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2026 Supreme(Online)(NCLT) 961
NATIONAL COMPANY LAW TRIBUNAL
Navneet Gupta – Appellant
Versus
Jasbir Singh Khangura – Respondent
IA(I.B.C) - 2486/2024
For the Petitioner:Siddhant Kant
For the Respondent:VIRENDER KUMAR SACHDEVA
The Insolvency and Bankruptcy Code overrides pre-existing agreements and arbitral awards, preventing suspended directors and related parties from retaining possession of corporate debtor assets during CIRP, as this would frustrate the resolution process and unfairly prioritise their claims over other stakeholders.
Headnote:(A) Insolvency and Bankruptcy Code, 2016 (IBC) - Section 17, 18, 19, 20, 25, 60(5) - Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 - Regulation 30 - Corporate Insolvency Resolution Process (CIRP) - Duty of personnel, promoters, and associates to cooperate and handover possession - The Code mandates that upon initiation of CIRP, the management and assets of the Corporate Debtor vest with the Resolution Professional (RP), and all persons in custody of assets must hand over control. (Paras 8.1.7, 13)
(B) IBC - Sections 18, 25, and 238 - Overriding effect of the Code - The provisions of the IBC override any other law, contract, or instrument inconsistent therewith, including private agreements and arbitral awards, to the extent of inconsistency. (Para 8.1.40)
(C) IBC - Section 19 - Non-cooperation by Suspended Directors and related parties - A Suspended Director or related party cannot claim a right to retain possession of Corporate Debtor's assets based on collusive or fabricated agreements, especially when such claims would give them priority over other stakeholders. (Paras 10, 12)
Facts of the case:
The Resolution Professional (RP) of Majestic Hotels Ltd. filed an application under Sections 19, 25, and 60(5) of the IBC seeking eviction of the Suspended Director (R1), his wife (R4), and a related dairy company (R3) from portions of a hotel property owned by the Corporate Debtor (CD). The portions included a salon on the 2nd floor, shops on the 3rd floor, rooms on the 8th floor, and the entire 9th floor used as a residence. The respondents claimed occupancy based on profit-sharing agreements, a barter arrangement, a memorandum of occupancy rights, and an arbitral award. The RP argued these documents were fabricated, not in the CD's records, and that the respondents were related parties seeking to circumvent the CIRP.
Findings of Court:
The Tribunal found that the respondents' occupation was illegal and interfered with the CIRP. The claims were based on documents that appeared collusive and were not reflected in the CD's books. The respondents, being the suspended director, his wife, and a related party, could not be allowed to retain possession as it would give them priority over other stakeholders. The Tribunal directed the respondents and any third party occupying the premises through them to vacate within two weeks. In case of non-compliance, the RP was directed to seek police assistance from the Commissioner of Police, Ludhiana.
Issues: The main issue was whether the Suspended Director, his wife, and a related party could continue to occupy the Corporate Debtor's premises during the CIRP based on alleged agreements and an arbitral award, and whether the NCLT had the jurisdiction to order their eviction.
Ratio Decidendi: The Tribunal held that the Insolvency and Bankruptcy Code overrides all other laws and instruments. Suspended directors and related parties cannot use pre-existing, potentially collusive agreements to retain possession of the Corporate Debtor's assets, as doing so would undermine the CIRP and give them an unfair priority over other creditors. The Adjudicating Authority has the jurisdiction under Sections 18 and 60(5) of the Code to direct the eviction of such occupants to facilitate the resolution process.
Result: The Application was allowed. R1, R3, and R4 were directed to vacate the premises within two weeks, failing which the RP could seek police assistance to enforce the order.
| Table of Content |
|---|
| 1. application for eviction of suspended directors and associates from corporate debtor premises during cirp (Para 1 , 2 , 3 , 4 , 5 , 6) |
| 2. arguments on validity and enforceability of pre-cirp occupancy agreements (Para 8) |
| 3. court's analysis of fabricated documents and related party transactions (Para 9 , 10 , 11 , 12) |
| 4. order to vacate premises with police assistance and disposal of application (Para 13 , 14) |
ORDER
1. This Application has been filed under Sections 19, 25 & 60(5) of the IBC, 2016 (hereinafter referred to as the Code) by the Resolution Professional (RP)-Mr. Navneet Gupta for seeking directions to the Respondent No.1 namely Mr. Jasbir Singh Khangura, the Suspended Director of the Corporate Debtor (CD), along with his wife Mrs. Raman Khangura (Respondent No.4)/friends/relatives/acquaintances to vacate the Corporate Debtor premises forthwith and hand over the vacant and peaceful possession of the CD premises in terms of the provisions of the Code; and also to direct the Police Authorities to take necessary steps to secure possession of the said premises.
2. Such an Application is filed in reference to the Corporate Insolvency Resolution Process (hereinafter referred to as a “CIRP”) initiated against the Corporate Debtor namely-Majestic Hotels Private Limited, vide Order dated 03.07.2024 by admitting the Company Petition No.180 of 2022 filed under Section 7 of the Code by UV Assets Reconstruction Company Limited- Financial Creditor (FC). The Applicant Mr. Navneet Gupta has been appointed to act as IRP/RP of the Corporate Debtor (CD).
3. The Corporate Debtor owns a five-star hotel property named “Hotel Majestic Park Plaza” situated in Ludhiana on a piece of land admeasuring 6558 square yards, which is operated by “Sarovar Hotels Private Limited” (Park Plaza group) since 1996 under the Hotel Operations Agreement dated 30.05.1996.
4. The Application is filed requiring the Respondent No.1 along with his wife/friends/relatives/acquaintances to vacate the following portions of the hotel building: -
i. A salon at the 2nd floor.
ii. 13 shops at the 3rd floor.
iii. Room Nos.1802 to 1806 at the 8th floor.
iv. Entire 9th floor used by R1 and his wife for their residence.
5. During the course of hearing, it was brought to our notice that the premises as mentioned above in para 4 at Serial No.(i) to (iii) i.e. a salon at the 2nd floor, 13 shops at the 3rd floor and Room Nos.1802 to 1806 at the 8th floor are in the possession of the Company named Tru Prime Private Limited, whereas, the premises as mentioned above at Serial No.(iv) i.e. the 9th floor are in the possession of Mrs. Raman Khangura wife of Respondent No.1. Accordingly, vide Order dated 05.05.2025, the Applicant was directed to implead them too as a Respondent party. Accordingly, True Prime Private Limited and Mrs. Raman Khangura have been arrayed as Respondent Nos.3 and 4 respectively as per the amended memo of parties.
6. The True Prime Private Limited (R3) has been supplying milk and milk products to the Corporate Debtor. It is claimed that second floor salon named “Beau Chic” is given to the Tru Prime Private Limited on the basis of Private Sharing Agreement (PSA) dated 17.06.2019 allegedly valid for 08 years for sharing of profit to the extent of 15% with the Corporate Debtor, whereas 12 shops out of 13 shops on the 3rd floor are given to them (Tru Prime Private Limited) based on another Private Sharing Agreement (PSA) dated 13.03.2020 allegedly valid for 10 years till 2030. Further the five rooms i.e. “Room Nos.1802 to 1806” on 8th floor are also given to the “Tru Prime Private Limited” in lieu of commercial barter agreement wherein the Tru Prime Private Limited had supplied milk and milk products to the Corporate Debtor; and the Corporate Debtor in return provided accommodation services to the Key Managerial Personnel (“KMP”) namely Mrs. Amandeep Khangura for use as her residence.
Mrs. Raman Khangura (R4) is stated to be occupying the portion of 9th floor a
