West Bengal Housing Infrastructure ... vs Kshitiz Chhawchharia(Liquidator Of ...

[Arising out of the Order dated 30.08.2024, passed by the 'Adjudicating Authority' (National Company Law Tribunal, Division Bench, Court-II, Kolkata), in Company Application No. 1763 of 2019 in Company Petition IB 446/KB/2017]

IN THE MATTER OF: 1. West Bengal Housing Infrastructure Development Corporation Ltd. A Govt. of West Bengal Company and a Company incorporated under the Companies Act, 1956 (Through its Authorised Representative) Having its registered office at: HIDCO Bhaban, Premises No. 35-1111, Biswa Bangla Sarani, 3rd Rotary, New Town, Kolkata-700156 Email:gm.law@wbhidco.in ...Appellant Versus

1. Kshitiz Chhawchharia (Liquidator of M/s Concast Steel and Power Ltd.) Having its office at: B Chhawchharia & Co., 8A and 8B, Satyam Towers, 3 Alipore Road, Kolkata, West Bengal- 700027 IBBI Registration No.: IBBI/IPA-001/IP- P00358/2017-2018/10616 Email:kshitiz@bccoindia.com ...Respondent Present: For Appellant : Mr. Palash S. Singhai, Mr. Harshal Sareen, Mr. Manish Srivastava and Ms. Kamakshi S. Rao, Advocates. For Respondent : Mr. Soorjya Ganguli, Ms. Kiran Sharma, Mr. Anand Amit and Ms. Pooja Chakraborti, Advocates. JUDGMENT

(Hybrid Mode)

[Per: Justice Mohd. Faiz Alam Khan, Member (Judicial)]

Instant appeal has been filed by the appellant West Bengal Housing

Infrastructure Development Corporation Limited under section 61 of the

Insolvency and Bankruptcy Code, 2016 read with rule 11 of the National

Company Law Appellate Tribunal Rules 2016 against the impugned order of

date 30.08.2024 passed by the National Company Law Tribunal Court No. II

Kolkata Bench, in CA number 1763 (KB) 2019 in CP IB number 446 KB of

2017 where by the IA No. 1763 of 2019 moved by the appellant has been

rejected.

2. Necessary facts required for disposal of the instant appeal are that

the appellant is Government of West Bengal company and a Planning

Authority appointed by the state government with a mandate to provide

larger supply of developed land for development of New Town, Kolkata. The

state government after acquiring a large chunk of land came into the

ownership and possession of the said and with the object of creating New

Town Kolkata and had developed the said land.

3. It is stated that the lease of a piece of land measuring about 3608.87

square metre situated at premise number 7/775 at street number 775 in

Newt Rajarhat Town Kolkata under Maouza Noupara District North 24

Parganas under Rajarhat Gopalpur, was granted to Concast Ispat Ltd. for a

period of 99 years on a premium of Rs 6,69,02,836/- along with payment of

annual lease rent, by lease deed dated September 17, 2012 duly registered

at the office of Registrar of Assurances II, Kolkata, with the clear stipulation

Company Appeal (AT) (Ins) No. 2119 of 2024 2 of35 that the lessee will use the land exclusively for establishing corporate house

of CIL for the use of business and for no other purpose. It was also

stipulated that lessee shall not assign, alienate or transfer the said land or

any part there of or the structure erected their on to anyone.

4. It is further stated that the appellant was informed in the year 2015

that the lessee (CIL) has amalgamated/merged with Concast Steel and

Power Limited, here in after referred to as CSPL, on 26th November 2015.

An application to rectify an error occurred in the above order with regard to

the inclusion of the subject land as a leasehold property was rejected by Ld.

NCLT Kolkata and on an appeal filed before this Appellate Tribunal the

matter was remitted back to the NCLT vide order of this Appellate Tribunal

dated July 14, 2017 and in pursuance of the same a new petition was filed

by the CSPL before the NCLT Kolkata and vide order dated September 14

2018 passed by it the error occurred in the merger scheme was rectified

and the subject land was included in part 1 of schedule B of the

amalgamation order.

5. It is further stated that the appellant did not grant any approval for

the transfer of the subject land from CIL to CSPL and the same has been

transferred without its consent, in violation of the specific terms and

conditions of the lease deed and in fact the subject land was never got

transferred to the corporate debtor (CD) and could not be the subject matter

of liquidation estate of the corporate Debtor in liquidation proceedings.

6. It is further stated that the appellant by writing many letters clarified

to the CD in liquidation that lease hold rights of the subject land has not

Company Appeal (AT) (Ins) No. 2119 of 2024 3 of35 been passed in favour of the CD and also that the subject land never

became the asset of the CD.

7. It is further stated that the respondent vide its letter dated December

17, 2018 called upon the appellant to transfer the lease in favour of the CD

and on being asked the liquidator vide its letter dated January 11, 2019

forwarded the order dated September 26, 2018 where by the liquidation of

the corporate debtor was directed by the Tribunal.

8. It is also stated that the appellant was shocked and surprised to note

publication of an advertisement in The Economic Times, Kolkata edition of

December 26, 2018 issued by the respondent liquidator whereby the

subject land was advertised for sale along with other properties of the

corporate debtor and immediately a notice was issued by the appellant to

the respondent on May 30, 2019, a reply of which was given by the

respondent on June 18, 2019 stating that in pursuance of many letters

written by the appellant an implied consent may be assumed.

9. It is also stated that subject land is part and parcel of the land

required by the State Government for New Town project and belongs to the

government of West Bengal and the respondent herein has illegally and

arbitrarily claiming the same to belong to the CD in liquidation and have

also issued a public advertisement with regard to its sale which could not

be done in the background of the fact that no right has been transferred to

the CD by an illegal merger scheme.

10. It is further stated that an application bearing IA No.1763 of 2019 for

the purpose of seeking necessary directions were moved before the NCLT

Kolkata which has been rejected by passing the impugned order

Company Appeal (AT) (Ins) No. 2119 of 2024 4 of35 and learned Tribunal has committed manifest illegality in rejecting the

same. It is prayed that as the lease could not be assigned to the CD by the

CIL, no rights in the impugned land has been transferred in favour of CD

and this land could not be the part of liquidation assets and the impugned

order is liable to be set aside.

11. The liquidator respondent has filed its reply by stating that the

original lessee CIL was amalgamated with CSPL and such amalgamation

was confirmed by the order of the Hon'ble Calcutta High Court dated

November 26, 2015 and by such amalgamation all the assets of CIL

including the lease hold interest in the said land is vested in the corporate

debtor.

12. It is further stated that the appellant was duly informed about the

amalgamation vide letter dated July 15, 2016 and on receipt of the same

appellant has also written a letter dated January 25, 2017 where by it is

noted that in the schedule of the amalgamation order dated November 26,

2015 the said land is not shown and thereafter the appellant requested the

CD to file a duly rectified order of the amalgamation with reference to the

subject land and thereafter a rectification application was moved which was

initially rejected by the NCLT Kolkata, however on the matter being

remanded by this Appellate Tribunal the rectification order was ultimately

passed by the NCLT Kolkata.

