NCLT Has Jurisdiction U/S 60(5)(C) IBC To Adjudicate Lease Disputes In Liquidation Proceedings: Gujarat High Court
The Gujarat High Court bench led by Justice Niral R. Mehta held that the NCLT has jurisdiction under section 60(5)(c) of the IBC to adjudicate the lease and license dispute during the liquidation proceedings. The petitioners, Fivebro Water Services Pvt. Ltd. and another, had the lease and license agreements with the corporate debtor for its premises in Ahmedabad and Mumbai....
The Gujarat High Court bench led by Justice Niral R. Mehta held that the NCLT has jurisdiction under section 60(5)(c) of the IBC to adjudicate the lease and license dispute during the liquidation proceedings.
The petitioners, Fivebro Water Services Pvt. Ltd. and another, had the lease and license agreements with the corporate debtor for its premises in Ahmedabad and Mumbai. Thereafter, the liquidation of the corporate debtor was ordered.
The liquidator filed an application before the NCLT to seek the possession of the properties, claiming non-payment and fraudulent transactions. The tribunal allowed the application and directed the petitioner to vacate the premises. Therefore, the writ was filed challenging the impugned order.
The petitioners contended that the impugned order is unsustainable due to lack of jurisdiction. It highlighted that the provision of section 60(5) can be invoked only upon prior declaration under sections 43, 45, or 49 of the IBC. However, in the present case no such order was passed.
The petitioner also argued that the validity and genuineness of the lease agreement and the leave and license agreement do not fall under the ambit of either the insolvency proceedings or liquidation proceedings. Therefore, as per the ruling of Gujarat Urja Vikas Nigam Ltd. v. Amit Gupta, (2021) 7 SCC 209, the tribunal has acted in excess of its jurisdiction.
Per contra, the respondent contended that the writ is not maintainable as an alternative efficacious remedy of appeal before the NCLAT is available. To this contention, the petitioner argued that the existence of an alternate statutory remedy would not operate as an absolute bar to the exercise of jurisdiction under Article 226.
The High Court observed that it has been consistently held that the power conferred upon the High Court under Article 226 is wide, plenary, and discretionary in nature, and the mere existence of an alternative statutory remedy does not, by itself, operate as an absolute bar to the exercise of such jurisdiction. However, except in the cases of exceptional circumstances where the interest of justice demands so, there are always self-imposed restraints from entertaining such petitions.
Further, the bench ruled that the NCLT is empowered to decide all incidental and ancillary issues pertaining to the possession, control, management, custody, or disposition of the assets of the corporate debtor, which bear a direct nexus to the proceedings before it. Lease and license agreements so executed in the name of the corporate debtor are also inherently connected to the liquidation proceedings.
The bench also clarified that the non-compliance with sections 43, 45, or 49 may constitute a procedural or legal error but not a lack of jurisdiction. The bench also noted the failure of the petitioners to approach the court with clean hands, citing the involvement of suspended management and execution of fresh agreements during the moratorium.
Accordingly, the court refused to invoke its extraordinary jurisdiction under Article 226.
Case Name: FIVEBRO WATER SERVICES PVT LTD & ANR. Versus BIJAY MURMURIA & ORS
Case No.: R/SPECIAL CIVIL APPLICATION NO. 9402 of 2024
Coram: HONORABLE MR. JUSTICE NIRAL R. MEHTA
Judgment Date: 13.10.2025