Resolution Professional Can Terminate Leave & Licence Agreements Without RERA Proceedings: NCLAT
Pranav B Prem
The National Company Law Appellate Tribunal (NCLAT), Principal Bench, New Delhi, comprising Justice Ashok Bhushan (Chairperson) and Barun Mitra (Technical Member), has upheld the termination of leave and licence agreements by the Resolution Professional (RP) of a corporate debtor. The Tribunal held that such termination was valid even in the absence of any proceedings under the Real Estate (Regulation and Development) Act, 2016 (RERA).
Background
The appellants had entered into three separate leave and licence agreements with the corporate debtor for use of the fourth floor of the “Pulse Care” building. According to the sanctioned plan, however, only the first and second floors were designated for commercial use, while the third and fourth floors were reserved for parking.The RP terminated the agreements, giving the appellants one month’s notice to vacate the premises. The appellants challenged this termination, arguing that they had invested in the premises and were entitled to continue in possession until the expiry of the licence period. They further contended that no authority, including RERA, had issued any notice for violation of the sanctioned plan, and since they were ready to pay the licence fee, the RP could not have directed eviction. The appellants also objected to the Adjudicating Authority’s direction requiring them to pay unpaid licence fees, submitting that no such prayer had been made by the RP, and therefore the order went beyond its jurisdiction.
Submissions
On behalf of the appellants, it was argued that:
They had validly invested in the property and should not be dispossessed before expiry of the licence term.
The RP could not terminate the licence without any proceedings under RERA, particularly when they were willing to continue paying the licence fee.
The Adjudicating Authority erred in directing them to pay arrears of licence fees when such relief was not sought by the RP.
The RP submitted that:
The sanctioned plan permitted commercial use only for the ground, first, and second floors, while the third and fourth floors were reserved for parking.
The leave and licence agreements for the fourth floor were contrary to the sanctioned plan.
The agreements themselves contained a clause allowing either party to terminate with one month’s notice, which was duly exercised by the RP.
Observations of the NCLAT
The Bench noted that the leave and licence agreements specifically empowered either party to terminate the arrangement with one month’s notice. The RP, therefore, did not act beyond his authority in issuing termination notices.
On the issue of payment of arrears of licence fees, the Bench referred to the Supreme Court’s ruling in Bharat Amratlal Kothari v. Dosukhan Samadkhan Sindhi & Ors., relied upon by the appellants. It observed that while relief not claimed should ordinarily not be granted, in this case, the direction to pay unpaid dues could not be faulted since the appellants had continued to occupy the premises.
Addressing the contention that the RP should not have acted in the absence of RERA proceedings, the NCLAT clarified that the sanctioned plan clearly earmarked the first and second floors for commercial use and the third and fourth floors for parking. Thus, the agreements for the fourth floor were inconsistent with the sanctioned plan. The RP could not be precluded from exercising his contractual right of termination merely because the appellants were ready to pay licence fees.
Holding that “the Resolution Professional did not commit any error in issuing notice of termination,” the NCLAT upheld the order of the Adjudicating Authority and dismissed the appeals. It confirmed that the termination of the leave and licence agreements was valid and enforceable .
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)
