MR. RAJENDRA K. BHUTTA versus MAHARASHTRA HOUSING AND AREA DEVELOPMENT AUTHORITY THROUGH ITS CHAIRMAN & ANR.
[2020] 4 S.C.R. 305, Supreme Court of India, 2020
Outcome: Appeal(s) allowed (Granted)
Segment: Body
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305
MR. RAJENDRA K. BHUTTA
v.
MAHARASHTRA HOUSING AND AREA
DEVELOPMENT AUTHORITY THROUGH ITS
CHAIRMAN & ANR.
(Civil Appeal No. 12248 of 2018)
FEBRUARY 19, 2020
[R. F. NARIMAN, S. RAVINDRA BHAT AND
V. RAMASUBRAMANIAN, JJ.]
Insolvency and Bankruptcy Code, 2016 – s.14(1)(d) –
Interpretation of a Tripartite Joint Development Agreement was
entered into between the society representing persons occupying
tenements, Maharashtra Housing and Area Development Authority
(MHADA) and the Corporate Debtor in a project for the
development of 47 acres of land – The Corporate Debtor entered
into a Loan Agreement with a bank for a sum of Rs. 200 crores –
The Corporate Debtor defaulted in repayment of loan – Consequent
to which, an application u/s.7 of the Code was admitted, appointing
interim resolution professional and a moratorium u/s. 14 was also
declared – After the imposition of the moratorium period u/s. 14,
the MHADA issued a termination notice of the Joint Development
Agreement to the Corporate Debtor – It was further stated that the
Corporate Debtor would have to hand over possession to MHADA,
which would then enter upon the plot and take possession of the
land including all structures thereon – The Appellant-Interim
Resolution Professional filed an application before the NCLT to
restrain MHADA from taking over possession of the land till
completion of the CIRP – The NCLT dismissed the said applciation
and stated that s.14(1)(d) does not cover licences to enter upon
land in pursuance of the Joint Development Agreements – The
NCLAT held that the land belonged to the MHADA and which was
not formally transferred in favour of the Corporate Debtor and
hence, it cannot be treated to be the asset of the ‘Corporate Debtor’
for application of the provisions of s.14(1)(d) of the Code – Before
the Supreme Court, the appellant contended that it is wholly incorrect
to state that a mere ‘licence to enter’ was granted, the reading of
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the relevant documents as a whole clearly show that the legal
possession was actually handed over to the Corporate Debtor – It
was further contended that any recovery of a property by an owner
where such property is ‘occupied by’ the Corporate Debtor would
clearly fall with s.14(1)(d) – Held: A bare reading of s.14(1)(d) of
the Code would make it clear that it does not deal with any of the
assets or legal right or beneficial interest in such assets of the
Corporate Debtor – Where recovery of property is to be made by
an owner u/s.14(1) (d), such recovery would be of property that is
‘occupied by’ a Corporate Debtor – The expression ‘occupied by’
would mean or be synonymous with being in actual physical
possession or being actually used by – In the instant case, it is
clear that the Joint Development Agreement read with the Deed of
modification has granted a license to the developer (Corporate
Debtor) to enter upon the property, with a view to do all things that
are mentioned in it, there can be no gainsaying that after such entry,
the property would not be ‘occupied by’ the developer – Therefore,
the impugned judgment of NCLAT is set aside and the NCLT is
directed to dispose of the resolution professional’s application.
Maxims – reddendo singula singulis – discussed.
Words and Phrases – ‘occupied by’ and ‘possession’ –
discussed.
Allowing the appeal, the Court
HELD: 1. The provisions of the Joint Development
Agreement
would show that, at the very least, a license is granted
in favour of the developer to enter upon the land to demolish
existing structures, construct and erect new structures, and allot
to erstwhile tenants, tenements in such constructed structures
in three categories – (1) the earlier tenants/licensees of structures
that were demolished; (2) tenements to be allotted free of cost
to Maharashtra Housing and Area Development Authority
(MHADA); and (3) what is referred to as “free sale component”
which the developers then sell and exploit to recover or recoup
cost and make profit. It is wholly unnecessary for this Court to
refer to any other clauses of the Joint Development Agreement.
It is also not necessary for the purpose of this case to state as to
whether an interest in property is or is not created by the said
Joint Development Agreement. [Paras 6][320-A-C]
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MR. RAJENDRA K. BHUTTA v. MAHARASHTRA HOUSING AND AREA
DEVELOPMENT AUTHORITY THR. ITS CHAIRMAN
2. A bare reading of Section 14(1)(d) of the Insolvency and
Bankruptcy Code, 2016 would make it clear that it does not deal
with any of the assets or legal right or beneficial interest in such
assets of the corporate debtor. For this reason, any reference to
Sections 18 and 36, as was made by the NCLT, becomes wholly
unnecessary in deciding the scope of Section 14(1)(d), which
stands on a separate footing. Under Section 14(1)(d) what is
referred to is the “recovery of any property”. The ‘property’ in
this case consists of land, ad-measuring 47 acres, together with
structures thereon that had to be demolished. ‘Recovery’ would
necessarily go with what was parted by the corporate debtor, and
for this, one has to go to the next expression contained in the
said sub-section. [Para 7][320-D-E]
3. The conspectus of the Supreme Court judgments would
show that the expression “occupied by” would mean or be
synonymous with being in actual physical possession of or being
actually used by, in contra-distinction to the expression
“possession”, which would connote possession being either
constructive or actual and which, in turn, would include legally
being in possession, though factually not being in physical
possession. Since it is clear that the Joint Development
Agreement read with the Deed of Modification has granted a
license to the developer (Corporate Debtor) to enter
upon the
property, with a view to do all the things that are mentioned in it,
there can be no gain saying that after such entry, the property
would not be “occupied by” the developer. [Para 15][331-E-F]
4. There is no doubt whatsoever that important functions
relating to repairs and re-construction of dilapidated buildings
are given to MHADA. Equally, there is no doubt that in a given
set of circumstances, the Board may, on such terms and conditions
as may be agreed upon, and with the previous approval of the
Authority, handover execution of any housing scheme under its
own supervision. However, when it comes to any clash between
the Maharashtra Housing and Area Development Act, 1976 and
the Insolvency Code, on the plain terms of Section 238 of the
Insolvency Code, the Code must prevail. This is for the very
good reason that when a moratorium is spoken of by Section 14
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of the Code, the idea is that, to alleviate corporate sickness, a
statutory status quo is pronounced under Section 14 the moment
a petition is admitted under Section 7 of the Code, so that the
insolvency resolution process may proceed unhindered by any of
the obstacles that would otherwise be caused and that are dealt
with by Section 14. The statutory freeze that has thus been made
is, unlike its predecessor in the SICA, 1985 only a limited one,
which is expressly limited by Section 31(3) of the Code, to the
date of admission of an insolvency petition up to the date that the
Adjudicating Authority either allows a resolution plan to come
into effect or states that the corporate debtor must go into
liquidation. For this temporary period, at least, all the things
referred to under Section 14 must be strictly observed so that
the corporate debtor may finally be put back on its feet albeit
with a new management. [Para 16][333-F-H; 334-A-B]
The Member, Board of Revenue v. Arthur Paul Benthall
[1955] 2 SCR 842; Koteswar Vittal Kamath v. K.
