Pranav B Prem

The National Company Law Appellate Tribunal (NCLAT), Principal Bench, New Delhi, held that vehicles repossessed by a lessor prior to the commencement of the Corporate Insolvency Resolution Process (CIRP) cannot form part of the corporate debtor’s assets or be controlled by the Resolution Professional (RP). A bench comprising Justice Ashok Bhushan (Chairperson) and Barun Mitra (Technical Member) disposed of an appeal filed by SMAS Auto Leasing India Pvt. Ltd. against Gensol Engineering Ltd., challenging the order of the National Company Law Tribunal (NCLT), Ahmedabad, which had admitted the Section 7 application filed by Indian Renewable Energy Development Agency Limited (IREDA) against Gensol.

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The appellant did not contest the admission of CIRP but sought protection of its proprietary ownership rights over 164 leased electric vehicles (EVs) that were under its leasing arrangement with Gensol.

Background

SMAS Auto Leasing entered into a Master Lease Agreement with Gensol Engineering Ltd. for leasing 164 electric vehicles. Following defaults in lease payments, SMAS terminated the agreement on April 30, 2025, and approached the Delhi High Court, which appointed a receiver to take possession of the vehicles. Pursuant to the High Court’s order, 152 of the 164 EVs were repossessed and returned to SMAS before the NCLT’s admission of the Section 7 petition in June 2025. After the NCLT Ahmedabad admitted IREDA’s insolvency application and imposed a moratorium under Section 14 of the IBC, SMAS filed an appeal before the NCLAT seeking clarity that the vehicles repossessed prior to the initiation of CIRP would not fall within the purview of the moratorium or form part of the corporate debtor’s estate.

Appellant’s Submissions

Senior Advocate Arun Katpalia, appearing for SMAS, submitted that the company was not challenging the Section 7 admission order but only sought to safeguard its ownership rights over the leased EVs. It was contended that the lease agreement was duly terminated before the CIRP commencement and that possession of 152 EVs had already been taken over through court-appointed receivers. Counsel further submitted that the remaining 12 vehicles were yet to be recovered from Gensol and requested necessary protection to prevent their inclusion in the CIRP assets.

Findings of the Tribunal

The NCLAT noted that the appeal had a very limited scope, as SMAS had already repossessed most of the vehicles prior to CIRP initiation under Delhi High Court’s supervision. It observed that these repossessed vehicles were no longer in Gensol’s possession at the time of the moratorium and, therefore, did not constitute part of the corporate debtor’s assets. The Bench recorded: “In view of the fact that the scope of the appeal is too limited and according to the own case of the appellant, he has received 152 vehicles back by the order of Delhi High Court, we are of the view that no purpose shall be served in keeping the appeal pending.” The Tribunal also took note of an advertisement issued by the Interim Resolution Professional (IRP) for inviting interest in pre-owned electric cars and clarified that such advertisements could not extend to vehicles not in the possession of the corporate debtor.

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Observing that there was no necessity for further adjudication, the NCLAT disposed of the appeal without interfering with the NCLT’s admission order. It reiterated that the repossessed vehicles were outside the corporate debtor’s control and thus beyond the scope of CIRP or moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016. Accordingly, the appeal was disposed of, affirming that assets lawfully repossessed before initiation of insolvency proceedings cannot be treated as part of the corporate debtor’s estate.

Appearance

For Appellant: Mr. Arun Katpalia, Sr. Adv. with MR. Sukrit Kapoor, Mr. Aditya Bhattacharya, Ms. Simran Tandon, Mr. Sarthak Miglani, Mr. Banshay Kaul Mr. Navnit Kumar, Advocates

For Respondents: Mr. Rishi Singhal, Ms. Reema, Mr. Anuj Kr. Pandey, Advocates of IRP/ R-1 Mr. Saurav Panda, Mr. M. Nijhawan, Mr. Gaurav Arora, Ms. Anushri Joshi, Advocates

Cause Title: SMAS Auto Leasing India Pvt. Ltd. v. Gensol Engineering Ltd. Through Its CoC and IRP

Case No: Company Appeal (AT) (Ins) No. 1042 of 2025

Coram: Justice Ashok Bhushan (Chairperson), Barun Mitra (Technical Member)