Can an unregistered intra-family agreement or a subsequent, unrecorded arbitral award override the statutory mandate of a Resolution Professional to take custody and control of and protect the assets of a Corporate Debtor? This critical question lies at the heart of the corporate insolvency landscape, showing the tension between private familial arrangements and statutory obligations. The Tribunal’s analysis in Raman Khangura v. Navneet Gupta & Ors.1 clarifies the hierarchy of asset rights during insolvency, holding an unregistered and undisclosed arrangement that does not create an enforceable occupancy right cannot defeat the Resolution Professional’s statutory duty to take control of assets owned by the Corporate Debtor. By prioritizing statutory mandates over unrecorded intra-family arrangements, the ruling ensures that private covenants cannot subvert the Resolution Professional’s duty to secure the corporate estate. The Tribunal also established that former directors or their families cannot claim a parallel or superior right of continued occupancy to withhold corporate property from the insolvency estate, as allowing such retention would fundamentally derail the maximization of asset value for creditors.
The Security Enforcement, Hotel Occupancy, and Initiation of CIRP
The factual matrix of the dispute traces back to Majestic Hotels Limited, the Corporate Debtor, which owns a five-star establishment known as the “Hotel Majestic Park Plaza” in Ludhiana. The Corporate Debtor had secured extensive financial facilities from the Punjab and Sind Bank, for which the Appellant, Mrs. Raman Khangura, a director and share holder holding an 11.05% equity share, had mortgaged her personal residential property in Chandigarh as security. Following defaults by the company, the bank auctioned her personal property in September 2015 to recover its dues. Mrs. Raman Khangura, alongside her husband (the former Managing Director) and her father-in-law, Jagpal Singh Khangura, continued to occupy the expansive ninth-floor penthouse of the hotel as their primary residence. When the Corporate Insolvency Resolution Process (CIRP) was initiated against the Corporate Debtor in July 2024 upon a Section 7 application by the UV Asset Reconstruction Company Limited, the newly appointed Resolution Professional, Mr. Navneet Gupta, moved to take custody of all hotel assets. However, the ex-directors refused to vacate the premises, prompting the Resolution Professional to approach the National Company Law Tribunal (NCLT), Chandigarh Bench, seeking their eviction. The Appellant vigorously resisted eviction by introducing a private Memorandum of Understanding (MoU) dated November 5, 2015, and a subsequent Arbitral Award dated March 19, 2019, which purportedly granted her exclusive occupancy rights of the ninth floor to exhaust a commuted compensation sum of up to ₹10 crore under a wider compensation arrangement arising from the sale of her personal property. The NCLT allowed the eviction in March 2026, leading to the present appellate challenge before the NCLAT.
In analyzing the legal viability of the Appellant’s claims, the NCLAT’s judicial rationale focused primarily on the statutory importance y of the statutory duties cast upon a Resolution Professional. Under Section 18(1)(f) and Section 25 of the IBC, the Resolution Professional is under legal obligation to take immediate custody and control of all assets over which the Corporate Debtor holds ownership rights. The Tribunal observed that the hotel property undisputedly belonged to the corporate debtor. To evaluate whether the private arrangements could legally strip the Resolution Professional of this right, the Bench heavily emphasized the statutory non-disclosure of the transaction. Because the Appellant was a director and a major shareholder, the execution of the MoU fell squarely within the definition of a related party transaction. Under Section 188 of the Companies Act, 2013, such transactions demand strict regulatory compliance and explicit disclosure. The Resolution Professional proved that neither the MoU, the addendums, nor the arbitral award were ever recorded in the official books of account, annual reports, statutory filings, or financial statements of the Corporate Debtor. Relying on established corporate governance principles, the Tribunal concluded that these hidden documents appeared collusive and to have been prepared purely as an afterthought to create a safe harbor for the promoters within the distressed asset.
The Tribunal further fortified its rationale through strict application of the Registration Act, 1908, and the Indian Stamp Act, 1899. It noted that the right of occupancy in immovable property for the duration asserted in the present case can only be legally claimed or transferred through a validly registered instrument creating such a right . Since the MoU was an unregistered instrument, it was incapable of conferring any legitimate occupancy or tenancy rights in the hotel property. Addressing the subsequent arbitral award, the NCLAT ruled that an award cannot confer a higher occupancy right than that created by the underlying instrument because the underlying MoU could not grant property rights, the arbitral award could not grant any higher or independent right. Even if the Appellant possessed a valid monetary claim arising out of the auction of her personal property, the proper legal remedy was to submit a formal claim as a creditor to the Resolution Professional within the CIRP structure, rather than unilaterally possessing a physical piece of the insolvency estate.
Conclusion
Ultimately, the NCLAT’s ruling rejects the proposition that occupation of corporate property may continue merely because it was treated by the former management as a promoter perequisite. By confirming that the Resolution Professional does not need to initiate protracted, separate civil eviction suits to clear out former management where ownership of the asset is undisputed and no enforceable occupancy right is established , the judgment provides a streamlined path for asset reclamation. Promoters who are part of the former management of a corporate debtor cannot treat corporate properties as personal fiefdoms or bypass the strict hierarchy of the CIRP claims process under the guise of private family settlements. The ruling reaffirms the strict, time-bound economic mandate of the IBC, reinforcing that when a company transitions into the insolvency regime, the collective insolvency process and asset maximization for creditors will consistently triumph over private, unrecorded arrangements that do not create legally enforceable rights.
Citations
Expositor(s): Adv. Jahnobi Paul,
