Mesne Profit Proceedings Limited Following Change of Management Under IBC: Calcutta HC

Assam Company India Limited Vs Numazar Dorab Mehta And Ors (Calcutta High Court)

This appeal before the Calcutta High Court arose from an order dated December 13, 2023, disposing of two interlocutory applications in a long-pending civil suit relating to possession and mesne profits. The appellant, a defendant in the original suit, challenged the refusal to dismiss the suit and the direction to proceed with quantification of mesne profits.

The respondents had instituted a civil suit in January 2007 seeking possession of immovable property and mesne profits. Possession was decreed in their favour on July 22, 2011, and a Special Referee was appointed to quantify mesne profits. The appellant eventually handed over possession on May 12, 2019, but proceedings for quantification of mesne profits remained pending.

During the pendency of these proceedings, the appellant was subjected to a corporate insolvency resolution process under the Insolvency and Bankruptcy Code, 2016. The National Company Law Tribunal (NCLT), Guwahati initiated the process on October 26, 2017, declared a moratorium under Section 14, and approved a resolution plan on September 20, 2018. The approved resolution plan made specific provisions for stakeholders, including the respondents. It expressly noted the pending appeals and the civil suit and stated that no claim could be made against the company or the new management. Any financial recovery, if arising from pending proceedings, was to be recovered from the “existing management.”