Harish Raghavji Patel vs Ajit Gyanchand Jain

[Arising out of Order dated 22.04.2025 passed by the Adjudicating Authority (National Company Law Tribunal), Mumbai Bench, Court-II in IA No.4820 of 2024 in CP (IB) No.211/MB/2023]

IN THE MATTER OF:

Harish Raghavji Patel & Anr. ...Appellants

Versus

Ajit Gyanchand Jain, ...Respondents IRP of Rajesh Cityspaces Pvt. Ltd. & Ors.

Present:

For Appellants: Mr. Abhijeet Sinha Sr. Advocate with Ms. Aakshi Lodha, Advocates. For Respondents: Mr. Krishnendu Dutta Sr. Advocate, Ms. Kritya Sinha, Mr. Yash Tondon, Advocates for RP/ R1.

JUDGMENT

(15th May, 2025)

Ashok Bhushan, J.

This Appeal by two Suspended Directors of the Corporate Debtor has

been filed challenging the order dated 22.04.2025 passed by the

Adjudicating Authority (National Company Law Tribunal), Mumbai Bench,

Court-II allowing IA No.4820 of 2024 filed by the Resolution Professional

seeking a direction to provide assistance to the IRP in obtaining peaceful

physical possession of the assets of the Corporate Debtor including Flat Nos.

601 and 1101 of Project Kailash Niwas.

2

2. Brief facts of the case necessary to be noticed for deciding the Appeal

are:-

2.1. On application filed under Section 7 by M/s. Assets Care and

Reconstruction Enterprise Pvt. Ltd., CIRP against the Corporate Debtor-

Rajesh Cityspaces Private Limited commenced on 15.01.2024. Mr. Ajit

Gyanchand Jain- Respondent No.1 was appointed as Interim Resolution

Professional (IRP). On 31.05.2024, the IRP has sent an e-mail to the

Suspended Board of Directors including the Appellant requesting to

handover the physical possession of the property admeasuring 20,881 sq. ft.

at Nutan Kailash Nivas Co-operative Society, R.B. Mehta Road, Ghatkopar

East, Mumbai. IRP thereafter filed an application being IA No.4820 of 2024

on 12.08.2024 seeking physical possession of the larger property. In the

said application, notices were issued on 08.10.2024. A reply was filed in the

IA No.4820 of 2024 by Respondent No.2- Mr. Rajesh Raghavji Patel,

suspended Director of the Corporate Debtor stating that Flat Nos. 601 and

1101 are in possession of the Appellants based on the arrangement recorded

in the Board Resolution dated 14.09.2017. No reply was filed by the

Appellant to the application. The Adjudicating Authority heard the parties

on several dates. Application under Section 19 filed by the Resolution

Professional being IA No.4820 of 2024 was withdrawn on 06.03.2025 and

the IA No.4820 of 2024 was directed to be listed on 11.03.2025. On

12.03.2025 parties were heard and by impugned order dated 22.04.2025,

Adjudicating Authority has allowed IA No.4820 of 2024 directing the

Appellant to handover the possession of the Flat Nos.601 and 1101 within

Company Appeal (AT) (Insolvency) No.682 OF 2025 3

10 days from the date of the order. Aggrieved by this order, this Appeal has

been filed by the Appellants.

3. We have heard Shri Abhijeet Sinha, Learned Senior Counsel for the

Appellants and Shri Krishnendu Datta, Learned Senior Counsel for the

Respondent No.1.

4. Counsel for the Appellants challenging the impugned order submits

that the Application IA No.4820 of 2024 was not maintainable before the

Adjudicating Authority. Appellants who were in possession of the two flats

by virtue of the Board Resolution could not have been directed to be evicted

by the Adjudicating Authority on the application of the IRP. IRP was free to

take normal process of law for evicting the Appellants. It is submitted that

the Corporate Debtor is one of the family-controlled concerns where

Appellant No.1 and Respondent Nos.2 & 3 were jointly engaged in the

conduct of business. Appellants were permitted vide Board Resolution dated

14.09.2017 to occupy Flat Nos.601 and 1101 respectively for their personal

use and the Appellants are residing in the said premises from 2017.

