

IA No.665/KB/2021, which was filed by the RP for taking possession of

Bagarcote Tea Garden, which also came to be rejected on 09.05.2022. In the

order dated 09.05.2022, the Adjudicating Authority again relied on order

dated 28.05.2021 passed in IA No.1256/KB/2020. In paragraph 20 of the

order, following has been observed:

"20. During the course of hearing it was noticed that, in this application also, the question of law is similar to the one in I.A. (IB) No. 1256/KB/2018 and I.A. (IB) No.1111/KB/2021. These two applications have already been decided after hearing exhaustive arguments of the learned Senior Counsel. Since the arguments are common and issue involved is conclusively covered by the order passed by this Bench earlier, there is no need to once again give more and more time for hearing the same arguments on behalf of the Resolution Professional and the Respondent No.1."

96. From the above, it is clear that while rejecting other Applications filed

by the RP for taking possession of Tea Gardens, reliance has been made on

order dated 28.05.2021 passed in IA No.1256/KB/2020. It is to be noted

that the possession of all four Tea Gardens, which was subject matter of IA 81

No.1256/KB/2020 was handed over to the Merico by the Corporate Debtor

under Bipartite Agreement and hence, the possession of those four Tea

Gardens were handed over prior to initiation of CIRP. It was a distinguishing

feature with regard to other Applications, where the RP has pleaded for

possession of other Tea Gardens, which have been taken over by Merico and

Sammelan, subsequent to initiation of CIRP on 05.03.2020. Further, we have

already held that order dated 28.05.2021 passed in IA No.1256/KB/2020 is

not sustainable with regard to Tea Garden Garganda and we have partly

allowed the Appeal, challenging the order dated 28.05.2021. We have taken

the view that Appeal deserves to be partly allowed against the order dated

28.05.2021. Furthermore, there were other grounds in other Applications

filed by the RP. There was pleading with regard to renewal of Lease Deeds for

two more Tea Gardens, i.e. Bagracote Tea Garden, which was renewed on

22.05.1998 and Kilcott Tea Garden, which was renewed on 15.11.1995 till

23.08.2025. Thus, mechanically relying on the order dated 28.05.2021 in IA

No.1256/KB/2020 is not sustainable. While passing the subsequent orders,

rejecting the IAs filed by the RP, the Adjudicating Authority was required to

consider the Applications. In any view of the matter, we have already

considered and held above that the leasehold rights of the Corporate Debtor,

subsisting in three Tea Gardens namely - Garganda, Kilcott and Bagarcote.

Hence, the Applications filed by the RP, insofar as above three Tea Gardens,

deserve to be allowed.

82

Question No.7

97. One of the submissions, which has been pressed by the learned

Counsel for the Appellant is that possession taken by the Sammelan and

Merico, subsequent to the order dated 05.03.2020, violates Section 14 of the

Code.

98. From the pleadings of State of West Bengal in its counter affidavit filed

on behalf of Respondent Nos.5 and 7 in Company Appeal (AT) (Insolvency)

Nos.593 of 2022, the State itself has given the dates when possession was

handed over to Merico or Sammelan of different Tea Gardens. The possession

of Birpara Tea Estate was taken by Merico with effect from 16.12.2021, which

is pleaded by the State in paragraph 11(y), which is as follows:

"11(y) That in accordance with the terms agreed upon in the meeting on 12th February 2021, Merico entered into possession and management of the Birpara Tea Estate and reopened the said Tea Estate with effect from 16th February 2021. Since reopening of Birpara Tea Estate under the supervision of the State Authorities, Merico has restored electricity, paying dues and regular wages and entitlements to all the workers to their utmost satisfactions, making regular timely deposits of Provident Funds and other statutory deposits after around a decade and gradually restored normalcy and functioning of the Garden in the best interest of improving the deplorable conditions of thousands of workers and labourers engaged thereat without retrenching any of them. Merico has since installed all necessary machinery and equipment, restored the dilapidated buildings with all necessary replacements and the Tea Garden is functioning as an exemplary Garden. This Deponent craves leave to refer to the Minutes of the Meeting held on 12th February 2021 at the time of hearing."

