Greater Noida Industrial Development Authority (GINDA) v. Roma Unicorn Designex Consortium
NCLAT, Principal Bench
Company Appeal (AT) (Insolvency) No. 180 of 2022
GNIDA v. Earth Infrastructures Ltd. & Ors
Company Appeal (AT) (Insolvency) No. 629 of 2022; Company Appeal (AT) (Insolvency) No. 630 of 2022
NCLT allows extension of CIRP period by six months and allows the Resolution Applicant to again participate in the process.
Background of the Case:
The three appeals filed by the same appellant challenge orders passed by the NCLT arising out of the same CIRP under Insolvency and Bankruptcy Code (IBC)
- Appeal No. 630 of 2022 was filed to challenge the order dated 05.04.2021 passed by the NCLT wherein the RP filed an application under S. 30 (6) approving the resolution plan submitted by Roma Unicon Disgnex Consortium.
- Appeal no. 629 of 2022 was filed against order dated 08.06.2021 wherein the the resolution plan made by M/s Alpha Corp Development Pvt Ltd was approved.
- Appeal no. 180 of 2022 was filed against order dated 07.12.2021 wherein GNIDA was directed to implement resolution plan dated 05.04.2021.
Facts of the Case:
- Greater Noida Industrial Development Authority is an Authority constituted under the provisions of the Uttar Pradesh Industrial Area Development Act, 1976 for the development of certain areas in the Uttar Pradesh into urban and industrial township. The Authority under the above 1976 Act is empowered to acquire the land, develop the same and make allotment of plots on lease basis. The Appellant vide allotment letter dated 19.03.2010 allotted to the Builder Residential/ Large Group Housing Plot No.GH-04, Sector 01, Greater Noida Uttar Pradesh with area of 73900 sq. mtrs to a Consortium consisting of – (i) M/s Earth Infrastructures Limited; (ii) Raus Infras Ltd.; and (iii) M/s. Shalini Holdings Limited @ Rs.10050 per sq. mtr.
- Under the terms and conditions of the Builders Scheme, the Consortium was to form a Special Purpose Company (SPC). A separate corporate legal entity namely – M/s Earth Towne Infrastructures Pvt. Ltd. (“Earth Towne”) was incorporated on 21.07.2010.
- The Appellant executed a Lese Deed dated 01.09.2010 in favour of M/s Earth Towne Infrastructures Pvt. Ltd., which consisted – M/s Earth Infrastructures Limited as a Lead Member and M/s Raus Infrastructure and M/s Shalini Holdings Ltd. as Members. The Earth Infrastructures Ltd. had 78% of shareholding and other two Members had 11% of shareholding in the Special Purpose Company.
- As per terms and conditions of the registered Lease Deed dated 01.09.2010 M/s Earth Towne Infrastructures Pvt. Ltd. was to develop and market the project on demarcated Plot No.GH-04, Sector 01, Greater Noida. The Lease Deed was executed for consideration of the total premium of Rs.74,26,95,000.00 and 10% premium was paid. Balance 90% premium was to be payable in 16 half-yearly instalments. Interest @ 12% per annum was to be paid after 24 months.
- After the execution of the Lease Deed on 01.09.2010 an unregistered Development Agreement dated 09.09.2010 was entered between Earth Towne and Earth Infrastructures Ltd., where First Party – Earth Towne was to develop the land. The development rights were given to the Earth Infrastructures Ltd. by the Development Agreement. The Development Agreement also stipulated that Earth Towne shall remain the lease right holder of the Scheduled Land and the Second Party shall only have the permission to enter into the Scheduled Land only for carrying out the development/ construction activities, as a Licensee. The area sharing ratio between Earth Towne and Earth Infrastructures Ltd. was 18% and 82%. On an application made by Lessee – Earth Towne, the Appellant had sanctioned building plan for construction on Lease Land. The Project was known as Earth Towne Project.
