The National Company Law Appellate Tribunal (NCLAT), New Delhi bench comprising Justice Rakesh Kumar, Judicial Member and Dr. Alok Srivastava, Technical Member was hearing an appeal and held that Disputes relating to the agreement to sale cannot be examined in a proceeding under the IBC.
The present appeal has been filed under Section 61 of the Insolvency and Bankruptcy Code, 2016 against an order passed by the Learned Adjudicating Authority, National Company Law Tribunal, Guwahati Bench, Guwahati. By the said order the Adjudicating Authority allowed the application filed by the corporate Debtor, which was filed under Section 60(5) read with Section 74(3) of IBC, 2016 and read with Rule 11 of the National Company Law Tribunal Rules, 2016. By the impugned order, in sum and substance, the appellant was directed to transfer Igatpuri Unit to the nominee of the Resolution Applicant within 45 days.
In the present case, Respondent No. 1 had sanctioned a loan of Rs. 1.95 Crores to one Company named M/S. Crystal Laminates Ltd. and the said Company had mortgaged its property to Respondent No 1. On failure of repayment of the loan by Crystal Laminates Ltd., Respondent No. 1 took over the possession of the mortgaged property of Crystal Laminates Ltd and thereafter advertised for sale of the said properties by inviting offers for the purchase of the same on "as is where is and what is basis" In response to the said advertisement, the CD offered to purchase the said properties at or for the price of Rs. 2,25,00,000.00 (Rupees Two Crores Twenty- Five Lakhs Only) with certain conditions.
Thereafter, the Applicant/CD had entered into an agreement with the Respondent on 03.09.1998 for the purchase of the Unit located at Village Takeghati, Igatpuri, District Nashik from the Respondent No. 1 for a consideration of Rs. 2.25,00,000.00 (Rupees Two Crores Twenty-Five Lakhs Only) only. The Respondent No. 1, on receipt of the earnest money of Rs. 10.00 lacs (Rupees Ten Lacs only) and a further sum of Rs. 56,25,000/- (Rupees Fifty Six lacs Twenty-Five thousand only) from the CD, had put the CD into possession of the said unit at Igatpuri in 1998. The CD since then has been in uninterrupted possession of the unit together with the building and structures, plant and machinery, electrical and other installation, equipment etc. standing thereon. The CD had reportedly made investments in plant and machinery aggregating to more than Rs. 3,00,00,000.00 (Rupees Three Crores only) in creating the infrastructure and maintaining the unit since 1998.
In terms of the Agreement, the balance purchase consideration amount of Rs. 1,58,75,000.00 (Rupees One Crore Fifty-Eight Lakhs Seventy-Five Thousand Only) for the said unit was to be paid in 31 monthly instalments under a Deferred Payment Facility (DPF) which was to culminate on 15.08.2001. However, due to the financial hardships faced by the CD at that time, it could not pay some of the instalments but had assured Respondent No. 1 that it would pay the same.
Subsequently, the CD made a proposal to Respondent No. 1 for a one-time settlement (OTS) of the dues under the ICD as well as the balance outstanding under the DPF for the purchase of the Igatpuri Unit. Respondent No.1 accepted the OTS proposal of the CD vide letter dated 20.02.2008 wherein it had agreed to accept an amount of Rs. 231.00 Lakhs from the CD towards full and final settlement of all outstanding dues. In terms of the OTS, the CD was required to pay Rs. 200.00 Lakhs in cash and Rs. 31.00 Lakhs by way of Allotment of Non-Convertible Debentures by 29.02.2008. The deadline for payment was extended to 19.03.2008 vide letter dated 04.03.2008 by Respondent No. 1. The CD in compliance with the said OTS dated 20.02.2008 paid an amount of Rs. 200.00 Lakhs vide Pay Order No. 529886 dated 17.03.2008 and also issued and forwarded the Non-Convertible Debentures of Rs. 31.00 Lakhs in favour of the Respondent No. 1 on 18.03.2008. Thus the CD fully complied and honoured the OTS well in time as stipulated by Respondent No. 1. The Respondent No.1 as stated in clause No. 2 (vi) of the OTS dated 20.02.2008 had unequivocally and unconditionally agreed to convey/transfer the Igatpuri Unit to the CD on receipt of the aforesaid amount.
This transaction of transfer of the Igatpuri Unit was complete and the Respondent 1 was required to transfer the Igatpuri Unit to the CD on that day itself but it has not been done to date. Hence Respondent 1 has erred here in not transferring the Unit to the CD.
The NCLAT, New Delhi bench observed that the dispute relating agreement to the sale which was entered in between the parties in the year 1998 was breached by the appellant or the respondent breached the agreement, which may not be examined in a proceeding under the IBC. Such disputes are required to be examined by the court of competent jurisdiction. In view of the admitted position that the title of the property in respect of the Igatpuri Unit still lies with the appellant, the Learned NCLT has committed an error in allowing the application filed on behalf of the Respondent in directing for transferring the land in question. As such there is no option but to set aside the impugned order. In the present case, the Learned NCLT has exceeded its jurisdiction in directing the appellant to transfer the property in question in favour of the Corporate Debtor
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