Authority: National Company Law Tribunal, Kolkata Division Bench (Court No.-I)

Order Date: 12 June 2026

Case Overview

The application was filed by Niraj Agarwal, Resolution Professional of United Royalfab Engineering Private Limited, under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 read with Rule 11 of the NCLT Rules. The matter involved Indian Bank as financial creditor and United Royalfab Engineering as corporate debtor, with Royal Engineering Company and its partners as respondents.

The corporate debtor had availed credit facilities from Allahabad Bank (amalgamated with Indian Bank effective 01.04.2020) through sanction letters dated 11.04.2016, 18.08.2017, 26.09.2018, and 20.05.2020. The security package included an equitable mortgage over 118 decimals of land at Dakshin Raipur owned by Royal Engineering Company, along with plant and machinery situated thereon. Indian Bank initiated SARFAESI proceedings after default, issuing demand notice on 07.08.2021 and taking possession on 07.12.2021.

CIRP was initiated against United Royalfab on 03.12.2025 based on Indian Bank's Section 7 application. Indian Bank emerged as the sole financial creditor with 100% voting share in CoC. The core dispute centered around whether land owned by Royal Engineering Company but mortgaged to Indian Bank and containing the corporate debtor's principal plant and machinery could be included in the resolution process.

The Resolution Professional argued that the land was functionally integrated with the corporate debtor's operations, with ₹3.86 crores spent on development, and separation would render resolution commercially unviable. The respondents contended that third-party assets cannot form part of the information memorandum under Section 18 of IBC.

Final Outcome

The NCLT allowed the application, permitting the Resolution Professional to:

  • Prepare and issue Information Memorandum incorporating the land with appropriate disclosures
  • Conduct CIRP enabling resolution applicants to consider all assets including the mortgaged land
  • Allow CoC to evaluate plans providing for treatment of Indian Bank's security interest

The tribunal ruled that tenancy rights under the Tenancy Agreement dated 03.01.2019 constitute intangible assets under Section 18(f)(iv) of IBC, following precedents from NCLAT and Supreme Court including Vanguard Credit & Holdings case, Shristi Infrastructure case, and Victory Iron Works case. The court found the alleged termination notice dated 02.01.2022 unreliable due to inherent inconsistencies and lack of subsequent legal action.

The order enables integrated resolution of the corporate debtor's business assets along with the functionally linked land, aiming for value maximization and going concern preservation.

Topics: Insolvency Resolution, Security Interest, Tenancy Rights