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What is the story about?
The appellate tribunal NCLAT has set aside an appeal filed by Reliance Realty, a step-down entity of debt-ridden Reliance Communications, seeking recovery of rental and assets from Independent TV, a firm which was in the DTH business and is now facing liquidation.
The National Company Law Appellate Tribunal (NCLAT) has upheld the earlier order passed by the Mumbai bench of NCLT, which had declined Reliance Realty’s plea and said the liquidation process of Independent TV (formally known as Reliance Big TV) has to be completed in a time-bound manner and in the shortest possible time.
A two-member bench said the liquidation process should not be ”disrupted and derailed by the Appellant (Reliance Realty) who for no cogent reasons had never agitated the issue of ownership of assets lying in the leased premises”.
”We do not find any infirmity in the impugned order allowing the Liquidator to remove all moveable assets of the Corporate Debtor lying at the leased premises and in restraining the Appellant from obstructing the Liquidator and successful bidder from accessing these moveable assets,” said NCLAT.
Reliance Realty had leased part of DKAC premises (Dhirubhai Ambani Knowledge City) along with pre-package infrastructure facilities on November 27, 2017 to the Independent TV (corporate debtor) to run its Direct to Home (DTH) business and for storage of good.
Independent TV had acquired the DTH business from the group following the execution of a Share Purchase Agreement on November 27, 2017 along with a draft agreement for premise use.
It paid service charges including rental, electricity and maintenance dues till October 2018 and later failed to make timely payments.
On February 26, 2020, insolvency proceedings were initiated against it and all the assets were handed over to its Resolution Professional by its CEO as per the provisions of the Insolvency & Bankruptcy Code (IBC).
As it failed to find a buyer, NCLT on March 17, 2023, directed initiation of liquidation of Independent TV, and an e-auction notice was issued.
However in liquidation, Reliance Realty declined permission to inspect prospective bidders, the assets of the company. It contended that the Independent TV had failed to pay rental charges for the premises for the last five years and demanded reimbursement of rental charges along with electricity charges before extending further support and also restricted inspection.
Meanwhile, Shree Sai Baba Ship Breaking Company emerged as the Successful Auction Purchaser (SAP) for assets of Independent TV, following which a sale certificate and possession memo comprising of 1,874 units of assets/inventory was handed over on December 10, 2024.
Later, Reliance Realty approached NCLT during the ongoing CIRP for recovery of outstanding rental and other dues. However, the National Company Law Tribunal (NCLT) directed Reliance Realty to allow the liquidator and SAP to access the leased premises to dismantle/remove the assets of the corporate debtor and not to cause any obstructions.
This was subsequently challenged by Reliance Realty before the appellate tribunal NCLAT. It contended that NCLT erroneously allowed the Liquidator to remove assets lying at the leased premises which also included the assets owned by Reliance Communication merely on the presumption that assets/goods lying at the premises during the CIRP is sufficient to establish ownership in favour of the Corporate Debtor.
However, this was also rejected by NCLAT observing that NCLT, while passing the order, has not only taken into account the developments in the matter during CIRP and liquidation but also the site-visit reports of the liquidator and the fact that the goods/assets were in the possession and control of the Corporate Debtor.
The erstwhile Resolution Professional during the CIRP (corporate insolvency resolution) proceedings had already conducted a fair and transparent examination to ascertain the actual ownership of the assets lying in the leased premises while taking custody and control of the property of the Corporate Debtor.
”This was not challenged by the RCom or the Appellant (Reliance Realty during the CIRP. Thereafter also when the Liquidator took control and possession of the goods/assets lying in the leased premises, this was also not objected to by the Appellant until completion of the auction process,” said NCLAT.
Moreover, Reliance Realty was not a party to the SPA, through which the DTH business was transferred to Independent TV.
”We are therefore persuaded to agree with the Respondent No 1 (Liquidator of Independent TV) that if any party should actually have been aggrieved by the impugned order, it should have been the RCom, which was the signatory to the SPA but is currently in liquidation. It has been submitted by the Respondent No.1 that though RCL is currently in liquidation, the Liquidator-Respondent No.1 has not received any intimation from the Liquidator of the RCL in this regard, claiming ownership of the assets lying in the leased premises,” NCLAT noted down in its order.