Rangappa Baliga & Co. (1969) 1 SCC 255 : [1969] 3
SCR 40; Kailash Nath Agarwal and Ors. v. Pradeshiya
Industrial & Investment Corporation of U.P. Ltd and
Anr. (2003) 4 SCC 305 : [2003] 1 SCR 1159; Industrial
Supplies Pvt. Ltd. and Anr. v. Union of India and Ors.
(1980) 4 SCC 341 : [1981] 1 SCR 375; Chief Inspector
of Mines v. Lala Karam Chand Thapar [1962] 1 SCR
9; Dunlop India Limited v.
A.A. Rahna and Anr. (2011)
5 SCC 778 : [2011] 5 SCR 1080 – relied on.
Municipal Corporation of Greater Mumbai (MCGM)
v. Abhilash Lal & Ors. (2020) 13 SCC 234; Sushil
Kumar Agarwal v. Meenakshi Sadhu and Ors. (2019)
2 SCC 241 : [2018] 12 SCR 756 – distinguished.
Ude Bhan and Others v. Kapoor Chand and Others
AIR (1967) P&H 53 (FB) – referred to.
Case Law Reference
[2018] 12 SCR 756
distinguished
Paras 4, 19
[1955] 2 SCR 842
relied on
Para 8
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MR. RAJENDRA K. BHUTTA v. MAHARASHTRA HOUSING AND AREA
DEVELOPMENT AUTHORITY THR. ITS CHAIRMAN
[1969] 3 SCR 40
relied on
Para 9
[2003] 1 SCR 1159
relied on
Para 10
[1981] 1 SCR 375
relied on
Para 12
[1962] 1 SCR 9
relied on
Para 12
[2011] 5 SCR 1080
relied on
Para 13
(2020) 13 SCC 234
distinguished
Paras 3, 17
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 12248
of 2018.
From the Judgment and Order dated 14.12.2018 of the National
Company Law Appellate Tribunal, New Delhi in Company Appeal (AT)
(Insolvency) No. 119 of 2018.
Dhruv Mehta, Sr. Adv., Ashish Verma, Ms. Avika Madhur, Daksh
Wadhawan, Prashant Chaudhary, Advs. for the Appellant.
Dushyant Dave, Basava Prabhu S. Patil, Sr. Advs., Chirag M.
Shroff, Ms. Yashika Verma, Ms. Abhilasha Bharti, Pawanshree Agrawal,
Ms. Abhipsa Anamik, Advs. for the Respondents.
The Judgment of the Court was delivered by
R. F. NARIMAN, J.
1. This appeal raises a question as to the correct interpretation of
Section 14(1)(d) of the Insolvency and Bankruptcy Code, 2016
(hereinafter referred to as “the Code”). The facts necessary to appreciate
the setting in which this question arises are as follows:
i.
On 01.11.2007, a Resolution bearing No. 6280 was passed by
the Maharashtra Housing and Area Development Authority
(hereinafter referred to as ‘the MHADA’) to execute a joint
development agreement with the Corporate Debtor, i.e. Guru
Ashish Construction Private Limited, and Goregaon Siddharth
Nagar Sahakar Griha Nirman Sanstha
Limited (a Society for
persons who are displaced and who are to be re-housed in the
project for joint development of land, ad-measuring about 40
acres), which envisaged re-development insofar as 672
tenements in Siddharth Nagar, Goregaon, Mumbai were
concerned.
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ii. On 03.03.2008, the Maharashtra State Government granted
its approval to the aforesaid Resolution.
iii. On 10.04.2008, a Tripartite Joint Development Agreement
(hereinafter referred to as the “Joint Development
Agreement”) was entered into between the Society
representing persons occupying 672 tenements, MHADA and
the Corporate Debtor.
iv. On 25.03.2011, a Loan Agreement was entered into and
executed between the Union Bank of India and the Corporate
Debtor for a sum of Rs. 200 Crores.
v. On 09.11.2011, a Deed of Modification was entered into
between the three parties to the Joint Development Agreement,
as after carrying out the survey of the land in question, it was
found that certain parcels of land, which were identified with
certain city survey numbers, were omitted, as a result of which
they were also added, now making the project for a total of 47
acres of land.
vi. As a result of the Corporate Debtor defaulting in repayment
of the loan to its financial creditor, namely, the Union Bank of
India, an Insolvency Application under Section 7 of the Code,
which was filed on 15.05.2017, was admitted on 24.07.2017,
appointing an Interim Resolution Professional (i.e. the Appellant
before us). A moratorium in terms of Section 14 was also
declared by this order.
vii. On 12.01.2018 - after the imposition of the moratorium period
under Section 14 of the Code - MHADA issued a termination
notice to the Corporate Debtor
stating that upon expiry of 30
days from the date of receipt of the notice, the Joint
Development Agreement as modified would stand terminated.
It was further stated that the Corporate Debtor would have to
handover possession to MHADA, which would then enter upon
the plot and take possession of the land including all structures
thereon.
viii.One hundred and eighty days from the start of the Corporate
Insolvency Resolution Process (hereinafter referred to as “the
CIRP”) expired on 19.01.2018. The NCLT, by order dated
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24.01.2018, extended the CIRP period by ninety days, as is
permissible under the Code.
ix. On 01.02.2018, the Appellant filed M.A. No. 96 of 2018, seeking
a direction from the NCLT to restrain MHADA from taking
over possession of the land till completion of the CIRP,
contending that such a recovery of possession was in
derogation of the moratorium imposed under Section 14 of the
Code. The NCLT, by order dated 02.04.2018, dismissed the
aforesaid application, stating that Section 14(1)(d) of the Code
does not cover licenses to enter upon land in pursuance of
Joint Development Agreements, stating that such licenses
would only be ‘personal’ and not interests created in property.
An appeal against this order was preferred to the NCLAT.
x. Meanwhile, in a parallel proceeding, on 18.04.2018, the amount
of time taken by the NCLT in deciding the application under
Section 7 under the Code, being 55 days, was sought to be
omitted from the total number of days allowable under the
Code. This application was partially granted, excluding 38 out
of 55 days. An appeal to the NCLAT proved successful,
whereby the NCLAT, by order dated 09.05.2018, allowed the
appeal and allowed the entire 55 days so taken before the
NCLT to be excluded.
xi. On 03.07.2018, the Appellant filed an approved Resolution Plan
before the NCLT, Mumbai by way of I.A. No. 21433 of 2018.
We
are informed that this was within the extended period of
55 days so granted by the NCLAT. It may only be mentioned
that the Resolution Plan was approved by 86.16% of the
Committee of Creditors. Ultimately, the NCLAT, by the
impugned order dated 14.12.2018, (after omitting to refer to
the order dated 09.05.2018), stated that 270 days are over, as
a result of which the entire discussion of Section 14(1)(d) would
now become academic. However, it also decided:
“14. On perusal of record, we find that pursuant to the
‘Joint Development Agreement’ the land of the ‘Maharashtra
Housing and Area Development Authority’ was handed over
to the ‘Corporate Debtor’ and ‘except for development
work’ the ‘Corporate Debtor’ has not accrued any right
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over the land in question. The land belongs to the
‘Maharashtra Housing and Area Development Authority’
which has not formally transferred it in favour of the
‘Corporate Debtor’. Hence, it cannot be treated to be the
asset of the ‘Corporate Debtor’ for application of provisions
of Section 14(1)(d) of the ‘I&B Code’.”