Appellants are ready to submit undertaking to vacate the premises within 3

months or within 10 days from approval of the Resolution Plan whichever be

earlier. Counsel for the Appellant submits that the Board Resolution

contemplated 10 months' notice for vacation of the premises, hence, the

Adjudicating Authority could not have directed for vacation of the said

premises. Counsel for the Appellant in support of the said submission has

Company Appeal (AT) (Insolvency) No.682 OF 2025 4

relied on various judgements of this Tribunal and the Hon'ble Supreme

Court which we shall notice hereinafter.

5. Shri Krishnendu Datta, Learned Senior Counsel for the Respondents

submits that the Appellant has no right to remain in possession of the

assets which admittedly owned by the Corporate Debtor. Appellant does not

claim any right in the assets Flat Nos.601 and 1101 nor they claim any

lease or license from the Corporate Debtor. Appellant is continuing in

possession of the said flats which is creating hurdle in successful resolution

of the Corporate Debtor. It is submitted that certain Resolution Applicants

have withdrew on the ground that there is no clarity with regard to

possession of the Flats. It is submitted that the Appellants are not entitled

to continue in the possession and the Adjudicating Authority at the time of

reserving the order on 12.03.2025 has only observed that Appellants at best

would have one month time to vacate the premises and when order was

passed by the Adjudicating Authority on 22.04.2025, Adjudicating Authority

noticed that more than 40 days' have been passed, when the matter was

heard, Appellant has not handed over the possession, hence, direction was

issued to handover the possession within 10 days. It is submitted that the

Adjudicating Authority has jurisdiction to entertain the application filed by

the IRP for taking possession of the assets of the Corporate Debtor. It is

submitted that the IRP was duty bound to take possession of the assets of

the Corporate Debtor. Counsel for the Respondents has also relied on

various judgments of this Tribunal in support of the submission. It is

submitted that the Appellant is not entitled for any further time for vacation

Company Appeal (AT) (Insolvency) No.682 OF 2025 5

as prayed by the Appellant. Appellant has no right to continue. The IRP by

e-mail dated 31.05.2024 has asked the Appellant to vacate the premises. It

is submitted that the Board Resolution which is relied was never brought to

the notice of the IRP and even as per the Board Resolution, Appellant were

required to vacate the premises within 10 months and when e-mail was sent

on 31.05.2024 for vacating the premises about more than 11 months have

elapsed but the Appellant has not vacated the premises.

6. We have considered the submissions of the Counsel for the parties

and perused the record.

7. There is no dispute between the parties that the assets i.e. two flats

601 and 1101 belong to the Corporate Debtor. Appellant who is ex-director

of the Corporate Debtor are occupying the two flats. The Appellant has

placed reliance on Board Resolution dated 14.09.2017 which is claimed to

be passed prior to initiation of CIRP. With regard to two flats which are

subject matter, the Board Resolution provides as follows:-

"RESOLVED FURTHER THAT Shri Harish Raghavji Patel and Shri Pratik Harish Patel further agreed to furnish an undertaking to the company that they shall vacate the said premises within 10 months of receipt of intimation from the company and further undertake not to create any encumbrance on the said premises in any manner whatsoever."

8. Counsel for the Respondent although has submitted that the Board

Resolution was never placed before the CoC and it was only in the reply filed

Company Appeal (AT) (Insolvency) No.682 OF 2025 6

by the Respondent No.2 the extract of Resolution was annexed. He submits

that even if the Resolution is considered at best the Resolution provides that

Appellants have given undertaking that they shall vacate the premises

within 10 months of receipt of intimation from the company. As noted

above, the CIRP commenced against the Corporate Debtor by an order dated

15.01.2024. IRP issued an e-mail on 31.05.2024 requesting for possession

of the assets of the Corporate Debtor. Both the Unit Nos.601 and 1101 were

mentioned in the e-mail. E-mail has been brought on the record by the

Appellant at pages 112-113 which is as follows:-

"Dear Sir,

I am writing to you in my capacity as the interim Resolution Professional appointed for Rajesh Cityspaces Private Limited under the corporate insolvency resolution process vide order dated 15.01.2024 passed by the Hon'ble National Company Law Tribunal Mumbai Bench

As you are aware, the corporate insolvency resolution process has been initiated for Rajesh Cityspaces Private Limited, and the management of its affairs now vests with the interim Resolution Professional as per the Insolvency and Bankruptcy Code.

