In a significant ruling on August 5, 2025, the Supreme Court of India allowed an appeal filed by Sincere Securities Pvt. Ltd. and others, restoring the National Company Law Tribunal (NCLT) order that directed the return of a leased property from a corporate debtor under insolvency. The case, Sincere Securities Pvt. Ltd. & Ors. vs Chandrakant Khemka & Ors., revolved around a dispute related to leased property during the Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code, 2016 (IBC).
"The commercial wisdom of the Committee of Creditors must be given primacy during CIRP."
- Supreme Court, quoting from K. Sashidhar v. Indian Overseas Bank & Ors.
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The case stemmed from financial agreements executed in 2019 between Nandini Impex Pvt. Ltd., the corporate debtor, and various appellants, including Sincere Securities. These agreements involved financial assistance totaling ₹6 crores, secured by mortgaging different parts of a property at White House, Rani Jhansi Road, New Delhi.
Despite transferring ownership of the property to the appellants in 2020 due to loan defaults, Nandini Impex continued to occupy the premises under a lease agreement. However, after defaulting on rent, the appellants terminated the lease and filed eviction suits.
Subsequently, UCO Bank, the sole financial creditor and member of the Committee of Creditors (CoC), initiated insolvency proceedings against Nandini Impex. During the CIRP, the Resolution Professional (RP) determined that retaining the high-rent property was financially unviable and recommended returning it to the owners. This decision was supported by UCO Bank.
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In 2023, the NCLT accepted this recommendation. But Chandrakant Khemka, a suspended director of Nandini Impex, challenged the NCLT's order before the National Company Law Appellate Tribunal (NCLAT), which set aside the NCLT ruling citing the Section 14(1)(d) moratorium provision.
"This is not a simple case of property recovery during moratorium. All stakeholders except the suspended director support the return."
- Supreme Court
The Supreme Court observed that Section 14(1)(d) prohibits recovery of property occupied by the corporate debtor during CIRP, but in this case, the CoC, RP, and creditor agreed that retaining the property was financially burdensome and unnecessary. Moreover, the Court emphasized that judicial authorities cannot override the CoC's commercial decisions, aligning with established legal precedent.
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Rejecting Khemka’s claim that the property was essential for operations (despite his unwillingness to pay rent), the Court concluded that the NCLAT wrongly remanded the case. It reinstated the NCLT’s earlier order for the RP to return the property.
The appeal was allowed, affirming the creditor's right to reclaim the property and reinforcing the autonomy of CoC decisions during insolvency proceedings.
Case Title: Sincere Securities Private Limited & Others vs Chandrakant Khemka & Others
Case Number: Civil Appeal No. 12812 of 2024