# In the matter of Prabhat Jain, Liquidator of Narmada Cereal Private Limited vs. MP Industrial Development Corporation Limited

> NCLAT judgment dated 2024-11-27. Citation: TCN-2024-NCLAT-00057. The case involves an appeal against an order passed by the National Company Law Tribunal…

- **Court:** NCLAT
- **Order date:** 27 Nov 2024
- **Citation:** TCN-2024-NCLAT-00057
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclat-new-delhi/prabhat-jain-liquidator-of-narmada-cereal-private-limited-vs-mp-industrial-devel-5f3ae7a2

## Summary

### Background

The case involves an appeal against an order passed by the National Company Law Tribunal (NCLT), New Delhi, which rejected the plea of the Appellant, the Liquidator of Narmada Cereal Pvt. Ltd. (the Corporate Debtor), to allow the sub-lease of the Corporate Debtor's factory to M/s Maa Yashoda Food Grains. The Corporate Insolvency Resolution Process (CIRP) was initiated against the Corporate Debtor on 07.12.2020, and subsequently, a liquidation order was passed on 04.01.2022, appointing Mr. Prabhat Jain as the Liquidator. The Appellant sought permission to sell the Corporate Debtor as a going concern, but faced challenges, including the rejection of a compromise arrangement proposed by an ex-director and show-cause notices from MP Industrial Development Corporation

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## Facts

The Corporate Debtor, Narmada Cereal Pvt. Ltd., underwent CIRP initiated on 07.12.2020, followed by a liquidation order on 04.01.2022, appointing Prabhat Jain as Liquidator. The Liquidator sought to sell the Corporate Debtor as a going concern and sub-leased the factory to M/s Maa Yashoda Food Grains on 04.11.2022 for 11 months to reduce expenses, as Muskaan Overseas, a job worker, had left, causing significant electricity costs. MP Industrial Development Corporation Limited (MPIDCL), the lessor, issued show-cause notices to the Liquidator for violating lease terms, specifically Clause 23, which required 60 days to remedy breaches, while MPIDCL only provided 15 days. The Liquidator filed IA No. 1208 of 2023 seeking continuation of the sub-lease, but the Adjudicating

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## Issues and analysis

### Issue 1: Whether the Liquidator of the Corporate Debtor had the authority to sub-lease the factory of the …

**Ratio:** The ratio is that a liquidator cannot sub-lease property of the corporate debtor without

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**Reasoning:** The court reasoned that the lease agreement between the Corporate Debtor and MPIDCL

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**Interpretation:** The interpretation is that the rights of the liquidator are subservient to the

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**Application:** The court applied this ratio to the facts by noting that the Liquidator had

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## Parties

- **Judges:** Rakesh Kuma…; Naresh Sa…; +1 more
- **Appellants:** Prabhat Jain,…
- **Respondents:** Narmada Cereal…; Narmada Cereals…; +1 more

## Timeline

- **2020-12-07 — CIRP Init…**: Corporate Insolvency Resolution Process (CIRP)…
- **2022-01-04 — Liquidation…**: Liquidation order passed against Narmada Cereal Pvt. Ltd., appointing Mr. Prabhat Jain as…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 61(1) — Appeals and Appellate Authority](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-61)

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