While symbolic possession has been taken by the Financial Creditor, Assets Care & Reconstruction Enterprise Limited, prior to the initiation of CIRP, I am writing to seek your urgent cooperation in physically handing over the possession of all assets, properties, documents records and units/inventory pertaining to Rajesh Cityspaces Private

Company Appeal (AT) (Insolvency) No.682 OF 2025 7

Limited that are currently under your control or possession. This includes but is not limited to

Description of the Property

(Plot No. 353/4A) situated at Village Ghatkopar (East) Kirol, District Mumbai Suburban together with all buildings constructed and to be constructed thereon comprising a minimum saleable carpet area of 20.880 square feet ("property')

Details of Unsold Units of Project Kailash Niwas

S.No. Unit Number Saleable Area (in sq. ft.) 1 103 1,157 2 601 691 3 1101 2,445 4 12th Floor 6,831 5 13th Floor 5,389 6 14th Floor 4,368 Total Area 20,881

Please make the necessary arrangements to transfer the above assets documents, records and units to the Interim Resolution Professional within 7 days from the date of this email.

Your cooperation is crucial to ensure a smooth resolution process and to protect the interests of all stakeholders involved. Any non-compliance or obstruction in handing over the assets may attract punitive actions as per the law.

Company Appeal (AT) (Insolvency) No.682 OF 2025 8

Please confirm the receipt of this email and provide details of the assets and units that will be handed over to the Interim Resolution Professional.

IRP Team member Urvi Parmar On behalf of CA Ajit Jain Insolvency Professional"

9. The submission which has been pressed by the Appellant is that the

Adjudicating Authority has no jurisdiction to entertain the application filed

by the IRP seeking possession of two flats. Section 18 of the IBC provides for

duties of IRP. Section 18(1) (f) provides as follows:-

"18. Duties of interim resolution professional. - The interim resolution professional shall perform the following duties, namely: -

(f) take control and custody of any asset over which the corporate debtor has ownership rights as recorded in the balance sheet of the corporate debtor, or with information utility or the depository of securities or any other registry that records the ownership of assets including -

(i) assets over which the corporate debtor has ownership rights which may be located in a foreign country;

(ii) assets that may or may not be in possession of the corporate debtor;

(iii) tangible assets, whether movable or immovable;

(iv) intangible assets including intellectual property;

Company Appeal (AT) (Insolvency) No.682 OF 2025 9

(v) securities including shares held in any subsidiary of the corporate debtor, financial instruments, insurance policies;

(vi) assets subject to the determination of ownership by a court or authority;"

10. The above provision empowers the IRP to take control and custody of

any assets over which the Corporate Debtor has ownership rights. The

present is a case where Appellants are not claiming any ownership rights in

the assets nor any rights on the basis of lease/license. Counsel for the

Appellant has referred to and relied on judgment of the Hon'ble Supreme

Court in "Victory Iron Works Limited vs. Jitendra Lohia and Anr.-

(2023) 7 SCC 227" and submitted that the order was passed by NCLT to

protect the interest of Victory Iron who was in possession of the assets. In

the above judgment, Appellant- Victory Iron has claimed possession by

virtue of leave and license agreement. CIRP commenced against Avani

Towers Pvt. Ltd. (developer) who had development rights in the assets. On

an application filed before the NCLT where the activity of Victory Iron was on

a piece of land, over which the possession was protected. Victory Iron has

claimed by virtue of leave and license agreement which is noticed in

paragraph 4 of the judgment is as follows:-

"4. M/s Victory Iron Works Ltd. (for short "Victory") which is the appellant in CA No. 1743 of 2021, claims to be in possession of the property in entirety, partly by virtue of a leave and licence agreement and partly by virtue of an oral understanding."

Company Appeal (AT) (Insolvency) No.682 OF 2025 10

11. The Hon'ble Supreme Court in paragraph 52 has made following

observations where interest of Victory Iron was protected:-

"52. The fact that there were security guards posted in the property is borne out by records. This is why NCLT as well as NCLAT have done a delicate act of balancing, by protecting the interests of Victory to the extent of the land permitted to be occupied. In fact, Victory does not even have the status of a lessee, but is only a licensee. A licence does not create any interest in the immovable property.

