Full Judgment Text
Non-reportable
2025 INSC 931
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 12812 OF 2024
Sincere Securities Private Limited & Ors. … Appellants
Versus
Chandrakant Khemka & Ors. … Respondents
J U D G M E N T
SANJAY KUMAR, J
1. This appeal, under Section 62 of the Insolvency and Bankruptcy
1
Code, 2016 , calls in question the order dated 12.11.2024 passed by the
2
National Company Law Appellate Tribunal, Principal Bench, New Delhi ,
allowing Company Appeal (AT) (Insolvency) No. 1064 of 2023 filed by
Chandrakant Khemka, respondent No. 1, and setting aside the order
dated 07.08.2023 of the National Company Law Tribunal, Kolkata
3
Bench , in CP(IB) No. 1377/KB/2020. Thereby, the NCLT had directed
delivery of possession of the property in question to the appellants
herein.
1
for short, “IBC”
2
for short, “NCLAT”
3
for short, “NCLT”
1
2. Facts, relevant to this adjudication, need recounting at some
length. On 13.02.2019, a Memorandum of Understanding was executed
by and between Nandini Impex Private Limited, which became a
corporate debtor under the IBC thereafter, represented by its Director,
Chandrakant Khemka, on the one hand, and Noble Dealcom Private
Limited along with Jodhpur Properties and Finance Private Limited,
appellant Nos. 2 and 3 herein, on the other hand, whereby Nandini
Impex Private Limited availed financial assistance to the tune of 3 ₹
crores from them and secured the same through deposit of the title
deeds relating to the rear portion of the ground floor of White House,
1/18-20, Rani Jhansi Road, New Delhi. Another Memorandum of
Understanding was executed by Nandini Impex Private Limited on
15.02.2019 with Sincere Securities Private Limited, appellant No.1
herein, for availing a loan of 3 crores from it and the same was secured
₹
through deposit of the title deeds of the front portion of the ground floor
of White House. As Nandini Impex Private Limited failed to repay the
loans, separate conveyance deeds were executed by it on 27.02.2020
transferring the title over the front and rear portions of the ground floor of
White House to the appellants respectively. However, two separate
Leave and License Agreements were executed simultaneously on the
same day, whereby possession of the front and rear portions of the
ground floor of White House was retained by Nandini Impex Private
2
Limited on payment of rentals of 6 lakhs per month for each portion. ₹
Owing to the default in payment of the rentals, the appellants terminated
the Leave and License Agreements on 08.05.2020. Eviction suits were
also instituted by the appellants for regaining possession of the subject
ground floor portions along with other reliefs.
3. While so, UCO Bank, respondent No. 3 herein, filed a petition
under Section 7 of the IBC against Nandini Impex Private Limited. The
same was admitted on 20.09.2022 by the NCLT, initiating corporate
4
insolvency resolution process against Nandini Impex Private Limited,
the corporate debtor. Significantly, UCO Bank was the sole member of
5
its Committee of Creditors . The appellants, as operational creditors,
filed their respective claims before the Interim Resolution Professional
appointed for the corporate debtor and the said claims were accepted in
toto . At that stage, UCO Bank, constituting the CoC, deputed the
Resolution Professional to visit the subject property on the ground floor
of White House and decide whether there was any need to retain the
same by paying huge rentals. Thereafter, at its meeting held on
06.04.2023, the CoC decided that there was no requirement to hold on
to the subject property and requested the Resolution Professional to
hand over the possession thereof to the appellants. Chandrakant
Khemka, being a suspended director of the corporate debtor, raised
4
for short, “CIRP”
5
for short, “CoC”
3
objections to this move. Interlocutory Applications came to be filed by the
appellants in 2023 seeking a direction from the NCLT to return the
subject property to them. By order dated 07.08.2023, the NCLT noted
the decision of the CoC that the subject property was not required and
directed the Resolution Professional to deliver possession of the same to
the appellants. Aggrieved thereby, Chandrakant Khemka filed an appeal
before the NCLAT. By way of the impugned order dated 12.11.2024, the
NCLAT allowed his appeal and set aside the order dated 07.08.2023
passed by the NCLT, observing that Section 14(1)(d) of the IBC barred
recovery by an owner of property during the CIRP, when such property
was occupied by the corporate debtor. The NCLAT remanded the matter
to the NCLT to consider the issue afresh.
4. By order dated 25.11.2024, this Court permitted the proceedings
before the NCLT to continue, subject to the final outcome of this appeal.