- Another Lease Deed dated 04.02.2008 was also executed by the Appellant in favour of M/s Neo Multimedia Ltd. A Development Agreement was entered between M/s Neo Multimedia Ltd. and M/s Earth Infrastructures Ltd. on 25.04.2011, under which the development and construction was to be carried out by Earth Infrastructures Ltd. on an area of 58866.03 sq. mtrs on Plot No.TZ-01, Sector-Tech zone in Greater Noida.
- Similarly a third Lease Deed dated 01.09.2009 was executed by the Appellant in favour of M/s Nishtha Software Pvt. Ltd. A Memorandum of Understanding (“MoU”) dated 20.02.2010 was entered between M/s Nishtha Sofware Pvt. Ltd. and the Corporate Debtor. A Development Agreement was entered between M/s Nishtha Software Pvt. Ltd. and M/s Earth Infrastructures Pvt. Ltd. for land area of 20911.23 sq. mtrs at Plot No. 48, Sector-Knowledge Park No.05, Greater Noida.
- The Earth Infrastructures Pvt. Ltd. was to develop, as per the Development Agreements, on lands owned by Earth Towne, M/s Neo Multimedia Ltd. and M/s. Nishtha Sofware Pvt. Ltd. The Earth Infrastructures Pvt. Ltd. started three Projects namely – Earth Towne Project, Earth Techone and Earth Sapphire Court. The building permissions were obtained by the Lessees for the aforesaid three parcel of lands for construction of the Projects advertised. A large number of homebuyers booked the residential flats in the aforesaid three Projects and paid substantial amount, which were received by the Developer and in few cases also by Lessee of the respective land parcels. The Projects were registered with UP RERA
- On an Application filed by Financial Creditor – Mr. Deepak Khanna against the Earth Infrastructures Pvt. Ltd. (Corporate Debtor) under Section 7, the Adjudicating Authority by an order dated 06.06.2018 commenced CIRP against the Earth Infrastructures Pvt. Ltd. One Shri Surinder Kumar was appointed as Interim Resolution Professional (“IRP”) and subsequently Shri Akash Singhal was appointed as RP.
- The RP prepared the Information Memorandum in June 2019 regarding the Corporate Debtor, where details of all the three Projects (which are subject matter of three Appeal(s) under consideration) were given. Form-G was issued inviting Expression of Interest for the Corporate Debtor on 19.04.2019. Thereafter on 22.05.2019. while issuing Expression of Interest the Resolution Plans were invited for the entire Project of the Corporate Debtor, individually or collectively.
- The Appellant on 18.09.2019 has sent a letter to RP claiming dues on the subsidiary of the Corporate Debtor namely Earth Towne for an amount of Rs.148,37,46,148/-, arising out of the Lease Deed executed on 01.09.2010.
- In pursuance of the request for Resolution Plan, Resolution Plans were submitted. Roma Unicorn Designex Consortium filed its Resolution Plan for the Earth Towne Project, which Resolution Plan was approved by the Committee of Creditors (“CoC”) in their 14th Meeting held on 26.08.2019 with 100% voting share. The said Resolution Plan was subsequently on an Application filed by the RP has been approved by the Adjudicating Authority vide its order dated 05.04.2021.
Alpha Corp Development Pvt. Ltd. submitted its Resolution Plan for four Projects. The Resolution Plan submitted by Alpha Corp Development Pvt. Ltd. was approved in 19th Meeting of the CoC held on 11.11.2019. On an Application filed by Resolution Professional, the Adjudicating Authority vide its order dated 08.06.2021 approved the Resolution Plan filed by Alpha Corp Development Pvt. Ltd. with regard to two projects, i.e., Earth Sapphire Court and Earth Techone.
- Company Appeal (AT) (Insolvency) No.630 of 2022 has been filed challenging the order dated 05.04.2021, approving the Resolution Plan of Earth Towne.