83 99. The possession of Runglee Rungliot Tea Estate has been taken by

Merico on 24.11.2021, which has been pleaded by State in paragraph 11(dd),

which paragraph is as follows:

"11(dd). That it is most respectfully submitted that in compliance of the terms so agreed, Merico took over possession and control of 'Runglee Rungliot Tea Estate' with effect from 24th November 2021 and reopened the Garden, restored the infrastructures situated which were in shambles, cleared all dues to the workers and is regularly paying wages devoid of any default and undertaken necessary process for renovation of the Bunglow which is in deplorable condition due to non-maintenances over decade, reopened the Factory by necessary replacements of plants and Machinery of the Garden, restored electricity and water connections, rejuvenation of the Tea Plants."

100. The possession of Bagracote Tea Estate has been taken by Sammelan

with effect from 01.07.2021, which is pleaded in paragraph 11 (ff), which is

as follows:

"11(ff) That it is most respectfully submitted that Sammelan Tea, the respondent herein accordingly assumed possession and management of the Bagracote Tea Estate and reopened the Tea Estate with effect from 1st July 2021 in the presence of high Officials of the Govt. of West Bengal, local Political Leaders, Union representatives and thousands of workers and labourers and since then undertaken all necessary process of renovations and repair of the factory, plants and machinery, restoration of Electricity and water connections, rejuvenation of the Tea Garden as a whole and paid dues and is also regularly paying the wages and due entitlements of the workers, without a single retrenchment or default."

84 101. Further, possession of Nagaisuree and Kilcott Tea Estates were taken

by the Sammelan with effect from 03.11.2021, which is pleaded in paragraph

11(ii), which is as follows:

"11(ii) That it is most humbly submitted that in compliance of the terms so agreed, Sammelan Tea took over and reopened both the Nagaisuree and Kilcott Tea Estates with effect from 3rd November, 2021 in the presence of high officials of the Govt. of West Bengal. Since taking over, Sammelan Tea has undertaken all necessary remedial steps, including payment of dues and regular timely payments of all wages and entitlements of the workers to their satisfactions, timely deposits of Statutory payments, replacements of junk equipment, plants and machineries, complete renovations of the buildings. The Tea Estates which were converted into jungles has been restored and rejuvenated."

102. Thus, possession of the above Tea Gardens have been taken

subsequent to 05.03.2020. Section 14 of the IBC, on which reliance has been

placed by Counsel for the Appellant, provides as follows:

"14. Moratorium. -

(1) Subject to provisions of sub-sections (2) and (3), on the insolvency commencement date, the Adjudicating Authority shall by order declare moratorium for prohibiting all of the following, namely: -

(a) the institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgement, decree or order in any court of law, tribunal, arbitration panel or other authority;

(b) transferring, encumbering, alienating or disposing off by the corporate debtor any of its assets or any legal right or beneficial interest therein;

85 (c) any action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of its property including any action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002);

(d)the recovery of any property by an owner or lessor where such property is occupied by or in the possession of the corporate debtor.

Explanation.-For the purposes of this sub-section, it is hereby clarified that notwithstanding anything contained in any other law for the time being in force, a licence, permit, registration, quota, concession, clearance or a similar grant or right given by the Central Government, State Government, local authority, sectoral regulator or any other authority constituted under any other law for the time being in force, shall not be suspended or terminated on the grounds of insolvency, subject to the condition that there is no default in payment of current dues arising for the use or continuation of the license or a similar grant or right during moratorium period;

(2) The supply of essential goods or services to the corporate debtor as may be specified shall not be terminated or suspended or interrupted during moratorium period.

(2A) Where the interim resolution professional or resolution professional, as the case may be, considers the supply of goods or services critical to protect and preserve the value of the corporate debtor and manage the operations of such corporate debtor as a going concern, then the supply of such goods or services shall not be terminated, suspended or interrupted during the period of moratorium, except where such corporate debtor has not paid dues arising from such supply during the moratorium period or in such circumstances as may be specified.

(3) The provisions of sub-section (1) shall not apply to --

(a) such transactions, agreements or other arrangement as may be notified by the Central 86

Government in consultation with any financial sector regulator or any other authority;

(b) a surety in a contract of guarantee to a corporate debtor.

(4) The order of moratorium shall have effect from the date of such order till the completion of the corporate insolvency resolution process:

Provided that where at any time during the corporate insolvency resolution process period, if the Adjudicating Authority approves the resolution plan under sub-section (1) of section 31 or passes an order for liquidation of corporate debtor under section 33, the moratorium shall cease to have effect from the date of such approval or liquidation order, as the case may be."