12. The above judgment in no manner supports the case of the Appellant

who is neither lessee nor licensee of two flats which are in their possession.

Admittedly, Appellants were suspended directors and according to them,

they were permitted to occupy the premises by Board Resolution passed on

14.09.2017. The Board Resolution permitted the occupation as per the case

of the Appellant which was subject to undertaking for vacating the premises

as contained in the Resolution.

13. Another judgment relied by the Appellant is Company Appeal (AT)

(Insolvency) No.884 of 2024- "Sumati Suresh Hegde & Ors. vs. Anand

Sonbhadra, RP of Champalalji Finance Pvt. Ltd. & Ors.". Counsel for

the Appellant submits that in the said case, this Tribunal has held that the

application filed by the Resolution Professional against the Appellant to take

control and custody of the property was held not maintainable. In the above

case, there was Civil Court decree in favour of the predecessor-in-interest of

the Appellant. Predecessor in interest of the Appellants were monthly

Company Appeal (AT) (Insolvency) No.682 OF 2025 11

tenants and suit was filed by the Corporate Debtor for eviction of the

Appellant from property being Suit No.149 of 2011 and at the time of CIRP

commenced suit was pending but was not pursued and Resolution

Professional filed an application. This Tribunal in the above facts held that

Resolution Professional could not short circuit the route of eviction of the

Appellants. Following was laid down in paragraph 28 of the judgment:-

"28. There is no dispute to the fact that it is not a case either of lease or license rather it is a case where the civil court decree has been passed in favour of the predecessor in interest of the Appellants in RAD Suit No. 916 of 2005 declaring that the predecessor in interest of the Appellant was a monthly tenant in the property in question and the defendant therein were restrained from interfering in his possession otherwise in due process of law. It is also not in dispute that the suit property was purchased by the CD from the erstwhile landlord/owner of the property in question alongwith the tenant and RAE Suit No. 149 of 2011 was filed by the CD for seeking eviction of the Appellants from the property in question, who have stepped into shoes of the predecessor in interest after his death on inheriting the tenancy right in the property in question. It is also not in dispute that the CIRP was initiated on 17.03.2023 and by at that time Suit No. 149 of 2011 was pending but the IRP, having been appointed as such on 26.04.2023 did not pursue the suit for eviction which was a right procedure because the tenancy was continuing and eviction was sought only on the ground of bonafide need of the CD as an owner who wanted to demolish

Company Appeal (AT) (Insolvency) No.682 OF 2025 12

the structure in possession of the present appellants as tenants for raising a new construction over the property in question. The RP rather filed an application under Section 60(5) r/w Section 25(2)(a) of the Code before the Tribunal by short circuiting the route of eviction of the present appellants under the garb of the provisions of the Code. The Tribunal has committed an patent error in passing the order of eviction considering the possession of the Appellants as of the lessee which is evident from the fact that in the impugned order itself a direction has been issued by the Tribunal that the RP is empowered to take custody of all the assets of the CD including the present property which is under the lease. There is a sharp difference between the lease and a tenancy. The lease is for a fixed period of time which can be terminated by issuance of notice under Section 106 of the Transfer of Property Act, 1882 whereas the tenancy continues until it is changed by contract or by operation of law. In the present case, there has been no change of the tenancy rights of the Appellants by way of a contract and the law which is to operate in respect of termination of tenancy are the provisions of the Act and not the Code. In this regard, judgments relied upon by the Appellants in the case of Raj Builders (Supra), K. L Jutes Products Pvt. Ltd. (Supra) and Devendera Padamchand Jain (Supra) supports the contention of the Appellants and the judgments relied upon by the Respondent in the case of Jhanvi Rajpal Automotive Pvt. Ltd. (Supra) and Adinath Jewellery Exports (Supra) are distinguishable on its own facts because the decisions in the case of in the

Company Appeal (AT) (Insolvency) No.682 OF 2025 13

case of Raj Builders (Supra), K. L Jutes Products Pvt.

Ltd. (Supra) and Devendera Padamchand Jain (Supra) are all pertaining to the tenancy whereas the decisions in the case of Jhanvi Rajpal Automotive Pvt.

