Noida Special Economic Zone Authority v. Manish Agarwal & Ors.
Judgment
Augustine George Masih, J.
1. In the present Appeals challenge is to the Judgment dated 14.02.2022
passed by the National Company Law Appellate Tribunal, Principal
Bench, New Delhi (hereinafter referred to as “NCLAT”) which were
preferred by the Appellant, i.e., NOIDA Special Economic Zone
Authority, being the Operational Creditor (hereinafter referred to as
“Appellant”) impugning the Order dated 05.10.2020 passed by the
Adjudicating Authority of National Company Law Tribunal, New Delhi
Bench (hereinafter referred to as “NCLT”) approving the Resolution
Plan as presented on the approval by the Committee of Creditors,
and also the Order dated 27.11.2020 vide which an application
preferred by the Appellant, challenging the approval of the Resolution
Plan, stood rejected.
2. Briefly, the facts are that the Respondent No.02, i.e., Shree Bhoomika
International Limited, being the Corporate Debtor (hereinafter referred
to as “Corporate Debtor”) was sub-leased the Plot bearing No. 59-I
admeasuring 16,100 square meters at NOIDA Special Economic Zone
(hereinafter referred to as “NSEZ”) by the Appellant, in capacity of
lessee of the said land from the NOIDA Authority, vide Lease Deed
dated 26.10.1995, and it was valid for a period of 15 years, i.e.,
up to 31.05.2010. It is the case of the Appellant that the Corporate
Debtor had begun defaulting on lease payments in 1999, and
moreover, there was no performance or activity on the said land since
the year 2003-2004 leading to financial losses to the Government
Exchequer, and same also being violative of the Special Economic
Zone Rules and guidelines framed therein. Appellant has also made
a reference to a Public Notice dated 06.02.2018 by the Stressed
Assets Stabilization Fund for sale of immovable and movable assets
Noida Special Economic Zone Authority v.
Manish Agarwal & Ors.
of the Corporate Debtor through an e-auction, fixing the total reserved
price at INR 09.18 Crores.
3. In the light of the defaults committed by the Corporate Debtor,
Corporate Insolvency Resolution Process (hereinafter referred to
as “CIRP”) was initiated by the Appellant before the NCLT. While
admitting the said application on 11.07.2019, an Interim Resolution
Professional (hereinafter referred to as “IRP”) was appointed. The
Committee of Creditors, which comprised of the Sole Financial
Creditor, being the Stressed Assets Stabilization Fund – IDBI Bank
Limited (hereinafter referred to as “sole Financial Creditor”) was
constituted by the IRP after making a public announcement on
17.07.2019 as per the prescribed procedure.
4. In pursuance thereto, the Appellant filed a claim of INR 6,29,18,121/-
(Rupees Six Crores Twenty Nine Lakhs Eighteen Thousand and One
Hundred Twenty One only) which was admitted by the Respondent
No.01 – Resolution Professional (hereinafter referred to as “RP”) in
entirety. Valuation of the Corporate Debtor was thereby conducted
by two different valuers, and an average thereof was carried out,
leading to the fixing of the liquidation value of the Corporate Debtor
at INR 04.25 Crores. The Appellant had put forth that the valuers
had also observed that the valuations derived by them could be
realised, subject to fulfilment of the rules of NSEZ and procedure
of approval thereof.
5. The Resolution Plan dated 24.11.2019 (hereinafter referred to as
“Resolution Plan”), which was prepared by the Respondent No. 03 –
M/s Commodities Trading, being the Resolution Applicant (hereinafter
referred to as “Resolution Applicant”) was put before the Committee
of Creditors, which approved it in its 4 th Meeting dated 06.01.2020.
