The Chennai Bench of National Company Law Appellate Tribunal ( NCLAT ) upheld the rejection of two applications filed by the appellant, confirming that a disputed property claimed by him would remain part of the Corporate Debtor’s ( CD ) assets in the Corporate Insolvency Resolution Process ( CIRP ).
Bhagawant Narayan Naik,appellant, challenged the rejection of two applications filed during the CIRP of Sovereign Industries Limited. The appeals concerned a decision made by the Adjudicating Authority (AA)on 22.10.2024.
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The appellant, a third party to the CIRP, claimed to have bought a piece of land that was part of the Corporate Debtor’s property. He argued that he had purchased the land from Chidanand Sangappa Patil in February 2023. Patil had bought it from Basavraj Ningappa Arekeri, the suspended director of the Corporate Debtor, earlier that year. The appellant claimed the land was free from encumbrances and should not be included in the CIRP or any Resolution Plan.
The appellant filed two applications during the CIRP. In IA No. 167/2024, he sought to prevent the Resolution Professional from including the land in the Corporate Debtor’s assets. In IA No. 417/2024, he requested access to the Information Memorandum, the Resolution Plan of the Successful Resolution Applicant, and the minutes of the CoC ( Committee of Creditors ) meetings. Both applications were rejected by the Adjudicating Authority.
The Authority found that the appellant’s purchase of the land was suspicious, as it occurred during the CIRP. It suggested that the sale was made to avoid the insolvency process. Furthermore, the Authority observed that the land was situated near the Corporate Debtor’s industrial plants, indicating it was part of its operational assets.
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The appellant’s ownership claim was still in dispute in a Civil Suit (O.S. No. 16/2024). The Civil Court had issued a temporary injunction, but the Resolution Professional argued that the CIRP process should take precedence.
The NCLAT upheld the Adjudicating Authority’s decision, concluding that the land was likely part of the Corporate Debtor’s assets. The appeal was dismissed, as the appellant’s claims were subject to the Civil Court’s decision, while the CIRP process remained unaffected.
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