Ltd. (Supra) is pertaining to 11 months lease which had already come to an end and then the application for eviction was filed before the Court and in the case of Adinath Jewellery Exports (Supra) which was a case of license which was not renewed after its expiry and the application under Section 60(5) r/w Section 25(2)(a) has been found to be duly maintainable."

14. The above judgment in no manner helps the Appellant. The above

judgment was passed in facts where there was decree in favour of the

Appellant not to evict except in accordance with law and suit was filed by

the Corporate Debtor for eviction which was not proceeded any further after

CIRP and Resolution Professional filed an application for eviction before the

Adjudicating Authority which was held to be not maintainable.

15. Counsel for the Appellant has also relied on order of the Hon'ble

Supreme Court in Civil Appeal No.4372 of 2024- "Pavan Vikram Sahjwani

vs. Santanu T. Ray" to support his submission that even in several cases

the Hon'ble Supreme Court has given time to vacate the premises on an

undertaking given by the Appellant. The order passed by the Hon'ble

Supreme Court dated 01.04.2024 relied by the Appellant in the above case

was on the facts of the said case and on the said basis Appellant cannot

claim a right to continue in the occupation for three months as claimed

herein.

Company Appeal (AT) (Insolvency) No.682 OF 2025 14

16. We, thus, do not find any substance in the submission of the Counsel

for the Appellant that application filed by IRP was not maintainable before

the Adjudicating Authority. Admittedly, the Flats were owned by the

Corporate Debtor and IRP was under obligation to take possession of the

assets of the Corporate Debtor. Counsel for the Resolution Professional

submitted that the CIRP process is underway and Resolution Plan has been

received and there being no clarity with regard to Flat Nos.601 and 1101

and Resolution Applicants are withdrawing. Reference of one of the emails

received from Resolution Applicants dated 20.01.2025 has been made where

one of the Resolution Applicants has expressed his intention to withdraw

from the Resolution Process. Appellant himself has brought on the record

the said e-mail dated 20.01.2025 along with Additional Affidavit which is as

follows:-

"Dear Sir

We invite your kind attention towards the Resolution plan submitted for Rajesh Cityspaces Private Limited.

We wish to inform you that we would like to withdraw our resolution plan for the following reasons

1. There is no clarity on the possession of the flats which are under dispute and we believe it shall take inconsiderable time and lots of litigation for the same.

2. The process is taking too long and considering other opportunities we would like to invest our time and capital for the same

Company Appeal (AT) (Insolvency) No.682 OF 2025 15

As mentioned above we would request you to kindly accept our withdrawal and release our EMD submitted against the plan

Please confirm and kindly advice us on the refund of the EMD amount of Rs 50 lacs submitted along with the plan.

Best Regards, Rahul Chhajed +919820072911"

17. In view of the above, submission of the Respondent has substance

that due to non vacation of the Flats by the Appellants, Resolution Process

is lingering. It is submitted by the Respondents that Adjudicating Authority

while reserving the order in the application on 12.03.2025 observed that

even if the Appellants are allowed a reasonable time to vacate there will be

period of one month to vacate and Adjudicating Authority when passed an

order in paragraph 37 of the order has made following observations:-

"37. Therefore, we hereby direct Respondent Nos. 2 and 4 to vacate the Flats Nos. 601 and 1101 within 10 days from the date of this order (as more than 40 days have already elapsed since the oral directions were given by this Bench to the parties at the time of hearing on 12th March, 2025) and hand over the physical possession of these properties to the Resolution Professional without any further delay. The RP is also directed to take necessary steps including seeking the help of local police to ensure

Company Appeal (AT) (Insolvency) No.682 OF 2025 16

that the flats are handed over to him within the time granted above."

18. The above order clearly indicates that the oral direction was given on

12.03.2025 to handover the possession.

19. Counsel for the Respondent has also relied on judgment of this

Tribunal in "Jhanvi Rajpal Automotive Pvt. Ltd. vs. R.P. of Rajpal

Abhikaran Pvt. Ltd. and Another-2023 SCC OnLine NCLAT 1436" where

this Tribunal has held the application to be maintainable for vacation of the

premises which was being occupied even after termination of the lease deed.

