Liquidator Bound To Handover Vacant & Peaceful Possession Of Property To Buyer As Per Contract : NCLT Hyderabad

The National Company Law Tribunal (NCLT), Hyderabad Bench, comprising of Shri Rajeev Bhardwaj (Judicial Member) and Shri Sanjay Puri (Technical Member), has held that after sale of Corporate Debtor’s property in auction and receipt of proceeds, the Liquidator is legally empowered to seek vacant and peaceful possession of such property from occupier before the NCLT. Even after expiry of Lease Deed and sale of Property to another person, the Tenant continued to be in occupation of the Corporate Debtor’s Property. The NCLT has directed the Tenant to pay the arrears of rent and vacate the Property. Background Facts In 2013, a Lease Deed was executed between Mr. Mohd Jamal Athemadnia (“Tenant”) and Sagar Infra Rail International Limited (“Corporate Debtor”) in respect of a property owned by the latter. The Tenant ran its business from the Property. The Lease Deed expired in January 2020. The Corporate Debtor was admitted into Corporate Insolvency Resolution Process (“CIRP”) by the NCLT. Subsequently, the NCLT ordered liquidation of the Corporate Debtor and the Property became a part of the liquidation estate. In 2021, the Liquidator issued a Sale Notice for auctioning the Property and the Tenant was one of the bidders. However, the Property was sold to another person in terms of Sale Certificate dated 17.09.2022. Thereafter, the Liquidator filed an application under Section 60(5) of IBC before the NCLT, seeking a direction to the Tenant to pay arrears of rent and vacate the Property. Issue Whether the Liquidator possesses the legal right or obligation to file for the eviction of the Property subsequent to the receipt of proceeds from the assets sold in the auction? NCLT Verdict The Bench observed that it is trite that even after the sale of a company's property and the transfer of property to the Purchaser, the duties and responsibilities of the Liquidator persist, regardless of whether the sale is conducted on an "as is where is and whatever there is" basis. Both the Liquidator and the purchaser are bound by the terms and conditions outlined in the tender document and the conveyance deed. Where in the course of executing the conveyance deed in favor of the buyer, if the Liquidator assured that the purchasers would possess the unencumbered right to use and enjoy the acquired property without any claims, obstacles, impediments, or demands, the Liquidator is bound to fulfill all essential actions and transactions to honor this commitment. “Given these responsibilities, the [Liquidator] cannot be considered functus officio, indicating that his official function has not ceased. Consequently, he cannot be precluded from seeking vacant and peaceful possession of the premises occupied”. It was held that the Liquidator is fully justified in approaching NCLT for seeking his eviction of Corporate Debtor’s Property which is still occupied by the Tenant. Even post expiry of the Lease Deed the Tenant continued to occupy the Property. Therefore, the Tenant is not a continuing tenant, but an unauthorised occupier of the Property that belonged to the Corporate Debtor. The Bench has directed the Tenant to pay arrears of rent and vacate the Property. Case Title: Mr. Sri Vamsi Kambhammettu v Mr. Mohd Jamal Athemadnia Case No.: CP (IB) No. 376/07/HDB/2018 Counsel for Applicant: V.V.S.N Raju, Advocate Click Here To Read/DownloadOrder

Liquidator Bound To Handover Vacant & Peaceful Possession Of Property To Buyer As Per Contract : NCLT Hyderabad

Pallavi Mishra

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