Ramdas Dutta Vs. IDBI Bank Ltd. - The period of limitation would be attracted from the date when the default occurs and not from the date of declaration of NPA. Therefore, the date of NPA cannot be taken to be the date of default for the purpose of limitation.

 NCLAT (26.04.2023) In Ramdas Dutta Vs. IDBI Bank Ltd.[Company Appeal (AT) (Insolvency) No. 1285 of 2022] held that;

• Hon’ble Supreme Court in the case of ‘Ramesh Kymal Vs. Siemens Gamesa Renewable Power Pvt. Ltd., (2021) 3 SCC 224’ that the date of default cannot be changed.

• The period of limitation would be attracted from the date when the default occurs and not from the date of declaration of NPA. Therefore, the date of NPA cannot be taken to be the date of default for the purpose of limitation.

• To claim exemption under s. 20 (now s.19). Limitation Act the plaintiff must be in a position to allege and prove not only that there was payment of interest on a debt or part payment of the principal, but that such payment had been acknowledged in writing in the manner contemplated by that section

Excerpts of the order; 

This appeal has been filed by the Suspended Director of the Corporate Debtor, namely, ‘Saraju Flour Mills Pvt. Ltd.’ against the order dated 26.08.2022 passed by the Adjudicating Authority (National Company Law Tribunal, Kolkata Bench –I, Kolkata) in CP(IB) No. 1749/KB/2019 by which an application filed under Section 7 of the Insolvency and Bankruptcy Code, 2016 r/w Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 (in short ‘Code’) by the IDBI Bank Limited (Financial Creditor) is admitted and Pankaj Kumar Tibrewal has been appointed as the Interim Resolution Professional (in short ‘IRP’). However, at the time of preliminary hearing of this appeal on 20.12.2022, notice was issued to the Respondents and it was ordered that “no further steps shall be taken in pursuance of the impugned order”.

# 2. Brief facts of this case are that the IDBI Bank Limited (in short ‘Bank’) sanctioned cash credit limit of the Corporate Debtor to the tune of Rs. 8,50,000/- which was later on enhanced to Rs. 15,54,000/-. According to the Bank, the Corporate Debtor was in default of payment of Rs. 15,22,21,838.58/- including interest calculated as on 01.08.2019. The Bank has also alleged that the directors of the Corporate Debtor executed five separate guarantee agreements on 13.07.2009 and the Corporate Debtor entered into a tripartite inter-se agreement with the Bank and West Bengal Industrial Development Corporation Limited on 16.06.2010 to create hypothecation of the plant and machinery both present and future and collateral security for the facilities. It is alleged that the Corporate Debtor failed to repay the credit facility to the Bank who initiated the proceedings under the SARFAESI Act, 2002 by issuance of a demand notice dated 27.09.2014 under Section 13(2) of the SARFAESI Act, 2002. It is also alleged that the Bank offered OTS (One Time Settlement) under SARAL KARJ BHUGTAN YOJNA to the Corporate Debtor on 23.10.2018 which was duly accepted by the Corporate Debtor on 29.12.2018 and the same was approved by the Bank on 11.01.2019 but the Corporate Debtor failed to honour the terms of repayment of the OTS, therefore, the settlement was revoked and the petition under Section 7 of the Code was filed on 18.10.2019.

# 3. The Corporate Debtor contested the application, inter alia, on the ground of limitation that the petition has been filed beyond the period of three years from the date of default.

# 4. It is pertinent to mention that since the Bank did not mention the date of default in its application filed under Section 7 of the Code in Part IV of Form 1, therefore, the Adjudicating Authority by way of a separate order dated 03.11.2021 allowed the Bank to file a supplementary affidavit to specifically mention the date of default, balance sheet of the Corporate Debtor and one time settlement. In this regard, it would be relevant to refer to the order dated 03.11.2021 which read as under:-

• “Ld. Counsel on both sides present.

• This matter was taken up for admission today. It is noticed from the application that while the NPA date has been mentioned, the date of default is not. Secondly, even if we go by the NPA date as the date of default, no material has been placed on record to deal with the limitation aspect. Mr. Shaunak Mitra refers to page 45(a) of the petition to say that there has been part payment.

• We have perused the statement at page 45(a) and it is seen that while payments have been made, there is no corresponding pleading to say that this repayment is in respect of the facilities advanced to the CD. Mr. Shaunka Mitra also submits that balance sheet acknowledgements are available. However, from the records we see that the Balance sheet as on 31.03.2013 alone is place on record. Mr. Shaunak Mitra also relies certain OTS proposal.

• Ld. Counsel for the Financial Creditor seeks to file a short supplementary affidavit to place on record (i) the formal declaration of the date of default (ii) the balance sheet which in his views will save limitation and (iii) the OTS proposal. He is permitted to do so in view of the Hon’ble Supreme Court Judgment dated 04.08.2021 in the case of Dena Bank (now Bank of Baroda) Vs. C. Shiva Kumar Reddy. The supplementary affidavit shall be filed within a period of 10 days from today. Copy thereof shall be served on the counsel on record of the Corporate Debtor. The Corporate Debtor to file reply within 10 days if need be to the Supplementary Affidavit.

• List this matter after completion of pleadings on 06.12.2021.”

# 5. Apropos the aforesaid order dated 03.11.2021, the Bank filed the Supplementary Affidavit in which it disclosed the date of default, date on which the payment was received from the Corporate Debtor etc. Para 20 of the Supplementary Affidavit in which the dates have been mentioned is reproduced as under:-

“20. A statement showing the series of events for the accounts of the  Corporate Debtor maintained with the Applicant Bank:-  Saraju Flour Mills Pvt. Ltd.

Sl. No.	Particulars	Date
1.	Date of Default	31.08.2013
2.	Date of NPA	31.03.2014
3.	Date of Representation u/s 13(3) of SARFAESI Act, 2002	21.11.2014
4.	Payment received from the CD	29.03.2017
5.	Payment received from the CD under OTS Offer SKBY	31.12.2018
6.	Further payment received from the CD	22.01.2019
7.	Further payment received from the CD	06.03.2019

6. The Adjudicating Authority recorded its findings in Para 21, 22 & 23 of the impugned order for the purpose of holding that the application filed under Section 7 of the Code by the Bank was within limitation, which are reproduced as under:-

• “21. Upon perusal of the record it is apparent that transaction between the parties was purely financial in nature and there is an existence of Financial Debt. From the above records it is apparent that the Financial Creditor under SARAL KARJ BHUGTAN YOJNA extended One Time Settlement offer to the Corporate Debtor and the same was accepted by the Corporate Debtor [at page 260 of the Company Petition]

• 22. Moreover, upon perusal of the records at page 259 of the Petition, it is apparent that the Corporate Debtor also made part payment of the OTS amount. Further, the settlement proposal under the SARAL KARJ BHUGTAN YOJNA provided for the payment of the balance amount within 30 days from the date of Letter of Approval of OTS i.e.,11 January, 2019. Hence, this falls within the ambit of acknowledgement of debt due and payable’.