13. It is further stated that much correspondence was exchanged

between the appellant and the CD pertaining to supply of rectified

amalgamation order and the appellant has always recognised the corporate

debtor as the lawful lessee of the subject land, however vide letter dated

Company Appeal (AT) (Ins) No. 2119 of 2024 5 of35 May 30, 2019 for the first time the appellant claimed that the said land has

not vested in favour of the corporate debtor.

14. It is also stated that the lease granted in favour of the original lessee

which was vested in the corporate debtor by virtue of the amalgamation

order was never determined as per requirement of section 111 (g) of the

Transfer of Property Act, 1882 and in absence of such determination the

lease hold rights vested in the corporate debtor may not be challenged

specially before the NCLT.

15. It is also stated that no material illegality has been committed by the

NCLT in rejecting the application moved by the appellant and the appeal is

liable to be dismissed.

16. We have heard learned counsels for the appellant as well as for the

liquidator and have also perused the written arguments submitted by

them.

17. Learned counsel for the appellant submits that the tribunal has

committed Manifest illegality in rejecting the application moved by the

appellant and has not considered the fact that lease hold rights could not

be transferred to CSPL in violations of terms of the lease deed and without

the consent of the appellant and this fact has been Ignored by the tribunal

and has not been considered in right perspective.

18. He further submits that the amalgamation of the CIL and the

corporate debtor CSPL without seeking consent of the appellant is in

violation of the specific terms and conditions of the lease deed and therefore

the merger/amalgamation scheme is not having any legal force. Elaborating

further it is submitted that the amalgamation deed or any order secured on

Company Appeal (AT) (Ins) No. 2119 of 2024 6 of35 the basis of such illegal amalgamation deed cannot override the terms and

conditions of the lease deed.

19. It is further submitted that learned tribunal failed to understand that

any action under section 111 of the Transfer of Property Act (TPA) could

only be initiated against the original lessee which in this case was CIL and

not the corporate debtor (SPL) and once the original lessee has seized to

exist and the amalgamation has been carried out without the consent of the

appellant the lease of the land automatically stood determined by operation

of law.

20. It is further submitted that the lease was rendered void upon

amalgamation undertaken in violation of its terms, and with the dissolution

of CIL, all leasehold rights, including possession of the land, automatically

reverted to the appellant and the corporate debtor never became a lessee in

the eyes of the Law.

21. It is further submitted that section 36(3) of the IBC defines

liquidation estate as comprising assets owned by the corporate debtor.

However, the lease hold rights in the demised land never vested in the

corporate debtor the subject land could not be treated as part of its

liquidation estate and learned tribunal has committed an illegality in not

considering this issue in right perspective.

22. It is also submitted that learned tribunal has committed an error by

presuming that the lease hold rights automatically vested in the corporate

debtor upon amalgamation overlooking the express statutory bar and

absence of appellant's consent. It is submitted that the respondent has no

Company Appeal (AT) (Ins) No. 2119 of 2024 7 of35 claim over the subject land as the leased land never became part of the

corporate debtor's estate.

23. It is also submitted that appellant at least is a secured creditor and

this aspect has also not been considered by Ld. Tribunal.

24. Learned counsel for the appellant has relied on the following cases in

support of his submissions;

(i) Embassy Property Developments Private Limited vs State of Karnataka

and others, (2020)13 SCC 308

(ii) Rajasthan State Industrial Development and Investment Corporation and

Another Vs Diamond and Gem Development Corporation Limited and

Another, (2013)5 Supreme Court cases 470

(iii) Indian Shaving Products Limited vs Delhi Development Authority and

other, 2001 SCC Online Delhi 1123

(iv) Greater Noida Industrial Development Authority vs Prabhjeet Singh Soni

and Another, (2024 )6 supreme Court cases 767

25. Learned counsel for the respondent liquidator submits that though

the lease deed was granted in favour of the Concast Ispat Limited CIL for a

period of 99 years, however, with the amalgamation of the CIL with

corporate debtor CSPL, all assets of CIL, including the subject land with

residuary period of the lease stood vested in CSPL.

26. It is further submitted that due to an inadvertent error in the order of

the amalgamation, the schedule of properties forming part of the order dated

26 November 2015 did not mention the demised land as lease, however, this

was rectified by the tribunal by an order dated September 14, 2018.

Moreover, in the correspondence made by the appellant, the appellant

Company Appeal (AT) (Ins) No. 2119 of 2024 8 of35 recognised CSPL as the lessee, in this regard, Ld. counsel has drawn the

attention of this tribunal on various communications held between the

parties in order to show that the appellant had recognised CSPL to be its

lessee.

27. It is further submitted that on noticing that the name of the CSPL had

not been reflected as the allottee of the land, the respondent has issued a

letter dated 27 May 2019 requesting the appellant to record the name of the

CSPL in the list of allottees and it is in response to this letter the appellant

for the very first time by its letter dated May 30, 2019 stated that the lease

land has not vested in CSPL and the same stood determined with effect from

the date of order of amalgamation of CIL with CSPL and this averment was

made despite the fact that the order of amalgamation dated November 26,

2015 was rectified by the order of learned adjudicating authority of

September 14,, 2018, which upon being communicated to the appellant was

neither questioned nor challenged, and this in itself is a clear evidence of the

fact that the letter dated May 30, 2019, was written by the appellant without

any basis and is an afterthought.

28. It is also submitted that the relief sought by the appellant in any event

could not be granted by this appellate tribunal as the application before the

adjudicating authority could not be filed without challenging the order of

amalgamation and its rectification. It is reiterated that by virtue of

amalgamation, the subject land has vested in the corporate debtor, and

there is no question, the appellant may seek its recovery without lawfully

terminating the lease and no steps, so far have been taken by the appellant

to determine or terminate the lease.

Company Appeal (AT) (Ins) No. 2119 of 2024 9 of35

29. It is also submitted that the relief prayed for by the appellant is in the

nature of equitable relief, and no such relief could be granted under section

60(5) of the IBC, reliance in this regard has been placed on following case

laws: -

(i) Ranjit Singh vs Karan Motors Pvt Ltd,2021SCC ONLINE NCLAT 4257.

(ii) Gujarat Urja Vikas Nigam Limited vs Mr. Amit Gupta and others, (2021)

7 SCC 209

(iii)Embassy Property Development Private Limited vs State of Karnataka,

2019 SCC Online SC1542

(iv)Tata Consultancy Services vs Vishal Ghisulal Jain (2022)2 SCC583

(v)Jai Narayan Dass and Ors vs Zubeida Khatoon, 1972 SCC online

Allahabad 300

(vi)Mukund Limited vs Devi Dayala Limited 2017 SCC online Bombay 3041.

