2023 (5) TMI 981 - AT - Insolvency and Bankruptcy

NCLT Has Jurisdiction Over Eviction Cases Under Insolvency Law; Invalid Eviction Notices Issued by Liquidator

Nitin Jain Partner AAA Insolvency Professionals LLP Versus Universal Tutorial Private Limited

The Tribunal held that the National Company Law Tribunal (NCLT) has jurisdiction to adjudicate eviction matters under the Insolvency and Bankruptcy Code. ... Liquidation of Corporate Debtor - Vacation of premises - direction to Respondent to co-operate with the Liquidator to show the said premise to the prospective investors - HELD THAT:- Reliance placed on judgment passed by three Members Bench of this Tribunal in the case of M/S. JHANVI RAJPAL AUTOMOTIVE PVT. LTD. VERSUS VERSUS R.P. OF RAJPAL ABHIKARAN PVT. LTD., AGARWAL REAL CITY PVT. LTD. [2023 (1) TMI 301 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI]. In the above case, lease Agreement was not renewed and also no dispute that assets in question is owned by the Corporate Debtor and this Appellate Tribunal laid down that Adjudicating Authority has rightly allowed the Application filed by the RP directing the Appellant to vacate from the premises so that Resolution Plan which has been approved can be implemented. We thus do not find any merit in the Appeal, the Appeal is dismissed. The aforesaid case was challenged before the Hon’ble Supreme Court in M/S. JHANVI RAJPAL AUTOMOTIVE PVT. LTD. VERSUS R.P. OF RAJPAL ABHIKARAN PVT. LTD. & ANR. [2023 (2) TMI 1133 - SC ORDER] and the Hon’ble Supreme Court upheld the order passed by three Members Bench of this Tribunal. In the present case also, Agreement was expired and further, Respondent is paying rent for the Tenanted Premises as per mutual understanding between the parties. The said internal communication email dated 31.07.2019 (at page 106 of the Appeal) of Corporate Debtor clearly stated that New Agreement will not be renewed and Corporate Debtor will raise invoice with 5% increase in monthly rent. Contrary to the above, the Tribunal noted the fact in the impugned order is of the dispute relating to title of the Corporate Debtor. Therefore, the Tribunal permitted the liquidator to file eviction suit in the proper Court. The Adjudicating Authority has failed to notice the above judgment passed by three Member Bench of NCLAT which was upheld by Hon’ble Supreme Court. The three Member Bench of NCLAT judgment is binding. In view of the fact, the impugned order dated 10.02.2021 passed by the Adjudicating Authority (National Company Law Tribunal, Ahmedabad Bench, Court 1) is hereby set aside and the matter is remanded back to the Adjudicating Authority with a request to pass afresh order in accordance with law at an early date. Issues Involved:1. Jurisdiction of NCLT to adjudicate eviction matters.2. Validity of eviction notices issued by the Liquidator.3. Whether the Liquidator can take possession of the property without filing a civil eviction suit.Summary:Jurisdiction of NCLT to Adjudicate Eviction Matters:The primary issue is whether the National Company Law Tribunal (NCLT) has jurisdiction to entertain eviction matters under Section 60(5) of the Insolvency and Bankruptcy Code (IBC). The Appellant argued that NCLT has exclusive jurisdiction over matters involving the corporate debtor, citing the Supreme Court's interpretation in 'Arcelor Mittal India Private Limited v Satish Kumar Gupta,' which emphasized that NCLT alone has jurisdiction for applications and proceedings by or against a corporate debtor. The Respondent countered that the dispute is civil in nature and should be adjudicated by a civil court, referencing the 'Embassy Property Developments Pvt Ltd v State of Karnataka and others' case, which delineated the limits of NCLT's jurisdiction. The Tribunal noted that NCLT's jurisdiction extends to matters arising out of or in relation to insolvency resolution or liquidation proceedings, as per Section 60(5)(c) of the IBC.Validity of Eviction Notices Issued by the Liquidator:The Appellant issued several eviction notices to the Respondent, who continued to occupy the premises despite the expiration of the Leave and License Agreement. The Respondent argued that the eviction notices were void ab initio as they did not comply with the contractual requirement of providing one month's notice to rectify any breach. The Tribunal found that the Respondent had been paying rent as per a mutual understanding, even after the agreement expired, and that the Appellant's notices did not adhere to the stipulated contractual terms.Whether the Liquidator Can Take Possession of the Property Without Filing a Civil Eviction Suit:The Appellant contended that requiring the Liquidator to file a civil eviction suit would unduly prolong the insolvency process, which is designed to be time-bound. The Tribunal referred to the NCLAT's decision in 'Jhanvi Rajpal Automotive Pvt. Ltd. v R.P. of Rajpal Abhikaran Pvt. Ltd. & Anr.,' where it was held that the Resolution Professional (RP) need not file a civil suit for eviction if the lease has expired. The Tribunal noted that this decision had been upheld by the Supreme Court. Consequently, the Tribunal concluded that the NCLT has the jurisdiction to direct the eviction of the Respondent without requiring the Liquidator to file a separate civil suit.Conclusion:The Tribunal set aside the impugned order dated 10.02.2021 by the Adjudicating Authority (NCLT, Ahmedabad Bench) and remanded the matter back to the Adjudicating Authority to pass a fresh order in accordance with the law. The Tribunal emphasized that the NCLT has jurisdiction over eviction matters involving the corporate debtor and that the Liquidator need not file a separate civil suit for eviction.