2. Mr. Dhruv Mehta, learned Senior Advocate appearing for the
Appellant, has taken us through the Joint Development Agreement
together with the Deed of Modification in great detail. His first submission
is that it would be wholly incorrect to state that a mere ‘license to enter’
had been granted. According to him, if these two documents were read
as a whole, it is clear that legal possession was actually handed over to
him in order to do three things: (1) construct tenements which were to
be handed over to MHADA free of cost; (2) construct tenements in
which the 672 occupiers of the erstwhile tenements were to be housed;
and (3) thereafter recoup costs and make profit by sale of what was
called the ‘free sale component’ that would be left over. Apart from the
above, he went through the NCLT order dated 02.04.2018 in great detail,
and stated that there is a conceptual confusion in the said order, inasmuch
as Section 14(1)(b) of the Code was not the subject-matter of
consideration, in which case it would have been necessary to see other
sections dealing with “assets” that pertain to the Corporate Debtor,
such
as Sections 18 and 36 of the Code. If Section 14(1)(d), on the other
hand, were to be seen, it does not mention the expression “assets” at all
but only refers to “property”, which according to Mr. Mehta was defined
extremely widely. He argued that, in any event, on the plain language of
Section 14(1)(d), it was not necessary for him to make out any case as
to legal possession having been handed over to him, as the expression
used by Section 14(1)(d) and applied to the facts of his case is ‘… is
occupied by’. He argued that applying the latin maxim reddendo singula
singulis, it is clear that any recovery of a property by an owner where
such property is ‘occupied by’ the Corporate Debtor would clearly fall
within Section 14(1)(d), the expression “...or in the possession of”
going with the expression “lessor” and not “owner”. This being the case,
he contended that it is clear that when two expressions of different
import are used within the same sub-section, they are meant to mean
different things. The expression ‘occupied’ would have to be confined
to physical occupation or use, and not to legal possession, which is a
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separate concept in law. He cited a number of authorities to buttress his
arguments.
3. Mr. Dushyant Dave, learned Senior Advocate appearing on
behalf of MHADA, painstakingly took us through the various provisions
of the Maharashtra Housing and Area Development Act, 1976
(hereinafter referred to as the “MHADA Act”). He relied, in particular,
upon the various clauses in the preamble and then referred to Sections
4, 5, 37, 66 and 74 and relied strongly upon Sections 76 and 79 of the
MHADA Act to argue that joint development schemes that the Authorities
concerned enter into with the builders must first be with the previous
approval of the Authority, and such schemes have to be executed under
the supervision of the Authority. This being the case, according to him,
there is no question of any possession or occupation being handed over
and, as a result, Section 14(1)(d) of the Code would not apply. He also
strongly relied upon a recent judgment by my brother S. Ravindra Bhat,
J. in Municipal Corporation of Greater Mumbai (MCGM) vs.
Abhilash Lal & Ors. (Civil Appeal No. 6350 of 2019), to buttress his
proposition that Section 238 of the Code, which contains a non-obstante
clause getting out of harm’s way other statutes, cannot be extended
beyond the provisions of the Code. He exhorted us to give full play to
the MHADA Act, and if that were done it is
obvious that any clash
between the MHADA Act and the Insolvency Code would then have to
be resolved, at least on the facts of this case, in favour of MHADA. He
also referred to a Bombay High Court order dated 05.04.2018, in which
it was stated that MHADA had taken symbolic possession on 05.04.2018.
4. Mr. Basava Prabhu Patil, learned Senior Advocate appearing
on behalf of some of the homebuyers, also referred to and relied upon
the judgment of my brother S. Ravindra Bhat, J. Both Mr. Dave and Mr.
Patil referred to and relied upon a recent judgment of this Court in Sushil
Kumar Agarwal vs. Meenakshi Sadhu and Others (2019) 2 SCC
241 in which, in the context of specific performance, development
agreements were categorized into three types, and it was stated that
where interests in property were not created by any category, such
agreements could not be specifically performed.
5. Having heard the learned senior counsel appearing for all the
parties, it is necessary to first set out some of the provisions of the Code.
Section 3(27) reads as follows:
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“3. Definitions. In this Code, unless the context otherwise
requires,—
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(27) “property” includes money, goods, actionable claims, land
and every description of property situated in India or outside India
and every description of interest including present or future or
vested or contingent interest arising out of, or incidental to,
property;”
Section 14 is set out as follows:
“14. Moratorium.
(1) Subject to provisions of sub-sections (2) and (3), on the
insolvency commencement date, the Adjudicating Authority shall
by order declare moratorium for prohibiting all of the following,
namely:—
(a) the institution of suits or continuation of pending suits or
proceedings against the corporate debtor including execution of
any judgment, decree or order in any court of law, tribunal,
arbitration panel or other authority;
(b) transferring, encumbering, alienating or disposing of by the
corporate debtor any of its assets or any legal right or beneficial
interest therein;
(c) any action to foreclose, recover or enforce any security interest
created by the corporate debtor in respect of its property including
any action under the Securitisation and Reconstruction of Financial
Assets and Enforcement of Security Interest Act, 2002 (54 of
2002);
(d) the recovery of any property by an owner or lessor where
such property is occupied by or in the possession of the corporate
debtor.
(2) The supply of essential goods or services
to the corporate
debtor as may be specified shall not be terminated or suspended
or interrupted during moratorium period.
(3) The provisions of sub-section (1) shall not apply to—
(a) such transaction as may be notified by the Central Government
in consultation with any financial regulator;
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(b) a surety in a contract of guarantee to a corporate debtor.
(4) The order of moratorium shall have effect from the date of
such order till the completion of the corporate insolvency resolution
process:
Provided that where at any time during the corporate insolvency
resolution process period, if the Adjudicating Authority approves
the resolution plan under sub-section (1) of section 31 or passes
an order for liquidation of corporate debtor under section 33, the
moratorium shall cease to have effect from the date of such
approval or liquidation order, as the case may be.”
(emphasis supplied)
Section 18, on which great reliance is placed, is also set out
hereunder:
“18. Duties of interim resolution professional.
(1) The interim resolution professional shall perform the following
duties, namely:—
(a) collect all information relating to the assets, finances and
operations of the corporate debtor for determining the financial
position of the corporate debtor, including information relating to—
(i) business operations for the previous two years;
(ii) financial and operational payments for the previous two years;
(iii) list of assets and liabilities as on the initiation date; and
(iv) such other matters as may be specified;
(b) receive and collate all the claims submitted by creditors to
him, pursuant to the public announcement made under sections
13 and 15;
(c) constitute a committee of creditors;
(d) monitor the assets of the corporate debtor and manage its
operations until a resolution professional is appointed by the
committee of creditors;
(e) file information collected with the information utility, if
necessary; and
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(f) take control and custody of any asset over which the corporate
debtor has ownership rights as recorded in the balance sheet of
the corporate debtor, or with information utility or the depository
of securities or any other registry that records the ownership of
assets including—
(i) assets over which the corporate debtor has ownership rights
which may be located in a foreign country;
(ii) assets that may or may not be in possession of the corporate
debtor;
(iii) tangible assets, whether movable or immovable;
(iv) intangible assets including intellectual property;
(v) securities including shares held in any subsidiary of the
corporate debtor, financial instruments, insurance policies;
(vi) assets subject to the determination of ownership by a court or
authority;
(g) to perform such other duties as may be specified by the Board.
