Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2026 Supreme(Online)(NCLT) 3131

NATIONAL COMPANY LAW TRIBUNAL
Attukal Bhagavathy Temple Trust – Appellant
Versus
ATTUKAL DEVI INSTITUTE OF MEDICAL SCIENCES LIMITED – Respondent
IA(I.B.C) - 217/2025

Advocates:
For the Petitioner:ASWIN GOPAKUMAR
For the Respondent:A.C.Venugopal

Property owned by a third party with an expired lease cannot be excluded from the CIRP estate, and recovery of possession is barred by Section 14(1)(d) moratorium.

Headnote:(A) Insolvency and Bankruptcy Code, 2016 - Section 60(5), Section 14(1)(d), Section 18, Section 12 - Kerala Buildings (Lease and Rent Control) Act, 1965 - Section 11(1) - Ownership of property - Lease expiry - Third-party assets - CIRP - Moratorium - Possession during CIRP - Commercial wisdom of Committee of Creditors.

(B) Insolvency and Bankruptcy Code, 2016 - Section 14(1)(d) - Moratorium - Recovery of property - The section expressly prohibits the recovery of any property by an owner or lessor where such property is occupied by or is in the possession of the corporate debtor during the moratorium period. (Paras 35, 36)

(C) Insolvency and Bankruptcy Code, 2016 - Section 12 - Timelines for CIRP - The outer limit of 330 days under Section 12 cannot be construed in a rigid or mechanical manner. Extension can be granted in exceptional circumstances, particularly where delay is attributable to pendency of legal proceedings and continuation is in the interest of stakeholders. (Paras 29, 30)

(D) Insolvency and Bankruptcy Code, 2016 - Section 18 - Assets of Corporate Debtor - Third-party assets - Assets owned by third parties but held under contractual arrangements are expressly excluded from the control of the Resolution Professional. Ownership vests with the lessor. (Paras 32, 19) (E) Company Law - CIRP - Possession of leased premises - The question of retaining or relinquishing possession of leased premises during CIRP is a matter within the commercial wisdom of the Committee of Creditors. (Paras 37, 38)

Facts of the case:
The Applicants, owners of the Schedule Property, leased it to the Corporate Debtor via a registered Rental Agreement dated 10.10.2008 for a period of fifteen years, which expired in September 2023 without renewal. The Corporate Debtor operated a hospital on the premises. CIRP was initiated against the Corporate Debtor on 27.09.2024, and a moratorium was declared. The Applicants sought a declaration that the property was not part of the CIRP estate and sought vacant possession. The Respondents argued that the Corporate Debtor continued as a statutory tenant under the Kerala Buildings (Lease and Rent Control) Act, 1965, and that Section 14(1)(d) of the IBC barred recovery of possession. A Resolution Plan had been approved by the Committee of Creditors.

Findings of Court:
The court found that ownership of the Schedule Property vests with the Applicants, and it was never treated as an asset of the Corporate Debtor. However, the court held that Section 14(1)(d) of the IBC prohibits the recovery of property occupied by the corporate debtor during the moratorium. Since CIRP was ongoing, a hospital was in operation, and a Resolution Plan had been approved, directing vacant possession would cause irreparable loss and prejudice value maximization. The court also noted that the Committee of Creditors had approved a plan, and the issue of continued occupation was a matter of commercial wisdom. (Paras 25, 32, 33, 34, 35, 38)

Issues: The main issues were whether the Schedule Property, being a third-party asset with an expired lease, can be excluded from the CIRP estate, and whether the Resolution Professional could be directed to hand over vacant possession.

Ratio Decidendi: The court ruled that while the property belongs to a third party and cannot be part of the CIRP estate, the Recovery Professional and/or the Corporate Debtor cannot be directed to hand over vacant possession due to the statutory bar under Section 14(1)(d) of the IBC, which protects the corporate debtor's possession during the moratorium. The final decision on continued occupation rests with the commercial wisdom of the Committee of Creditors.

