Gujarat High Court
Gujarat Hydrocarbons And Power Sez ... vs Gujarat Industrial Development ... on 1 December, 2025
NEUTRAL CITATION
C/SCA/4937/2022 CAV JUDGMENT DATED: 01/12/2025
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Reserved On : 02/09/2025
Pronounced On : 01/12/2025
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 4937 of 2022
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE NIRAL R. MEHTA
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Approved for Reporting Yes No
✔
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GUJARAT HYDROCARBONS AND POWER SEZ LIMITED
Versus
GUJARAT INDUSTRIAL DEVELOPMENT CORPORATION & ORS.
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Appearance:
MR MIHIR JOSHI, SR ADVOCATE WITH MR KEYUR GANDHI WITH MR
ISA HAKIM WITH MS ARADHANA JAIN FOR GANDHI LAW
ASSOCIATES(12275) for the Petitioner(s) No. 1
MR SN SOPARKAR, SR. ADVOCATE WITH MR RD DAVE(264) for the
Respondent(s) No. 1
MR ISHAN JOSHI WITH MR DHANESH DESAI FOR SINGHI & CO(2725) for
the Respondent(s) No. 3
TIRTH NAYAK(8563) for the Respondent(s) No. 2
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CORAM:HONOURABLE MR. JUSTICE NIRAL R. MEHTA
CAV JUDGMENT
1. By way of present petition under Article 226 of the Constitution of India, the petitioner has prayed for an appropriate writ, direction or order quashing and setting aside order dated 13th December, 2021 terminating the lease deed dated Page 1 of 50 Uploaded by ANUP V PARIKH(HC00956) on Tue Dec 02 2025 Downloaded on : Tue Dec 02 23:02:07 IST 2025 NEUTRAL CITATION C/SCA/4937/2022 CAV JUDGMENT DATED: 01/12/2025 undefined 21st February, 2008 as well as consequential order dated 10th March, 2022 directing the petitioner to hand over possession of the leased premises to respondent No.1.
2. The facts giving rise to the present petition, in nutshell, are stated as under:
2.1 The petitioner is the Resolution Professional of M/s.Gujarat Hydrocarbon & Powers SEZ Limited (Corporate Debtor).
2.2 The respondent No.3 initiated insolvency proceedings against the Corporate Debtor under Section 7 of the Insolvency & Bankruptcy Code, 2016 (the IBC) before the learned Adjudicating Authority being Company Petition (IB) No.571 of 2020.
2.3 Thus, CIRP proceedings commenced on filing the said application. Initially the petitioner was appointed as Interim Resolution Professional (IRP), then confirmed as Resolution Professional.
2.4 The Corporate Debtor is a company incorporated under the provisions of the Companies Act, 1956, having its registered office at New Delhi, and is engaged, inter alia, in the business of developing, operating, and Page 2 of 50 Uploaded by ANUP V PARIKH(HC00956) on Tue Dec 02 2025 Downloaded on : Tue Dec 02 23:02:07 IST 2025 NEUTRAL CITATION C/SCA/4937/2022 CAV JUDGMENT DATED: 01/12/2025 undefined maintaining Special Economic Zones (SEZs), including leasing and sub-dividing land parcels to industrial undertakings.
2.5 The Corporate Debtor applied for allotment of various lands in Industrial Plot No.6 situated in Vilayat Industrial Estate, District Bharuch. Pursuant thereto, land admeasuring 29,64,781 sq. metres came to be allotted vide offer-cum-allotment letter, and a lease deed was executed between the Corporate Debtor and respondent No.1 on 21st February, 2008.
Subsequently, the land was bifurcated into two parts -- the Northern and Southern portions. The Central Government, by notification dated 23rd March, 2010, declared the Southern portion admeasuring 13,99,046 sq. metres as SEZ. The petitioner contends that respondent No.1 failed to fulfill its assurance regarding handing over adjoining lands, resulting in the Corporate Debtor's inability to commence development and infrastructure planning within the notified SEZ area.
2.6 Thereafter, the Corporate Debtor proposed shifting the power corridor and sub- station approach road to the west of the irrigation canal to maintain continuity between Page 3 of 50 Uploaded by ANUP V PARIKH(HC00956) on Tue Dec 02 2025 Downloaded on : Tue Dec 02 23:02:07 IST 2025 NEUTRAL CITATION C/SCA/4937/2022 CAV JUDGMENT DATED: 01/12/2025 undefined the two plots. Respondent No.1 accepted the said proposal and executed a Rectification Deed on 11th February, 2011, modifying the measurement of the leased land from 27,61,212 sq. metres to 29,64,781 sq. metres.
2.7 In the meantime, the Corporate Debtor availed financial assistance of Rs.100 crore from respondent No.3. In terms of clause 4.3.9 of the lease deed, respondent No.1 granted permission to the Corporate Debtor to create a leasehold interest in favour of respondent No.3.
2.8 Respondent No.1 thereafter issued a notice dated 19th March, 2011, alleging failure on the part of the Corporate Debtor to submit development plans or commence construction. The Corporate Debtor responded with a proposal seeking permission to transfer the Southern plot to third parties in accordance with the GIDC SEZ Exim Policy.
2.9 The respondent No.3 initiated proceedings under Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, alleging default in repayment of loan, before DRT-1, Kolkata.
2.10 On 20th December, 2018, respondent No.1 Page 4 of 50 Uploaded by ANUP V PARIKH(HC00956) on Tue Dec 02 2025 Downloaded on : Tue Dec 02 23:02:07 IST 2025 NEUTRAL CITATION C/SCA/4937/2022 CAV JUDGMENT DATED: 01/12/2025 undefined once again issued a letter alleging non- utilisation of the leased land, non-construction, and breach of lease conditions. Thereafter, proceedings under the Gujarat Public Premises (Eviction of Unauthorized Occupants) Act, 1972 were initiated by issuing a show-cause notice dated 04th February, 2019.
2.11 Respondent No.3 filed one another application under Section 7 of the IBC before the learned Adjudicating Authority which was admitted on 18th November, 2020. Learned Adjudicating Authority, on initiation of the CIRP, declared a moratorium under Section 14 of the IBC. Thus, on and from 18th November, 2020, moratorium under Section 14 of the IBC operated.
2.12 Respondent No.2 submitted a Resolution Plan dated 05th April, 2021, which was subsequently revised on 23rd August, 2021 which has been approved unanimously by the Committee of Creditors (CoC). As per the revised plan, respondent No.2 proposed to pay a total amount of Rs.135 crore, including Rs.6,14,48,685/- to respondent No.1 and Rs.125 crore to respondent No.3.
2.13 On approval of the The Resolution Plan by the CoC, the petitioner - Resolution Page 5 of 50 Uploaded by ANUP V PARIKH(HC00956) on Tue Dec 02 2025 Downloaded on : Tue Dec 02 23:02:07 IST 2025 NEUTRAL CITATION C/SCA/4937/2022 CAV JUDGMENT DATED: 01/12/2025 undefined Professional filed I.A. No.4585 of 2021 under Section 31(1) of the IBC seeking approval of the Resolution Plan. The respondent No.1 - GIDC filed I.A. No.136 of 2022 before National Company Law Tribunal (NCLT) raising objection to the Resolution Plan. The said application was withdrawn by the counsel of the respondent No.1 and was disposed of as withdrawn on 13th September, 2023. On 19th September, 2023, learned Adjudicating Authority approved the Resolution Plan. The respondent No.1 submitted a claim in Form 'B' dated 10th March, 2021 for Rs.180,62,63,182/-.
