NCLAT: Joint Development Agreement Between Lessee And Corporate Debtor Valid; NOIDA's Appeal Dismissed, Right To Submit Claim Closed To Protect CIRP Timelines

The National Company Law Appellate Tribunal, New Delhi has dismissed the Appeal preferred by New Okhla Industrial Development Authority (NOIDA) against the NCLT, New Delhi's order directing NOIDA to "lodge its due claim with Resolution Professional as per law and participate in the CIRP process through duly Authorised person and attend all future CoC meetings participate in the discussions/negotiations on the Resolution Plans submitted by prospective Resolution Applicants, and give consent to the Resolution Plan sought to be approved by the CoC." The Appellant/NOIDA challenged the NCLT's order before the NCLAT, New Delhi and raised the following arguments: While the plot in question was leased by NOIDA to M/s Logix City Developers Private Limited (Logix) for development of a Group Housing Project, the same was illegally transferred by Logix to M/s Dream Procon Private Limited (Corporate Debtor) by way of a Joint Development Agreement (JDA), which was in violation of the provisions of the Lease Deed executed between NOIDA and Logix.As per the Lease Deed, Logix could sub-divide the subject premises into smaller plots and could have transferred the same to any third party only with NOIDA's prior approval and after due payment of transfer charges to NOIDA as per the prevailing policy. Further, Logix was not allowed to assign or change its role under the said Lease Deed and in case of contravention of the same, the lease could have been cancelled by the NOIDA. If Logix violated any of the terms of registration/allotment/lease or failed to deposit the amount, NOIDA had the right to terminate the Lease Deed.It is only after the initiation of the CIRP Proceedings against the Corporate Debtor that NOIDA came to know of the transactions with the Corporate Debtor involving the land in question. During the pendency of the CIRP, the Respondent No. 2/Victory Ace Social Welfare Society (VASWS), a society comprising of 234 allottees of residential units/flats in the Project of the Corporate Debtor, approached the NCLT vide IA No. 4538/2020 for directions to NOIDA and the NCLT, vide Order dated 21.10.2020, directed the Resolution Professional to make a representation to NOIDA seeking its consent for inviting a Resolution Plan in respect of the Corporate Debtor. In compliance with this Order, the RP sent a letter dated 23.10.2020 along with copies of the JDA, GPA and Agreement to sell, requesting it to participate in the CIRP Proceedings. It was only at this time that NOIDA became aware of the existence of the JDA, the Agreement to sell and the GPA.IA No. 5050/2020 was preferred by NOIDA seeking directions to the RP to exclude the said premises from the pool of assets of the Corporate Debtor mainly on the ground that the Agreement was executed by Logix in a covert manner without NOIDA's approval which is against the provisions of the terms entered into between NOIDA and Logix.The Corporate Debtor had no rights over the subject premises as the JDA, GPA and Agreement to sell are non-est in the eyes of law. The asset does not belong to the Corporate Debtor under Section 18 of the Insolvency and Bankruptcy Code, 2016, (the Code), since the interest was not transferred legally by Logix to the Corporate Debtor. Approval of the Project by UPRERA would not vest any title to the Corporate Debtor in respect of the subject premises.NOIDA's Ledger Statements show that no payments were made by the Corporate Debtor to NOIDA. The advertisements were issued by the various unknown parties such as 'Victory Infra Projects Private Limited', where even the basic details were not mentioned. NOIDA does not recognize the Corporate Debtor and denies the validity of the JDA, and therefore the NCLT's order directing it to participate in the CIRP and submit its claim before the Resolution Professional is illegal and liable to be set aside. The Respondent No. 1/Resolution Professional opposed the appeal and raised the following arguments: The Project was duly approved by NOIDA and accordingly 80% of the construction work was completed after getting approval of Building Plans, Water Supply Plan and Water Disposal Plan etc. as per statutory requirements. The Project was duly registered with UPRERA and as per Section 4(2)(c) of RERA Act, 2016 a Project could not be registered without submitting authenticated copy of approvals and Commencement Certificate from the Competent Authority. The JDA and development of the Project was well within NOIDA's knowledge and NOIDA is not taking a contrary stand and trying to defeat the CIRP which would adversely affect more than 500 Homebuyers. The Resolution Professional duly performed his duties and took control and custody of the assets of the Corporate Debtor as mentioned in the Balance Sheet as under Section 18(1)(f); the development rights have vested in the 'Corporate Debtor' is admittedly a proprietary right of the Corporate Debtor....

NCLAT: Joint Development Agreement Between Lessee And Corporate Debtor Valid; NOIDA's Appeal Dismissed, Right To Submit Claim Closed To Protect CIRP Timelines

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NCLAT: Joint Development Agreement Between Lessee And Corporate Debtor Valid; NOIDA's Appeal Dismissed, Right To Submit Claim Closed To Protect CIRP Timelines

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