- Company Appeal (AT) (Insolvency) No.629 of 2022 has been filed challenging the order dated 08.06.2021, approving the Resolution Plan submitted by M/s Alpha Corp Development Pvt. Ltd
- In Company Appeal (AT) (Insolvency) No.180 of 2022, which has been filed against the order dated 07.12.2021, an IA No.4235 of 2021 was filed by Roma Unicon Designex Consortium praying for certain directions against the Appellant including the direction to transfer the lease land in favour of the Successful Resolution Applicant. The IA No.4235 of 2021 was opposed by the Appellant by filing a reply. It was submitted by the Appellant in reply to the Application that land was allotted to M/s Earth Infrastructure Limited and two other Companies and the lease was executed in the name of Earth Towne Infrastructure Pvt. Ltd. The Respondent (Appellant herein) submitted that proposed transfer is against the terms and conditions of the Lease Deed. The Appellant stated that claim of the Appellant was never vetted, verified and determined, hence, the prayer made in the Application be rejected. The Adjudicating Authority after hearing the parties passed an order on 07.12.2021 allowing IA No.4235 of 2021.
- The Appellant aggrieved against the orders passed by the Adjudicating Authority has filed these three Appeal(s).
- Whether in the CIRP proceedings of the Corporate Debtor, i.e., Earth Infrastructures Limited, the assets of the land holding companies, i.e., subsidiary of the Corporate Debtor can be treated to be assets of the Corporate Debtor?
- Whether, in the Resolution Plans submitted by the Successful Resolution Applicants, i.e., Roma Unicon Designex Consortium and Alpha Corp Development Private Limited, the assets of the subsidiary, i.e., lease lands could have been dealt and the Resolution Plan could legally contain a clause for transfer of the lease hold rights by the Appellant in favour of Successful Resolution Applicant without there being any prior permission from the Appellant?
- Whether assets of the subsidiary companies can be dealt with in Corporate Insolvency Resolution Process of holding Company?
- Whether the Appellant was required to be made party to the CIRP proceedings and heard before approval of any resolution plan dealing with the Project land?
- Whether, Resolution Professional acted within the ambit of I & B Code in giving a certificate that Resolution Plans submitted by Roma Unicon Designex Consortium and Alpha Corp Development Private Limited are in accordance with the provisions of the Code?
- Whether Appellant was aware of the development carried out by the Corporate Debtor on the lease land before commencement of the CIRP of the Corporate Debtor?
- What is the way out in the facts and circumstances of the present case?
It was the Appellant who was owner of the lease lands,
|The Resolution Professional in the Information Memorandum as prepared in June, 2019 has disclosed the assets of the Corporate Debtor. Details of five projects were separately included. In the Information Memorandum it is stated that the Corporate Debtor has development and selling rights of five projects and land is allotted to different land-owning companies which are the subsidiaries of Earth Infrastructure Ltd. With regard to project Earth Towne, the name of land-owning company in the Information Memorandum was wrongly mentioned as Earth Infrastructures Limited, Raus Infra Ltd. and Shalini Holding Ltd. whereas they were members of the consortium in whose favour land was allotted but by virtue of Lease Deed executed dated 01.09.2010 and the land-owning company was “Earth Towne Infrastructure Pvt. Ltd
|The Learned Counsel for the Resolution Professional, Mr. G. P. Madaan refuting the submissions of learned counsel for the Appellant submits that the Resolution Professional in the Information Memorandum has given all the details regarding the land-owning companies and the details of the developer who has development and selling rights over the five projects. It is submitted that the Information Memorandum has also given details of the claim which was received from the Appellant. The Resolution Professional has also shared the letter of its dues of Rs.148,37,46,148/- received from the Appellant claiming to be dues of Earth Towne. It is submitted that it was the Corporate Debtor which was making all payments against the Lease Deed dated 01.09.2010 and Earth Towne was nothing but alter ego of Corporate Debtor. Appellant was not vigilant of its claim. Appellant was well aware of the insolvency process which was initiated against the Corporate Debtor.
Answer 1: In the CIRP Process of Corporate Debtor that is Earth Infrastructure Limited, assets of the Land Holding Companies cannot be treated to be assets of the Corporate Debtor.
Answer. 2: Resolution Plan submitted by Roma Unicon Designex consortium and Alpha Corp Development Private Limited could not have dealt with the project land which was a land leased out by the Appellant in favour of the Land Holding Company.
