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        Insolvency and Bankruptcy

        2018 (6) TMI 1060 - AT - Insolvency and Bankruptcy

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        Resolution professional powers under insolvency law do not extend to tenant eviction, though asset control and rent recovery remain available. Section 14 of the Insolvency and Bankruptcy Code does not empower a resolution professional to evict tenants or seek police protection for taking charge ...
                      Cases where this provision is explicitly mentioned in the judgment/order text; may not be exhaustive. To view the complete list of cases mentioning this section, Click here.

                          Resolution professional powers under insolvency law do not extend to tenant eviction, though asset control and rent recovery remain available.

                          Section 14 of the Insolvency and Bankruptcy Code does not empower a resolution professional to evict tenants or seek police protection for taking charge of assets; it only restrains recovery of property from the corporate debtor's possession, and any operational difficulty must be addressed through the appropriate statutory mechanism. Section 18(f) authorises the resolution professional to take control of and take over the corporate debtor's assets, even if not in its possession, and to recover unpaid rent through the proper forum, but it does not permit forcible dispossession of tenants. The appeal was therefore found to disclose no infirmity in the impugned order.




                          Issues: (i) Whether the resolution professional could invoke the moratorium under section 14 of the Insolvency and Bankruptcy Code, 2016 to seek removal of tenants and police protection for taking charge of the assets. (ii) Whether the resolution professional could rely on section 18(f) of the Insolvency and Bankruptcy Code, 2016 to contend that he was entitled to take over the assets and recover rent from the tenants.

                          Issue (i): Whether the resolution professional could invoke the moratorium under section 14 of the Insolvency and Bankruptcy Code, 2016 to seek removal of tenants and police protection for taking charge of the assets.

                          Analysis: The moratorium under section 14(1)(d) bars recovery of property by an owner or lessor when the property is in the possession of the corporate debtor. It does not confer a power on the resolution professional to remove tenants or use section 14 as a basis for eviction or police protection. If the resolution professional faces difficulty in discharging statutory functions, recourse may be taken to the District Administration under the relevant regulation.

                          Conclusion: The resolution professional could not invoke section 14 for eviction of tenants or for the relief sought against them.

                          Issue (ii): Whether the resolution professional could rely on section 18(f) of the Insolvency and Bankruptcy Code, 2016 to contend that he was entitled to take over the assets and recover rent from the tenants.

                          Analysis: Section 18(f) enables the resolution professional to take control of and take over the assets of the corporate debtor, whether or not they are in possession of the corporate debtor. That entitlement does not include a right to remove a tenant by force. If rent is unpaid, the resolution professional may proceed before the appropriate forum and may also recover rent from the tenants.

                          Conclusion: The resolution professional had authority to take over the assets and recover rent, but not to dispossess the tenants under section 18(f).

                          Final Conclusion: The impugned order disclosed no infirmity, and the appeal failed.

                          Ratio Decidendi: The resolution professional's statutory power to take control of the corporate debtor's assets does not extend to eviction of tenants under the moratorium provisions, and any difficulty in discharge of duties must be addressed through the appropriate statutory mechanism.


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                          ActsIncome Tax
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