2.14 Despite the moratorium imposed by the learned Adjudicating Authority by order dated 18th November, 2020 was in operation and despite the restriction/bar under Section 14 of the IBC, during the CIRP proceedings, the respondent No.1 by order dated 13th December, 2021 terminated the lease deed dated 21st February, 2008 executed between the Corporate Debtor and respondent No.1
- GIDC. The termination order dated 13th December, 2021 is the subject matter of present Special Civil Application.
2.15 During the pendency of the present petition, and despite the subsistence of the Page 6 of 50 Uploaded by ANUP V PARIKH(HC00956) on Tue Dec 02 2025 Downloaded on : Tue Dec 02 23:02:07 IST 2025 NEUTRAL CITATION C/SCA/4937/2022 CAV JUDGMENT DATED: 01/12/2025 undefined moratorium, respondent No.1 issued an eviction order dated 10th March, 2022 under Section 5(1) of the Gujarat Public Premises (Eviction of Unauthorized Occupants) Act, 1972, directing the Corporate Debtor to vacate the leased land. By way of amendment, the petitioner has also challenged the said order.
2.16 On approval of the Resolution Plan by the learned Adjudicating Authority vide order dated 19th September, 2023, the successful Resolution Applicant - respondent No.2 paid Rs.06,14,49,685/- to the respondent No.1 - GIDC on 18th October, 2023. However, on the same date, respondent No.1 addressed a communication to the respondent No.2 (successful Resolution Applicant) demanding additional amount.
2.17 The respondent No.1 thereafter preferred Company Appeal No.1648 of 2023 before National Company Law Appellate Tribunal (NCLAT) on 15th December, 2023 challenging order dated 13th September, 2023 whereby I.A. No.136 of 2022 was disposed of as withdrawn and order dated 19th September, 2023 whereby learned NCLT (Adjudicating Authority) approved the Resolution Plan. It was the case on berhalf of the respondent No.1 that withdrawal of I.A. No.136 of Page 7 of 50 Uploaded by ANUP V PARIKH(HC00956) on Tue Dec 02 2025 Downloaded on : Tue Dec 02 23:02:07 IST 2025 NEUTRAL CITATION C/SCA/4937/2022 CAV JUDGMENT DATED: 01/12/2025 undefined 2022 was without proper instructinos. Learned NCLAT by order dated 08th August, 2024 allowed the said Appeal and quashed and set aside the order dated 19th September, 2023 approving the Resolution Plan and restored I.A. No.136 of 2022 to original file. Learned NCLAT, thus, remanded the matter to learned NCLT.
2.18 On remand, the learned NCLT, vide order dated 19th February, 2025, approved the Resolution Plan by allowing I.A. No.4585 of 2021 and rejected I.A. No.136 of 2022 as well as I.A. No.544 of 2024, thereby overruling the objections raised by respondent No.1 - GIDC.
2.19 Feeling aggrieved by the order passed by learned NCLT, respondent No.1 - GIDC has preferred Appeals before learned NCLAT and the same are pending consideration.
2.20 Thus, the order passed by respondent No.1 - GIDC dated 13th December, 2021 terminating lease deed dated 21st February, 2008 and subsequent eviction order passed under the Act, 1972 dated 10th March, 2022 which were passed during the period of moratorium and during CIRP are the subject matter of present Special Civil Application.
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3. In light of the above facts and circumstances, and with the consent of learned advocates appearing for the respective parties, the matter was taken up for final disposal at the admission stage. Issue Rule, returnable forthwith. Learned advocates for the respective respondents waives service of notice of Rule.
4. Learned Senior Advocate Mr.Mihir Joshi has appeared with learned advocate Mr.Keyur Gandhi for the petitioner, learned Senior Advocate Mr.Saurabh Soparkar has appared with learned advocate Mr.R.D. Dave for respondent No.1, learned advocate Mr.Tirth Nayak has appeared for respondent No.2 and learned advocate Mr.Ishan Joshi with learned advocate Mr.Dhanesh Desai for Singhi & Co. has appeared for respondent No.3.
SUBMISSIONS ON BEHALF OF THE PETITIONER:
5. Learned Senior Advocate Mr.Mihir Joshi for the petitioner, while assailing the impugned orders, has made following submissions:
5.1 The impugned orders dated 13th December, 2021 and 10th March, 2022 terminating the lease deed and eviction passed by the respondent No.1 -
GIDC are illegal, bad in law and in clear Page 9 of 50 Uploaded by ANUP V PARIKH(HC00956) on Tue Dec 02 2025 Downloaded on : Tue Dec 02 23:02:07 IST 2025 NEUTRAL CITATION C/SCA/4937/2022 CAV JUDGMENT DATED: 01/12/2025 undefined violation of Section 14 and de hors the Scheme of the IBC;
5.2 That, under Section 14(1)(d) of the IBC, recovery of any property of owner or lessor where such property is occupied by or in the possession of the Corporate Debtor, is expressly prohibited during the period of moratorium. Attention of this Court is drawn to Section 14 of the IBC. Therefore, according to learned Senior Advocate, the impugned orders having been passed in contravention of statutory bar under Section 14 of the IBC are liable to be quashed and set aside;
5.3 That, in view of Section 238 of the IBC, provisions of the IBC would have overriding effect over any other law or instructions for the time being in force. It was, therefore, submitted that the provisions of the IBC would prevail over those contained in the Gujarat Public Premises (Eviction of Unauthorized Occupants) Act, 1972 (hereinafter referred to as 'the Act, 1972') and therefore also, the eviction order dated 10th March, 2022 is liable to be quashed and set aside;
5.4 That, in fact the respondent No.1 submitted its claim in Form 'B' and lodged the Page 10 of 50 Uploaded by ANUP V PARIKH(HC00956) on Tue Dec 02 2025 Downloaded on : Tue Dec 02 23:02:07 IST 2025 NEUTRAL CITATION C/SCA/4937/2022 CAV JUDGMENT DATED: 01/12/2025 undefined claim under the Regulations of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, and thereby subjected itself to the jurisdiction of the learned Adjudicating Authority under the provisions of the IBC and thus, bound by the outcome of the CIRP proceedings. It was further contended that once the respondent No.1 lodged claim and the claim became part of the resolution process/Resolution Plan, the respondent No.1 could not have unanimously terminated the lease deed or taken steps to recover possession for the alleged past dues for which already the claim was lodged;
5.5 That, the impugned orders and the conduct on part of the respondent No.1 would frustrate the very object of the Scheme of the IBC and would render the operational creditor to assert precedence over the financial creditors and to bypass and/or affect the CIRP;
5.6 That, the sole business of the Corporate Debtor belongs to subleasing of the lands in question and the lands in question are the only property to carry out the business of the Corporate Debtor. Therefore, termination of the lease deed would render the Corporate Debtor devoid of any business or assets, effectively Page 11 of 50 Uploaded by ANUP V PARIKH(HC00956) on Tue Dec 02 2025 Downloaded on : Tue Dec 02 23:02:07 IST 2025 NEUTRAL CITATION C/SCA/4937/2022 CAV JUDGMENT DATED: 01/12/2025 undefined defeating any possibility of any resolution or revival. Such an action strikes at the very root of the IBC whose object is to ensure continuation of Corporate Debtor as a going concern. It is, therefore, submitted that the impugned orders being contrary to the scheme, object and purpose of the IBC, thus deserves to be quashed and set aside;
5.7 That, the impugned orders being in violation of Section 14 of the IBC having been passed during the moratorium period and despite the bar under Section 14, the impugned orders are non est, void ab initio and patently illegal which deserve to be quashed and set aside;
