Leasehold rights as intangible assets under insolvency law allow resolution professionals to take custody during CIRP.

Leasehold rights acquired by a corporate debtor under a long-term lease were treated as an intangible asset within section 18(f) of the Insolvency and Bankruptcy Code, 2016, because the lease conferred vested commercial rights of use, development, and conditional transfer, distinct from ownership of the underlying land. The explanation to section 18(f) was held to exclude only third-party assets held in trust or under different contractual arrangements, not leasehold interests. Accordingly, the resolution professional was entitled to take custody and control of the leasehold rights during CIRP, while the land itself was not treated as the debtor's owned asset. The appeal failed and the impugned order was sustained.

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Issues: Whether leasehold rights acquired by the corporate debtor under a long-term lease are an intangible asset falling within the scope of section 18(f) of the Insolvency and Bankruptcy Code, 2016, and whether the resolution professional can take control and custody of such rights during the corporate insolvency resolution process.

Analysis: The lease deed conferred on the corporate debtor a vested leasehold interest with incidents of use, development, transfer subject to permission, and mortgage subject to conditions. The Court treated such leasehold rights as a species of commercial interest distinct from bare ownership of the land. It held that the exclusion in the explanation to section 18(f) is confined to assets owned by third parties in the debtor's possession under trust or contractual arrangements of a different character and does not cover leasehold rights. Relying on the statutory concept of property, the nature of ownership as a bundle of rights, and the treatment of leaseholds as intangible assets, the Court held that the resolution professional was entitled to take custody of the leasehold rights, while the underlying plot itself was not to be treated as the debtor's owned land.

Conclusion: Leasehold rights were held to be an intangible asset of the corporate debtor within section 18(f), and the appeal failed.

Final Conclusion: The impugned order was sustained in substance, and the leasehold interest remained within the insolvency estate for resolution purposes.

Ratio Decidendi: Leasehold rights carrying substantial incidents of commercial enjoyment and control are intangible assets of the corporate debtor for the purposes of section 18(f) of the Insolvency and Bankruptcy Code, 2016, and may be taken into custody by the resolution professional during CIRP.

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