Summary
The Supreme Court held that the insolvency moratorium protected a developer’s actual occupation of MHADA land under a joint development agreement against recovery by its owner. Section 14(1)(d) concerns occupied property and does not require ownership or a proprietary interest in the corporate debtor. MHADA’s statutory functions did not override that temporary protection. The NCLAT order was set aside and the pending resolution-plan application directed to be decided within six weeks.
Issues
- Whether Section 14(1)(d) protected actual occupation under a development licence without a proprietary interest.
- Whether MHADA’s statutory powers displaced the insolvency moratorium.
Provisions considered
- Section 14(1)(d), Insolvency and Bankruptcy Code, 2016Protected property actually occupied by the corporate debtor against recovery by the owner during the moratorium. (¶¶ 5, 7, 8, 11, 15, 18, 19)
- Sections 14(4) and 31(3), Insolvency and Bankruptcy Code, 2016Explained the temporary statutory freeze pending approval of a resolution plan or a liquidation order. (¶¶ 5, 16)
Held
- Unlike Section 14(1)(b), clause (d) does not depend on the debtor’s ownership of assets or legal or beneficial rights in them. Reliance on Sections 18 and 36 to confine its scope to debtor-owned assets was misplaced. (¶¶ 5, 6, 7)
- Read distributively, recovery by an owner is linked to property occupied by the corporate debtor. Occupation denotes actual physical possession or use, distinct from the broader legal concept of possession. The development licence and the owner’s own termination notice established the relevant occupation here; whether a proprietary interest arose was unnecessary to decide. (¶¶ 6, 8, 11, 12, 13, 14, 15, 19)
- The moratorium imposes a temporary statutory status quo to enable unhindered resolution. In any clash with the MHADA Act in that context, the Code prevails. The decision did not subsume MHADA’s ownership into the debtor’s assets or approve the proposed resolution plan. (¶¶ 16, 17, 18, 20)
Result
Appeal allowed and NCLAT order set aside. NCLT directed to dispose of the resolution professional’s pending application concerning the resolution plan within six weeks.