The New Delhi bench of the National Company Law Appellate Tribunal (NCLAT) has held that the Interim Resolution Professional (IRP) is well within his authority under Section 18(1)(f) of the Insolvency and Bankruptcy Code, 2016 (Code) to take possession of assets owned by the Corporate Debtor, and applying to the Adjudicating Authority under Section 60(5) of the Code for the purpose is permissible.
The Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor, Rajesh Cityspaces Private Limited, began on January 15, 2024, following an application submitted under Section 7 by M/s. Assets Care and Reconstruction Enterprise Pvt. Ltd.
The IRP requested via email on May 31, 2024, that the Appellant and the Suspended Board of Directors transfer physical control of the 20,881 square foot property located at Nutan Kailash Nivas Co-operative Society, R.B. Mehta Road, Ghatkopar East, Mumbai.
After hearing the parties on March 12, 2025, the Adjudicating Authority granted IA No. 4820 of 2024, which required the Appellant to turn over control of Flat Nos. 601 and 1101 within ten days of the order’s date. The appellants have filed this appeal because they are upset with this order.
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The appellants argued that the Adjudicating Authority could not have ordered the eviction of the appellants who were in possession of the two apartments due to the Board Resolution on the basis of the IRP application. IRP was allowed to evict the appellants using the standard legal procedure.
It was further argued that the Adjudicating Authority could not have ordered the vacation of the aforementioned premises because the Board Resolution contemplated ten months’ notice.
In contrast, the Respondent argued that the Appellant had no right to keep the assets that were acknowledged to belong to the Corporate Debtor. The appellant makes no claims to any lease or license from the corporate debtor, nor does it assert any ownership rights over Flat Nos. 601 and 1101.
Furthermore, it was argued that the Adjudicating Authority possesses the authority to consider the IRP’s application to seize the Corporate Debtor’s assets. It was the IRP’s responsibility to seize the corporate debtor’s assets.
The Tribunal noted that the IRP is authorized by section 18 of the Code to assume custody and control of any assets that the Corporate Debtor possesses ownership rights over. In the current instance, the appellants are not asserting any ownership or lease-based rights over the assets.
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The Tribunal ruled that the Appellant’s claim that the IRP’s application was unmaintainable lacked validity. The Corporate Debtor is without a doubt the rightful owner of the apartments, and the IRP has a responsibility to seize its property.
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It further mentioned that the Resolution Professional said that although a Resolution Plan has been received and the CIRP is still in progress, Resolution Applicants are withdrawing due to uncertainties surrounding Flats 601 and 1101. One such applicant’s email from January 20, 2025, attests to this desire to withdraw.
The bench of Justice Ashok Bhushan (Judicial Member), Mr. Barun Mitra (Technical Member) and Mr. Arun Baroka (Technical Member) that the Adjudicating Authority rightly directed the Appellant to vacate the premises to implement the approved Resolution Plan, and the appeal was dismissed as meritless.
Even if, for the purposes of argument, the Appellant was entitled to a 10-month notice period, the Tribunal held that this period had already passed and that the Resolution Professional’s notification to the Appellant following the start of the CIRP clearly served as notice to vacate the premises.
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