Pranav B Prem

The National Company Law Appellate Tribunal (NCLAT), Principal Bench, New Delhi, has upheld the authority of a Resolution Professional (RP) to terminate leave and licence agreements of the corporate debtor, even in the absence of proceedings by the Real Estate Regulatory Authority (RERA). The bench comprising Justice Ashok Bhushan (Chairperson) and Barun Mitra (Member-Technical) dismissed three connected appeals filed by licensees against orders of the NCLT, Mumbai, which had directed them to vacate premises situated on the fourth floor and terrace of the “Pulse Care” building.

Also Read: Revival Of Insolvency Proceedings Permissible Despite Absence Of Revival Clause In Settlement Agreement: NCLAT New Delhi

Background

The corporate debtor, Gigeo Construction Company Pvt. Ltd., had executed three leave and licence agreements: one with Chandan Ravishankar Madan for 17,000 sq. ft. of terrace area; another with Shanod Sameer Das for 2,250 sq. ft. on the 4th floor; and a third with M/s Home Grid, for 12,000 sq. ft. on the 4th floor. These were commercial arrangements permitting use of the premises for business purposes. The CIRP commenced against the corporate debtor on 04.06.2024, and the respondent RP was appointed. The RP initially accepted licence fees up to September 2024 but later issued notices dated 28.10.2024 to the licensees, pointing out that under the sanctioned plan approved by RERA, only the ground, first, and second floors were earmarked for commercial use, while the third and fourth floors were designated as parking areas. Consequently, the agreements permitting commercial use of the 4th floor and terrace were contrary to the sanctioned plan.

The RP terminated the agreements by giving one month’s notice, as provided in the contract, and sought possession. When the licensees failed to vacate, the RP approached NCLT, which allowed the applications and directed eviction along with payment of unpaid licence fees till the date of vacation.

Appellants’ Submissions

The appellants argued that:

• The RP had not prayed for recovery of unpaid licence fees, yet NCLT directed such payment, which was beyond jurisdiction.

• They had invested in the premises and were ready to continue paying licence fees, hence they should be allowed to occupy till expiry of the licence period.

• No proceedings had been initiated by RERA or any other authority against the corporate debtor or the appellants for violation of the sanctioned plan. Thus, the RP could not terminate the agreements merely on that ground.

RP’s Submissions

The RP maintained that the sanctioned plan permitted commercial use only on the ground, first and second floors. The leave and licence agreements for the 4th floor and terrace were not in accordance with law. Clause 10 and Clause 19 of the agreements expressly empowered either party to terminate on one month’s notice, which the RP had validly exercised.

Tribunal’s Observations

The NCLAT upheld the NCLT’s reasoning, observing:

• The RP’s termination notice was within the contractual framework and supported by valid reasons, including violation of the sanctioned plan.

• The absence of RERA proceedings did not preclude the RP from exercising contractual rights under the leave and licence agreements.

• The NCLT’s direction to pay unpaid licence fees was a consequential relief, as the appellants had continued in occupation beyond the termination notice.

• Mere willingness to pay licence fees could not prevent the RP from terminating the agreements.

Also Read: NCLAT: Resolution Plan Cannot Be Approved Without Valid Leasehold Rights Over Primary Assets

The bench concluded: “The RP did not commit any error in issuing the notice of termination. The agreements themselves empowered termination by giving one month’s notice, which was complied with. The appellants cannot insist on continuing in occupation contrary to the sanctioned plan and contractual terms.” The appeals were dismissed, and the order of the NCLT, Mumbai dated 13.08.2025, was upheld. The appellants were directed to vacate the premises by 30.09.2025, with liberty to the RP to adjust security deposits against unpaid dues.

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: Ashok Bhushan (Chairperson), Barun Mitra (Member-Technical)