103. Section 14 (1) (d) prohibit recovery of any property by an owner or lessor

where such property is occupied by or in the possession of the Corporate

Debtor.

104. Learned Counsel for the Appellant has placed reliance on the judgment

of Hon'ble Supreme Court in Rajendra K. Bhutta vs. Maharashtra Housing

and Area Development Authority and Anr. - (2020) 13 SCC 208. The

Hon'ble Supreme Court in the above case had occasion to consider Section

14(1) of the IBC. In the above case, a joint development agreement was

executed by Maharashtra Housing and Area Development Authority

("MHADA") with the Corporate Debtor and Goregaon Siddharth Nagar

Sahakar Griha Nirman Sanstha Ltd. which had envisaged redevelopment of

tenements. The CIRP against the Corporate Debtor commenced on

24.07.2017. The MHADA by notice dated 12.01.2018 issued termination

notice, terminating the lease and directing the Corporate Debtor to hand over 87

possession to MHADA, in turn the MHADA shall take possession. An

Application was filed before the Adjudicating Authority by the Corporate

Debtor restraining the MHADA to take possession, which was rejected by the

Adjudicating Authority. The Appeal against the said order was also dismissed

by the NCLAT. In the above context, the Hon'ble Supreme Court had occasion

to consider applicability of Section 14, sub-section (1). In paragraph 25, the

Hon'ble Supreme Court held that after imposition of moratorium under

Section 14, statutory status quo is pronounced. In paragraph 25, following

was laid down:

"25. There is no doubt whatsoever that important functions relating to repairs and reconstruction of dilapidated buildings are given to MHADA. Equally, there is no doubt that in a given set of circumstances, the Board may, on such terms and conditions as may be agreed upon, and with the previous approval of the Authority, hand over execution of any housing scheme under its own supervision. However, when it comes to any clash between MHADA Act and the Insolvency Code, on the plain terms of Section 238 of the Insolvency Code, the Code must prevail. This is for the very good reason that when a moratorium is spoken of by Section 14 of the Code, the idea is that, to alleviate corporate sickness, a statutory status quo is pronounced under Section 14 the moment a petition is admitted under Section 7 of the Code, so that the insolvency resolution process may proceed unhindered by any of the obstacles that would otherwise be caused and that are dealt with by Section 14. The statutory freeze that has thus been made is, unlike its predecessor in the SICA, 1985 only a limited one, which is expressly limited by Section 31(3) of the Code, to the date of admission of an insolvency petition up to the date that the adjudicating authority either allows a resolution plan to come into effect or states that the corporate debtor must go into the liquidation. For this temporary period, at least, all the things referred to under 88 Section 14 must be strictly observed so that the corporate debtor may finally be put back on its feet albeit with a new management."

105. The learned Counsel for the Appellant has also relied on the judgment

of this Tribunal in Maharashtra Industrial Development Corporation vs.

Sasntanu T. Ray Resolution Professional and Anr. - (2022) SCC OnLine

NCLAT 105. In the above case also, this Tribunal had occasion to consider

Section 14. The facts of the case have been noticed in paragraph-1 of the

judgment, which are as follows:

"1. This Appeal has been filed against the order dated 12.04.2021 passed by the Adjudicating Authority (National Company Law Tribunal), Mumbai Bench, Court No. I in M.A No. 3691 of 2019. Brief facts of the case giving rise to this Appeal are:-

The Appellant- 'Maharashtra Industrial Development Corporation' allotted Plot No. B-11 to the Corporate Debtor on 23.12.2014. A Lease Agreement was executed between the Appellant and the Corporate Debtor on 20.01.2015 whereunder license was granted in respect of the plot for two years subject to condition that it must complete 20% construction within two years i.e. from 20.01.2015 till 19.01.2017. Tri-partite Agreement was executed between the Corporate Debtor, the Appellant and DHFL, whereunder the Plot was mortgaged to DHFL and loan amount of Rs.7,22,80,214/- was disbursed to the Corporate Debtor. A Notice dated 01.11.2018 was issued by the Appellant to the Corporate Debtor asking it to show cause as to why action as provided in Clause 5(b) (i) of the Agreement to lease should not be taken against it since the Corporate Debtor has not completed the construction work of the factory building. By order dated 11.03.2019, Corporate Insolvency Resolution Process (CIRP) was initiated against the Corporate Debtor on an Application filed by 'Kay Bee Foundry Services Private Limited'- (Operational Creditor). On 29.01.2019, the Appellant had issued a letter to DHFL informing that the Corporate Debtor had committed the breach and the Appellant would be taking possession of the plot. The Respondent No.2- 'Asset 89

