NCLT Kochi Holds Kerala Trade Centre Project; Developmental Rights Form Part Of KCCI's CIRP Assets

The National Company Law Tribunal (NCLT), Kochi, has held that the Kerala Trade Centre project and the development and allied rights vested in Kerala Chamber of Commerce and Industries (KCCI) under a Joint Development Agreement (JDA) form part of the company's asset base during its Corporate Insolvency Resolution Process (CIRP).

It also directed the landowner, Cherupushpam Films Private Limited, to cooperate in implementing the resolution plan.

A coram of Judicial Member Vinay Goel and Technical Member Ravichandran Ramasamy observed,

“Respondent No. 1, having consciously contributed the land to the joint development project and enabled the Corporate Debtor to undertake the development, cannot now assert rights inconsistent with the arrangement so as to obstruct the Corporate Insolvency Resolution Process or defeat the rights flowing therefrom.”

The application was filed by KCCI's Resolution Professional (RP). The RP sought a declaration that the Kerala Trade Centre project, along with the development and allied rights arising under the JDA, formed part of the Corporate Debtor's asset base for the CIRP. It also sought directions requiring the landowner to cooperate in implementing the resolution plan.

Cherupushpam Films, under the JDA, had agreed to contribute the land. KCCI, in turn, undertook development of the Kerala Trade Centre project under a 60:40 revenue-sharing arrangement. The landowner also executed a Power of Attorney authorising KCCI to obtain approvals, construct, market, and sell units.

Following arbitral proceedings, the parties entered into a settlement deed. However, the RP alleged that Cherupushpam Films failed to cooperate during the CIRP. According to the RP, the project was KCCI's principal value-bearing asset. Both resolution plans received during the CIRP were premised on the inclusion of the project and the associated development rights.

Opposing the application, the landowner argued that the JDA did not transfer ownership of the land to KCCI. It also contended that the inclusion of the project in the CIRP documents did not make it an asset of the corporate debtor.

Rejecting the contention, the tribunal noted that the landowner had contributed the land and enabled KCCI to develop the project. It also enabled the creation of third-party rights in favour of homebuyers.

The tribunal observed that the Kerala Trade Centre project and the associated development rights had been included in the Information Memorandum. However, Cherupushpam Films never challenged their inclusion.

“Having accepted participation in the CIRP by lodging its claim and having failed to assail the inclusion of the project in the Information Memorandum when the same was published, Respondent No. 1 cannot now be permitted to contend that the project or the rights arising therefrom do not form part of the asset base of the Corporate Debtor,” it held.

Relying on the Supreme Court's decision in Victory Iron Works Ltd. v. Jitendra Lohia, the Tribunal held that title to the land continued to remain with Cherupushpam Films.

However, the development and incidental rights created in favour of KCCI constituted "property" under Section 3(27) of the Insolvency and Bankruptcy Code.

Accordingly, the tribunal declared that the Kerala Trade Centre project and the development and allied rights vested in KCCI under the JDA formed part of the corporate debtor's asset base and would continue to remain in the information memorandum.

It also directed the landowner to cooperate with the resolution professional.

For Applicant: Advocate Akhil Suresh

For Respondents: Advocates Pradeep Joy, Suresh Dobhal and Terry V James