Answer 3: Assets of the Subsidiary Company cannot be dealt with in the CIRP Process of Holding Company without the permission of the Lessor.
Answer 4: Appellant was required to be made party to the CIRP Process before approval of any resolution plan dealing with project land.
Answer 5: We direct the Registry to forward the Copy of this Order to IBBI to examine the work and conduct of RP and take such action as it may deem fit and proper.
Answer 6: The knowledge by the Appellant of carrying out development by the corporate debtor cannot be read as their consent to transfer the land in favour of the Successful Resolution Applicant or any other person.
Looking to the stage at which the projects are as on date and looking to the fact that allottees have paid hundreds of crores rupees in the above three projects to the Corporate Debtor and waiting for possession of the flat for last several years, we have to find out ways and means to save the interest of the allottees as well as the interest of the Appellant. We are of the view that Resolution Professional jointly with Flat Buyer Association of respective projects be permitted to make an Application to the Appellant seeking permission for transfer of land in favour of the proposed resolution Company Appeal (AT) (Insolvency) Nos.180, 629 & 630 of 2022 107 applicants so as to execute the necessary transfer deeds in favour of the allottees subject to payment of dues of the Appellant. It shall be open for the Appellant to enter into an arrangement with the Resolution Applicant and Flat Buyer Associations for payment of dues and thereafter it may permit transfer of the land so ultimately allottees be given rights and the projects can be developed by the SRA. 92. The RP has to publish a fresh Form-G inviting fresh Resolution Plans with specific condition that resolution plans shall be presented before the COC for consideration only when dues of the appellants are paid and permission of appellant is obtained for transfer of lease land. The Roma Unicon as well as Alpha Corp shall also be permitted to file resolution plans. The Appellant shall recalculate the dues and communicate to the Resolution Professional and Flat Buyers Associations without charging any penal interest within 15 days. Fresh Resolutions Plans so submitted will be considered and examined by the RP and be submitted before CoC for fresh consideration and approval. The application of Resolution Plan may be filed for approval of the plan, thereafter.
In view of the foregoing discussions, we dispose of these Appeals, in following manner:
- The Order dated 05th April, 2021 passed by the Adjudicating Authority, the Order dated 08th June, 2021 passed by the Adjudicating Authority and Order dated 07th December, 2021 Company Appeal (AT) (Insolvency) Nos.180, 629 & 630 of 2022 108 passed by the Adjudicating Authority in I.A. No. 401(ND)2017 are set aside.
- The Appellant is directed to recalculate its dues payable by the respective land holding companies without charging any penal interest and communicate the same to the Resolution Professional and the Flat Buyer Association(s) of three projects within 15 days of this order.
- The appellant is made party to the CIRP of the Corporate Debtor and shall be entitled to participate in the process hereinafter.
- After receiving the details of the dues, the Resolution Professional shall publish a fresh Form-G containing a condition that Resolution Plans received in pursuance of request for Resolution Plan shall be placed for consideration after receiving prior approval of the Appellant for transfer of land in favour of the proposed resolution applicant subject to arrangement for payment of dues of the Appellant.
- The Appellant shall consider granting permission for the transfer of project land under the three projects as above on the terms and conditions as finalized by the Appellant with Resolution Professional and flat buyer associations of respective projects.
- The Resolution Plan so received shall be again examined by the Resolution Professional and placed before the CoC for fresh consideration. All consequential steps shall be taken thereafter. Company Appeal (AT) (Insolvency) Nos.180, 629 & 630 of 2022 109.
- All above steps till the submission of application by Resolution Professional before the Adjudicating Authority for approval of the plan, if any, shall be completed within six months from today.
- The CIRP period is extended for a period of six months from today.
About the Author- The summary of this order has been composed by the Associates of SSARVI Resolution Services LLP. SSARVI stands for “Special Situation Assets Resolution, Viability & Investment Advisory”. It provides services like Insolvency and Resolution, Litigation, Strategic Debt Restructuring, distress assets sale or investment, to all stakeholders like lenders, borrowers, suppliers of goods/services, statutory authorities and others.
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