This Court also noted that UCO Bank, constituting the CoC, supported
the appellants in so far as return of possession of the subject property
was concerned. Further, this Court noted that the learned counsel
appearing on advance notice for Chandrakant Khemka, respondent No.
1, conceded that he was not willing to pay the current rent or the arrears
of rent, post initiation of the CIRP. This Court also recorded that the
Resolution Professional did not wish to retain possession of the property
in question.
4
5. Thereafter, on 14.07.2025, upon being informed that a new
Resolution Professional was appointed for the corporate debtor, this
Court required him to make known his stand by way of a written affidavit.
Pursuant thereto, Pratim Bayal, the new Resolution Professional, filed
affidavit dated 17.07.2025. Therein, he categorically stated that, given
the extremely limited operations of the corporate debtor at present and
the extremely high rent of the White House property, it was not feasible
and was totally unnecessary for the corporate debtor to continue to hold
on to the said property. He, therefore, reiterated the statement made by
his predecessor before the NCLT to the effect that the property could be
returned to the appellants.
6. Given the aforestated facts, it is clear that except for Chandrakant
Khemka, respondent No. 1, who is a suspended director of the corporate
debtor, all other parties are at consensus that the property in question
need not be retained by the corporate debtor, as it is not required by it
and imposes a huge financial burden on it, in terms of the lease/license
rentals payable therefor. It is, however, the case of Chandrakant
Khemka that the erstwhile Resolution Professional of the corporate
debtor made a factually incorrect statement before the NCLT, leading to
the passing of the unreasoned order dated 07.08.2023 and, therefore,
the NCLAT was justified in remanding the matter for a comprehensive
adjudication afresh. It is his further case that the property in question is
5
essential for the functioning of the corporate debtor and Section 14(1)(d)
of the IBC barred its return to the appellants.
7. Despite all others involved in the CIRP being in favour of doing so,
Chandrakant Khemka alone opposes the return of the subject property
to the appellants. His lofty claim that the rent due to the appellants would
stand secured by the provisions of the IBC does not stand to reason,
Further, Chandrakant Khemka is himself not willing to bear the
expenditure for retaining the possession of the subject property.
8. UCO Bank, constituting the CoC, echoed the stand of the
Resolution Professional, by filing separate written submissions.
Reference was made therein to the decision of this Court in
6
K. Sashidhar v. Indian Overseas Bank and others . Paragraph 52 of
the decision reads as follows:
52. As aforesaid, upon receipt of a “rejected” resolution plan the
adjudicating authority (NCLT) is not expected to do anything more;
but is obligated to initiate liquidation process under Section 33(1)
of the I&B Code. The legislature has not endowed the adjudicating
authority (NCLT) with the jurisdiction or authority to analyse or
evaluate the commercial decision of CoC much less to enquire into
the justness of the rejection of the resolution plan by the dissenting
financial creditors. From the legislative history and the background
in which the I&B Code has been enacted, it is noticed that a
completely new approach has been adopted for speeding up the
recovery of the debt due from the defaulting companies. In the new
approach, there is a calm period followed by a swift resolution
process to be completed within 270 days (outer limit) failing which,
initiation of liquidation process has been made inevitable and
6
(2019) 12 SCC 150
6
mandatory. In the earlier regime, the corporate debtor could
indefinitely continue to enjoy the protection given under Section 22
of the Sick Industrial Companies Act, 1985 or under other such
enactments which has now been forsaken. Besides, the
commercial wisdom of CoC has been given paramount status
without any judicial intervention, for ensuring completion of the
stated processes within the timelines prescribed by the I&B Code.
There is an intrinsic assumption that financial creditors are fully
informed about the viability of the corporate debtor and feasibility
of the proposed resolution plan. They act on the basis of thorough
examination of the proposed resolution plan and assessment
made by their team of experts. The opinion on the subject-matter
expressed by them after due deliberations in CoC meetings
through voting, as per voting shares, is a collective business
decision. The legislature, consciously, has not provided any ground
to challenge the “commercial wisdom” of the individual financial
creditors or their collective decision before the adjudicating
authority. That is made non-justiciable.
The commercial wisdom of the CoC must, accordingly, be given
primacy during the CIRP. When UCO Bank, constituting the CoC,
decided that retention of the possession of the subject property was not
in the interest of the CIRP, that decision must be given the respect that is
lawfully due to it.
