NCLAT Holds a Liquidator May Recover Possession Through the NCLT Without Going to the Rent Controller

Kaustav Chowdhury

4 days ago

5 min read

Background and Facts

An occupant of a corporate debtor's premises cannot convert a liquidation dispute into a tenancy dispute by asserting a lease. The National Company Law Appellate Tribunal has upheld an order requiring occupants to vacate two properties owned by a company in liquidation, holding that the liquidator may recover possession through the National Company Law Tribunal rather than through rent control proceedings. The order in Duke Fashions (India) Limited v. Pramod Kumar Misra was reported on September 24, 2026.

Venus Garments (India) Limited was the absolute owner of the two properties, at Karabara and Hussainpura in Ludhiana, and was ordered into liquidation on July 22, 2025. The liquidator sought possession from the two occupying companies. They resisted on the basis of leases said to run for thirty years, and contended that they could be evicted only under the East Punjab Urban Rent Restriction Act, 1949.

The National Company Law Tribunal directed the occupants to vacate. They appealed.

Key Legal Issue

Whether a claim by a liquidator to recover possession of the corporate debtor's premises from an occupant asserting a lease is a question arising in relation to the liquidation, within Section 60(5)(c) of the Insolvency and Bankruptcy Code, 2016, or a landlord and tenant dispute that must go to the authority under the applicable rent control legislation.

The Appellate Tribunal's Ruling

Both appeals were dismissed and the eviction upheld.

The Incidental Effect on Possession Does Not Change the Character of the Dispute

The reasoning is captured in a single sentence:

"The mere incidental effect of an IBC order on the possession of premises does not convert an insolvency matter into a landlord-tenant matter". The question the liquidator raised was whether an asset of the corporate debtor should be brought into the liquidation estate. That the answer displaced occupants is a consequence of the relief, not a reclassification of the claim.

Section 60(5)(c) of the Insolvency and Bankruptcy Code, 2016 gives the National Company Law Tribunal jurisdiction to entertain or dispose of any question of priorities or any question of law or facts arising out of or in relation to the insolvency resolution or liquidation proceedings of a corporate debtor. An entitlement to possession of property owned by the corporate debtor, raised by the liquidator in the liquidation, falls within those words.

The Liquidator's Statutory Duty Supplies the Standing

The claim was not a discretionary choice of forum but the discharge of a duty. Section 35(1)(b) requires the liquidator to take into his custody or control all the assets, property, effects and actionable claims of the corporate debtor, and Section 35(1)(k) empowers him to institute or defend any suit, prosecution or other legal proceedings, civil or criminal, in the name of and on behalf of the corporate debtor.

The distinction matters because it separates two questions that are easily run together. Whether the corporate debtor owns the asset is a question of title. Whether the liquidator is entitled to custody of an asset the corporate debtor owns is a question about the liquidation. The first may well belong elsewhere; the second is the tribunal's own business, and Section 35(1)(b) is what makes it so.

Section 238 Answers the Rent Control Argument

Section 238 provides that the provisions of the Code have effect notwithstanding anything inconsistent contained in any other law for the time being in force or any instrument having effect by virtue of any such law. Where a rent control statute would route the liquidator to a different forum, and so delay or defeat the assembly of the liquidation estate, the Code prevails.

The limit on that reasoning is worth keeping in view. Section 238 operates on inconsistency, not on subject matter, so it does not convert every dispute that touches an insolvent company into a matter for the tribunal. What carried this case was that the corporate debtor was the absolute owner and the relief sought was custody of its own asset.

Practice Notes

In practice, the order matters most to liquidators assembling an estate and to occupants of a corporate debtor's premises:

For the liquidator, plead the statutory duty: Frame the application as the discharge of the obligation under Section 35(1)(b) to take custody of the corporate debtor's assets, and identify the question as one arising in relation to the liquidation under Section 60(5)(c). A bare prayer for eviction invites the forum objection.
Establish ownership first: The case turned on the corporate debtor being the absolute owner. Where title is itself disputed between rival claimants, the tribunal's jurisdiction is a great deal more doubtful, and the application should be prepared on that footing.
For an occupant, a lease is not a jurisdictional answer: Asserting tenancy and pointing to the rent control authority will not by itself move the dispute. The defence has to be run on the merits of the right to occupy, in the tribunal.
Expect scrutiny of connected occupants: A long lease in favour of an entity connected with the corporate debtor invites examination of the commercial substance of the arrangement rather than acceptance of it at face value.
Do not over-read Section 238: The override operates on inconsistency, not on subject matter. It will not carry a dispute into the tribunal merely because an insolvent company is somewhere in it.

Key Provisions Discussed

Section 35 of the Insolvency and Bankruptcy Code, 2016: Powers and duties of the liquidator, including under clause (b) of sub-section (1) the duty to take into his custody or control all the assets, property, effects and actionable claims of the corporate debtor, and under clause (k) the power to institute or defend any suit, prosecution or other legal proceedings, civil or criminal, in the name of and on behalf of the corporate debtor.
Section 60(5) of the Insolvency and Bankruptcy Code, 2016: The National Company Law Tribunal has jurisdiction to entertain or dispose of any application or proceeding by or against the corporate debtor, any claim made by or against it, and any question of priorities or any question of law or facts arising out of or in relation to the insolvency resolution or liquidation proceedings.
Section 238 of the Insolvency and Bankruptcy Code, 2016: The provisions of the Code have effect notwithstanding anything inconsistent contained in any other law for the time being in force or any instrument having effect by virtue of any such law.

Case Details

Case: Duke Fashions (India) Limited v. Pramod Kumar Misra
Tribunal: National Company Law Appellate Tribunal
Reported: September 24, 2026
Corporate Debtor: Venus Garments (India) Limited, in liquidation from July 22, 2025
Properties: Two properties at Karabara and Hussainpura, Ludhiana
Statute Relied on by the Occupants: East Punjab Urban Rent Restriction Act, 1949
Outcome: Both appeals dismissed. The eviction of the occupants through the insolvency proceedings upheld.

Sources and References

Disclaimer: This article is for informational purposes only and does not constitute legal advice. Readers should consult a qualified legal professional for advice specific to their circumstances.