5.8 That, once the Resolution Plan is approved by the learned Adjudicating Authority, the same is binding on all concerned, including the respondent No.1 being operational creditor. Therefore, respondent No.1 is bound by the Resolution Plan and cannot go beyond the approved Resolution Plan. Any attempt on part of respondent No.1 - GIDC being the operational creditor to act contrary to the approved Resolution Plan would defeat the entire proceedings of the CIRP;
5.9 That, the impugned orders are hit by the Page 12 of 50 Uploaded by ANUP V PARIKH(HC00956) on Tue Dec 02 2025 Downloaded on : Tue Dec 02 23:02:07 IST 2025 NEUTRAL CITATION C/SCA/4937/2022 CAV JUDGMENT DATED: 01/12/2025 undefined doctrine of approbate and reprobate. It was contended that respondent No.1, having participated in the CIRP proceedings by submitting its claim before the Resolution Professional as an Operational Creditor, could not, during the pendency of such proceedings, unilaterally terminate the lease deed. The said act of respondent No.1, according to the learned Senior Advocate, is wholly inconsistent with the object and intent of the IBC, and the orders passed pursuant thereto are, therefore, unsustainable in law;
5.10 That, respondent No.1 had filed I.A. No.136 of 2022 before the learned Adjudicating Authority, inter alia, seeking additional monetary reliefs under the Resolution Plan, and yet, during the pendency of such application, respondent No.1 proceeded to pass the impugned orders. Such conduct, according to the petitioner, is self-contradictory and indicative of an attempt to pursue parallel remedies to defeat the CIRP, which cannot be countenanced in law;
5.11 That, once CIRP proceedings are initiated and claims are lodged before the Resolution Professional, no creditor whether Page 13 of 50 Uploaded by ANUP V PARIKH(HC00956) on Tue Dec 02 2025 Downloaded on : Tue Dec 02 23:02:07 IST 2025 NEUTRAL CITATION C/SCA/4937/2022 CAV JUDGMENT DATED: 01/12/2025 undefined operational or otherwise can be permitted to undertake any action that would defeat or frustrate the insolvency resolution process. Permitting respondent No.1 to act to terminate the lease and seeking possession would not only render the CIRP nugatory but would also constitute a colourable and arbitrary exercise of power. Learned Senior Advocate submitted that respondent No.1, having chosen to participate in the CIRP by filing its claim and by raising objections to the Resolution Plan before the Adjudicating Authority, cannot thereafter avail or pursue remedies inconsistent with the insolvency framework. Hence, the impugned orders, being contrary to the scheme, object, and spirit of the IBC, deserve to be quashed and set aside;
By making above submissions, learned Senior Advocate for the petitioner requested this Court to allow the petition as prayed for by quashing and setting aside the impugned orders.
SUBMISSIONS ON BEHALF OF RESPONDENT NO.1 (GIDC):
6. Per contra, learned Senior Advocate Mr.S.N. Soparkar appearing for the respondent No.1, has opposed the petition by making the following submissions supporting the impugned orders:
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6.2 That, the reliance placed by the petitioner on Section 14(1)(d) of the IBC is wholly misconceived. It was submitted that Section 14(1)(d) merely prohibits recovery of property occupied by the Corporate Debtor but does not contain any express prohibition against termination of a lease. Learned Senior Advocate invited attention to the Explanation appended to Section 14(1)(a) to (d), wherein the term Page 15 of 50 Uploaded by ANUP V PARIKH(HC00956) on Tue Dec 02 2025 Downloaded on : Tue Dec 02 23:02:07 IST 2025 NEUTRAL CITATION C/SCA/4937/2022 CAV JUDGMENT DATED: 01/12/2025 undefined "termination" has been employed only in the context of licences, permissions, registrations, quotas, concessions, etc., and such termination is barred only when it is occasioned by reason of insolvency. Accordingly, it was contended that in the present case, the lease deed was terminated not on account of insolvency but on account of repeated and continuing breaches of the terms and conditions of the lease agreement. Therefore, the termination of the lease deed cannot be fell within the ambit of Section 14(1) of the IBC. It was next submitted that the said provision cannot be read in isolation but must be interpreted harmoniously with the Explanation appended thereto. On such conjoint reading, the prohibition under Section 14 would not extend to a case where termination is based on independent contractual breaches unrelated to insolvency;
6.3 That, the act of respondent No.1 - GIDC in submitting a claim in Form 'B' before the Resolution Professional cannot be construed as a waiver or relinquishment of its right to terminate the lease agreement. It was contended that the lodging of a claim in the CIRP and the exercise of the contractual right to terminate the lease are two distinct and independent rights of the lessor. The termination of the lease in Page 16 of 50 Uploaded by ANUP V PARIKH(HC00956) on Tue Dec 02 2025 Downloaded on : Tue Dec 02 23:02:07 IST 2025 NEUTRAL CITATION C/SCA/4937/2022 CAV JUDGMENT DATED: 01/12/2025 undefined the present case arose out of persistent non-
performance and violation of lease conditions and was in no manner connected to or dependent upon the insolvency proceedings. Therefore, the action of respondent No.1 in terminating the lease deed is fully justified and within its legal authority;
6.4 That, the Corporate Debtor had ceased to carry on any business for more than 15 years and was not functioning as a going concern at the time when CIRP was initiated. Therefore, the contention that termination of the lease would adversely affect the Corporate Debtor's status as a going concern is misconceived. It was further submitted that the land in question is government land allotted by the GIDC at a substantially concessional rate solely for the purpose of establishing a Special Economic Zone (SEZ). The Corporate Debtor, having failed to fulfill its obligations under the lease, cannot now claim protection under the IBC to perpetuate possession over such valuable public property. Learned Senior Advocate pointed out that as per the claim submitted on 10th March, 2021, the dues of GIDC were to the tune of approximately Rs.180 crore, whereas the Resolution Applicant has proposed to pay a meagre sum of Rs.06.14 crore in respect of Page 17 of 50 Uploaded by ANUP V PARIKH(HC00956) on Tue Dec 02 2025 Downloaded on : Tue Dec 02 23:02:07 IST 2025 NEUTRAL CITATION C/SCA/4937/2022 CAV JUDGMENT DATED: 01/12/2025 undefined land admeasuring approximately 1500 acres. Granting relief to the petitioner in such circumstances, it was contended, would result in grave prejudice to the public exchequer and would amount to permitting misuse of public property;
6.5 That, to substantiate the aforesaid contentions, learned Senior Advocate relied on the following decisions - (i) Tata Consultancy Services Ltd. v. Vishal Ghisulal Jain, Resolution Professional, SK Wheels Private Ltd. passed in Civil Appeal No.3045 of 2020, (ii) Phatu Romchiram Mulchandani v. Karnataka Industrial Areas Development Board reported in (2015) 5 SCC 244, (iii) Municipal Corporation of Greater Mumbai (MCGM) v. Abhilash Lal reported in (2020) 13 SCC 234 and (iv) CAV judgment in case of Biotor Industries Ltd. (In Liquidation) represented by Liquidator Mr. Sanjay Kumar Agarwal v. Gujarat Industrial Development Corporation passed in Special Civil Application No.3688 of 2022.
By making the above submissions, learned Senior Advocate for respondent No.1 requested this Court to dismiss the petition.
