Case Note & Summary
The National Company Law Appellate Tribunal (NCLAT) addressed two appeals concerning eviction orders issued against tenants of a corporate debtor undergoing insolvency proceedings. The appellants, M/s Duke Fashions (India) Ltd. and M/s UV & W Products Private Limited, contested their eviction from properties owned by the corporate debtor, Venus Garments (India) Limited, following its liquidation order dated 22.07.2025. The appellants argued that eviction could only be pursued under the East Punjab Urban Rent Restriction Act, 1949, and that the Liquidator lacked the authority to evict them without following the Rent Control Act procedures. The court examined the powers of the Liquidator under the Insolvency and Bankruptcy Code (IBC), particularly Sections 35 and 60(5)(c), which empower the Liquidator to take possession of the corporate debtor's assets. The NCLAT held that the Liquidator's obligation to recover assets is mandatory and that the IBC provisions override the Rent Control Act in the context of insolvency. The court found that the appellants were unauthorized occupants and that the lease agreements were unregistered, thus not enforceable. The appeals were dismissed, affirming the Liquidator's authority to evict the appellants without resorting to civil proceedings. The decision underscored the importance of timely resolution in insolvency cases and the need to protect the interests of creditors over those of unauthorized occupants.
Headnote
A) Insolvency Law - Liquidator's Authority - Jurisdiction to Evict Tenants - Insolvency and Bankruptcy Code, 2016, Section 60(5)(c) - The Liquidator has the authority to seek eviction of tenants as part of the insolvency resolution process, and such proceedings are maintainable under the IBC. The court held that the Liquidator's obligation to recover assets is mandatory and cannot be circumvented by tenancy laws. (Paras 10-12). B) Tenant Rights - Eviction Under Rent Control Act - East Punjab Urban Rent Restriction Act, 1949 - The court clarified that the provisions of the IBC override the Rent Control Act in cases of insolvency, allowing the Liquidator to evict tenants without resorting to civil proceedings. The court emphasized that the IBC is a special legislation aimed at timely resolution of insolvency matters. (Paras 13-22).
Issue of Consideration
Whether the Liquidator could pursue an application filed by the Resolution Professional for eviction and if possession from the tenant can be secured under the IBC.
Final Decision
The NCLAT dismissed the appeals, affirming the NCLT's orders for eviction. The court found that the appellants were unauthorized occupants and that the lease agreements were unregistered, thus not enforceable. The court held that the Liquidator has the authority to seek eviction under the IBC, and the provisions of the IBC prevail over the Rent Control Act.
Law Points
- Insolvency proceedings
- eviction
- tenant rights
- Liquidator's powers
- statutory duties
- Rent Control Act
- IBC provisions
- jurisdiction of NCLT