Explanation.—For the purposes of this section, the term “assets”
shall not include the following, namely:—
(a) assets owned by a third party in possession of the corporate
debtor held under trust or under contractual arrangements including
bailment;
(b) assets of any Indian or foreign subsidiary of the corporate
debtor; and
(c) such other assets as may be notified by the Central Government
in consultation with any financial sector regulator.”
Section 31 which indicates the period of moratorium is also
important and is set out as follows:
“31.  Approval of resolution plan.
(1) If the
Adjudicating Authority is satisfied that the resolution
plan as approved by the committee of creditors under sub-section
(4) of section 30 meets the requirements as referred to in sub-
section (2) of section 30, it shall by order approve the resolution
plan which shall be binding on the corporate debtor and its
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employees, members, creditors, including the Central Government,
any State Government or any local authority to whom a debt in
respect of the payment of dues arising under any law for the time
being in force, such as authorities to whom statutory dues are
owed, guarantors and other stakeholders involved in the resolution
plan:
Provided that the Adjudicating Authority shall, before passing an
order for approval of resolution plan under this sub-section, satisfy
that the resolution plan has provisions for its effective
implementation.
(2) Where the Adjudicating Authority is satisfied that the resolution
plan does not confirm to the requirements referred to in sub-section
(1), it may, by an order, reject the resolution plan.
(3) After the order of approval under sub-section (1),-
(a) the moratorium order passed by the Adjudicating Authority
under section 14 shall cease to have effect; and
(b) the resolution professional shall forward all records relating to
the conduct of the corporate insolvency resolution process and
the resolution plan to the Board to be recorded on its database.
(4) The resolution applicant shall, pursuant to the resolution plan
approved under sub-section (1), obtain the necessary approval
required under any law for the time being in force within a period
of one year from the date of approval of the resolution plan by the
Adjudicating Authority under sub-section (1) or within such period
as provided for in such law, whichever is later:
Provided that where the resolution plan contains a provision for
combination, as referred to in section 5 of the Competition Act,
2002 (12 of 2003), the resolution applicant shall obtain the approval
of the Competition Commission of India under that Act prior to
the approval of such resolution plan by the committee of creditors.”
Section 36(4) which is also relied upon, particularly by the NCLT
judgment, is set out as follows:
“36.  Liquidation estate.
(4) The following shall not be included in the liquidation estate
assets and shall not be used for recovery in the liquidation:—
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(a) assets owned by a third party which are in possession of the
corporate debtor, including—
(i) assets held in trust for any third party;
(ii) bailment contracts;
(iii) all sums due to any workman or employee from the provident
fund, the pension fund and the gratuity fund;
(iv) other contractual arrangements which do not stipulate transfer
of title but only use of the assets; and
(v) such other assets as may be notified by the Central Government
in consultation with any financial sector regulator;
(b) assets in security collateral held by financial services providers
and are subject to netting and set-off in multi-lateral trading or
clearing transactions;
(c) personal assets of any shareholder or partner of a corporate
debtor as the case may be provided such assets are not held on
account of avoidance transactions that may be avoided under this
Chapter;
(d) assets of any Indian or foreign subsidiary of the corporate
debtor; or
(e) any other assets as may be specified by the Board, including
assets which could be subject to set-off on account of mutual
dealings between the corporate debtor and any creditor.”
6. The Joint Development Agreement, in the present case, makes
it clear that a license is granted to the developer (i.e. the Corporate
Debtor) to enter upon the land, demolish the existing structures and to
construct and erect new structures and allot tenements. This is done in
the Joint Development Agreement as
follows:
“1.1.9 License Agreement shall mean and include an agreement
by which a license will be granted in favour of the developer to
enter upon the said land, to demolish the existing structures, to
construct and erect new structures, to allot tenements in such
constructed structures to the tenants and to do all other acts as
are necessary for implementation of the project.
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1.1.10 Project shall mean the building/s to be constructed by the
developer and handed over to the society for housing the tenants
and to MHADA in terms of this agreement but shall not mean
and include the free sale buildings that the developer is entitled to
develop and construct in terms of this agreement and in terms of
the plan.”
“2.1.2 For the performance of the project, it is expressly agreed
between the parties that:
xxx xxx xxx
(xxvi)  It is agreed that the license will be granted to the Developer
as per the requirement of the project. After completion of the
development, the beneficiaries housing societies will have to enter
into lease deed with MHADA.
(xxvii) The Developer shall abide the terms of indemnity bond
regarding the responsibility and risk for implementation, execution
and completion of the project and specification and quality of work
to be executed which is submitted to the VP and CEO/MHADA.
xxx xxx xxx
(xxxix)  For the purpose of rehabilitation of the tenants and
implementing the project, MHADA hereby grants the license in
the favour of the Developer to enter upon the said land, to demolish
the existing structures, to construct and erect new structures, to
allot tenements in such constructed structures to the tenants and
to do all other acts as are necessary for implementation of the
project. After completion of the
project by the Developer and
recovery of all the dues by MHADA, MHADA shall execute
separate lease deeds in favour of the Society and in favour of the
Developer of free sale tenements constructed by the Developer.
All the tenements both Rehab and sale will have to be allotted on
ownership basis.
xxx xxx xxx
(xlvi) The Developer will be permitted to use their share of 50%
of the built-up area for non-residential purpose. For this purpose,
additional premium will not be charged by MHADA.”
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The aforesaid provisions of the Joint Development Agreement
would show that, at the very least, a license is granted in favour of the
developer to enter upon the land to demolish existing structures, construct
and erect new structures, and allot to erstwhile tenants, tenements in
such constructed structures in three categories – (1) the earlier tenants/
licensees of structures that were demolished; (2) tenements to be allotted
free of cost to MHADA; and (3) what is referred to as “free sale
component” which the developers then sell and exploit to recover or
recoup cost and make profit. It is wholly unnecessary for us to refer to
any other clauses of the Joint Development Agreement. It is also not
necessary for the purpose of this case to state as to whether an interest
in property is or is not created by the said Joint Development Agreement.
7. A bare reading of Section 14(1)(d) of the Code would make it
clear that it does not deal with any of the assets or legal right or beneficial
interest in such assets of the corporate debtor. For this reason, any
reference to Sections 18 and 36, as was made by the NCLT, becomes
wholly unnecessary in deciding the scope of Section 14(1)(d), which
stands on a separate footing. Under Section 14(1)(d) what is referred to
is the “recovery of any property”. The ‘property’ in this case consists of
land, ad-measuring 47 acres, together with structures thereon that had
to be demolished.
‘Recovery’ would necessarily go with what was parted
by the corporate debtor, and for this one has to go to the next expression
contained in the said sub-section.
