Liquidation Pendency Cannot Confer Jurisdiction Over Property Outside Liquidation Estate: NCLT Delhi

The Delhi Bench of the National Company Law Tribunal (NCLT) on 3 September held that the mere pendency of liquidation proceedings does not confer jurisdiction on the Adjudicating Authority to determine an independent dispute over possession of immovable property that does not form part of the liquidation estate.

A Bench comprising President Justice Anupinder Singh Grewal and Technical Member Ravindra Chaturvedi dismissed an application filed by Vikas Chopra, who sought possession of an industrial plot leased to VHV Beverages, holding that disputes concerning ownership, lease or sub-lease of property outside the liquidation estate are civil in nature. The Tribunal observed:

“Where eviction is sought in relation to an asset forming part of the liquidation estate, such relief may bear a direct nexus with the Liquidator's statutory duty to take custody and control of the assets of the Corporate Debtor. However, where the property in respect of which possession is sought is admittedly outside the liquidation estate, the mere pendency of liquidation proceedings cannot, by itself, confer jurisdiction upon this Adjudicating Authority to adjudicate an independent claim of ownership or possession.”

Chopra, the landlord of the industrial plot leased to VHV Beverages in 2012, contended that the lease expired in November 2021 and was never renewed. Despite this, VHV Beverages continued to occupy the premises and allegedly sub-let it to Crystal Beverages in violation of the lease terms.

CIRP was initiated against VHV Beverages in December 2021, followed by liquidation in December 2025. Chopra thereafter sought exclusion of the land from the liquidation estate and recovery of possession. He also claimed outstanding rentals of Rs. 1,85,99,370. Further, he submitted that third-party assets are excluded from the liquidation estate and that the Liquidator therefore had no authority to retain possession of the land. He contended that continued occupation amounted to unlawful deprivation of his property.

The Liquidator did not dispute that the land was excluded from the liquidation estate. However, it argued that the leasehold rights constituted an intangible asset of VHV Beverages that could be dealt with during CIRP and liquidation. It was also submitted that Chopra had filed a claim of Rs. 1,85,99,370 during the liquidation, of which Rs. 1,40,12,274 had been admitted.

The Bench noted that civil suits concerning the dispute were already pending before competent civil courts. It held that allowing parallel adjudication would risk conflicting findings and invoked the principle underlying Section 10 of the Code of Civil Procedure. It observed:

“The mere change in the forum or the description of the relief cannot permit a party to subject the same underlying dispute to parallel adjudication. Where the foundation of the relief sought remains the same, namely, the Applicant's alleged right to possession of the subject property, permitting simultaneous adjudication would defeat the very object underlying Section 10 of the CPC.”

The Tribunal also found that Chopra had failed to disclose the pending civil proceedings in his original application and disclosed them only in the rejoinder. It held that the suppression was relevant since Chopra sought to invoke the NCLT's residuary jurisdiction. It also observed:

“The Applicant cannot, on one hand, pursue a remedy before the Civil Court in respect of the subject property and, on the other hand, seek substantially overlapping relief before this Adjudicating Authority without placing the earlier proceeding before the Tribunal.”

On merits, the Bench held that although the land was excluded from the liquidation estate, disputes concerning its ownership, lease or sub-lease remained civil disputes and could not be adjudicated under the Insolvency and Bankruptcy Code merely because one of the parties was a Liquidator.

Accordingly, the NCLT dismissed the application, holding that the pending civil proceedings and the dispute concerning rights and obligations arising from the purported sub-lease fell outside the purview of the IBC.