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Synopsis

The Supreme Court has recently rejected a plea by the Union government's Noida Special Economic Zone Authority against the NCLAT's order which accepted a resolution plan on behalf of the Committee of Creditors and granted only Rs 50 lakh to it as against its admitted claims of Rs 6.29 Cr in respect of a plot leased out to the corporate debtor.

A bench of Justices Abhay S Oka and Augustine George Masih upheld the orders passed by the NCLT and NCLAT in 2020 and 2022 respectively and dismissed the appeal by the operational creditor as devoid of merit.

The court noted that it was admitted that the resolution plan had already been implemented and the dues as found payable under the resolution plan had 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, leading to the dismissal of the appeal," the bench said.

The court said the submission of the appellant's 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 had to be dealt with as per Clause 10.9 of the resolution plan could not 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, 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," the bench said.

The appellant said that it works under the guidance of the Ministry of Commerce and Industry, Government of India, and 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 transfer of units by the original allottee.

It contended the attempt to bypass the payment of statutory fees would be an unjust enrichment to the resolution applicant, thus, contradicting Section 34(2)(d) of the Special Economic Zone Act, 2005.

With regard to the appellant's assertions on statutory dues and the claims, the bench said NCLAT had in extenso dealt with it and its conclusion was correct that all the dues, including statutory dues owned by the Central Government, State Government and local authority, which was not part of the resolution plan stood 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 could be pressed into service or continues. 

The appellant also raised a question mark over the fair value and liquidation value of the corporate debtor, Shree Bhoomika International Limited, as derived by the valuers, which fixed the liquidation value of it at Rs 04.25 Cr. 

On this, the bench said, 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. In this regard, the bench cited Duncans Industries Ltd Vs State of UP and Others (2001). 

In the case, the court noted 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," the bench said.

The appellant was aggrieved with the resolution plan and first approached the NCLT, which dismissed its plea observing that the said tribunal did not have the jurisdiction to accept the prayer made in the application, which would amount to setting aside the resolution plan, and the appellant had the remedy of filing an appeal before the NCLAT.

Thereafter, the appellant moved appeals under Section 61 of IBC 2016 before the NCLAT, which also dismissed the pleas by order on February 14, 2022.

Case Title: Noida Special Economic Zone Authority Vs Manish Agarwal & Ors