8. One thing is clear that “owner or lessor” qua “property” is then
to be read with the expression “occupied or in the possession of”. One
manner of reading this clause is to state that whether recovery is sought
by an owner or lessor, the property should either be occupied by or be in
the possession of the corporate debtor. The difficulty with this
interpretation is that a “lessor” would not normally seek recovery of
property “occupied by” a tenant – having leased the property, a transfer
of property has taken place in favour of a tenant, “possession” of which
would then have to be recovered. This is where the latin maxim reddendo
singula singulis comes in. In an earlier judgment of this Court reported
in The Member, Board of Revenue vs. Arthur Paul Benthall [1955]
2 SCR 842, this Court dealt with two different expressions used in Sections
5 and 6 of the Indian Stamp Act, 1899, and held:
“We are unable to accept the contention that the word “matter”
in Section 5 was intended to convey the same meaning as the
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word “description” in Section 6. In its popular sense, the expression
“distinct matters” would connote something different from distinct
“categories”. Two transactions might be of the same description,
but all the same, they might be distinct. If A sells Black-acre
to X and mortgages White-acre to Y, the transactions fall under
different categories, and they are also distinct matters. But
if A mortgages Black-acre to X and mortgages White-acre to Y,
the two transactions fall under the same category, but they would
certainly be distinct matters. If the intention of the legislature was
that the expression ‘distinct matters’ in Section 5 should be
understood not in its popular sense but narrowly as meaning
different categories in the Schedule, nothing would have been
easier than to say so. When two words of different import are
used in a statute in two consecutive provisions, it would be difficult
to maintain that they are used in the same sense, and the conclusion
must follow that the expression “distinct matters” in Section 5
and “descriptions” in Section 6 have different connotations.”
(at page 846)
9. In Koteswar Vittal Kamath vs. K. Rangappa Baliga & Co
(1969) 1 SCC 255, this Court had before it the proviso to Article 304(b)
of the Constitution of India. This proviso is set out herein below:
“Provided that no Bill or amendment for the
purposes of clause
(b) shall be introduced or moved in the Legislature of a State
without the previous sanction of the President.”
The expression “no Bill or amendment” was read distributively
with the expression “shall be introduced or moved in the Legislature of a
State”, it being clear that a bill is “introduced” and an amendment
“moved”, in the following paragraphs:
“13. The High Court, in this connection, relied on two earlier
decisions of the same court in George v. State of Travancore-
Cochin, AIR 1954 Tra-Co 34 and State v. Philipose Philip, AIR
1954 Tra-Co 257. In fact, the High Court, in the present case,
expressed its decision in almost the same language as was
contained in the case of George v. State. In the second case
of State v. Philipose Philip, this aspect was not clearly discussed.
The point, however, was considered in detail by a Full Bench of
that High Court in Ulahannan Mathai v. State, AIR 1955
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Tra-Co 82. The High Court interpreted the expression “No Bill or
amendment shall be introduced or moved” in the proviso as
requiring that the Bill should neither be introduced nor moved
without the prior sanction of the President, and, since in the case
of Act 5 of 1950, the Bill was moved for consideration, without
the prior sanction of the President, on 23rd March, 1950, after the
Constitution had come into force, there had been non-compliance
with the proviso. The court rejected the contention put forward
before it that what the proviso really stipulates is that no Bill “shall
be introduced” or “amendment moved” in the Legislature of a
State without the previous sanction of the President. That argument
was advanced on the basis of the maxim “reddendo singula
singulis” which, according to Black’s Interpretation of Laws,
means:
“Where a sentence in a statute contains several antecedents
and several consequences, they are to be read distributively, that
is to say, each phrase or expression is to be referred to its
appropriate object.”
14. The court based its decision on the view that, if the
interpretation urged before it was accepted, it would be possible
to introduce a Bill which required no Presidential sanction, get it
amended by a Select Committee in such a way as to make it
require the Presidential sanction in case it was originally introduced
in the amended form and then pass it into law, and thus escape
the
necessity for the prior Presidential sanction provided by Article
304 of the Constitution. It was held that there can be no doubt
that such a result could never have been intended by the makers
of the Constitution. In our opinion, the High Court did not correctly
appreciate the position. The language of the proviso cannot be
interpreted in the manner accepted by the High Court without
doing violence to the Rules of construction. If both the words
“introduced” or “moved” are held to refer to the Bill, it must
necessarily be held that both those words will also refer to the
word “amendment”. On the face of it, there can be no question of
introducing an amendment. Amendments are moved and then, if
accepted by the House, incorporated in the Bill before it is passed.
There is further an indication in the Constitution itself that wherever
a reference is made to a Bill, the only step envisaged is introduction
of the Bill. There is no reference to such a step as a Bill being
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moved. The articles, of which notice may be taken in this
connection, are Articles 109, 114, 117, 198 and 207. In all these
articles, whatever prohibition is laid down relates to the introduction
of a Bill in the Legislature. There is no reference at any stage to
a Bill being moved in a House. The language thus used in the
Constitution clearly points to the interpretation that, even in the
proviso to Article 304, the word ”introduced” refers to the
Bill, while the word ”moved” refers to the amendment.”
10. Likewise, in Kailash Nath Agarwal and Others v.
Pradeshiya Industrial & Investment Corporation of U.P. Ltd. and
Another (2003) 4 SCC 305, this Court referred to Section 22(1) of the
Sick Industries Companies (Special Provisions) Amendment Act, 1994
and applied the aforesaid latin maxim to the words “suit” and
“proceeding” as follows:
“20. There is an apparent distinction between the expressions
“proceeding” and “suit” used in Section 22(1). While it is true that
two different words may be used in the same statute to convey
the same meaning, that is the exception rather than the rule. The
general rule is that when two different words are used by the
same statute, prima facie one has to construe these different words
as carrying different meanings. In Kanhaiyalal Vishindas
Gidwani (1993) 2 SCC 144, this Court found that the words
“subscribed”
and “signed” had been used in the Representation
of the People Act, 1951 interchangeably and, therefore, in that
context the Court came to the conclusion that when the legislature
used the word “subscribed” it did not intend anything more than
“signing”. The words “suit” and “proceeding” have not been used
interchangeably in SICA. Therefore, the reasons which persuaded
this Court to give the same meaning to two different words in a
statute cannot be applied here.
xxx xxx xxx
26. Apart from the semantic difference between the words “suit”
and “proceeding” there is the absence of expansive words “or
the like” which appear after the expression “proceedings”, after
the word “suit”. The exclusion of such “omnibus expression” after
the word “suit” must be given some weight in interpreting the
word. As held by this Court in LIC v. Escorts Ltd. (2001) 1 SCC
78: (SCC p. 313, para 63)
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“The distinction made by Parliament … in the several
provisions of the same Act cannot be ignored or strained to be
explained away by us. That is not the way to interpret statutes.
The proper way is to give due weight to the use as well as the
omission to use the qualifying words in different provisions of the
Act. The significance of the use of the qualifying word in one
provision and its non-use in another provision may not be
disregarded.”
27. Since the legislature has expressly chosen to make a distinction
between the suits for recovery of the money and enforcement of
guarantees and proceedings for the recovery of money, that must
be given effect to.
28. Furthermore, Parliament must be taken to be aware of the
decision in Maharashtra Tubes [Arising out of SLPs (C) Nos.
21370 and 21371 of 2002] and the fact that the word “proceeding”
used in Section 22(1) had been widely construed to include
proceedings for recovery of dues by the State Financial
Corporation as arrears of land revenue. The deliberate choice of
the word “suit” in the circumstances would indicate that Parliament
intended to limit the ambit of the amendment introduced to
particular modes for the recovery of money or enforcement of
guarantees.”
11. Regard being had to the aforesaid authorities, it is clear that
when recovery of property is to be made by an owner under Section
14(1)(d), such recovery would be of property that is “occupied by” a
corporate debtor.