30. It is also emphasised that in the grounds of appeal, the appellant has

not taken the plea of being a secured creditor and it is only during the final

arguments made before this appellate criminal, the appellant has for the

very first time attempted to make out a case that it has been denied of its

right as a secured creditor by the liquidator. It is urged by him that it

is established law that the parties as well as the courts cannot travel beyond

the pleadings to grant any relief. In this regard. reliance has been placed on

Arikala Natasha Reddygari vs Venkat Ram Reddy Gari, (2014)5 SCC 312.

31. It is also highlighted that as per the provisions of IBBI liquidation

process regulations 2016, a claimant has to file a claim within a period of 30

days from the liquidation commencement date and in the instant case, the

said liquidation commencement date is September 26, 2018, and as such

Company Appeal (AT) (Ins) No. 2119 of 2024 10 of35 the last date for submission of claim would be October 26, 2018, but no

claim has been filed by the appellant.

32. It is also submitted that in Czarnikov Group Limited vs Commissioner

of Customs Preventive petition number 29614 of 2022 Hon'ble Madras High

Court has held that the right of any creditor, whether a financial creditor,

operational creditor, secured or unsecured creditor would arise only in the

event and upon the condition that claim has been made by the creditor. It is

submitted that the appeal as such is liable to be dismissed.

33. We have heard Ld. Counsel for the parties and have perused the

record as well as the written submissions submitted by Ld. Counsels for the

parties.

34. It is reflected that the lease of the demised land was granted by the

appellant in favour of the Concast Ispat Ltd. (CIL) for a period of 99 years

upon payment of total lease premium of Rs. 6,69,02,836/- and subject to

other conditions mentioned in the lease deed, admeasuring about 3608.67

sq. metres (0.891 acres) vide lease deed dated 17.09.2012 which was duly

registered, for establishing the group Corporate House of Concast Ispat Ltd.

(CIL). A copy of this lease deed has been made available by the appellant on

the appeal paper book and no objection with regard to the authenticity of

this copy of the lease deed has been raised by the Respondent liquidator.

35. A perusal of this lease deed would reveal that various terms and

conditions have been placed therein under which the lease of the land in

favour of the Concast Ispat Ltd. (CIL) has been granted. Those terms and

conditions of the lease deed which are relevant for our discussion are being

reproduced as under:

Company Appeal (AT) (Ins) No. 2119 of 2024 11 of35 "And Whereas after due consideration of the said request in 56th meeting of the Board of Directors held on 23.11.2010 followed by 67th meeting of the Board of Directors of this Corporation held on 30.07.2012 the Lessor by its letter of offer of allotment being No. M-

5067/HIDCO/ADMN-1429/2010 dt. 24.08.2012 read with letter No. M-5140/HIDCO/ADMN-1429/2010 dated 27.08.2012 intimated the Lessee its offer for allotment of land measuring 0.90 acre at New Town, Kolkata on Leasehold Basis for 99 years (ninety-nine years) for the purpose of establishing the Group's Corporate House of Concast Ispat Ltd. at a total lease premium of Rs.

6,75,18,000/- (Rupees Six Crores Seventy-Five Lakhs Eighteen Thousands) only at the rate of Rs. 12,40,000/- (Rupees Twelve Lakhs Forty Thousand) only per cotta subject to fulfilment of the Terms and Conditions stipulated in the said offer letter of allotment dated 24.08.2012.

(iii)the Lessee shall use the said demised land exclusively for the purpose of constructing building thereon at the cost of the Lessee in conformity with the Building Rules & Regulations as applicable in New Town, Kolkata and other Rules and Regulations as prescribed or might be framed out from time to time for the New Town, Kolkata and more specifically according to plans, specifications, elevations designs and sections sanctioned by the Planning Authority and with the condition as the Lessor may decide and shall use the said demised land and the structure thereon exclusively and wholly for establishing the Group's Corporate House of Concast Ispat Ltd. under the principal use "Business" and no part of such building or land shall be used for any other purpose.

(iv) Taking Over physical possession of the allotted plot of land and shall complete the project within 5 (Five) years in compliance of the Building, Rules and Regulations as applicable in New Town, Kolkata failing which the Lessor shall have the liberty to cancel the offer/Lease Agreement/Lease Deed and Lessor shall be entitled to re- enter into or upon the said land on refund of the payment of original premium made by the Lessee and resume possession thereof and the same shall thereafter vest with Lessor as in their former estate.

(xi) The Lessee shall not sub-divide or sublet or sub-lease the demised land/building constructed thereon/or any part thereof or the structure constructed thereon.

(xii) The Lessee shall obtain necessary prior approval from appropriate authorities for establishing the intended

Company Appeal (AT) (Ins) No. 2119 of 2024 12 of35 project as required under Law for the time being in force and shall also go on complying with all the terms and conditions of such clearances throughout the period or lease.

(xiii) the Lessee shall not assign, alienate or transfer the demised land or any part thereof and/or the structure erected thereon. However, in case of Lessees inability to continue the lease for the unexpired time period of the lease, the Lessor shall have the right of pre-emption and upon the exercise of this right the building constructed by the Lessee on the land shall be taken over by the Lessor at a valuation of the building made by the Lessor on the basis of the cost of construction of the building less depreciation at the usual rate or the market value thereof, whichever is less. The value of the land will be the amount of the premium paid by the lessee.

The land shall, however, have to be surrendered by the lessee to the lessor.

(xxi) If any of the aforesaid terms and conditions is violated or any act is done in contravention of the aforesaid terms and conditions covenanted herein by the Lessee or any of its members, the Lessor shall have the right to revoke the lease and to re-enter into possession of the demised plot of land and resume the same including the structure thereon, if any, even after the handing over of possession to the Lessee on such determination of lease.

(xxvi) The Lessee may however mortgage the leasehold land and/or structure constructed thereon for obtaining loans and/or financial assistance from any RBI recognized bank/Institution on prior written consent of the Lessor and of course without prejudice to WBHIDCO Ltd's claims and interest as the owner of the land, if any, being treated as the first-charge and also all rights whatsoever as spelt out in this Deed of Lease".

(Emphasis Ours)

36. It is further reflected that vide order dated 26.11.2015, of Hon'ble

High Court of Calcutta the CIL was merged/amalgamated with Concast

Steel and Power Ltd. (herein after referred to as 'CSPL') and it is claimed by

the appellant that the said merger/amalgamation was without its approval

and was in violation of specific terms of the lease deed. The claim of the

Company Appeal (AT) (Ins) No. 2119 of 2024 13 of35 liquidator Respondent however is that appellant was duly informed of this

merger and it is further claimed that vide letters written in July, 2015 and

2016 the appellant was informed of such merger whereby all the properties

and assets of the CIL was transferred to the CSPL, (the another group

Company of the same group).

