NCLAT Upholds Jurisdiction in Insolvency Resolution Case, Directs Execution of Sale Deed
Adjudicating Authority's Order to Execute Sale Deed Affirmed, Protecting Corporate Debtor's Asset Rights
In a significant ruling, the National Company Law Appellate Tribunal (NCLAT) has upheld the jurisdiction of the Adjudicating Authority under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 (IBC), affirming its decision to direct the execution of a Sale Deed related to an insolvency case involving Jasrati Education Solutions Limited. The decision, pronounced by Justice Ashok Bhushan and Member (Technical) Barun Mitra, came in response to an appeal filed by Sunder Lal, the legal heir of Late Babu Lal, against an order passed by the National Company Law Tribunal (NCLT), Chandigarh Bench-I.
The case centers around the execution of a Sale Deed for a parcel of agricultural land in Alwar, Rajasthan, originally contracted for sale by Babu Lal and his sons to OSN Infrastructure and Projects Pvt. Ltd. The Corporate Debtor, Educomp Infrastructure & School Management Ltd., later acquired rights over this land through a series of transactions. With the Corporate Debtor undergoing Corporate Insolvency Resolution Process (CIRP), Jasrati Education Solutions Ltd. emerged as the successful resolution applicant, yet faced challenges in perfecting the title due to the non-execution of a registered Sale Deed.
The NCLAT's judgment emphasizes that the Adjudicating Authority acted within its jurisdiction, as the matter was directly linked to the insolvency resolution process. The tribunal rejected the appellant's contention that the Power of Attorney (POA) became void upon Babu Lal's death, noting that the POA was conferred for the benefit of a third party and thus remained irrevocable.
Additionally, the tribunal addressed the appellant's argument regarding the applicability of the Supreme Court's judgment in Suraj Lamps and Industries Pvt. Ltd. v. State of Haryana, clarifying that the judgment's prospective application does not affect transactions concluded prior to its pronouncement, such as in this case.
The NCLAT dismissed the appeal, instructing Shonu Chandra, the POA holder, and Sunder Lal to execute the Sale Deed in favor of the Corporate Debtor within 30 days to uphold the resolution plan's lawful implementation.
Bottom Line:
Jurisdiction of Adjudicating Authority under Section 60(5) of Insolvency and Bankruptcy Code, 2016 (IBC) extends to adjudicating disputes that arise solely from or relate to the insolvency resolution process of the Corporate Debtor. The nexus with the insolvency of the Corporate Debtor must exist.
Statutory provision(s): Insolvency and Bankruptcy Code, 2016 - Sections 60(5), 61(2); Indian Contract Act, 1872 - Section 201; Registration Act, 1908 - Sections 17, 49
