Tribunal holds that even after expiry of licence, owner cannot evict Corporate Debtor occupying premises on insolvency commencement date; monetary claims to be verified under CIRP framework
In a significant judgment dated September 21, 2026, the National Company Law Tribunal (NCLT), Ahmedabad Bench, in the case of Raja Narandas Wadhwani and Another v. Rathin Amishbhai Majmudar, has clarified the rights of licensors and owners regarding possession of premises during the Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code, 2016 ("IBC").
The dispute arose over Unit Premises No. 104, VedTranscube Plaza, Vadodara, measuring 2,722 sq. ft., originally leased by GSRTC and subsequently licensed to the Corporate Debtor under an eight-year registered licence agreement commencing on December 18, 2017, which expired on December 18, 2025. The Corporate Debtor was admitted into CIRP on March 10, 2026. Despite expiry of the licence, the Corporate Debtor continued occupying the premises. The Applicants (owners) sought immediate vacant possession, declaration of expiry of the licence agreement, and recovery of mesne profits and occupation charges from the CIRP commencement date.
The key legal question was whether the expiry of the licence agreement before the insolvency commencement date entitled the owners to recover possession during the moratorium period under Section 14 of the IBC.
The NCLT Bench, presided over by Mr. Shammi Khan (Judicial Member) and Mr. Sanjeev Sharma (Technical Member), relied on the express provisions of Section 14(1)(d) of the IBC which prohibits recovery of any property by an owner or lessor from the Corporate Debtor during the moratorium period if the Corporate Debtor was in possession on the insolvency commencement date. The Tribunal held that mere expiry of the contractual licence term before the CIRP commencement does not override the statutory moratorium protection. It emphasized that possession by the Corporate Debtor at the insolvency commencement date is decisive, irrespective of expiry or termination of the underlying contract.
The Tribunal further noted that no renewal, extension, or fresh licence agreement had been executed after expiry of the original licence. It clarified that Committee of Creditors (CoC) resolutions authorizing continuation of business or rent payment during CIRP do not amount to creation of fresh contractual rights in favour of the Corporate Debtor. Therefore, the Corporate Debtor's possession during CIRP is protected by the moratorium.
Regarding the monetary claim of Rs. 41,60,298.12 claimed by the Applicants as outstanding rent and occupation charges, the Tribunal observed that the Resolution Professional (RP) disputed this amount and that the claim required verification and reconciliation under the CIRP cost framework. The NCLT declined to pass any final order on the monetary claims in the interlocutory application and directed the Applicants to place their claims before the RP for verification.
The Tribunal also rejected the Applicants' request for immediate recovery of possession during the moratorium, holding that the statutory bar under Section 14(1)(d) prevails notwithstanding private communications or offers made by the Applicants to waive dues upon surrender of possession. The Applicants were held at liberty to seek possession after the moratorium ends in accordance with law.
This judgment aligns with previous NCLAT rulings, including S. Rajendran v. B.M. Anand, Prerna Singh v. CoC of Xalta Food and Beverages Pvt. Ltd., and Sudha Apparels Ltd. v. Ravi Sethia, which reinforce the moratorium's protection of possession rights of the Corporate Debtor during CIRP despite expiry or termination of lease or licence agreements.
The NCLT's ruling provides clarity on the interplay between contractual expiry and statutory moratorium protections, underscoring that the IBC's moratorium provisions cannot be circumvented by expiry of underlying agreements or CoC decisions during insolvency proceedings.
Bottom Line:
Insolvency and Bankruptcy Code, 2016 Section 14(1)(d) Even where licence agreement had expired prior to commencement of CIRP, owner/licensor cannot recover possession of premises during subsistence of moratorium if Corporate Debtor was in possession on insolvency commencement date - Monetary claim for use and occupation during CIRP to be placed before RP for verification and dealt with in accordance with CIRP cost provisions.
Statutory provision(s):
Insolvency and Bankruptcy Code, 2016 Sections 14(1)(d), 20(1), 25(1), 60(5)
Raja Narandas Wadhwani v. Rathin Amishbhai Majmudar, (NCLT)(Ahmedabad) : Law Finder Doc Id # 2984170
