Implied Consent Validates Lease Transfer to Corporate Debtor: NCLAT Rejects Plea to Exclude Govt Land from Liquidation [Read Order]

The National Company Law Appellate Tribunal (NCLAT), principal bench, New Delhi has dismissed West Bengal Housing Infrastructure Development Corporation Ltd.’s (WBHIDCO) appeal challenging the inclusion of government-leased land in the liquidation estate of the respondent.

The appellant challenged the National Company Law Tribunal (NCLT) Kolkata’s rejection of its application seeking exclusion of a 0.891-acre government-leased plot from the liquidation estate of CSPL. The land was originally leased to Concast Ispat Ltd. (CIL) in 2012 for 99 years, with strict conditions prohibiting assignment, alienation, or transfer without prior approval from the lessor.

WBHIDCO contended that the merger of CIL with CSPL in 2015 occurred without its consent, violating the lease deed’s terms. It argued that the leasehold rights never vested in CSPL and thus could not be treated as part of the liquidation estate under Section 36(3) of the IBC.

Complete Supreme Court Judgment on GST from 2017 to 2024 with Free E-Book Access, Click here

The appellant further claimed that the liquidator’s attempt to sell the land via public advertisement was illegal and that the NCLT had committed manifest illegality in rejecting its plea.

The liquidator, however, maintained that the merger was sanctioned by the Calcutta High Court and that all assets of CIL, including leasehold interests, vested in CSPL.

He pointed to extensive correspondence between WBHIDCO and CSPL, including a 2017 meeting where WBHIDCO’s counsel advised rectification of the merger order to include the leased land. The rectified order was passed by NCLT in 2018 and communicated to WBHIDCO, which did not challenge it.

NCLAT found that WBHIDCO’s conduct,engaging in meetings, requesting rectified orders, and delaying objections,amounted to implied consent. The Tribunal emphasized that while no express approval was granted, WBHIDCO’s actions supported the inference that it had acquiesced to the lease transfer. It held that the appellant could not now claim exclusion of the land from the liquidation estate, especially without challenging the merger or its rectification.

The Tribunal also noted that WBHIDCO failed to file any claim within the statutory 30-day window from the liquidation commencement date in 2018.

Its assertion of being a secured creditor was raised only during final arguments and not pleaded in the appeal, rendering the claim procedurally untenable.

Rejecting WBHIDCO’s reliance on lease deed conditions, two member bench comprising Mohd. Faiz Alam Khan (Judicial Member) and Arun Baroka (TechnicalMember) clarified that the Tribunal lacked jurisdiction to adjudicate the validity of the merger scheme itself.

It reiterated that equitable relief under Section 60(5) of the IBC could not be granted in the absence of a direct challenge to the amalgamation order.

Ultimately, the Tribunal upheld the NCLT’s decision, affirming that the leased land forms part of CSPL’s liquidation estate. The appeal was dismissed, reinforcing the principle that implied consent and procedural conduct can validate asset inclusion in insolv

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates