AA Empowered To Direct Tenant To Vacate Premises Of Corporate Debtor: NCLAT Delhi

The National Company Law Appellate Tribunal (“NCLAT”), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson), Dr Alok Srivastava (Technical Member) and Mr. Barun Mitra (Technical Member), while adjudicating an appeal filed in M/s. Jhanvi Rajpal Automotive Pvt. Ltd. v R.P. of Rajpal Abhikaran Pvt. Ltd. & Anr., has held that the Adjudicating Authority is empowered under Section 60(5) of IBC to direct a tenant to vacate the property of Corporate Debtor. The NCLAT Bench has upheld the decision of Adjudicating Authority directing the Tenant to vacate the Corporate Debtor’s property, which impeded implementation of the approved Resolution Plan. Background Facts Rajpal Abhikaran Pvt. Ltd. (“Corporate Debtor”) is the owner of an immovable asset (“Premises”) situated at Indore. The Premises was let out to M/s. Jhanvi Rajpal Automotive Pvt. Ltd. (“Appellant/Tenant”) vide unregistered lease deed and the lease was to terminate on 31.12.2021. In the meanwhile, the Corporate Debtor was admitted into Corporate Insolvency Resolution Process (“CIRP”) on 26.03.2021 and the Premises formed part of the Information Memorandum prepared by Resolution Professional. On 21.12.2021 the Tenant was requested to vacate the Premises. The Tenant had undertaken to vacate the premises within 10 days of final approval of Resolution Plan for the Corporate Debtor. The Resolution Plan submitted by Agarwal Real City Pvt. Ltd. (“Successful Resolution Applicant”) was approved by the Adjudicating Authority on 25.08.2022. However, the Tenant declined to vacate the Premises and thus the Resolution Plan could not be implemented. Further, the Tenant instituted a civil suit before the Civil Court, Indore, seeking permanent injunction against the Resolution Professional, from taking over the Premises either directly or indirectly. The Resolution Professional filed an application under Section 60(5), seeking direction to remove the encroachment/trespass from the assets of the Corporate Debtor. The Tenant contended that Resolution Professional is obliged to file a suit for eviction of the Appellant under MP Accommodation Control Act, 1961 and not an application under section 60(5) of IBC. The Adjudicating Authority vide an order dated 11.11.2022 allowed the application and directed the Tenant to vacate the premises within 15 days. NCLAT Verdict The Bench observed that Section 18 of IBC empowers the Interim Resolution Professional to take control and custody of any asset owned by Corporate Debtor, whether or not in possession of the Corporate Debtor. Further, for effectuating the duties under Section 18 of IBC, recourse to Adjudicating Authority by filing an Application under Section 60(5) is fully permissible. The Bench observed, “When the Corporate Debtor has the ownership rights over the premises which premises can be taken in control by IRP/RP, we are of the view that for eviction of the Appellant especially in event when lease in favour of the Appellant has come to an end, filing a suit is not contemplated in the statutory scheme contained in IBC.” The Bench upheld the Adjudicating Authority’s decision to allow the Application and directing the Tenant to vacate the premises so that approved Resolution Plan can be implemented. The Appeal was dismissed. Case Title: M/s. Jhanvi Rajpal Automotive Pvt. Ltd. v R.P. of Rajpal Abhikaran Pvt. Ltd. & Anr. Case No.: Company Appeal (AT) (Insolvency) No. 1417 of 2022 Counsel for Appellant: Mr. Abhijeet Sinha, Mr. Karthik Sundar, Mr. Aalok Kumar, Mr. Akash Chatterjee, Mr. Aditya Shukla, Advocates. Counsel For Respondents: Mr. P. Nagesh, Sr. Advocate with Ms. Shraddha Deshmukh, Mr. Karan Valecha, Mr. Akshay Sharma, Advocates for R-1. Mr. Sumesh Dhawan, Mr. Shaurya Shyam, Ms. Vatsala Kak, Ms. Soumya Singh, Mr. Praveen N. Surange, Advocates for R-2. Click Here To Read/Download Order

AA Empowered To Direct Tenant To Vacate Premises Of Corporate Debtor: NCLAT Delhi

Pallavi Mishra

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