6. An application was then filed under Sections 31(1) and 60(5) of
the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to
as “IBC 2016”) before the NCLT by the RP, seeking an approval of
the Resolution Plan on behalf of the Committee of Creditors. The
same was allowed by NCLT vide Order dated 05.10.2020, granting
only INR 50 Lakhs to the Appellant against its admitted claim of
INR 06.29 Crores. Aggrieved, the Appellant put forth its objections
before the RP to the Resolution Plan and claimed payment of the
entire amount of INR 06.29 Crores from the Corporate Debtor,
494 [2024] 11 S.C.R.
Digital Supreme Court Reports
leaving open the legal remedy to recover the full dues, in case the
same was not accepted.
7. Being at loggerhead with the RP with respect to the payment of
admitted claim, the Appellant moved an application before the
NCLT challenging the Order dated 05.10.2020, which approved the
Resolution Plan. This was dismissed vide Order dated 27.11.2020,
observing that the said tribunal did not have the jurisdiction to accept
the prayer made in the application, which would amount to setting
aside of the Resolution Plan, and the Appellant had the remedy of
filing an appeal before the NCLAT.
8. Thereafter, the Appellant moved appeals under Section 61 of IBC
2016 before the NCLAT, challenging both the orders, as referred
to above. These appeals were also dismissed vide the impugned
Judgment dated 14.02.2022.
9. The grievance put forth by the Appellant is with regard to the Appellant
not being informed about the auction proceedings which were initiated
at behest of the RP, thus, depriving it of its participation in the said
proceedings. Once the total claim had been admitted by the RP,
which was clearly indicated in the Resolution Plan, the said amount
should have been disbursed to the Appellant prior to the claim of the
other claimants, including the sole Financial Creditor.
10. Another aspect which has been pressed into service is with regard to
Clause 10.9 of the Resolution Plan, as regards the exemptions from
the NSEZ, asserted to be in direct contravention and contradiction to
their established rules and principles of the functioning of the NSEZ.
The Appellant, which works under the guidance of the Ministry of
Commerce and Industry, Government of India, could not have been
commanded relating to its functions by the RP, especially with regard
to the charges or penalties relatable to the change in any business
model for transfer of units by the original allottee. The attempt to
by-pass the payment of statutory fee would be an unjust enrichment
to the Resolution Applicant, thus, contradicting Section 34(2)(d) of
the Special Economic Zone Act, 2005 (hereinafter referred to as
“SEZ Act, 2005”).
11. The Appellant even challenged the fair and liquidation valuation of
the Corporate Debtor being conducted by the two valuers. It was so
challenged on the ground that no physical inspection of the property
Noida Special Economic Zone Authority v.
Manish Agarwal & Ors.
in question was carried out by the said valuers. A reference in this
regard was made to Regulation 35(1)(a) of Insolvency and Bankruptcy
Board of India (Insolvency Resolution Process for Corporate Persons)
Regulations 2016 (hereinafter referred to as “IBBI Regulations 2016”),
which required physical verification of the Corporate Debtor.
12. At the cost of reiteration, the Appellant invariably pressed over and
over again assignment of only INR 50 Lakhs as against the admitted
claim of INR 6,29,18,121/- (Rupees Six Crores Twenty Nine Lakhs
Eighteen Thousand and One Hundred Twenty One only).
13. The learned Senior Advocate appearing for the Appellant has
vehemently put forth the submissions as recorded above and has also
referred to the statutory provisions before this Court. On considering
the same, going through the impugned judgment dated 14.02.2022
passed by the NCLAT and the records, we are not persuaded to
take a different view.
14. As regard the fair value and liquidation value of Corporate Debtor, as
derived by the valuers is concerned, this Court in Duncans Industries
Ltd. v. State of U.P. and Others1 held that the question of valuation is
basically a question of facts, which does not call for any interference
if it is based on relevant material on record. As stated above, the
average of the two closest estimates given by the valuers were taken
into consideration as fair value and liquidation value respectively,
which were found to be just and reasonable. This would be, keeping
in view Section 35C of IBC 2016, where the powers and duties of the
liquidator have been laid down. Since due process appears to have
been followed no fault is found requiring interference.