The National Company Law Appellate Tribunal (NCLAT) has upheld the earlier order passed by the Mumbai bench of NCLT, which had declined Reliance Realty’s plea and said the liquidation process of Independent TV (formally known as Reliance Big TV) has to be completed in a time-bound manner and in the shortest possible time.
A two-member bench said the liquidation process should not be ”disrupted and derailed by the Appellant (Reliance Realty) who for no cogent reasons had never agitated the issue of ownership of assets lying in the leased premises”.
”We do not find any infirmity in the impugned order allowing the Liquidator to remove all moveable assets of the Corporate Debtor lying at the leased premises and in restraining the Appellant from obstructing the Liquidator and successful bidder from accessing these moveable assets,” said NCLAT.
Reliance Realty had leased part of DKAC premises (Dhirubhai Ambani Knowledge City) along with pre-package infrastructure facilities on November 27, 2017 to the Independent TV (corporate debtor) to run its Direct to Home (DTH) business and for storage of good.
Independent TV had acquired the DTH business from the group following the execution of a Share Purchase Agreement on November 27, 2017 along with a draft agreement for premise use.
It paid service charges including rental, electricity and maintenance dues till October 2018 and later failed to make timely payments.
On February 26, 2020, insolvency proceedings were initiated against it and all the assets were handed over to its Resolution Professional by its CEO as per the provisions of the Insolvency & Bankruptcy Code (IBC).
As it failed to find a buyer, NCLT on March 17, 2023, directed initiation of liquidation of Independent TV, and an e-auction notice was issued.
However in liquidation, Reliance Realty declined permission to inspect prospective bidders, the assets of the company. It contended that the Independent TV had failed to pay rental charges for the premises for the last five years and demanded reimbursement of rental charges along with electricity charges before extending further support and also restricted inspection.
Meanwhile, Shree Sai Baba Ship Breaking Company emerged as the Successful Auction Purchaser (SAP) for assets of Independent TV, following which a sale certificate and possession memo comprising of 1,874 units of assets/inventory was handed over on December 10, 2024.
Later, Reliance Realty approached NCLT during the ongoing CIRP for recovery of outstanding rental and other dues. However, the National Company Law Tribunal (NCLT) directed Reliance Realty to allow the liquidator and SAP to access the leased premises to dismantle/remove the assets of the corporate debtor and not to cause any obstructions.
This was subsequently challenged by Reliance Realty before the appellate tribunal NCLAT. It contended that NCLT erroneously allowed the Liquidator to remove assets lying at the leased premises which also included the assets owned by Reliance Communication merely on the presumption that assets/goods lying at the premises during the CIRP is sufficient to establish ownership in favour of the Corporate Debtor.
However, this was also rejected by NCLAT observing that NCLT, while passing the order, has not only taken into account the developments in the matter during CIRP and liquidation but also the site-visit reports of the liquidator and the fact that the goods/assets were in the possession and control of the Corporate Debtor.
The erstwhile Resolution Professional during the CIRP (corporate insolvency resolution) proceedings had already conducted a fair and transparent examination to ascertain the actual ownership of the assets lying in the leased premises while taking custody and control of the property of the Corporate Debtor.
”This was not challenged by the RCom or the Appellant (Reliance Realty during the CIRP. Thereafter also when the Liquidator took control and possession of the goods/assets lying in the leased premises, this was also not objected to by the Appellant until completion of the auction process,” said NCLAT.
Moreover, Reliance Realty was not a party to the SPA, through which the DTH business was transferred to Independent TV.
”We are therefore persuaded to agree with the Respondent No 1 (Liquidator of Independent TV) that if any party should actually have been aggrieved by the impugned order, it should have been the RCom, which was the signatory to the SPA but is currently in liquidation. It has been submitted by the Respondent No.1 that though RCL is currently in liquidation, the Liquidator-Respondent No.1 has not received any intimation from the Liquidator of the RCL in this regard, claiming ownership of the assets lying in the leased premises,” NCLAT noted down in its order.
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