Cancelled lease property cannot enter the insolvency estate or attract moratorium unless restored in accordance with law.

A plot whose lease was validly cancelled before commencement of insolvency proceedings cannot be treated as an asset of the corporate debtor or brought within the resolution plan, because moratorium protection does not extend to property no longer forming part of the debtor's estate. Mere possession, holding over, or a belated restoration request does not revive a cancelled lease unless restoration or continuation is established in accordance with law. The resolution professional was also found to have acted without sufficient circumspection by projecting the cancelled plot in the information memorandum and CIRP process, so the adverse observations on his conduct were upheld.

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Issues: (i) Whether the cancelled plot could be treated as an asset of the corporate debtor and included in the resolution plan, with moratorium protection under the Insolvency and Bankruptcy Code; (ii) Whether the adverse observations made against the resolution professional in relation to the conduct of the corporate insolvency resolution process required interference.

Issue (i): Whether the cancelled plot could be treated as an asset of the corporate debtor and included in the resolution plan, with moratorium protection under the Insolvency and Bankruptcy Code.

Analysis: The lease of the subject plot had been cancelled long before commencement of the corporate insolvency resolution process, and there was no material to show restoration of the lease or any consent permitting its continuation. A belated restoration request did not revive the lease, and mere possession or an assertion of holding over could not override the cancellation. Once the lease stood cancelled, the subject plot ceased to be an asset of the corporate debtor, and the moratorium under the Insolvency and Bankruptcy Code was not attracted.

Conclusion: The subject plot could not be included in the resolution plan, and moratorium protection was unavailable in relation to it.

Issue (ii): Whether the adverse observations made against the resolution professional in relation to the conduct of the corporate insolvency resolution process required interference.

Analysis: The resolution professional was aware of the cancellation of the lease, yet continued to project the cancelled plot in the information memorandum and resolution process as though it remained an asset of the corporate debtor. The Tribunal found that the resolution professional should have acted with greater circumspection and that the observations on his conduct were justified on the record.

Conclusion: The adverse observations against the resolution professional were upheld.

Final Conclusion: The appeal disclosed no ground for interference, as the cancelled land could not form part of the resolution estate and the findings on the resolution professional's conduct were sustained.

Ratio Decidendi: A plot whose lease had been validly cancelled before commencement of insolvency proceedings cannot be treated as an asset of the corporate debtor or protected by moratorium unless the lease is restored or continued in accordance with law.

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