Tribunal Rules That Despite Termination of Leave and Licence Agreement, Corporate Debtor Retains Possession During Insolvency Proceedings; Claims for Occupation Charges to Be Addressed Under IBC Framework
In a significant judgment dated September 29, 2026, the National Company Law Tribunal (NCLT), Ahmedabad Bench, has reiterated the protective ambit of the moratorium under Section 14(1)(d) of the Insolvency and Bankruptcy Code, 2016 (IBC), by denying the lessor's petition for recovery of possession and removal of assets belonging to the Corporate Debtor during the ongoing Corporate Insolvency Resolution Process (CIRP).
The case arose when Eldeco Infrastructure and Properties Limited (Applicant), the licensor of certain premises located at Basement Level 3, Eldeco Station One, Faridabad, filed an interlocutory application seeking immediate removal of charging infrastructure, fixtures, electrical equipment, and other belongings of the Corporate Debtor - Blu-Smart Charge Private Limited - and restoration of vacant possession. The Applicant also sought contractual occupation and licence charges as insolvency resolution process costs from the insolvency commencement date, January 16, 2026.
The facts reveal that the Leave and Licence Agreement dated July 11, 2023, was terminated on April 19, 2025, prior to the initiation of CIRP against the Corporate Debtor. Subsequently, a civil suit concerning the same premises was pending before the Civil Judge, Faridabad, with a status quo order restraining any change in possession.
The tribunal, comprising Mr. Shammi Khan (Judicial Member) and Mr. Sanjeev Sharma (Technical Member), observed that the declaration of moratorium under Section 14 of the IBC prohibits any recovery of property or eviction of the Corporate Debtor from premises it possessed on the insolvency commencement date. Reliance was placed on authoritative decisions including S. Rajendran v. Mr. B.M. Anand (2022), Prerna Singh v. Committee of Creditors of Xalta Food and Beverages Pvt. Ltd. (2021), and Sudha Apparels Ltd. v. Future Lifestyle Fashion Ltd. (2026), which clarify that termination of agreements prior to CIRP commencement does not entitle lessors to recover possession during moratorium.
Further, the tribunal highlighted that contractual consequences of termination could not be adjudicated in insolvency proceedings when the matter was sub judice before a civil court. While the Applicant's claim for occupation and licence charges was acknowledged, the tribunal directed that such claims be addressed under Section 5(13)(e) read with Regulation 31(b) of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, thus preserving the framework envisaged under the Code.
Consequently, the tribunal dismissed the application seeking removal of assets and restoration of possession, emphasizing the sanctity of the moratorium and the need to avoid piecemeal litigation during the CIRP.
This decision reinforces the legislative intent behind the moratorium under the IBC to provide a corporate debtor a protected breathing space from actions by creditors and lessors, ensuring an orderly resolution process without disruption due to premature recovery attempts.
Bottom Line:
Insolvency and Bankruptcy Code, 2016 - During subsistence of moratorium under Section 14(1)(d), owner/lessor cannot recover possession of premises occupied by Corporate Debtor, even where leave and licence agreement stood terminated prior to commencement of CIRP - Prayer for removal of Corporate Debtor's assets and restoration of possession not maintainable during moratorium - Claim for occupation/licence charges may be dealt with in accordance with Code and CIRP Regulations.
Statutory provision(s):
Section 14(1)(d), Section 60(5), Section 5(13)(e) of Insolvency and Bankruptcy Code, 2016; Regulation 31(b) of IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016
