No Concept Of “Symbolic Possession” Under IBC, IRP Is Entitled To Take Actual Control Of Corporate Debtor's Assets: NCLAT

The National Company Law Appellate Tribunal (NCLAT) Chennai bench of Justice Sharad Kumar Sharma (Judicial Member) and Jatindranath Swain (Technical Member) has dismissed an appeal filed by two promoters of M/s Orion Water Treatment Private Limited holding that there is no concept of symbolic possession under the Insolvency and Bankruptcy Code, 2016 (IBC) once Corporate Insolvency Resolution Process (CIRP) is initiated under section 10 of the IBC. The Tribunal further held that the Interim Resolution Professional is legally entitled to take actual possession and custody of all assets of the corporate debtor under sections 17 and 18 of the IBC. This case arose out of an order passed by National Company Law Tribunal (NCLT) by which it directed the promoters to cooperate with the IRP, vacate the premises and hand over the assets of the corporate debtor. Background: The corporate debtor was admitted into insolvency following an application under section 10 of the IBC. An IRP was subsequently appointed. An Interlocutory Application was filed by the IRP seeking directions against the Appellants to cooperate with the IRP, vacate the premises and handover the assets and inventories of the corporate debtor. The Application was allowed. This order has been challenged in the present appeal contending that the Appellants should be directed to hand over only symbolic possession of the assets, rather than actual possession. Findings: The Tribunal at the outset rejected the plea of the Appellants on the ground that neither section 10 nor any other provisions of the IBC contemplates symbolic possession of the assets of the corporate debtor after commencement of the CIRP. The Tribunal further noted that once the CIRP is initiated, the management of the corporate debtor vests in the IRP under section 17 of the IBC. The IRP is legally entitled to take custody and control of all the assets of the corporate debtor under section 18 of the IBC over which it has ownership rights. The Tribunal held that if symbolic possession of the assets is permitted, it would defeat the very purpose of the IBC and delay the insolvency resolution process. Accordingly, the present appeals were dismissed. Case Title: Mr. M. Bhaskaran. V Mr. Sandeep Kothari Case Number: Company Appeal (AT) (CH) (Ins) No. 402/2025 Order Date: 18.09.2025 Click Here To Read/Download The Order

No Concept Of “Symbolic Possession” Under IBC, IRP Is Entitled To Take Actual Control Of Corporate Debtor's Assets: NCLAT

Mohd Malik Chauhan

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