Supreme Court of India
Noida Special Economic Zone Authority vs Manish Agarwal on 5 November, 2024
Author: Abhay S. Oka
Bench: Abhay S. Oka
2024 INSC 839
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOS. 5918-5919 OF 2022
Noida Special Economic
Zone Authority … Appellant
Vs.
Manish Agarwal & Ors. … Respondents
J U D G M E N T
AUGUSTINE GEORGE MASIH, J.
1. In the present Appeals challenge is to the
Judgment dated 14.02.2022 passed by the
National Company Law Appellate Tribunal,
Principal Bench, New Delhi (hereinafter referred
to as “NCLAT”) which were preferred by the
Appellant, i.e., NOIDA Special Economic Zone
Signature Not Verified
Digitally signed by
ANITA MALHOTRA
Date: 2024.11.05
Authority, being the Operational Creditor
17:13:03 IST
Reason:
Civil Appeal Nos. 5918-19 of 2022 Page 1 of 17
(hereinafter referred to as “Appellant”) impugning
the Order dated 05.10.2020 passed by the
Adjudicating Authority of National Company Law
Tribunal, New Delhi Bench (hereinafter referred
to as “NCLT”) approving the Resolution Plan as
presented on the approval by the Committee of
Creditors, and also the Order dated 27.11.2020
vide which an application preferred by the
Appellant, challenging the approval of the
Resolution Plan, stood rejected.
2. Briefly, the facts are that the Respondent No.02,
i.e., Shree Bhoomika International Limited, being
the Corporate Debtor (hereinafter referred to as
“Corporate Debtor”) was sub-leased the Plot
bearing No. 59-I admeasuring 16,100 square
meters at NOIDA Special Economic Zone
(hereinafter referred to as “NSEZ”) by the
Appellant, in capacity of lessee of the said land
Civil Appeal Nos. 5918-19 of 2022 Page 2 of 17
from the NOIDA Authority, vide Lease Deed
dated 26.10.1995, and it was valid for a period of
15 years, i.e., up to 31.05.2010. It is the case of
the Appellant that the Corporate Debtor had
begun defaulting on lease payments in 1999, and
moreover, there was no performance or activity
on the said land since the year 2003-2004
leading to financial losses to the Government
Exchequer, and same also being violative of the
Special Economic Zone Rules and guidelines
framed therein. Appellant has also made a
reference to a Public Notice dated 06.02.2018 by
the Stressed Assets Stabilization Fund for sale of
immovable and movable assets of the Corporate
Debtor through an e-auction, fixing the total
reserved price at INR 09.18 Crores.
3. In the light of the defaults committed by the
Corporate Debtor, Corporate Insolvency
Civil Appeal Nos. 5918-19 of 2022 Page 3 of 17
Resolution Process (hereinafter referred to as
“CIRP”) was initiated by the Appellant before the
NCLT. While admitting the said application on
11.07.2019, an Interim Resolution Professional
(hereinafter referred to as “IRP”) was appointed.
The Committee of Creditors, which comprised of
the Sole Financial Creditor, being the Stressed
Assets Stabilization Fund – IDBI Bank Limited
(hereinafter referred to as “sole Financial
Creditor”) was constituted by the IRP after
making a public announcement on 17.07.2019
as per the prescribed procedure.
4. In pursuance thereto, the Appellant filed a claim
of INR 6,29,18,121/- (Rupees Six Crores Twenty
Nine Lakhs Eighteen Thousand and One
Hundred Twenty One only) which was admitted
by the Respondent No.01 – Resolution
Professional (hereinafter referred to as “RP”) in
Civil Appeal Nos. 5918-19 of 2022 Page 4 of 17
entirety. Valuation of the Corporate Debtor was
thereby conducted by two different valuers, and
an average thereof was carried out, leading to the
fixing of the liquidation value of the Corporate
Debtor at INR 04.25 Crores. The Appellant had
put forth that the valuers had also observed that
the valuations derived by them could be realised,
subject to fulfilment of the rules of NSEZ and
procedure of approval thereof.
5. The Resolution Plan dated 24.11.2019
(hereinafter referred to as “Resolution Plan”),
which was prepared by the Respondent No. 03 –
M/s Commodities Trading, being the Resolution
Applicant (hereinafter referred to as “Resolution
Applicant”) was put before the Committee of
Creditors, which approved it in its 4th Meeting
dated 06.01.2020.
