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Sincere Securities Private Limited v. Chandrakant Khemka

Civil Appeal · 2025 INSC 931Decided 5 Aug 2025
Civil Appeal No. 12812 of 2024
Justice Sanjay Kumar · Justice Satish Chandra Sharma

Background

Nandini Impex Private Limited had borrowed money from the appellants and secured the loans with the title deeds to portions of a Delhi property, later executing conveyance deeds transferring title while retaining possession through Leave and License Agreements. After Nandini Impex defaulted on rent, the appellants terminated those agreements and sued for possession, but before that could conclude, a bank pushed Nandini Impex into insolvency (CIRP). The Committee of Creditors (CoC) and successive Resolution Professionals decided the company had no need to keep paying huge rent for the property and asked that it be handed back to the appellants; the NCLT agreed, but the NCLAT reversed that order on appeal by a suspended director, Chandrakant Khemka, holding that the IBC's moratorium barred any owner from recovering property from a corporate debtor during insolvency proceedings.

Decision Breakdown

The Supreme Court restored the NCLT's order directing return of the property. It held that Section 14(1)(d) of the IBC, which bars an owner from recovering property occupied by a corporate debtor during the moratorium, was never meant to stop the CoC and Resolution Professional themselves from voluntarily giving up property that was a financial drain on the company. The commercial wisdom of the CoC (which, along with the bank forming it and successive Resolution Professionals, unanimously wanted to hand back the loss-making premises) must be given primacy and cannot be overridden by one dissenting suspended director unwilling to bear the rental costs himself.

Lesson Learnt

The insolvency moratorium protects a bankrupt company from being stripped of assets it needs, but it does not let an individual stakeholder block the company's own creditors' committee from shedding a financial burden that everyone else agrees is not worth keeping: the CoC's collective commercial decision generally prevails.

Official source (sci.gov.in)View Judgment (PDF)

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