12. The expression “occupied” has been the subject-matter of
decision in a number of judgments in different contexts. Thus, in Industrial
Supplies Pvt. Ltd. and Another vs. Union of India and Others
(1980) 4 SCC 341, this Court was faced with the following question:
“2. The appeals raise a question of far-reaching importance
namely, whether a raising contractor of a coal mine is an owner
within the meaning of sub-section (1) of Section 4 of the Coking
Coal Mines (Nationalisation) Act, 1972 (hereinafter referred to
as the “Nationalisation Act”); and if so, whether the fixed assets
like machinery, plants, equipment and other properties installed or
brought in by such a raising contractor vest in the Central
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Government. They also give rise to a subsidiary question, namely,
whether subsidy receivable from the erstwhile Coal Board
established under Section 4 of the Coal Mines (Conservation,
Safety and Development) Act, 1952 up to the specified date, from
a fund known as Conservation and Safety Fund, by such raising
contractor prior to the appointed day, can be realised by the Central
Government by virtue of their powers under sub-section (3) of
Section 22 of the Nationalisation Act, to the exclusion of all other
persons including such contractor and applied under sub-section
(4) of Section 22 towards the discharge of the liabilities of the
coking coal mine, which could not be discharged by the appointed
day.”
In answering the aforesaid question, this Court distinguished Chief
Inspector of Mines vs. Lala Karam Chand Thapar (1962) 1 SCR 9
in the context of raising contracts of coal in paragraphs 18 and 19 of the
judgment; and such raising agreements by registered instruments being
held not to amount to a lease, were held to be licenses coupled with a
grant. This being the case, a raising contractor being in possession on
behalf of an owner of property, or a lessee of a mine was held to be an
“occupier” within the meaning of Section 2(1) of the Mines Act, 1952.
In so holding, this Court went into various dictionary meanings of the
word “occupier” and
“occupation” and held as follows:
“19. … These observations, if we may say so, with great respect,
are rather widely stated. They are indeed susceptible of a
construction that a raising contractor being in possession on behalf
of a proprietor or the lessee of a mine in possession is not an
“occupier” within the meaning of Section 3(n) of the
Nationalisation Act read with Section 2(1) of the Mines Act, 1952.
We are quite sure that that was not the intention of the legislature.
There is no reason why the word “occupier” should not be
understood to have been used in its usual sense, according to its
plain meaning. In common parlance, an “occupier” is one who
“takes” or (more usually) “holds” possession: Shorter oxford
dictionary, 3rd Edn., Vol. 2, p. 1433. In the legal sense, an occupier
is a person in actual occupation. The petitioners being raising
contractors were, under the terms of the agreement dated February
7, 1969 entitled to, and in fact in actual physical possession and
enjoyment of the colliery and were, therefore, an occupier thereof.
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That being so, the petitioners being in possession, in their own
right, by virtue of the substantial rights acquired by them under
the agreement, were not in possession on behalf of somebody
else and, therefore, the decision in Lala Karamchand Thapar
case [(1962) 1 SCR 9] cannot apply.”
13. Likewise, in Dunlop India Limited vs. A.A. Rahna and
Another (2011) 5 SCC 778, this Court was concerned with Section
11(4)(v) of the Kerala Buildings (Lease and Rent Control) Act, 1965
which was set out in paragraph 19 of the judgment as follows:
“(v) if the tenant ceases to occupy the building continuously for
six months without reasonable cause.”
Coming to the word “occupy” in the said section, this Court then
held:
“21. The word “occupy” used in Section 11(4)(v) is not
synonymous with legal possession in technical sense. It means
actual possession of the tenanted building or use thereof for the
purpose for which it is let out. If the building is let out for residential
purpose and the tenant is shown to be continuously absent from
the building for six months, the court may presume that he has
ceased to occupy the building or abandoned it. If the building is let
out for business or commercial purpose, complete cessation of
the business/commercial activity may give rise to a presumption
that the tenant has ceased to occupy the premises. In either case,
legal possession of the building by the tenant will, by itself, be not
sufficient for refusing an order of eviction unless the tenant proves
that there was a reasonable cause for his having ceased to occupy
the building.
xxx xxx xxx
25. The Court highlighted the distinction between the terms
“possession” and “occupy” in the context of rent control legislation
in the following words: (Ram Dass case (2004) 3 SCC 684, SCC
pp. 687-88, para 7)
“7. The terms ‘possession’ and ‘occupy’ are in common
parlance used interchangeably. However, in law, possession over
a property may amount to holding it as an owner but to occupy is
to keep possession of by being present in it. The rent control
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legislations are the outcome of paucity of accommodations. Most
of the rent control legislations, in force in different States, expect
the tenant to occupy the tenancy premises. If he himself ceases
to occupy and parts with possession in favour of someone else, it
provides a ground for eviction. Similarly, some legislations provide
it as a ground of eviction if the tenant has just ceased to occupy
the tenancy premises though he may have continued to retain
possession thereof. The scheme of the Haryana Act is also to
insist on the tenant remaining in occupation of the premises.
Consistently with what has been mutually agreed upon, the tenant
is expected to make useful use of the property and subject the
tenancy premises to any permissible and useful activity by actually
being there. To the landlord’s plea of the tenant having ceased to
occupy the premises it is no answer that the tenant has a right to
possess the tenancy premises and he has continued in juridical
possession thereof. The Act protects the tenants from eviction
and enacts specifically the grounds on the availability whereof
the tenant may be directed to be evicted. It is for the landlord to
make out a ground for eviction. The burden of proof lies on him.
However, the onus keeps shifting. Once the landlord has been
able to show that the tenancy premises were not being used for
the
purpose for which they were let out and the tenant has
discontinued such activities in the tenancy premises as would have
required the tenant’s actually being in the premises, the ground
for eviction is made out. The availability of a reasonable cause
for ceasing to occupy the premises would obviously be within the
knowledge and, at times, within the exclusive knowledge of the
tenant. Once the premises have been shown by evidence to be
not in occupation of the tenant, the pleading of the landlord that
such non-user is without reasonable cause has the effect of putting
the tenant on notice to plead and prove the availability of reasonable
cause for ceasing to occupy the tenancy premises.”
xxx xxx xxx
29. In Ananthasubramania Iyer v. Sarada Amma 1978 KLT
338, the learned Single Judge of the Kerala High Court held: (KLT
pp. 339-40, para 3)
The physical absence of the tenant from the building for
more than six months would raise a presumption that he had ceased
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to occupy the building and that he had abandoned it and that it
was for the tenant to dislodge the presumption and establish that
he had the intention to continue to occupy the tenanted premises.
30. The word “occupy” appearing in Section 11(4)(v) of the 1965
Act has been interpreted by the Kerala High Court in a large
number of cases. In Mathai Antony v. Abraham (2004) 3 KLT
169, the Division Bench of the High Court referred to several
judgments including the one of this Court in Ram
Dass v. Davinder (2004) 3 SCC 684 and observed:
“4. … The word ‘occupy’ occurring in Section 11(4)(v)
has got different meaning in different context. The meaning of
the word ‘occupy’ in the context of Section 11(4)(v) has to be
understood in the light of the object and purpose of the Rent Control
Act in mind. The rent control legislation is intended to give
protection to the tenant, so that there will not be interference with
the user of the tenanted premises during the currency of the
tenancy. The landlord cannot disturb the possession and enjoyment
of the tenanted premises. Legislature has guardedly used the
expression ‘occupy’ in Section 11(4)(v) instead of ‘possession’.