Result: IA(IBC)/217/KOB/2025 IN CP(IBC)/22/KOB/2024 stands disposed of. No direction was issued for handing over vacant possession. The possession and occupation of the Schedule Property by the Corporate Debtor during the subsistence of the moratorium shall continue in accordance with the IBC. (Paras 40, 42)

O R D E R

1. This Application has been filed under Section 60(5) of the Insolvency and Bankruptcy Code, 2016, read with Rule 11 and 32 of the NCLT Rules, 2016, seeking the following reliefs: -

a) Declare that the property belonging to the Applicants having an extent of 112.5 cents equivalent to 45.1 Ares of property in Survey No. 1704, 1704/1, 1705, 1705/1, 1705/3, 1705/4, 1705/5 of Mancaud Village along with a three storied building having a total area of 32185 Sq. Ft. and its improvements are not and cannot be part of the CIRP Process initiated against the 1st Respondent vide order dated 27.09.2024 in CP(IBC)/22/KOB/2024.

b) Direct the Interim Resolution Professional to handover vacant possession of property belonging to the Applicants having an extent of 112.5 cents equivalent to 45.1 Ares of property in Survey No. 1704, 1704/1, 1705, 1705/1, 1705/3, 1705/4, 1705/5 of Mancaud Village along with a three storied building having a total area of 32185 Sq.Ft. and its improvements

c) Pass such further or other orders as this Hon'ble Tribunal may deem fit and proper in the light of justice, equity and good conscience.

Brief facts of the case are as follows: -

2. The 1^st Applicant is a religious, charitable and educational trust constituted for the maintenance and administration of Attukal Bhagavathy Temple and its properties, while the 2^nd Applicant is the Idol, Attukal Bhagavathy, represented through the Secretary of the Trust. The 1^st Respondent Company, Attukal Devi Institute of Medical Sciences Limited (Corporate Debtor), was incorporated under the aegis of the Applicant Trust for running “Attukal Devi Hospital”, a multi-speciality hospital intended for the welfare of the general public. The 2^nd Respondent was appointed as the Interim Resolution Professional of the 1^st Respondent Company pursuant to the initiation of the Corporate Insolvency Resolution Process vide order dated 27.09.2024 in CP(IBC)/22/KOB/2024.

3. It is submitted that the Applicant Trust had, by virtue of a registered Rental Agreement dated 10.10.2008, leased out to the 1^st Respondent an extent of 112.5 cents of land comprised in Survey Nos. 1704, 1704/1, 1705, 1705/1, 1705/3, 1705/4, and 1705/5 of Mancaud Village, together with a three- storied building having a total area of 32,185 sq. ft., for the purpose of conducting the hospital. The lease was for a period of fifteen years ending in September 2023, with renewal only upon mutual agreement between the parties. According to the Applicants, the 1^st Respondent committed persistent defaults in payment of rent from the inception of the tenancy, which constrained the Applicants to initiate multiple proceedings before the Rent Control Court, Thiruvananthapuram, seeking recovery of arrears and eviction.

4. The Applicants submitted that several proceedings, including RCP No. 35 of 2011 and RCP No. 15 of 2016, were instituted under the Kerala Buildings (Lease and Rent Control) Act, 1965, against the 1^st Respondent on account of substantial arrears of rent. Orders were passed by the Rent Control Court directing payment of arrears, and eviction orders were also passed against the 1^st Respondent, which were challenged before the Appellate Authority and the Hon’ble High Court of Kerala. It is stated that despite partial payments made pursuant to court directions, the 1^st Respondent continued to remain in default, and huge arrears allegedly accumulated towards rent payable to the Applicants.

5. The Applicants further stated that the lease arrangement expired by efflux of time in September 2023 and was never renewed thereafter. It is their case that resolutions were passed by the Applicant Trust, deciding not to extend the tenancy in favour of the 1st Respondent and to resume management of the hospital premises for charitable medical activities. The Applicants also alleged that the 1st Respondent carried out unauthorised constructions and alterations in the Schedule Property without requisite approvals from competent authorities.

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2026 Supreme(Online)(NCLT) 3131

NATIONAL COMPANY LAW TRIBUNALAttukal Bhagavathy Temple Trust – AppellantVersusATTUKAL DEVI INSTITUTE OF MEDICAL SCIENCES LIMITED – RespondentIA(I.B.C) - 217/2025

Property owned by a third party with an expired lease cannot be excluded from the CIRP estate, and recovery of possession is barred by Section 14(1)(d) moratorium.

NATIONAL COMPANY LAW TRIBUNAL
Attukal Bhagavathy Temple Trust – Appellant
Versus
ATTUKAL DEVI INSTITUTE OF MEDICAL SCIENCES LIMITED – Respondent
IA(I.B.C) - 217/2025