RP’s Plea Challenging Acquisition of Slum Plot by an Authority Dismissed as Moratorium Was Declared Against CD | SC

Case Details: Rajan Garg v. Chief Executive Officer - [2024] 167 taxmann.com 443 (SC)

Judiciary and Counsel Details

• Dr. D.Y. Chandrachud, CJ., J.B. Pardiwala & Manoj Misra, JJ.
• Siddharth Bhatnagar, Sr. Adv., Rahul Arya, Premlal Krishnan, Aditya Sidhra, Ms Pracheta Kar, Nadeem Afroz, Yogesh Sharma, Advs. & Rohit Amit Sthalekar, AOR, for the Petitioner.
• Shyam Divan, Sr. Adv., Saurabh Kalia, Ms Supriya Juneja, AOR, Ms Anshula Laroiya & Ms Tanvi Bansal, Advs., for the Respondent.

Facts of the Case

In the instant case, the corporate debtor, the developer, had acquired a plot and was issued a Letter of Intent (LoI) for a slum redevelopment proposal. However, it failed to implement the Slum Rehabilitation Schemes contemplated by the amended Maharashtra Slum Areas Act, 1971.

Since there was no construction, many slum dwellers were deprived of the transit rent. Consequently, Slum Rehabilitation Authority (SRA) terminated the appointment of the corporate debtor and permitted the society to appoint another developer.

Further, SRA proceeded with the acquisition proceedings and declared the slum plot as a slum rehabilitation area. Meanwhile, the CIRP was initiated against the corporate debtor and the petitioner.

The RP of the corporate debtor filed an instant writ petition on the ground that the NCLT declared a moratorium against the corporate debtor, so the acquisition could not proceed.

The petitioner-RP of the corporate debtor, filed a writ petition before the High Court on the ground that the section 14 moratorium declared by the NCLT meant that the acquisition could not proceed.

High Court Held

The High Court vide the impugned order dismissed the said writ petition on the ground that the developer had applied for a Lol, it assumed an obligation to provide rehabilitation units and, in the meantime, to provide transit rent or transit accommodation to eligible slum dwellers and that was a condition precedent to its acquiring free sale rights. Thereafter, an appeal was made before the Supreme Court.

In view of the facts, the Supreme Court held that the instant Court was not inclined to entertain the Special Leave Petition under Article 136 of the Constitution of India, and therefore, the same was to be dismissed.

List of Cases Reviewed

• Order of HIGH COURT (Bombay) in [2024] 161 taxmann.com 682, Rajan Garg, Resolution Professional of Truly Creative Developers (P.) Ltd. v. Chief Executive Officer, Slum Rehabilitation Authority (para 3) affirmed