M K Resely vs Union Bank Of India
2022 Latest Caselaw 4593 Ker

        IN THE HIGH COURT OF KERALA AT ERNAKULAM
                        PRESENT
          THE HONOURABLE MR.JUSTICE N.NAGARESH
 FRIDAY, THE 22ND DAY OF APRIL 2022 / 2ND VAISAKHA, 1944
                 WP(C) NO. 2832 OF 2022
PETITIONERS:

    1    M K RESELY
         AGED 47 YEARS
         S/O M.S. KOCHUTHAMPI
         MURICKOLLI HOUSE, NADACKA PO
         ERATTUPETTA VILLAGE KOTTAYAM DISTRICT.
         PIN- 686 124
    2    M.K.FAISAL
         S/O M.S. KOCHUTHAMPI
         MURICKOLLI HOUSE, NADACKA PO
         ERATTUPETTA VILLAGE KOTTAYAM DISTRICT.
         PIN- 686 124
    3    M K ANAS
         S/O M.S. KOCHUTHAMPI
         MURICKOLLI HOUSE, NADACKA PO
         ERATTUPETTA VILLAGE KOTTAYAM DISTRICT.
         PIN- 686 124
    4    ANCY MOL
         MURICKOLLI HOUSE, NADACKA PO
         ERATTUPETTA VILLAGE KOTTAYAM DISTRICT.
         PIN- 686 124
    5    AMINA S
         MURICKOLLI HOUSE, NADACKA PO
         ERATTUPETTA VILLAGE KOTTAYAM DISTRICT.
         PIN- 686 124
    6    DR MOHAMMED ISMAIL
         SON OF M.K MOHMAMMED ALI,
         MADAVANA, PATHAIKKARA, PERINTHALMANNA,
         MALAPURAM DISTRICT
         KERALA 679322
    7    M K NABEEL
         MURIKKOLIL HOUSE,NADACKAL P.O.
         ERATTUPETTA VILLAGE, KOTTAYAM, KERALA,
         PIN 686124
 W.P.(C) No.2832/2022
                                :2:


    8      SHAILA ISMAIL
           MADAVANA HOUSE, PATHIAKKARA P.O.
           PERINTHALMANNA, MALAPPURAM, KERALA 679322

           BY ADVS.
           S.EASWARAN
           P.MURALEEDHARAN (IRIMPANAM)
           K.V.RAJESWARI
           V.K.PEERMOHAMED KHAN


RESPONDENTS:

    1      UNION BANK OF INDIA
           ERATTUPETTA BRANCH,
           1ST FLOOR,PARAANAL ARCADE,
           ARUVITHARA, SD MEENACHIL,
           ERATTUPETTA P.O., KOTTAYAM - 686121
    2      MEENACHIL EAST CO-OPERATIVE BANK
           NO.4266,POONJAR, POONJAR ,
           THEKKEKARA PO. KOTTAYAM DISTRICT 686582
           REPRESENTED BY ITS CHIEF MANAGER
    3      C.A.MAHALINGAM SURESH KUMAR
           LIQUIDATOR OF MS.RAIHAN HEALTHCARE PRIVATE
           LIMITED,
           MS.SPP & CO., CHARTERED ACCOUNTANTS,
           NO.27/9,NIVEDH VIKAS, PANKAJA MILL ROAD,
           PUIYAKULAM, COIMBATORE - 641045
    4      NATIONAL COMPANY LAW TRIBUNAL
           COMPANY LAW BHAVAN,
           KAKKANAD KOCHI- 682030
           REPRESENTED BY ITS REGISTRAR

           BY ADVS.
           S.SREEKUMAR (SR.)
           MANOJ RAMASWAMY
           JOSEPH GEORGE
           A.G.SATHYANARAYANA



     THIS WRIT PETITION (CIVIL) HAVING COME UP          FOR
ADMISSION ON 22.04.2022, THE COURT ON THE SAME          DAY
DELIVERED THE FOLLOWING:
 W.P.(C) No.2832/2022
                                        :3:




                            N. NAGARESH, J.

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                        W.P.(C) No.2832 of 2022

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                 Dated this the 22nd day of April, 2022