• 23. Balance sheet for year ending as on 2017 – 2018 of the Corporate debtor reflects that Corporate Debtor has certain short term borrowings which is showing that there exists cash credit facilities from the Bank. Further, as per the Auditors Report of the Corporate Debtor for financial year ending as on 2017-2018 (page 104 of the Supplementary Affidavit), it states that the Corporate Debtor has defaulted in the repayment of loans or borrowings to financial institutions, banks.”

# 7. Counsel for the Appellant has submitted that admittedly no date of default was mentioned by the Bank in Part-IV of Form 1 and the date of default has been given in the supplementary affidavit as 31.08.2013. It is submitted that the application under Section 7 of the Code, for the purpose of initiation of the Corporate Insolvency Resolution Process (CIRP), can be filed on account of default. In this regard, Section 7(1) of the Code is reproduced for a quick reference:-

• “7. Initiation of corporate insolvency resolution process by financial creditor.

• (1) A financial creditor either by itself or jointly with other financial creditors, or any other person on behalf of the financial creditor, as may be notified by the Central Government] may file an application for initiating corporate insolvency resolution process against a corporate debtor before the Adjudicating Authority when a default has occurred.”

# 8. She has further submitted that the date of default triggers the period of limitation which is provided under Article 137 of the Limitation Act, 1963 (in short ‘the Act’). Article 137 of the Act is reproduced as under:-

Description of suit	Period of limitation	Time from which period begins to run
Any other application for which no period of limitation is provided elsewhere in this division.	Three years.	When the right to apply accrues

# 9. It is further submitted that admittedly the application under Section 7 of the Code has been filed on 18.10.2019 whereas the date of default is given as 31.08.2013 and the period of three years had expired on 31.08.2016. It is further submitted that there has been no acknowledgment in between 31.08.2013 to 31.0.2016 to attract Section 18 of the Act for the purpose of extension of period of limitation.

# 10. It is further submitted that the Adjudicating Authority has itself observed in para 23 of the impugned order that the balance sheet for the year ending on 2017-18 reflects that the Corporate Debtor has certain short term borrowings but the said balance sheet would not extend the period of limitation in view of Section 18 of the Act because the acknowledgement has to be during the currency of the period of limitation. In this regard, she has referred to Section 18 of the Act which is reproduced as under:-

• “18. Effect of acknowledgment in writing.—(1) Where, before the expiration of the prescribed period for a suit or application in respect of any property or right, an acknowledgment of liability in respect of such property or right has been made in writing signed by the party against whom such property or right is claimed, or by any person through whom he derives his title or liability, a fresh period of limitation shall be computed from the time when the acknowledgment was so signed.

• (2) Where the writing containing the acknowledgment is undated, oral evidence may be given of the time when it was signed; but subject to the provisions of the Indian Evidence Act, 1872 (1 of 1872), oral evidence of its contents shall not be received.

• Explanation.—For the purposes of this section,—

• (a) an acknowledgment may be sufficient though it omits to specify the exact nature of the property or right, or avers that the time for payment, delivery, performance or enjoyment has not yet come or is accompanied by a refusal to pay, deliver, perform or permit to enjoy, or is coupled with a claim to set off, or is addressed to a person other than a person entitled to the property or right,

• (b) the word “signed” means signed either personally or by an agent duly authorised in this behalf, and

• (c) an application for the execution of a decree or order shall not be deemed to be an application in respect of any property or right.”

# 11. She has also referred to judgment of the Hon’ble Supreme Court rendered in the case of ‘Sampurna Singh & Ors. Vs. Niranjan Kaur & Ors., AIR 1999 SC 1047’ in which it has been held that the acknowledgment if any has to be prior to the expiration of the prescribed period for filing of the suit and if the limitation has already expired it would not revive under this Section.

# 12. She has further submitted that the Adjudicating Authority has referred to OTS for the purpose of bringing the application filed under Section 7 of the Code within the limitation on the ground that the OTS was approved in January, 2019 and the application was filed on 18.10.2019. However, it is submitted that even the OTS has to occur during the currency of the period of limitation and it cannot extend the period of limitation which had already expired.

# 13. On the other hand, though Counsel for Respondent has submitted that the date of default has been mentioned as 31.08.2013 in the supplementary affidavit but limitation would trigger from the date of NPA which is specifically mentioned in Form 1 as the date of default. It is further submitted that since the date of default is 31.03.2014, therefore, it will run up to 31.03.2017 and since the Appellant had deposited a sum of Rs. 2.75 Lakh on 29.03.2017 in their account, therefore, the limitation would further extend from 29.03.2017 to 29.03.2020 in view of Section 19 of the Act and as the application under Section 7 of the Code is filed on 18.10.2019, therefore, it has to be taken to have been filed within the period of limitation. He has also submitted that there has been one time settlement (OTS) which was approved and accepted, therefore, the period of limitation would further extend by it.

# 14. In rebuttal, Counsel for the Appellant has submitted that the Bank is trying to make out a new case in this appeal by referring to the date of NPA dated 31.03.2014, which is mentioned in Part IV, as the date of default because the Bank, on an affidavit, has disclosed the date of default as 31.08.2013 and the date of NPA as 31.03.2014. It is further submitted that the date of NPA is not recognised by law for the purpose of triggering the period of limitation of three years rather it is the date of default which is the sine qua non. In this regard, she has relied upon four decisions of the Hon’ble Supreme Court rendered in the case of 

• ‘Babulal Vardharji Gurjar Vs. Veer Gurjar Aluminium Industries P. Ltd. & Anr., (2020) 15 SCC 1’, 

• ‘B.K. Educational Services Pvt. Ltd. Vs. Parag Gupta & Associates, (2019) 11 SCC 633’, 

• ‘Jignesh Shah & Anr. Vs. Union of India & Anr., (2019) 10 SCC 750’ & 

• ‘Laxmi Pat Surana Vs. Union Bank of India, (2021) 8 SCC 481’.

# 15. She has further submitted that the alleged payment dated 29.03.2017 cannot be taken as an acknowledgement in terms of Section 19 of the Act because the acknowledgement has to be in the form of writing by the person paying and signed by him. In this regard, she has relied upon a decision of the Hon’ble Supreme Court rendered in this case of ‘Shanti Conductors Pvt. Ltd. Vs. Assam State Electricity Board, (2020) 2 SCC 677’.

# 16. It is further submitted that the OTS, relied upon by the Respondent shall not extend the limitation because it did not happen during the currency of the period of limitation.

# 17. We have heard Counsel for the parties and perused the record with their able assistance.

# 18. There is no dispute that the Bank did not mention the date of default in Part IV of Form 1 i.e. the application filed under Section 7 of the Code and disclosed the date of default only in its supplementary affidavit which was filed pursuant to the order passed by the Adjudicating Authority. The Bank has mentioned the date of default as 31.08.2013 in the affidavit. It has also mentioned the date of NPA as 31.03.2014. The Bank has tried to change the date of default as 31.03.2014 which in fact has been mentioned as the date of NPA. The period of limitation, counted from 31.08.2013 i.e. date of default would continue till 31.08.2016 and shall expire w.e.f. 01.09.2016. The Bank failed to produce any evidence of acknowledgement of debt on the part of the Appellant during the period from 31.08.2013 to 31.08.2016. Faced with these difficulties, the Bank has tried to project the date of NPA i.e. 31.03.2014 as the date of default to take it up to 31.03.2017 so that it may use the payment of Rs. 2.75 Lakh made on 29.03.2017 in the account as acknowledgment under Section 19 of the Act in order to gain further period of three years from that date i.e. 29.03.2017 till 29.03.2020 to bring the application filed under Section 7 of the Code on 18.10.2019 within the period of limitation.

