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Powerdeal Energy: Lease Expiry After Plan Approval Not Issue, Mumbai Rules
In a significant ruling that clarifies the jurisdictional limits of the insolvency tribunal post-resolution, the ) Mumbai Bench has held that a dispute over handing over possession after the expiry of a lease period does not fall within the ambit of the ) if the lease period expires after the approval of the .
The Bench, comprising Judicial Member Sh. Sushil Mahadeorao Kochey and Technical Member Sh. Prabhat Kumar, dismissed an application filed by the (MC) Chairman of seeking possession of factory premises from two occupant companies, and .
A Tale of Two Properties
The judgment dealt with two separate applications concerning different assets of the corporate debtor. The first set of applications (IA 2656 and 2678 of 2026) pertained to the land at Village Vilholi, Nashik, admeasuring 80,400 square metres. Here, the Tribunal directed the — including Mr. Mahesh Khairnar — to hand over full possession of the entire land to the ), Mr. Bhupendra Shantilal Shah, and the MC Chairman.
The second application (IA 2745 of 2026) concerned factory premises at F-29(A) and (B), , Satpur, Nashik, which were occupied by Novacept and Rachana under lease arrangements. The MC Chairman sought their eviction, claiming .
Lease Expiry After Plan Approval: A Jurisdictional Question
The occupants argued that the lacked jurisdiction to order their eviction under , as their lease periods had expired only after the was approved on . Novacept's lease ran from to , while Rachana's lease spanned to — both extending beyond the plan approval date.
The Tribunal noted that neither party had produced the actual lease agreements, but the minutes of the first (CoC) meeting confirmed these periods. Since both leases had expired by the time the application was filed, the question was whether the could intervene.
: Not a Catch-All Remedy
The Bench drew a clear line, holding that the
— the refusal to hand over possession after lease expiry — arose after the
was approved. Consequently, it could not be said to arise
"out of or in relation to"
the insolvency resolution process.
"It cannot be said that the issue of handing over on expiry of lease period is arising out of or in relation to the insolvency resolution of the Corporate Debtor. Since the has arisen after approval of the , we do not consider that non handing over the possession of premises by Respondent No. 1 and 2 after results into , as the is to get the assets in the position it were there as on date of approved ."
The Tribunal emphasised that the Successful Resolution Applicant is entitled to the assets only in the condition they were in on the date of plan approval. If the lease period had not yet expired on that date, the and must honour the existing lease. Once the lease expires, the must pursue remedies available under , not under the .
Contrasting Outcome for the Vilholi Land
In sharp contrast, the Tribunal ordered the immediate handover of the entire 80,400 sq mtr Vilholi land, which the had only partly released. Relying on the approved on — which explicitly recorded that the land (owned by the promoters but held by the corporate debtor under ) was an integral part of the plan — the Bench directed the directors to hand over the full area within 15 days. Failure to comply would invite police assistance.
The Tribunal noted that the plan had been approved with 100% voting by the , and the objection raised by the regarding the land being in their personal names had been considered and rejected.
What This Means for Resolution Applicants
The ruling sends a clear message to resolution applicants: the 's jurisdiction under Section 60(5) is not a substitute for in matters that arise after plan approval. While the Tribunal will ensure that plan terms are enforced against parties bound by the plan (such as ), it will not entertain claims against third-party occupants whose rights arose and expired after the plan's approval.
The has been left at liberty to pursue other legal proceedings against Novacept and Rachana for possession of the premises.
Key Observations from the Judgment
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"The whole of 80,400 sq. mtrs. area was to be handed over to the in terms of the approved . In view thereof the Respondent Ex directors are directed to hand over the whole of 80,400 sq. mtrs. area to the MC Chairman / without any further delay."
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"Since the has arisen after approval of the , we do not consider that non handing over the possession of premises by Respondent No. 1 and 2 after results into ."
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"The shall be at liberty to take any other proceeding, as permissible under law, for seeking possession of the premises from Respondent Nos. 1 and 2."
The judgment underscores the importance of for resolution applicants, who must anticipate and address post-approval possession challenges through contractual or rather than relying solely on the 's .
(The writer is a legal journalist and not a legal professional. This article is based on the published judgment of the Mumbai Bench.)
