NCLT Mumbai: Sterling Biotech Cannot Reclaim Leased Land From Sterling Healthcare During Insolvency Moratorium
Pranav B Prem
The National Company Law Tribunal (NCLT), Mumbai Bench-I, comprising Prabhat Kumar (Technical Member) and Sushil Mahadeorao Kochey (Judicial Member), has dismissed multiple applications filed by Sterling Biotech Ltd (SBL) seeking possession of industrial land in Pune leased to Sterling Healthcare Ltd (SHL), holding that recovery of property occupied by a corporate debtor is prohibited during the insolvency moratorium under Section 14(1)(d) of the Insolvency and Bankruptcy Code, 2016 (IBC).
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Background
SBL had leased land situated at Village Urse, Maval, Pune, measuring 2 hectares and 10.4 ares (GAT No. 396), to SHL under a registered lease deed dated March 3, 2008 for 29 years at an annual rent of ₹12 lakh. The land housed SHL’s pharmaceutical manufacturing facility for life-enhancing drugs used to treat diseases such as blood pressure and diabetes. SBL alleged that SHL defaulted on rent payments for years, prompting it to terminate the lease in August 2023. Thereafter, in December 2023, SHL was admitted into Corporate Insolvency Resolution Process (CIRP). SBL then filed multiple applications before the NCLT under Section 60(5) of the IBC, seeking possession of the property and exclusion of the land from SHL’s asset pool. SBL also sought revised rent of ₹5 lakh per month under an informal email agreement of 2019, claiming that SHL had agreed to an enhanced lease rent but had failed to pay.
Proceedings
Senior Advocate Mustafa Doctor appeared for SBL, while Senior Advocate Gaurav Joshi represented SHL’s Resolution Professional (RP). SBL contended that since the lease was terminated prior to the commencement of SHL’s insolvency, the moratorium could not protect SHL’s continued possession, which it described as “illegal occupation.” It further argued that the property was not part of SHL’s assets and therefore recoverable during the insolvency process.
Conversely, the RP for SHL submitted that the company remained in lawful possession of the leased property on the insolvency commencement date and that Section 14(1)(d) of IBC barred any owner or lessor from recovering property occupied by a corporate debtor during the moratorium period.
Findings
The Tribunal observed that SHL was in undisputed possession of the Pune land on the CIRP commencement date (December 7, 2023). Since the moratorium prohibits recovery of property from a corporate debtor during insolvency, the bench held that SBL could not be granted possession until the moratorium ceased. The Tribunal stated: “Since, the moratorium under Section 14(1)(d) of the Code prohibits the recovery of any property by an owner or lessor where such property is occupied by or in the possession of the corporate debtor, SBL could not be granted possession thereof till the moratorium in terms of Section 14 of the Code is in force in case of SHL.”
Regarding the enhanced rent claim, the bench held that the registered lease deed of 2008 remained binding and had no clause permitting renegotiation of rent. Therefore, SBL’s claim for enhanced rent based on email communications was invalid. “As long as lease deed dated 3rd March 2008 was not modified, SHL could not have been obligated to pay enhanced rent on basis of email communications. Accordingly, the claim of SBL is to be determined in accordance with lease deed dated 03.03.2008 only,” the Tribunal ruled. The NCLT further rejected SBL’s assertion that the payment of enhanced rent amounted to a fraudulent transaction, noting that SHL’s management had acted under pressure to avoid eviction, not with intent to defraud creditors.
Directions and Outcome
The Tribunal dismissed all four connected applications — IA Nos. 1831/2024, 4971/2024, 23/2025, and 1146/2025 — and issued the following directions:
SBL cannot reclaim possession of the Pune land until the moratorium under Section 14 IBC ceases.
Upon cessation of the moratorium, SBL and SHL may mutually renegotiate lease terms.
Past dues stand extinguished under the approved resolution plan.
If the lease is not renewed, SBL must allow SHL a reasonable period to relocate its operations and transfer licenses and certifications.
By refusing SBL’s plea for repossession, the NCLT reinforced that the moratorium under Section 14 of the IBC protects possession of assets lawfully occupied by a corporate debtor, even if lease termination occurred before the insolvency process. The ruling emphasizes that contractual disputes over leased property must yield to the statutory objectives of insolvency resolution until the moratorium period ends.
Appearance
For Applicant: Senior Advocate Mustafa Doctor
For Respondent: Senior Advocate Gaurav Joshi
Cause Title: Sterling Biotech Ltd v. Dhiren Shah, Resolution Professional of Sterling Healthcare Ltd
Case No: Company Petition No. 370 Of 2023
Coram: Prabhat Kumar (Technical Member), Sushil Mahadeorao Kochey (Judicial Member)
