NCLAT Delhi: AA authorized to direct tenant to vacate premises of Corporate Debtor

NCLAT Delhi: AA authorized to direct tenant to vacate premises of Corporate Debtor

The National Company Law Appellate Tribunal (NCLAT), Principal Bench consisting of Justice Ashok Bhusan (Chairperson), Dr Alok Srivastava (Technical Member) and Mr. Barun Mitra (technical Member), while adjudicating an appeal filed by appellant-M/s. Jhanvi Rajpal Automotive Pvt Ltd has held that the Resolution Professional (in short RP) need not file a suit for eviction of the appellant under the Madhya Pradesh Accommodation Control Act, 1961 (in short MP Act) and ruled that Adjudicating Authority (in short AA) had rightly allowed the application filed by the RP directing the appellant to vacate from the premises so that Resolution Plan which has been approved could be implemented.

The brief facts of the case were that the appeal was filed challenging the order passed by National Company Law Tribunal, Indore Bench dated 11 November, 2022 by which order, Application filed by the Insolvency Professional and Chairman of the Monitoring Committee of the Corporate Debtor seeking direction to the Appellant to vacate the premises belonging to the Corporate Debtor in his possession had been allowed.

On 26th March, 2021, Corporate Insolvency Resolution Process was initiated against the Corporate Debtor-Rajpal Abhikaran Pvt. Ltd. In the Resolution Proceeding, Information Memorandum was prepared by the Resolution Professional in which the asset which is the ground floor of the premises situated at Niranjanpur Dewas Naka, Indore was included in the assets of the Corporate Debtor. The Appellant was in possession of the premises prior to the initiation of Corporate Insolvency Resolution Process (in short CIRP) as the lessee.

Mr. Abhijeet Sinha, Learned Counsel for the Appellant challenged the Order dated 11 November, 2022 submitted that the Adjudicating Authority had no jurisdiction to entertain the Application seeking direction to the Appellant to vacate the premises. The Appellant had been continuing in the premises under lease deed granted by the Corporate Debtor from 1 November, 2018 and for eviction of the Appellant, proceedings have to be initiated by the Resolution Professional under the MP Accommodation Control Act, 1961. It was submitted that the Adjudicating Authority has no jurisdiction to direct the Appellant to vacate from the premises.

Following three questions arose for consideration in this Appeal:

i) Whether the Adjudicating Authority had jurisdiction to entertain filed by the RP seeking direction to the Appellant to hand over the possession of the premises which premises was owned by the Corporate Debtor?

ii) Whether the remedy of Resolution Professional for taking possession from the Appellant, whose lease had come to an end on 31st December, 2021 was only taking proceeding for eviction under MP Accommodation Control Act, 1961?

iii) Whether the Committee of Creditors who have decided to renew the lease in favor of the Appellant till 31 December, 2021 and had jurisdiction to issue legal notice for eviction of the Appellant from the premises in question?

The Tribunal observed that there was no dispute that assets in question is owned by the Corporate Debtor hence by virtue of Section 18(1)(f), Resolution Professional can take steps for taking possession of the assets. To resist the case taken by the RP, Appellant contends that under Section 60(5), no Application can be entertained for eviction of the Appellant and the only remedy available to the RP is to take proceedings under MP Accommodation Control Act, 1961.

The appellant had placed its reliance on the case Embassy Property Developments Pvt Ltd. Vs. State of Karnataka and others to which the Tribunal highlighted that Corporate Debtor being owner of the assets as observed in paragraph 40 by the Hon'ble Supreme Court, NCLT has been conferred with jurisdiction to decide all types of claims to property, of the corporate debtor. Section 18(1)(f)(vi) provides "assets subject to the determination of ownership by a court or authority".

In the present case, there was no applicability of clause (vi) of Section 18(1)(f) since there was no cloud over the title of the corporate debtor over the assets nor any dispute pertaining to ownership of assets is pending in any court or authority.

When the Corporate Debtor has the ownership rights over the premises which premises can be taken in control by IRP/RP, Tribunal was of the view that for eviction of the Appellant especially in event when lease in favor of the appellant came to an end, filing a suit was not contemplated in the statutory scheme contained in IBC, noted the Tribunal. Accordingly, dismissed the appeal.