SUBMISSIONS ON BEHALF OF RESPONDENT NO.2 - (successful Resolution Applicant):
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7. Learned advocate Mr.Tirth Nayak, appearing on behalf of respondent No.2, while supporting the case of the petitioner, has adopted the submissions advanced on behalf of the petitioner and has further made the following additional submissions:
7.1 That, respondent No.2 is the successful Resolution Applicant whose Resolution Plan has been approved by the learned Adjudicating Authority (NCLT) by order dated 19th February, 2025, and the objections raised by GIDC has been rejected. Against the said order, GIDC has preferred Company Appeal No.62 of 2025 and Company Appeal No.68 of 2025 before the Hon'ble NCLAT, which are pending adjudication. In the said appeals, GIDC has challenged the approved Resolution Plan. Thus, according to learned advocate, respondent No.1 is simultaneously availing two parallel remedies one before the NCLAT challenging the approval of the Resolution Plan and another before this Court by way of the present proceedings which is impermissible in law;
7.2 It was submitted that respondent No.1 GIDC has been actively participating in the insolvency proceedings before the NCLT under the Page 19 of 50 Uploaded by ANUP V PARIKH(HC00956) on Tue Dec 02 2025 Downloaded on : Tue Dec 02 23:02:07 IST 2025 NEUTRAL CITATION C/SCA/4937/2022 CAV JUDGMENT DATED: 01/12/2025 undefined provisions of the Insolvency and Bankruptcy Code, 2016 ("the Code") and that the reliefs now sought are directly connected with the very subject matter forming part of the Resolution Plan.
Therefore, respondent No.1 cannot be permitted to pursue two remedies for the same cause of action. Learned advocate further submitted that GIDC, being an Operational Creditor, cannot be allowed to interpret the provisions of the Code in a manner which would result in conferring upon it a status superior to that of Financial Creditors, which would run contrary to the legislative scheme and intent of the Code;
7.3 That, the impugned order of termination of lease and direction to surrender possession of the leased premises is contrary to the express provisions of Section 14(1)(d) of the Code. It was submitted that the object and purpose of the moratorium declared under Section 14 is to preserve the assets of the Corporate Debtor and to ensure that the Corporate Debtor continues as a going concern during the pendency of the CIRP. In the present case, the land in question constitutes the sole and primary asset of the Corporate Debtor and forms the substratum of the Resolution Plan. If possession of the said land is permitted to be taken over by terminating the Page 20 of 50 Uploaded by ANUP V PARIKH(HC00956) on Tue Dec 02 2025 Downloaded on : Tue Dec 02 23:02:07 IST 2025 NEUTRAL CITATION C/SCA/4937/2022 CAV JUDGMENT DATED: 01/12/2025 undefined lease post approval of the Resolution Plan, it would defeat the very purpose of the CIRP and render the approved Resolution Plan infructuous, thereby frustrating the entire insolvency process;
7.4 That, such an action would also prejudice the interests of the Financial Creditors, who would be left remediless, while the Operational Creditor, namely GIDC, would stand unduly benefited. Such an outcome, it was contended, is wholly contrary to the scheme and object of the Code, 2016, which aims to revive the Corporate Debtor and maximise the value of its assets. Accordingly, it was submitted that the impugned action of respondent No.1 is beyond jurisdiction and liable to be quashed;
7.5 That, though GIDC had issued several notices to the Corporate Debtor on 19th March, 2011, 20th December, 2018, and 04th February, 2019, alleging breach of the terms of the lease deed, no substantive action was taken by GIDC at the relevant time. Having chosen to remain inactive, GIDC cannot now, after initiation of CIRP, be permitted to adopt a dual approach on one hand, participating in the insolvency proceedings by filing its claim, and on the other, seeking to terminate the lease and recover possession of the Page 21 of 50 Uploaded by ANUP V PARIKH(HC00956) on Tue Dec 02 2025 Downloaded on : Tue Dec 02 23:02:07 IST 2025 NEUTRAL CITATION C/SCA/4937/2022 CAV JUDGMENT DATED: 01/12/2025 undefined leased premises during the subsistence of the moratorium;
7.6 That, the object of the Code, 2016, is to ensure revival of the Corporate Debtor and to maintain it as a going concern, irrespective of whether it is an operational enterprise or merely possesses land assets capable of being commercially utilised. Once the CIRP is initiated and moratorium declared, all coercive or recovery proceedings are to remain in abeyance to facilitate resolution and revival under a new management;
7.7 That, the Code seeks to strike a balance between protecting the interests of the Corporate Debtor and ensuring recovery for Secured Financial Creditors. If the impugned action of GIDC is upheld, it would disrupt the entire structure and purpose of the Code by rendering the CIRP proceedings and the approval of the Resolution Plan meaningless. The Financial Creditors would stand deprived of recovery, while the Operational Creditor would secure undue precedence by repossessing the land. Learned advocate, therefore, vehemently urged that the petition be allowed, holding that the action and stand adopted by respondent No.1 are contrary to the letter and spirit of the Insolvency and Page 22 of 50 Uploaded by ANUP V PARIKH(HC00956) on Tue Dec 02 2025 Downloaded on : Tue Dec 02 23:02:07 IST 2025 NEUTRAL CITATION C/SCA/4937/2022 CAV JUDGMENT DATED: 01/12/2025 undefined Bankruptcy Code, 2016;
By making above submissions, learned advocate for respondent No.2 requested this Court to allow the petition as prayed for.
8. Heard learned advocates for the respective parties and have gone through the materials produced on record. No other and/or further submissions have been canvassed except those are mentioned hereinabove.
POINT OF DETERMINATION
9. Upon hearing the learned advocates for the respective parties and on perusal of the material placed on record, a short question that paused for consideration of this Court is "whether the respondent No.1 - GIDC being operational creditor is/was justified in passing the impugned orders during the moratorium period under Section 14 of the IBC and also during the CIRP"?
RELEVANT PROVISIONS OF IBC, 2016
10. While appreciating the rival submissions, relevant provisions of the IBC which required to be referred to, are as under:
Section 3 - Definition Page 23 of 50 Uploaded by ANUP V PARIKH(HC00956) on Tue Dec 02 2025 Downloaded on : Tue Dec 02 23:02:07 IST 2025 NEUTRAL CITATION C/SCA/4937/2022 CAV JUDGMENT DATED: 01/12/2025 undefined (27) "property" includes money, goods, actionable claims, land and every description of property situated in India or outside India and every description of interest including present or future or vested or contingent interest arising out of, or incidental to, property.
14. Moratorium.--(1) Subject to provisions of sub-sections (2) and (3), on the insolvency commencement date, the Adjudicating Authority shall by order declare moratorium for prohibiting all of the following, namely:--
(a) the institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority;
(b) transferring, encumbering, alienating or disposing of by the corporate debtor any of its assets or any legal right or beneficial interest therein;
(c) any action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of its property including any action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002;
(d) the recovery of any property by an Page 24 of 50 Uploaded by ANUP V PARIKH(HC00956) on Tue Dec 02 2025 Downloaded on : Tue Dec 02 23:02:07 IST 2025 NEUTRAL CITATION C/SCA/4937/2022 CAV JUDGMENT DATED: 01/12/2025 undefined owner or lessor where such property is occupied by or in the possession of the corporate debtor.
Explanation.--For the purposes of this sub-section, it is hereby clarified that notwithstanding anything contained in any other law for the time being in force, a license, permit, registration, quota, concession, clearances or a similar grant or right given by the Central Government, State Government, local authority, sectoral regulator or any other authority constituted under any other law for the time being in force, shall not be suspended or terminated on the grounds of insolvency, subject to the condition that there is no default in payment of current dues arising for the use or continuation of the license, permit, registration, quota, concession, clearances or a similar grant or right during the moratorium period;
(2) The supply of essential goods or services to the corporate debtor as may be specified shall not be terminated or suspended or interrupted during moratorium period.
