Embassy Property Developments Pvt. Ltd. v. State of Karnataka & Ors.

     In the Supreme Court of India
Name of The Case
Embassy Property Developments Pvt. Ltd. v. State of Karnataka & Ors. 
Civil Appeal No S. 9170-9172 Of 2019  
 Year of the Case         
M/s Embassy Pvt. Ltd.   
State of Karnataka  
Justice Rohinton Fali Nariman, Justice Aniruddha Bose, Justice Ramasubramanian  
Important Sections       
Section-7 and Section 14 of Insolvency Bankruptcy Code, 2016  
Acts Involved         
Insolvency and Bankruptcy Code 2016      


The seminal question of Importance made In the present matter Is whether the High court interferes Under Article 226/227 of the Constitution of India 1950 with an order passed by the National Company Law Tribunal In a going under the IBC 2016, Not taking into account the ability to use of a rule given way of putting things right if the appeal to the National Company law appellate tribunal and if so under the conditions and whether Question of fraud can be Question into by NCLT/NCLAT In the proceeding started Under the insolvency and bankruptcy code, 2016 (IBC). 


Lately, the supreme court in the decision of Embassy Development v. State of Karnataka had said nothing that a United as a body debtor could not make use to get the help of Mortarium under Section-14 of the code to make attempts for thought extension of the lease agreement. In the present case, the IRP had looked for a thought extension of the mining lease kept by the United, as a body debtor. The reasonable base is given by the court in putting back(not desired) the extension was that Mortarium under the code only fruit jelly the status quo and cannot be requested the help of by the united, as a body debtor to make come into existence and place in the ship for goods a new right. While the said decision had become a precedent for the moot point on when the high court can come in between in proceedings under the code, a critical issue in this ruling in relation to the extension of the lease has gone unnoted. 


1. A company named M/s Uddhyaman money put into business Pvt Ltd saying is a fact itself to be financial creditor moved on the application before the National company law tribunal (in this referred to as NCLT Chennai under Section-7 of the insolvency bankruptcy code 2016(in this referred as the IBC code against M/s Tiffin’s barytes asbestos & paints Ltd. The company debtor. 

2. National company law tribunal (NCLT) taken the application and coming after a moratorium was also declared in terms of section-14 of IBC in company with a company resolution process, at that time the company debtor also held a mining lease given agreement by the state of Karnataka which being in debt to the breaking of certain rules by the debtor was to end early, however no order of termination was passed till the start of the corporate resolution process. 

3. The time in between resolution expert (RE) gave out a letter to the organization chief of the monitor committee and also to the organization chief of the mines and geology making attempts the get the help of the extension of the lease till the year 2020, since there was no move the resolution expert keep records a petition before the high court of Karnataka making attempts the having to force in law of the extension till 2020 as per the MMDR act, 1957.

4. Meanwhile, during the pendency of the petition, the state government put back (not desired) the statement for the thought extension on the grounds of several violations by the company debtor represented by the resolution expert keep records a number of different application before the national company law tribunal making a religious request the court to set aside the order of the state government and grant the extension of the lease and direct government of Karnataka to execute supplement lease completed acts in way of the company debtor for the period up-to 31-03-2020 the same was passed by the NCLT giving the above talked about relief wounded in feelings by the decision of the NCLT the state government keeps records a petition before the high court and the high court set aside the order of the NCLT and give direction the NCLT for the matter to be taken into account as fresh in place of the number of different application. 

5. The state of Karnataka made issues before the NCLT which are covered in the issues section of this short account and the same was put back ( not desired) by the NCLT letting the number of different application set on one side the order of not taking and giving directions for the government of Karnataka to execute supplemental lease deeds. Challenging the order of the NCLT Chennai and the Government of Karnataka moved a law Order petition before the high court of Karnataka which put off the matter and given a stay of operation. It is against the said time-in between order given by the high court that the Resolution applicant the resolution professional and the committee of creditors have come up with the present appeals. 


Question. 1. If the high court has to interfere under Article 226/227 when an order passed by the NCLT not taking into account the ability to use of rules given way of putting things right of appeal of the NCLT and if so, under which circumstances? 

Question. 2. If questions of fraud can question into by the NCLT/NCLAT in the proceedings started under the I&B code? 


To give out the first issue, that is the power of the high court to interface with the decision of the NCLT the apex court put questions to the range of observation of jurisdiction of the NCLT and NCLAT under the statement of the law of IBC 2016, the court observed that the in relation to agreement contract between the state government and the company debtor in a matter of public interest which is through law rules made necessary this was buttressed by looking at the statement on the law of the MMDR Act, 1957 whereby section 7 states that:

It is because of this declared that it is of help, but possibly not right in the public interest that union should take under its control the regulation of mines and development of mined substances to the size, range, a degree from here on condition that. 

The apex court observed that the decision taken by the state government is a matter which is of public interest made necessary by a statute for this reason the decision can only be gone over it stated that the NCLT being a Quasi-judicial body made come into a superior Court having the power of judicial review reference this can be made to para twenty nine of the judgment wherever the court observed-

The NCLT isn’t even a civil court that has jurisdiction attributable to section-9 of the code of civil procedure to try all suits of a civil nature except for processes in the law of which their consciousness is either put into words or impliedly stopped. As associate outcome of that NCLT will create use of solely such powers among the outlines of jurisdiction as suggests by the statute the law in respect of which it is named upon to give. 


From the above opinion of the Supreme Court, it can be clearly got clear that there has existed a clear with the idea difference and nature between the extension of the term and start over of lease deed. 

In the present case, what was looked for by the IRP in view of the Moratorium made over-great use of under the code was an extension of the mining lease which is in fact prolongation in time of the uncommon, noted lease. There is not clearly no new right made come into existence in way of the united, as a body debtor by giving agreement such as an extension. 

The Supreme Court was not right in keeping that the range of observation of Moratorium grants only a right of not to be property less of the property of the corporate as a body debtor. During the insolvency resolution process, it is to be made certain that the corporate as a body debtor remains a going about as such is the objective of the code itself. The range of observation and objective of Moratorium should be formed and gave sense to in a broad way by the courts to make certain that the corporate as a body debtor is not put an end to of any license or any untouchable right kept before to the insolvency resolution process as most today trading, the business-like undertaking is dependent on such rights to generate income. 

The very purpose behind law put into force of the code is to make certain value maximization of Properties of the corporate as a body debtor so in connection with being in prison the interests of all interested organizations of the corporate as a body debtor. In going after an idea of such are end, the purpose is essential to interpret the code in a broad way to make certain that the corporate as a body debtor remains in existence as a going about a thing. 

Leave a Reply

Your email address will not be published. Required fields are marked *