No Rent, No Refuge, NCLAT Clears the Way for Eviction in Liquidation

Once a company enters liquidation, related-party tenants occupying corporate assets under unregistered lease agreements with unpaid rents cannot exploit state rent control laws to derail proceedings, as the NCLT holds plenary jurisdiction under the Insolvency and Bankruptcy Code, 2016 (IBC) to evict them and safeguard the liquidation estate. This was affirmed by the NCLAT in Duke Fashions (India) Ltd. v. Pramod Kumar Misra,¹ wherein the Appellate Tribunal dismissed appeals challenging summary eviction orders and upheld the overriding effect of the IBC. The Tribunal clarified that Section 238 of the IBC,² which operates ex proprio vigore, has an overriding effect that constitutes a statutory mandate rather than a discretionary argument.

The present case deals with two appeals challenging the common order passed by the NCLT, Chandigarh. M/s UV & W Products Private Limited and M/s Duke Fashions (India) Ltd, the Appellants, were tenants occupying properties owned by Venus Garments, the Corporate Debtor. The NCLT, by its order dated June 11, 2026, directed both companies to vacate the respective premises within two weeks. The NCLT held that both properties were admittedly assets of the Corporate Debtor and would form part of the liquidation estate within the meaning of Section 36(3)(a) of the IBC,³ empowering the Liquidator to take possession under Section 35(1)(b) of the Code.⁴ It further held that Sections 18⁵ and 35⁶ impose statutory duties on the Resolution Professional and Liquidator, respectively, to secure and realise the Corporate Debtor’s assets. Relying on Jhanvi Rajpal Automotive Pvt. Ltd. v. Resolution Professional,⁷ The NCLT affirmed its jurisdiction under Section 60(5)(c) of the IBC,⁸ to adjudicate eviction proceedings arising directly from insolvency. This order was challenged in the present case. 

Challenge to the Eviction Proceedings under the IBC 

The Appellant argued that, during a meeting of the Committee of Creditors (CoC), the Respondent was advised to initiate eviction proceedings under the Rent Restriction Act, 1949, before the Rent Controller. However, the Resolution Professional filed an application under Section 60(5) read with Sections 18 and 25⁹ of the IBC, allegedly concealing material facts, including the existence and operation of the lease deed. It was contended that taking control of the Corporate Debtor’s assets does not equate to securing vacant possession of tenanted premises, particularly in a dispute concerning non-payment of rent. The Appellant further argued that, following the Corporate Debtor’s liquidation on July 22, 2025, the Resolution Professional’s application had become infructuous and the Liquidator was required to file a fresh application under Section 35. It was also submitted that the property could be sold subject to the existing tenancy, as under the SARFAESI Act, 2002, and that Section 238 of the IBC could not render the non-obstante clause of the Rent Restriction Act redundant. Relying on Vishal N. Kalsaria v. Bank of India,¹⁰ The Appellant contended that tenants protected under rent control legislation could only be evicted through due process of law under the Rent Control Act. Lastly, the Appellants argued that Entry 18 of List II of the Seventh Schedule¹¹ places landlord-tenant relations within the State’s exclusive legislative competence, requiring Section 60(5) of the IBC to exclude the eviction of protected tenants.

NCLT’s Jurisdiction and Liquidator’s Powers. 

The Tribunal held that the NCLT, Chandigarh, had jurisdiction to deal with the eviction application and that its jurisdiction under Section 60(5)(c) is plenary and inherent. In this regard, the Tribunal relied on the judgment in Gujarat Urja Vikas Nigam Ltd. v. Amit Gupta,¹² wherein the Court held that, considering the text of Section 60(5)(c), the NCLT has jurisdiction to adjudicate disputes that arise solely from or relate to the insolvency of the Corporate Debtor. The NCLAT then examined whether the Liquidator could pursue the Resolution Professional’s application. The Appellate Tribunal held that the Liquidator could validly continue the eviction application initially filed by the Resolution Professional after the Corporate Debtor entered liquidation, as the Liquidator was impleaded in the proceedings. The application did not become infructuous merely because it was originally filed under different provisions, since its contents, rather than the sections invoked, determined its maintainability. Further, Section 35(1)(b), (d), (e), (k) and (l) of the IBC confers powers pari materia to those under Sections 18 and 25, imposing statutory duties on the Liquidator to take custody of, protect, preserve and realise the Corporate Debtor’s assets. Accordingly, pursuing the eviction proceedings was not merely discretionary, but a statutory obligation, and failure to do so would amount to a dereliction of duty

