Current AffairsIndia

NCLT directs Resolution Professional to not proceed with resolution plan

The National Company Law Tribunal (NCLT), Principal Bench has passed an order directing a Resolution Professional to not proceed a resolution plan in a corporate insolvency resolution process (CIRP) after an issue with respect to the rights of the landowners came up before it (SCSL Build well Pvt Ltd v. PAL Infrastructure & Developers Pvt Ltd).

The order was passed by a two-member Bench of Acting President BSV Prakash Kumar and Technical Member, Hemant Kumar Singh.

PAL Infrastructure, the corporate debtor, had entered into collaboration agreement(s) with certain landowners for the development of a group housing complex on their land.

Under the terms of the collaboration agreement, the corporate debtor was to develop the land at its own cost and expense, including the expenses for obtaining the requisite approvals, licenses, etc.

In lieu of the consideration for the land, the corporate debtor agreed to provide certain sum of money to build up permissible constructed area and hand over the same to the landowners under the terms of the collaboration agreement.

However, the collaboration agreement was vitiated by efflux of time as the corporate debtor did not perform the obligations as set out in the agreement. Even the license issued by the Department of Town and Country Planning, Haryana was cancelled in the year 2015.

Thereafter, the landowners filed civil suits before the district court against the corporate debtor.

Meanwhile, the NCLT admitted the insolvency petition against the corporate debtor and vide its order dated September 9, 2019, ordered for commencement of CIRP against the corporate debtor.

Certain landowners thus moved the NCLT asserting that the corporate debtor was unlawfully trying to proceed with invitation of resolution plans in respect of their land.

In their letters to the Resolution Professional (RP), the landowners asked that their valuable piece of land be given back to them. The RP also filed an application seeking a direction to the landowners to file their claim as an operational creditor of the corporate debtor.

The landowner stated that the application was not maintainable in the eyes of law as the RP could not ask a creditor to file a claim in a particular class.

After hearing the counsel for the RP and the landowners, the NCLT ordered,

For the RP counsel having not denied about such cancellation, we are of the view that the RP shall not proceed with processing of resolution plans until before order is passed in the applications by these applicants as well as the applications filed by the RP in respect to the land-hold rights of the landowners.

The matter was posted for further hearing on February 2.

A team from AZB & Partners led by Senior Partner Hardeep Sachdeva, Partner Parag Maini and Senior Associate Raghav Chadha represented the landowners.

Advocates Mrinali Prasad, Aditya Gauri, and Dhanajay Sood appeared for the RP.


Via Bar & Bench
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