(2A) Where the interim resolution professional or resolution professional, as the case may be, considers the supply of goods or services critical to protect and preserve the value of the corporate debtor and manage the operations of such corporate debtor as a going concern, then the supply of such goods Page 25 of 50 Uploaded by ANUP V PARIKH(HC00956) on Tue Dec 02 2025 Downloaded on : Tue Dec 02 23:02:07 IST 2025 NEUTRAL CITATION C/SCA/4937/2022 CAV JUDGMENT DATED: 01/12/2025 undefined or services shall not be terminated, suspended or interrupted during the period of moratorium, except where such corporate debtor has not paid dues arising from such supply during the moratorium period or in such circumstances as may be specified;
(3) The provisions of sub-section (1) shall not apply to--
(a) such transactions, agreements or other arrangements as may be notified by the Central Government in consultation with any financial sector regulator or any other authority;
(b) a surety in a contract of guarantee to a corporate debtor.
(4) The order of moratorium shall have effect from the date of such order till the completion of the corporate insolvency resolution process:
Provided that where at any time during the corporate insolvency resolution process period, if the Adjudicating Authority approves the resolution plan under sub-section (1) of section 31 or passes an order for liquidation of corporate debtor under section 33, the moratorium shall cease to have effect from the date of such approval or liquidation order, as the case may be.
25. Duties of resolution professional.
--
(1) It shall be the duty of the resolution professional to preserve Page 26 of 50 Uploaded by ANUP V PARIKH(HC00956) on Tue Dec 02 2025 Downloaded on : Tue Dec 02 23:02:07 IST 2025 NEUTRAL CITATION C/SCA/4937/2022 CAV JUDGMENT DATED: 01/12/2025 undefined and protect the assets of the corporate debtor, including the continued business operations of the corporate debtor.
(2) For the purposes of sub-section (1), the resolution professional shall undertake the following actions, namely:--
(a) take immediate custody and control of all the assets of the corporate debtor, including the business records of the corporate debtor;
(b) represent and act on behalf of the corporate debtor with third parties, exercise rights for the benefit of the corporate debtor in judicial, quasi-
judicial or arbitration proceedings;
(c) raise interim finances subject to the approval of the committee of creditors under section 28;
(d) appoint accountants, legal or other professionals in the manner as specified by Board;
(e) maintain an updated list of
claims;
(f) convene and attend all meetings of the committee of creditors;
(g) prepare the information memorandum in accordance with section 29;
(h) invite prospective Resolution Applicants, who fulfill such criteria as may be laid down by him with the approval of committee of creditors, Page 27 of 50 Uploaded by ANUP V PARIKH(HC00956) on Tue Dec 02 2025 Downloaded on : Tue Dec 02 23:02:07 IST 2025 NEUTRAL CITATION C/SCA/4937/2022 CAV JUDGMENT DATED: 01/12/2025 undefined having regard to the complexity and scale of operations of the business of the corporate debtor and such other conditions as may be specified by the Board, to submit a resolution plan or plans.
(i) present all resolution plans at the meetings of the committee of creditors;
(j) file application for avoidance of transactions in accordance with Chapter III, if any; and
(k) such other actions as may be specified by the Board.
31. Approval of resolution plan.- (1) If the Adjudicating Authority is satisfied that the resolution plan as approved by the committee of creditors under sub-section (4) of section 30 meets the requirements as referred to in sub-section (2) of section 30, it shall by order approve the resolution plan which shall be binding on the corporate debtor and its employees, members, creditors, including the Central Government, any State Government or any local authority to whom a debt in respect of the payment of dues arising under any law for the time being in force, such as authorities to whom statutory dues are owed, guarantors and other stakeholders involved in the resolution plan.
Provided that the Adjudicating Authority shall, before passing an Page 28 of 50 Uploaded by ANUP V PARIKH(HC00956) on Tue Dec 02 2025 Downloaded on : Tue Dec 02 23:02:07 IST 2025 NEUTRAL CITATION C/SCA/4937/2022 CAV JUDGMENT DATED: 01/12/2025 undefined order for approval of resolution plan under this sub-section, satisfy that the resolution plan has provisions for its effective implementation.
(2) Where the Adjudicating Authority is satisfied that the resolution plan does not confirm to the requirements referred to in sub-section (1), it may, by an order, reject the resolution plan.
(3) After the order of approval under sub-section (1),--
(a) the moratorium order passed by the Adjudicating Authority under section 14 shall cease to have effect; and
(b) the resolution professional shall forward all records relating to the conduct of the corporate insolvency resolution process and the resolution plan to the Board to be recorded on its database.
(4) The resolution applicant shall, pursuant to the resolution plan approved under sub-section (1), obtain the necessary approval required under any law for the time being in force within a period of one year from the date of approval of the resolution plan by the Adjudicating Authority under sub-section (1) or within such period as provided for in such law, whichever is later:
Provided that where the resolution plan contains a provision for combination, as referred to in section 5 of the Competition Act, 2002 (12 of Page 29 of 50 Uploaded by ANUP V PARIKH(HC00956) on Tue Dec 02 2025 Downloaded on : Tue Dec 02 23:02:07 IST 2025 NEUTRAL CITATION C/SCA/4937/2022 CAV JUDGMENT DATED: 01/12/2025 undefined 2003), the resolution applicant shall obtain the approval of the Competition Commission of India under that Act prior to the approval of such resolution plan by the committee of creditors.
238. Provisions of this Code to override other laws.--
The provisions of this Code shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law.
DELIBERATIONS ON THE AFORESAID STATUTORY PROVISIONS:
11. The term 'property' as defined in Section 3(27) of the Code is inclusive in nature, encompassing within its ambit money, actionable claims, land, and every description of property, together with all interests arising out of or incidental thereto. This legislative formulation clearly indicates that the legislature intended to include not only tangible or corporeal property but also intangible interests and rights connected therewith. In the present case, therefore, the property of the Corporate Debtor would necessarily include its leasehold rights over the land in question.Page 30 of 50 Uploaded by ANUP V PARIKH(HC00956) on Tue Dec 02 2025 Downloaded on : Tue Dec 02 23:02:07 IST 2025
NEUTRAL CITATION C/SCA/4937/2022 CAV JUDGMENT DATED: 01/12/2025 undefined 11.1 Upon a careful examination of Section 14 of the Insolvency and Bankruptcy Code, 2016, what assumes significance for the purpose of the present case is sub-section (1)(d) read in conjunction with the explanation appended thereto.
As per the mandate of Section 14(1)(d), once a moratorium is declared by the Adjudicating Authority, there operates a statutory prohibition on the recovery of any property by an owner or lessor where such property is in the occupation or possession of the Corporate Debtor. When this provision is read in harmony with the definition of "property" under Section 3(27), it becomes abundantly clear that the land in question, which continues to remain in possession of the Corporate Debtor pursuant to a lease deed, cannot be recovered by the respondent - GIDC, being the lessor, during the subsistence of the moratorium.
The object and underlying rationale of clauses (a) to (d) of sub-section (1) of Section 14 are clearly to preserve the assets and maintain the value of the Corporate Debtor as a going concern during the resolution process. A conjoint reading of these provisions with the Explanation to sub-section (1) makes it evident Page 31 of 50 Uploaded by ANUP V PARIKH(HC00956) on Tue Dec 02 2025 Downloaded on : Tue Dec 02 23:02:07 IST 2025 NEUTRAL CITATION C/SCA/4937/2022 CAV JUDGMENT DATED: 01/12/2025 undefined that the Legislature, in its wisdom, sought to ensure that any licence, permit, registration, quota, concession, clearance, or similar grant or right, conferred by any governmental or statutory authority, shall not be suspended or terminated merely on the ground of insolvency, provided there is no default in respect of current dues.
