NCLT Indore Holds Resolution Professional Cannot Revive Lease Terminated By CoC

The Indore Bench of the National Company Law Tribunal (NCLT) on 7 July held that an unregistered lease deed cannot create valid rights over the Corporate Debtor's property and that a Resolution Professional (RP) cannot revive a lease arrangement that the Committee of Creditors (CoC) has already decided to terminate.

The Bench of Judicial Member Brajendra Mani Tripathi and Technical Member Man Mohan Gupta directed Vatsal Acharya to vacate the factory premises of Shree Uttam Food Products, holding that he occupied the premises without valid authority. It observed:

“Access taken, and security deployed, under the orders of this Tribunal, and confined to the protection of the movable assets of the Corporate Debtor, cannot be construed as a waiver of the invalidity of the lease; and, in any event, the Resolution Professional has no power to ratify or to revive a lease which the Committee of Creditors, in exercise of its commercial wisdom, has resolved to terminate.”

Kuldeep Tank, the RP of Shree Uttam Food Products, filed the application against Acharya seeking directions to hand over vacant possession of the factory premises at Bamnia, Jhabua, Madhya Pradesh, and police assistance to enforce the order. He submitted that the Corporate Debtor entered the Corporate Insolvency Resolution Process (CIRP) on 5 December 2025 following a petition filed by Punjab National Bank. After his appointment, Tank attempted to take control of the Corporate Debtor's assets, but Acharya allegedly obstructed him and denied him access to the factory.

He further submitted that Acharya failed to provide details of lease payments, statutory compliance records and other documents despite repeated communications. The RP placed the issue before the CoC, which unanimously decided in its second meeting held on 29 January 2026 to terminate the lease arrangement due to Acharya's non-cooperation and failure to provide supporting documents.

Thereafter, he issued a termination notice, but Acharya continued to occupy the premises. Tank argued that Acharya's possession was unauthorised and exposed the Corporate Debtor's plant and machinery to risk while preventing inspection and valuation by prospective resolution applicants.

Acharya claimed that he lawfully occupied the premises under a lease deed dated 16 December 2023 executed by the Corporate Debtor's then director, late Nilesh Upadhyay. The lease deed covered a period of 60 months from 15 January 2024 to 14 January 2029. He claimed that he paid monthly rent of Rs. 40,000 in cash due to frozen bank accounts and relied on cash-book extracts to support his claim.

He argued that the CoC terminated the lease through an ex parte decision and could not extinguish his contractual rights without adjudication. He contended that the RP had no authority to invoke Section 14 of the Insolvency and Bankruptcy Code, 2016 (IBC) to dispossess him or unilaterally terminate a valid lease. He also argued that the NCLT could not decide disputed questions of title and lease validity while exercising summary jurisdiction under Section 60(5) of the IBC (which empowers the Tribunal to decide matters arising out of or connected with insolvency proceedings).

The Bench held that the lease deed required compulsory registration under Section 107 of the Transfer of Property Act, 1882 and Section 17(1)(d) of the Registration Act, 1908, as it created a lease for more than one year. Since Acharya did not register the lease deed, it held that the document could not create or establish leasehold rights.

It rejected Acharya's objection regarding the NCLT's jurisdiction and relied on the Supreme Court's judgment in Gujarat Urja Vikas Nigam Ltd. v. Amit Gupta. It held that the NCLT's residuary jurisdiction under Section 60(5)(c) of the IBC covers disputes directly connected with insolvency resolution. Since the factory premises formed part of the Corporate Debtor's assets, the Bench held that it could decide the dispute and order eviction despite the pending civil suit.

The Bench also rejected Acharya's reliance on the moratorium under Section 14 of the IBC (which restricts certain proceedings and enforcement actions against the Corporate Debtor during CIRP), holding that the provision protects the Corporate Debtor's possession and not that of third-party occupants. It further held that the RP's access to the premises and deployment of security personnel under earlier orders did not amount to ratification of the invalid lease.

Accordingly, the NCLT allowed the application and directed Acharya and all persons claiming through him to vacate the premises within two weeks and hand over peaceful possession to the RP.

For Appellants: Advocate Darshana Baghel

For Respondents: Advocate Eesha Kalve