                             JUDGMENT

~~~~~~~~~

The petitioners, who have mortgaged their

properties to secure the dues of M/s.Raihan Health Care

Private Limited, have approached this Court seeking to

quash Ext.P14 order of the National Company Law Tribunal,

Kochi and to declare that properties of the petitioners

included in Ext.P1 application stated to have been

mortgaged to 1st and and 2nd respondents as guarantors, are

not liable to be included in the Liquidation Estate of the

Company M/s.Raihan Health Care Private Limited.

2. The Company M/s.Raihan Health Care Private

Limited obtained credit facilities from the 1 st respondent-

Union Bank of India and the 2 nd respondent-Meenachil East W.P.(C) No.2832/2022

Urban Co-operative Bank Limited. The petitioners

mortgaged their properties to the Banks as guarantors.

3. The 1st respondent-Union Bank of India resorted to

Insolvency and Bankruptcy Code, 2016 and initiated

insolvency proceedings against the Company, approaching

the National Company Law Tribunal. The Tribunal appointed

the 3rd respondent as Liquidator. The Liquidator informed the

Tribunal that landed property of 100.16 Ares mortgaged to

the Bank is leasehold land of the Promoters/Directors of the

Corporate Debtor. The lease was for a period of 99 years

and was intended for construction of a Hospital. The lease

deed empowered the Company to mortgage the leasehold

land for obtaining advances from financial institutions.

4. Accordingly, the Company mortgaged the land to

the Bank. Another 16.55 Ares of land inside the Hospital

premises owned by the Promoters/Directors was used for

Hospital utility services on implied lease. The said property

was mortgaged to the Meenachil Urban Co-operative Bank.

On an application filed by the Liquidator seeking to direct W.P.(C) No.2832/2022

both the Banks to handover physical possession of the

mortgaged leasehold lands of the corporate debtor for the

purpose of including in the Liquidation Estate, both the

Banks expressed their willingness to release the property.

Thereupon, the Tribunal directed the Banks to handover

physical possession of the mortgaged leasehold land of the

corporate debtor, to the Liquidator in order to use as

Liquidation Estate.

5. The petitioners thereupon approached this Court

filing W.P.(C) No.3864/2021 and connected cases. This

Court found that the Bank has security interests in the

properties involved under two heads. The properties are

held by the corporate debtor under a lease agreement which

permits the corporate debtor to mortgage their leasehold

rights for raising funds. Furthermore, the petitioners are

sureties to the loan transactions of the corporate debtor and

their title documents in respect of the properties are

deposited with the Bank. This Court held that Liquidator can

include the leasehold rights in the liquidation estate in view of W.P.(C) No.2832/2022

Section 36(3) of the IBC. This Court doubted whether

ownership rights of a property which are still with the

petitioners, which stands mortgaged to the Bank can be

included in the Liquidation Estate. After considering the facts

of the case, this Court disposed of W.P.(C) No.3864/2021

and connected cases setting aside the order of the NCLT

impugned therein to the extent it allows the Liquidator to add

the mortgaged land of the petitioners into the Liquidation

Estate. The NCLT was directed to pass orders afresh on the

issue of inclusion of the said land in the Liquidation Estate in

the light of the observations made in the judgment, after

giving an opportunity of hearing to the petitioners.

6. The NCLT thereafter considered the issue and

observed as follows:

21. We have heard the learned counsel appearing on either side and have thoroughly perused the records. As directed by the Hon'ble High Court, the liquidator impleaded the Personal Guarantors of the Corporate Debtor and they filed their counter affidavit and argued elaborately. Their main contention is that the liquidator cannot proceed against their properties, even though they have given to the Corporate Debtor on lease for constructions of the Doctors' quarters in their W.P.(C) No.2832/2022

properties, which forms part of the liquidation estate now decided by the liquidator. On the other hand, the respondents 1 & 2 are agreeable to the proceeding of the liquidation against all the properties mortgaged by the Corporate Debtor. Second respondent even though stated that they will be proceeding against the Personal Guarantors, till date no steps taken by them against the guarantors. Hence, both parties are in favour of the liquidation proceedings against the Corporate Debtor. The only thing is that the Personal Guarantors are opposing the action taken by the liquidator, which they are not entitled to because they have given on lease their properties to the Corporate Debtor and the Corporate Debtor has been put under liquidation. In such an event, the respondents 3 to 8 are estopped from seeking a relief from this Tribunal, that their properties cannot be treated as properties of the Corporate Debtor, which is proceeded under the IBC. We cannot treat them as 3rd parties, as they were part and parcel of the Corporate Debtor. In view of the fact that they have mortgaged their properties to the Corporate Debtor and the Corporate Debtor is now reached in the stage of Corporate Insolvency Process. The liquidator has rightly proceeded against their properties also for completion of the liquidation process. We do not find any merit in the contention of Respondents 3 to 8.

