Tribunal Rules Recovery of Rent & Eviction Matter Belongs to Civil Court

The tribunal held that the recovery of rent and eviction of the tenant from the corporate debtor's property fall under the jurisdiction of civil courts. The liquidator's claim of ownership was upheld, advising the liquidator to take possession and proceed with the sale through legal channels. Both applications were dismissed, directing the parties to pursue remedies in the civil court.

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Issues Involved:

1. Legality of the respondent's occupation of the subject property.
2. Entitlement of the applicant to recover outstanding rent/compensation and interest.
3. Authority of the applicant to sell, dispose of, and transfer the subject property.
4. Jurisdiction of the National Company Law Tribunal (NCLT) in eviction proceedings and recovery of rent.

Issue-wise Detailed Analysis:

1. Legality of the Respondent's Occupation:

The applicant, the liquidator of M/s Precision Fasteners Limited, filed an application under Section 60(5)(c) of the Insolvency and Bankruptcy Code, 2016, seeking a declaration that the respondent's occupation of the subject property was illegal and requesting the respondent to vacate and hand over peaceful possession of the property. The applicant asserted ownership of the property by the corporate debtor, supported by an agreement dated 07/10/1983 and a letter from the developer recognizing the corporate debtor's ownership. The respondent, however, refused to vacate, claiming tenancy rights and disputing the corporate debtor's title to the property.

2. Entitlement to Recover Outstanding Rent/Compensation and Interest:

The applicant sought an order directing the respondent to pay Rs. 1,94,953 towards outstanding rent/compensation and Rs. 12,235 as interest, along with further interest at 12% per annum from the date of default. The respondent had reduced the rent unilaterally and stopped paying rent from June 2018. The applicant argued that the respondent's actions were unjustified and that the corporate debtor's ownership was evident from property tax receipts and rent payments.

3. Authority to Sell, Dispose of, and Transfer the Property:

The applicant requested permission to sell, dispose of, and transfer the subject property in accordance with the Insolvency and Bankruptcy Code, 2016. The applicant emphasized the liquidator's duty to liquidate the corporate debtor's assets and distribute proceeds to creditors. The applicant also sought police protection to implement the tribunal's orders.

4. Jurisdiction of NCLT in Eviction Proceedings and Recovery of Rent:

The tribunal referred to the Supreme Court's judgment in Embassy Property Developments Pvt. Ltd. vs. State of Karnataka, which clarified that NCLT does not have jurisdiction over all types of claims related to the property of the corporate debtor. It highlighted that matters such as eviction and recovery of rent fall under the jurisdiction of civil courts. The tribunal also cited the NCLAT judgment in K.L Jute Products Pvt. Ltd. vs. Tirupti Jute Industries Ltd., which reinforced that eviction proceedings are beyond NCLT's purview.

Conclusion:

The tribunal concluded that the recovery of rent and eviction of the tenant from the corporate debtor's property are within the exclusive domain of civil courts. The liquidator's inclusion of the property in the liquidation estate was upheld, and the liquidator was advised to take possession and proceed with the sale through due legal process. Both applications, MA 1512/2018 and MA 47/2019, were dismissed, directing the parties to seek remedies in the appropriate civil court.

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