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2025 Supreme(SC) 1155
SUPREME COURT OF INDIA
SANJAY KUMAR, SATISH CHANDRA SHARMA, JJ.
Sincere Securities Private Limited & Ors. – Appellants
Versus
Chandrakant Khemka & Ors. – Respondents
Civil Appeal No. 12812 of 2024
Decided On : 05-08-2025
For the Appellant(s) : Mr. Siddharth Bhatnagar, Sr. Adv. Mr. Ashish Choudhury, AOR Mr. Aditya Sidhra, Adv. Mr. Akash Agarwal, Adv. Ms. Sulekha Agarwal, Adv. Mr. Abhishek Arora, Adv. Ms. Prachi Grover, Adv.
For the Respondent(s): Ms. Arundhati Katju, Sr. Adv. Mr. Aman Gupta, AOR Mr. Anup Kashyap, Adv. Mr. Shambo Nandy, AOR Mr. Partha Sil, AOR Mr. Utkarsh Dwivedi, Adv. Mr. Srijit Datta, Adv.
The Court reaffirmed that the commercial decisions made by the Committee of Creditors during insolvency proceedings are paramount and not subject to judicial review, ensuring property possession aligns with financial feasibility under the Insolvency and Bankruptcy Code.
Headnote:(A) Insolvency and Bankruptcy Code, 2016 - Section 62 and Section 14(1)(d) - Appeal against order of NCLAT setting aside NCLT’s direction for possession - Company’s failure to repay loans led to insolvency proceedings and disputes over property possession - NCLT directed delivery to appellants based on CoC’s decision, but NCLAT remanded the matter citing recovery prohibition under Section 14(1)(d). (Paras 1, 3, 4, 9, 11)
(B) Corporate Insolvency Resolution Process - Commercial wisdom of Committee of Creditors (CoC) has paramount status and should not be judicially intervened upon - Appellate court's authority is limited in examining the appropriateness of business decisions made by CoC. (Paras 8, 10)
Facts of the case:
The corporate debtor, Nandini Impex Private Limited, secured loans through deposit of property title deeds but failed to repay them, leading to insolvency proceedings initiated by UCO Bank. Appellants sought possession of property via NCLT, which initially granted possession but was reversed by NCLAT due to Section 14(1)(d) protections.
Findings of Court:
The Court held that taking possession was necessary and justified, overriding the NCLAT's remand decision due to the dominant consensus among all parties except for one who opposed it based on unconvincing reasons.
Issues: Whether the decision to retain or deliver possession conflicted with Section 14(1)(d) during CIRP and the role of the CoC’s commercial wisdom in possession decisions.
Ratio Decidendi: The Court emphasized that the CoC's decision regarding possession was rational and should not be dismissed, maintaining that simply possessing property was not grounds for recovery during the moratorium under Section 14(1)(d).
Result: Appeal allowed.
| Table of Content |
|---|
| 1. facts involving financial disputes and property possession rights under ibc. (Para 1 , 2 , 3) |
| 2. arguments centered on the necessity of property retention and differing views of involved parties. (Para 4 , 6 , 7) |
| 3. court's observation regarding the precedence of committee's decisions in legal interpretations under ibc. (Para 5 , 8 , 9 , 10) |
| 4. final ruling restoring the nclt's order and emphasizing fiscal responsibility. (Para 11) |
JUDGMENT
SANJAY KUMAR, J
1. This appeal, under Section 62 of the Insolvency and Bankruptcy Code, 2016 [for short, “IBC”], calls in question the order dated 12.11.2024 passed by the National Company Law Appellate Tribunal, Principal Bench, New Delhi [for short, “NCLAT”], allowing Company Appeal (AT) (Insolvency) No. 1064 of 2023 filed by Chandrakant Khemka, respondent No. 1, and setting aside the order dated 07.08.2023 of the National Company Law Tribunal, Kolkata Bench [for short, “NCLT”], in CP(IB) No. 1377/KB/2020. Thereby, the NCLT had directed delivery of possession of the property in question to the appellants herein.
2. Facts, relevant to this adjudication, need recounting at some length. On 13.02.2019, a Memorandum of Understanding was executed by and between Nandini Impex Private Limited, which became a corporate debtor under the IBC thereafter, represented by its Director, Chandrakant Khemka, on the one hand, and Noble Dealcom Private Limited along with Jodhpur Properties and Finance Private Limited, appellant Nos. 2 and 3 herein, on the other hand, whereby Nandini Impex Private Limited availed financial assistance to the tune of Rs. 3 crores from them and secured the same through deposit of the title deeds relating to the rear portion of the ground floor of White House, 1/18-20, Rani Jhansi Road, New Delhi. Another Memorandum of Understanding was executed by Nandini Impex Private Limited on 15.02.2019 with Sincere Securities Private Limited, appellant No.1 herein, for availing a loan of Rs. 3 crores from it and the same was secured through deposit of the title deeds of the front portion of the ground floor of White House. As Nandini Impex Private Limited failed to repay the loans, separate conveyance deeds were executed by it on 27.02.2020 transferring the title over the front and rear portions of the ground floor of White House to the appellants respectively. However, two separate Leave and License Agreements were executed simultaneously on the same day, whereby possession of the front and rear portions of the ground floor of White House was retained by Nandini Impex Private Limited on payment of rentals of Rs. 6 lakhs per month for each portion.
Owing to the default in payment of the rentals, the appellants terminated the Leave and License Agreements on 08.05.2020. Eviction suits were also instituted by the appellants for regaining possession of the subject ground floor portions along with other reliefs.
3. While so, UCO Bank, respondent No. 3 herein, filed a petition under Section 7 of the IBC against Nandini Impex Private Limited. The same was admitted on 20.09.2022 by the NCLT, initiating corporate insolvency resolution process [for short, “CIRP”] against Nandini Impex Private Limited, the corporate debtor. Significantly, UCO Bank was the sole member of its Committee of Creditors [for short, “CoC”]. The appellants, as operational creditors, filed their respective claims before the Interim Resolution Professional appointed for the corporate debtor and the said claims were accepted in toto. At that stage, UCO Bank, constituting the CoC, deputed the Resolution Professional to visit the subject property on the ground floor of White House and decide whether there was any need to retain the same by paying huge rentals. Thereafter, at its meeting held on 06.04.2023, the CoC decided that there was no requirement to hold on to the subject property and requested the Resolution Professional to hand over the possession thereof to the appellants. Chandrakant Khemka, being a suspended di
