Appellate Tribunal Dismisses Premature Appeal Over Ownership Dispute, Allows Property Inspection
In a significant ruling, the National Company Law Appellate Tribunal (NCLAT), Principal Bench, New Delhi, has upheld the decision of the Adjudicating Authority to allow the inspection and measurement of a disputed property claimed to be part of the liquidation estate. This decision comes as part of the ongoing insolvency proceedings involving Middle East Management Services LLP and others against Birendra Kumar Agarwal and others.
The appellants, Middle East Management Services LLP, challenged the Adjudicating Authority's order dated July 9, 2026, which directed the appointment of an independent architect or surveyor to inspect and measure the premises in question. The appellants contended that the property was owned and possessed by them and that the Adjudicating Authority overstepped its jurisdiction by ordering such an inspection, given that the ownership and possession issues fall under the jurisdiction of civil courts.
Despite the appellants' arguments, the NCLAT bench, comprising Mr. Justice Mohammad Faiz Alam Khan and Mr. Naresh Salecha, held that the inspection was necessary to determine whether the property forms part of the liquidation estate. The tribunal found discrepancies in the documentation related to the property, noting that it appeared to have been sold twice, which justified further investigation.
The tribunal emphasized that the Adjudicating Authority has limited jurisdiction under the Insolvency and Bankruptcy Code, 2016, primarily to issues directly related to the insolvency resolution or liquidation process. It clarified that the order for inspection and measurement did not affect the ownership or possessory rights of the appellants, making the appeal premature.
The case stems from the liquidation proceedings of a Corporate Debtor (CD) for which no resolution plan was approved, leading to the appointment of a liquidator. The liquidator sought the tribunal's intervention to ascertain if the disputed property was part of the liquidation estate, following claims of illegal encroachment by the appellants.
The NCLAT's decision underscores the importance of ensuring that properties purported to be part of a liquidation estate are clearly identified and segregated, allowing the liquidation process to proceed lawfully.
This ruling serves as a reminder of the procedural nuances involved in insolvency and liquidation cases, especially when ownership disputes arise. The tribunal's decision ensures that the liquidation process is not hindered by unresolved property disputes, while also respecting the jurisdictional boundaries of the Adjudicating Authority.
Bottom Line :
Insolvency and Bankruptcy Code, 2016 - Adjudicating Authority's jurisdiction is limited to matters related to the insolvency resolution or liquidation process of the corporate debtor and does not extend to adjudicating complex and disputed questions of title and possession of immovable property between third parties.
Statutory provision(s):
Insolvency and Bankruptcy Code, 2016, Section 60(5)