# 19. The first question is as to whether the date of default can be changed by the Bank? In this regard, it has been held by the Hon’ble Supreme Court in the case of ‘Ramesh Kymal Vs. Siemens Gamesa Renewable Power Pvt. Ltd., (2021) 3 SCC 224’ that the date of default cannot be changed. It has also been held in the case of Laxmi Pat Surana (Supra), Babulal Vardharji Gurjar (Supra), B.K Educational Services Pvt. Ltd. (Supra) and Jignesh Shah (Supra) that the period of limitation would be attracted from the date when the default occurs and not from the date of declaration of NPA. Therefore, the date of NPA cannot be taken to be the date of default for the purpose of limitation.

# 20. In so far as, the issue regarding the payment of Rs. 2.75 Lakh on 29.03.2017 by the Appellant in their account is concerned, it has now been well settled by three judge bench of the Hon’ble Supreme Court, in the case of Shanti Conductors Pvt. Ltd. (Supra), that Section 19 would come into play if the payment is acknowledged in the handwriting of, or in a writing signed by the person making the payment. In this regard, Para 15 and 16 of the Judgment is reproduced as under:-

• “15. Order VII Rule 6 uses the words “the plaint shall show the ground upon which exemption from such law is claimed”. The exemption provided under Sections 4 to 20 of the Limitation Act, 1963 are based on certain facts and events. Section 19, with which we are concerned, provide for a fresh period of limitation, which is founded on certain facts, i.e., (i) whether payment on account of debt or of interest on legacy is made before the expiration of the prescribed period by the person liable to pay the debt or legacy, (ii) an acknowledgement of the payment appears in the handwriting of, or in a writing signed by, the person making the payment.

• 16. We may notice the judgment of this Court dealing with Section 20 of the Limitation Act, 1908, which was akin to present Section 19 of the Limitation Act, 1963. In Sant Lal Mahton Vs. Kamla Prasad and Others, AIR 1951 SC 477, this Court held that for applicability of Section 20 of the Limitation Act, 1908, two conditions were essential that the payment must be made within the prescribed period of limitation and it must be acknowledged by some form of writing either in the handwriting of the payer himself or signed by him. This Court further held that for claiming benefit of exemption under Section 20, there has to be pleading and proof. In paragraphs 9 and 10, following has been laid down:-

• “9. It would be clear, we think, from the language of s. 20, Limitation Act, that to attract its operation two conditions are essential : first, the payment must be made within the prescribed period of limitation and secondly, it must be acknowledged by some form of writing either in the handwriting of the payer himself or signed by him. We agree with the Subordinate Judge that it is the payment which really extends the period of limitation under s. 20, Limitation Act; but the payment has got to be proved in a particular way and for reason of policy the legislature insists on a written or signed acknowledgment as the only proof of payment and excludes oral testimony. Unless, therefore, there is acknowledgment in the required from, the payment by itself is of no avail. The Subordinate Judge, however, is right in holding that while the section requires that the payment should be made within the period of limitation, it does not require that the acknowledgment should also be made within that period. To interpret the proviso in that way would be to import into it certain words which do not occur there. This is the view taken by almost all the High Courts in India and to us it seems to be a proper view to take (See Md. Moizuddin v. Nalini Bala A.I.R. (24) 1937 Cal 284 : I.L.R. (1937) 2 Cal. 137; Lal Singh v. Gulab Rai 55 All 280, Venkata Subbhu v. Appu Sundaram 17 Mad. 92, Ram Prasad v. Mohan Lal A.I.R. (10) 1923 Nag 117 and Viswanath v. Mahadeo 57 Bom. 453.

• 10. …………………………………If the plaintiff’s right of action is apparently barred under the Statute of limitation, O. 7, R. 6, Civil P.C. makes it his duty to state specifically in the plaint the grounds of exemption allowed by the Limitation Act upon which he relies to exclude its operation; and if the plaintiff has got to allege in his plaint the facts which entitle him to exemption, obviously these facts must be in existence at or before the time when the plaint is filed; facts which come into existence after the filing of the plaint cannot be called in aid to revive a right of action which was dead at the date of the suit. To claim exemption under s. 20. Limitation Act the plaintiff must be in a position to allege and prove not only that there was payment of interest on a debt or part payment of the principal, but that such payment had been acknowledged in writing in the manner contemplated by that section…………………………”

# 21. Therefore, no advantage can be given to the Bank of the entry dated 29.03.2017.

# 22. As regards the OTS, it has come on record that the OTS has occurred much after the expiry of period of limitation, therefore, it cannot be taken into consideration for the purpose of Section 18 to extend the period of limitation.

# 23. Thus, in view of the aforesaid facts and circumstances, we are of the considered opinion that the impugned order is patently illegal and the appeal is thus hereby allowed and the impugned order is set aside. No costs.

# 24. Before parting with the order, it would be relevant to refer to the prayer made by the IRP during the course of hearing about the cost incurred for which he may avail any other remedy available to him in accordance with law.

 

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Adinath Jewellery Exports Vs. Mr. Brijendra Kumar Mishra - We are therefore, convinced that once a property was part of the liquidation state of the Corporate Debtor under liquidation, the provisions of IBC were applicable regarding the assets which were in the ownership of the Corporate Debtor and Section-238 of the IBC prohibited the applicability of any other law which was inconsistent with the IBC.

NCLAT (24.04.2023) In Adinath Jewellery Exports Vs. Mr. Brijendra Kumar Mishra [Company Appeal (AT) (Insolvency) No. 748 of 2022] held that;

• We are therefore, convinced that once a property was part of the liquidation state of the Corporate Debtor under liquidation, the provisions of IBC were applicable regarding the assets which were in the ownership of the Corporate Debtor and Section-238 of the IBC prohibited the applicability of any other law which was inconsistent with the IBC.

• It is also true that the respondent accepted the monthly compensation offered by the petitioners from time to time. That alone cannot be the basis to inter that the Respondent agreed for change of relationship between the parties from one of licensor and licensee to that of landlord and tenant in relation to the suit premises.

• We are of the opinion that the NCLT possesses the correct jurisdiction for considering an application for vacation of the premises in question in the circumstances of the present case, and the NCLT was correct in passing the Impugned Order which would be necessary to place the custody of the premises in question with the Liquidator

Excerpts of the order; 

# 1. The present appeal has been filed under Section 61 of the Insolvency and Bankruptcy Code, 2016 (in short ‘IBC’) assailing the order dated 06.07.2022 (in short ‘Impugned Order’) passed by the Adjudicating Authority [National Company Law Tribunal, Mumbai] in I.A. No. 1635 of 2022 in C.P. (IB) No. 190(MB)/2018, by which Respondent No. 1 has been directed to put lock and seal on the Plot No. A7, MIDC, Andheri (E), Mumbai – 400093.

