Resolution Professional Can Terminate Leave & Licence Agreements Even In Absence Of RERA Proceedings: NCLAT New Delhi

The NCLAT, Principal Bench, New Delhi, comprising Justice Ashok Bhushan (Chairperson) and Barun Mitra (Member-Technical), has upheld the termination of the leave and license agreement by the resolution professional (RP) in the absence of RERA proceedings. The corporate debtor executed three separate leave and license agreements with the appellants pertaining to the use of the fourth floor of the 'Pulse Care' building. However, the RERA didn't permit the commercial use of the fourth floor. Therefore, the RP terminated the agreements with one month's notice. The appellant contended that the RP made no prayer regarding the payment of the license fee; still, the adjudicating authority has directed them to pay the unpaid dues. Hence, the direction is beyond the jurisdiction of the adjudicating authority. Appellants further submitted that they have invested in the premises; therefore, they should be allowed to continue till the period mentioned in the licence agreement. Appellants lastly submitted that only the first and second floors were sanctioned for commercial use, and no authority, including RERA, had issued any notice against anyone for violation of the sanctioned plan. Therefore, the RP was not open to direct vacation, especially when the appellant was willing to pay the licence fee. The RP submitted that only the 1st and 2nd floors were sanctioned for commercial use, and the 3rd and 4th were for parking. It was said that the leave and licence were not in accordance with the sanctioned plan; therefore, RP exercised his right under the agreement, which empowered him to terminate the parties on one-month notice. Observations of the NCLAT The bench observed that the termination notice was issued, and the appellants were asked to vacate within one month. Considering the direction issued by the adjudicating authority to pay the unpaid license fee, the bench discussed the ruling of the Supreme Court in Bharat Amratlal Kothari vs. Dosukhan Samadkhan Sindhi & Ors., relied upon by the appellant. The bench observed that in the said judgment, the court observed that the relief not claimed shall not be granted if that would result in serious prejudice or if that would hamper the right conferred under statute. Considering the last submission of the appellant, the bench observed that as per the sanctioned plan, the approved ground, first, and second floors were for commercial utilization, and the third and fourth floors were designated for parking areas. Further, the bench observed that the resolution professional didn't commit any error in issuing the notice of termination, as the agreement itself empowered both parties to terminate the licence. Hence, the termination was in accordance with the leave and licence agreement. Also, it said that the RP cannot be precluded from exercising his right under the agreement merely because of the fact that the appellants were willing to pay the licence fee. Accordingly, the decision of the adjudicating authority was upheld. Case Name: Mr. Shanod Sameer Das & Ors. vs. CA. Pankaj Bhattad, Resolution Professional of Gigeo Construction Company Pvt. Ltd. & Anr. Case No.: Company Appeal (AT) (Insolvency) No. 1425, 1426 & 1427 of 2025 Coram: Justice Ashok Bhushan (Chairperson) and Barun Mitra (Member-Technical) Judgment Date: 22.09.2025 Click Here To Read/Download The Order

Resolution Professional Can Terminate Leave & Licence Agreements Even In Absence Of RERA Proceedings: NCLAT New Delhi

Mohd.Rehan Ali

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Resolution Professional Can Terminate Leave & Licence Agreements Even In Absence Of RERA Proceedings: NCLAT New Delhi

Mohd.Rehan Ali

This is a premium content Available exclusively to Our subscribers

INR 1099+GST

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This is a premium content
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