37. It is also claimed by the liquidator in his reply that a letter dated

25.01.2017 was written by appellant noticing that amalgamation of the

order dated 26.11.2015 did not include the leased land. A copy of this letter

had also been brought on record with reply of the Respondent liquidator as

its Annexure-C. Perusal of this letter would transpire that after noticing

absence of leased property in the schedule of assets of the amalgamation

order, which stood transferred to the CSPL, vide amalgamation order dated

26.11.2015, the matter was discussed in a meeting held between the

Counsels of the appellant corporation with Mr. Chetan Jain, Senior Vice

President of the Project of the CD and in this meeting Mr. Jain was advised

to arrange for a rectification of the amalgamation order and it is thereafter

the amendment/rectification application appears to have been moved by the

CSPL before NCLT, Kolkata, which was rejected on 06.04.2017 apparently

for want of jurisdiction. However, an appeal being CA (AT) (Ins) No. 186 of

2017 was preferred against this order and this Appellate Tribunal vide order

dated 14.07.2017 disposed of the same by remanding the matter back to the

NCLT and it is thereafter another application appears to have been moved

by the CSPL before NCLT which was ultimately allowed vide order dated

14.09.2018 and in this way the order dated 26.11.2015 approving the

merger scheme was rectified/corrected and impugned land was included in

Company Appeal (AT) (Ins) No. 2119 of 2024 14 of35 Part-I of Schedule B of the amalgamation order under the short description

of the lease hold properties. Aforesaid letter of date 25.01.2017 mentioned

by liquidator in his reply precisely in para no. 5 (d) has not been specifically

denied by the appellant in his rejoinder affidavit.

38. It is also reflected that the liquidator in his reply at para 5 (h) stated

that several correspondences were addressed by the appellant requesting

the CSPL to provide the rectified copy of the amalgamation order and

appellant was served with duly rectified order of the NCLT by letter dated

17.12.2018. This letter along with the copy of letter dated 11.07.2018 and

20.08.2018 have also been placed as Annexure-G to the reply of the

Respondent liquidator and in its rejoinder the appellant has not denied

these facts and has only stated that these facts are matter of record.

Significantly, vide letter dated 17.12.2018 request was made by the CSPL to

transfer lease of the demised land in its favour, in compliance of the

rectification order passed by NCLT, Kolkata.

39. Thus it is transpired that the fact of merger of CIL with CSPL was very

much in the knowledge of the appellant and when they were informed by the

CSPL about this merger, a meeting was held between the Counsels of the

appellant and Senior Vice President of the CSPL and in this meeting it was

advised by none other than, but the Counsels for the appellant to get the

amalgamation order dated 26.11.2015 corrected, so as to include the

impugned lease land in the properties which were intended to be transferred

to the CSPL in lieu of the amalgamation/merger scheme and it is thereafter

an appropriate application was moved by the CSPL which was ultimately

allowed by NCLT, Calcutta on 14.09.2018. Thus it is crystal clear that

Company Appeal (AT) (Ins) No. 2119 of 2024 15 of35 though no express permission was taken for amalgamation of this property

with CSPL by the CIL but there was an implied consent of the appellant for

transferring of this lease hold land in favour of the CSPL. Thus it could not

be said that the leasehold land was transferred to the CSPL (CD) without the

consent of the appellant, may be implied.

40. It is also significant that the appellant in its letter dated 20.08.2018

has stated that as the rectified copy of the order has not been supplied to

them, the matter of transfer of lease in favour of CSPL could not be taken for

consideration by the Corporation. Thus, the appellant was very much aware

of the order dated 26.11.2015 and also the intended proceedings of its

correction which appears to have been undertaken on the advice given by

the Counsels of the Appellant Corporation in a meeting held between the

Counsels of the Corporation and Senior Vice President of the CSPL and at

no stage any objection to the inclusion of this lease property in the

amalgamation order has been raised by the appellant. So now it cannot be

claimed by the appellant that the lease property has not been transferred to

the CD/CSPL with its consent. Thus it is crystal clear that the consent of

the appellant to include the lease property in the list of the properties of

amalgamation order, which were transferred to the CSPL, was not express

but was implied and it could not be said that the leasehold property has

been transferred, without the consent of the appellant.

41. Ld. Counsel for the Respondent has submitted that the Tribunal is not

having any jurisdiction to adjudicate so far as the validity of the

amalgamation order/merger scheme is concerned, while Ld. Counsel for the

Appellant has submitted that NCLT as well as this Appellate Tribunal is

Company Appeal (AT) (Ins) No. 2119 of 2024 16 of35 having jurisdiction to adjudicate on the legality and propriety of the

amalgamation order as the lease property could not have been transferred

by any amalgamation order without the express consent of the appellant.

42. It is to be recalled that the order of amalgamation was passed by the

Hon'ble High Court of Kolkata on 26.11.2015 and it was only a rectification

application moved by the CSPL which was ultimately allowed on 14.09.2018

by the NCLT, Kolkata apparently on account of coming in force of the

Insolvency and Bankruptcy Code, 2016 which has ceased the jurisdiction of

the Hon'ble High Court of Calcutta in the matter pertaining to the

merger/amalgamation of the companies. Thus in our considered opinion,

the rectification order passed by the NCLT, Kolkata of date 14.09.2018

relates back to the date of the original order i.e. 26.11.2015. The appellant

despite having knowledge of the order dated 26.11.2015 did not do anything

to challenge the same but as the correspondence exchanged between the

parties would show that the appellant in fact was facilitating the filing of the

rectification application and was in fact waiting for the passing of the

rectification order. Thus not raising any objection at the time of the

rectification proceedings, whereby the leasehold property was included in

the correct schedule of properties of the amalgamation scheme earlier

approved by the Hon'ble Calcutta High Court, is sufficient indication that

appellant was not having any objection with regard to the

merger/amalgamation scheme and has in fact acknowledged this merger

scheme, so now it cannot raise any objection with regard to the authenticity

of the merger scheme specially in IBC proceedings.

Company Appeal (AT) (Ins) No. 2119 of 2024 17 of35

43. Ld. Counsel for the Respondent in support of his submissions has

relied on Embassy Property Developments Pvt. Ltd. Vs State of

Karnataka 2019 SCC Online SC 1542, Gujarat Urja Vikas Nigam Limited

Vs. Mr. Amit Gupta & Ors. (2021) Vol 7 SCC 209 and Tata Consultancy

Services vs Vishal Ghisulal Jain, (2022) Vol 2 SCC 583, in order to show

that the tribunal or this Appellate tribunal could not go into the validity of

the merger scheme as the same is not related with the resolution of the CD

and also that without challenging the order of the Hon'ble Calcutta High

Court the appeal could not be entertained for want of jurisdiction. Hon'ble Supreme Court of India in Miheer H. Mafatlal Vs. Mafatlal

Industries Ltd., MANU/SC/2143/1996, while considering a scheme of

merger/ Amalgamation held as under: -

"28-A. However further question remains whether the Court has jurisdiction like an appellate authority to minutely scrutinizes the scheme and to arrive at an independent conclusion whether the scheme should be permitted to go through or not when the majority of the creditors or members or their respective classes have approved the scheme as required by Section 391 Sub- section (2). On this aspect the nature of compromise or arrangement between the company and the creditors and members has to be kept in view.