This legislative scheme, when read as a whole, demonstrates that while each clause of sub-section (1) operates independently, they are intended to function harmoniously to give full effect to the protective framework of the moratorium. The cumulative intention of the Legislature is unmistakable to safeguard the property and business interests of the Corporate Debtor, to preserve its value, and to ensure that the continuity of its operations is not jeopardized during the Corporate Insolvency Resolution Process.
11.2 On a plain and contextual reading of Section 25 of the Insolvency and Bankruptcy Code, 2016, it is evident that the Legislature has imposed specific statutory obligations upon the Resolution Professional. The foremost duty entrusted to the Resolution Professional is to preserve and protect the assets of the Page 32 of 50 Uploaded by ANUP V PARIKH(HC00956) on Tue Dec 02 2025 Downloaded on : Tue Dec 02 23:02:07 IST 2025 NEUTRAL CITATION C/SCA/4937/2022 CAV JUDGMENT DATED: 01/12/2025 undefined Corporate Debtor and to ensure the continuity of its business operations during the pendency of the Corporate Insolvency Resolution Process.
In particular, under Section 25(2)(a), the Resolution Professional is mandated to take custody and control of all assets of the Corporate Debtor, thereby maintaining the integrity and value of the corporate entity. The legislative intent underlying these provisions is to safeguard the interests of all stakeholders, including prospective Resolution Applicants, who may submit a Resolution Plan envisaging the revival of the Corporate Debtor and the settlement of its debts.
Accordingly, the role of the
Resolution Professional assumes pivotal
significance throughout the insolvency process commencing from the declaration of moratorium until the approval or rejection of the Resolution Plan by the Adjudicating Authority. The Resolution Professional is thus duty bound to preserve, protect, and maintain the assets, books of accounts, and records of the Corporate Debtor, so that, upon approval of the Resolution Plan, the same may be seamlessly handed over to the successful Resolution Page 33 of 50 Uploaded by ANUP V PARIKH(HC00956) on Tue Dec 02 2025 Downloaded on : Tue Dec 02 23:02:07 IST 2025 NEUTRAL CITATION C/SCA/4937/2022 CAV JUDGMENT DATED: 01/12/2025 undefined Applicant in an orderly manner.
11.3 A fair reading of the provisions of Section 31(1) makes the legislature's intention very clear. once the Adjudicating Authority approves the Resolution Plan, the same Resolution Plan shall be binding on the Corporate Debtor, its employees, members, creditors, including the Central Government, any State Government or any Local Authority to whom the debt in respect of the payment of dues arising under law for the time being in force as also guarantors and other stakeholders involved in the Resolution Plan. The creditors include a financial creditor, an operational creditor, a secured creditor, an unsecured creditor and a decree holder. Therefore, once the Resolution Plan has been approved, the same will be binding upon all those stakeholders involved in the Resolution Plan.
11.4 By way of Section 238, provisions of the IBC have been given overriding effect over the other laws. Therefore, if any order passed under the Gujarat Public Premises (Evection of Unauthorised Occupants) Act, during the period of moratorium and/or if Resolution Plan is approved then if such order is contrary to the Page 34 of 50 Uploaded by ANUP V PARIKH(HC00956) on Tue Dec 02 2025 Downloaded on : Tue Dec 02 23:02:07 IST 2025 NEUTRAL CITATION C/SCA/4937/2022 CAV JUDGMENT DATED: 01/12/2025 undefined claim and object of the Code, 2016 and for such order, Code, 2016 shall be given overriding effect.
ANALYSIS BY THE COURT:
12. At the outset, it is to be noted that the Corporate Debtor is/was in the business of developing, operating and maintaining SEZs by leasing and sub-dividing the lands to industrial undertakings. To carry out the same business, the Corporate Debtor obtained lands in question on lease from GIDC. Thus, the leasehold interest/lands/plots allotted on lease by the GIDC are the only assets of the Corporate Debtor.
12.1 That, the Corporate Debtor was subjected to the insolvency proceedings under Section 7 of the IBC upon filing of the application on 18th November, 2020. That, the learned Adjudicating Authority, on admitting the application under Section 7 of the IBC, also declared moratorium under Section 14 of the IBC on 18th November, 2020. Therefore, the bar/restrictions under Section 14 of the IBC operated on or from 18th November, 2020. That, during the moratorium period and CIRP, the respondent No.1 has passed the impugned orders Page 35 of 50 Uploaded by ANUP V PARIKH(HC00956) on Tue Dec 02 2025 Downloaded on : Tue Dec 02 23:02:07 IST 2025 NEUTRAL CITATION C/SCA/4937/2022 CAV JUDGMENT DATED: 01/12/2025 undefined terminating the lease deed dated 13th December, 2021 and subsequently passing the eviction order under the provisions of the Act, 1972 on 10th March, 2022, inter alia, for non-payment of the past dues and breach of conditions. At this stage, it is to be noted that respondent No.1, during the CIRP, lodged its claim in Form 'B'. The CoC approved the Resolution Plan submitted by the respondent No.2 Resolution Applicant, which included payment of Rs.06,14,48,685/- to the respondent No.1 in terms of the approved Resolution Plan. Pertinently, in the present case, pursuant to the order passed by learned NCLT, New Delhi, moratorium under Section 14 of the IBC came into effect on and from 18th November, 2020. Thus, on fair reading of Section 14 of the IBC, once the moratorium period is declared by the learned Adjudicating Authority, there shall be prohibition with respect to Sections 14(1)(a) to (d). In the present case, the impugned order of termination of lease deed has been passed on 13th December, 2021 and order of eviction under the provisions of the Act, 1972 has been passed on 10th March, 2022 which, admittedly, were during the moratorium period and CIRP. Therefore, the impugned orders are contrary to Section 14 of the IBC and thereby non est, illegal and bad in Page 36 of 50 Uploaded by ANUP V PARIKH(HC00956) on Tue Dec 02 2025 Downloaded on : Tue Dec 02 23:02:07 IST 2025 NEUTRAL CITATION C/SCA/4937/2022 CAV JUDGMENT DATED: 01/12/2025 undefined law.
12.2 Even otherwise, respondent No.1 - GIDC did lodge its claim in Form 'B' before the Resolution Professional and that there is already a provision for the dues of respondent No.1 and as per the approved Resolution Plan, respondent No.1 was entitled to Rs.06,14,48,685/- which the respondent No.2 - successful Resolution Applicant has in fact paid on approval of the Resolution Plan. The Resolution Plan was allowed by the Adjudicating Authority after overruling the objections raised by the respondent No.1. Therefore, as per Section 31 read with Section 2(10) of the IBC, approved Resolution Plan shall be binding upon all the stakeholders involved in the Resolution Plan. Thus, respondent No.1 being an operational creditor is also bound by the approved Resolution Plan. The respondent No.1 being an operational creditor under the scheme of the IBC, cannot have higher rights than the financial creditors and cannot have priority over the dues of the financial creditors. Dues of an operational creditor are always subject to the provisions of such dues made in the Resolution Plan as per Section 30 of the IBC.
Page 37 of 50 Uploaded by ANUP V PARIKH(HC00956) on Tue Dec 02 2025 Downloaded on : Tue Dec 02 23:02:07 IST 2025NEUTRAL CITATION C/SCA/4937/2022 CAV JUDGMENT DATED: 01/12/2025 undefined 12.3 Looking to the scheme, object and purpose of the IBC, the impugned orders are not sustainable in the eye of law. I say so because the underlined object behind the aforesaid enactment is to provide effective legal framework for timely resolution of insolvency and bankruptcy to support development of credit markets and encourage entrepreneurship. So as to achieve the goal and object of the enactment, the Resolution Professional clothed with ample powers to ensure that the assets of the Corporate Debtor are preserved, protected and ultimately realized to its optimum potential so as to secure maximum value for all the stakeholders within the framework without any delay. As per the law laid down by the Apex Court in catena of decisions, under the IBC, all efforts should be made to revive the company, rather than liquidation. Liquidation of the company/ Corporate Debtor shall be the last resort when all the efforts to revive the company fail. In the present case, the Corporate Debtor is in the business of developing, operating, and maintaining Special Economic Zones (SEZs), including leasing and sub-dividing land parcels to industrial undertakings. The plots in question are the only assets which can be termed as its capital.
