Authority: National Company Law Tribunal, Indore Bench (Court No. 1)

Order Date: 07 July 2026

Case Overview

The application was filed by Mr. Kuldeep Tank, Resolution Professional (RP) of M/s Shree Uttam Food Products (India) Private Limited (Corporate Debtor), against Mr. Vatsal Acharya (Respondent) under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 read with Regulation 30 of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. The Corporate Debtor was admitted into Corporate Insolvency Resolution Process (CIRP) vide order dated 05.12.2025 in CP(IB) No. 16(MP) of 2024 on a petition filed by Punjab National Bank.

The RP alleged that the Respondent, claiming rights under an unregistered Lease Deed dated 16.12.2023, obstructed access to the factory premises at Village Bamnia, Tehsil Petlawad, District Jhabua, and failed to provide necessary documents and information despite multiple reminders. The Committee of Creditors (CoC), in its second meeting on 29.01.2026, resolved with 100% voting share to terminate the lease arrangement due to non-cooperation, absence of supporting documentation for rent payments, and non-compliance with statutory requirements. The RP subsequently issued a termination notice, but the Respondent refused to vacate, claiming lawful possession under the lease.

The Respondent contended that the lease was valid and subsisting for 60 months (15.01.2024 to 14.01.2029) with monthly rent of ₹40,000 paid in cash to the late director Shri Nilesh Upadhyay due to frozen bank accounts. He denied obstruction and claimed to have permitted access for inspection on 07.03.2026 as per Tribunal's order. He also filed a civil suit in District Jhabua seeking declaration of lease validity and injunction against dispossession.

The Tribunal framed two key issues: (1) Whether the unregistered Lease Deed was valid and conferred subsisting rights, and (2) Whether NCLT had jurisdiction under Section 60(5) to entertain the application and direct vacation.

On the first issue, the Tribunal held that the Lease Deed, being for a term exceeding one year (60 months), was compulsorily registrable under Section 107 of the Transfer of Property Act, 1882 and Section 17(1)(d) of the Registration Act, 1908. As it was unregistered, it could not be examined to establish the lease term, purpose, or other substantive rights. The Respondent failed to prove manufacturing activity or payment of rent (cash payments were unsupported by evidence of receipt by Corporate Debtor). The Panchnama dated 07.03.2026 showed no electricity, water, or use of factory, contradicting manufacturing claims.

On the second issue, the Tribunal affirmed jurisdiction under Section 60(5)(c) of the Code, citing Gujarat Urja Vikas Nigam Ltd. v. Amit Gupta & Ors. (2021) 7 SCC 209, which upholds NCLT's residuary jurisdiction over matters arising from insolvency resolution. The premises being an asset of the Corporate Debtor, the RP's duty to take custody under Sections 18, 20, and 25 of the Code established sufficient nexus. The moratorium under Section 14(1)(d) protects the Corporate Debtor's possession and does not assist the Respondent. The pendency of civil suit did not oust NCLT's jurisdiction due to overriding effect of Section 238 of the Code.

Final Outcome

The application was allowed. The Respondent, Mr. Vatsal Acharya, and all persons claiming through him were directed to vacate and hand over peaceful and vacant possession of the factory premises within two weeks from the order date. The RP was authorized to enter, inspect, secure, and protect the assets, and deploy private security. The Respondent was restrained from removing, damaging, or dealing with any assets. The District Administration/Superintendent of Police of Jhabua were directed to provide necessary assistance for implementation.

Topics: Insolvency Resolution, Lease Dispute, Asset Protection