# 2. Briefly, the facts of the case as stated and argued by the Appellant are that the Appellant entered into a Leave and Licence Agreement (in short ‘Agreement’) for taking the premises located at Plot No. A-7, MIDC, Andheri (E), Mumbai – 400093 admeasuring approximately 6000 sq. ft. (built up area) at 1st and 2nd Floor for house for a period of three years commencing from 03.08.2016 to 02.08.2019 (both days inclusive). The Appellant has further stated that Corporate Insolvency Resolution Process (in short ‘CIRP’) was initiated against the Corporate Debtor Shrenuj & Co. by an order of the Adjudicating Authority on 12.03.2019 and during the subsistence of the moratorium the Resolution Professional (‘RP’) extended the Leave and Licence Agreement from 03.08.2019 to 02.07.2020 on requirement of the Corporate Debtor.

# 3. It is further stated by the appellant that an order for liquidation of the Corporate Debtor was passed on 12.07.2021, whereafter the Liquidator-Respondent No. 1 (in short ‘R-1) started proceedings for liquidation of the Corporate Debtor.

# 4. During the on-going liquidation proceedings, the Liquidator started the e-auction of the said premises and sent letter dated 04.01.2022 through his legal counsel to the Appellant asking for vacation of the licensed premises and payment of outstanding licence fee within 7 days of the vacation of the said premises, whereafter, the Appellant paid an amount of Rs. 18,83,520/- through a Cheque No. 199479 dated 08.02.2021 as rent for the period of June 2021 to January, 2022, which amount was duly received and the fact of receipt of this amount was acknowledged by the Liquidator vide his e-mail dated 24.03.2022.

# 5. The Appellant has further stated that he again received a notice dated 13.04.2022 for vacation of the said premises from the Liquidator referring to an early e-mail dated 24.03.2022 sent by the Liquidator asking the Appellant to vacate the said premises on or before 22.05.2022 and also stating that the e-auction of the said premises took place on 06.04.2022 and that the property has been successfully auctioned. The Appellant has submitted that another letter dated 13.04.2022 was sent by the legal counsel of the Liquidator stating that the e-auction was duly concluded and the said premises has been successfully auctioned regarding which the Liquidator had intimated the Appellant earlier, and again calling upon the Appellant to vacate the said premises and handover peaceful and vacant possession on or before 22.05.2022 to the Liquidator.

# 6. The Appellant has further stated that he sent letter dated 27.05.2022 addressed to the Liquidator stating that the Appellant was the lawful tenant of the said premises and is in uninterrupted and peaceful use of auction on the premises and therefore he is not required to vacate the said premises. The Appellant further stated that he appeared before the Adjudicating Authority in Interlocutory Application No. 1635/2022 filed by the Liquidator primarily with a prayer for direction to the Appellant to handover the peaceful and vacant possession to the Liquidator.

# 7. The Appellant has further stated that since it was the tenant of the said premises and continued in uninterrupted possession and occupation of the same since the year 2016, it filed R.A.D Suit No. 259 of 2022 in the Small Causes Court at Mumbai, since the jurisdiction to give directions for vacation or eviction lay with the Small Causes Court. This suit was taken up by the Small Causes Court, Mumbai on 28.06.2022, whereupon an order was passed by the Court directing both the parties to maintain ‘status-quo’ till the next date which was fixed as 06.07.2022. The Appellant has stated that despite this order dated 28.06.2022 passed by the Small Causes Court, the Learned Adjudicating Authority went ahead and passed the Impugned Order dated 06.07.2022 without taking into account the ‘status quo’ order passed by the Small Causes Court, Mumbai and it is Appellant’s contention that the Learned Adjudicating Authority (National Company Law Tribunal, Mumbai) did not possess the necessary jurisdiction to pass the Impugned Order but the vacation/ eviction from the said premises could have been done by the Small Causes Court, Mumbai which possessed jurisdiction under the Maharashtra Rent Control Act, 1999.

# 8. We heard the arguments of both the parties and perused the record. The Learned Senior Counsel for the Appellant has initiated his arguments by submitting that the National Company Law Tribunal, Mumbai does not possess jurisdiction in relation to matters relating to landlord and tenant viz. tenant by eviction and payment of rent which are matters to be dealt under the Maharashtra Rent Control Act, 1999 for which jurisdiction vests only with the Court of Small Causes. He has further referred to Section 33 of the Maharashtra Rent Control Act, 1999 to clarify the aspect of jurisdiction of the Small Causes Court, Mumbai and has also referred to Section 47 of this Act to clarify that no other authority can grant any injunction which relate to issues that are within the jurisdiction of Small Causes Court. He has submitted that the Leave and Licence Agreement was signed between the Appellant and the Corporate Debtor for renting the said premises located at Plot No. A-7, MIDC, Andheri (E), Mumbai – 400093 for the period of 03.08.2016 – 02.08.2019 and further after the onset of moratorium during the insolvency resolution of the Corporate Debtor consequent to the initiation of the CIRP on 12.03.2019, the said agreement was extended for the period of 03.08.2019 to 02.07.2020.

# 9. The Learned Senior Counsel for Appellant has referred to Sections 25(2)(b) and 35(k) of the IBC to point out that is the duty of the Resolution Professional/Liquidator to represent the Corporate Debtor in judicial, quasi-judicial or arbitration proceedings and therefore the Liquidator has to contest the suit filed by the Appellant in the Small Causes Court. He has further referred to Section 18 (f) (5) to point out that it is the duty of the IRP to take control and custody of any asset of the Corporate Debtor in which the Corporate Debtor has ownership rights and therefore it was incumbent on the Corporate Debtor to get the possession of the premises after lawful eviction of the tenant/ Appellant.

# 10. He has cited the judgment of the Hon’ble Supreme Court in the matter of Embassy Properties Developments Pvt. Ltd. vs. State of Karnataka and Ors. [(2020) 13 SCC 308] wherein it is held that the custody of the assets of the Corporate Debtor is subject to determination by the competent court or authority, which in this case is the Small Causes Court and not the Adjudicating Authority. Further, he has referred to the Judgment in the matter of K.L. Jute Products Pvt. Ltd. vs. Tirupti Jute Industries Ltd. [(2020 SCC Online NCLAT 426] wherein this tribunal has held that the Adjudicating Authority is not empowered to pass an order for eviction and it is for the aggrieved party to move the appropriate forum for redressal of its grievances in accordance with law.

# 11. The Learned Senior Counsel for Appellant has also cited the Judgment of Hon’ble Supreme Court in the matter of Vishal N. Kalsaria vs. Bank of India and Ors. [(2016) 3 SCC 762] to claim that Hon’ble Supreme Court has gone into the issue of primacy between the SARFAESI Act and Rent Control Laws and held that the provision of SARFAESI Act cannot override the provisions of Rent Control Law in the matter of taking possession of an asset.

