Ramsarup Industries Ltd. Vs Orissa Metaliks Pvt. Ltd. & Ors. (Calcutta High Court)
Summary: The Calcutta High Court substantially affirmed the Single Judge’s order setting aside the Railway Authorities’ April 2024 revival/renewal of Way Leave Permission in favour of Ramsarup Industries Ltd. for restoration of its water pipeline through railway land, while expunging the Single Judge’s observations alleging fraud and collusion. Ramsarup’s predecessor had received Way Leave Permission on July 10, 2007 for ten years. The company subsequently entered insolvency proceedings and a resolution plan for its revival was approved by NCLT on September 4, 2019. Meanwhile, after the original permission expired on July 9, 2017, Orissa Metaliks Pvt. Ltd. (OMPL) obtained Railway permissions and constructed two Road Under Bridges (RUBs) at the concerned location. Ramsarup later sought revival of its pipeline permission and, after technical processing by Railway departments, deposited Rs.2,16,62,573/- towards Way Leave Permission fee and furnished a Rs.5,00,000/- bank guarantee.
An agreement dated April 3, 2024 purported to permit the pipeline for ten years, with the Railway communication stating that the permission operated with effect from 2017-18. OMPL challenged the permission, raising safety concerns regarding its RUBs, industrial boundary wall and plant infrastructure. The Single Judge quashed the permission and consequential steps. In appeal, Ramsarup argued, inter alia, that OMPL lacked locus standi; that all necessary technical scrutiny had been undertaken; that the 2007 permission stood preserved because its Section 10 IBC application had been filed before expiry of the permission; and that OMPL’s challenge was motivated by its unsuccessful attempt to acquire Ramsarup during CIRP. The Division Bench rejected the locus objection. Since OMPL had constructed two RUBs pursuant to agreements with the Railways and claimed that revival of the pipeline could adversely affect those structures, it had sufficient interest to invoke writ jurisdiction. The Court noted that OMPL’s letters dated January 11, 2024 and April 8, 2024 specifically raised safety objections, but the Railway Authorities neither responded nor afforded OMPL a hearing. On examination of the Railway report filed during the appeal, the Court found that a comprehensive and exhaustive safety audit had not been undertaken before the impugned permission was granted. Such an audit was considered essential in view of the potential consequences for the RUBs, the industrial area, property and human safety. The Court also agreed that the permitted overhead structure appeared contrary to Clause 1033(12) of the Railway Engineering Code. On the IBC issue, the Court held that the original Way Leave Permission expired by efflux of time on July 9, 2017. Although Ramsarup had filed its CIRP application before expiry, it was admitted to CIRP only on January 8, 2018, when no subsisting Way Leave Permission existed. NCLT consequently could not revive, renew or preserve an expired Railway permission while approving the resolution plan. Referring to Gujarat Urja Vikas Nigam Ltd. v. Amit Gupta & Ors., the Court held that a dispute concerning Way Leave Permission over Railway land was dehors the insolvency resolution process and therefore outside NCLT’s jurisdiction.