9. Lastly, we may note that Section 14(1)(d) of the IBC states that
once the adjudicating authority, by order, declares a moratorium, it would
prohibit, amongst other acts, the recovery of any property by an owner or
lessor where such property is occupied by or is in the possession of the
corporate debtor. In the case on hand, the chronology of events
7
manifests that, at its very first meeting held on 20.02.2023, the CoC
discussed the issue of retention of the ground floor of White House. It
asked the Resolution Professional to visit the said premises and decide
as to whether holding on to the same was required, spending a huge
amount towards rentals. Thereafter, at its third meeting held on
06.04.2023, the CoC took note of the Resolution Professional’s report
that it was not feasible to hold on to the subject property, as only 8 to 9
staff members were there and the revenue generated would not be
sufficient to pay the lease/license rentals. The CoC recorded that the
matter was duly discussed and the Resolution Professional was asked to
hand over possession as early as possible, as there was no requirement
to hold on to the said premises spending such a huge amount towards
rentals.
10. It was only thereafter that the appellants filed Interlocutory
Applications before the NCLT praying for a direction to deliver
possession of the subject property to them along with other reliefs. It is,
therefore, manifest that this was not a simple case of the owner of the
property seeking recovery of possession thereof from the corporate
debtor, which would be barred by the express language of Section
14(1)(d) of the IBC. On the other hand, as already noted hereinbefore, it
was the CoC and the Resolution Professional who were and still are
desirous of returning the possession of the property in question to the
8
appellants, keeping in mind the adverse financial implications of
retaining the same. It appears that Chandrakant Khemka, respondent
No. 1, who is not willing to personally bear the expenditure for such
retention, is bent upon stalling that process for some undisclosed and
extraneous reasons.
11. This was, therefore, not a situation which warranted an order of
remand in the context of Section 14(1)(d) of the IBC. The order dated
12.11.2024 passed by the National Company Law Appellate Tribunal,
Principal Bench, New Delhi, in Company Appeal (AT) (Insolvency) No.
1064 of 2023, is accordingly set aside and the order dated 07.08.2023
passed by the National Company Law Tribunal, Kolkata Bench, in
CP(IB) No. 1377/KB/2020, is restored. The Resolution Professional shall
act upon and implement the said order expeditiously.
The appeal is allowed, in the aforesaid terms.
Pending application(s), if any, shall stand disposed of.
............................., J
(SANJAY KUMAR)
………………............................., J
(SATISH CHANDRA SHARMA)
August 05, 2025
New Delhi.
9
2025 INSC 931
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 12812 OF 2024
Sincere Securities Private Limited & Ors. … Appellants
Versus
Chandrakant Khemka & Ors. … Respondents
J U D G M E N T
SANJAY KUMAR, J
1. This appeal, under Section 62 of the Insolvency and Bankruptcy
1
Code, 2016 , calls in question the order dated 12.11.2024 passed by the
2
National Company Law Appellate Tribunal, Principal Bench, New Delhi ,
allowing Company Appeal (AT) (Insolvency) No. 1064 of 2023 filed by
Chandrakant Khemka, respondent No. 1, and setting aside the order
dated 07.08.2023 of the National Company Law Tribunal, Kolkata
3
Bench , in CP(IB) No. 1377/KB/2020. Thereby, the NCLT had directed
delivery of possession of the property in question to the appellants
herein.
1
for short, “IBC”
2
for short, “NCLAT”
3
for short, “NCLT”
1
2. Facts, relevant to this adjudication, need recounting at some
length. On 13.02.2019, a Memorandum of Understanding was executed
by and between Nandini Impex Private Limited, which became a
corporate debtor under the IBC thereafter, represented by its Director,
Chandrakant Khemka, on the one hand, and Noble Dealcom Private
Limited along with Jodhpur Properties and Finance Private Limited,
appellant Nos. 2 and 3 herein, on the other hand, whereby Nandini
Impex Private Limited availed financial assistance to the tune of 3 ₹
crores from them and secured the same through deposit of the title
deeds relating to the rear portion of the ground floor of White House,
1/18-20, Rani Jhansi Road, New Delhi. Another Memorandum of
Understanding was executed by Nandini Impex Private Limited on
15.02.2019 with Sincere Securities Private Limited, appellant No.1
herein, for availing a loan of 3 crores from it and the same was secured
₹
through deposit of the title deeds of the front portion of the ground floor
of White House. As Nandini Impex Private Limited failed to repay the
loans, separate conveyance deeds were executed by it on 27.02.2020
transferring the title over the front and rear portions of the ground floor of
White House to the appellants respectively. However, two separate
Leave and License Agreements were executed simultaneously on the
same day, whereby possession of the front and rear portions of the
ground floor of White House was retained by Nandini Impex Private
2
Limited on payment of rentals of 6 lakhs per month for each portion. ₹
Owing to the default in payment of the rentals, the appellants terminated
the Leave and License Agreements on 08.05.2020. Eviction suits were
also instituted by the appellants for regaining possession of the subject
ground floor portions along with other reliefs.
