NCLT Mumbai: Society Not Entitled To Recover Past Arrears Of Applicant's Purchase In The Auction From Liquidator Of Corporate Debtor

Background Facts:

On 23.09.2022, liquidation commenced against Max Flex & Imaging Systems Ltd. (Corporate Debtor), and Mr. Fanendra H Munot, Respondent 2, was confirmed as the Liquidator. The Liquidator issued an Asset Sale Process Memorandum and a public announcement of the proposed auction. Mr. Hitendra Vishanji Nagda and Ors. (Applicants) were declared as the highest bidder for the Immovable property in the E-Auction with a Letter of Intent ('LoI') being issued on 09.01.2023 post payment of the Earnest Money Deposit ('EMD').

The Applicants paid a sale consideration of Rs. 3.41 crores and executed a Sale Deed dated 30.01.2023. The Applicants requested to be included as the member of the Society being the rightful owner of the Immovable Property. The Applicant provided that any outstanding dues, maintenance, or liabilities of the Immovable Property before 30.01.2023 shall be claimed by the Liquidator or the Corporate Debtor. Prime Plaza Premises Co-operative Society Ltd. (Respondent 1) claimed Rs. 17.17 Lakhs due from the Corporate Debtor to be cleared by the Applicants. since the Applicants are the current purchasers of the Immovable Property.

The Applicants have filed the present application against the Respondents to restrain Respondent No.01 from recovering outstanding dues from the Applicants payable by the Corporate Debtor, to be included as a member of the society and to allow the use of the parking space forming part of the immovable property purchased by them.

NCLT Verdict:

The NCLT Mumbai allowed the application and held that the Society is not entitled to recover the past arrears in respect of the unit purchased by the Applicant in the auction from the Liquidator of the Corporate Debtor.

The Tribunal considered Haryana State Industrial and Infrastructure Development Corporation Ltd. v. AAR AAR Technoplast Pvt. Ltd. and Anr., wherein NCLAT held that Society cannot recover the arrears of the dues pertaining to the period prior to execution of the sale deed in favour of the auction purchaser.

It noted that the law laid down in K C Ninan vs. Kerala State Electricity Board and other cannot be relied upon in the present case as the property was not sold under the provisions of IBC and the sale was simply through an auction on 'as is where is' basis.

In conclusion, NCLT directed the Respondent not to recover the past dues relating to before the execution of the sale deed in favour of the Applicant by the Liquidator. It also noted that the Respondent may claim any transfer fees or other charges which are usually charged by the society from the transferee members. The Applicant shall be liable to pay all charges payable in respect of the period post the execution of the sale deed in his favour.

Case Title: Mr. Hitendra Vishanji Nagda and Ors. vs. Prime Plaza Premises Co-operative Society Ltd.

Case No.: I.A. No. 2903/2023 in CP (IB) No. 4302/MB/C-II/2018

Counsel for Applicant: Adv. Meghna Arvind.

Counsel for Respondents: Adv. Abhishek Pednekar and Adv. Kunal Chheda.

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