Case Details: Yes Bank Ltd. v. Sarga Hotel (P.) Ltd. - [2024] 160 taxmann.com 4 (NCLT - Kolkata) (SB)
Judiciary and Counsel Details
- Smt. Bidisha Banerjee, Judicial Member & Balraj Joshi, Technical Member
- Ramji Srinivasan, Abhinav Vasisht, Sr. Advs. Abhrajit Mitra, Ms Manju Bhuteria, Souvik Mazumdar, Ms Pooja Mahajan, Ms Mahima Singh, Shreya Mahalwar, Ms Mehak Nayak, Saptarshi Saha, Arindam Mrinal Pal, Sarvapriya Mukherjee & Saurav Jain, Advs. for the Appearing Parties.
Facts of the Case
In the instant case, Shristi Infrastructure Development Corporation Limited (SIDCL) was the promoter/shareholder of the corporate debtor. The hotel was built on underlying land owned by SIDCL. The corporate debtor had availed a loan from Yes Bank and security over all its assets (which would include Westin Hotel and leasehold interest over underlying land) had been created in favour of Yes Bank.
Subsequently, the CIRP was initiated in respect of the corporate debtor and RP was appointed. SIDCL filed an instant petition seeking the exclusion of the subject property from the CIRP of the corporate debtor. According to SIDCL, the subject property could not be made part of the CIRP of the corporate debtor since the lease over the subject property was not an asset of the corporate debtor.
Further, under Clause 3 of a framework agreement executed between the parties, SIDCL had the right to terminate the lease upon the lessee’s insolvency.
It was noted that the alleged Framework Agreement was neither a registered instrument nor an oral agreement accompanied by delivery of possession or payment of any sum. It merely denotes a Mutual Agreement to record understanding between the parties in relation to land leased under a Lease Deed to be executed and registered subsequently.
NCLT Held
The NCLT observed that the original (registered) lease deed which was executed subsequently did not bear a termination clause. It was modified by an extension and modification deed adding to the original lease deed a termination clause on account of default in payment of lease rentals.
The NCLT, further observed that such an addition did not make any reference to any termination clause of the framework agreement nor modify any such clause therein. Had the parties to framework agreement intended to terminate the lease in terms of the framework agreement, the said termination clause as in the framework agreement ought to have been found mentioned in the modification agreement.
The NCLT held that the framework agreement couldn’t be looked into to determine the lease or to ascertain whether the subject property could be made part of the CIRP process of the corporate debtor, or to conclude that the lease stood terminated due to the initiation of the CIRP against the corporate debtor. Therefore, the instant petition was to be dismissed.
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