The National Company Law Appellate Tribunal (NCLAT) dismissed two appeals challenging eviction orders passed by the NCLT, Chandigarh, directing appellant tenant companies to vacate properties owned by the corporate debtor, Venus Garments (India) Ltd., which was in liquidation. The appellants, M/s Duke Fashions (India) Ltd. and M/s UV & W Products Pvt. Ltd., claimed protection under the East Punjab Urban Rent Restriction Act, 1949, arguing that eviction could only be pursued before the Rent Controller.
The NCLAT held:
1. The liquidator is empowered and duty-bound under Sections 35(1)(b), (d), (e), (k), (l) and 36(1) of the Insolvency and Bankruptcy Code, 2016 (IBC) to take custody and control of all assets of the corporate debtor, including those in possession of occupants. The application filed by the resolution professional during CIRP remained maintainable and was properly continued by the liquidator after the liquidation order dated 22.07.2025, as the liquidation estate vested in the liquidator under Section 36.
2. The NCLT has jurisdiction under Section 60(5)(c) of the IBC to adjudicate disputes arising solely from or relating to the insolvency of the corporate debtor. The dispute over possession of the corporate debtor's properties is inextricably linked to the liquidation process and falls within the NCLT's plenary jurisdiction.
3. The alleged lease deeds for 30 years were unregistered and thus inadmissible as evidence under Section 49 of the Registration Act, 1908. The appellants, being related parties of the corporate debtor under Section 5(24) of the IBC, had not paid any rent for years, and their occupancy was found to be a collusive attempt to obstruct the liquidation process, including nine failed auctions.
4. Section 238 of the IBC provides an overriding effect over any inconsistent law, including the Rent Restriction Act. The Supreme Court's decision in Vishal N. Kalsaria v. Bank of India (2016) 3 SCC 762, which protected tenants under the SARFAESI Act, was distinguished: it applied to blameless, unrelated, rent-paying tenants and was decided before Section 238 IBC was enacted. The ratio does not extend to related-party occupants who have not paid rent.
5. The constitutional argument based on Entry 18 of List II (State List) — that landlord-tenant relations are a State subject — was rejected. The IBC is enacted under Entries 9 of List III and 43-44 of List I (Union List), and its object is insolvency resolution and asset realisation. The incidental effect on possession does not convert the proceeding into a landlord-tenant dispute. The Supreme Court's affirmation of NCLT's eviction jurisdiction in Jhanvi Rajpal Automotive Pvt. Ltd. v. R.P. of Rajpal Abhikaran Pvt. Ltd. (2023 SCC OnLine SC 1535) and the constitutional validation of the IBC in Swiss Ribbons Pvt. Ltd. v. Union of India (2019) 4 SCC 17 foreclose this argument.
