Supreme Court Stays NCLAT Order Holding NCLT Can Adjudicate Easement Dispute Linked To Liquidation Assets, Directs Mediation

The Supreme Court on Thursday stayed the operation of the National Company Law Appellate Tribunal's (NCLAT) July 29, 2026.

The NCLAT held that the NCLT can adjudicate a dispute concerning an easementary right of way under the Insolvency and Bankruptcy Code where the dispute has a direct nexus with the insolvency or liquidation proceedings and affects value maximisation of the corporate debtor's assets.

A 2:1 Bench of Technical Members Arun Baroka and Indevar Pandey, constituting the majority, upheld the NCLT's order recognising the Liquidator's right to access the corporate debtor's property through an existing pathway.

Judicial Member Justice N. Seshasayee dissented, holding that disputes relating to easementary rights fall within the exclusive jurisdiction of civil courts.

The dispute arose during the liquidation of Adya Oils and Chemicals Ltd which owned industrial land at Vadodara purchased for establishing a castor oil manufacturing unit.

A bench of Justices J.B. Pardiwala and K. Vinod Chandran stayed the impugned NCLAT order during the pendency of the proceedings and directed the parties to appear before the Supreme Court Mediation Centre.

The bench said, “However, we believe that the parties should sit, talk, and try to find some viable solution to the problem.” The Court further requested that a senior mediator be appointed and asked the mediator to visit the site, survey the entire property and place an appropriate report before the Court on the next date.

The Court also noted the question concerning the availability of an alternative access to the corporate debtor's property. It observed, “It appears, from the order by the NCLAT, that there is an alternative access to the property.”

When this was disputed, the Court said, “This is a disputed question of fact. We want the learned mediator to give us some idea in this regard also.”

Appearing for ARC Research and Development Centre, counsel argued that the dispute essentially arose from an IBC proceeding concerning Adya Oils and Chemicals Ltd., while ARC was a third party to the insolvency proceedings. Counsel sought to emphasise that ARC's property rights could not be affected merely because the dispute had arisen in the context of the liquidation.

At this stage, the bench observed, “You may be justified in your legal submissions, but then should you not find a way out, you have blocked the entire block?”

Counsel responded that ARC had not blocked access to the corporate debtor's property and referred the Court to coloured maps showing an alternative route through the highway side. Counsel submitted that the maps demonstrated that there was another place from which access could be provided.

The Court thereafter issued notice and directed that in the meantime, the impugned NCLAT order shall remain stayed from its operation. It further directed the parties to appear before the Supreme Court Mediation Centre on the date fixed by the Court.

The bench requested the mediation centre to appoint a senior mediator and specifically asked the mediator to visit the site, survey the entire property and submit an appropriate report before the Court by the next date of hearing. The mediator was also asked to ascertain the position regarding the alleged alternative access to the corporate debtor's property.