Supreme Court Restores NCLT Order Directing Return of Commercial Premises to Lenders, Emphasises Primacy of CoC's Commercial Wisdom

A bench of Justices Sanjay Kumar and Satish Chandra Sharma heard an appeal under Section 62 of the Insolvency and Bankruptcy Code challenging the National Company Law Appellate Tribunal’s order that had set aside an NCLT direction to deliver possession of commercial premises to lenders. The appeal arose from a dispute over possession of portions of the ground floor of White House, Rani Jhansi Road, New Delhi, following corporate insolvency proceedings against the corporate debtor.

The Court allowed the appeal, set aside the NCLAT order dated 12.11.2024 and restored the NCLT order dated 07.08.2023 which had directed the Resolution Professional to hand over possession to the appellants. The Supreme Court held that the decision of the Committee of Creditors, constituted by UCO Bank, that the property was not required for the corporate debtor must be afforded primacy as part of the CoC’s "commercial wisdom." The Court noted that this was not a simple owner recovery claim barred by Section 14(1)(d) of the IBC because the CoC and the Resolution Professional were themselves desirous of returning possession in view of the significant rental burden. The Court, in its reasoning, observed: The Court directed that "the Resolution Professional shall act upon and implement the said order expeditiously."

Background The dispute began with two Memoranda of Understanding in February 2019 by which Nandini Impex Private Limited availed loans totaling ₹6 crores from the lenders and secured them by deposit of title deeds for the front and rear portions of the ground floor of White House. Conveyance deeds were executed on 27.02.2020 transferring title to the lenders, while simultaneous leave-and-license agreements allowed Nandini Impex to retain possession on payment of monthly rentals of ₹6 lakhs for each portion. After defaults, the appellants terminated the leave-and-license agreements and instituted eviction suits.

UCO Bank filed a Section 7 petition and the NCLT admitted it on 20.09.2022, initiating CIRP; UCO Bank was the sole member of the CoC. The appellants’ operational creditor claims were admitted. The CoC asked the Resolution Professional to inspect and report on whether the corporate debtor needed the premises; the RP reported that retention was not feasible given limited operations and high rentals. At its meeting on 06.04.2023 the CoC recorded that the property was not required and requested handover to the appellants. The NCLT, by order dated 07.08.2023, directed delivery of possession to the appellants. Respondent Chandrakant Khemka, a suspended director, appealed to the NCLAT, which set aside the NCLT order and remanded the matter, observing that Section 14(1)(d) barred recovery by an owner during CIRP where property was occupied by the corporate debtor.

This Court earlier permitted proceedings before the NCLT to continue subject to the appeal and recorded that UCO Bank supported return of possession; counsel for Chandrakant Khemka conceded he would not pay current or arrears of rent. A newly appointed Resolution Professional filed an affidavit confirming it was unnecessary and not feasible for the corporate debtor to retain the premises. Relying on this record and precedent in K. Sashidhar v. Indian Overseas Bank, the Supreme Court held that the CoC’s commercial decision deserved primacy and remand was unwarranted. The appeal was allowed, the NCLAT order set aside, the NCLT order restored, and the RP was directed to implement the NCLT order expeditiously. Pending applications were disposed of.

Case Details: Case No.: 2025 INSC 931 Case Title: Sincere Securities Private Limited & Ors. v. Chandrakant Khemka & Ors. Appearances: For the Petitioner(s): [Not indicated in the judgment text] For the Respondent(s): [Not indicated in the judgment text]