NDLI: Victory Iron Works Ltd. Vs. Jitendra Lohia & Anr

Content Provider	Supreme Court of India
e-ISSN	30484839
Language	English
Access Restriction	NDLI
Subject Keyword	2016 – s.25(2)(a) – IBBI (Insolvency Resolution Process for Corporate Persons) Regulations 2016 Insolvency and Bankruptcy Code
Content Type	Text
Resource Type	Law Judgement
Jurisdiction	India
Act(s) Referred	Insolvency and Bankruptcy Code, 2016 (31 of 2016)
Case(s) Referred	Referred Case 0 Referred Case 1 Referred Case 2
Case Type	Appeal
Court	Supreme Court of India
Disposal Nature	Appeal Dismissed
Headnote	Insolvency and Bankruptcy Code, 2016 – s.25(2)(a) – IBBI(Insolvency Resolution Process for Corporate Persons) Regulations,2016 – Regulation 30 – Corporate Debtor and one ‘EP’ (appellantin CA No.1782 of 2021) entered into an MoU – Corporate Debtorfinanced the purchase of the property in question by ‘EP’ for 40%of the share capital in ‘EP’ and a Joint Development Agreementwith it in respect of the property – Actual physical possession of theproperty was also handed over to the Corporate Debtor whichfactum was confirmed in two subsequent MoUs – Later, CorporateDebtor also executed a Leave and License Agreement grantinglicense to ‘V’ (appellant in CA No.1743 of 2021), for the permissiveuse of a portion of the property, however, ‘V’ now claims to be inpossession of the entire property – ‘EP’ joined this Agreement as aconfirming party – CIRP was initiated against Corporate Debtorby a third-party financial creditor – Resolution Professional (RP)filed application u/s.25 r/w Regulation 30 of 2016 Regulations forcertain directions – NCLT directed ‘V’ and ‘EP’ not to obstructpossession and activities of RP however, it also held that the orderwould not prevent ‘V’ from carrying on its business in the portion ofland licensed to it – Appeals filed by ‘V’ and ‘EP’ were dismissed byNCLAT, RP was directed to disclose in the Information Memorandumthat the Corporate Debtor has development rights over the property– On appeal, held: A bundle of rights and interests created in favourof the Corporate Debtor over the immovable property in questionby a series of documents, partake the character and shade ofownership rights – Therefore, these rights and interests in theimmovable property are definitely liable to be included by the RP inthe Information Memorandum – Resolution Professional is dutybound u/s.25(2)(a) to take custody and control of the same – NCLTand NCLAT have done a delicate act of balancing, by protectingthe interests of ‘V’ to the extent of the land permitted to be occupied In fact, ‘V’ does not even have the status of a lessee, but is only alicensee and a license does not create any interest in the immovableproperty – NCLT as well as NCLAT rightly held that the possessionof the Corporate Debtor, of the property needs to be protected andthus, a direction u/Regulation 30 was issued to the local districtadministration to give assistance to the RP for completion of CIRPof the Corporate Debtor effectively.Insolvency and Bankruptcy Code, 2016 – s.3(37) – IncomeTax Act, 1961 – s.102(2) – “asset” – Held: The word “asset” is notdefined, either in IBC or in any of the seven enactments referred toin s.3(37) of the Code – But the word “asset” is defined in s.102(2)of the 1961 Act to include “property or right of any kind” – Thoughs.102 applies as such to Chapter X-A of the Income Tax Act, thedefinition throws light on the fact that property or right of any kindis considered to be an asset.Insolvency and Bankruptcy Code, 2016 – ss.3(27), 18(f),25(2)(a) – “property”, “asset” – CIRP was initiated against theCorporate Debtor – Interim Resolution Professional claimed thatthe development rights held by the Corporate Debtor formed partof its intangible assets and therefore, must be included in theInformation Bulletin and protected – Held: Definition of theexpression “property” u/s.3(27) includes “every description ofinterest, including present or future or vested or contingent interestarising out of or incidental to property” – Since the expression“asset” in common parlance denotes “property of any kind”, thebundle of rights that the Corporate Debtor has over the property inquestion would constitute “asset” within the meaning of s.18(f) ands.25(2)(a), IBC – Income Tax Act, 1961 – s.102(2).Indian Bankruptcy Code, 2016 – Explanation u/s.18; s.25 –Appellants challenging the impugned orders of the NCLT and NCLATargued that by virtue of the Explanation u/s.18, the disputes betweenthe Corporate Debtor and the third-party lessee/licensee are notamenable to the jurisdiction of the authorities under the Code –Held: Explanation u/s.18 begins with a caveat “for the purposes ofthis Section” – Therefore, the exclusion of assets owned by a thirdparty,but in the possession of the Corporate Debtor held undercontractual arrangements, from the definition of the expression“assets”, is limited to s.18 – The Explanation u/s.18 does not extendto s.25.
Judge	Hon'ble Mr. Justice V. Ramasubramanian
Neutral Citation	2023 INSC 230
Petitioner	Victory Iron Works Ltd.
Respondent	Jitendra Lohia & Anr
SCR	[2023] 7 S.C.R. 1021
Judgement Date	2023-03-14
Case Number	1743

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Victory Iron Works Ltd. Vs. Jitendra Lohia & Anr

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