Fresh lease signed during CIRP moratorium despite existing lease held invalid; tenants told to vacate and pay rent dues.

The dominant issue was whether a fresh lease executed after commencement of CIRP was valid despite the moratorium. Applying the moratorium bar on creating legal rights or interests in the corporate debtor's assets, the Appellate Tribunal held that execution/registration of a new lease during moratorium, while an earlier lease was subsisting, lacked transparency and was contrary to the IBC; the fresh lease was therefore invalid and unenforceable, justifying directions to vacate and for consequential recovery of rent/licence dues. A further issue was jurisdiction under s.60(5) IBC to decide disputes concerning lease/licence terms linked to liquidation. Relying on SC precedent, it held that such questions "arise out of" or "relate to" insolvency/liquidation; the impugned order was sustained and the appeals were dismissed.

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1. ISSUES PRESENTED AND CONSIDERED

(i) Whether the Adjudicating Authority could, under Section 60(5) of the IBC, direct occupants of the corporate debtor's premises to vacate and hand over possession to the liquidator and also direct payment of rent/licence fees and allied dues, notwithstanding contractual dispute, arbitration clause, or ordinary civil remedies.

(ii) Whether a fresh lease deed executed and registered after commencement of CIRP/moratorium, while an earlier lease arrangement was subsisting, was invalid and unenforceable so as to justify eviction and taking custody of the premises for the liquidation estate.

(iii) Whether an unregistered, merely notarised licence agreement in respect of the corporate debtor's premises was legally unenforceable (being compulsorily registrable under the applicable rent law), thereby rendering continued occupation unauthorised and warranting directions to vacate and hand over possession to the liquidator.

(iv) Whether recovery of rent/licence fees (and related charges) for continued occupation of the corporate debtor's premises was a matter "arising out of or in relation to" liquidation, enabling adjudication and consequential directions under Section 60(5) of the IBC.

2. ISSUE-WISE DETAILED ANALYSIS

Issue (i) & (iv): Jurisdiction under Section 60(5) IBC to order eviction/possession and recovery of rent/licence fees during liquidation

Legal framework (as discussed by the Court): The Court examined Section 60(5) IBC (residuary jurisdiction over questions of law/fact arising out of or in relation to insolvency resolution or liquidation) and Section 35 IBC (liquidator's duty to take custody/control of assets and actionable claims, and to approach the Adjudicating Authority for necessary directions). The Court also noted the objective of a single forum for insolvency-related disputes, subject to the requirement of a direct nexus with insolvency/liquidation.

Interpretation and reasoning: The Court held that where premises admittedly belong to the corporate debtor and are required to be brought under the liquidator's custody as part of the liquidation estate, disputes concerning continued occupation and payment obligations have a direct nexus with liquidation. The liquidator's applications seeking possession and recovery of occupation charges were treated as integral to liquidation, not as independent civil disputes. The Court rejected the contention that invocation of Section 60(5) was an impermissible circumvention of civil remedies or arbitration, holding that the Adjudicating Authority can decide questions of law/fact connected with liquidation, provided the insolvency nexus exists.

Conclusions: The Court upheld the Adjudicating Authority's assumption of jurisdiction under Section 60(5) to (a) direct handing over of possession of the corporate debtor's premises to the liquidator, and (b) direct payment of rent/licence fees and allied dues, as these matters arose out of and related to liquidation and the liquidator's statutory duties under Section 35.

Issue (ii): Validity/enforceability of a lease executed and registered after commencement of moratorium

Legal framework (as discussed by the Court): The Court applied the moratorium consequences under the IBC, emphasising that after CIRP commencement there is prohibition on actions resulting in transfer/encumbrance/creation of legal rights or beneficial interests in the corporate debtor's assets during moratorium.

Interpretation and reasoning: The Court treated the timing and circumstances of execution/registration of the fresh lease as decisive. It found that the corporate debtor's management and the occupant (a subsidiary with commonality of management) proceeded to register a new long-tenure lease at a time when the admission order and moratorium were imminent/known and then in force, despite an earlier lease arrangement being subsisting. This conduct was held to lack transparency and to be in the teeth of the moratorium, indicating an attempt to keep the premises outside the liquidation estate.

Conclusions: The Court held the fresh lease deed executed/registered after the moratorium to be invalid and unenforceable. It affirmed the finding that it was an "eyewash" designed to keep the asset out of liquidation, and upheld the direction to vacate and hand over possession of the premises to the liquidator.

Issue (iii): Effect of an unregistered licence agreement for continued occupation of the corporate debtor's premises

Legal framework (as discussed by the Court): The Court considered that the relevant rent law required compulsory registration of the licence arrangement and that non-registration rendered the licence void and unenforceable. It also tied this to the liquidator's duty under Section 35 IBC to take possession of the corporate debtor's assets and to approach the Adjudicating Authority under Section 60(5)(c) for necessary orders.

Interpretation and reasoning: It was undisputed that the premises belonged to the corporate debtor and that the licence agreement was merely notarised and unregistered. Given the compulsory registration requirement, the Court held the licence agreement to be invalid, and therefore the occupant's continued possession could not be protected as a lawful right against the liquidation estate. The Court found that the liquidator's request to bring the premises under his control squarely arose from liquidation and justified consequential directions for vacant possession.

Conclusions: The Court upheld the Adjudicating Authority's conclusion that the unregistered licence agreement was void/unenforceable and affirmed directions requiring the occupant to vacate and hand over peaceful and vacant possession to the liquidator.

Final dispositive outcome (material to decision): The Court found no infirmity in the impugned directions requiring vacation/handing over of possession of both premises and payment of rent/licence fees and related dues, holding that the Adjudicating Authority properly exercised jurisdiction under Section 60(5) IBC in aid of liquidation and that the relied-upon occupation documents were invalid/unenforceable in the manner found. The appeals were dismissed.

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