IBC Moratorium Doesn’t Bar Voluntary Surrender Of Leased Property | Supreme Court Upholds CoC’s Commercial Wisdom In CIRP
Kiran Raj
The Supreme Court of India Division Bench of Justice Sanjay Kumar and Justice Satish Chandra Sharma allowed a civil appeal filed under Section 62 of the Insolvency and Bankruptcy Code, 2016, setting aside the order of the National Company Law Appellate Tribunal (NCLAT) that had remanded the matter for reconsideration. The Court restored the earlier order of the National Company Law Tribunal (NCLT), which had directed that possession of the disputed property be delivered to the appellants. The Court held that the decision of the Committee of Creditors (CoC) to return the property must be respected and acted upon. The Resolution Professional was directed to implement the restored NCLT order expeditiously.
The appeal arose under Section 62 of the Insolvency and Bankruptcy Code, 2016, against the NCLAT order dated 12.11.2024. The case concerned the possession of a commercial property located on the ground floor of White House, 1/18-20, Rani Jhansi Road, New Delhi. Nandini Impex Private Limited, later designated as a corporate debtor, had entered into financial agreements with three appellant companies for a total loan amount of ₹6 crores, secured by the deposit of title deeds for the front and rear portions of the said property.
On 13.02.2019, a Memorandum of Understanding (MoU) was executed between Nandini Impex Private Limited and two of the appellants, Noble Dealcom Private Limited and Jodhpur Properties and Finance Private Limited, for a loan of ₹3 crores, secured by the rear portion of the ground floor. On 15.02.2019, a separate MoU was executed between Nandini Impex and the third appellant, Sincere Securities Private Limited, for another ₹3 crore loan secured by the front portion.
Due to non-repayment, conveyance deeds were executed on 27.02.2020, transferring ownership of the respective portions to the appellants. Simultaneously, Leave and License Agreements were signed, permitting Nandini Impex to retain possession of both portions at a monthly rent of ₹6 lakhs per portion. These agreements were terminated on 08.05.2020 following defaults in rental payments. The appellants-initiated eviction proceedings.
Subsequently, UCO Bank filed a petition under Section 7 of the IBC, leading to the initiation of the corporate insolvency resolution process (CIRP) on 20.09.2022. UCO Bank remained the sole member of the Committee of Creditors. The appellants, classified as operational creditors, submitted claims accepted in full by the Interim Resolution Professional.
During a meeting on 06.04.2023, the CoC resolved that the rented property was not essential and instructed the Resolution Professional to return possession to the appellants. Chandrakant Khemka, suspended director of Nandini Impex, objected. Following these developments, the NCLT passed an order on 07.08.2023 directing that possession be handed over to the appellants.
Chandrakant Khemka filed an appeal before the NCLAT, which set aside the NCLT order and remanded the matter, citing Section 14(1)(d) of the IBC that bars recovery of property by owners during CIRP when occupied by the corporate debtor.
The Supreme Court, by interim order dated 25.11.2024, allowed NCLT proceedings to continue, subject to the outcome of the appeal. The Court also recorded that Chandrakant Khemka declined to pay current or past rent. The newly appointed Resolution Professional filed an affidavit dated 17.07.2025 supporting the return of the property due to limited operations and high rent.
The Court recorded "Given the aforestated facts, it is clear that except for Chandrakant Khemka, respondent No. 1, who is a suspended director of the corporate debtor, all other parties are at consensus that the property in question need not be retained by the corporate debtor, as it is not required by it and imposes a huge financial burden on it, in terms of the lease/license rentals payable therefor."
"His lofty claim that the rent due to the appellants would stand secured by the provisions of the IBC does not stand to reason." The Court noted that Khemka was not willing to bear the cost of retaining the property.
The Bench cited K. Sashidhar v. Indian Overseas Bank, stating "The legislature has not endowed the adjudicating authority (NCLT) with the jurisdiction or authority to analyse or evaluate the commercial decision of CoC much less to enquire into the justness of the rejection of the resolution plan by the dissenting financial creditors."
It added, "The commercial wisdom of the CoC has been given paramount status without any judicial intervention, for ensuring completion of the stated processes within the timelines prescribed by the I&B Code."
With reference to Section 14(1)(d), the Court observed that "this was not a simple case of the owner of the property seeking recovery of possession thereof from the corporate debtor, which would be barred by the express language of Section 14(1)(d) of the IBC."
"It was the CoC and the Resolution Professional who were and still are desirous of returning the possession of the property in question to the appellants, keeping in mind the adverse financial implications of retaining the same."
The Court remarked that the respondent appeared to be stalling the process for undisclosed reasons: "It appears that Chandrakant Khemka... is bent upon stalling that process for some undisclosed and extraneous reasons."
The Supreme Court stated that the remand ordered by the NCLAT was unwarranted in the context of Section 14(1)(d). It recorded: "This was, therefore, not a situation which warranted an order of remand in the context of Section 14(1)(d) of the IBC."
The final direction issued was: "The order dated 12.11.2024 passed by the National Company Law Appellate Tribunal, Principal Bench, New Delhi, in Company Appeal (AT) (Insolvency) No. 1064 of 2023, is accordingly set aside and the order dated 07.08.2023 passed by the National Company Law Tribunal, Kolkata Bench, in CP(IB) No. 1377/KB/2020, is restored."
It further directed: "The Resolution Professional shall act upon and implement the said order expeditiously."’
Pending applications, if any, were disposed of.
Advocates Representing the Parties:
For the Petitioners: Mr. Siddarth Bhatnagar, Sr. Adv., Mr. Ashish Choudhury, AOR, Mr. Aditya Sidhra, Adv., Mr. Anand Kamal, Adv., Mr. Abhishek Arora, Adv., Ms. Prachi Grover, Adv., Ms. Sulekha Agarwal, Adv., Ms. Akash Agarwal, Adv.
For the Respondents: Mr. Aman Gupta, AOR, Mr. Anup Kashyap, Adv., Mr. Divyam Kandhari, Adv., Mr. Shambo Nandy, AOR, Mr. Partha Sil, AOR, Mr. Utkarsh Dwivedi, Adv., Mr. Srijit Datta, Adv.
Case Title: Sincere Securities Private Limited & Ors. v. Chandrakant Khemka & Ors.
Neutral Citation: 2025 INSC 931
Case Number: Civil Appeal No. 12812 of 2024
Bench: Justice Sanjay Kumar, Justice Satish Chandra Sharma
