Development Rights Constitute Property U/S 3(27) Of IBC, Can Be Included In Information Memorandum By RP U/S 29 Of Code: NCLAT

The NCLAT New Delhi bench of Justice Ashok Bhushan (Chairperson) and Barun Mitra (Technical Member) affirmed that development rights are property within the meaning of section 3(27) of the IBC which can be included in the Information Memorandum by Resolution Professional under section 29 of the IBC. The Tribunal further observed that the Adjudicating Authority has jurisdiction to enter into as to whether property included in the IM is asset of the corporate debtor under section 60 of the IBC and for decision of the question, the parties are not required to be relegated to the Competent Civil Court having jurisdiction Brief Facts These two Appeals have been filed by the same Appellant challenging the order dated 30.04.2024 passed by the Adjudicating Authority.Company Appeal (AT) (Insolvency) No.1117 of 2024 has been filed challenging the order dated 30.04.2024 passed in IA No. 4648 of 2020 which was filed by the Appellant. By the impugned order the IA No. 4648 of 2020 has been disposed of. Company Appeal (AT) (Insolvency) No.1116 of 2024 has been filed against the order dated 30.04.2024 passed in Intervention Petition IA No. 58 of 2023 by which order Adjudicating Authority has allowed the intervention application filed by M/s. Art Constructions Pvt. Ltd., the Successful Resolution Applicant (SRA). Both the Appeals have arisen out of common facts and sequence, they have been heard together and are being decided by this common judgment. Appellants herein are the owners of land measuring 36 acres 04 Guntas situated at Kengeri Village, Kengeri Hobli, Bangalore South Taluk. Appellants along with Mr. Karar Ahmed (brother of Appellant No.1) entered into MoU dated 25.04.2008 with M/s. Upkar Developers (India) Pvt. Ltd. which company was incorporated by the Appellants themselves for development of the land. A loan was taken from HUDCO of Rs.15 Crores mortgaging the assets. The Appellant entered with a Collaboration Agreement dated 05.07.2008 with M/s. Upkar Developers (India) Pvt. Ltd. and M/s. Era Landmarks (India) Ltd. M/s. Era Landmarks (India) Ltd. was referred to as Developer in the Collaboration Agreement who undertook to discharge the loan of HUDCO and obtain the building plan of the project land and develop the project. The developer undertook to pay Rs.35 Crores towards interest free Refundable Security Deposit. On 25.01.2010, an Assignment Agreement was entered into by the Developer with its one of the subsidiaries namely— 'Parinda Buildcon Private Limited' assigning rights of developer to develop and carry on the project. The developers in the Assignment Agreement had also undertaken to discharge its liabilities under the Collaboration Agreement, in event of 'Parinda Buildcon Private Limited' failed to discharge its liabilities. The owners along with M/s. Upkar Developers (India) Pvt. Ltd. issued two legal notices dated 17.02.2012 and 22.02.2012 alleging that the corporate debtor has not been able to discharge its obligations under the Collaboration Agreement. By the legal notices, Collaboration Agreement dated 05.07.2008, addendum dated 28.10.2009, Assignment Agreement dated 25.01.2010 and General Power of Attorney dated 05.07.2008 were terminated. Arbitrator passed a detailed order on 15.07.2015 terminating the proceedings. Against the order dated 15.07.2015 passed by the Sole Arbitrator, an application under Section 34 of the Arbitration & Conciliation Act, 1996 was filed by the developer- M/s. Era Landmarks Ltd. which came to be dismissed by the Addl. City Civil & Sessions Judge, Bengaluru on 12.10.2018. M.F.A. No. 10068 of 2018 was filed by both the Claimants before the High Court of Karnataka at Bengaluru against the order dated 12.10.2018 passed by the Addl. City Civil & Sessions Judge, Bengaluru. The High Court dismissed M.F.A No.10068 of 2018 holding that Arbitral Award dated 6 Company Appeal (AT) (Insolvency) No. 1116 of 2024 & 1117 of 2024 15.07.2015 was passed under Section 32(2) (c) of the Arbitration & Conciliation Act, 1996 and hence could not have been subjected to challenge under Section 34 of the Arbitration & Conciliation Act, 1996. An order was passed on 05.12.2018 by the Adjudicating Authority in an application under Section 7 of the IBC filed by Edelweiss Asset Reconstruction Company Ltd. initiating the CIRP against M/s. Adel Landmarks Ltd. (M/s. Era Landmarks Ltd. was subsequently re-named as M/s. Adel Landmarks Ltd., the Corporate Debtor herein). A Public Notice was published on 07.08.2020 in Bangalore Edition, The Times of India qua the schedule property. Notice was issued by one M/s. Brigade Enterprises Ltd. intimated that M/s. Brigade Enterprises Ltd. intends to enter into a Joint Development Agreement for the development of the properties mentioned therein. The properties mentioned therein were the properties of 35 acres 11 Guntas which was subject to the Development Agreement. ...

Development Rights Constitute Property U/S 3(27) Of IBC, Can Be Included In Information Memorandum By RP U/S 29 Of Code: NCLAT

Mohd Malik Chauhan

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