3. While so, UCO Bank, respondent No. 3 herein, filed a petition
under Section 7 of the IBC against Nandini Impex Private Limited. The
same was admitted on 20.09.2022 by the NCLT, initiating corporate
4
insolvency resolution process against Nandini Impex Private Limited,
the corporate debtor. Significantly, UCO Bank was the sole member of
5
its Committee of Creditors . The appellants, as operational creditors,
filed their respective claims before the Interim Resolution Professional
appointed for the corporate debtor and the said claims were accepted in
toto . At that stage, UCO Bank, constituting the CoC, deputed the
Resolution Professional to visit the subject property on the ground floor
of White House and decide whether there was any need to retain the
same by paying huge rentals. Thereafter, at its meeting held on
06.04.2023, the CoC decided that there was no requirement to hold on
to the subject property and requested the Resolution Professional to
hand over the possession thereof to the appellants. Chandrakant
Khemka, being a suspended director of the corporate debtor, raised
4
for short, “CIRP”
5
for short, “CoC”
3
objections to this move. Interlocutory Applications came to be filed by the
appellants in 2023 seeking a direction from the NCLT to return the
subject property to them. By order dated 07.08.2023, the NCLT noted
the decision of the CoC that the subject property was not required and
directed the Resolution Professional to deliver possession of the same to
the appellants. Aggrieved thereby, Chandrakant Khemka filed an appeal
before the NCLAT. By way of the impugned order dated 12.11.2024, the
NCLAT allowed his appeal and set aside the order dated 07.08.2023
passed by the NCLT, observing that Section 14(1)(d) of the IBC barred
recovery by an owner of property during the CIRP, when such property
was occupied by the corporate debtor. The NCLAT remanded the matter
to the NCLT to consider the issue afresh.
4. By order dated 25.11.2024, this Court permitted the proceedings
before the NCLT to continue, subject to the final outcome of this appeal.
This Court also noted that UCO Bank, constituting the CoC, supported
the appellants in so far as return of possession of the subject property
was concerned. Further, this Court noted that the learned counsel
appearing on advance notice for Chandrakant Khemka, respondent No.
1, conceded that he was not willing to pay the current rent or the arrears
of rent, post initiation of the CIRP. This Court also recorded that the
Resolution Professional did not wish to retain possession of the property
in question.
4
5. Thereafter, on 14.07.2025, upon being informed that a new
Resolution Professional was appointed for the corporate debtor, this
Court required him to make known his stand by way of a written affidavit.
Pursuant thereto, Pratim Bayal, the new Resolution Professional, filed
affidavit dated 17.07.2025. Therein, he categorically stated that, given
the extremely limited operations of the corporate debtor at present and
the extremely high rent of the White House property, it was not feasible
and was totally unnecessary for the corporate debtor to continue to hold
on to the said property. He, therefore, reiterated the statement made by
his predecessor before the NCLT to the effect that the property could be
returned to the appellants.
6. Given the aforestated facts, it is clear that except for Chandrakant
Khemka, respondent No. 1, who is a suspended director of the corporate
debtor, all other parties are at consensus that the property in question
need not be retained by the corporate debtor, as it is not required by it
and imposes a huge financial burden on it, in terms of the lease/license
rentals payable therefor. It is, however, the case of Chandrakant
Khemka that the erstwhile Resolution Professional of the corporate
debtor made a factually incorrect statement before the NCLT, leading to
the passing of the unreasoned order dated 07.08.2023 and, therefore,
the NCLAT was justified in remanding the matter for a comprehensive
adjudication afresh. It is his further case that the property in question is
5
essential for the functioning of the corporate debtor and Section 14(1)(d)
of the IBC barred its return to the appellants.
7. Despite all others involved in the CIRP being in favour of doing so,
Chandrakant Khemka alone opposes the return of the subject property
to the appellants. His lofty claim that the rent due to the appellants would
stand secured by the provisions of the IBC does not stand to reason,
Further, Chandrakant Khemka is himself not willing to bear the
expenditure for retaining the possession of the subject property.
8. UCO Bank, constituting the CoC, echoed the stand of the
Resolution Professional, by filing separate written submissions.