Occupy in certain context indicates mere physical presence, but
in other context actual enjoyment. Occupation includes possession
as its primary element, and also includes ‘enjoyment’. The word
‘occupy’ sometimes indicates legal possession in the technical
sense; at
other times mere physical presence. We have to examine
the question whether mere ‘physical possession’ would satisfy
the word ‘occupy’ within the meaning of Section 11(4)(v) of the
Act. In our view mere physical possession of premises would not
satisfy the meaning of ‘occupation’ under Section 11(4)(v). The
word ‘possession’ means holding of such possession, animus
possidendi, which means, the intention to exclude other persons.
The word ‘occupy’ has to be given a meaning so as to hold that
the tenant is actually using the premises and not mere physical
presence or possession. A learned Single Judge of this Court
in Abbas v. Sankaran Namboodiri (1993) 1 KLT 76 took the
view that the word ‘occupation’ is used to denote the tenant’s
actual physical use of the building either by himself or through his
agents or employees. The Division Bench of this Court of which
one of us is a party (Radhakrishnan, J.), in Rajagopalan v.
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Gopalan (2004) 1 KLT (SN) 54 interpreting Section 11(4)(v) took
the view that occupation in the context of Section 11(4) means
only physical occupation, which requires further explanation.
Occupation in the context of Section 11(4)(v) means actual user.
If the landlord could establish that in a given case even if the
tenant is in physical possession of the premises, the premises is
not being used, that is a good ground for eviction under Section
11(4)(v) of the Act. Section 11(4) uses the words ‘put the landlord
in possession’ and not ‘occupation’, but Section 11(4)(v) uses the
words ‘the tenant ceases to occupy’. In Section 11(4)(v) in the
case of landlord the emphasis is on ‘possession’ but in the case of
tenant the emphasis is on ‘occupation’. The word ‘occupy’ has a
distinct meaning so far as the Rent Act is concerned when pertains
to tenant, that is, possession with user.”
14. A Full Bench judgment of the Punjab and Haryana High Court
reported in Ude Bhan and Others vs. Kapoor Chand and Others
AIR 1967 P&H 53 (FB) is also instructive. Paragraph 1 of the judgment
speaks of three questions referred to the Full Bench. We are directly
concerned with question 2 which is set out by us herein below:
“(2) If any building attached to the main residential house belonging
to and occupied by a non-agriculturist judgment-debtor is let out
to a
tenant, will that portion be considered to be in his occupation
within the meaning of the above provision?”
In answering this question, the Full Bench went into various
authorities and dictionaries as to what the expression “occupied” would
mean, as follows:
“20. The other term about which considerable argument has been
addressed to the Bench is “occupied by him” and it has even
been suggested that the property which is let by the owner to a
tenant, though not in the former’s actual occupation, is in his
constructive occupation just as it may be said that he is possessing
it though indirectly through his tenant. Reference was made to
the connotation of the term “occupied” as given at pages 83 and
84 of Volume 67 of Corpus Juris Secundum.
“The term has many meanings; in legal acceptation the term
implies use and possession, and it has been said that it implies
actual possession and not constructive possession, but it also has
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been held that “occupied” does not always require an actual
occupancy, but it may sometimes permit a constructive occupancy.
It is defined as meaning held in possession. “Occupied” is an
appropriate word to use for the purpose of identifying land in actual
possession, and when applied to a building, implies a substantial
and practical use of the building for the purpose for which it is
designed”.
21. I do not consider that the above quotation with its many
meanings, some of them self-contradictory, is of any real help,
and it is clear that the meaning of the word varies according to
the context of the statute in which it is used.
22. Mr. S.L. Puri, learned counsel for the decree-holder in the
Letters Patent Appeal, in his turn referred to the meaning of the
word “occupy” in the Webster’s Third New International
Dictionary and some of the meanings as given there are, to fill up
a place or extent, to take up residence, to settle in, to reside in as
an owner or tenant. This indicates that the term “occupy” in relation
to a house has an element of physical and actual occupation though
not necessarily of every cubic inch of the premises which would,
of course, be impossible at any given time.
23. Reference was also made by Mr. Roop Chand to the meaning
of the term “occupation” as given at page 15 of Volume 14 of the
Halsbury’s Laws of England (Third Edition). It was stated that
“an occupier is one who actually exercises
the rights of an owner
in possession. The primary element of occupation is possession,
but it includes something more, for mere legal possession cannot
constitute an occupation. The owner of a vacant house is in
possession, though not in occupation; but if he furnishes the house
and keeps it ready for habitation, he is an occupier, though he may
not have resided in it for a considerable time before the qualifying
date”.
xxx xxx xxx
26. The term “occupy” has been interpreted in numerous cases
of the Punjab and other Courts in India and it would be tedious as
well as unnecessary to refer to all of them. On behalf of the
judgment-debtor reference has been made to the interpretation of
the terms “occupation” and “occupy” in clause (3) of the Mysore
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House Rent and Accommodation Control Order in Ratilal
Bros. v. The Government of Mysore and another, AIR 1951
Mysore 66 and section 11(3) of the Bihar Buildings (Lease, Rent
and Eviction) Control Act, 1947, in Balmukand Khatry v. Hari
Narain and others, AIR 1949 Patna 31 and on behalf of the
decree-holders reliance was placed on the definition of similar
terms in section 7(3) of the Madras Buildings (Lease and Rent
Control) Act,1946, as given in Dr. Mohammad Ibrahim v. Syed
Ahmed Khan and another, AIR 1950 Mad 556 and in sub-section
(5) of section 15 of the East Punjab Urban Rent Restriction Act,
1949, as made in Shakuntla Bawa v. Ram Parkash and others,
ILR (1963) 1 Punj 827. These interpretations depend on the
particular context in which the terms occur in the relevant statute
but what has been observed in most of these cases is that the
term “occupation” is of a wider import than the term possession
and means something more than legal possession, which may be
either actual or constructive. More helpful are some cases which
arose in the Punjab under section 60(1)(c) or (ccc) of the Code.”
15. The conspectus of the aforesaid judgments would show that
the expression “occupied by” would mean or be synonymous with being
in actual physical possession of or being actually used by, in
contra-distinction to the expression “possession”, which would
connote
possession being either constructive or actual and which, in turn, would
include legally being in possession, though factually not being in physical
possession. Since it is clear that the Joint Development Agreement read
with the Deed of Modification has granted a license to the developer
(Corporate Debtor) to enter upon the property, with a view to do all the
things that are mentioned in it, there can be no gain saying that after
such entry, the property not would not be “occupied by” the developer.
Indeed, this becomes clear from the termination notice dated 12.01.2018,
issued by MHADA to the developer, in which it is stated:
“35. This is therefore to inform you that on the expiry of 30 days
from the date of receipt of this notice, the Joint Development
Agreement dated 10.04.2008 and Deed of Confirmation and
Modification dated 03.11.2011 and Letter dated 18.01.2014 stands
terminated and you will not be allowed to enter the property and
your authority/license to enter the property or remain thereupon
is terminated. MHADA thereupon will not allow you to do anything
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on or in relation to the property and MHADA shall take possession
of all the structures standing at whatever stage they are situated
at Goregaon (West) and bearing CTS No …”
It now remains for us to deal with some of the provisions of the
MHADA Act as well as some of the judgments cited on behalf of the
respondents. MHADA Act, as its preamble states, is an Act to unify,
consolidate and amend the laws relating to housing, repairing and
reconstructing dangerous buildings and carrying out improvement works
in slum areas. By Section 4 of the Act, the Authority, i.e. the MHADA,
is to be a corporate body, and is deemed to be a local authority for the
purposes of the Act. By Section 5 the Rent Act, or any corresponding
laws are not to apply. By Section 66, the Competent Authority is given
power to evict persons from premises under certain circumstances.