22. Moreover, since the Resolution Professional has to conclude the proceedings, it is highly necessary to get the possession of the property, as it is the duty of the Resolution Professional to dispose of the Liquidation Assets of the Corporate Debtor, if necessary, to settle the claims of all claimants including the Financial Creditors. Since, the Building/hospital is situated in the very same land having 16.55 Ares, no purpose would be served without getting the hospital property also into the Liquidation Assets. It is also noticed that the 1st Respondent Union Bank of India has no objection in handing over the possession and the 2nd Respondent Meenanchil W.P.(C) No.2832/2022

East Urban Co-operative Bank Limited even though objected to; they have conditionally agreed to hand over possession, provided their interests is well secured. There is no doubt that the Liquidator will consider all the claims and make payments to each person/authority, as per the Regulations/Rules. Hence, the 2nd Respondent's apprehension cannot be sustained.

23. Hence, we affirm our order passed on st 1 February, 2021 in MA/76/KOB/2020 and ordered as under:

a. Both Respondents are directed to hand over the physical possession of the mortgaged leasehold land of the Corporate Debtor (both Express Lease & Implied Lease lands used by the Corporate Debtor) to the Applicant in order to use as the Liquidation Estate of the Corporate Debtor.

b. The Applicant is also permitted to add the mortgaged land (Express Lease-100.16 Ares & Implies Lease- 78.45 Ares) into the Liquidation Estate of the Corporate Debtor of the respondents 3 to 8, to the liquidation Estate of the Corporate Debtor.

c. The Liquidator is directed to strictly follow the procedures to take over the property in question, as per the Regulations.

The petitioners challenge the said Ext.P14 order dated

21.01.2022 of the Tribunal.

7. The learned counsel for the petitioners argued that

the Tribunal has inherent lack of jurisdiction. Personal

properties of the petitioners cannot be included in the

liquidation estate since there is a statutory bar under Section

36 of the IBC. The Tribunal has not applied its mind W.P.(C) No.2832/2022

properly. Even after the remand, the Tribunal has chose to

affirm its earlier order.

8. The learned counsel argued that Section 36 of the

IBC lays down exception as to what all assets which will not

form part of the Liquidation Estate. Personal properties of

the petitioners cannot form part of the Liquidation Estate.

The Liquidator in this case is acting as a real estate agent.

The learned counsel further urged that the findings of the

Tribunal is contrary to the legislative intent. When there are

provisions for separate proceedings for the resolution of debt

against the personal guarantors of a corporate debtor, the

Liquidator cannot bypass the statutory provisions and include

personal assets of the petitioners in the liquidation estate.

9. The learned counsel for the petitioner relied on the

judgment of the Apex Court in Embassy Property

Developments Private Limited v. State of Karnataka and

others [(2020) 13 SCC 308] to contend that when there is

lack of jurisdiction in NCLT to include 3 rd party's properties in

Liquidation Assets, a writ petition under Article 226 is W.P.(C) No.2832/2022

maintainable. The learned counsel also relied on the

judgment in Pushpa Shah v. Union of India and others

[2019 SCC Online Bom 2019] and argued that when a

statutory authority has not acted in accordance with the

provisions of enactment in question, exercise of writ

jurisdiction is warranted.

10. The 3rd respondent-Liquidator filed a counter

affidavit. The 3rd respondent stated that any person

aggrieved by the order of the NCLT can prefer an appeal to

the NCLAT. Since the petitioners have efficacious alternate

remedy, the writ petition is not maintainable. The learned

counsel for the 3rd respondent relied on a Division Bench

judgment of this Court in Sulochana Gupta and others v.

RBG Enterprises Private Limited and others [W.A.

No.1083/2020) and a judgment in Ideal Surgicals v. National

Company Law Tribunal and others (W.P.(C) No.8257 of

2021) to urge the point.

11. The alleged immovable properties being the

assets of the personal guarantors which was mortgaged in W.P.(C) No.2832/2022

favour of the financial creditors, the 3rd respondent being a

