Mere Effect Of IBC Order On Property Possession Does Not Make It A Landlord-Tenant Matter: NCLAT

The National Company Law Appellate Tribunal (NCLAT), New Delhi, has reiterated that an insolvency dispute does not become a landlord-tenant dispute merely because an order under the Insolvency and Bankruptcy Code (IBC) affects possession of a property.

“The mere incidental effect of an IBC order on the possession of premises does not convert an insolvency matter into a landlord-tenant matter falling under Entry 18 of List II,” the bench of Officiating Chairperson Justice Yogesh Khanna and Technical Member Barun Mitra observed.

The observation came while the NCLAT was hearing appeals by Duke Fashions (India) Ltd. and UV & W Products Pvt. Ltd. against their eviction from properties owned by Venus Garments (India) Ltd. The companies argued that they could be evicted only under the East Punjab Urban Rent Restriction Act, 1949.

Venus Garments was ordered into liquidation on July 22, 2025, after which Liquidator Pramod Kumar Misra pursued possession of the properties. The NCLT had directed the companies to vacate within two weeks. They argued that the Resolution Professional's pending application became infructuous after liquidation and that the Liquidator needed to file a fresh application under Section 35 of the IBC.

The NCLAT rejected the argument, holding that the Liquidator could continue the pending application.

The tribunal found that Venus Garments was the absolute owner of both properties and that the appellants were unauthorised occupants. The alleged 30-year leases had never been registered and therefore could not be received in evidence as to their contents under Section 49 of the Registration Act.

The directors of both companies were also noted to be related parties of Venus Garments under Section 5(24) of the IBC. The tribunal observed that their common interest was to keep the Liquidator from recovering the properties, which served the interests of the suspended directors.

On jurisdiction, the NCLAT relied on Section 60(5)(c), which gives the NCLT jurisdiction to decide questions of fact or law arising in relation to the liquidation of a corporate debtor. It held that the Liquidator's entitlement to possession of the liquidation estate was such a question.

The tribunal also relied on Jhanvi Rajpal Automotive Pvt. Ltd. v. Resolution Professional of Rajpal Abhikaran and Classic Marble v. Truvisory Insolvency Professionals Pvt. Ltd.

Those decisions held that a Resolution Professional or Liquidator can seek eviction of tenants, licensees, and other occupants before the NCLT without approaching a civil court or rent-control authority.

The NCLAT distinguished Vishal N. Kalsaria v. Bank of India, relied upon by the appellants. It noted that the Supreme Court decision concerned the interaction between the SARFAESI Act and rent-control legislation and involved a rent-paying, unrelated tenant, unlike the circumstances before it.

The tribunal also held that Section 238 of the IBC gives the Code overriding effect where its provisions conflict with another law. The liquidation order had separately directed the Liquidator to continue pending applications and pursue recovery steps.

The NCLAT accordingly dismissed both appeals and upheld the NCLT's order directing Duke Fashions and UV & W to vacate the properties