# 12. The Learned Senior Counsel for Appellant has referred to the e-mail dated 14.02.2022 of the Liquidator wherein he has confirmed payment of ‘Rent’ for the period of June 2021 to January 2022. He has further referred to the e-auction notice issued by the Liquidator dated 16.03.2022 to point out that the subject property was to be auctioned on “As Is Where Is”, “As Is What Is” and “Whatever There Is Basis” and therefore the bidders were advised to satisfy themselves about the title and occupation and physically verify the site and subject property prior to bidding, which means that the Liquidator was well aware that the Appellant was a tenant under whose lawful and peaceful possession the subject property continued to be in. He has also referred to the e-mail dated 24.03.2022 of the Liquidator to the successful bidder to say that after noticing the conditions of the e-auction document and the fact that the subject property was in the possession of the Appellant as a tenant, the successful bidder decided to bid and deposited the EMD with the Liquidator. He had said that in such a situation the e-auction was carried out and was the Bidder (R-2) has declared as the successful bidder, then it was the responsibility of the successful bidder or the Liquidator to get back the possession of the subject property from the Appellant after following the due process of law and they should subject themselves to the lawful authority of the Small Causes Court which has the jurisdiction under Maharashtra Rent Control Act, 1999.

13. The Learned Senior Counsel for Appellant has further submitted that the Respondent No. 1/ Liquidator filed I.A. No. 1635 of 2022 before the Adjudicating Authority which did not have jurisdiction to adjudicate upon the matter regarding handing over of vacant and peaceful possession of the said premises by the Appellant. He has further submitted that since the Appellant is a ‘tenant’ and any dispute or action for eviction has to take place under the Maharashtra Rent Control Act, 1999, the Appellant filed a R.A.D. Suit No. 259 of 2022 before the Small Causes Court, Mumbai on 27.06.2022, wherein by an order dated 28.06.2022 the Small Causes Court directed that the status quo be maintained between the parties. He has further claimed that the NCLT, Mumbai passed the Impugned Order on 06.07.2022 while the order dated 28.06.2022 was subsisting and any challenge to the ‘status quo’ order passed by the Small Causes Court should have been done before the relevant Appellate Authority, and therefore aggrieved by the Impugned Order passed by NCLT, the Appellant has filed the present appeal.

# 14. The Learned Senior Counsel for Appellant has referred to the Judgment in the case of Jhanvi Rajpal Automotive Pvt. Ltd. vs. R.P. of Rajpal Abhikaran Pvt. Ltd. & Anr. to contend that the judgment of this Tribunal in that case does not apply in the facts the present case since in the Jhanvi Rajpal case a settlement proposal given by the tenant which was accepted and also because the property in Jhanvi Rajpal case was the only property and therefore it was relevant for insolvency resolution of the corporate debtor. He has further contended that in the Jhanvi Rajpal case, the CIRP proceedings were going on and moratorium under Section 14 of the IBC was in operation, whereas in the present case liquidation has been initiated since no successful resolution could be achieved and moreover the renewed Leave and Licence Agreement in the present case came to an end on 02.07.2020, and therefore tenancy of the Appellant commenced on 03.07.2020 which has continued till the time of e-auction.

15. The Learned Senior Counsel for Appellant has also claimed that since the Appellant has admittedly paid “rent” and the Liquidator had received and accepted the said rent when there was no Leave and Licence Agreement subsisting between the parties, the Appellant is a tenant fully covered under the Maharashtra Rent Control Act, 1999. He has further claimed that the Respondent No. 2, the Successful Bidder, was aware of the rights and claims of the Appellant by virtue of the conditions set out in the e-auction document, and the subject property was put to auction on “as is where is”, “as is what is” and “whatever there is basis” and therefore under the provisions of the letter of intent and Transfer of Property Act the Successful Bidder was aware of the Appellant is a tenant in possession of the subject property.

# 16. The Learned Senior Counsel for Appellant has also cited the judgment of Hon’ble Supreme Court in the matter of Tata Consultancy Services Ltd. vs. Vishal Ghisulal Jain, Resolution Professional, SK Wheels Private Limited (Supreme Court Appeal No. 3045 of 2020, Judgment dated 23.11.2021) wherein it is held that the NCLT and NCLAT should bear in mind the narrow exceptions crafted by Hon’ble Supreme Court in the matter of Gujarat Urja even while examining the interim relief and there should be a clear analysis on how determination of any agreement would put the survival on the corporate debtor in jeopardy.

# 21. The Learned Senior Counsel for Liquidator/ Respondent No. 1 has further referred to Section 33 (5) of the IBC to claim that once a Liquidation order has been passed, no suit or other legal proceedings can be instituted by or against the Corporate Debtor and any suit or legal proceeding may be instituted by the Liquidator on behalf of the Corporate Debtor with the prior approval of the Adjudicating Authority. He has thus clarified that the Liquidator filed I.A. No. 1635 of 2022 before the Adjudicating Authority in accordance with the requirement of Section 33 (5) since it was the duty and responsibility of the Liquidator to take into custody and control the assets of the Corporate Debtor.

# 27. The Learned Senior Counsel for Liquidator has cited the judgment in the matter of Jhanvi Rajpal Automotive (Supra) to point out that moratorium under Section 14 which was operative during the CIRP continues even during liquidation and Liquidator has similar rights under Section 35 as the IRP’s rights under Section 18(1)(f). He has also claimed that the Appeal against the Judgment of NCLAT in the matter of Jhanvi Rajpal Automotive (Supra) before the Hon’ble Supreme Court was dismissed and therefore the Judgment of NCLAT has attained finality. The Learned Senior Counsel for Liquidator has also referred to the Judgment in the matter of Hemal Ishwarbhai Patel vs. Veer Narmad South Gujarat University [(2016) SCC OnLine Guj 10037] wherein the powers and duties of the Liquidator have been clarified and it is held that the Liquidator is bound by Section 35(1)(d) of the IBC. The Learned Senior Counsel for Liquidator has also referred to the Judgment in the matter of Parineeta Chaudhary vs. Mohammed Hussain A. Furniturewalla [(2008) SCC OnLine Bom 858] in support of his contentions. The Learned Senior Counsel for Liquidator has referred to the Judgment in the matter of Vijisan Jewels Pvt. Ltd. vs. Cimme Jewels Ltd. [Company Appeal (AT) (Insolvency) No. 204 of 2021] which is given on similar facts as this case where the corporate debtor was in liquidation and the Adjudicating Authority has allowed the Liquidator to proceed with e-auction and the occupier was asked to vacate the said premises. The matter went on Appeal before the Hon’ble Supreme Court and the Civil Appeal was dismissed and therefore the order of the Adjudicating Authority was upheld. Further, he has referred to Section 35(1)(b) where the duties of the Liquidator have been listed to point out that it is the duty of the Liquidator to take in custody the assets of the corporate debtor and by Section 35(1)(d), the Liquidator has to adopt measures to protect and preserve the assets of the Corporate Debtor. He has also claimed that the suit before the Small Causes Court was filed on 27.06.2022 which was almost one year after passing of the liquidation order and such a delay cannot give any right to the Appellant to take recourse to the issue of his tenancy before the Small Causes Court.

# 28. The Learned Senior Counsel for Respondent No. 2/ Successful Bidder has referred to Section 60(5) to claim that the Liquidator was fully entitled to file an application before the NCLT. He has also referred to Section 33 (5) of the IBC to strongly argue that once the liquidation order has been passed, no suit or other legal proceeding shall be instituted by or against the Corporate Debtor, and proviso to this Sub-Section (5) of Section 33 gives the right to the Liquidator to file a suit or legal proceeding with the prior approval of the Adjudicating Authority. He has thus contended that the Liquidator took the correct step by approaching the Adjudicating Authority through I.A. No. 1635 of 2022 for vacation of the premises under illegal occupation of the Appellant. He has also referred to Section 238 of the IBC to contend that the provisions of IBC shall have over-riding effect during the proceedings during CIRP and in liquidation and will override any inconsistency contained in any other law.