Civil Appeal Nos. 5918-19 of 2022 Page 5 of 17
6. An application was then filed under Sections
31(1) and 60(5) of the Insolvency and Bankruptcy
Code, 2016 (hereinafter referred to as “IBC
2016”) before the NCLT by the RP, seeking an
approval of the Resolution Plan on behalf of the
Committee of Creditors. The same was allowed
by NCLT vide Order dated 05.10.2020, granting
only INR 50 Lakhs to the Appellant against its
admitted claim of INR 06.29 Crores. Aggrieved,
the Appellant put forth its objections before the
RP to the Resolution Plan and claimed payment
of the entire amount of INR 06.29 Crores from
the Corporate Debtor, leaving open the legal
remedy to recover the full dues, in case the same
was not accepted.
7. Being at loggerhead with the RP with respect to
the payment of admitted claim, the Appellant
moved an application before the NCLT
Civil Appeal Nos. 5918-19 of 2022 Page 6 of 17
challenging the Order dated 05.10.2020, which
approved the Resolution Plan. This was
dismissed vide Order dated 27.11.2020,
observing that the said tribunal did not have the
jurisdiction to accept the prayer made in the
application, which would amount to setting aside
of the Resolution Plan, and the Appellant had the
remedy of filing an appeal before the NCLAT.
8. Thereafter, the Appellant moved appeals under
Section 61 of IBC 2016 before the NCLAT,
challenging both the orders, as referred to above.
These appeals were also dismissed vide the
impugned Judgment dated 14.02.2022.
9. The grievance put forth by the Appellant is with
regard to the Appellant not being informed about
the auction proceedings which were initiated at
behest of the RP, thus, depriving it of its
Civil Appeal Nos. 5918-19 of 2022 Page 7 of 17
participation in the said proceedings. Once the
total claim had been admitted by the RP, which
was clearly indicated in the Resolution Plan, the
said amount should have been disbursed to the
Appellant prior to the claim of the other
claimants, including the sole Financial Creditor.
10. Another aspect which has been pressed into
service is with regard to Clause 10.9 of the
Resolution Plan, as regards the exemptions from
the NSEZ, asserted to be in direct contravention
and contradiction to their established rules and
principles of the functioning of the NSEZ. The
Appellant, which works under the guidance of
the Ministry of Commerce and Industry,
Government of India, could not have been
commanded relating to its functions by the RP,
especially with regard to the charges or penalties
relatable to the change in any business model for
Civil Appeal Nos. 5918-19 of 2022 Page 8 of 17
transfer of units by the original allottee. The
attempt to by-pass the payment of statutory fee
would be an unjust enrichment to the Resolution
Applicant, thus, contradicting Section 34(2)(d) of
the Special Economic Zone Act, 2005 (hereinafter
referred to as “SEZ Act, 2005”).
11. The Appellant even challenged the fair and
liquidation valuation of the Corporate Debtor
being conducted by the two valuers. It was so
challenged on the ground that no physical
inspection of the property in question was carried
out by the said valuers. A reference in this regard
was made to Regulation 35(1)(a) of Insolvency
and Bankruptcy Board of India (Insolvency
Resolution Process for Corporate Persons)
Regulations 2016 (hereinafter referred to as “IBBI
Regulations 2016”), which required physical
verification of the Corporate Debtor.
Civil Appeal Nos. 5918-19 of 2022 Page 9 of 17
12. At the cost of reiteration, the Appellant invariably
pressed over and over again assignment of only
INR 50 Lakhs as against the admitted claim of
INR 6,29,18,121/- (Rupees Six Crores Twenty
Nine Lakhs Eighteen Thousand and One
Hundred Twenty One only).
13. The learned Senior Advocate appearing for the
Appellant has vehemently put forth the
submissions as recorded above and has also
referred to the statutory provisions before this
Court. On considering the same, going through
the impugned judgment dated 14.02.2022
passed by the NCLAT and the records, we are not
persuaded to take a different view.
14. As regard the fair value and liquidation value of
Corporate Debtor, as derived by the valuers is
concerned, this Court in Duncans Industries
Civil Appeal Nos. 5918-19 of 2022 Page 10 of 17
Ltd. v. State of U.P. and Others1 held that the
question of valuation is basically a question of
facts, which does not call for any interference if
it is based on relevant material on record. As
stated above, the average of the two closest
estimates given by the valuers were taken into
consideration as fair value and liquidation value
respectively, which were found to be just and
reasonable. This would be, keeping in view
Section 35C of IBC 2016, where the powers and
duties of the liquidator have been laid down.
Since due process appears to have been followed
no fault is found requiring interference.