Reconstruction Company (India) Limited' assignee of the DHFL filed Writ Petition No. 2470 of 2019 challenging the letter dated 29.01.2019 in the Bombay High Court which petition was dismissed on 04.11.2019 holding that lease was liable to be revoked if the Corporate Debtor had committed default in complying with the terms of the lease. On 08.11.2019, the Appellant issued a Notice to the Corporate Debtor cancelling the Lease Agreement dated 20.01.2015 directing the license holder to vacate the plot. Notice communicated that Authorised Officer will visit the plot on 14.11.2019 to take possession. The Resolution Professional filed an M.A No. 3691 of 2019 before the Adjudicating Authority praying for following reliefs:-

"a. To quash and set aside the notice dated 8.11.2019 issued by the Respondent as null and void and to restrain the Respondent from taking any steps in further of the said notice dated 8.11.2019;

b. To direct the Respondent to restrain from terminating the lease agreement dated 21.1.2015 till the completion of the corporate insolvency resolution process or to take any further step in this respect;

c. To direct the Respondent to extend their co-operation in concluding the corporate insolvency resolution process in terms of the Insolvency and Bankruptcy Code, 2016; d. Till the disposal of this MA, to pass an order directing and injuncting the Respondent from taking possession of the said leasehold land till such time this MA is disposed of. e. For interim and ad interim orders in terms of prayers (1) to (3) above.""

106. The Adjudicating Authority has allowed the prayer (a) in the

Application, aggrieved by which order, the Maharashtra Industrial

Development Corporation has filed the Appeal. Question of Section 14, came

for consideration in the above context. This Tribunal noticed the judgment

of the Hon'ble Supreme Court in Rajendra K. Bhutta (supra) and in 90

paragraph 8, two questions were noticed, which arise for consideration.

Paragraph 8 of the judgment is as follows:

"8. From the submissions of the Counsel for the parties, following questions arise for consideration in this Appeal are:-

(i) Whether after initiation of CIRP and enforcement of 'Moratorium' under Section 14, the Appellant could have cancelled the lease which was earlier granted in favour of the Corporate Debtor and take possession of the plot in question during CIRP?

(ii) Whether the Adjudicating Authority had no jurisdiction to entertain MA No.3691 of 2019 praying for quashing the Notice dated 08.11.2019?

(iii) Relief, if any, to which the Appellant is entitled in this Appeal?"

107. After considering earlier precedent, this Tribunal concluded that

Moratorium having kicked in w.e.f. 11.03.2019, the Appellant could not have

taken possession of the leased property by virtue of restrain under Section

14(1)(d). In paragraph 28, 29 and 30, following have been observed:

"28. From the law of the Hon'ble Supreme Court as laid down in "Embassy Property Developments Private Limited" and "Tata Consultancy Services Limited" (supra), the Adjudicating Authority has no jurisdiction to judicial review of any action taken by the Government or Statutory Authority in relation to matters which is in the realm of public law. Thus, in the facts of the present case, the Appellant who had granted a lease to the Corporate Debtor is well within its jurisdiction to take appropriate action on account of breach of conditions by the Corporate Debtor but limited question for consideration is as to whether it has to stay its hand from taking such action during currency of CIRP.

29. After considering the facts on the record and arguments of the parties, we are of the considered opinion that in view of the fact that 91

Moratorium has kicked in w.e.f. 11.03.2019 due to currency of Moratorium, the Appellant could not have taken possession of the leased property by virtue of restrain under Section 14(1)(d). Further continuation or initiation of any other proceeding under Section 14(1)(a) which also prohibited the Appellant to cancel the lease during currency of the Moratorium. Although after CIRP is over, there is no fetter on the right of the Appellant to take proceeding for breach of terms of the lease by the Corporate Debtor.

30. We have noticed that the Adjudicating Authority by its impugned order has allowed the prayer (a) i.e. quash the Notice dated 08.11.2019. The order having passed during the currency of the Moratorium, no exception can be taken to the order passed by the Adjudicating Authority. We however, hasten to add that the quashing of the Notice dated 08.11.2019 does not create any fetter on the rights of the Appellant to pass appropriate order for breach of terms of lease after CIRP is over. The Adjudicating Authority with regard to prayers (b) to

(d) has directed the Appellant not to take any coercive action till the Application for approval of the Resolution Plan is heard by the Adjudicating Authority. The above direction was also to protect the status quo which was existing on the date of initiation of CIRP. We, however, make it clear that as soon as the CIRP is over, the Appellant shall have all powers to take appropriate action."