# 29. The Learned Senior Counsel for Respondent No. 2 has referred to the Judgment of Hon’ble Supreme Court in the matter of Gujarat Urja Vikas Nigam Limited vs. Amit Gupta [(2021) 7 SCC 209] wherein the jurisdiction of NCLT and NCLAT is upheld in case of any contractual dispute which relates to insolvency resolution and liquidation of the Corporate Debtor. He has referred to the Judgment of the Hon’ble High Court of Gujarat in the matter of Biotor Industries Limited vs. Gujarat Industrial Development Corporation [Special Civil Application No. 3688 of 2022] to point out that the NCLT possesses jurisdiction to consider and dispose of any question of law or facts arising out of or in relation to the insolvency resolution or liquidation proceedings of the corporate debtor under the IBC. He has also pointed out that this Judgment of Hon’ble High Court of Gujarat considers the Judgement in Gujarat Urja Vikas Nigam Limited (Supra) and Tata Consultancy Services Ltd. (Supra) and takes the view that the residuary jurisdiction of NCLT is correctly invoked by the Respondent Gujarat Industrial Development Corporation in that case. He has also referred to the Judgment of Hon’ble Supreme Court in the matter of Ranjan Kumar & Ors. vs. State of Bihar & Ors. [(2014) 16 SCC 187], wherein it is held that, if necessary, parties are not impleaded, the writ petition would be defective and no relief could be granted in such writ petition. He has sought support from this Judgement in his contention that the successful bidder was a necessary party since it had been given a Letter of Intent in its favour by the Liquidator and the possession of the said premises was to be handed over to the successful bidder and the Appellant was well aware that the Letter of Intent had been issued to the successful bidder. He has vehemently argued that in such a situation the plaint before the Small Causes Court was defective and relief of ‘status-quo’ in this matter could not have been granted.

# 30. In Rejoinder, the Learned Senior Counsel for the Appellant has clarified that he had earlier submitted that the NCLT did not possess jurisdiction to consider any dispute relating to insolvency during liquidation of the Corporate Debtor and the Judgment in Jhanvi Rajpal Automotive (Supra) related to proceedings during CIRP. He has also referred to various sections of the Maharashtra Rent Control Act, 1999 to claim that the Appellant had rights to approach the Small Causes Court as licensee is a party as defined in Section 7(5) of this Act who has the right to approach to Small Causes Court. He has also referred to the Judgement of Madras High Court in the matter of DGFT vs. RP and Sons & Anr. [(2004) 5 CTC 696] whereby the issue of a ‘question of law being left open’ would be available to any other Court and not only the Hon’ble Supreme Court even if the question of law is left open by an order of Hon’ble Supreme Court. He has also cited Judgment in the case of Faujdar Singh vs. State of Uttar Pradesh & Ors. [(2016) SCC OnLine All 3877] where also the Hon’ble Allahabad High Court has held that when a question of law is kept open by an order, that question of law can be looked into by the High Court. He has also referred to the Judgment in the matter of Vishal N. Kalsaria (Supra) to reiterate the point that the jurisdiction under the SARFAESI Act would not be the correct jurisdiction and the provisions of SARFAESI Act will not override the provisions of the Rent Control Act.

# 31. The issues that arise for consideration in this Appeal are two-fold, which are as follows:

• (i) Whether the Appellant was a ‘tenant’ or a ‘licensee’ or an ‘illegal occupant’ and whether the jurisdiction for deciding on the eviction vested with the Small Causes Court or the NCLT where liquidation was underway?

• (ii) Whether the NCLT was correct in passing the Impugned Order for putting the said premises in Plot No. A-7, MIDC, Andheri (E), Mumbai – 400093 under lock and key of the Liquidator once a status-quo order has been passed by the Small Causes Court, Mumbai on 28.06.2022?

34. We further note that ‘tenant’ has been defined in Section 7 (15) of the Maharashtra Rent Control Act, 1999 as “any person by whom or on whose account rent is payable for any premises” and ‘licensee’ has been defined separately in Section 7(5) of this Act as a person who is in occupation of the premises or such part, as the case may be, under a subsisting agreement for licence given for a licence fee or charge. Further, the various references to ‘rent’ in the Maharashtra Rent Control Act, 1999 are between the ‘landlord’ and ‘tenant’ but when it is in respect of any premises given to licensee, the term ‘licence fee’ or ‘charge’ is used. Thus it is clear that while the term ‘rent’ is used for payment or of use of premises by a tenant, the term ‘licence fee’ is used in respect of use of any premises given under licence agreement by a licensee.

# 35. Admittedly, the Leave and Licence Agreement for the said premises was entered into for a period of 3 years from 03.08.2016 to 02.08.2019, and thereafter CIRP was initiated vide order of the Adjudicating Authority on 12.03.2019 against the corporate debtor. During the subsistence of the CIRP, the Resolution Professional renewed the Leave and Licence Agreement from 03.08.2019 to 02.07.2020 and no further extension or renewal of the Leave and Licence Agreement took place after expiry of the agreement of 02.07.2020. It is noted by us that the Appellant remained in position of the subject premises and continued to pay licence fees for use of the premises. It is also noted that the Liquidator, through his legal counsel, sent a notice dated 04.01.2022 (attached at Page No. 46 to 49 of the Appeal Paper Book) for vacation of the licensed premises and payment of outstanding licence fee. In particular, Para- 8 of this notice is relevant, wherein the Liquidator has asked the Appellant to provide proof of interest fee deposit of Rs. 6 Lakhs and asked the Appellant to pay the outstanding ‘licence fees’ of an amount of Rs. 18,00,680/- plus the amount that is to be calculated on the date of vacation which is mentioned as outstanding licence fees, and has also called upon the Appellant to vacate the licenced premises i.e. Plot No. A-7, MIDC, Andheri (E), Mumbai – 400093. In reply to this notice, the Appellant submits a Cheque No. 199479 dated 08.02.2022 for an amount of Rs. 18,83,520/- but makes the mention that this payment is being made for rent for the period of June 2021 to January 2022 which to us appears to be an incorrect term ‘rent’ used by the Appellant.

# 36. The Learned Senior Counsel for the Appellant has sought support from the reply dated 24.03.2022 sent by the Liquidator to the Appellant, wherein the word ‘rent’ has been used twice. A closer look at this e-mail makes it clear that the Liquidator uses the word ‘licence fee’ that is demanded from the licensee/ Appellant but repeats the word ‘rent’ when it refers to the contents of Appellant’s letter dated 14.02.2022. Thus, it is quite clear that even though the Appellant uses word of ‘rent’ while sending the overdue outstanding payment of licence fee by its letter dated 14.02.2022, the Liquidator has all along in his letters/e-mails dated 04.01.2022, 24.03.2022, 13.04.2022, 30.04.2022, 18.05.2022 and in its I.A. No. 1635 of 2022 used the word ‘Leave and Licence Agreement’ extensively while referring to the arrangement for use of the sub premises by the Appellant. It is, therefore, not clear as to how after admitting that the said premises were used on ‘Leave and Licence’ basis by the Appellant in accordance with the Leave and Licence Agreement, the Appellant does a complete turnaround and mentions that the subject premises were being used and occupied by him as lawful tenant in its letter dated 27.05.2022 and again in its letter dated 10.06.2022 and 11.06.2022.

