NCLAT Upholds Eviction of Unauthorised Occupant from Corporate Debtor’s Premises During CIRP

NCLAT Upholds Eviction of Unauthorised Occupant from Corporate Debtor’s Premises During CIRP

Introduction

The National Company Law Appellate Tribunal, Delhi Bench, upheld the NCLT Mumbai’s order directing eviction of an unauthorised occupant from the corporate debtor’s property during CIRP, reaffirming that the Resolution Professional can seek possession of undisputed assets directly before the Adjudicating Authority without being compelled to initiate separate civil proceedings.

Factual Background

The dispute arose from a portion of premises owned by Shree Ram Urban Infrastructure Ltd., where Classic Marble Company Pvt. Ltd. had been permitted in 2008 to store marble. The appellant continued in occupation for several years and later sought to justify its possession by claiming an oral tenancy arrangement. It also alleged that its continued occupation was linked to outstanding dues of approximately ₹1.34 crore allegedly payable by the corporate debtor. During CIRP, the Resolution Professional treated the occupation as unauthorised and sought directions for recovery of possession so that the property could be brought under the control of the insolvency estate.

Procedural Background

The Resolution Professional approached the NCLT Mumbai seeking directions to recover possession of the premises as part of his statutory duty to take control and custody of the corporate debtor’s assets. The NCLT allowed the application and directed Classic Marble Company to vacate the premises. Aggrieved by this order, the appellant preferred an appeal before the NCLAT, contending that the dispute was essentially one of eviction and tenancy that fell within the domain of civil courts.

Issues

1. Whether the Resolution Professional can seek eviction of an unauthorised occupant directly before the NCLT during CIRP.

2. Whether the appellant had established any valid tenancy or possessory right in the premises.

3. Whether a separate civil suit was necessary for recovery of possession.

Contentions of Parties

The appellant argued that the NCLT lacked jurisdiction to adjudicate what was essentially an eviction and tenancy dispute, which according to it required adjudication by a civil court. It relied on an alleged oral tenancy, a long period of possession, and an interim civil court order restraining dispossession. It was further submitted that unpaid dues of ₹1.34 crore justified its continued possession. The Resolution Professional contended that the property undisputedly belonged to the corporate debtor, that the appellant had no legal tenancy rights, and that requiring separate civil proceedings would frustrate the time-bound insolvency process.

Reasoning and Analysis

The NCLAT held that the IBC places a clear statutory duty upon the Resolution Professional to take control and custody of all assets of the corporate debtor. Where ownership of the property is undisputed, the RP is entitled to approach the NCLT for appropriate directions to secure possession. The Bench found no material supporting the appellant’s plea of oral tenancy. The only document relied upon merely permitted storage of marble and did not confer any tenancy or proprietary right. There was no evidence of rent payment or any landlord-tenant relationship. The claim of oral tenancy was therefore rejected as an afterthought designed to justify illegal occupation.

On jurisdiction, the Appellate Tribunal emphasized that compelling the RP to institute separate civil proceedings would unduly prolong CIRP, contrary to the Code’s mandate of strict timelines. It also held that the existing civil court order requiring dispossession only through due process stood satisfied by proceedings before the NCLT, especially in view of the Code’s bar on civil court jurisdiction over matters arising from insolvency.

Decision

The NCLAT dismissed the appeal and affirmed the NCLT Mumbai’s eviction order. It further directed that if the appellant failed to vacate within 30 days, the Resolution Professional would be at liberty to take possession of the premises with police assistance.

In this case the appellant was represented by Senior Advocate Abhijeet Sinha, Advocates Abhishek Prasad, Vedant Sharma. Meanwhile the respondent was represented by Senior Advocate Krishnendu Datta, Advocates Milan Singh Negi, Ashish Pyasi, Nikhil Kumar Jha,Katyayani, Yash Tandon, Utkarsh.