108. When we look into the facts of the present case, it is clear that the

Corporate Debtor has subsisting rights in three Tea Gardens, i.e., Garganda,

Kilcott and Bagracote-I as noticed above. Although, possession of Garganda

was taken prior to enforcement of moratorium, but possession of Kilcott and

Bagaracote was taken respectively on 03.11.2021 and 01.07.2021 as noticed

above. The Corporate Debtor has subsisting rights in the above leases of

Bagaracote and Kilcott, which were renewed. Hence, after the enforcement of

the moratorium on 05.03.2020, the possession of Tea Estates of the Kilcott

and Bagaracote could not have been taken. It is true that the State was the 92

owner of Tea Estates and due to suffering of labour, the Department of

Labour, Govt. of West Bengal and Labour Commissioner held various

meetings to mitigate the sufferings of the labourers, the possession of

different gardens were handed over to Sammelan to the aforesaid two Tea

Gardens, but moratorium having enforced, taking possession of aforesaid two

Tea Gardens is in clear breach of Section 14 (1) (d).

109. With regard to other Tea Gardens whose leases have expired, State was

owner of all the Tea Estates and it is a case of the Department that lease of

Tea Gardens were not renewed and possession was taken. There being no

subsisting right of the Corporate Debtor in the Tea Gardens, except the three

Gardens, i.e. Garganda, Kilcott and Bagracote. We do not find any infirmity

with regard to handing over possession to Marico and Sammelan for running

other Tea Gardens after enforcement of moratorium. Thus, violation of

moratorium under Section 14(1)(d) has to confine to two Tea Gardens where

the Corporate Debtor has subsisting rights, i.e., Kilcott and Bagracote.

Question No.8

110. The question now to be answered as to which Tea Gardens, the

Appellant was entitled to be handed over possession for which Applications

were filed. As noted above, IA No.1256/KB/2020 was filed for four Tea

Gardens. We have already observed that the rejection of the Application, IA

No.1256/KB/2020 is not sustainable with regard to Tea Estate of Garganda

for which lease was renewed on 08.11.1996 as the Corporate Debtor had 93

subsisting leasehold right in Garganda. Hence, the Application filed by RP,

ought not to have been rejected for Tea Garden Garganda.

111. Similarly, we come to IA No.1111/KB/2021, which was filed for

possession for Nagaisuree and Kilcott Tea Gardens. We have already held

that lease for Kilcott was renewed with effect from 15.11.1995 till 23.08.2025.

Hence, the Application, IA No.1111/KB/2021, ought not to have been rejected

with regard to Tea Garden Kilcott and the RP was entitled to take possession

and custody of Tea Garden Kilcott.

112. Coming to the Application, IA No.665/KB/2021, which was filed for

taking possession of Bagracote Tea Estate Div.I, II, III and IV. We have noticed

above that with regard to Bagracote Div.I, lease was renewed with effect from

19.06.1998 for 30 years, hence, the Corporate Debtor/ has subsisting right.

Thus, the Application, IA No.665/KB/2021, ought not to have been rejected

with regard to Bagracote Div.I.

113. In view of the aforesaid discussions, we are of the view that the

Company Appeal (AT) (Insolvency) No.672 of 2021 deserved to be partly

allowed and set aside the order passed by Adjudicating Authority dated

28.05.2021 in IA No.1256/KB/2020, insofar as Tea Garden Garganda is

concerned.

114. Similarly, the Company Appeal (AT) (Insolvency) No.592 of 2022 deserve

to be partly allowed by setting aside order dated 21.04.2022 in IA

No.1111/KB/2021. Accordingly, we partly set aside order dated 21.04.2021

in IA No.1111/KB/2021 insofar as Tea Garden Kilcott is concerned. 94

115. Company Appeal (AT) (Insolvency) No.754 of 2022 is also deserve to be

partly allowed by setting aside order passed by Adjudicating Authority in IA

No.665/KB/2021 insofar as Bagracote Div.I Tea Garden is concerned.

