Introduction

The case of MIS Jhanvi Rajpal Automotive Private Limited v. R.P. of Rajpal Abhikaran Pvt. Ltd. adjudicated by the National Company Law Appellate Tribunal (NCLAT) in January 2023, addresses a critical aspect of the Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code (IBC), 2016. The appellant, Jhanvi Rajpal Automotive Pvt. Ltd., challenged an order directing it to vacate premises owned by Rajpal Abhikaran Pvt. Ltd., the corporate debtor, amidst ongoing CIRP. The primary issues revolved around the jurisdiction of the Adjudicating Authority to order eviction without following traditional eviction procedures under state-specific laws.

Parties Involved:

• Appellant: MIS Jhanvi Rajpal Automotive Private Limited
• Respondents:
  • R.P. of Rajpal Abhikaran Pvt. Ltd. (Corporate Debtor)
  • Agarwal Real City Pvt. Ltd. (Successful Resolution Applicant)

Summary of the Judgment

The NCLAT upheld the order of the Adjudicating Authority, which directed Jhanvi Rajpal Automotive Pvt. Ltd. to vacate the premises it occupied from the corporate debtor. The tribunal found that adhering to traditional eviction procedures would cause undue delays in the CIRP, thereby defeating the very objective of the IBC to expedite the resolution process. The appellant's contention that eviction should follow the procedures under the MP Accommodation Control Act, 1961, was dismissed. The NCLAT emphasized the authority of the IRP/RP under Section 18(1)(f) of the IBC to manage and take control of the debtor's assets, including directing tenants to vacate to facilitate the implementation of the approved resolution plan.

Analysis

Precedents Cited

The appellant referenced two key judgments to support its stance:

• Embassy Property Developments Pvt Ltd. vs. State of Karnataka & Ors. [2020 13 SCC 308]: This Supreme Court case involved a corporate debtor challenging the state government's rejection of a mining lease extension. The Court held that disputes involving public law matters, such as lease extensions, fall outside NCLT's jurisdiction.
• K.L. Jute Products Pvt. Ltd. Vs. Tirupati Jute Industries Ltd. [2020 SCC OnLine NCLAT 426]: Here, the NCLAT refused to approve a resolution plan that involved terminating an existing lease agreement, emphasizing that eviction orders should follow appropriate legal channels.

The NCLAT distinguished these cases, noting that in the present case, the corporate debtor owned the premises, and the lease had expired without any dispute over ownership, thereby falling within NCLAT's jurisdiction to facilitate CIRP by ordering eviction.

Legal Reasoning

The tribunal's decision hinged on several legal provisions and principles:

• Section 18(1)(f) of IBC: This section empowers the Interim Resolution Professional (IRP)/Resolution Professional (RP) to take control and custody of the debtor's assets. Subsection (ii) further includes assets not in the debtor's possession, which encompasses tenancy agreements.
• Section 60(5) of IBC: Grants NCLT jurisdiction over applications related to the debtor, including actions necessary to implement the resolution plan.
• Section 25(1)(b) of IBC: Obligates the RP to act on behalf of the debtor in judicial and quasi-judicial proceedings.

The NCLAT reasoned that enforcing eviction through traditional courts would delay the CIRP, undermining the IBC's objective of a time-bound resolution process. Given that the lease had already expired and the resolution plan required the premises to be vacated for implementation, NCLAT found it within its jurisdiction to direct eviction directly.

Impact

This judgment reinforces the authority of NCLT/NCLAT in expediting CIRP by granting it broader powers to manage debtor assets, including directing tenants to vacate without adhering strictly to state-specific eviction laws. The decision aims to prevent strategic delays by parties opposed to the resolution plan, thereby enhancing the efficacy of the IBC framework. Future cases involving tenancy disputes during CIRP may refer to this judgment to support the tribunal's authority in ordering evictions essential for implementing resolution plans.

Complex Concepts Simplified

Conclusion

The NCLAT's judgment in MIS Jhanvi Rajpal Automotive Pvt. Ltd. v. R.P. of Rajpal Abhikaran Pvt. Ltd. underscores the tribunal's pivotal role in facilitating efficient CIRP by asserting its authority to direct tenant evictions. By prioritizing the timely implementation of resolution plans over conventional eviction processes, the tribunal aligns with the IBC's objective of expediting corporate insolvency resolutions. This judgment sets a precedent that empowers resolution professionals and tribunals to take decisive actions necessary for the revival of distressed companies, thereby strengthening the overall effectiveness of the insolvency framework in India.