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Ahmedabad NCLT Declines Gensol EV Lease RP's Plea To Repossess 70 EVs
In a significant ruling that underscores the limits of the insolvency framework in resolving commercial disputes, the has declined the plea of the of to immediately repossess 70 electric vehicles (EVs) and recover outstanding dues of ₹1.29 crore from The decision, handed down on by a bench comprising Judicial Member Shammi Khan and Technical Member Sanjeev Sharma, highlights the careful balance between the and contractual rights.
Background of the Dispute
, a company engaged in leasing electric vehicles, was admitted into CIRP on . Keshav Khaneja was appointed as the and later confirmed as the RP. Prior to insolvency, Gensol had entered into two with Minder EV Logistics on and , under which 70 EVs were leased for fleet operations. The agreements set out monthly rentals, fleet management charges, maintenance obligations, and the return of vehicles upon termination.
The RP claimed that Minder EV Logistics made payments only until and defaulted thereafter. Despite repeated demands, the company allegedly neither cleared the dues nor returned the vehicles. Quantifying the outstanding amount at ₹1,29,57,183 up to , the RP sought repossession to discharge his duties under (IBC). These provisions require the RP to take custody and control of the corporate debtor’s assets and to protect and preserve the value of its property.
Minder EV Logistics’ Defence and Counterclaims
Minder EV Logistics denied any wilful default and instead alleged that Gensol had failed to provide maintenance support from . The lessee claimed that several vehicles were defective, uninsured, or non-operational, resulting in substantial operational losses. It further asserted that it had incurred its own maintenance expenditure and sought reconciliation and adjustment of those expenses against the RP’s claim.
Crucially, Minder EV Logistics contended that Gensol had not served a notice as required under Articles 2.1 and 10 of the lease agreements. The company pointed to the 48-month , arguing that repossession would cripple its business. Additionally, it relied on in the agreements, submitting that the parties’ contractual claims should be resolved through arbitration rather than through the insolvency proceedings.
NCLT’s Ruling: Limited Scope of Section 60(5)
The NCLT carefully examined the competing submissions. It noted that while Gensol retained ownership of the vehicles, Minder EV Logistics remained in possession. The tribunal observed that the RP’s claim of ₹1.29 crore was disputed, with competing assertions regarding maintenance expenditure, insurance liabilities, and .
The bench held that the communications relied upon by the RP did not conclusively establish , as determining the issue required examination of the contractual notice and . It stated:
“Whether the agreements stood validly terminated and whether Respondent No.1's consequently came to an end cannot be conclusively determined without adjudicating the disputed contractual obligations, notices and cure period. In the facts of the present case, such adjudication would travel beyond the limited determination necessary for protection of the insolvency process and is accordingly left open for determination in accordance with the contractual terms and applicable law.”
The tribunal further clarified that although confers jurisdiction on the NCLT to adjudicate matters connected with insolvency, this power cannot be expanded into a general forum for resolving every contractual dispute. In a key observation, it said:
“The existence of a contractual element does not, by itself, exclude such jurisdiction; however, the statutory jurisdiction cannot be enlarged into a general forum for adjudication of every contractual dispute between the parties.”
The bench found that the disputes over lease rentals, maintenance expenditure, insurance liabilities, penalties, damages, and adjustments or did not involve an admitted or . These required a determination of the parties’ contractual obligations, which was beyond the scope of the under the IBC.
Directions and Disposition
While declining the RP’s prayers for immediate repossession and recovery of dues, the NCLT directed Minder EV Logistics to furnish, within seven days, a vehicle-wise statement setting out the location, registration, condition, and custody of each vehicle. The company was also required to permit physical verification by the RP upon prior notice. This ensures that the RP retains oversight of the assets without prejudging the contractual disputes.
The bench also absolved Respondents 2 and 3 of personal liability, with the directions applying to them only if any of the vehicles were in their custody. The parties were left free to pursue their remedies in accordance with law, including through arbitration or other contractual mechanisms. The application was disposed of without costs.
Implications for Insolvency Practitioners and Lessees
This ruling serves as a crucial reminder that the IBC is not a substitute for contractual adjudication. Resolution professionals must carefully assess whether disputed claims and possession rights can be resolved within the summary insolvency framework or whether they require separate proceedings. The decision reinforces the principle that the NCLT’s jurisdiction under Section 60(5) is limited to matters that are directly connected with the insolvency process, and that it cannot be used to short-circuit complex contractual disputes.
For lessees and counterparties in insolvency, the order provides a measure of protection. Where a lessor enters CIRP, the lessee’s right to possession may not be automatically extinguished if the lease termination is disputed. The lessee is entitled to insist on a proper adjudication of contractual rights before being compelled to return assets.
Conclusion
The Ahmedabad NCLT’s decision strikes a careful balance between the need for efficient asset recovery in insolvency and the protection of contractual rights. By refusing to allow the RP to repossess the 70 EVs without first adjudicating the validity of termination, the tribunal has reaffirmed that the IBC is not a blanket tool for resolving all disputes. The case is a valuable precedent for insolvency professionals, emphasising that a disputed contractual claim must be resolved through its agreed contractual or arbitral mechanism, leaving the insolvency process to focus on its core objective: the maximisation of value and resolution of stress.