It is the commercial wisdom of the parties to the scheme who have taken and informed decision about the usefulness and propriety of the scheme by supporting it by the requisite majority vote that has to be kept in view by the Court. The Court certainly would not act as a court of appeal and sit in judgment over the informed view of the concerned parties to the compromise as the same would be in the realm of corporate and commercial wisdom of the concerned parties. The Court has neither the expertise nor the jurisdiction to delve deep into the commercial wisdom exercised by the creditors and members of the company who have ratified the Scheme by the requisite majority. Consequently, the Company Court's jurisdiction to that extent is peripheral and supervisory and not appellate. The Court acts like an umpire in a game of cricket who has to see that both the teams play their game according to the

Company Appeal (AT) (Ins) No. 2119 of 2024 18 of35 rules and do not overstep the limits. But subject to that how best the game is to be played is left to the players and not to the umpire.

The Court cannot, therefore, undertake the exercise of scrutinising the scheme place for its sanction which a view to finding out whether a better scheme could have been adopted by the parties. This exercise remains only for the parties and is in the realm of commercial democracy permeating the activities of the concerned creditors and members of the company who in the their best commercial and economic interest by majority agree to give green single to such a compromise or arrangement. "

44. Thus in view of the law placed above we are of the considered opinion

that the Ld. Tribunal has rightly did not enter into the area of adjudicating

the correctness or illegality of the Amalgamation/ Merger scheme as firstly

the appellant has given an implied consent by not raising any objection, for

inclusion of demised leased property in the list of properties which was

being transferred by CIL to CSPL (under the short description of leasehold

property) at the time of correction proceedings and secondly the lease

granted in favour of CIL was never revoked and when the lease property was

transferred to the CD, suddenly the termination of lease appears to have

been made by the appellant vide notice dated 30.05.2019, when the

moratorium was already declared under Section 14 of the Code.

45. Ld. Counsel for the appellant submits that the property in question

should not be included in the Liquidation Estate of the CD while Ld. counsel

for the respondent submits that Adjudicating Authority and this Appellate

Tribunal is not having any jurisdiction, on the pretext that the relief sought

by the appellant in any event could not be granted by this appellate tribunal

as the application before the adjudicating authority could not be filed

without challenging the order of amalgamation and its rectification.

Company Appeal (AT) (Ins) No. 2119 of 2024 19 of35

46. In Victory Iron Works Ltd. Vs. Jitendra Lohia and Ors.,

MANU/SC/0229/2023 and after considering all above decisions it is opined

that "38. The main ground of attack of the Appellants to the impugned orders

of the NCLT and NCLAT is that by virtue of the Explanation Under Section 18

of the Code and also by virtue of the judicial pronouncements, the disputes

between the Corporate Debtor and the third-party lessee/licensee are not

amenable to the jurisdiction of the authorities under the Code.

39. But as rightly pointed out by the learned Counsel for the Resolution Professional, the Explanation Under Section 18 begins with a caveat namely "for the purposes of this Section". Therefore, the exclusion of assets owned by a third-party, but in the possession of the Corporate Debtor held under contractual arrangements, from the definition of the expression "assets", is limited to Section 18. In other words, the Explanation Under Section 18 does not extend to Section 25.

40. It must be mentioned here that the Explanation was originally limited to "the Sub-section" but by Act 26 of 2018, the word "Sub-section" was substituted by the word "section". Therefore, the Explanation Under Section 18 will not provide an escape route for the Appellants. In any case, the bundle of rights and interests created in favour of the Corporate Debtor may even tantamount to creation of an implied agency under Chapter-X of the Indian Contract Act, 1872 and such agency may not even be amenable to termination in view of Section 202 of the said Act, since the creation of the same in favour of the Corporate Debtor was coupled with flow of consideration.

41. Having dealt with the objections raised on the strength of statutory provisions, let us now see the decisions on which heavy reliance is placed by the Appellants.

42. Embassy Property Developments Private Limited (supra) arose out of a case where, under the guise of preserving and protecting the interests of the Corporate Debtor, NCLT issued a direction to the Government of Karnataka to grant renewal of a mining lease, in terms of the deeming provision in Section 8A (6) of the Mines and Minerals (Development and Regulation) Act, 1957. Raising the question of jurisdiction of the NCLT to issue such a direction, the Government of Karnataka approached the

Company Appeal (AT) (Ins) No. 2119 of 2024 20 of35 High Court by way of a writ petition, instead of filing a statutory appeal to NCLAT. The jurisdiction of the High Court to entertain the said writ petition and also grant interim stay, was what was questioned before this Court in the said decision. The right to have a mining lease granted by the Government, was neither a statutory right nor a contractual right. A person applying for a mining lease may at the most be entitled to have his application considered along with the applications of others and to a fair treatment. Once a mining lease is granted, the terms and conditions of such grant may be subject to the covenants contained in the grant as well as the statutory provisions. Therefore, the ratio laid down in Embassy Property Developments Private Limited (supra) may not go to the rescue of the Appellants in a case of this nature where Energy Properties became the owner only on account of the money paid by the Corporate Debtor and a bundle of very valuable rights and interests in immovable property was created thereafter in favour of the Corporate Debtor.

43. The decision of this Court in Gujarat Urja Vikas Nigam Limited (supra) may not also go to the rescue of the Appellants, since the same arose out of a termination of Power Purchase Agreement. In fact, this Court made a distinction in the said case, between (i) a dispute that arose out of the termination of PPA solely on account of insolvency on the one hand; and (ii) the other disputes relating to the PPA on the other hand.

44. The decision in Tata Consultancy, rather than helping the Appellants, actually supports the case of the Corporate Debtor. In fact, the decision in Gujarat Urja Vikas Nigam Limited was distinguished in Tata Consultancy (by the very same author), on the ground that if the termination was on an ipso facto Clause i.e., the fact of insolvency itself, then NCLT will have jurisdiction, but that there was no residuary jurisdiction for NCLT, if the termination of a contract is based on grounds unrelated to the insolvency.

45. Thus, none of the decisions relied upon by the Appellants revolve around the rights and interests that a Corporate Debtor has in an immovable property.

46. As a matter of fact, the only decision of this Court which may probably come close to the facts of the present case, is the one in Rajendra K. Bhutta v. Maharashtra Housing and Area Development Authority and Anr.

MANU/SC/0226/2020: (2020) 13 SCC 208. In the said case, there was a tripartite joint development agreement

Company Appeal (AT) (Ins) No. 2119 of 2024 21 of35 entered into between (i) a Society representing a large number of persons occupying 672 tenements in the property; (ii) Maharashtra Housing and Area Development Authority10, which was the owner of the land; and (iii) the corporate debtor. After initiation of CIRP against the corporate debtor, MHADA issued a notice for the termination of the joint development agreement. NCLAT refused to treat the property as the asset of the corporate debtor. But this Court reversed the said decision, by holding that Section 14(1)(d) stood attracted in the facts and circumstances of the said case and that even a reference to Sections 18 and 25 may not be necessary. Though the said case arose out of a fact situation where the termination of the joint development agreement was hit by Section 14, the said decision clinches the issue on what constitute a property and the distinction between occupation and possession of a property."

