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2026 Supreme(Online)(NCLT) 2656
NATIONAL COMPANY LAW TRIBUNAL
G. Vinayan – Appellant
Versus
Davani Silks Pvt. Ltd – Respondent
IA(I.B.C) - 75/2026
For the Petitioner:Rony Jose
For the Respondent:SANKAR P PANICKER
The decision to retain or vacate a leased premises during CIRP is within the commercial wisdom of the CoC, not the Adjudicating Authority, and the moratorium under Section 14 does not bar the CoC from voluntarily returning possession.
Headnote:(A) Insolvency and Bankruptcy Code, 2016 - Sections 14, 60(5) and 238 - NCLT Rules, 2016 - Rule 11 - Kerala Buildings (Lease and Rent Control) Act, 1965 - Sections 11(2) and 12 - Moratorium under Section 14 of IBC does not bar a lessor from seeking possession of leased premises where the Committee of Creditors (CoC) has decided not to retain the premises - The decision to retain or vacate a leased premises falls within the commercial wisdom of the CoC, which must be given primacy - Rent payable during CIRP is CIRP cost, and during liquidation it is liquidation cost, payable in priority - Any expenditure on leased premises impacts the financials of the Corporate Debtor and recovery available to creditors. (Paras 41-45)
(B) Insolvency and Bankruptcy Code, 2016 - Section 14(1)(d) - Does not prohibit the recovery of possession where the CoC and Resolution Professional are themselves desirous of returning possession due to adverse financial implications - The moratorium is not an absolute bar against the owner seeking possession when the Corporate Debtor has abandoned the premises and the lease stands terminated - Sincere Securities Pvt. Ltd. v. Chandrakant Khemka (2025) ibclaw.in 296 SC, relied upon. (Paras 41-42)
Facts of the case:
The Applicant, owner of a building, leased the premises to the Corporate Debtor in 2020. The Corporate Debtor defaulted on rent from April 2023. The lease was mutually determined on 17.07.2023, with an undertaking to hand over vacant possession by 15.11.2023. The Corporate Debtor failed to do so. CIRP was initiated against the Corporate Debtor on 30.05.2024, and a moratorium under Section 14 was imposed. The Applicant filed a Rent Control Petition, which was kept in abeyance due to the moratorium. The premises were locked and abandoned by the Corporate Debtor, with no business operations. The CoC decided to seek liquidation of the Corporate Debtor. The Applicant sought a direction to the IRP to hand over possession, but the IRP failed to respond.
Findings of Court:
The Adjudicating Authority held that since the premises were not actively used for business, the CoC had decided to go for liquidation, and the continued retention of the premises incurred a recurring financial burden, the decision to retain or vacate the premises must be taken by the CoC in its commercial wisdom. The CoC was directed to convene a meeting within 15 days and take a considered decision.
Issues: The main issues were whether the moratorium under Section 14 of IBC bars the lessor from seeking possession of premises that have been abandoned by the Corporate Debtor, and whether the decision to retain or vacate such premises lies with the Adjudicating Authority or with the CoC.