Argument raised before the Tribunal that Adjudicating Authority had no

jurisdiction to consider any application was noticed and rejected. In

paragraphs 14, 19, 20 & 21 of the judgment, following was observed:-

"14. For effectuating the duties entrusted on the IRP under Section 18 recourse to adjudicating Authority by filing an Application under Section 60(5) is fully permissible. In the present case, we are considering the case where there is no dispute that assets in question is owned by the Corporate Debtor hence by virtue of Section 18(1)(f), Resolution Professional can take steps for taking possession of the assets. To resist the case taken by the RP, Appellant contends that under Section 60(5), no Application can be entertained for eviction of the Appellant and the only remedy available to the RP is to take proceedings under MP Accommodation Control Act, 1961. It is further relevant to notice that present is a case where renewal lease dated 17.09.2021 was executed by the

Company Appeal (AT) (Insolvency) No.682 OF 2025 17

RP himself for a period of 5 months till 31st December, 2021. The Appellant thus was permitted by the RP to continue with the Lease for five months till 31.12.2021 and we have already noticed the conditions in the rent agreement as extracted above. Paragraph 11 and 16 which clearly stipulated that first party is to vacate the premises when 15 days notice is given in writing. Renewal of the lease to the Appellant was with the approval of the CoC as noted above, RP cannot create any right in favour of the Appellant with regard to the assets of the Corporate Debtor without prior approval of the CoC as contained in Section 28(1)(k) of the Code. We have noticed above that CoC has taken decision to issue Legal Notice to the Appellant to vacate from premises.

19. The present is not a case where lease in favour of the Appellant is subsisting. The lease has come to an end on 31st December, 2021. Further the lease renewal in favour of the Appellant was by RP himself on 17.09.2021 (Fresh Lease) which lease contained specific clause for eviction by 15 days' notice.

20. Accepting the contention of the Learned Counsel for the Appellant that RP is obliged to file a suit for eviction of the Appellant under MP Accommodation Control Act, 1961 even though lease in favour of the Appellant has expired shall be unduly prolonging the insolvency process which is a time bound process. When the Corporate Debtor has the ownership rights over the premises which premises can be taken in control by IRP/RP, we are of the view that for eviction of the Appellant especially in event when lease in favour of the Appellant has come to an end, filing a

Company Appeal (AT) (Insolvency) No.682 OF 2025 18

suit is not contemplated in the statutory scheme contained in IBC.

21. Thus, the contention of the Appellant that RP has to file a suit for eviction of the Appellant under the MP Accommodation Control Act, 1961 can not be accepted. We thus, in view of the foregoing discussions are of the considered opinion that Adjudicating Authority has rightly allowed the Application filed by the RP directing the Appellant to vacate from the premises so that Resolution Plan which has been approved can be implemented. We thus do not find any merit in the Appeal, the Appeal is dismissed."

20. The above judgment of the Adjudicating Authority fully supports the

case of the Respondent. As noted above, IRP vide e-mail dated 31.05.2024

has already asked for possession of the assets of the Flats and the period for

10 months which according to the Appellant was to be given a notice for

vacation is also over. When the undertaking was given by the Appellant to

vacate the premises, intimation received from the Company which is part of

the Resolution relied by the Appellant to following effect:-

"RESOLVED FURTHER THAT Shri Harish Raghavji Patel and Shri Pratik Harish Patel further agreed to furnish an undertaking to the company that they shall vacate the said premises within 10 months of receipt of intimation from the company and further undertake not to create any encumbrance on the said premises in any manner whatsoever."

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21. Intimation by the Resolution Professional after commencement of the

CIRP is clearly intimation to the Appellant to vacate the premises and even

for argument sake, it is accepted that they were entitled for 10 months

notice that period is very well over. We do not find any error in the order of

the Adjudicating Authority rejecting IA No.4820 of 2024.

22. This Appeal was filed by the Appellant within 10 days from passing of

the order although no interim order was passed in the Appeal but Appellant

has not vacated the premises till date as has been submitted during the

course of the submissions. We, thus, direct the Appellant to vacate the

premises within 10 days from today. The Appeal is dismissed.

[Justice Ashok Bhushan] Chairperson

[Barun Mitra] Member (Technical)

[Arun Baroka] Member (Technical)

New Delhi Anjali

Company Appeal (AT) (Insolvency) No.682 OF 2025