NCLT Directs Return of Leased EV Vehicles in Insolvency Case

Authority: National Company Law Tribunal, Division Bench, Court-I, Ahmedabad

Order Date: 13 July 2026

Case Overview

The Resolution Professional (RP) of Gensol EV Lease Limited (Corporate Debtor) filed an application under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 read with Rule 11 of NCLT Rules, 2016 against Passion International Private Limited. The RP sought directions for: (i) return of 20 electric vehicles (EVs) leased to Passion International under a Master Lease Agreement dated 21 September 2023; (ii) payment of outstanding dues amounting to Rs. 70,46,742.52 with late payment charges; and (iii) interim reliefs to protect the assets.

The Corporate Debtor, engaged in EV leasing business, had entered into the agreement where it remained legal owner of the vehicles while Passion International had usage rights. The Respondent defaulted on lease rentals from February 2025, leading to notices dated 28 April 2025 and 23 July 2025 demanding payment and return of vehicles. The RP argued that the vehicles constituted assets of the corporate debtor and their recovery was essential for the Corporate Insolvency Resolution Process (CIRP) initiated on 13 June 2025.

Passion International admitted willingness to return the vehicles but imposed conditions including: (A) refund of security deposit of Rs. 19,21,850; (B) reimbursement of parking charges paid for 10 months; (C) waiver of claims due to business losses allegedly suffered from failed vehicle purchase negotiations with CSB Bank; and (D) compensation for non-renewal of insurance and fitness certificates. The Respondent also challenged the maintainability of the application citing Clause 13.2 of the agreement which provided for arbitration of disputes.

The Tribunal examined three main issues: (i) whether the RP was entitled to seek return of leased vehicles; (ii) whether outstanding amounts could be adjudicated; and (iii) whether Respondent's contractual disputes could be decided in these proceedings.

Final Outcome

The NCLT partly allowed the application with the following directions:

  • The Respondent must hand over all 20 leased EV vehicles with original registration certificates, insurance documents, permits, keys, chargers, and accessories to the Resolution Professional within 7 days from the order date
  • The Respondent must provide full cooperation for inspection, identification, and peaceful physical delivery of vehicles
  • The Respondent, its directors, officers, employees, and agents are restrained from alienating, transferring, creating third-party rights, or encumbering the vehicles
  • The RP is permitted to seek police assistance if required for taking custody under Sections 18 and 25 of IBC
  • The prayer for recovery of Rs. 70,46,742.52 with charges is left open and not adjudicated
  • All rights regarding security deposit, parking charges, damages, losses, and reciprocal claims are kept open to be pursued in accordance with law

The Tribunal rejected the arbitration clause defense, citing the Supreme Court's Alchemist judgment and Section 238 of IBC which gives overriding effect to the Code. The bench distinguished between recovery of assets (which is statutory) and adjudication of monetary claims (which requires detailed evidence).

Topics: NCLT Order, Asset Recovery, Insolvency Proceedings