VICTORY IRON WORKS LTD. versus JITENDRA LOHIA & ANR

VICTORY IRON WORKS LTD. versus JITENDRA LOHIA & ANR

A bundle of rights and interests (including development rights) created in favour of the corporate debtor by the MoU, shareholders agreement, development agreement and memoranda recording possession constitute "property" under s.3(27) and therefore "asset" within the meaning relevant to s.18 and s.25; accordingly the Resolution Professional must include those development rights in the Information Memorandum and is duty bound under s.25(2)(a) to take custody and control of them. The Explanation to s.18 is limited to section 18 and does not operate to prevent s.25 remedies; NCLT and NCLAT correctly balanced competing interests by protecting Victory's limited license (10000 sq.ft.) while...

Parties
Appellant (civil Appeal No.1743 of 2021): Victory Iron Works Ltd.; Appellant (civil Appeal No.1782 of 2021): Energy Properties Private Limited; Respondents: Jitendra Lohia & Anr.
Jurisdiction
India
Judgment Date
14 March 2023
Procedural Posture
Civil Appeal / Appeal From NCLAT Order Confirming NCLT Order in CIRP Proceedings
Outcome
Appeals dismissed
Legal Topics
Assets V. Property, Development Rights as Assets, Possession and Custody of Property During CIRP, Leave and License Agreements, Information Memorandum (regulation 36), Duties of Resolution Professional (s.25, S.18), Regulation 30 IBBI (assistance by Local Administration)
Insolvency and Bankruptcy Property Law Contract Law Company Law Assets V. Property Development Rights as Assets Possession and Custody of Property During CIRP Leave and License Agreements +3 more

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Parties

Victory Iron Works Ltd.

Appellant (civil Appeal No.1743 of 2021)

Energy Properties Private Limited

Appellant (civil Appeal No.1782 of 2021)

Jitendra Lohia & Anr.

Respondents

Procedural Posture

Civil Appeal / Appeal From NCLAT Order Confirming NCLT Order in CIRP Proceedings

Legal Issues

  1. 1 Whether development rights and bundle of rights held by the corporate debtor over immovable property constitute "property"/"asset" under the IBC and therefore must be included in the Information Memorandum and taken into custody under s.25(2)(a)
  2. 2 Whether the Explanation to s.18 excluding third-party assets in the possession of the corporate debtor extends to s.25 and prevents the Resolution Professional from taking custody/control
  3. 3 Whether NCLT/NCLAT exceeded jurisdiction in issuing directions (including under Regulation 30) to protect/restore possession in favour of the corporate debtor given competing claims by owner and licensee

Ratio Decidendi

A bundle of rights and interests (including development rights) created in favour of the corporate debtor by the MoU, shareholders agreement, development agreement and memoranda recording possession constitute "property" under s.3(27) and therefore "asset" within the meaning relevant to s.18 and s.25; accordingly the Resolution Professional must include those development rights in the Information Memorandum and is duty bound under s.25(2)(a) to take custody and control of them. The Explanation to s.18 is limited to section 18 and does not operate to prevent s.25 remedies; NCLT and NCLAT correctly balanced competing interests by protecting Victory's limited license (10000 sq.ft.) while...

Court Disposition

Appeals dismissed

Orders

  • Appeals dismissed; no costs
  • NCLT and NCLAT orders upheld directing Victory Iron Works Ltd. and Energy Properties not to obstruct the possession and activities of the Resolution Professional and protecting Victory's right to occupy the 10,000 sq.ft. licensed area