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TMI Blog2025 (1) TMI 553X X X X Extracts X X X X X X X X Extracts X X X X ..... t 'Code') by the Resolution Professional (RP) of M/s Champalalji Finance Pvt. Ltd. (Corporate Debtor) against the present Appellants (Predecessor in interest of Late Shri Suresh Padmanabha Hegde) for a direction to handover the control and custody of the property bearing Villa Mohindra Outhouse, 13h Road, TPS III, CTS No. 543, Khar (W), Mumbai - 400052 (property in question) belonging to the CD, has been allowed. 2. In brief, the CD slipped into Corporate Insolvency Resolution Process (CIRP) vide order dated 17.03.2023 and in the first meeting of the CoC held on 26.04.2023 the Respondent (IRP) was appointed as the RP of the CD. 3. The RP alleged to have visited the property in question owned by the CD and found that it was occupied by the present Appellants who have claimed their tenancy right over the same. 4. The RP filed I.A. No. 4632 of 2023 under Section 60(5) r/w Section 25(2)(a) of the Code for taking control and possession of the property in question owned by the CD by evicting the present Appellants from its occupation. 5. Whereas the case set up by the Appellants before the Tribunal is that the property in question was in occupation of Late Shri Suresh Padmanabha Hegd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on. 11. However, the Tribunal while referring to Section 18(1)(f) and Section 25 of the Code observed that it is the duty of the IRP/RP to take immediate custody of all the assets of the CD, therefore, the property in question has to be repossessed by him after eviction of the present appellants and also held that the provisions of Section 238 shall prevail over and above the provisions of the Act by which the tenancy of the Appellants has been protected. 12. Aggrieved against the order passed in I.A No. 4632 of 2023 by which RP has held to be empowered to take custody of all the assets of the CD including the property which is under lease, the Appellant filed the present appeal in which the following order was passed on 28.05.2024 which read as under:- "The Ld. Counsel for the appellant submits that the Adjudicating Authority by impugned order had directed the eviction of the appellant who was lawful tenant in whose favour the decree by the Ld. Small Causes Court at Bandra and it was after the decree the corporate debtor has filed a suit for eviction being Suit No. 149 of 2011 which is still pending for consideration. It is submitted in the said circumstances Adjudicating Auth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng monthly tenant over the property in question are protected under the provisions of the Act as per which the Appellant cannot be dispossessed under the provisions of the Code much less Section 25(2)(a) of the Code otherwise than a suit for eviction filed in terms of the provisions of the Act. In this regard, he has relied upon a decision of this Court in the case of Raj Builders Vs. Raj Oil Mills Limited and Anr., 2018 SCC Online NCLAT 899 in which this Court has held as under:- "3. In terms of Section 14 of the Insolvency and Bankruptcy Code, 2016, during the period of moratorium the Appellant cannot evict the Corporate Debtor from the premises in question, even if during period of moratorium they have agreed to vacate it. The period of moratorium has come to an end on 19th April, 2018 i.e. date of approval of resolution plan under Section 31, therefore, now it is open to the Appellant to get the Corporate Debtor evicted, if it is still in occupation, in accordance with law. However, as the Adjudicating Authority is not competent authority to pass any order for eviction, Adjudicating Authority rightly not passed any such order." 16. He has also relied upon another decision of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncerned with Non Performing Assets of the Banks, the Rent Control Act governs the relationship between a tenant and the landlord and specifies the rights and liabilities of each as well as the rules of ejectment with respect to such tenants. The provisions of the SARFAESI Act cannot be used to override the provisions of the Rent Control Act. If the contentions of the learned counsel for the respondent Banks are to be accepted, it would render the entire scheme of all Rent Control Acts operating in the country as useless and nugatory. Tenants would be left wholly to the mercy of their landlords and in the fear that the landlord may use the tenanted premises as a security interest while taking a loan from a bank and subsequently default on it. Conversely, a landlord would simply have to give up the tenanted premises as a security interest to the creditor banks while he is still getting rent for the same. In case of default of the loan, the maximum brunt will be borne by the unsuspecting tenant, who would be evicted from the possession of the tenanted property by the Bank under the provisions of the SARFAESI Act. Under no circumstances can this be permitted, more so in view of the sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the word "property" together with the word "value". Sections 18 and 25 do not use the expression "property". Another important aspect is that under Section 25 (2) (b) of IBC, 2016, the resolution professional is obliged to represent and act on behalf of the corporate debtor with third parties and exercise rights for the benefit of the corporate debtor in judicial, quasijudicial and arbitration proceedings. Section 25(1) and 25(2)(b) reads as follows: "25. Duties of resolution professional - (1) It shall be the duty of the resolution professional to preserve and protect the assets of the corporate debtor, including the continued business operations of the corporate debtor. (2) For the purposes of subsection (1), the resolution professional shall undertake the following actions: (a) ............. (b) represent and act on behalf of the corporate debtor with third parties, exercise rights for the benefit of the corporate debtor in judicial, quasi judicial and arbitration proceedings." c. This shows that wherever the corporate debtor has to exercise rights in judicial, quasijudicial proceedings, the resolution professional cannot shortcircuit the same and bring a claim before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (b) any claim made by or against the corporate debtor or corporate person, including claims by or against any of its subsidiaries situated in India; and (c) any question of priorities or any question of law or facts, arising out of or in relation to the insolvency resolution or liquidation proceedings of the corporate debtor or corporate person under this Code. 69(h) Therefore, considering the text of Section 60(5)(c) and the interpretation of similar provisions in other insolvency related statutes, NCLT has jurisdiction to adjudicate disputes, which arise solely from or which relate to the insolvency of the Corporate Debtor. However, in doing do, we issue a note of caution to the NCLT and NCLAT to ensure that they do not usurp the legitimate jurisdiction of other courts, tribunals and fora when the dispute is one which does not arise solely from or relate to the insolvency of the Corporate Debtor. The nexus with the insolvency of the Corporate Debtor must exist. 74. Therefore, we hold that the RP can approach the NCLT for adjudication of disputes that are related to the insolvency resolution process. However, for adjudication of disputes that arise dehors the insolvency of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lawful owner of the property in question and the Appellants are the tenants but the decree passed in favour of the predecessor in interest of the Appellants is of no relevance because the CD is under insolvency and the only forum to take appropriate action to protect the assets of the CD is the Tribunal. 23. He has further submitted that the present Appellants have neither prior to the commencement of the CIRP nor subsequent to the commencement of the CIRP paid any rent and are thus not protected under the provisions of the Act. He has referred to Section 15 of the Act which read as under:- "15(1). A landlord shall not be entitled to the recovery of possession of any premises so long as the tenant pays, or is ready and willing to pay, the amount of the standard rent and permitted increases, if any, and observes and performs the other conditions of the tenancy, in so far as they are consistent with the provisions of this Act" 24. It is submitted that the tenants are in default of rent payment and were liable for eviction and because of their continuing non-payment of rent and breach of tenancy terms, cannot seek refuge under the Act and are liable to be evicted. He has relied u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... used the record with their able assistance. 28. There is no dispute to the fact that it is not a case either of lease or license rather it is a case where the civil court decree has been passed in favour of the predecessor in interest of the Appellants in RAD Suit No. 916 of 2005 declaring that the predecessor in interest of the Appellant was a monthly tenant in the property in question and the defendant therein were restrained from interfering in his possession otherwise in due process of law. It is also not in dispute that the suit property was purchased by the CD from the erstwhile landlord/owner of the property in question alongwith the tenant and RAE Suit No. 149 of 2011 was filed by the CD for seeking eviction of the Appellants from the property in question, who have stepped into shoes of the predecessor in interest after his death on inheriting the tenancy right in the property in question. It is also not in dispute that the CIRP was initiated on 17.03.2023 and by at that time Suit No. 149 of 2011 was pending but the IRP, having been appointed as such on 26.04.2023 did not pursue the suit for eviction which was a right procedure because the tenancy was continuing and evicti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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