# 37. While noting the above, we are conscious of the fact that the Appellant vide its letter dated 26.04.2022, (which has been mentioned by the Appellant in passing in the Appeal, but the copy is not attached with the Appeal Memo) states that the subject premises located at Plot No. A-7, MIDC, Andheri (E), Mumbai – 400093 belonging to Shrenuj and Co. is being occupied by them on ‘Leave and Licence’ basis and acknowledged that since the said premises had been sold through auction and they have to vacate it before 22.05.2022, they are looking for an alternate place to shift in order to vacate the property, further seeking time till 31.07.2022 to the vacate property.

# 38. Admittedly, the original Leave and Licence Agreement between the Appellant and Corporate Debtor was for 3 years from 03.08.2016 to 02.08.2019 and this Agreement was extended by the Resolution Professional during the currency of the Moratorium from 03.08.2019 to 02.07.2020. Thereafter, as per the Agreement terms as included in Clause 28, no alteration, amendment or modification of the Agreement could have been done in writing and signed by both the parties. Quite clearly the Agreement was not extended beyond 03.07.2020 and this fact was brought to the notice of the Appellant by the Liquidator through communication dated 04.01.2022, whereby the Appellant was intimated that the Leave and Licence Agreement was only valid up to 02.07.2020 and that the Appellant was required to vacate the licensed premises within 7 days from the date of receipt of the notice. Further, the Appellant was communicated that the e-auction of the said property was to take place on 06.04.2022 and by an e-mail dated 08.04.2022 the Liquidator communicated as follows to the Appellant :-

• “Dear Sir,

• As you are aware that the E-Auction notice was published for sale of assets of the Corporate Debtor including A7-MIDC property and during the E-Auction held on 06.04.2022, MIDC A-7 property has been successfully auctioned. In this regard, you are requested to kindly vacate the premises of MIDC A-7 within a period of 45 days from today’s mail.

• Kindly acknowledge the receipt of this mail and do the needful.”

# 39. Further, we note that the Liquidator issued a Letter of Intent to the successful bidder on 13.04.2022. The Appellant sent a letter dated 26.04.2022, whereby it took note of the e-mail and notice from the Advocate of the Liquidator for the vacation of the premises and admitted that he was looking for an alternate place to shift in order to vacate the property and requested for time till 31.07.2022 to vacate the property. In the light of the fact that the Leave and Licence Agreement terminated on 02.07.2020 and that the Liquidator continued to inform the Appellant that the said premises were being e-auctioned as part of the liquidation proceedings of the Corporate Debtor, it is abundantly clear that the Appellant was in illegal possession and occupation of the said premises and was consciously aware that it had to vacate the said premises, as is evident from the Appellant’s letter dated 26.04.2022 addressed to the Liquidator.

# 40. Thus, in the light of the Leave and Licence Agreement entered between the Appellant and Resolution Professional and a series of communications sent by the Liquidator and in particular the letter dated 26.04.2022 (attached in Reply of R-1, Page-22) sent by the Appellant to the Liquidator admitting that the said premises have to be vacated after having been sold through e-auction. We are of the clear view that the relationship that existed between the Appellant and the corporate debtor is that of a ‘licensee’ and ‘licensor’ and not that of ‘tenant’ and ‘landlord’.

41. We now peruse section 18(1)(f) of the IBC which imposes a duty on the Resolution Professional to take control and custody of any asset over which the corporate debtor has ownership rights. Therefore, the Resolution Professional had to take ownership of the sub-property and he decided to extend the Leave and Licence Agreement till 02.07.2020 in accordance with the requirements of the corporate debtor. On the same lines, the powers and duties of the Liquidator are enumerated in Section 35 of the IBC, and the relevant clause (f) of sub-section (1) is as follows:- . . . . .

42. Further, Section-35(1)(d) imposes a duty on the Liquidator to take such measures to protect and prevent the asset and property of the Corporate Debtor as he considers necessary, and Section 35(1)(n) gives the power to the Liquidator to apply to the Adjudicating Authority for such orders or directions as may be necessary for the liquidation of the Corporate Debtor. It is clear that the said premises at Plot No. A-7, MIDC, Andheri (E), Mumbai – 400093 were in the ownership of the corporate debtor and it was a duty of the Liquidator to protect and preserve this asset of the Corporate Debtor pending its disposal in the liquidation process and further clause (n) of sub-Section (1) of Section (35) gave powers to the Liquidator to the apply to the Adjudicating Authority for such orders as may be necessary for the liquidation of the Corporate Debtor.

47. The Liquidator approached the Adjudicating Authority in the light of Section- 33(5) and Section- 60(5)(c) of the IBC for vacation of the premises which in our view was the correct thing to do. We note that I.A. 1635 of 2022 was preferred by the Liquidator before NCLT, Mumbai on 15.06.2022, and the Appellant filed his Affidavit in Reply on 22.06.2022. The Affidavit in Reply of the Appellant in I.A. 1635 of 2022 is attached at Page- 99 to 108 of the Appeal Paper Book, wherein the Appellant raised the question of it being a tenant of the Corporate Debtor, objecting to the jurisdiction of NCLT to decide the application for vacation of the said premises. In the facts of the case the Appellant, by virtue of signing the Leave and Licence Agreement which was operational till 02.07.2022, was in illegal occupation of the subject premises on the date I.A. No. 1635 of 2022 was instituted. While the Appellant filed the Reply in I.A. No. 1635 of 2022 on 27.06.2022 but without waiting for NCLT, Mumbai to give its decision in the matter, the Appellant went ahead and filed R.A.D Suit No. 259 of 2022 in the Court of Small Causes at Mumbai on the basis of the understanding raising the issue of that he was a tenant of the Corporate Debtor. Whose eviction could be considered only under the Maharashtra Rent Control Act, 1999. It appears surprising that when Appellant was aware that the said premises had been in e-auctioned and the Successful Bidder- Rexnord Electronics and Controls Limited had been issued a ‘Letter of Intent’, why it failed to maintain these reasons based known to the facts in his Affidavit in support of application for interim relief nor did it implead the successful bidder as a party in the suit before the Small Causes Court.

48. We are therefore, convinced that once a property was part of the liquidation state of the Corporate Debtor under liquidation, the provisions of IBC were applicable regarding the assets which were in the ownership of the Corporate Debtor and Section-238 of the IBC prohibited the applicability of any other law which was inconsistent with the IBC.

