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AI Drafter - (New and Powerful) ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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Issues: (i) Whether the reliefs sought by the applicant concerning the lease property were capable of being granted by the Tribunal; (ii) whether the subject property could be treated as an asset of the corporate debtor.
Issue (i): Whether the reliefs sought by the applicant concerning the lease property were capable of being granted by the Tribunal?
Analysis: The dispute arose out of a registered lease-cum-sale arrangement under which the corporate debtor was in physical possession of the allotted land. The parties were raising rival allegations of breach of the agreement, and the applicant sought declaratory and restraining reliefs to prevent the resolution professional and the corporate debtor from dealing with the property. The Tribunal held that, in these circumstances, eviction or interference with possession could not be ordered in the insolvency proceedings and that the appropriate remedy lay before the competent civil court.
Conclusion: The reliefs were not capable of being granted by the Tribunal and this issue was answered against the applicant.
Issue (ii): Whether the subject property could be treated as an asset of the corporate debtor?
Analysis: The registered instrument was treated as more than a bare lease, as it conferred possessory legal rights and also contemplated extension of lease and eventual sale on fulfilment of conditions. The corporate debtor's possession under that document had not been lawfully disturbed, and the applicant's claim of breach did not justify immediate removal of the property from the estate through the present application. The Tribunal held that the legal rights already acquired under the lease-cum-sale agreement would continue to vest in the resolution applicant until eviction in accordance with law.
Conclusion: The property could continue to be treated as part of the corporate debtor's rights for the purpose of the insolvency process and this issue was answered against the applicant.
Final Conclusion: The application for declaration and restraint in relation to the lease property was not maintainable before the Tribunal and was rejected, leaving the parties to pursue their remedies in accordance with law.
Ratio Decidendi: Where a corporate debtor is in settled possession under a registered lease-cum-sale arrangement, disputes over alleged breach and possession cannot be resolved by the insolvency tribunal by way of eviction or declaration, and such interference must proceed only through due process of law before the competent forum.
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