15. Sections 30 and 31 of IBC 2016, which deal with
the submission of the Resolution Plan has rightly
been evaluated and analysed NCLAT as per the
1 (2000) 1 SCC 633
Civil Appeal Nos. 5918-19 of 2022 Page 11 of 17
ratio laid down by this Court in Maharashtra
Seamless Limited v. Padmanabhan
Venkatesh and Others2, Ghanashyam Mishra
and Sons Private Limited v. Edelweiss Asset
Reconstruction Company Limited and
Others3, and K. Sashidhar v. Indian Overseas
Bank and Others4, reference thereof has been
made by the NCLAT in extenso. Conclusion as
culled out and elucidated is correct that all the
dues, including statutory dues owned by the
Central Government, State Government and
local authority, which is not the part of the
Resolution Plan shall stand extinguished and no
proceedings in respect of such dues for the period
prior to the date on which the Adjudicating
Authority had approved the Resolution Plan
2 (2020) 11 SCC 467
3 (2021) 9 SCC 657
4 (2019) 12 SCC 150
Civil Appeal Nos. 5918-19 of 2022 Page 12 of 17
could be pressed into service or continues. These
observations took care of the assertions of the
Appellant with regard to the statutory dues and
the claims as have been made and put forth
relatable to the areas of lease.
16. Beside this, as regards the other claims
pertaining to the transfer fees, etc. were not to be
interfered with by courts or tribunals as the same
stood related to the commercial wisdom of the
Committee of Creditors for they being the best
persons to determine their interests, and any
such interference is non-justiciable except as
provided by Section 30(2) of IBC 2016. We do not
find violation of the statute or the procedure as
also the norms fixed as per the decisions referred
to above of this Court, the Resolution Plan as
approved by the Committee of Creditors, and the
Civil Appeal Nos. 5918-19 of 2022 Page 13 of 17
same having been accepted deserves and has
rightly been left untouched.
Fundamentally, the financial decisions as have
been taken by Committee of Creditors, especially
with regard to viability or otherwise, while
evaluating the plan would thus prevail.
17. As far as the submission of the Learned Senior
Counsel that exemptions from NSEZ payments,
including any type of fees or penalty for renewal
of sub-lease and/or for transfer charges due with
regard to the change of directorship or
shareholding in favour of the Resolution
Applicant has to be dealt with as per Clause 10.9
of the Resolution Plan cannot be accepted in the
light of Section 238 of IBC 2016, which provides
for the provisions of IBC 2016 to have an
overriding effect over the other laws. If that be so,
Civil Appeal Nos. 5918-19 of 2022 Page 14 of 17
the obvious effect is that the same would prevail,
leading to the provisions as contained in the SEZ
Act 2005 giving way to IBC 2016.
18. It has come on record and stands admitted that
the Resolution Plan had already been
implemented and the dues as found payable
under the Resolution Plan have been disbursed
to the concerned parties. As regards the
Appellant is concerned, the amount was
disbursed vide Demand Draft dated 22.10.2020
which has been received and accepted by the
Appellant. Leading to the dismissal of the appeal
vide impugned Judgment dated 14.02.2022.
19. In the light of above and having perused the
record while bearing in mind the extensive
observations made by 3-Judge Bench of this
Court in Committee of Creditors of Essar Steel
Civil Appeal Nos. 5918-19 of 2022 Page 15 of 17
India Limited v. Satish Kumar Gupta and
Others5, and its reiteration by numerous
subsequent decisions of this Court such as the
Ebix Singapore Private Limited v. Committee
of Creditors of Educomp Solutions Limited
and Another6 and in the latest decision in DBS
Bank Limited Singapore v. Ruchi Soya
Industries Limited and Another7, we find
ourselves not in a position to accept the claim of
the Appellant as sought to be made and put forth
in these appeals.
20. The Orders dated 05.10.2020 and 27.11.2020,
as have been passed by the NCLT and approved
by the NCLAT vide its impugned Judgment dated
14.02.2022, do not call for any interference in the
5 (2020) 8 SCC 531
6 (2022) 2 SCC 401
7 (2024) 3 SCC 752
Civil Appeal Nos. 5918-19 of 2022 Page 16 of 17
present Appeals. The appeals being devoid of
merit, stand dismissed.
21. There shall be no order as to costs.
22. Pending application(s), if any, also stand
disposed of.
….………………………………. J.
(ABHAY S. OKA)
..……………………………………J.
(AUGUSTINE GEORGE MASIH)
New Delhi;
November 05, 2024.
Civil Appeal Nos. 5918-19 of 2022 Page 17 of 17