NCLT Rejects Sterling Biotech's Plea To Reclaim Pune Land From Sterling Healthcare

The National Company Law Tribunal (NCLT) at Mumbai on Friday rejected an application filed by Sterling Biotech Ltd (SBL) seeking possession of an industrial plot in Pune leased to Sterling Healthcare Ltd (SHL), which is currently under insolvency proceedings.

The dispute related to a 29-year lease executed in 2008 for land located at Village Urse in Pune district.

A coram comprising Judicial Member Sushil Mahadeorao Kochey and Technical Member Prabhat Kumar held that SBL could not recover the property while SHL's insolvency process was in force.

It said, “Since, the moratorium u/s 14(1)(d) of the Code prohibits the recovery of any property by an owner or lessor where such property is occupied by or in the possession of the corporate debtor, SBL could not be granted possession thereof till the moratorium in terms of Section 14 of the Code is in force in case of SHL.”

According to SBL, it had leased the land to SHL under a registered deed dated March 3, 2008, for 29 years at an annual rent of Rs 12 lakh. The land houses pharmaceutical manufacturing facility. SHL allegedly defaulted on rent payments, prompting SBL to terminate the lease in August 2023.

A few months later, SHL was admitted into insolvency proceedings in December 2023. SBL argued that the lease had already been terminated and that SHL's continued possession was unlawful and not protected by the insolvency moratorium.

The Resolution Professional for SHL contested the claim, stating that the company remained in lawful possession of the land on the insolvency commencement date. SBL also sought payment of revised rent of Rs 5 lakh per month, citing an informal agreement reached in 2019.

The tribunal however, dismissed this demand, “The registered lease deed does not contain any clause enabling any party to re-negotiate the rent. Hence, as long as lease deed dated 3rd March, 2008 was not modified, SHL could not have been obligated to pay enhanced rent on basis of email communications. Accordingly, in our considered view, the claim of SBL is to be determined in accordance with lease deed dt. 03.03.2008 only."

It disposed of all pending applications, holding that SBL may renegotiate the lease terms once the moratorium ends but cannot claim past dues that stand extinguished under the approved resolution plan. It further directed that, if the lease is not renewed, SBL should grant SHL a reasonable period to relocate its operations from the site.

Case Title: Sterling Biotech Limited v Dhiren Shah, Resolution Professional of Sterling Healthcare Limited  

Case Number: COMPANY PETITION NO. 370 OF 2023

For Applicant: Senior Advocate Mustafa Doctor

For Respondent: Senior Advocate Gaurav Joshi 

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