4. The Court held that a harmonious interpretation of the IBC and the Admiralty Act brings about a solution which would “serve the interests of all stakeholders under both statutes and would be consistent with the objectives of both acts and give effect to the same.”

5. Three scenarios emerged where the provisions of both statutes got involved and the Court provided elaborate solutions for the same and set out below.

6. Scenario I – If a Plaintiff has commenced Admiralty proceedings in rem and obtained an order of arrest of a ship from an Admiralty Court, subsequent to which insolvency proceedings are filed against the owner of the vessel and the adjudicating authority declares a moratorium under Section 14 of the IBC.

6.1. If security for release of the vessel has been furnished prior to the declaration of moratorium:
(i) Then the Suit will not proceed as the Suit is no longer an action in rem but in personam against the corporate debtor who has furnished security.
(ii) However, Plaintiff will be considered to be a secured creditor having obtained security exclusively for his claim.

6.2. If after furnishing security the CIRP is successful and a Resolution Plan is approved:
(i) Then the maritime claim of Plaintiff will be determined in accordance with the resolution plan approved by the COC and the adjudicating authority (“AA”) under the IBC.
(ii) Plaintiff’s status as a secured creditor and its exclusivity to the security will be considered by the COC / AA in determining the entitlement of Plaintiff and ordinarily be entitled to realise his claim to the full extent of the security provided. To this extent the Admiralty Court will protect the interest of Plaintiff and its right to the security provided to the Admiralty Court for release of the ship.

6.3. If after furnishing security the CIRP is not successful and the company is ordered to be liquidated:
(i) The Plaintiff will be a secured creditor in liquidation and will be entitled to realise its security interest in accordance with the applicable law, viz., Admiralty Act, as provided in Section 52(4) of the IBC itself.
(ii) It will be open to the Liquidator to defend the suit which right is available to him as provided in S. 35(1) (k) of the IBC.

6.4. If security has not been furnished at the time when the moratorium is declared:
(i) Then the Admiralty Court will not proceed further with the Suit in rem as it would defeat the insolvency resolution objective of the IBC.
(ii) However, the vessel will remain under arrest and it would be up to the RP to decide whether security ought to be furnished for release of the vessel. Thus the maritime claimant or his right in rem would not be prejudiced.
(iii) If no security is furnished, the vessel will remain under arrest until the end of the CIRP period.
(iv) In that event, Plaintiff’s maritime lien or claim which is a perfected claim against the vessel by virtue of the arrest, will operate as a charge on the vessel and Plaintiff will be considered as a secured creditor.

6.5. If security has not been furnished and the company is liquidated then:
(i) Plaintiff’s action being an action in rem will proceed and the vessel will be sold by way of an Admiralty sale to maximize its realisation value.
(ii) Plaintiff and any other claimant who has a maritime claim or a maritime lien and has obtained an order of arrest before liquidation, will be considered a secured creditor and will be entitled to enforce and realize his security interest in accordance with Admiralty Act.
(iii) The Admiralty Court will be entitled to invite claims against the sale proceeds by following the Admiralty procedure prescribed in the Rules.
(i) Parties having a maritime lien or a maritime claim will be entitled to file an action in rem against the sale proceeds as in law there no difference between an action in rem against a ship and against the proceeds of sale of that ship.
(ii) The determination of priorities will also be done in accordance with Section 10 of the Admiralty Act and inter se priorities of maritime liens will be decided in accordance with Section 9 of the said Act.
(iii) Section 53 of the IBC which refers to distribution of assets will not apply.
(iv) If the ship is sold by the Admiralty Court in exercise of its jurisdiction in rem then the machinery of the Admiralty Act will apply and the sale proceeds will be distributed on the basis of priorities determined under the Admiralty Act.
(v) All those claimants who are unable to recover their claim from the sale proceeds will have to pursue their claim in the liquidation as unsecured creditors.

6.6. If on the other hand if the company is not liquidated and Resolution Plan is approved, then:
(i) The Plaintiff’s claim together with that of all other Claimants who have obtained an order of arrest and have become secured creditors qua the ship will be determined in accordance with the approved plan.
(ii) Being secured creditors, their rights and claims in respect of the vessel under arrest shall be considered by the COC / AA whilst approving the Resolution Plan when it comes to payments to be made to them from the amounts made available to secured creditors by the successful Resolution applicant.
(iii) The claim of Plaintiff and all other maritime Claimants who have arrested the vessel before a moratorium was declared shall be accorded priority in respect of the value ascribed to the vessel in the Resolution Plan.
(iv) The vessel would have been sold by the Admiralty Court and the priorities would have been determined in accordance with the Admiralty Act. However, the ship value for the purpose of ascertaining the proportionate and priority entitlements of the maritime claimants will be the liquidation value assigned to that particular vessel.

6.7. Since the ship was arrested before the declaration of moratorium, the Admiralty Court will protect the interests of Plaintiff and release the ship from arrest only upon being satisfied that the claim of Plaintiff has been accorded priority as required under the Admiralty Act in respect of the value ascribed to the ship and paid accordingly.

6.8. All those claimants who had arrested the vessel but are unable to recover their claim under the Resolution Plan in part or in full because the value ascribed to the ship is not sufficient to pay all claims against the vessel in full, will rank as operational creditors of the corporate debtor as regards their unrecovered claim and may recover depending on what payment is offered to operational creditors in the resolution plan. They are not secured creditors of the corporate debtor’s other assets.

