CASE NAME: MRS. DURDANA AABID ALI & ORS. VS MR. VIJAY KUMAR V IYER
2024 SCC OnLine NCLAT 549.
Bench: Mr. Justice Ashok Bhushan (Chairperson) and Mr. Barun Mitra (Technical Member)
Facts:
- The case arises out of the order dated 05.10.2023 passed by the National Company Law Tribunal (NCLT), Mumbai Bench.
- The appellant, Durdana Aabid Ali, sought to set aside a notice issued by the Resolution Professional (RP) requesting inspection and access to the property owned by the appellant.
- Food World Super Markets Pvt. Ltd. (FWSL) assigned the lease of the property to the Corporate Debtor i.e., FRL, via a Deed of Assignment which the appellant disputed, claiming no prior written intimation was provided as required by Clause 14.7 of the Lease Deed.
- The Corporate Debtor entered CIRP and a notice was issued to inspect the property and assets
- The appellant filed an application to set aside the notice, arguing the lease had expired, no assignment occurred, and the property was in their vacant possession.
- The NCLT dismissed the application, leading to this appeal.
Issues
- Whether the Deed of Assignment from FWSL to FRL was valid and undisputed.
- Whether the lease was extended beyond 14.11.2021, and if FRL was in possession of the property at the CIRP commencement.
- Whether the RP’s notice for inspection was permissible under Sections 14, 18, or 25 of the IBC.
Arguments:
- The appellant consistently denied the assignment of the lease to FRL, asserting no written intimation was provided as required by Clause 14.7 and no proof of a No Objection Certificate (NOC) from the appellant was provided by the RP.
- The lease expired on 14.11.2021, before the CIRP commenced on 20.07.2022. Clause 2.1 of the Lease Deed required a new deed for extension, but no evidence of extension or rental payments post-expiry was produced.
- The NCLT wrongly inferred FRL’s possession from the appellant’s 24.05.2022 notice to FWSL. The notice was addressed to FWSL, not FRL, indicating the appellant did not recognize FRL’s role. The RP’s reliance on employee records and store lists was insufficient without evidence of FRL’s actual possession.
Holding
- The NCLAT allowed the appeal, set aside the NCLT’s order dated 05.10.2023, and directed the RP to withdraw the notice The RP and staff were restrained from dealing with the property.
- The NCLT erred in finding the assignment undisputed, as the appellant’s reply on 09.05.2023 and prior notices (24.05.2022, 01.03.2023) clearly contested it.
- Under Section 18(1)(f) and Explanation (a) of the IBC, the RP cannot take custody of third-party assets not in the Corporate Debtor’s possession. Section 14(1)(d) prohibits recovery of property occupied by the Corporate Debtor but does not create new rights, such as lease renewal. The property, owned by the appellant and not possessed by FRL, was outside the CIRP and moratorium scope.
Significance
The judgement clarifies the limits of a Resolution Professional’s authority under the IBC for third-party assets, especially those not in the Corporate Debtor’s possession, to be excluded from CIRP and the moratorium under Section 18(1)(f) and Explanation (a). The ruling emphasized on the need for RPs to substantiate claims of possession or assignment with evidence, particularly when disputed, and reinforces that Section 14(1)(d) preserves the status quo without creating new rights.
