NCLAT Rules, Interim Resolution Professional Is Empowered To Take Possession Of Assets Owned By Corporate Debtor
Pranav B Prem
The National Company Law Appellate Tribunal (NCLAT), Principal Bench, New Delhi, comprising Justice Ashok Bhushan (Chairperson), Mr. Barun Mitra and Mr. Arun Baroka (Technical Members), has reaffirmed that an Interim Resolution Professional (IRP) is empowered under Section 18(1)(f) of the Insolvency and Bankruptcy Code, 2016 (IBC) to take possession of assets owned by the Corporate Debtor. It held that filing an application before the Adjudicating Authority under Section 60(5) of the Code for assistance in taking such possession is valid and permissible. The decision came in an appeal filed by two suspended directors of Rajesh Cityspaces Private Limited, challenging the NCLT Mumbai's order dated 22.04.2025 directing them to vacate two flats owned by the Corporate Debtor.
Background
On a Section 7 application filed by M/s. Assets Care and Reconstruction Enterprise Pvt. Ltd., the Corporate Insolvency Resolution Process (CIRP) against Rajesh Cityspaces Pvt. Ltd. was admitted on 15.01.2024, and Mr. Ajit Gyanchand Jain was appointed as the Interim Resolution Professional.
On 31.05.2024, the IRP emailed the suspended Board of Directors, including the appellants, requesting physical possession of the Corporate Debtor’s assets, including Flats Nos. 601 and 1101 in Kailash Niwas, Ghatkopar (East), Mumbai. As the flats were not vacated, the IRP filed IA No. 4820 of 2024 before the NCLT seeking assistance under Section 60(5). The NCLT, after hearing the parties, allowed the application on 22.04.2025, directing the appellants to hand over possession within 10 days. Aggrieved by the order, the suspended directors appealed to the NCLAT.
Appellants’ Contentions
The appellants argued that:
They had occupied the flats since 2017 under a Board Resolution dated 14.09.2017, which granted them temporary use of the flats and contemplated a 10-month notice period for vacating.
The IRP should have resorted to ordinary civil proceedings for eviction instead of filing an application under Section 60(5) of the IBC.
The Adjudicating Authority lacked jurisdiction to evict them based solely on the IRP's application, especially since no lease or license had been formally terminated.
The appellants also relied on several judgments, including Victory Iron Works Ltd. v. Jitendra Lohia [(2023) 7 SCC 227] and Sumati Suresh Hegde v. RP of Champalalji Finance Pvt. Ltd , to argue that proceedings under IBC cannot bypass proper eviction procedures where occupancy has legal basis.
Respondents’ Submissions
The Respondent IRP, through Senior Counsel, argued that:
The flats were undisputedly owned by the Corporate Debtor.
The appellants had no lease or license or any legally recognized right to occupy the flats.
Their continued unauthorized possession was obstructing the resolution process, and at least one resolution applicant had withdrawn due to uncertainty over the property’s status.
The IRP was obligated under Section 18(1)(f) to take custody of all assets owned by the Corporate Debtor and was entitled to seek the Adjudicating Authority’s assistance under Section 60(5) for this purpose.
NCLAT’s Observations
The Tribunal rejected the appellants' contention that the IRP’s application was not maintainable. It held that Section 18(1)(f) of the IBC clearly authorizes the IRP to take custody of assets over which the Corporate Debtor has ownership rights, regardless of whether such assets are in its physical possession.
It observed that the appellants were not claiming ownership, leasehold, or tenancy rights but mere occupancy based on a Board Resolution. The said resolution, in fact, required the appellants to vacate the premises within 10 months of receiving an intimation from the company. The IRP’s email dated 31.05.2024 constituted such an intimation, and more than the stipulated 10 months had elapsed without the appellants vacating.
The NCLAT distinguished the cases relied upon by the appellants:
In Victory Iron Works, the occupier had a leave and license agreement. Here, no such agreement existed.
In Sumati Suresh Hegde, the appellant had protection under a civil court decree and was a monthly tenant. In contrast, the appellants in the present case were only permitted temporary occupation by a Board Resolution.
The NCLAT further relied on its earlier decision in Jhanvi Rajpal Automotive Pvt. Ltd. v. RP of Rajpal Abhikaran Pvt. Ltd [2023 SCC OnLine NCLAT 1436], which upheld the IRP’s right to seek possession of corporate debtor assets through Section 60(5) without resorting to separate civil proceedings, especially where the lease had expired or no formal lease existed.
Resolution Impact
The Tribunal noted that the IRP had informed the court that the ongoing possession dispute was causing resolution applicants to back out. An email from one such applicant dated 20.01.2025 explicitly stated that they wished to withdraw from the process due to lack of clarity over the flats’ possession. Recognizing the urgency and importance of ensuring a successful resolution, the Tribunal affirmed that the Adjudicating Authority rightly issued the direction for eviction.
Verdict
The NCLAT concluded that the IRP acted within his statutory duties and that the Adjudicating Authority’s order was justified. It directed the appellants to vacate the premises within 10 days and dismissed the appeal as devoid of merit.
Appearance
For Appellants: Mr. Abhijeet Sinha Sr. Advocate with Ms. Aakshi Lodha, Advocates.
For Respondent: Mr. Krishnendu Dutta Sr. Advocate, Ms. Kritya Sinha, Mr. Yash Tondon, Advocates for RP/ R1.
Cause Title: Harish Raghavji Patel & Anr. V. Ajit Gyanchand Jain, IRP of Rajesh Cityspaces Pvt. Ltd. & Ors.
Case No: Company Appeal (AT) (Insolvency) No. 682 of 2025
Coram: Justice Ashok Bhushan [Judicial Member], Mr. Barun Mitra [Technical Member], Mr. Arun Baroka [Technical Member]
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