Applicability of Rent Control Law 

Once it was established that the Liquidator could pursue the eviction application, the Tribunal examined whether possession of the property could be recovered from the occupants under the IBC. The NCLAT observed that three facts were established: the Corporate Debtor was the absolute owner of the property; the Appellants were unauthorised occupants who were illegally using the property; and the purported lease deed, executed for 30 years, was never registered and, therefore, could not be read in evidence. The Tribunal relied on the NCLAT judgment in Adinath Jewellery Exports v. Mr. Brijendra Kumar Mishra,¹³ Liquidator, which addressed when a Resolution Professional would need to resort to the Rent Act. It held that the Resolution Professional was not required to approach the Rent Controller, and that the Rent Act might be relevant only where a registered lease deed exists and rent is regularly paid. Both conditions were absent in the present case, as the alleged lease deed was unregistered and no rent had ever been paid. Further, relying on Jhanvi Rajpal Automotive Pvt. Ltd. v. R.P. of Rajpal Abhikaran, which was upheld by the Supreme Court, the Tribunal reiterated that the Resolution Professional or Liquidator could seek the eviction of tenants, licensees and other occupants before the NCLT without resorting to separate civil or rent control proceedings.

IBC Prevails over Tenancy Claims 

Lastly, the Tribunal held that the Appellants’ reliance on Vishal N. Kalsaria v. Bank of India was misplaced on three grounds. First, the judgment predated Section 238 of the IBC and concerned the SARFAESI Act. Second, it protected bona fide, unrelated, rent-paying tenants, unlike the Respondents, who were related parties under Section 5(24) of the IBC, as held by the NCLT, Chandigarh. Third, the Respondents had admittedly paid no rent for seven years, and their alleged adjustments were unsupported by proper documentation. The Tribunal, while relying on  Innoventive Industries Ltd. v. ICICI Bank, further observed that Section 238 overrides any inconsistent law, whether substantive or procedural.  Accordingly, any inconsistency between the Rent Act and the Liquidator’s statutory duty to take custody of the liquidation estate’s assets must be resolved in favour of the IBC. While dismissing the Appellants’ constitutional arguments, the Tribunal held that recovery of the liquidation estate is integral to the IBC and that the incidental effect of eviction orders on property possession does not convert insolvency proceedings into landlord-tenant disputes under Entry 18 of List II of the Seventh Schedule to the Constitution. 

Conclusion 

The Tribunal finally observed that allowing related-party, non-rent-paying occupants to obstruct liquidation would undermine the Code’s objectives of time-bound insolvency resolution and maximisation of asset value.  The case reaffirms that the Liquidator can seek eviction before the NCLT to recover assets forming part of the liquidation estate. Where the alleged lease is unregistered, rent remains unpaid, and the occupants are related parties, rent control protection cannot defeat the Liquidator’s statutory duties under the IBC.

Citations

1. M/s. Duke Fashions (India) Ltd. & Ors. v. Sh. Pramod Kumar Misra (Liquidator) & Ors., Company Appeal (AT) (Ins.) Nos. 1462 and 1475 of 2026 ↩︎
2. The Insolvency and Bankruptcy Code, 2016 (Act 31 of 2016), s. 238. ↩︎
3. The Insolvency and Bankruptcy Code, 2016 (Act 31 of 2016), s. 36(3)(a). ↩︎
4. The Insolvency and Bankruptcy Code, 2016 (Act 31 of 2016), s. 35(1)(b). ↩︎
5. The Insolvency and Bankruptcy Code, 2016 (Act 31 of 2016), s. 18. ↩︎
6. The Insolvency and Bankruptcy Code, 2016 (Act 31 of 2016), s. 35. ↩︎
7. M/s. Jhanvi Rajpal Automotive Pvt. Ltd. v. R.P. of Rajpal Abhikaran Pvt. Ltd. & Anr., Company Appeal (AT) (Ins.) No. 1417 of 2022, ↩︎
8. The Insolvency and Bankruptcy Code, 2016 (Act 31 of 2016), s. 60(5)(c). ↩︎
9. The Insolvency and Bankruptcy Code, 2016 (Act 31 of 2016), s. 25. ↩︎
10. Vishal N. Kalsaria v. Bank of India, (2016) 3 SCC 762. ↩︎
11. The Constitution of India, sch. VII, List II, entry 18. ↩︎
12. Gujarat Urja Vikas Nigam Ltd. v. Amit Gupta, (2021) 7 SCC 209. ↩︎
13. Jewellery Exports v. Mr. Brijendra Kumar Mishra, Liquidator, Company Appeal (AT) (Ins.) No. 748 of 2022 ↩︎

Expositor(s): Adv. Siddharath Shrivastava and Adv. Stephin Sinu Oommen