Inclusion of Leasehold Rights in Liquidation Estate Upheld, Alternative Remedy Available

The High Court upheld the NCLT's order directing the inclusion of the leasehold rights in the Liquidation Estate, emphasizing the need for possession to maximize realization value. The Court dismissed the writ petition challenging the inclusion of personal properties, stating the petitioners had an alternate remedy through appeal under the IBC.

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Issues:
1. Inclusion of personal properties of petitioners in the liquidation estate under the Insolvency and Bankruptcy Code, 2016.

Detailed Analysis:

Issue 1: Inclusion of personal properties of petitioners in the liquidation estate under the Insolvency and Bankruptcy Code, 2016:
The petitioners mortgaged their properties to secure the dues of M/s. Raihan Health Care Private Limited, which led to the National Company Law Tribunal (NCLT) appointing a Liquidator. The main contention was whether the personal properties of the petitioners, which were mortgaged to the Banks as guarantors, could be included in the Liquidation Estate. The High Court found that the leasehold rights of the corporate debtor, which were mortgaged to the Banks, could be included in the Liquidation Estate as per Section 36(3) of the IBC. However, the ownership rights of the petitioners, which were still with them but mortgaged to the Bank, raised doubts on their inclusion in the Liquidation Estate. The High Court set aside the NCLT's order allowing the Liquidator to add the mortgaged land of the petitioners into the Liquidation Estate, directing the NCLT to reconsider the issue after giving an opportunity of hearing to the petitioners.

The NCLT later affirmed its order directing the Banks to hand over the physical possession of the mortgaged leasehold land of the corporate debtor to the Liquidator for the Liquidation Estate. The Liquidator argued that the personal properties of the petitioners, being assets mortgaged to financial creditors, were bound to be included in the Liquidation Estate to maximize realization value for stakeholders. The NCLT emphasized the necessity of obtaining possession of the property for the Liquidator to dispose of the assets and settle claims.

The High Court reiterated that the leasehold rights of the corporate debtor could be included in the Liquidation Estate, as directed by the NCLT after hearing the petitioners. The Court found that the judgments cited by the petitioners were not applicable in this case, and since the petitioners had an alternate remedy of appeal to the NCLAT under the IBC, a writ petition under Article 226 was not maintainable. Therefore, the writ petition challenging the inclusion of personal properties in the Liquidation Estate was dismissed.

In conclusion, the High Court upheld the NCLT's order directing the inclusion of the leasehold rights in the Liquidation Estate, emphasizing the need for possession to maximize realization value, and dismissed the writ petition due to the availability of an alternate remedy through appeal under the IBC.

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