47. Thus we do not find any illegality in the approach of the Tribunal

in not entering into the correctness or validity of the merger scheme.

However, it is also clarified at this stage that by virtue of the amalgamation

deed or merger scheme it were only the leasehold rights in the land which

were transferred to the CSPL by the CIL and since the leasehold rights

were connected with the beneficial enjoyment of the land that land was

also transferred to the CSPL only for the purpose of enjoying the leasehold

rights of the land, while the ownership of the land remains with the

appellants. In fact, the CSPL (CD) has stepped into the shoes of CIL only

for the beneficial enjoyment of the leasehold rights (As a Lessee) and no

ownership rights were transferred to CSPL(CD).

48. The issue as to whether the leasehold rights in a land could be

transferred is also now no more res integra and has been put to rest by

this Appellate Tribunal and Hon'ble Supreme Court in catena of

judgments.

Company Appeal (AT) (Ins) No. 2119 of 2024 22 of35

49. This tribunal in Company Appeal (AT) (Insolvency) No. 71 of

2024, Shristi Infrastructure Development Corporation Ltd. vs.

Avishek Gupta, Resolution Professional [Sarga Hotel Pvt. Ltd.] & Anr.,

decided on 4th April, 2024 held as under:

"17. The submission of the Appellant is that as per explanation (a), assets shall not include assets owned by a third party in possession of the Corporate Debtor held under trust or under contractual arrangements. The expression 'asset' has not been defined in the IBC. However, IBC defines expression 'property' in Section 3(27) in following manner: -

"3. Definition. (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;"

18. Corporate Debtor claims leasehold rights by virtue of Registered Lease Deed dated 31.03.2007. Expression 'lease' has been defined in Section 105 of the Transfer of Property Act, 1882, which is as follows: -

"105. Lease defined. -- A lease of immoveable property is a transfer of a right to enjoy such property, made for a certain time, express or implied, or in perpetuity, in consideration of a price paid or promised, or of money, a share of crops, service or any other thing of value, to be rendered periodically or on specified occasions to the transferor by the transferee, who accepts the transfer on such terms."

19. As per the above definition, lease of the immoveable property is a transfer of a right to enjoy such property, made for a certain express or implied, or in perpetuity, in consideration of a price paid or promised. The present is a case where on payment of monthly rent as reserved in the lease deed, Corporate Debtor has given possession and right to erect building of the land. Thus, by lease, Appellant has acquired a right to enjoy the property. Leasehold rights which has been granted to the Corporate Debtor is property within the meaning of Section 3(27) and has to be treated as an asset for the purposes of Section 18(1)(f). Much reliance has been placed by the Appellant on explanation (a) and what is sought to be contended is that

Company Appeal (AT) (Ins) No. 2119 of 2024 23 of35 the land under the lease is owned by the Appellant, hence, the possession of the said land ought not to have been taken by the Resolution Professional. The expression 'assets' occurring in explanation (a) has wide meaning which meaning encompasses itself the immoveable land as well as leasehold rights.

20. The leasehold rights which are owned by the Corporate Debtor consists of right to enjoy the immoveable property by virtue of Registered Lease Deed dated 31.03.2007. Explanation (a) does not come into way of the Corporate Debtor in enjoying the leasehold rights i.e. enjoyment of the property by virtue of Registered Lease Deed. We, thus, do not find any substance in the submission of the Appellant that the leasehold rights should be excluded from the assets of the corporate debtor".

50. After considering "Victory Iron Works Ltd V. Jitendra Lohia &

Anr.- Civil Appeal No.1743 of 2021" this tribunal in the above case

further held as under;

"22. We, thus, have no hesitation to hold that the leasehold rights which was granted to the Corporate Debtor by virtue of Registered Lease Deed dated 31.03.2007 is right to enjoy the property and erect building of the land is a right which is an 'asset' within the meaning of Section 18(1)(f) and the said asset is owned by the corporate debtor by virtue of Registered Lease Deed".

51. In New Okhla Industrial Development Authority vs Mr. Nilesh

Sharma Resolution Professional of Dream Procon Pvt., COMPANY

APPEAL (AT) (INSOLVENCY) No. 288 of 2021 decided on 08th March,

2022, wherein prior approval from the lessor has not been taken before

subleasing portion of the land to the 'Corporate Debtor' for development of

the Housing Project by the lessee, this tribunal while upholding the sublease

held as under: -

"24. Keeping in view the decision of the Hon'ble Supreme Court in 'Rajendra K. Bhutta' (Supra), we are of the view Company Appeal (AT) (Ins) No. 2119 of 2024 24 of35 that 'development rights' construe 'Property' of the 'Corporate Debtor' and hence we hold that the Resolution Professional has duly performed his duties as per Section 18(1)(a)(iii) and has taken control and custody of the assets of the 'Corporate Debtor' mentioned in the Balance Sheet in compliance of the provisions of Section 18(1)(f) and resultantly we do not find any deficiency of service on behalf of the RP."

52. This Appellate Tribunal in New Okhla Industrial Development

Authority vs Mr. Amit Agarwal Resolution Professional of Boulevard

Projects Pvt. Ltd. decided on 21 st October, 2022, relying on the law laid

down Hon'ble Supreme Court in 'New Okhla Industrial Development

Authority' Vs. 'Anand Sonbhadra' in while considering leasehold rights

concluded as under: -

"20. We are of the view that the 'Leasehold Rights' is an 'Asset' under 'Intangible Assets' falling within the ambit of Section 18(f)(iv). It is the consistent stand of the Respondent that 'the said Plot is not owned by the 'Corporate Debtor', but it has only Leasehold Rights over it'. We are of the considered view that the Leasehold Rights accrued to the 'Corporate Debtor' vide the Lease Deed, is a right vested with the 'Corporate Debtor' and is an 'Intangible Assets' and the ownership is only to the extent of these Leasehold Rights based on which the 'Corporate Debtor' can be continued as 'a Going Concern'. It is also significant to mention that the Appellant has never initiated any proceedings or chosen to exercise their rights to invoke any of the Clauses of the Lease Deed for cancellation of the subject Deed."

53. In Victory Iron Works Ltd. Vs. Jitendra Lohia and Ors.,

MANU/SC/0229/2023 Hon'ble Supreme Court while considering the

nature of leasehold rights opined as under: -

"19. Section 3(27) of the IBC defines the word "property" as follows: 3. Definitions. --In this Code, unless the context otherwise requires, -- xxx xxx xxx (27) "property" includes money, goods, actionable claims, land and every description of property situated in India or outside India Company Appeal (AT) (Ins) No. 2119 of 2024 25 of35 and every description of interest including present or future or vested or contingent interest arising out of, or incidental to, property. But the word "asset" is not defined either in Section 3 or in Section 5 or in Section 79 of the Code, though Section 79(14) defines the expression "excluded assets".

