The NCLAT, Principal Bench New Delhi expounded that Section 14(1)(d) of the IBC prohibits recovery of any property by an owner or lessor, where such property is occupied and in possession of the Corporate Debtor.

In terms of facts of present case, it was held that the present case is not a recovery of the Facility by owner or lessor, who is Respondent No.2 herein. Further, the Facility is neither in occupation, nor in possession of the Corporate Debtor, since the Corporate Debtor has been appointed as operating and maintenance contractor. The Facility, which was constructed by Respondent No.2, the subsidiary of the Corporate Debtor and has been hypothecated and charged with the lender, i.e. Respondent No.1, it continues to be in possession and occupation of Respondent No.2, the subsidiary of the Corporate Debtor.

Brief Facts:

The present appeal has been filed to challenge the order of the NCLT vide which the RP’s praying for quashing the invitation of Expression of Interest (“EoI”) issued by Respondent No.1 – Financial Creditor was rejected.

Brief Background:

The Appellant (hereinafter referred to as the “Corporate Debtor”),holding Company of Respondent No.2 – Wind World (India) Infrastructure Pvt. Ltd. Wind World (India) Infrastructure Pvt.Ltd., which was earlier known as (Enercon India Infrastructure Pvt. Ltd.) proposed to construct and operate power switchyard (“the Facility) required for pooling of power to be generated by Enercon India Limited (“EIL”) existing and/or proposed wind energy projects for the purpose of maintenance and operating power switch yards, the Facility Agreement was entered between the Corporate Debtor and Respondent No.2.

CIRP was commenced against the Corporate Debtor. Respondent No.2 having committed default in repayment of loan, the account of Respondent No.2 was declared NPA. Respondent No.1 issued an EoI seeking new operation and management contractors for the Facility of Respondent No.2.

Contentions of the Appellant:

It was argued that The Corporate Debtor is in occupation of Facility. It is submitted that Respondent No.1 has right over the assets, which are its security interest, but cannot call for fresh EoI under the Facility Use Agreement, under the SARFAESI Act.

Contentions of Respondent No.1:

It was urged that Respondent No.1 is neither the owner nor lessor of the property. Further, it was Respondent No.2, who is owner and in possession of substations and switchyards and has handing over the facility for use, operate and maintenance by the Appellant/ Corporate Debtor, cannot be said to be in occupation for the purpose of Section 14 of the IBC.

Observations of the Tribunal:

It was observed that Facility Usage Agreement dated clearly mandated that the Corporate Debtor shall operate, maintain and use the Facility, but Corporate Debtor shall have no right whatsoever in the ownership of the Facility.

It was ruled that Section 14(1)(d) of the IBC prohibits recovery of any property by an owner or lessor, where such property is occupied and in possession of the Corporate Debtor.

In terms of facts of present case, it is not a recovery of the Facility by owner or lessor, who is Respondent No.2 herein. Further, the Facility is neither in occupation, nor in possession of the Corporate Debtor, since the Corporate Debtor has been appointed as operating and maintenance contractor. The Facility, which was constructed by Respondent No.2, the subsidiary of the Corporate Debtor and has been hypothecated and charged with the lender, i.e. Respondent No.1, it continues to be in possession and occupation of Respondent No.2, the subsidiary of the Corporate Debtor.

The decision of the Tribunal:

Based on above findings, accordingly, the appeal was dismissed.   

 

Case Title: Wind World (India) Limited v. Indian Renewable Energy & Anr.

Case No.:  Company Appeal (AT) (Insolvency) No.175 of 2023

Coram: Justice Ashok Bhushan and Barun Mitra (Technical Member)

Advocates for Appellant: Advs. Mr. Sumant Batra and Ms. Nidhi Yadav, Ms. Neha Naik and Mr. S. Laskari

Advocates for Respondent: Advs. Mr. Nakul Sachdiva, Mr. Karundeep Singh and Mr. Abhinandan Sharma

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