Fivebro Water Services Pvt. Ltd. Vs Bijay Murmuria (NCLAT Delhi)
Conclusion: Liquidator, in discharge of duties under Section 35, was entitled to take custody and control of the assets of the Corporate Debtor forming part of the liquidation estate and recover outstanding dues. Since the premises belonged to the Corporate Debtor and the Appellants had continued in possession without clearing rental and licence fee liabilities, the directions issued by the Adjudicating Authority to vacate the premises and pay arrears were justified.
Held: Corporate Debtor had executed an unregistered lease deed in favour of its subsidiary Fivebro Water Services Pvt. Ltd. for occupation of its Ahmedabad premises and a licence agreement in favour of another subsidiary Gondwana Engineers for use of its Mumbai premises. Corporate Debtor was admitted into CIRP on 31-08-2021, whereupon moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 came into force. Resolution Professional called upon both occupants to deposit rent/licence fees into the CIRP account. On failure to clear dues, applications were filed seeking possession of the premises and recovery of arrears. Subsequently, the Corporate Debtor went into liquidation and the Liquidator pursued the applications. Adjudicating Authority allowed the applications and directed the Appellants to vacate the premises and pay outstanding rent/licence fees and other charges. Aggrieved, the Appellants preferred appeals. Appellants contended that the Adjudicating Authority lacked jurisdiction to adjudicate disputes arising out of lease and licence agreements, which were contractual in nature and triable by civil courts or through arbitration as per the agreements. It was argued that Section 60(5) of the Code could not be invoked to determine alleged breaches of contractual terms or order eviction. The Liquidator contended that the premises formed part of the assets of the Corporate Debtor, and under Section 35 of the IBC the Liquidator was duty-bound to take custody and control of such assets. The fresh lease relating to the Ahmedabad premises had been executed after commencement of CIRP and imposition of moratorium, rendering it invalid. The licence agreement relating to the Mumbai premises was unregistered and legally unenforceable. Since the dispute related to recovery of assets and dues forming part of the liquidation estate, the Adjudicating Authority rightly exercised jurisdiction under Section 60(5). Held: Dismissing the appeals, Appellate Tribunal held that the Adjudicating Authority possessed jurisdiction under Section 60(5) of the IBC to adjudicate disputes relating to possession of the assets of the Corporate Debtor and recovery of rent/licence fees where such issues arise in relation to insolvency or liquidation proceedings. The fresh lease agreement executed after the initiation of CIRP and imposition of moratorium was contrary to Section 14 of the Code and therefore invalid and unenforceable. Likewise, the licence agreement relating to the Mumbai premises being unregistered and not compliant with statutory requirements could not confer lawful possession upon the occupant. Tribunal further held that the Liquidator, in discharge of duties under Section 35, was entitled to take custody and control of the assets of the Corporate Debtor forming part of the liquidation estate and recover outstanding dues. Since the premises belonged to the Corporate Debtor and the Appellants had continued in possession without clearing rental and licence fee liabilities, the directions issued by the Adjudicating Authority to vacate the premises and pay arrears were justified. The disputes raised had a direct nexus with the liquidation process and therefore fell within the jurisdiction of the Adjudicating Authority. Accordingly, the impugned order was upheld and the appeals were dismissed as devoid of merit.
The present appeal filed under Section 61 of Insolvency and Bankruptcy Code 2016 (‘IBC’ in short) by the Appellant arises out of the Order dated 21.06.2024 (hereinafter referred to as ‘Impugned Order’) passed by the Adjudicating Authority (National Company Law Tribunal, Ahmedabad Bench-I) in I.A. No. 63 of 2022 and I.A. No. 94 of 2022 in C.P. (IB) No. 59 of 2019. By the common impugned order, the Adjudicating Authority allowed both I.A.s filed by the Liquidator and directed the Appellants to handover possession of the leased/licensed premises to the Liquidator and make payment of rental/licence fees dues. Aggrieved by the impugned order, the present appeals have been preferred by the Appellants.