52. We note that in the matter of Embassy Properties Developments(Supra), the Hon’ble Supreme Court has held that “if asset owned by a third party in possession of the Corporate Debtor held under contractual arrangements, is specifically kept out of the definition of the term “assets” Further, in a situation where a contractual arrangement is ongoing, the Resolution Professional cannot short-circuit the same and bring a claim before NCLT taking advantage of Section 60(5). These judgements are distinguished on the basis of the fact that no contractual arrangement existed between the Appellant and the Corporate Debtor after 02.07.2020, when the extended Leaves and Licence Agreement expired and therefore the ratio in these judgements cannot provide support to the case of the Appellant.

53. The Learned Senior Counsel for Appellant has also referred to the judgment in the matter of K.L. Jute Products Pvt. Ltd. vs. Tirupti Jute Industries Ltd. [(2020 SCC Online NCLAT 426] which is as follows, to claim that the Adjudicating Authority did not possess jurisdiction to pass order regarding eviction:-

“66. Insofar as, the eviction of 2nd Respondent is concerned, the Adjudicating Authority is not empowered to pass an order of eviction and it is for an ‘Aggrieved party’ to move the appropriate forum for redressal of its grievances in accordance with Law. In short, the Committee of Creditors had approved the Resolution Plan in utter regard to the ingredient of Section 30(2)(e) of the I&B Code and as hence the same was rejected by the Adjudicating Authority. Moreover, the Adjudicating Authority had appointed a ‘Liquidator’ other than the ‘Existing Resolution Professional’.

54. The above judgment is in a case where a lease agreement was signed by the corporate debtor after the section 13(2) notice had been issued and further the resolution plan was subject to the termination of all the existing lease agreement. It was held by the NCLAT that such a condition imposed in the resolution plan was not correct and the eviction should have been dealt with under the correct law. On the contrary, in this case, the Appellant had occupied the subject premises under a Leave and Licebec Agreement as a licensee and the agreement had expired when the e-auction took place. Furthermore, the Liquidator had all along, before conducting the e-auction apprised the appellant that it had to vacate the subject premises regarding which the appellant had agreed to as is evident by his letter dated 26.4.2022.

55. The Learned Senior Counsel for Appellant has also cited Judgement in the matter of Vishal N. Kalsaria vs. Bank of India and Ors. [(2016) 3 SCC 762] wherein the following has been held:- . . . .  . 

56. Insofar as above judgement in case of Vishal N. Kalsaria (Supra) is concerned, it is distinguishable since in the facts of that case tenancy was the issue and, therefore the tenant could have been evicted only after following the due process of law as prescribed under the Rent Control Act. In the present case there is no existence of tenancy in favour of the Appellant and the Applicant it was only a licensee till 02.07.2020, whereafter he was in illegal occupation and possession of the said premises. Therefore, the Judgement in Vishal N. Kalsaria (Supra) case cannot also provide support to the case of the Appellant.

57. The Learned Counsel for the Respondent No. 1/ Liquidator relied upon the following few judgment in the matter of Parineeta Chaudhary vs. Mohammed Hussain A. Furniturewalla [(2008) SCC OnLine Bom 858]. We note that this judgment supports the contention of the Liquidator that mere payment of some amount, which the Appellant incorrectly calls ‘rent’ cannot create the right of tenant in favour of the Appellant :-

“11. In the present case, however, the licence period expired in January 2005. Indeed, respondent did not file application under section 24 with immediate despatch but waited till December 2005. It is also true that the respondent accepted the monthly compensation offered by the petitioners from time to time. That alone cannot be the basis to inter that the Respondent agreed for change of relationship between the parties from one of licensor and licensee to that of landlord and tenant in relation to the suit premises. In the present case, the Courts below have Considered the defence of the petitioners in this behalf and rejected the same. That is the finding of fact which would bind this Court. Merely because another view is possible or that there is some error here or there in the judgement under challenge, cannot be the basis to exercise writ jurisdiction under Article 227 of the Constitution of India. In so far as the finding recorded by the two courts below on the material issue as to whether the petitioners are liable to be evicted from the suit premises, I have no hesitation in upholding the same as just and proper and in accordance with the legal requirement.”

58. The Learned counsel for Respondent No. 2 has placed reliance on the following judgment in the matter of Biotor Industries Limited vs. Gujarat Industrial Development Corporation [Special Civil Application No. 3688 of 2022] to contend that the residuary jurisdiction in relation to issues during CIRP lie with the Adjudicating Authority insofar as insolvency resolution of the corporate debtor is concerned. The relevant part of this judgment is as hereunder:

“7.14 While in the case of Gujarat Urja (supra) and Tata Consultancy Services Limited (supra) the contract was central to the success of CIRP. Reading paras 84 to 91 of the judgment in Gujarat Urja (supra), what is evident is that the residuary jurisdiction of NCLT under Section 60(5)(c) of the IBC provides a wide discretion to adjudicate questions of law or fact arising from or in relation to the insolvency resolution proceedings. Reading the relevant paragraphs in Tata Consultancy Services Limited (supra) as cited by the respondent, the NCLT can intervene when, it is even the case of the petitioner that there is an embargo under the IBC. In the application filed by the respondent which is pending before the NCLT, it is open for the petitioner to take all the contentions raised in this petition. The residuary jurisdiction of the Tribunal therefore to decide this issue had already been invoked by the respondent and the petition therefore, at the hands of the petitioner company which seeks the protective umbrella under the IBC itself can oppose the prayers made in that application.

8. For all the aforesaid reasons therefore, the petition is dismissed. Rule is discharged.”

59. We are of the view that the residuary jurisdiction is relevant during the CIRP when the insolvency resolution of the corporate debtor is taking place, whereas in the present case the liquidation of the corporate debtor is being considered and the liquidator has taken recourse to its powers under section 33(5) to get control and custody of the asset of the corporate debtor.

61. It is noted that during the hearing in I.A. No. 1635 of 2022 the Liquidator/ Respondent No. 1 was present before the NCLT when the above-mentioned order was passed. The NCLT order notes the contention of the Liquidator that Respondent No. 1 had obtained status-quo order from the Small Causes Court, Mumbai by suppressing facts and without making the Liquidator as a necessary party. We therefore, are of the opinion that the ‘status- quo’ order was obtained from the Small Causes Court by the Appellant without placing full and complete facts regarding its occupation and possession of the said premises and without impleading the Liquidator as a necessary party. It is also a fact that the Appellant claimed to be a ‘tenant’ covered under the Maharashtra Rent Control Act, 1999 when it had neither signed any tenancy agreement with the Corporate Debtor and further the Leave and Licence Agreement had also expired on 02.07.2020. We are of the opinion that the NCLT possesses the correct jurisdiction in considering an application for vacation of the premises in question and that the NCLT was correct in passing the Impugned Order which would be necessary to put the premises in question with the Liquidator and pending the final disposed of I.A. No. 1635 of 2020. Therefore, we are clear that the Impugned Order does not need any intervention.

62. In the light of the above-stated discussion, we are of the opinion that the NCLT possesses the correct jurisdiction for considering an application for vacation of the premises in question in the circumstances of the present case, and the NCLT was correct in passing the Impugned Order which would be necessary to place the custody of the premises in question with the Liquidator pending the final disposal of I.A. No. 1635 of 2020 so that the liquidation process is completed timely and in accordance with legal provisions. We are, therefore, of the clear view that the Impugned Order does not need any intervention. The Appeal is, therefore, dismissed with no order as to costs.

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