Case Note & Summary
The National Company Law Appellate Tribunal addressed two appeals challenging an order from the Adjudicating Authority regarding the eviction of certain occupants from the premises of Majestic Hotels Limited, a corporate debtor undergoing insolvency proceedings. The appeals were filed by Raman Khangura and Jagpal Singh Khangura against an order dated 17.03.2026, which allowed the Resolution Professional to evict them from the hotel premises. The corporate debtor had taken financial facilities from Punjab and Sind Bank, which led to the auction of mortgaged assets. The appellants claimed occupancy rights based on a Memorandum of Understanding (MoU) and an arbitration award. The Adjudicating Authority found that the MoU was not disclosed in the corporate debtor's records and deemed it a related party transaction that required disclosure under Section 188 of the Companies Act. The court emphasized that the appellants, being responsible for the corporate debtor's insolvency, could not claim priority over other creditors. The tribunal upheld the eviction order, stating that the appellants could not continue occupying the premises under the alleged agreements. The court directed the appellants to vacate the premises within two weeks, failing which the Resolution Professional could seek police assistance for eviction. The decision reinforced the principle that management of the corporate debtor must be transferred to a third party to resolve insolvency, ensuring equitable treatment of all creditors.
Headnote
A) Insolvency Law - Eviction of Occupants - Authority to Evict - Insolvency and Bankruptcy Code, 2016, Section 25 - The Adjudicating Authority directed the appellants to vacate the premises of the corporate debtor, emphasizing that management must be handed over to the Resolution Professional post-CIRP initiation. The court held that allowing the appellants to retain possession would prioritize their claims over other creditors, contrary to the intent of the Code (Paras 10-13).
Issue of Consideration
Whether the appellants could continue occupying the premises of the corporate debtor following the initiation of Corporate Insolvency Resolution Process (CIRP).
Final Decision
The tribunal dismissed the appeals, affirming the Adjudicating Authority's order for eviction, stating that the appellants could not claim priority over other creditors and must vacate the premises within two weeks.
Law Points
- Insolvency proceedings
- eviction of occupants
- related party transactions
- management of corporate debtor
- rights of occupancy
- arbitration award enforcement
