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Are the Assets owned by a third party in possession of the Corporate Debtor is excluded from the scope of CIRP?

Case Details: Company Appeal (AT) (Insolvency) No. 27 of 2024& I.A. No. 89 of 2024

Court: NCLAT New Delhi

The Appellant had signed a lease deed with a Party A for the subject property. The Party A has allegedly assigned the lease to Party B. The Corporate Insolvency Resolution Process (CIRP) was initiated against Party B via an NCLT order.

The Resolution Professional, who was then appointed sent a notice to the Appellant, seeking inspection and access to the subject property and the assets lying therein.

Since the original lease deed had expired and there was no subsisting lease agreement with the Corporate Debtor, the Appellant filed an before the Adjudicating Authority to set aside the notice of the RP. The said IA, was rejected by the Adjudicating Authority.

It was contended that in terms of the Lease Deed, any act of transfer or assignment of the lease deed could have been done by Party A only after providing prior written intimation to the Lessor.

And the Appellant was never kept informed of any such assignment by Party A and Party B.

It was argued that no assignment of the lease deed to the Corporate Debtor had occurred, and therefore party B had no rights or interest in the subject property.

The lease deed with Party A had already expired prior to the commencement of CIRP, and therefore the RP had no authority to issue any notice for inspection of any inventory or assets in the subject property.

The notice of inspection issued by the RP was not maintainable under Sections 14, 18 or 25 of the IBC.

For rebutting the above arguments, it respondents raised that the lease was validly obtained after informing the Party A.

The subject property was in possession of the Paty B and this was substantiated by the fact that three active employees on the pay roll of the Party B were mapped to the store of the Corporate Debtor located at the subject property.

The NCLAT, after noting that -

1.the lease deed of the Appellant was with Party A and not with Party B.

2. The appellant was informed about the assignment of the deed. And this was denied by them in their reply to the notice sent by RP.

the NCLAT concluded that adjudicating authority erred as to overlook these and conclude that the assignment of the lease deed to Party B has not been disputed by the Appellant.

The Appellant had sent a legal notice to Party A asking them to handover the possession, upon the expiry of the lease deed. The Appellant denied that they had given their NOC to the Deed of Assignment and they are not even signatories to the said Deed, the onus of proof lay on the Corporate Debtor to show if any NOC was given by the Appellant. However, there is no such proof which has been placed on record.

Also, there was no substantive evidence to establish that the property was in the possession of the Corporate Debtor in clear cut and precise terms.

Thus, the RP cannot be said to have the right to inspect the subject property of a third party at a time when the lease period had already expired.

Assets owned by a third party in possession of the Corporate Debtor is excluded from the scope of CIRP and moratorium in view of Explanation (a) to Section 18 of the IBC.

The notice was therefore set aside.

What are the relevant principles for considering a Second/successive regular bail petition(s) ? Punjab and Haryana High Court clarifies.

Case Details: 024:PHHC:054064

I.Second/successive regular bail petition(s) filed is maintainable in law & hence such petition ought not to be rejected solely on the ground of maintainability thereof.

II. Such second/successive regular bail petition(s) is maintainable whether earlier petition was dismissed as withdrawn/dismissed as not pressed/dismissed for non-prosecution or earlier petition was dismissed on merits.

III For the second/successive regular bail petition(s) to succeed,the petitioner/applicant shall be essentially/pertinently required to show substantial change in circumstances and showing of a mere superficial or ostensible change would not suffice. The metaphoric expression of seeking second/successive bail plea(s) ought not be abstracted into literal iterations of petition(s) without substantial,effective and consequential change in circumstances.

IV.No exhaustive guidelines can possibly be laid down as to what would constitute substantial change in circumstances as every case has its own unique facts/circumstance. Making such an attempt is nothing but an utopian endeavour. Ergo, this issue is best left to the judicial wisdom and discretion of the Court dealing with such second/successive regular bail petition(s).

V.In case a Court chooses to grant second/successive regular bail petition(s), cogent and lucid reasons are pertinently required to be recorded for granting such plea despite such a plea being second/successive petition(s). In other words, the cause for a Court having successfully countenanced/entertained such second/successive petition(s) ought to be readily and clearly decipherable from the said order passed.

References:

1. Babu Singh and others vs. The State ofU.P. 1978 AIR (Supreme Court) 527

2.Kalyan Chandra Sarkar vs. Rajesh Ranjan @ Pappu Yadav, 2005 (2) SCC 42