Page 38 of 50 Uploaded by ANUP V PARIKH(HC00956) on Tue Dec 02 2025 Downloaded on : Tue Dec 02 23:02:07 IST 2025NEUTRAL CITATION C/SCA/4937/2022 CAV JUDGMENT DATED: 01/12/2025 undefined If the lands in question are taken over, in that case, there would be nothing left in the company which would result into death of the Corporate Debtor, therefore would be against the scheme of the IBC. As stated hereinabove, under the approved Resolution Plan, respondent No.2 - successful Resolution Applicant has already paid Rs.06,14,49,685/- taking into consideration the plots in question only. Except the lands in question, there remains nothing for to be paid. Therefore, if the impugned orders are not set aside, it would not only defeat the approved Resolution Plan but would also defeat the purpose and scheme of the IBC.
13. In the aforesaid backdrop, this Court would now proceed to examine the contentions advanced by learned Senior Advocate Mr.Soparkar for the respondent No.1 - GIDC.
13.1 So far as submissions on behalf of respondent No.1 that once the Resolution Plan is approved, CIRP ends and Resolution Professional ceases to hold the office as having become functuous officio and thereby Resolution Professional has no locus and/or authority to pursue the present proceedings is Page 39 of 50 Uploaded by ANUP V PARIKH(HC00956) on Tue Dec 02 2025 Downloaded on : Tue Dec 02 23:02:07 IST 2025 NEUTRAL CITATION C/SCA/4937/2022 CAV JUDGMENT DATED: 01/12/2025 undefined concerned, this Court is not impressed by the said submission.
In the scheme of the IBC, role and responsibilities of the Resolution Professional are clearly delineated under Section 25. Therefore, when the present petition was filed, moratorium and the CIRP were pending. Accordingly, being Resolution Professional, it is the statutory duty casted upon him to protect the property of the Corporate Debtor. Thus, harmonious reading of Section 25 with Section 3(27), once the Resolution Plan is approved, it is the statutory duty of the Resolution Professional to hand over peaceful and vacant possession of the property to the successful Resolution Applicant. Therefore, the contention of respondent No.1 is devoid of any merits and is hereby rejected.
13.2 With regard to the contention raised by making reliance on the explanation appended to Sections 14(1)(a) to (d) to state that the termination is barred only when it is occasioned by reason of insolvency and not otherwise where the lease deed was terminated on account of repeated and continuing breaches of terms and conditions of the lease deed is Page 40 of 50 Uploaded by ANUP V PARIKH(HC00956) on Tue Dec 02 2025 Downloaded on : Tue Dec 02 23:02:07 IST 2025 NEUTRAL CITATION C/SCA/4937/2022 CAV JUDGMENT DATED: 01/12/2025 undefined concerned, the said contention, in my considered opinion, cannot be accepted.
A plain reading of clauses (a) to (d) of Section 14(1) clearly manifest the legislative intent that once the moratorium is declared upon commencement of CIRP, there shall be a prohibition against recovery of any property by the owner of lessor where such property is in possession or occupation of the Corporate Debtor. The explanation appended to Section 14(1) cannot be construed to defeat the clauses (a) to (d) of Section 14(1). The explanation inserted by the legislature to clarify that a license, permit, registration, quota, concession, clearances or a similar grant or right given by the Central Government, State Government, local authority, sectoral regulator or any other authority constituted under any other law for the time being in force, shall not be suspended or terminated on the grounds of insolvency, with a louder object that if the business of the Corporate Debtor is depending upon any such licence, permit, registration etc. then the same shall not be cancelled or terminated on the grounds of insolvency. Therefore, it cannot be construed that the lease deed terminated by respondent Page 41 of 50 Uploaded by ANUP V PARIKH(HC00956) on Tue Dec 02 2025 Downloaded on : Tue Dec 02 23:02:07 IST 2025 NEUTRAL CITATION C/SCA/4937/2022 CAV JUDGMENT DATED: 01/12/2025 undefined No.1 - GIDC is permitted as the same was terminated on the ground of continuing breaches of terms and conditions of the lease agreement. If the interpretation of explanation appended to Sections 14(1)(a) to (d) is construed in a way sought to be perceived by respondent No.1, it would render the provisions of Section 14(1) nugatory.
13.3 So far as the contention that right to terminate lease and right to lodge a claim before learned NCLT are distinct and independent rights of the lessor is concerned, this Court finds such argument to be wholly inconsistent with the object and scheme of the IBC.
As observed hereinabove and it is not in dispute that respondent No.1 lodged its claim in Form 'B' before the CoC and in the approved Resolution Plan, there is a provision made in respect of the claim of the respondent No.1 and accordingly, a sum of Rs.06,14,49,685/- has already been paid by the respondent No.2 - successful Resolution Applicant. The very respondent No.1 has also challenged the order passed against the approval of the Resolution Plan against learned Page 42 of 50 Uploaded by ANUP V PARIKH(HC00956) on Tue Dec 02 2025 Downloaded on : Tue Dec 02 23:02:07 IST 2025 NEUTRAL CITATION C/SCA/4937/2022 CAV JUDGMENT DATED: 01/12/2025 undefined NCLAT and the said appeal is pending. Thus, if contention of the GIDC being an operational creditor allowed to simultaneously exercise its right to terminate the lease deed, would render the entire insolvency process otiose and would amount to granting an impermissible preferential position vis-à-vis financial creditor which would normally be contrary to the statutory hierarchy envisaged under the IBC. On the contrary, conduct on the part of GIDC to terminate the lease and to initiate the proceedings under the provisions of the Act, 1972 deserves serious consideration. It is to be noted that initially the respondent No.1 participated in the CIRP and lodged its claim before the CoC and Resolution Professional. However, having realized that in the scheme of IBC, position of it being an operational creditor would not allow to meet the expectation and thereby to defeat the CIRP, passed an order under the provisions of the Act, 1972. GIDC being statutory authority was even otherwise expected to act fairly and in accordance with law and certainly not in a manner contrary to the statutory framework of the IBC.
13.4 With regard to the contention that Page 43 of 50 Uploaded by ANUP V PARIKH(HC00956) on Tue Dec 02 2025 Downloaded on : Tue Dec 02 23:02:07 IST 2025 NEUTRAL CITATION C/SCA/4937/2022 CAV JUDGMENT DATED: 01/12/2025 undefined since the Corporate Debtor was not an ongoing concern at the time of initiation of CIRP, the termination of lease deed would not be hit by the moratorium, this Court is unable to concur.
It is not a condition precedent under the Code that CIRP can be initiated only in respect of a functioning or ongoing concern. The moratorium envisaged under Sections 14(1)
(a)-(d) applies upon initiation of CIRP against any Corporate Debtor, irrespective of its operational status.
The Explanation appended to Section 14(1) further fortifies this position by clarifying that even where the Corporate Debtor is an ongoing concern, and its business depends upon statutory licences or permissions, such rights shall not be terminated merely because of the insolvency. Therefore, the distinction sought to be drawn between an ongoing and non- operational concern is immaterial.