22. It may be noticed from Sections 18 and 25 that the word "asset" and not the word "property" is what is used in these provisions, though the word "property" is defined in Section 3(27). But the said word "asset used in Sections 18 and 25 is not defined in the IBC. We have seen from Section 3(37) that it makes a reference to seven different enactments, to which one can take recourse, for finding the definition of words and expressions used but not defined in the Code. Therefore, let us find out whether those seven enactments will be of any assistance to find out the meaning of the word "asset" used, but not defined in IBC.

26. As we have pointed out earlier, the word "asset is not defined, either in IBC or in any of the seven enactments referred to in Section 3(37) of the Code. But the word "asset" is defined in Section 102(2) of the Income Tax Act, 1961 to include "property or right of any kind". Though Section 102 applies as such to Chapter X-A of the Income Tax Act, the definition throws light on the fact that property or right of any kind is considered to be an asset."

54. Thereafter Hon'ble Supreme Court after considering the factual

matrix of that case came to a conclusion that by executing lease of land in

favour of Corporate Debtor a bundle of rights and interests were created in

favour of the Corporate Debtor, over the immovable property in question

and goes on to held as under: -

" 35. 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) of IBC. At the cost of repetition, it must be recapitulated that the definition of the

Company Appeal (AT) (Ins) No. 2119 of 2024 26 of35 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(f) and Section 25(2)(a) of IBC.

36. In Sushil Kumar Agarwal (supra), this Court brought out the distinction between different types of Development Agreements, with particular reference to Section 14(3)(c) of the Specific Relief Act, 1963. After summarizing the different types of Development Agreements in paragraph 17 of the decision, this Court held in paragraph 19 as follows:

19. ...An essential incident of ownership of land is the right to exploit the development potential to construct and to deal with the constructed area. In some situations, under a development agreement, an owner may part with such rights to a developer. This in essence is a parting of some of the incidents of ownership of the immovable property...

37. Therefore, it is not very difficult to conclude, that a bundle of rights and interests were created in favour of the Corporate Debtor, by a series of documents such as (i) the MoU dated 24.01.2008; (ii) the shareholders agreement dated 24.01.2008; (iii) the flow of the consideration from the Corporate Debtor to the UCO Bank and to Energy Properties; (iv) the Development Agreement dated 16.06.2008; (v) the Memorandum Recording Possession dated 02.03.2010 executed by the original shareholders of Energy Properties; (vi) the Memorandum Recording Possession dated 24.06.2010 executed by Energy Properties in favour of the Corporate Debtor; and (vii) the Leave and License Agreement primarily executed by the Corporate Debtor in favour of Victory, which was merely confirmed by Energy Properties as a confirming party.

Some of these bundle of rights and interests, partake the character and shade of ownership rights. Therefore, these rights and interests in the immovable property are definitely liable to be included by the Resolution Professional in the Information Memorandum and the Resolution Professional is duty bound Under Section 25(2)(a) to take custody and control of the same."

55. This Tribunal in Company Appeals (AT) (Insolvency) No. 1116 of

2024 and 1117 of 2024, K.H. Khan & Anr. Vs Art Constructions Pvt.

Company Appeal (AT) (Ins) No. 2119 of 2024 27 of35 Ltd. & Ors. decided on 14th November, 2024 wherein the land was

owned by other party and Corporate debtor was only possessing the

development rights held as under: -

"22. Whether an asset is required to be reflected in the Information Memorandum or the asset belong to the Corporate Debtor are the question which arise out of or in relation to the insolvency resolution process. The present is a case where the Corporate Debtor has claimed development rights in the land. It is no more res-integra that the development rights are property within the meaning of Section 3(27) of the IBC. We may refer to the judgment of the Hon'ble Supreme Court in "Victory Iron Works Ltd. vs. Jitendra Lohia & Anr.- (2023) 7 SCC 227"

where the Hon'ble Supreme Court had held that the development rights created in favour of the corporate debtor constitute "property" within the meaning of Section 3(27) of the IBC. In paragraph 38 of the judgment, following was laid down: -

"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.

24. The Hon'ble Supreme Court while considering Issue No.2 noticed the ground of attack of the appellants to the impugned orders. In paragraph 41, following was stated: -

Company Appeal (AT) (Ins) No. 2119 of 2024 28 of35 "Issue 2 41. The main ground of attack of the appellants to the impugned orders of the NCLT and NCLAT is that by virtue of the Explanation under Section 18 of the Code and also by virtue of the judicial pronouncements, the disputes between the corporate debtor and the third party lessee/licensee are not amenable to the jurisdiction of the authorities under the Code."

25. After considering the submissions of the parties in paragraph 53, the Hon'ble Supreme Court upheld the decision of the NCLT and NCLAT regarding exercise of jurisdiction for protection of the property of the corporate debtor. The above judgment clearly laid down that insofar as the protection of assets of the corporate debtor is concerned, the NCLT and NCLAT does not lack jurisdiction. Following was observed in paragraph 53:-

"53. Therefore, NCLT as well as NCLAT were right in holding that the possession of the corporate debtor, of the property needs to be protected. This is why a direction under Regulation 30 had been issued to the local district administration."

29. The question as to whether the assets which are included in the Information Memorandum are the assets of the corporate debtor is foundation of entire CIRP process. When the inclusion of the said asset is questioned before the NCLT by the Appellant, Adjudicating Authority does not lack jurisdiction in entering into question and deciding as to whether assets are part of the CIRP or it should be excluded. We, thus, are of the view that the above question could be determined by the Adjudicating Authority and parties need not have to be relegated to the Civil Court having jurisdiction, the view of the NCLT to the contrary cannot be approved. Judgment of the Hon'ble Supreme Court in Victory Iron, as noticed above, clearly has held that the NCLT and NCLAT can exercise jurisdiction in the above facts. We, thus, answer Question No.(I) in following manner:

The Adjudicating Authority had jurisdiction to enter into as to whether the subject land is asset of the corporate debtor and for decision of the question, the parties were not required to be relegated to the Competent Civil Court having jurisdiction."

56. Thus it is clear from the precedents noted above that the lease hold

rights created in favour of the CIL which were transferred to the CSPL by a Company Appeal (AT) (Ins) No. 2119 of 2024 29 of35 merger scheme duly approved by the Order of the Hon'ble High Court of

Calcutta as rectified by the Tribunal are the assets of the CD and the

question, as to whether the assets which are included in the Information

Memorandum or liquidation estate are the assets of the corporate debtor,

goes to the core of the CIRP process and when the inclusion of the said asset

is questioned before the Ld. NCLT by the Appellant, Adjudicating Authority

or this Appellate Tribunal does not lack jurisdiction in entering into the

question and deciding as to whether the leasehold assets are part of the

Liquidation Estate of the CD or should be excluded therefrom.

Thus keeping in view the above precedents we do not find much force in the

submissions of Ld. Counsel for the appellant as well as of respondent and in

our considered opinion the leasehold rights in the land which were assigned

in favour of the CD by a merger deed is owned by the CD while land is owned

by the Appellant and these rights could be transferred and validly held to be

the part of the Liquidation Estate of the CD and this issue may validly be

considered and adjudicated by the Adjudicating Authority as well as by this

Appellate Tribunal.

