NCLAT Upholds Inclusion of Leasehold Rights in Liquidation Estate

Tribunal Rules Leasehold Rights Acquired via Merger as Intangible Assets Under IBC

In a significant judgment, the National Company Law Appellate Tribunal (NCLAT), Principal Bench, New Delhi, has upheld the inclusion of leasehold rights as part of the liquidation estate under the Insolvency and Bankruptcy Code (IBC), 2016. The case, involving West Bengal Housing Infrastructure Development Corporation Ltd. (Appellant) and Kshitiz Chhawchharia, Liquidator of M/s Concast Steel and Power Ltd. (Respondent), revolved around the treatment of leasehold rights acquired through a merger scheme.

The bench, comprising Justice Mohd. Faiz Alam Khan and Arun Baroka, pronounced the judgment on October 28, 2025, dismissing the appeal by the appellant corporation. The appeal challenged the decision of the National Company Law Tribunal (NCLT), Kolkata Bench, which had rejected the appellant's application concerning the transfer of leasehold rights in a piece of land situated in New Town, Kolkata.

The crux of the dispute lay in whether the leasehold rights, originally held by Concast Ispat Ltd. (CIL) and subsequently transferred to Concast Steel and Power Ltd. (CSPL) via a merger, could be considered assets of the corporate debtor. The appellant contended that the transfer occurred without its consent and violated the lease deed's terms, arguing that these rights could not be included in the liquidation estate.

The tribunal, however, found that the leasehold rights constituted intangible assets as per Section 36 of the IBC. It emphasized that the rights were validly owned by the corporate debtor following the merger, which had received implicit consent from the appellant. The tribunal clarified that while the ownership of the land remained with the appellant, the leasehold rights were rightfully part of the corporate debtor's estate.

In its judgment, the tribunal noted the lack of express consent from the appellant but highlighted the appellant's conduct, which indicated implied consent. The appellant's awareness and facilitation of the rectification of the merger order further supported this view.

The tribunal also addressed the applicability of Section 36(4)(a)(iv) of the IBC, which bars the inclusion of certain assets in the liquidation estate. It ruled that the leasehold rights were not owned by any third party, thereby not attracting the statutory bar.

The judgment underscores the tribunal's stance on the inclusion of leasehold rights as assets within the IBC framework, setting a precedent for similar cases in the future. The decision reinforces the legal interpretation that leasehold rights, even when acquired via mergers, are integral to the liquidation estate, provided they are part of the corporate debtor's assets.

Bottom Line:

Leasehold rights of a corporate debtor, acquired through a merger scheme duly approved by a competent authority, are considered assets of the corporate debtor and can be included in its liquidation estate under the Insolvency and Bankruptcy Code.

Statutory provision(s): Insolvency and Bankruptcy Code, 2016 - Section 36, Section 36(4)(a)(iv); Transfer of Property Act, 1882 - Section 111 (g)

West Bengal Housing Infrastructure Development Corporation Ltd. v. Kshitiz Chhawchharia (Liquidator of M/s Concast Steel and Power Ltd.), (NCLAT)(Principal Bench)(New Delhi) : Law Finder Doc Id # 2800534