The essence of Section 14 lies in maintaining the status quo of the Corporate Debtor's assets and preventing disruption during the CIRP so that the interests of creditors particularly the Financial Creditors are adequately protected. Consequently, this Page 44 of 50 Uploaded by ANUP V PARIKH(HC00956) on Tue Dec 02 2025 Downloaded on : Tue Dec 02 23:02:07 IST 2025 NEUTRAL CITATION C/SCA/4937/2022 CAV JUDGMENT DATED: 01/12/2025 undefined contention also stands rejected.
13.5 So far as submission of respondent No.1 that if the GIDC not permitted to recover its dues, then in that case, it would amount to loss to the public exchequer, has no substance. The said submission is as such contrary to the scheme and relevant provisions of the IBC. The concept of public exchequer cannot be selectively revoked by the one State entity to elevate its standing above other financial creditors. Therefore, GIDC cannot seek preferential treatment under the guise of protecting public revenue so as to displace the statutory priority accorded to the financial creditors under the IBC.
14. Even taking into consideration Section 238 of the IBC, the impugned order of eviction passed under the provisions of the Act, 1972 is not tenable in the eye of law and is unsustainable. As per Section 238 of the IBC, the provisions shall override other laws and the provisions of the IBC shall have the effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of such law. Therefore, IBC Page 45 of 50 Uploaded by ANUP V PARIKH(HC00956) on Tue Dec 02 2025 Downloaded on : Tue Dec 02 23:02:07 IST 2025 NEUTRAL CITATION C/SCA/4937/2022 CAV JUDGMENT DATED: 01/12/2025 undefined shall override the provisions of the Act, 1972. Thus, the impugned order of eviction deserves to be quashed and set aside.
14.1 At this stage, it would be relevant to take note of the decision of the Apex Court in the case of Ghanshyam Mishra & Sons Pvt. Ltd. v. Edelweiss Asset Reconstruction Company Ltd. [(2021) 9 SCC 657] held thus as under:
"102. In the result, we answer the questi ons framed by us as under:
102.1 That once a resolution plan is duly approved by the Adjudicating Authority under sub-section (1) of Section 31, the claims as provided in the resolution plan shall stand frozen and will be binding on the Corporate Debtor and its employees, members, creditors, including the Central Government, any State Government or any local authority, guarantors and other stakeholders. On the date of approval of resolution plan by the Adjudicating Authority, all such claims, which are not a part of resolution plan, shall stand extinguished and no person will be entitled to initiate or continue any proceedings in respect to a claim, which is not part of the resolution plan;
102.2 The 2019 amendment to Section 31 of the I&B Code is clarificatory and declaratory in nature and therefore will be effective from the date on which I&B Code has come into effect;
102.3 Consequently all the dues including the statutory dues owed to the Central Government, any State Government or any local authority, if not part of the resolution plan, shall stand extinguished and no proceedings in respect of such dues for the Page 46 of 50 Uploaded by ANUP V PARIKH(HC00956) on Tue Dec 02 2025 Downloaded on : Tue Dec 02 23:02:07 IST 2025 NEUTRAL CITATION C/SCA/4937/2022 CAV JUDGMENT DATED: 01/12/2025 undefined period prior to the date on which the Adjudicating Authority grants its approval under Section 31 could be continued."
15. So far as the decisions relied on by learned Senior Advocate Mr.Soparkar for the respondent No.1 in case of Tata Consultancy Services Ltd. (supra) is concerned, the facts of the case is wholly converse to the case on hands. In the said case, the Corporate Debtor was the lessor and was receiving services from the lessee. Whereas, in the present case, the Corporate Debtor is the lessee and was enjoying leasehold rights under the lease agreement. Before the Apex Court, in Tata Consultancy Services Ltd. (supra), it has been observed that the appellant therein is neither supplying any goods or services to the Corporate Debtor in terms of Section 14(2) nor is it recovering any property that is in possession or occupation of the Corporate Debtor as the owner or lessor of such property as envisaged under Section 14(1)(d). It is further observed that the appellant therein was availing services of the Corporate Debtor and using the property that has been leased to it by the Corporate Debtor and therefore, it would held that Section 14 is indeed not applicable to the case. Whereas, in the case on hand, as Page 47 of 50 Uploaded by ANUP V PARIKH(HC00956) on Tue Dec 02 2025 Downloaded on : Tue Dec 02 23:02:07 IST 2025 NEUTRAL CITATION C/SCA/4937/2022 CAV JUDGMENT DATED: 01/12/2025 undefined discussed, GIDC being the lessor has sought to recover the possession of the property of the Corporate Debtor in capacity of owner or lessor. Thus, the facts are materially different and hence, the decision in case of Tata Consultancy Services Ltd. (supra) will not be applicable in the facts of the present case.
15.1 So far as decision in case of Phatu Romchiram Mulchandani (supra) is concerned, the said decision was rendered in the context of the provisions of the Companies Act, 1956 and not in the context of Section 14 of the IBC. The scope of Section 14 of the IBC and Section 537 of the Companies Act, 1956 are wholly different and thereby, in my considered opinion, the said decision would not come to any help to respondent No.1.
15.2 So far as decision in case of Abhilash Lal (supra) is concerned, in the said decision, development agreement executed between MCGM and the Corporate Debtor whereby the Corporate Debtor was required to construct a hospital with 1500 bed and after completion of the construction, a lease deed was to be executed. Since the construction was not completed, lease deed was never executed. In the said facts and Page 48 of 50 Uploaded by ANUP V PARIKH(HC00956) on Tue Dec 02 2025 Downloaded on : Tue Dec 02 23:02:07 IST 2025 NEUTRAL CITATION C/SCA/4937/2022 CAV JUDGMENT DATED: 01/12/2025 undefined the context, when Corporate Debtor was admitted in the CIRP and MCGM terminated the development agreement, the Apex Court has held that protection of Section 14(1)(d) was not available to the Corporate Debtor as the lease deed was not executed. However, in the instant case, admittedly, lease deed was executed in favour of the Corporate Debtor and thereby leasehold rights would come within the sweep of Section 3(27) and thereby the rigors of Section 14 would come into play. Hence, the said decision is also of no help to the respondent No.1.
15.3 So far as decision of the coordinate Bench of this Court in case of Biotor Industries Limited (in liquidation) (supra) is concerned, the scope and the context in the said case was under Section 33(5) of the IBC. In the said case, liquidation proceedings against the Corporate Debtor was going on and at that time termination was made on the ground that leased property would not be part of the liquidation estate as per Section 36(6)(iv). However, in the present case, leased 'property' is clearly included within Section 14(1)(d) wherein it takes its meaning from Section 3(27) and includes an interest in the property.
Page 49 of 50 Uploaded by ANUP V PARIKH(HC00956) on Tue Dec 02 2025 Downloaded on : Tue Dec 02 23:02:07 IST 2025NEUTRAL CITATION C/SCA/4937/2022 CAV JUDGMENT DATED: 01/12/2025 undefined Hence, the said case is also not of any help to the respondent No.1.
I answer the question accordingly.
16. Resultantly, the petition is allowed. The impugned orders dated 13th December, 2021 terminating the lease deed dated 21st February, 2008 as well as consequential order dated 10th March, 2022 directing the petitioner to hand over possession of the leased premises to respondent No.1 are hereby quashed and set aside.
Rule is made absolute accordingly.
(NIRAL R. MEHTA,J) FURTHER ORDER At this stage, learned advocate Mr.R.D. Dave for respondent No.1 - GIDC requested for stay of the order.
However, in view of what is observed and held above, request is rejected.
(NIRAL R. MEHTA,J) ANUP V PARIKH Page 50 of 50 Uploaded by ANUP V PARIKH(HC00956) on Tue Dec 02 2025 Downloaded on : Tue Dec 02 23:02:07 IST 2025