Case Note & Summary
The case involved two appeals filed by AKJ Metals Private Limited against orders of the National Company Law Tribunal (NCLT) regarding the possession of two properties, Nalagarh and Baddi, during the Corporate Insolvency Resolution Process (CIRP) of RCI Industries and Technologies Limited. The Appellant claimed to have purchased these properties through Agreements to Sell and had taken possession prior to the initiation of CIRP. The NCLT had approved the Resolution Plan which included the properties as assets of the Corporate Debtor, leading to the Appellant's appeals. The Appellant argued that the properties were not part of the Corporate Debtor's assets and that the NCLT's orders were unsustainable as they ignored a prior Consent Decree recognizing the Appellant's rights. The Respondents, including the Resolution Professional (RP), contended that the transactions were fraudulent and aimed at defrauding creditors. The Tribunal analyzed the legal implications of the Consent Decree and the statutory provisions of the IBC, ultimately finding that the Appellant's possessory rights were protected under Section 53A of the Transfer of Property Act, 1882, and that the NCLT had erred in ordering possession to be handed over to the RP. The Tribunal held that the Appellant's rights could not be divested without due process and that the NCLT's orders were contrary to established legal principles.
Headnote
A) Insolvency Law - Possessory Rights - Protection under Section 53A of the Transfer of Property Act, 1882 - Appellant's possessory rights over properties were protected despite non-execution of registered conveyance deeds, as the properties were purchased and possession was taken prior to CIRP. The Adjudicating Authority's orders to hand over possession were erroneous as they disregarded the Consent Decree and the Appellant's lawful rights (Paras 10-12).
Issue of Consideration
Whether the possessory rights of the Appellant over the Nalagarh and Baddi properties could be divested by the impugned orders despite the existence of a Consent Decree.
Final Decision
The Tribunal set aside the NCLT's orders directing the Appellant to hand over possession of the Baddi and Nalagarh properties, maintaining status quo until the pending I.A. No. 5153 of 2023 is resolved. The Tribunal emphasized that the Appellant's rights were protected under Section 53A of the Transfer of Property Act, 1882, and that the NCLT's orders disregarded the Consent Decree and the established legal principles.
Law Points
- Insolvency and Bankruptcy Code
- 2016
- Section 18
- Section 66
- Transfer of Property Act
- 1882
- Section 53A
- Consent Decree
- Corporate Insolvency Resolution Process
