The Indore Bench of the National Company Law Tribunal (NCLT) has held that a lease of immovable property for a term exceeding one year must be compulsorily registered under Section 107 of the Transfer of Property Act and Section 17(1)(d) of the Registration Act, and if such a lease deed is unregistered, it cannot be relied upon to establish substantive leasehold rights, duration of tenancy, or a continuing right to remain in possession when those very issues are in dispute. At best, only a limited collateral use may be permissible, but not where the main lis concerns the nature and validity of possession itself.
The Tribunal further held that where occupation of the corporate debtor’s premises directly affects the RP’s ability to take custody, preserve assets, conduct valuation, and facilitate CIRP, the NCLT has jurisdiction under Section 60(5)(c) read with Section 238 of the Code to examine the validity of such possession and direct delivery of possession. Such a dispute is sufficiently connected with insolvency resolution and is not excluded merely because the occupant raises contractual or civil law objections or has filed a parallel civil suit.
The Division Bench comprising Brajendra Mani Tripathi (Judicial Member) and Man Mohan Gupta (Technical Member) noted that the lease deed dated Dec 16, 2023 had indeed been executed on behalf of the corporate debtor by its erstwhile director in favour of the respondent, that the CoC had resolved on Jan 29, 2026 with 100% voting share to terminate that lease, and that the respondent continued to remain in possession of the premises. The real controversy, therefore, was not about whether the lease deed existed or whether the respondent was in occupation, but whether the lease deed had legal efficacy and whether the NCLT had jurisdiction to decide the dispute and order delivery of possession.
On the first issue, the Tribunal held that the lease deed was for a term of 60 months and therefore fell squarely within Section 107 of the Transfer of Property Act, 1882 and Section 17(1)(d) of the Registration Act, 1908, both of which required compulsory registration of such a lease. The deed produced before the Tribunal bore only notarial attestation and had no endorsement of registration by the Sub-Registrar. The Tribunal therefore found it to be an unregistered instrument which the law required to be registered.
The Tribunal then examined the legal consequence of non-registration by referring to Section 49 of the Registration Act and held that an unregistered lease deed which is compulsorily registrable cannot be used to prove the substantive leasehold rights asserted by a party when the very nature, duration and purpose of possession are themselves in issue. In this case, the respondent was relying on the deed to establish a fixed 60-month lease and his continuing right to remain in possession. The Tribunal held that such substantive terms could not be relied upon from an unregistered instrument.
The Tribunal further held that at best, the conduct of parties might have created only a periodic tenancy under Section 106 of the Transfer of Property Act. But even that argument failed on facts. The burden to show that the premises had been let for manufacturing purposes and that a different kind of tenancy existed was on the respondent, and that burden had not been discharged. The Tribunal noted that the RP had verified all three bank accounts of the corporate debtor and found no lease rent payments in them. The respondent had only produced cash-book extracts, but there was no independent proof showing that the corporate debtor or any authorised representative had actually received such rent. The Tribunal also relied on the Panchnama which showed there was no electricity, no water and no use of the factory, which was inconsistent with any actual manufacturing use.
On the question of jurisdiction, the Tribunal held that Section 60(5)(c) of the Insolvency and Bankruptcy Code gives the Adjudicating Authority wide residuary jurisdiction to decide questions of law or fact arising out of or in relation to the insolvency resolution of the corporate debtor, and that Section 238 gives the Code overriding effect. This jurisdiction is not confined only to matters expressly covered by the moratorium under Section 14. Since the factory premises were assets of the corporate debtor and the RP was under statutory duty to take custody and control of them under Sections 18, 20 and 25, the dispute had a direct and clear nexus with the insolvency resolution process.
The Tribunal rejected the respondent’s reliance on Section 14(1)(b) and Section 14(1)(d). It observed that Section 14(1)(d) protects the corporate debtor’s possession against recovery by an owner or lessor and cannot be used by an occupant like the respondent against the corporate debtor itself. In the present case, the corporate debtor was the owner and lessor, and the respondent was merely the occupant. Therefore, the moratorium did not support the respondent’s case; rather, it reinforced the RP’s duty to secure the asset. The Tribunal also held that the pendency of a civil suit filed by the respondent did not oust NCLT’s jurisdiction under Section 60(5), and that earlier access granted to the RP and deployment of security personnel could not amount to acceptance of the lease’s validity or revocation of the CoC’s termination decision.
Briefly, the application was filed by the Resolution Professional of Shree Uttam Food Products (India) Pvt Ltd. seeking directions against Vatsal Acharya, who was occupying the corporate debtor’s factory premises at Village Bamnia, Jhabua, Madhya Pradesh. The RP asked the Tribunal to direct the respondent to vacate the factory, hand over peaceful possession, and for police and district administration support to secure the premises. The RP’s case was that the corporate debtor had been admitted into CIRP, and when he visited the factory, he was denied entry and access to the factory and its assets, which obstructed him from taking custody and control of the corporate debtor’s property as required under the Insolvency and Bankruptcy Code.
The RP further stated that despite repeated emails, letters and reminders, the respondent did not properly cooperate or provide the information and records sought by him. Although the respondent eventually shared a copy of a lease deed, the RP said the respondent still withheld important records, including proof of lease rent payments, electricity bill payments, labour law compliances, licences and board authorisation. The RP also obtained confirmation from the District Industries Centre that no permission had been granted for sub-leasing the premises under the conditions of the lease deed.
According to the RP, the issue was placed before the Committee of Creditors in its second meeting on Jan 29, 2026. The CoC noted that the RP had checked the corporate debtor’s bank accounts and found no transactions reflecting payment of lease rent. Taking into account the respondent’s non-cooperation, lack of supporting records and the interests of the corporate debtor and its creditors, the CoC resolved with 100% voting share that the lease arrangement was not in the interest of the corporate debtor and should be terminated. Even after termination, the respondent did not vacate the premises. The RP also highlighted that the sole suspended director had died in February 2026, leaving no one from the erstwhile management to protect the assets, and that there was a real risk of the plant and machinery being removed, damaged or otherwise dealt with.
The RP additionally stated that Form G had already been published, eight prospective resolution applicants had submitted expressions of interest, and immediate control over the factory premises was necessary to facilitate inspection, valuation and due diligence during the CIRP. His case was that if access and control were not secured, the insolvency process itself would be seriously prejudiced and the value of the corporate debtor’s assets could be diminished.
The respondent opposed the application and claimed that he was not an unauthorised occupant. He argued that he was in possession under a valid lease deed dated Dec 16, 2023 for a period of 60 months, executed before the commencement of CIRP. He claimed that monthly rent of Rs. 40,000 plus taxes was being paid in cash to the suspended director because the company’s bank accounts were frozen, and also said electricity charges were being paid. He further contended that he had complied with earlier NCLT orders by permitting access to the RP for inspection and valuation, and argued that the absence of District Industries Centre permission for sub-leasing was a matter between the corporate debtor and the authority, not something that made his possession unlawful.