Liquidator is bound to proceed against the properties. The

Hon'ble Apex Court has repeatedly held that it is the duty of

the RP/Liquidator to maximise the realisation value to the

stakeholders of the corporate debtor either through revival or

by selling the corporate debtor as a going concern. Major

part of the Hospital and its utilities are constructed on the

leasehold part of the land. Therefore, sale of land separately

by the mortgage holders is not feasible. The writ petition is

therefore liable to be dismissed, contended the learned

counsel for the 3rd respondent.

12. Heard the learned counsel for the petitioners, the

learned Standing Counsel for the 1 st respondent and the

learned counsel for the 3rd respondent.

13. This Court finds that against Ext.P14 order of the

NCLT, the petitioners have an alternate remedy of appeal to

the NCLAT under Section 61 of the IBC. It is true that a writ

petition was found maintainable earlier as is seen from

Ext.P4 judgment. In Ext.P4 judgment, this Court found that W.P.(C) No.2832/2022

the order of the NCLT impugned therein lacks clarity

inasmuch as whether what is directed to be included in the

liquidation estate is leasehold rights of the corporate debtor

or the ownership rights of the petitioners or both. If the

ownership rights of the petitioners are included in the

liquidation estate that would be against Section 36 of IBC

and that would give rise to a cause of action to the petitioners

to invoke Article 226 of the Constitution of India, especially

when the order is passed without hearing the petitioners.

14. It was under the afore circumstances that this

Court entertained W.P.(C) No.3864/2021 and connected

cases and directed the Tribunal to pass orders afresh on the

issue of inclusion of the land of the petitioners in the

liquidation estate. The NCLT considered the matter and

passed Ext.P14 order directing the Banks to handover the

physical possession of the mortgaged leasehold land of the

corporate debtor (both express lease and implied lease lands

used by the corporate debtor) to the applicant in order to use

as the liquidation estate of the corporate debtor. W.P.(C) No.2832/2022

15. It is therefore evident that what is directed to be

included in the Liquidation Estate, is the leasehold rights

given to the Bank. Such leasehold rights can be included in

the Liquidation Estate. The Tribunal passed the order after

hearing the petitioners. In the facts and circumstances of the

case, the judgments in Embassy Property Developments

Private Limited (Supra) and Pushpa Shah (Supra) are of no

assistance to the petitioner.

16. In the afore facts of the case, this Court does not

find any reason to entertain a writ petition under Article 226

of the Constitution of India, when the petitioners have

alternate remedy of appeal as provided under the IBC.

The writ petition therefore fails and it is dismissed.

Sd/-

N. NAGARESH, JUDGE aks/21.04.2022 W.P.(C) No.2832/2022

APPENDIX OF WP(C) 2832/2022

PETITIONER'S EXHIBITS

Exhibit P 1 COPY OF MA NO 76 OF 2020 IN IBA 204 OF 2019 ON THE FILES OF NATIONAL COMPANY LAW TRIBUNAL KOCHI Exhibit P 2 COPY OF THE ORDER DATED 1.2.2021 IN MA 76 OF 2020 PASSED BY NATIONAL COMPANY LAW TRIBUNAL KOCHI Exhibit P 3 COPY OF THE JUDGMENT DATED 9.4.2021 IN WP 3864 OF 2021 AND CONNECTED CASE RENDERED BY THIS HON'BLE COURT Exhibit P 4 COPY OF IA NO 138 OF 2021 IN MA 76 OF 2020 IN IBA 240 OF 2019 ON THE FILES OF THE NATIONAL COMPANY LAW TRIBUNAL KOCHI Exhibit P5 COPY OF THE COUNTER AFFIDAVIT FILED BY RESPONDENTS 3 TO 6 IN MA 76 OF 2020 IN IBA 240 OF 2019 ON THE FILES OF NATIONAL COMPANY LAW TRIBUNAL KOCHI Exhibit P6 COPY OF THE COUNTER AFFIDAVIT FILED BY RESPONDENTS 7 AND 8 IN MA NO 76 OF 2020 IN IBA 240 OF 2019 ON THE FILES OF NATIONAL COMPANY LAW TRIBUNAL KOCHI Exhibit P7 COPY OF IA NO 7 OF 2021 IN IBA 240 OF 2019 ON THE FILES OF THE NATIONAL COMPANY LAW TRIBUNAL KOCHI Exhibit P8 COPY OF IA NO 8 OF 2021 IN IBA 240 OF 2019 ON THE FILES OF THE NATIONAL COMPANY LAW TRIBUNAL KOCHI Exhibit P9 COPY OF THE COUNTER AFFIDAVIT FILED BY THE 1ST RESPONDENT IA NO 7 OF 2021 IN IBA 240 OF 2019 ON THE FILES OF NATIONAL COMPANY LAW TRIBUNAL KOCHI Exhibit P10 COPY OF THE COUNTER AFFIDAVIT FILED BY THE 1ST RESPONDENT TO IA 8 OF 2021 IN IBA 240 OF 2019 ON THE FILES OF NATIONAL COMPANY LAW TRIBUNAL KOCHI W.P.(C) No.2832/2022

Exhibit P11 COPY OF THE COUNTER AFFIDAVIT FILED BY THE 3RD RESPONDENT HEREIN TO IA 7 OF 2021 IN IBA 240 OF 2019 ON THE FILE OF THE NATIONAL COMPANY LAW TRIBUNAL KOCHI Exhibit P12 COPY OF THE COUNTER AFFIDAVIT FILED BY THE 3RD RESPONDENT HEREIN TO IA 8 OF 2021 IN IBA 240 OF 2019 ON THE FILES OF NATIONAL COMPANY LAW TRIBUNAL KOCHI Exhibit P13 COPY OF THE REJOINDER FILED BY THE PETITIONERS IN IA NO 7 OF 2021 IN IBA 240 OF 2019 ON THE FILES OF NATIONAL COMPANY LAW TRIBUNAL Exhibit P14 COPY OF THE ORDER DATED 21.1.2022 IN MA NO 76 OF 2020 AND CONNECTED CASES IN IBA 240 OF 2019 ON THE FILES OF THE NATIONAL COMPANY LAW TRIBUNAL KOCHI