MUNICIPAL CORPORATION OF GREATER MUMBAI (MCGM) versus ABHILASH LAL & ORS.

Citation: [2019] 14 S.C.R. 659 · Decided: 15-11-2019 · Supreme Court of India · Bench: ARUN MISHRA · Disposal: Appeal(s) allowed

Cited by 3 judgment(s) · cites 6 · see the full citation network in Lexace

Judgment (excerpt)

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MUNICIPAL CORPORATION OF GREATER MUMBAI (MCGM)
v.
ABHILASH LAL & ORS.
(Civil Appeal No. 6350 of 2019)
NOVEMBER 15, 2019
[ARUN MISHRA, VINEET SARAN AND
S. RAVINDRA BHAT, JJ.]
Mumbai Municipal Corporation Act, 1888 – ss.92 and 92A
– Appellant owns inter alia, the lands in question – By contract dated
20.12.2005, one ‘SHCL’ agreed to develop these lands (to be
leased to it) and construct 1500 bed hospital – Construction was
to be completed in 60 months (excluding monsoons) which ended
on 24.04.2013 – Lease deed was to be executed after the
completion of the project – Project not completed within the period
– ‘SHCL’ had to pay lease rent at the annual rate of
` 10,41,04,000/- –Appellant alleged defaults in the payments –
Issued show cause notice on 23.01.2018, proposing contract
termination – Insolvency proceedings initiated by Axis Bank also
as ‘SHCL’ was unable to repay its debts – Before the period given
by appellant’s show-cause notice ended, the Petition was admitted
by the National Company Law Tribunal (NCLT), Hyderabad Bench
– 1st respondent was appointed as the Resolution Professional (RP),
approved by Committee of Creditors (CoC)– Terms of the Request
for Proposal (RFP), criteria for evaluation (of RFPs received)
approved – Resolution plan submitted by one ‘SNMC’ – Revised
RFP submitted by RP – Revised resolution plan approved by CoC
– Appellant opposed the resolution plan – Plan approved by NCLT
and the Appellate Tribunal, NCLAT – Held: Resolution plan
contemplated infusion of capital and one of the modes for securing
capital was mortgaging the land – In view of the clear conditions
stipulated in the contract, the appellant reserved all its rights and
thus, its properties could not have been, in any manner, affected
by the resolution plan – Adjudicating authority could not have
approved the plan which implicates the assets of the appellant
especially when ‘SHCL’ had not fulfilled its obligations under the
contract – Further, the resolution plan was never approved by the
corporation – Also, s.238, IBC cannot be read as overriding the
   [2019] 14 S.C.R. 659
659
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SUPREME COURT REPORTS
[2019] 14 S.C.R.
appellant’s right- indeed its public duty to control and regulate how
its properties are to be dealt with– That exists in ss.92, 92A – s.238,
IBC could be of importance when the properties and assets are of
a debtor and not when a third party like the appellant is involved
– Therefore, in the absence of approval in terms of ss.92 & 92A,
the adjudicating authority could not have overridden appellant’s
objections and enabled the creation of fresh interest in respect of
its properties and lands – Authorities under the Code could not
have precluded the control that the appellant has, under law, to
deal with its properties and the land in question, which undeniably
are public properties – Resolution plan therefore, would be serious
impediment to appellant’s independent plans to ensure that public
health amenities are developed in the manner it chooses, and for
which fresh approval under the MMC Act may be forthcoming for
a separate scheme formulated by it – Impugned order and the order
of NCLT, set aside – Insolvency and Bankruptcy Code, 2016 –
s.238 and ss.14(1)(d), 22, 30(2), 31, 62 – Interpretation of Statutes
– IBBI (CIRP) Regulations, 2016 – Regulations 37, 38, 38(IA) &
39(4).
Insolvency and Bankruptcy Code, 2016 – Aim of; insolvency
process under– Discussed.
Insolvency and Bankruptcy Code, 2016 – s.238 – Scope of
– Discussed.
Allowing the appeal, the Court
HELD: 1. In the present case, Section 92 of the Mumbai
Municipal Corporation Act, 1888 (MMC Act) has no bearing on
the validity of the resolution plan, the approval order or the
impugned order. Section 92 of the MMC Act mandates and
prescribes the manner in which disposal of land belonging to the
appellant would take place. However, the resolution plan does
not contemplate any disposal of the said land or creation of any
additional rights and obligations of appellant or the Corporate
Debtor in relation to the lands. It is merely the shareholding of
the Corporate Debtor which undergoes a change pursuant to the
resolution plan. Appellant cannot place any embargo on such
shareholding changes by resorting to proceeding under the
Code. On admission of an insolvency application preferred by a
financial creditor/operational creditor, a moratorium is declared
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on the continuation and initiation of all legal procee

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