# In the matter of SEL Manufacturing Company Ltd. vs. Punjab Small Industries & Export Corporation Limited

> NCLAT judgment dated 2024-03-20. Citation: TCN-2024-NCLAT-00568. The appeal was filed by SEL Manufacturing Company Limited against the order dated 03.06.2022…

- **Court:** NCLAT
- **Order date:** 20 Mar 2024
- **Citation:** TCN-2024-NCLAT-00568
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclat-new-delhi/sel-manufacturing-company-ltd-vs-punjab-small-industries-export-corporation-limi-4b2f85a0

## Summary

### Background

The appeal was filed by SEL Manufacturing Company Limited against the order dated 03.06.2022 of the National Company Law Tribunal, Chandigarh in IA No. 598 of 2021 in CP(IB) No. 114/Chd/Pb/2017. The dispute concerns a lease deed dated 22.12.2008 between the appellant and Punjab Small Industries & Export Corporation Limited (the respondent) regarding a plot of land. Insolvency proceedings were initiated against the appellant on 11.04.2018. The respondent issued a demand notice on 05.03.2021 for enhanced land cost compensation, which the appellant challenged. The appellant argues that the respondent is an operational creditor and should have filed its claim during the CIRP. The respondent contends that the appellant failed to inform the IRP and CoC about the pending

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## Facts

A lease deed dated 22.12.2008 was executed between SEL Manufacturing Company Ltd. (appellant) and Punjab Small Industries & Export Corporation Limited (respondent) for Plot No.256-57, Phase-VIII, Focal Point, Ludhiana for 99 years. Insolvency proceedings were initiated against the appellant on 11.04.2018. The respondent did not file any claim during the CIRP. A resolution plan was approved on 10.02.2021. On 05.03.2021, the respondent issued a demand notice for Rs.1,12,97,128/- based on Clause 2(iii) of the Allotment Letter dated 01.12.1995 and Clause 2(i) of the Lease Deed dated 22.12.2008, representing enhanced land cost compensation. The appellant submitted a demand draft of Rs.1,05,34,414/- on 27.06.2022, which was returned. The respondent enhanced the demand to

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## Issues and analysis

### Issue 1: Whether the successful resolution applicant can be granted ownership of leasehold rights over the …

**Ratio:** The 'clean slate principle' allows a new management to commence and restart the business

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**Reasoning:** The court reasoned that the appellant failed to inform the IRP and CoC about the pending

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**Interpretation:** The court interpreted the 'clean slate principle' as not being absolute and

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**Application:** The court applied the ratio to the specific facts, noting that the demand for

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## Parties

- **Judges:** Rakesh Kuma…; Ajai Das Me…
- **Respondents:** Sel Manufacturing…; Punjab Small…

## Timeline

- **2008-12-22 — Lease Deed Ex…**: Lease Deed executed between SEL Manufacturing Company Ltd. and Punjab Small Industries &…
- **2018-04-11 — Insolvency Proceedings…**: Insolvency proceedings initiated…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 5(20) — Definitions](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-5)

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