NCLAT Limits NCLT’s IBC Jurisdiction Over Disputed Easementary Rights

The National Company Law Appellate Tribunal (NCLAT), Principal Bench, New Delhi, has split 2:1 on whether the National Company Law Tribunal (NCLT) can decide a disputed easementary right of way over land owned by a third party in a liquidation. The order in ARC Research and Development Centre Limited vs. Liquidator of Adya Oils and Chemicals Ltd. and Ors., Company Appeal (AT) (Ins) No. 292 of 2025, was pronounced on 29 July 2026. The two Technical Members held that the NCLT had jurisdiction under Section 60(5)(c) of the Insolvency and Bankruptcy Code, 2016 (IBC) and upheld its order in favour of the liquidator. The Judicial Member, Justice N. Seshasayee, dissented and would have sent the liquidator to a civil court.

Earlier versions of this report described the dissent as the NCLAT's holding. Under the majority view, which decides the appeal, the NCLT's declaration of the right of way stands.

The dispute: a road to the highway across a neighbour's land

The corporate debtor, Adya Oils and Chemicals Ltd., owned land at New Block No. 83 (Old Block No. 87), Village Manglej, Taluka Karjan, Vadodara. Its access to the national highway ran over the adjoining New Block Nos. 90 and 92 (Old Block Nos. 94 and 96), owned by the appellants, ARC Research and Development Centre Limited and ARC Fintube Technologies Pvt. Ltd. The access traced back to a non-agricultural (NA) order dated 4 November 1999.

The corporate insolvency resolution process (CIRP) began on 16 September 2019 and the company went into liquidation on 4 March 2020. During the Covid-19 lockdown, the appellants built a boundary wall that blocked the access. A police complaint was filed in February 2021, and the police closed the investigation on 9 June 2021 citing lack of documentary evidence.

The liquidator then moved IA No. 2658 of 2021 before the NCLT, Mumbai Bench, Court-V. On 22 January 2025 the NCLT allowed the application. It declared that the corporate debtor had acquired an easementary right of way by prescription under Section 15 of the Indian Easements Act, 1882, and directed removal of the obstruction, protection of the right of way, its entry in land records and assistance from local authorities for enforcement.

What the majority held

The majority judgment was written by Arun Baroka (Member, Technical), with Indevar Pandey (Member, Technical) concurring. Its main points, as set out in the order, were:

• The dispute had a direct nexus with the insolvency because the access was blocked after the CIRP had begun, and it affected the value that could be realised from an estate asset in liquidation.
• Relying on the Supreme Court's reasoning in Gujarat Urja Vikas Nigam, the majority said the NCLT can decide disputes that arise solely from or relate to the insolvency. A dispute over access needed to realise the value of an estate asset, arising in the course of and because of the liquidation, fell within Section 60(5)(c).
• The NCLT did not create a new right. It recorded and gave effect to a pre-existing right that had been enjoyed for more than 20 years under the 1999 NA order without challenge.
• The timing of the wall, built after the CIRP began and during the lockdown, and the appellants' family connection with the promoters supported an inference that the obstruction was aimed at depressing the value of the asset.
• There was no exclusive statutory forum for such access disputes, and the single-window design of the IBC supported the NCLT deciding the issue.

The dissent

Justice Seshasayee would have allowed the appeal and set aside the NCLT order. In his view, a prescriptive easement is a classic civil-law question that needs a full trial, with evidence on whether the use was "as of right", cross-examination and local inspection, which summary IBC proceedings cannot provide. He noted that the liquidator, appointed only in 2019 and 2020, could not personally prove 20 years of uninterrupted use, and had not specified the location or dimensions of the pathway. He treated the NA order as an administrative communication that did not bind third parties who were not heard, and relied on Article 300A of the Constitution. He wrote that "no tribunal can create any new right or new obligation which did not exist when a CIRP commenced", and said the liquidator was free to approach the civil court under the proviso to Section 33(5) of the IBC.

Why it matters for insolvency professionals and bidders

For liquidators and resolution professionals, the majority view supports using an application under Section 60(5)(c) where a third party obstructs access to an estate asset after insolvency begins and the obstruction affects value. The record they build matters: the majority relied on the documentary basis of the right (the 1999 NA order), the long and unchallenged use, and the timing of the obstruction.

The dissent shows where such applications are open to attack. A claim that rests on prescription, without clear evidence of the route, its dimensions and continuous use as of right, invites the argument that it belongs before a civil court.

For resolution applicants and auction bidders, access rights over neighbouring land should be checked separately in due diligence: whether the access is backed by a document, whether it is disputed, and whether the liquidator has already obtained an order protecting it.

Updated on 28 September 2026: verified against the NCLAT order dated 29 July 2026 published by IBBI, added the case details, facts and both opinions, and corrected the earlier report, which had presented the dissent as the NCLAT's holding.