Tribunal Upholds Protection Under IBC Section 33(5), Ensures Lease Agreement Execution
In a significant ruling, the National Company Law Tribunal (NCLT) Mumbai Bench has barred the Maharashtra Industrial Development Corporation (MIDC) from terminating the land allotment to Jet Airways (India) Limited during its liquidation process. The tribunal, comprising Member (Technical) Sh. Prabhat Kumar and Member (Judicial) Sh. Sushil Mahadeorao Kochey, ruled that such termination constitutes "other legal proceedings" and is barred under Section 33(5) of the Insolvency and Bankruptcy Code (IBC), 2016, as it depletes the assets of the corporate debtor.
The ruling came after Jet Airways' liquidator, Mr. Satish Kumar Gupta, filed an application seeking relief against the termination notices issued by MIDC concerning two plots in the TTC Industrial Area, Navi Mumbai. The tribunal found that the termination of the allotment without prior notice or hearing violated principles of natural justice, thereby setting aside the termination notices.
MIDC had allotted the plots to Jet Airways for specific use, and the requisite lease premium was paid by the corporate debtor. However, due to the failure to execute a lease agreement, MIDC issued termination notices and forfeited the premium money. The tribunal directed MIDC to execute the lease agreement promptly, recognizing Jet Airways' rights under Section 53A of the Transfer of Property Act, 1882, for the use of the land for 95 years.
The tribunal's decision emphasizes the importance of adhering to the moratorium during liquidation proceedings, highlighting that actions that deplete the corporate debtor's assets are impermissible. This judgment is a significant development in insolvency jurisprudence, reinforcing the protection of corporate debtors' assets during liquidation.
Bottom line:-
The termination of land allotment by Maharashtra Industrial Development Corporation (MIDC) to a corporate debtor during the liquidation process is barred under Section 33(5) of the Insolvency and Bankruptcy Code, 2016, as it constitutes "other legal proceedings" that deplete the assets of the corporate debtor.
Statutory provision(s): Insolvency and Bankruptcy Code, 2016 Section 33(5), Transfer of Property Act, 1882 Section 53A