Ratio Decidendi: The court ruled that while the moratorium restricts recovery of possession by the lessor, the decision to retain or relinquish possession of a leased premises lies within the commercial wisdom of the CoC. Where the CoC decides that retention is not beneficial, that decision must be given primacy. The court directed the CoC to take a decision on the matter. Result : IA(IBC)/75/KOB/2026 stands disposed of, with a direction to the Committee of Creditors to convene a meeting within 15 days and take a decision regarding the continuation or relinquishment of the schedule premises. (Para 47) The registry was directed to send a copy of the order to IBBI. (Para 48)
| Table of Content |
|---|
| 1. lease agreement terms and default in payment of rent. (Para 1 , 2 , 3 , 4 , 5 , 6 , 7 , 8) |
| 2. initiation of cirp, moratorium, and lessor's claim for arrears. (Para 9 , 10 , 11 , 12 , 13 , 14 , 15 , 16) |
| 3. irp's defense: moratorium protects possession, claim delay, coc authority. (Para 17 , 18 , 19 , 20 , 21 , 22 , 23 , 24 , 25 , 26 , 27 , 28 , 29) |
| 4. lessor's rejoinder: possession is nominal, moratorium not absolute. (Para 30 , 31 , 32 , 33 , 34 , 35 , 36 , 37) |
| 5. court's observations on undisputed facts and coc's decision to liquidate. (Para 38 , 39 , 40) |
| 6. commercial wisdom of coc prevails over moratorium for leased premises. (Para 41 , 42 , 43 , 44 , 45) |
| 7. final order: coc to decide on lease retention within 15 days. (Para 46 , 47 , 48 , 49 , 50) |
O R D E R
1. This application has been filed under Section 60 (5) of the Insolvency and Bankruptcy Code 2016 r/w Rule 11 of the NCLT rules 2016 with the following prayers: -
a) Direct the Respondent-Interim Resolution Professional to consider, decide and pass appropriate orders forthwith on Ann. A10 application seeking handing over of vacant and peaceful possession of Building Nos. 7/128 to 7/138, Muvattupuzha Municipality, in accordance with law;
b) Consequent thereto, direct the Respondent-Interim Resolution Professional to hand over vacant and peaceful possession of Building Nos. 7/128 to 7/138, Muvattupuzha Municipality to the Applicant forthwith along with keys;
c) Declare that Building Nos. 7/128 to 7/138, Muvattupuzha Municipality covered under Annexure Al do not form part of the assets of the Corporate Debtor and that continued retention of possession is not protected by the moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016;
d) Permit the Applicant to take possession of Building Nos. 7/128 to 7/138, Muvattupuzha Municipality along with keys and to deal with any abandoned articles lying therein, in accordance with law;
e) Pass such other or further order(s) as this Hon'ble Adjudicating Authority may deem fit and proper in the interests of justice.
Brief facts of the case are as follows: -
2. The Applicant submitted that he is the absolute owner of an extent of 3500 sq. ft. situated on the ground floor of the building bearing Nos. 7/128 to 7/138 of Muvattupuzha Municipality, Ernakulam.
3. The Schedule Premises were leased to the Corporate Debtor, Davani Silks Pvt. Ltd., as per the lease deed dated 18.09.2020, on a monthly rent of Rs. 1,68,300/-plus GST, which was subsequently revised from time to time.
4. Applicant further submitted that the rent was later enhanced to Rs.1,98,000/- plus GST, thereafter revised to Rs. 1,93,000/- plus GST with effect from 07.08.2021, and finally fixed at Rs. 2,27,740/-inclusive of GST.
5. The Corporate Debtor committed default in payment of rent from April 2023 onwards, despite repeated demands, and also failed to clear statutory dues, including electricity charges of the Schedule Premises.
6. It is further submitted that the applicant and the Corporate Debtor mutually determined the lease and entered into a written agreement with the Applicant on 17.07.2023, whereby the Corporate Debtor agreed and undertook to hand over vacant possession of the Schedule Premises on or before 15.11.2023, after removing all articles and furniture stored therein, and further agreed to adjust the rent arrears against the security deposit and to clear all statutory charges and damages before handing over possession.
7. Despite Annexure. A2, the Corporate Debtor failed to honor its undertaking and neither handed over vacant possession nor cleared the admitted arrears and statutory liabilities.
8. Left with no alternative, the Applicant filed RCP No. 4/2024 before the Rent Controller, Muvattupuzha, under Section 11(2) of the Kerala Buildings (Lease and Rent Control) Act, 1965, along with IA No. 3/2024 under Section 12 of the Act.
9. In the meantime, this Adjudicating Authority admitted CP (IBC) No. 05/KOB/2024 and appointed the Respondent as Inte