Sections 76 and 79, on which great reliance was placed by Mr. Dave,
are set out herein below:
 “76. Duties relating to repairs and reconstruction of
dilapidated buildings. Subject to the provisions of this Chapter,
it shall be the duty of the Board –
(a) to undertake and carry out structural repairs to buildings, in
such order of priority as the Board, having regard to the exigencies
of the case and availability of resources, considers necessary,
without recovering any expenses thereof from the owners or
occupiers of such buildings;
(b) to provide temporary or alternative
accommodation to the
occupiers of any such building, when repairs thereto are
undertaken, or a building collapses;
(c) to undertake, from time to time, the work of ordinary and
tenantable repairs in respect of all premises placed at the disposal
of the Board;
(d) to move the State Government to acquire old and dilapidated
buildings and which are, in the opinion of the Board, beyond repairs;
and to reconstruct or to get reconstructed new buildings thereon
for the purpose of housingas many occupiers of those properties
as possible, and for providing alternative accommodation to other
affected occupiers;
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MR. RAJENDRA K. BHUTTA v. MAHARASHTRA HOUSING AND AREA
DEVELOPMENT AUTHORITY THR. ITS CHAIRMAN [R. F. NARIMAN, J.]
79. Power of Board to undertake building repairs, building
reconstruction and occupiers housing and rehabilitation
schemes.
(1) The Authority may, on such terms and conditions as it may
think fit to impose, entrust to the Board the framing and execution
of schemes for building repairs or for reconstruction of buildings
or for housing and rehabilitation of, dishoused occupiers, whether
provided by this Act or not, and the Board shall thereupon undertake
the framing and execution of such schemes as if it had been
provided for by this Act.
(2) The Board may, on such terms and conditions as may be agreed
upon and with the previous approval of the Authority-
(a) hand over the execution under its own supervision of any
building repairs scheme, building reconstruction scheme, or
dishoused occupier’s housing scheme to a Municipal Corporation
or to a co-operative society or to any other agency recognized for
the purpose by the Board, as it may deem necessary, and
(b) transfer by sale, exchange or otherwise in any manner
whatsoever any new building constructed on any land acquired
under this Chapter to any co-operative society, if it is formed by
all the occupiers, or to apartment owners for the purposes of the
Maharashtra Apartment Ownership Act, 1970 (the apartment
owners being all such occupiers).”
16. There is no doubt whatsoever that important
functions relating
to repairs and re-construction of dilapidated buildings are given to
MHADA. Equally, there is no doubt that in a given set of circumstances,
the Board may, on such terms and conditions as may be agreed upon,
and with the previous approval of the Authority, handover execution of
any housing scheme under its own supervision. However, when it comes
to any clash between the MHADA Act and the Insolvency Code, on the
plain terms of Section 238 of the Insolvency Code, the Code must prevail.
This is for the very good reason that when a moratorium is spoken of by
Section 14 of the Code, the idea is that, to alleviate corporate sickness, a
statutory status quo is pronounced under Section 14 the moment a petition
is admitted under Section 7 of the Code, so that the insolvency resolution
process may proceed unhindered by any of the obstacles that would
otherwise be caused and that are dealt with by Section 14. The statutory
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freeze that has thus been made is, unlike its predecessor in the SICA,
1985 only a limited one, which is expressly limited by Section 31(3) of
the Code, to the date of admission of an insolvency petition up to the
date that the Adjudicating Authority either allows a resolution plan to
come into effect or states that the corporate debtor must go into the
liquidation. For this temporary period, at least, all the things referred to
under Section 14 must be strictly observed so that the corporate debtor
may finally be put back on its feet albeit with a new management.
17. My learned brother S. Ravindra Bhat, J.’s judgment in
Municipal Corporation of Greater Mumbai (supra), which has been
strongly relied upon by Mr. Dave and Mr. Patil, dealt with an entirely
different fact situation, as is clear from paragraphs 32 and 33 of the said
judgment, which are set out herein below:
“32. A cumulative reading of the stipulations reveals that the
contract/agreement contemplates that the lease deed was to be
executed after the completion of the project. The contract reveals
that (a) the project period was for 60 months starting from the
date excluding the monsoon period; (b) by Clauses 5 and 17,
SevenHills could mortgage the property for securing advances
from financial institutions for the construction of the project and
thereafter towards its working. Such mortgage/charge or interest
was subject to approval by MCGM. In the event the
contract
was to be terminated, it was agreed that MCGM would not in any
manner be liable towards the mortgaged amount and all its rights
and ownership would continue to vest in it free from encumbrances
(Clause 17).
33. The show cause notice in this case preceded admission of the
insolvency resolution process. In view of the clear conditions
stipulated in the contract, MCGM reserved all its rights and its
properties could not have therefore, in any manner, been affected
by the resolution plan. Equally in the opinion of this Court, the
adjudicating authority could not have approved the plan which
implicates the assets of MCGM especially when Seven Hills had
not fulfilled its obligations under the contract.”
18. The matter had come to this Court after the Adjudicating
Authority had approved of a certain resolution plan, unlike in the facts of
the present case, and what was clear, on the facts of that case, was that
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MR. RAJENDRA K. BHUTTA v. MAHARASHTRA HOUSING AND AREA
DEVELOPMENT AUTHORITY THR. ITS CHAIRMAN [R. F. NARIMAN, J.]
a show cause notice of the Municipal Corporation, which preceded
admission of the insolvency resolution process, made it clear that assets
of MCGM could not possibly be subsumed within a resolution plan without
its approval/permission. It was in this context that this Court, in para 47
of the said judgment, stated that Section 238 of the Code cannot be read
as overriding the MCGM’s right - indeed its public duty - to control and
regulate how its properties are to be dealt with. “Properties” was referred
to in this judgment as referring to assets of the corporate debtor. We
have seen how, in the facts of this case, we are not concerned with the
assets of the corporate debtor, least of all the assets of MHADA. The
limited question before us is as to whether Section 14(1)(d) of the Code
will apply to statutorily freeze ‘occupation’ that may have been handed
over under a Joint Development Agreement.
19. Likewise, the recent judgment Sushil Kumar Agarwal (supra)
deals with specific performance and whether a Development Agreement
may be specifically performed. The ratio of that judgment appears to be
that where Development Agreements create an interest in property, they
may be specifically performed, but not otherwise. As we have pointed
out herein above, it is clear that Section 14(1)(d) of the Insolvency &
Bankruptcy Code, when it speaks about
recovery of property “occupied”,
does not refer to rights or interests created in property but only actual
physical occupation of the property. For this reason also, this judgment is
wholly distinguishable.
20. Regard being had to the above, we allow the appeal and set
aside the impugned order of the NCLAT. Considering that this matter
has been pending for some time, we direct the NCLT to dispose of the
resolution professional’s application (I.A. No.21433/2018) within a period
of six weeks from today.
Ankit Gyan
Appeal allowed.