Petitioner was liable to deposit arrears of lease rent to GNIDA as he stepped into shoes of corporate debtor: HC

Case Details: Palika Towns LLP v. State of U.P. - [2022] 140 taxmann.com 561 (Allahabad)

Judiciary and Counsel Details

• • Surya Prakash Kesarwani and Vikas Budhwar, JJ.
  • Manu Khare for the Petitioner.
  • Anjali Upadhya, C.S.C. and Ramendra Pratap Singh for the Respondent.

Facts of the Case

In the instant case, the corporate debtor was allotted a commercial plot by the R2 – Greater NOIDA Industrial Development Authority (GNIDA) for a period of 90 years. Initially, the lease deed was executed on 26-6-2001 between GNIDA on one part and the corporate debtor on the other part setting out the terms and the conditions (covenants) of the leased land in question.

An application u/s 7 was instituted by a financial creditor for initiating Insolvency Resolution Process (IRP) against the corporate debtor. The said application was admitted by the NCLT and Interim Resolution Professional (IRP) was appointed.

The NCLT allowed the application preferred by IRP under section 33(2) of the IBC while ordering the Liquidation of the corporate debtor. In furtherance thereof the Liquidator made a public announcement under regulation 12 of the Insolvency and Bankruptcy (Liquidation Process) Regulations, 2016 inviting claims owed and due to the corporate debtor giving details and description of the assets of the corporate debtor.

Thereafter, an advertisement/sale notice of the assets of the corporate debtor was published by the Liquidator wherein details and description of the assets were put to an auction of the corporate debtor.

The petitioner participated in the auction so conducted and the bid of the petitioner was found to be commensurate to the expectation of the Liquidator. Consequently, the NCLT accepted the offer of the petitioner and the petitioner thereafter received the acceptance letter of the Liquidator. According to the petitioner, the full and final payment was made by it and a Certificate of Sale was issued in favour of the petitioner.

Consequent to the issuance of the sale certificate, the petitioner approached GNIDA for issuance of a transfer memorandum and deposited arrears of lease rent, which was being claimed by GNIDA. The petitioner filed an instant writ for a refund of the amount so paid to GNIDA on the ground that said amount was deposited by it under protest and it being a bona fide auction purchaser, could not be fastened with any monetary liability, which was attached with corporate debtor under liquidation

The stand taken by the GNIDA in their affidavit was that GNIDA was at no point of time apprised of the fact that the corporate debtor lessee became bankrupt and proceedings were drawn under IBC against it culminating in an auction of the demised land and transfer of the same, therefore, auction in favour of the petitioner was illegal.

High Court Held

The High Court held that since the petitioner had stepped into the shoes of the corporate debtor in pursuance of the transfer memorandum, the petitioner had to honour commitments and discharge its contractual obligation as embodied in lease deeds, transfer memorandum and sale certificate and merely because the petitioner was a bona fide auction purchaser who had purchased assets of the corporate debtor through auction/bidding so conducted by orders of the NCLT, would not absolve it from paying arrears of lease rental and interest therein.

Therefore, instant writ seeking a refund of money deposited by him was devoid of merit and was to be dismissed.

List of Cases Referred to

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