Advance Paid Towards Transfer Of Leasehold Rights In An Immovable Property Is Not An Operational Debt: NCLT Mumbai

The National Company Law Tribunal, Mumbai Bench, comprising Shri Kishore Vemulapalli (Judicial Member) and Shri Prabhat Kumar (Technical Member), while adjudicating an application under Section 9 of Insolvency and Bankruptcy Code, 2016 (“IBC, 2016”) in RSM Infra Partners vs Siddhivinayak Skyscrapers Private Limited has held that an amount paid as advance towards an agreement of transfer of leasehold rights in an immovable property does not come within the ambit of Operational Debt. Background Facts RSM Infra Partners (“Operational Creditor”) and Siddhivinayak Skyscrapers Private Limited (“Corporate Debtor”) entered into an MOA dated 02.08.2016 for the purpose of assignment of right of lease in a plot of land. M/s Kuber Builders acquired leasehold rights in a plot of land situated in Navi Mumbai from City Industrial Development Corporation of Maharashtra ("CIDCO") vide an Agreement dated 15.05.1996. The Corporate Debtor vide an MOU dated 16.06.2016 agreed to purchase the said Plot with clear and marketable title, free from all encumbrances, claims, demands, doubts and disputes along with the quiet, vacant and peaceful possession of the plot. The Corporate Debtor further agreed to transfer and assign the entire right, title and interest held by the Corporate Debtor in the said Plot to the Operational Creditor for a consideration of Rs. 40,00,00,000/-. The Operational Creditor paid an amount of Rs. 1,00,00,000/- towards the same. It was contended by the Operational Creditor that the Corporate Debtor agreed to execute a Composite Agreement between the Corporate Debtor, Operational Creditor and M/s Kuber Builders in respect of transfer and assignment of the MOU to the extent of the said Plot. However, the Corporate Debtor failed to execute the aforesaid Composite Agreement. It was contended that the Operational Creditor was entitled to refund of the Rs. 1,00,00,000 along with interest within 3 days of failure to comply with the obligations under the MOU. Thus a Demand Notice dated 09.03.2020 was issued demanding a sum of Rs. 1,66,37,808/- from the Corporate Debtor. On the Contrary, it was contended by the Corporate Debtor that the claim does not fall within the ambit of Operational Debt and the interest claimed @18% p.a. is illegal. Findings of the Tribunal The Tribunal observed that the amount of debt claimed in default is an amount paid as advance towards an agreement of transfer of leasehold rights in an immovable property. The debt has arisen due to failure of the Corporate Debtor to transfer the leasehold rights. Thus the agreement is for purchase of leasehold rights in an immovable property. The immovable property is neither a good, nor a service nor a claim for repayment of dues arising under any law. Thus the amount claimed does not for part of an Operational Debt With the aforesaid observations, the Tribunal dismissed the petition Case:RSM Infra Partners vs Siddhivinayak Skyscrapers Private Limited Case No. ;CP (IB) No. 1155/MB-IV/2020 Counsels for the Applicants;Adv. Rohit Gupta a/w Adv. Amrut Bairagra i/b M/s. M.T. Miskita & Co., Advocates Counsel for the Respondent ;Adv. Smit Shah i/b Adv. Mangesh Shirsat, Click Here To Read/Download Order

Advance Paid Towards Transfer Of Leasehold Rights In An Immovable Property Is Not An Operational Debt: NCLT Mumbai

Udai Yashvir Singh

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