HC Validates FC’s Claim for Transfer Fee as Petitioner Misled Court that Waiver Clause of RP was Approved

Case Detail: S S Natural Resources (P.) Ltd. v. West Bengal Industrial Corporation Ltd. - [2024] 160 taxmann.com 692 (HC - Calcutta)

Judiciary and Counsel Details

• Suvra Ghosh, J.
• Ratnanko Banerji, Sr. Adv. & Vaibhavi Pandey, Adv. for the Petitioner.
• T.M. Siddiqui & Suddhadev Adak , Advs. for the Respondent.

Facts of the Case

In the instant case, the corporate debtor was engaged in the steel business. An indenture of sub-lease was executed between the respondent-financial creditor and the corporate debtor. Thereafter, the corporate debtor being the lessee sub-leased the said land in favour of (RLU).

The CIRP was initiated against the corporate debtor and the resolution plan was approved. The respondent issued a notice to the petitioner, demanding a transfer fee at 10% of the prevailing market value of the land.

The petitioner, being successful resolution applicants filed an appeal before the High Court on the ground that the respondents were duty bound to ensure the transfer of sub-lease in favour of the petitioners without payment of any fee, consideration, premium, etc., in terms of clause of resolution plan, which was approved by the NCLT, NCLAT and the Supreme Court.

It was noted that the NCLT approved the resolution plan with the modification that the resolution plan would include a portion of security expenses incurred by financial creditor, which was admitted by the RP in an upfront amount payable by the resolution applicant to creditors.

High Court Held

The High Court observed that the NCLT vide order held that any exemption for payment could be dealt with by respective authorities if applied for and refused to approve the waiver as prayed for in the plan. Such waiver was left to the discretion of appropriate authorities, if applied for.

The High Court, further observed that the clause of the resolution plan was not approved by the NCLT. The said order was carried in appeal by the petitioners before the NCLAT and by an order, the NCLAT dismissed the appeal and directed the monitoring agency to start taking steps for the implementation of the resolution plan immediately. In case, the successful resolution applicant failed to implement the approved resolution plan, appropriate action was directed to be taken immediately.

The High Court held that the resolution plan in its entirety was not approved by the NCLT or by appellate forums. Thus, the notices issued by the financial creditor were in conformity with the terms of the resolution plan and there was no illegality or irregularity in the notices that called for interference by the instant Court.