NCLT Mumbai Sets Aside MIDC's Cancellation Of Plot Allotments To Jet Airways, Directs Lease Execution

The National Company Law Tribunal (NCLT) in Mumbai on Wednesday set aside the Maharashtra Industrial Development Corporation's (MIDC) cancellation of two plot allotments made to Jet Airways (India) Ltd, holding that the airline's rights under the long-term lease arrangements form part of its liquidation estate.

The tribunal directed MIDC to execute the lease agreements with the corporate debtor.

A bench of Judicial Member Sushil Mahadeorao Kochey and Technical Member Prabhat Kumar ruled that Jet Airways' leasehold rights over the two Navi Mumbai plots formed part of the liquidation estate notwithstanding that ownership of the land remained with MIDC.

The tribunal held, "In our considered view the contention of the Respondent that the right to use a property under lease agreement falls within Section 36(4)(a)(iv) is bereft of any merit because the said clause does not include properties leased to a person for enjoyment for period exceeding 6 years, and such right of such person remains part of liquidation estate."

The tribunal rejected MIDC's contention that Jet Airways' leasehold rights amounted to nothing more than contractual rights to use the land and therefore stood excluded from the liquidation estate.

It observed, "In our considered view, such interpretation would exclude all the properties enjoyed by a corporate debtor under long term lease arrangement from liquidation estate, which is not a correct interpretation of the words 'contractual arrangements which do not stipulate transfer of title but only use of assets'. Accordingly, these rights vested in corporate debtor do not fall within scope of section 36(4)(a)(iv)"

Jet Airways entered the corporate insolvency resolution process on June 20, 2019. Its resolution plan was approved by the committee of creditors on October 17, 2020 and by the tribunal on June 22, 2021. After the plan could not be implemented, the Supreme Court directed the company's liquidation on November 7, 2024. The tribunal subsequently passed the liquidation order on November 26, 2024.

MIDC allotted the two plots at its TTC Industrial Area in Mahape, Navi Mumbai, in December 2017 and January 2018. Jet Airways paid the entire lease premium of about ₹15.86 crore for one plot and ₹16,170 for the other within the stipulated period. MIDC handed over possession of both plots on September 25, 2020. It later cancelled the allotments on September 12, 2025 for non-execution of the lease deeds and forfeited the premium paid by the company.

The liquidator challenged the cancellation, contending that it depleted assets available during liquidation and that the delay in executing the lease deeds could not be attributed to Jet Airways because possession was handed over only in September 2020 after repeated follow-up by the erstwhile resolution professional.

The tribunal held that, in the facts of the case, the cancellation notices fell within the expression "other legal proceedings" because they depleted assets of the corporate debtor that were otherwise available for settlement of creditors' claims.

The tribunal observed, "The action of the Respondent directly deals with the assets of the Corporate Debtor having the effect of depletion thereof, which were otherwise available as on liquidation commencement date, and the proceeds therefrom were to be used for settlement of claims of the creditors. Accordingly, these cancellation notice(s) deplete the assets of the corporate debtor, which is held by the Liquidator as a fiduciary for the benefit of all the creditors in terms of Section 36(2) of IBC. Hence, we are of considered view that, the proceedings initiated by the Respondent by issuance of cancellation notice fall within the scope of 'other legal proceedings'."

Addressing MIDC's contention that Jet Airways had failed to execute the lease deeds, the tribunal observed that possession was handed over only in September 2020 despite the company having paid the entire lease premium within the stipulated period.

It also noted that MIDC shared the draft lease agreement only in October 2020, by which time the corporate insolvency resolution process was underway.

The tribunal held, "These dates of event demonstrate that failure of Corporate Debtor to execute the lease agreement, in these peculiar facts of the case, cannot be attributed to the unwillingness of Corporate Debtor. Even, otherwise these notices take away substantial rights of the Corporate Debtor, the principles of natural justice were required to be adhered to prior to cancellation of allotment of these plots."

The tribunal also observed that MIDC had not produced any evidence to show that the alleged unauthorised use of the plots by a third party had taken place with Jet Airways' permission.

Accordingly, the tribunal held the termination notices to be non est, being barred under Section 33(5) of the Insolvency and Bankruptcy Code. It directed MIDC to promptly execute the lease agreements with the corporate debtor.

For Applicant: Advocates Malhar Zatakia, Nishant Upadhayay

For Respondent: Advocate Shraddha Dube patil