116. We may also notice the two Intervention Applications filed in these

Appeals - one by State Bank of India being IA No.3712 of 2022 in Company

Appeal (AT) (Insolvency) No.593 of 2022, where State Bank of India has

pleaded that Adjudicating Authority erred in passing the impugned order in

IA No.1111/KB/2021. It was further pleaded by the State Bank of India that

Nagaisuree and Kilcott Tea Estates along with leasehold rights, were the Tea

Estates, which were mortgaged to the State Bank of India. The Application

was also joined by Asset Reconstruction Company (India) Limited, which

claim to get assignment from Financial Creditors with respect to various Tea

Gardens.

117. In the Appeal(s), which has arisen for consideration before us, need no

consideration for the security interest of the Financial Creditors in different

Tea Gardens by virtue of mortgage and other financial documents. These are

issues, which need to be gone into during CIRP. We, however, observe that

security interest can be claimed by Financial Creditors only in the Tea

Gardens where leasehold rights of the Corporate Debtor subsist on the date

of commencement of the CIRP, i.e., 05.03.2020.

118. Another IA No.1888/2023 filed by Uniglobal Papers Private Limited in

Company Appeal (AT) (Insolvency) No.593 of 2022, which claims to be

Resolution Applicant, whose Resolution Plan in the CIRP of the Corporate 95

Debtor has been approved by the Committee of Creditors. The Applicant

submits that it has submitted the Resolution Plan in consortium with Trade

Sea International Pvt. Ltd., which was placed for e-voting and the Plan of the

Applicant was approved with 99.20% vote share and the Applicant has been

declared Successful Resolution Applicant.

119. The Plan approval Application has been submitted by the RP, which is

pending consideration before the Adjudicating Authority. As observed above,

the issue in the present Appeal, relates to the Applications filed by the RP for

taking possession of Tea Gardens, which we have already considered in these

Appeal(s). The issue of Resolution Plan submitted by the Applicant or its

credibility are not the issues, which need any consideration in the present

Appeal. Hence, no observations need to be made in these Appeal(s) with

regard to Resolution Plan submitted by the Applicant.

Question No.9

120. In view of the foregoing discussions and conclusions, we held that

leasehold rights of the Corporate Debtor subsist in three Tea Gardens, namely

- Garganda, Kilcott and Bagracote, where the lease has been renewed and

valid as follows:

Sl. No. Tea Estate Valid upto

1. Garganda 08.09.2026

2. Kilcott 23.08.2025

3. Bagarcote Div. I 22.05.2028 96

121. The orders rejecting the IAs of RP insofar as the aforesaid three Tea

Gardens are concerned are unsustainable and deserve to be set aside. In

view of the above, all the Appeal(s) are disposed of in following manner:

I. Company Appeal (AT) (Insolvency) No. 672 of 2021 is partly

allowed. The order dated 28.05.2021 passed in IA

No.1256/KB/2020 is partly allowed, insofar as Garganda Tea

Garden is concerned. The order of the Adjudicating Authority

with respect to other Tea Gardens, i.e., Hantapara, Tulsipara and

Dumchipara is affirmed.

II. Company Appeal (AT) (Insolvency) No.593 of 2022 is partly

allowed. Order dated 21.04.2022 in IA No.1111/KB/2021 set

aside, insofar it relates to Tea Garden Kilcott. Rest of the order

is affirmed.

III. Company Appeal (AT) (Insolvency) No.754 of 2022 is partly

allowed. Order dated 09.05.2022 passed in IA No.665/KB/2021,

insofar as it relates to Bagracote Div.I is set aside. Rest of the

order is affirmed.

IV. Company Appeal (AT) (Insolvency) No.628 of 2022 and Company

Appeal (AT) (Insolvency) No.907 of 2022 are dismissed.

V. It is held that Tea Gardens of Garganda, Kilcott and Bagracote

are assets of the Corporate Debtor, to which the RP was entitled

to be handed over the possession. However, in sequence of the

events and facts that these three Tea Gardens having been run

by Merico and Sammelan and in the Tea Gardens, thousands of 97

workers are working, we are of the view that ends of justice will

be served in holding that RP shall be deemed to be in possession

of the aforesaid Tea Gardens and operation of these three Tea

Gardens shall henceforth be under the supervision and control

of the RP till the CIRP continues.

Parties shall bear their own costs.

[Justice Ashok Bhushan] Chairperson

[Barun Mitra] Member (Technical)

New Delhi

Anjali/Archana/ Himanshu /Ashwani