NCLAT: Resolution Professional Can Terminate Leave & Licence Agreements Even Without RERA Proceedings
Pranav B Prem
The National Company Law Appellate Tribunal (NCLAT), Principal Bench, New Delhi, has upheld the power of a Resolution Professional (RP) to terminate leave and licence agreements even in the absence of proceedings under the Real Estate (Regulation and Development) Act (RERA). The bench, comprising Justice Ashok Bhushan (Chairperson) and Barun Mitra (Member-Technical), dismissed the appeal filed by licensees who had challenged the RP’s termination of their agreements for using the fourth floor of the “Pulse Care” building.
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The case arose when the corporate debtor had executed three separate leave and licence agreements with the appellants, granting them use of the fourth floor of the building. However, as per the sanctioned building plan, only the first and second floors were approved for commercial use, while the third and fourth floors were designated as parking areas. In light of this, the RP terminated the agreements by issuing a one-month notice, citing the illegality of using the premises contrary to the sanctioned plan.
The appellants argued that they had invested in the premises and were willing to continue paying the licence fee; therefore, they should be permitted to occupy the property until the expiry of the licence term. They further contended that no notice of violation had been issued by RERA or any competent authority, and therefore, the RP’s unilateral termination was unwarranted. They also objected to the adjudicating authority’s direction requiring them to pay unpaid dues, arguing that no such relief had been sought by the RP.
On the other hand, the RP submitted that the licence agreements were in direct violation of the sanctioned plan, which earmarked the disputed floors for parking. Since the agreements themselves contained a termination clause empowering either party to end the licence with one month’s notice, the RP was within his rights to issue the notice.
The NCLAT, after considering the submissions, held that the RP had acted lawfully in terminating the licence agreements. The Tribunal noted that the sanctioned plan clearly allowed only the ground, first and second floors for commercial purposes, and hence the agreements granting use of the fourth floor were inconsistent with statutory approvals. The bench further observed that the willingness of the appellants to pay licence fees could not override the RP’s contractual right to terminate, particularly when the occupation itself was contrary to the sanctioned plan.
On the issue of unpaid dues, the bench referred to the Supreme Court’s decision in Bharat Amratlal Kothari v. Dosukhan Samadkhan Sindhi & Ors., which emphasized that relief not specifically prayed for should not ordinarily be granted if it prejudices the parties. Nevertheless, the Tribunal found no error in the adjudicating authority’s order as it merely directed payment of outstanding amounts that had accrued under the agreements before termination.
Concluding that the termination notice was valid and in accordance with the terms of the leave and licence agreements, the NCLAT dismissed the appeal. The ruling reaffirms that resolution professionals can exercise contractual rights under existing agreements during the Corporate Insolvency Resolution Process (CIRP), and occupants cannot resist termination by invoking willingness to continue payment or citing absence of regulatory action.
Appearance
For Appellant: Mr. Amit R. Agrawal, Advocate
For Respondent: Mr. Utsav Mukherjee, Mr. Saksham Ahuja, Mr. Mayukh Roy, Advocates for RP
Cause Title: Mr. Shanod Sameer Das & Ors. V. CA. Pankaj Bhattad, Resolution Professional of Gigeo Construction Company Pvt. Ltd. & Anr.
Case No: Company Appeal (AT) (Insolvency) No. 1425, 1426 & 1427 of 2025
Coram: Justice Ashok Bhushan (Chairperson), Barun Mitra (Member-Technical)