Reference was made therein to the decision of this Court in
6
K. Sashidhar v. Indian Overseas Bank and others . Paragraph 52 of
the decision reads as follows:
52. As aforesaid, upon receipt of a “rejected” resolution plan the
adjudicating authority (NCLT) is not expected to do anything more;
but is obligated to initiate liquidation process under Section 33(1)
of the I&B Code. The legislature has not endowed the adjudicating
authority (NCLT) with the jurisdiction or authority to analyse or
evaluate the commercial decision of CoC much less to enquire into
the justness of the rejection of the resolution plan by the dissenting
financial creditors. From the legislative history and the background
in which the I&B Code has been enacted, it is noticed that a
completely new approach has been adopted for speeding up the
recovery of the debt due from the defaulting companies. In the new
approach, there is a calm period followed by a swift resolution
process to be completed within 270 days (outer limit) failing which,
initiation of liquidation process has been made inevitable and
6
(2019) 12 SCC 150
6
mandatory. In the earlier regime, the corporate debtor could
indefinitely continue to enjoy the protection given under Section 22
of the Sick Industrial Companies Act, 1985 or under other such
enactments which has now been forsaken. Besides, the
commercial wisdom of CoC has been given paramount status
without any judicial intervention, for ensuring completion of the
stated processes within the timelines prescribed by the I&B Code.
There is an intrinsic assumption that financial creditors are fully
informed about the viability of the corporate debtor and feasibility
of the proposed resolution plan. They act on the basis of thorough
examination of the proposed resolution plan and assessment
made by their team of experts. The opinion on the subject-matter
expressed by them after due deliberations in CoC meetings
through voting, as per voting shares, is a collective business
decision. The legislature, consciously, has not provided any ground
to challenge the “commercial wisdom” of the individual financial
creditors or their collective decision before the adjudicating
authority. That is made non-justiciable.
The commercial wisdom of the CoC must, accordingly, be given
primacy during the CIRP. When UCO Bank, constituting the CoC,
decided that retention of the possession of the subject property was not
in the interest of the CIRP, that decision must be given the respect that is
lawfully due to it.
9. Lastly, we may note that Section 14(1)(d) of the IBC states that
once the adjudicating authority, by order, declares a moratorium, it would
prohibit, amongst other acts, the recovery of any property by an owner or
lessor where such property is occupied by or is in the possession of the
corporate debtor. In the case on hand, the chronology of events
7
manifests that, at its very first meeting held on 20.02.2023, the CoC
discussed the issue of retention of the ground floor of White House. It
asked the Resolution Professional to visit the said premises and decide
as to whether holding on to the same was required, spending a huge
amount towards rentals. Thereafter, at its third meeting held on
06.04.2023, the CoC took note of the Resolution Professional’s report
that it was not feasible to hold on to the subject property, as only 8 to 9
staff members were there and the revenue generated would not be
sufficient to pay the lease/license rentals. The CoC recorded that the
matter was duly discussed and the Resolution Professional was asked to
hand over possession as early as possible, as there was no requirement
to hold on to the said premises spending such a huge amount towards
rentals.
10. It was only thereafter that the appellants filed Interlocutory
Applications before the NCLT praying for a direction to deliver
possession of the subject property to them along with other reliefs. It is,
therefore, manifest that this was not a simple case of the owner of the
property seeking recovery of possession thereof from the corporate
debtor, which would be barred by the express language of Section
14(1)(d) of the IBC. On the other hand, as already noted hereinbefore, it
was the CoC and the Resolution Professional who were and still are
desirous of returning the possession of the property in question to the
8
appellants, keeping in mind the adverse financial implications of
retaining the same. It appears that Chandrakant Khemka, respondent
No. 1, who is not willing to personally bear the expenditure for such
retention, is bent upon stalling that process for some undisclosed and
extraneous reasons.
11. This was, therefore, not a situation which warranted an order of
remand in the context of Section 14(1)(d) of the IBC. The order dated
12.11.2024 passed by the National Company Law Appellate Tribunal,
Principal Bench, New Delhi, in Company Appeal (AT) (Insolvency) No.
1064 of 2023, is accordingly set aside and the order dated 07.08.2023
passed by the National Company Law Tribunal, Kolkata Bench, in
CP(IB) No. 1377/KB/2020, is restored. The Resolution Professional shall
act upon and implement the said order expeditiously.
The appeal is allowed, in the aforesaid terms.
Pending application(s), if any, shall stand disposed of.
............................., J
(SANJAY KUMAR)
………………............................., J
(SATISH CHANDRA SHARMA)
August 05, 2025
New Delhi.
9