Summary and Analysis of Sincere Securities Private Limited & Ors. vs Chandrakant Khemka & Ors (Civil Appeal No. 12812 of 2024)

1. Heading of the Judgment

Sincere Securities Private Limited & Ors. vs Chandrakant Khemka & Ors.
Civil Appeal No. 12812 of 2024
Supreme Court of India
Decided on: August 05, 2025
Judges: Hon’ble Mr. Justice Sanjay Kumar & Hon’ble Mr. Justice Satish Chandra Sharma
Outcome: Appeal Allowed

2. Relevant Laws & Legal Provisions

The judgment interprets and applies the following provisions of the Insolvency and Bankruptcy Code, 2016 (IBC):

• Section 14(1)(d): Imposes a moratorium prohibiting the recovery of any property by an owner/lessor if such property is occupied by or in the possession of the corporate debtor during the Corporate Insolvency Resolution Process (CIRP).

• Section 62: Provides for appeals to the Supreme Court against orders of the National Company Law Appellate Tribunal (NCLAT).

• Committee of Creditors (CoC) Authority: Reaffirms the primacy of the CoC’s commercial wisdom in CIRP decisions (as established in K. Sashidhar v. Indian Overseas Bank (2019) 12 SCC 150). The CoC’s decisions are non-justiciable unless fraudulent or illegal.

3. Basic Judgment Details

• Parties:
  Appellants: Sincere Securities Pvt. Ltd. (Appellant No. 1), Noble Dealcom Pvt. Ltd. (Appellant No. 2), Jodhpur Properties & Finance Pvt. Ltd. (Appellant No. 3) – Owners of the disputed property.
  Respondents:
  Chandrakant Khemka (Respondent No. 1): Suspended Director of the corporate debtor, Nandini Impex Pvt. Ltd.
  UCO Bank (Respondent No. 3): Sole member of the Committee of Creditors (CoC).

• Subject Property: Ground floor (front and rear portions) of *White House, 1/18-20, Rani Jhansi Road, New Delhi*.

• Core Dispute: Whether the property leased to the corporate debtor (Nandini Impex) should be returned to its owners (Appellants) during the CIRP, despite the moratorium under Section 14(1)(d) of the IBC.

• Background:
  2019: Nandini Impex borrowed ₹6 crores from Appellants, secured by depositing title deeds of the property.
  2020: After loan default, Nandini Impex executed conveyance deeds transferring property ownership to Appellants but retained possession via Leave and License Agreements (rent: ₹12 lakhs/month total).
  2020: Appellants terminated agreements due to rent default and filed eviction suits.
  2022: UCO Bank initiated CIRP against Nandini Impex. The CoC (solely UCO Bank) and Resolution Professional (RP) decided the property was a financial burden and should be returned to Appellants.

• Lower Courts’ Decisions:
  NCLT (07.08.2023): Directed RP to hand over property possession to Appellants, accepting the CoC’s decision.
  NCLAT (12.11.2024): Reversed NCLT, holding that Section 14(1)(d) barred property recovery during CIRP. Remanded the case to NCLT.

4. Explanation of the Judgment (Core Reasoning)

The Supreme Court allowed the appeal, set aside the NCLAT’s order, and restored the NCLT’s direction to return the property to the Appellants. The reasoning is summarized below:

Key Issue:

Whether Section 14(1)(d) of the IBC (moratorium) prevents the voluntary surrender of property by the CoC/RP during CIRP?

Supreme Court’s Analysis:

1. Primacy of CoC’s Commercial Wisdom:
   The CoC (UCO Bank) and RP unanimously concluded that retaining the property was financially unviable. Rent was ₹12 lakhs/month, but the corporate debtor had minimal operations (only 8–9 staff) and could not generate revenue to cover this cost.
   Citing K. Sashidhar v. Indian Overseas Bank, the Court emphasized that the CoC’s commercial decisions are paramount and cannot be interfered with by courts unless illegal or fraudulent. The CoC acted to protect the corporate debtor’s assets by avoiding unnecessary expenses.

2. Section 14(1)(d) Does Not Apply:
   The moratorium bars owners from recovering property from the corporate debtor. Here, the Appellants were not seeking recovery. Instead, the CoC/RP voluntarily decided to surrender possession to prevent financial drain.
   The Court clarified:
   "This was not a simple case of the owner seeking recovery... It was the CoC and RP desirous of returning possession."

3. Lack of Justification to Retain Property:
   Chandrakant Khemka (Respondent No. 1) claimed the property was "essential" but:
   Refused to pay rent/arrears himself.
   Provided no evidence of its necessity for business revival.
   All other parties (CoC, RP, Appellants) agreed retention was detrimental to the CIRP.

4. Remand by NCLAT Was Unnecessary:
   The NCLAT remanded the case for "fresh adjudication" on Section 14(1)(d). The Supreme Court held this was futile since all material facts were already on record, and the CoC’s decision was lawful.

Final Decision:

• The Supreme Court restored the NCLT’s order (07.08.2023), directing the RP to hand over possession of the property to the Appellants.

• The RP was ordered to implement this decision immediately.

Key Takeaway:

The moratorium under IBC does not prevent the CoC/RP from voluntarily surrendering leased property if retaining it harms the corporate debtor’s financial health. The CoC’s commercial wisdom must prevail over objections from suspended directors lacking merit.