NCLAT Upholds Inclusion of WBHIDCO Leasehold Land in Concast Steels’ Liquidation Estate; Says Amalgamation Had Implied State Consent
NCLAT Upholds Inclusion of WBHIDCO Leasehold Land in Concast Steels’ Liquidation Estate; Says Amalgamation Had Implied State Consent
Introduction
The National Company Law Appellate Tribunal (NCLAT), New Delhi Bench, has affirmed that leasehold land allotted by the West Bengal Housing Infrastructure Development Corporation Ltd. (WBHIDCO) to Concast Ispat Ltd. (CIL) validly formed part of the liquidation estate of Concast Steel and Power Ltd. (CSPL). Dismissing WBHIDCO’s appeal, the Tribunal held that the transfer of leasehold rights pursuant to the amalgamation between CIL and CSPL had occurred with the implied consent of WBHIDCO, which was aware of and participated in the rectification proceedings before the NCLT, Kolkata. The judgment was delivered by a Bench comprising Justice Mohd. Faiz Alam Khan (Judicial Member) and Mr. Arun Baroka (Technical Member).
Factual Background
WBHIDCO had granted a 99-year lease to Concast Ispat Ltd. in 2012 for land located in New Town, Kolkata, for the limited purpose of establishing a corporate office. The lease deed included a clear prohibition on transferring or alienating the land without WBHIDCO’s prior written consent. Subsequently, in 2015, the Calcutta High Court approved an amalgamation scheme whereby CIL merged with Concast Steel and Power Ltd. (CSPL). Following the amalgamation, the NCLT, Kolkata Bench, through an order passed in 2018, rectified the amalgamation scheme to include the leased land in the schedule of transferred assets.
After CSPL entered liquidation due to failure of resolution efforts, the liquidator issued a public advertisement for the sale of the company’s assets, which included the leasehold property. WBHIDCO objected, contending that it retained ownership of the land and that no formal consent had been granted for transferring leasehold rights.
Procedural Background
WBHIDCO filed an application before the NCLT, Kolkata, arguing that the leasehold land could not be treated as part of CSPL’s liquidation estate. The NCLT rejected the plea, holding that the transfer of leasehold rights was valid as WBHIDCO had prior knowledge of and participated in the amalgamation process. Aggrieved, WBHIDCO filed an appeal before the NCLAT, challenging the inclusion of the leased land in the liquidation estate and questioning the jurisdiction of the NCLT to determine the validity of such amalgamation.
Issues
1. Whether the leasehold land granted by WBHIDCO to CIL could be validly included in the liquidation estate of CSPL.
2. Whether the transfer of leasehold rights upon amalgamation occurred with the consent of WBHIDCO.
3. Whether the NCLT had jurisdiction to determine ownership and inclusion of assets in the liquidation estate under the IBC.
Contentions of the Parties
Appellant (WBHIDCO): WBHIDCO argued that the land was state property and not part of the corporate debtor’s estate. It submitted that no formal consent was given for transferring leasehold rights from CIL to CSPL and that the amalgamation order could not override the express restrictions under the lease deed. WBHIDCO contended that the NCLT lacked jurisdiction to adjudicate on issues related to ownership or transfer of state-owned property.
Respondent (Liquidator of CSPL): The Liquidator contended that WBHIDCO was fully aware of the amalgamation proceedings and even participated in subsequent rectification before the NCLT, amounting to implied consent. It further argued that leasehold rights constitute “property” within the meaning of Section 3(27) of the IBC and are therefore part of the liquidation estate.
Reasoning and Analysis
The Tribunal noted that documentary evidence established WBHIDCO’s knowledge of and participation in the amalgamation process. The fact that WBHIDCO facilitated the rectification of the amalgamation order demonstrated its implied consent to the transfer of leasehold rights.
The NCLAT emphasized that only leasehold rights—not ownership rights—had been transferred to CSPL, and such rights form part of the liquidation estate as “property” under Section 3(27) of the IBC. The Tribunal rejected the argument that the NCLT lacked jurisdiction, stating that determining what constitutes the liquidation estate falls squarely within the insolvency court’s domain.
The Bench observed that, “Though no express permission was taken for amalgamation, there was an implied consent of the appellant for transferring this leasehold land in favour of CSPL, including its correspondence and advice to rectify the amalgamation order.” The NCLAT also found that WBHIDCO had neither challenged the amalgamation nor the rectification order at the appropriate stage, which rendered its current challenge unsustainable.
Implications
This ruling reinforces the principle that leasehold rights constitute transferrable property under the IBC and can validly form part of the liquidation estate of a corporate debtor. The decision further underscores that implied consent, particularly when a lessor participates or acquiesces in amalgamation or transfer proceedings, can validate such transfers. Importantly, the Tribunal has clarified that the insolvency courts (NCLT/NCLAT) have jurisdiction to determine what assets constitute the liquidation estate, even where state entities claim ownership.
In this case the appellant was represented by Mr. Palash S. Singhai, Mr. Harshal Sareen, Mr. Manish Srivastava and Ms. Kamakshi S. Rao, Advocates. Meanwhile the respondent was represented by Mr. Soorjya Ganguli, Ms. Kiran Sharma, Mr. Ananad Amit and Ms. Pooja Chakraborti, Advocates.