57. At this juncture Ld. Counsel for the appellant submits that as the

lease land is owned by the appellant the same could not be included in the

liquidation estate of the CD by virtue of bar contained under Section 36(4)

(a) (iv) of the code and secondly, it is impressed upon that it could not be

sold in pursuance of the auction advertisement advertised by the liquidator

as the Respondent is not having any right or authority over the lease land.

Reliance in this regard has been placed on Indian Shaving Products Ltd.

vs. Delhi Development Authority & Anr. 2001 SCC Online Delhi, 1123 Company Appeal (AT) (Ins) No. 2119 of 2024 30 of35 passed by the Hon'ble Delhi High Court. The case relied on by the Appellant

is not applicable to the factual matrix of this case as in the case relied on

by the Ld. Counsel for the appellant the ownership of the property was

transferred by way of amalgamation, while in the instant case only leasehold

rights are transferred as is evident from the perusal of the amalgamation

order and rectification order whereby the impugned property was included

in part (i) of schedule B of the amalgamation order under the heading of

"short description of leasehold properties of Concast Ispat Ltd." Thus by

amalgamation order and by its subsequent correction, only the leasehold

rights in the impugned property were transferred/amalgamated in the CD

and not the ownership of the property. We have already concluded herein

before that the leasehold rights with regard to the leased property are also

the assets of the Company in favour of which these lease hold rights have

been created by the owner or transferred and these rights could very well be

enjoyed and may also be transferred and has been validly transferred to the

CSPL/CD by the CIL by virtue of duly approved merger/amalgamation

scheme.

58. Now the question arises as to whether these lease hold rights may be

included in the liquidation estate of the CD having regard to the bar

contained under Section 36 (4) (a) (iv) and could be sold in auction?

There is no dispute with regard to the fact that only leasehold rights in the

impugned land were transferred by the appellant in favour of the CIL and

the same lease hold rights were transferred to the CD/CSPL by merger

scheme which was approved by the Hon'ble Calcutta High Court vide order

Company Appeal (AT) (Ins) No. 2119 of 2024 31 of35 dated 26.11.2015 as rectified by the Tribunal vide order dated 14.09.2018.

It also appears to be an admitted position that in the lease deed executed

between the appellant and CIL there was a provision in clause (xii) that the

lessee (CIL) is not entitled to sub-divide or sub-let or sub-lease the demised

land and it was also provided in clause no. (xiii) of the lease deed that the

lessee shall not assign, alienate or transfer the demised land or any part

thereof or the structure which may be erected thereon to anyone , however,

it was also provided that in case of inability of the lessee to continue the

lease for unexpired time of the lease, the lesser shall have a right of pre-

emption and in case this right is exercised, the building constructed by the

lessee on the land shall be taken over at a valuation of the building made by

the lessor on the basis of the cost of the construction of the building minus

depreciation at the usual rate or the market value, whichever is less. It was

also stipulated that the value of the land will be the amount paid by the

lessee.

59. Perusal of the impugned order would reveal that the IA filed by the

appellant was not found favour of the Tribunal on the score that no notice

under Section 111(G) of the transfer of property act has been given and the

lease has not been determined and secondly, that the appellant was aware

of the amalgamation order including its rectification order of 14.09.2018,

having regard to the correspondence exchanged between the parties and the

appellant has chosen not to challenge such amalgamation at an appropriate

forum.

60. We in this judgment herein before have already held that though no

express consent was given by the appellant for the merger of impugned

Company Appeal (AT) (Ins) No. 2119 of 2024 32 of35 leasehold land from CIL to CSPL (CD) however, keeping in view the conduct

of the appellant, implied consent is evident and it is not a case wherein the

demised lease property has been merged in the CSPL(CD) without any

consent of the appellant. We have also held herein before that the Leasehold

Rights of the CD in demised property is an Asset under Intangible Assets of

the CD. It is the consistent stand of the Respondent that 'the said Plot is not

owned by the Corporate Debtor, but it has only Leasehold Rights over it'. We

are of the considered view that the Leasehold Rights accrued to the

Corporate Debtor vide the Lease Deed in favour of CIL and transferred to

CSPL vide merger deed are rights vested in and owned by the Corporate

Debtor and is its Intangible Asset and this ownership is to the extent of

these Leasehold Rights only. It is also significant to mention that the

Appellant has never initiated any proceedings or chosen to exercise their

rights to invoke any of the Clauses of the Lease Deed mentioned above, for

cancellation of the subject Lease Deed before the initiation of the CIRP

against the CD. In these facts and circumstances the Liquidator, in our

view, was legally empowered under the Code to take control and custody of

the Asset over which the 'Corporate Debtor' has the 'Ownership Right'. At

the cost of repetition, we clarify that the 'Asset' in the instant case are only

the 'Leasehold Rights' and not the 'land' per se and the advertisement issued

by the Liquidator dated 26.12.2018 would also reveal that it has been

clearly mentioned therein that the land in question is a leased land.

Therefore, the ownership of lease hold rights is clearly in favour of the CD

and could not be said to be owned by any third party and therefore in our

considered view the bar contained under section 36(4) (a) (iv) of the Code will

Company Appeal (AT) (Ins) No. 2119 of 2024 33 of35 not attract in the background of peculiar factual matrix of this case. Thus

we don't find any force in this submission of the Ld. counsel for the

appellant.

61. We have also noticed that at a belated stage of this appeal i.e. during

the course of arguments and in written submissions, the appellant has

taken plea that it is a secured creditor. However, this plea has been rebutted

by respondent on the ground that this plea was never taken before the

tribunal or even in the grounds of appeal before this Tribunal and could not

be raised for the very first time before this appellate tribunal at such a

belated stage. It is also submitted that no claim of any nature has been filed

by the appellant within the stipulated period before the Liquidator or

Tribunal. We find force in these submissions and choose not to adjudicate

this issue in this appeal as at first the same was not raised before the

Tribunal and would also require consideration of many issues including

issue of limitation. Thus we refrain from making any observations on this

debatable issue and leave it open to the appellant to raise this issue before

the Liquidator or Tribunal as the case may be and if such an issue is raised

by the appellant either before the liquidator or the Tribunal, as the case may

be, the same shall be considered on its own merits strictly in accordance

with law.

62. Thus keeping in view all the facts and circumstances, of the case and

the law discussed herein before we are of the firm view that the liquidator

has not committed any illegality in including the demised leased land in the

Liquidation Estate of the CD and consequently the Tribunal has also not

Company Appeal (AT) (Ins) No. 2119 of 2024 34 of35 committed any error in dismissing the IA No. 1763 of 2019 moved by the

appellant.

63. Resultantly the Appeal lacks merits and is dismissed as such.

64. Keeping in view the peculiar facts and circumstances of this case the

parties shall bear their own costs. Pending IA's, if any, are also closed.

[Justice Mohd. Faiz Alam Khan] Member (Judicial)

[Arun Baroka] Member (Technical)

New Delhi.

28.10.2025.

sr

Company Appeal (AT) (Ins) No. 2119 of 2024 35 of35