15. Sections 30 and 31 of IBC 2016, which deal with the submission
of the Resolution Plan has rightly been evaluated and analysed
NCLAT as per the ratio laid down by this Court in Maharashtra
Seamless Limited v. Padmanabhan Venkatesh and Others, 2
Ghanashyam Mishra and Sons Private Limited v. Edelweiss
Asset Reconstruction Company Limited and Others, 3 and
K. Sashidhar v. Indian Overseas Bank and Others, 4 reference
1 (2000) 1 SCC 633
2 [2020] 2 SCR 1157 : (2020) 11 SCC 467
3 [2021] 13 SCR 737 : (2021) 9 SCC 657
4 [2019] 3 SCR 845 : (2019) 12 SCC 150
496 [2024] 11 S.C.R.
Digital Supreme Court Reports
thereof has been made by the NCLAT in extenso. Conclusion as
culled out and elucidated is correct that all the dues, including
statutory dues owned by the Central Government, State Government
and local authority, which is not the part of the Resolution Plan shall
stand extinguished and no proceedings in respect of such dues
for the period prior to the date on which the Adjudicating Authority
had approved the Resolution Plan could be pressed into service or
continues. These observations took care of the assertions of the
Appellant with regard to the statutory dues and the claims as have
been made and put forth relatable to the areas of lease.
16. Beside this, as regards the other claims pertaining to the transfer
fees, etc. were not to be interfered with by courts or tribunals as the
same stood related to the commercial wisdom of the Committee of
Creditors for they being the best persons to determine their interests,
and any such interference is non-justiciable except as provided by
Section 30(2) of IBC 2016. We do not find violation of the statute
or the procedure as also the norms fixed as per the decisions
referred to above of this Court, the Resolution Plan as approved by
the Committee of Creditors, and the same having been accepted
deserves and has rightly been left untouched.
Fundamentally, the financial decisions as have been taken by
Committee of Creditors, especially with regard to viability or otherwise,
while evaluating the plan would thus prevail.
17. As far as the submission of the Learned Senior Counsel that
exemptions from NSEZ payments, including any type of fees or
penalty for renewal of sub-lease and/or for transfer charges due with
regard to the change of directorship or shareholding in favour of the
Resolution Applicant has to be dealt with as per Clause 10.9 of the
Resolution Plan cannot be accepted in the light of Section 238 of
IBC 2016, which provides for the provisions of IBC 2016 to have
an overriding effect over the other laws. If that be so, the obvious
effect is that the same would prevail, leading to the provisions as
contained in the SEZ Act 2005 giving way to IBC 2016.
18. It has come on record and stands admitted that the Resolution Plan
had already been implemented and the dues as found payable under
the Resolution Plan have been disbursed to the concerned parties.
As regards the Appellant is concerned, the amount was disbursed
vide Demand Draft dated 22.10.2020 which has been received and
Noida Special Economic Zone Authority v.
Manish Agarwal & Ors.
accepted by the Appellant. Leading to the dismissal of the appeal
vide impugned Judgment dated 14.02.2022.
19. In the light of above and having perused the record while bearing
in mind the extensive observations made by 3-Judge Bench of this
Court in Committee of Creditors of Essar Steel India Limited v.
Satish Kumar Gupta and Others,5 and its reiteration by numerous
subsequent decisions of this Court such as the Ebix Singapore
Private Limited v. Committee of Creditors of Educomp Solutions
Limited and Another6 and in the latest decision in DBS Bank Limited
Singapore v. Ruchi Soya Industries Limited and Another, 7 we
find ourselves not in a position to accept the claim of the Appellant
as sought to be made and put forth in these appeals.
20. The Orders dated 05.10.2020 and 27.11.2020, as have been passed
by the NCLT and approved by the NCLAT vide its impugned Judgment
dated 14.02.2022, do not call for any interference in the present
Appeals. The appeals being devoid of merit, stand dismissed.
21. There shall be no order as to costs.
22. Pending application(s), if any, also stand disposed of.
Result of the case: Appeals dismissed.
†