6.9. If security has not been furnished and the vessel remains under arrest:
(i) the Admiralty Court will not order the sale of the vessel during the moratorium period in order to allow the insolvency resolution process to fructify, unless an application for sale is made by the RP or if the vessel is not being manned, equipped and maintained by the RP during the moratorium and all charges for the same are not being paid by the RP including port charges or if the vessel becomes a navigational hazard.
(ii) In such a case the Admiralty Court will have the discretion to sell the vessel at the instance of any party who has filed an Admiralty Suit and has a maritime claim.
(iii) The order of sale is made to ensure that the value of the vessel is not put at risk and the vessel is preserved and / or is not allowed to waste and deteriorate and further encumbered with claims and liabilities during the moratorium period. This is done with a view to maximize the value of the ship (asset) and also to secure the interests of the secured creditors qua the ship in question which is also the objective of the IBC. This will be a matter entirely in the discretion of the Admiralty Court.

6.10. In all such cases notice will be given to the owner who may be represented by the RP before any sale of the ship is carried out by the Admiralty Court.

6.11. In all cases of sale of the vessel during the moratorium period in view of exigencies mentioned in the preceding paragraph, the proceeds will not be distributed but will be retained by the Admiralty Court to await the outcome of the CIRP or liquidation, as the case may be. Once either of these events happen, the procedure laid down in paragraph 6.6 & 6.8 above will apply as regards distribution of the sale proceeds and priorities.

6.12. All expenses incurred for preservation and maintenance of the vessel during the period of arrest with the permission of the admiralty Court will be treated as sheriff’s expenses in Admiralty and Resolution Process costs under the IBC and paid out in priority from the sale proceeds of the ship if the company is liquidated or be accorded priority in the resolution plan as resolution process costs.

7. Scenario II : If a moratorium has been declared under Section 14 of the IBC before any Admiralty Suit in rem is filed for enforcement of a maritime lien or maritime claim.

7.1 There will be no bar to filing such an action and If an order of arrest is made, the warrant of arrest will be executed against the vessel.

7.2 Upon the RP entering appearance on behalf of the owner/corporate debtor, the Suit will not proceed in rem so as not to defeat the objective of the insolvency resolution and the Admiralty action in rem will have to be stayed and not proceeded with after the vessel has been arrested, till such time as the insolvency resolution process is completed or a Liquidator is appointed.

7.3 If the vessel is trading during the moratorium period the vessel will be permitted to trade under arrest once the RP enters appearance on behalf of the corporate debtor and appropriate undertakings are provided in respect of the vessel. This will ensure that trading of the vessel is not impaired or affected, if this is in the interest of the corporate debtor or the CIRP.

7.4 The Claimant will be considered as a secured creditor and the observations in paragraphs 6.5, 6.6 & 6.8 above will apply if the insolvency resolution process is successful and a resolution plan is approved or if the resolution process fails and the liquidator is appointed, as the case may be.

7.5 At all stages, in such a situation it would be open to the RP acting on behalf of the owner to furnish security for release of the vessel if he deems fit. The RP, however, will be under an overriding obligation to maintain the vessel in any event and if this is not being it will be open to the Admiralty Court to consider an application for sale of the vessel at any stage during the CIRP. The sale proceeds will, however, not be distributed and will be retained by the Admiralty Court to await the outcome of the CIRP or liquidation as the case may be.

7.6 Same procedure for paying out the incurred expenses will apply as mentioned in paragraph 6.12.

8. Scenario III : If the owner of the vessel (corporate debtor) is in liquidation at the time the Plaintiff commences Admiralty proceedings in rem for arrest of the vessel.

8.1 An action in rem can be entertained even at the stage of liquidation of the corporate debtor as the claim is against the res and not against the corporate debtor.

8.2 Once a Plaintiff obtains an order of arrest, the vessel can then be sold by the Admiralty Court in order to realize maximum value as it is only a judicial sale by an Admiralty Court which extinguishes all maritime liens against the res and thereby giving a clear title to the buyer.

8.3 Once the sale proceeds are realized and deposited in Court, paragraph 6.6 above will apply and the matter will proceed on that basis. The Liquidator will be entitled to defend the suit.

8.4 This may also be seen from another perspective. Once Plaintiff obtains an order of arrest, Plaintiff would then become a secured creditor and realize the security interest in accordance the Admiralty Act.

9. An action in rem can be filed and have the ship arrested before or during the moratorium period or even when in liquidation to perfect his maritime lien or maritime claim under the Admiralty Act. The action in rem will not proceed till the moratorium is in place. This will ensure that the rights under both the IBC & the Admiralty Act are not defeated. The priorities for payment out of the sale proceeds will also be determined in accordance with the said Admiralty Act.

10. The Judgment indeed advances both fields of law and gives an elaborate rule-book in case of any interplay between both laws. The Discretion given to Admiralty Court to step in and protect the ship and the crew members is an additional judge-created remedy which come to rescue for any concerned party. The Judgment is based on well settled principles of interpretation and its unlikely to be assailed; however, possibility of minor inference & modification can’t be ruled out thus it is advisable to be updated on the issue.

A FORCE MAJEURE CLAUSE TYPICALLY ALSO HAS A NOTICE REQUIREMENT WHEREIN DEFAULTING PARTY I REQUIRED TO INTIMATE THE OTHER PARTY THAT UNFORESEEN CIRCUMSTANCES HAVE INTERRUPTED PERFORMANCE AND HENCE FORCE MAJEURE NEEDS TO BE INVOKED WITHIN A PROVIDED DURATION EVEN IF SUCH A REQUIREMENT IS NOT PROVIDED IN THE INTEREST OF JUSTICE AND TO AVOID ANY DISPUTE OF DELAY YOU SHOULD IDEALLY INFORM THE OTHER PARTY OF YOUR INTENTION TO INVOKE FORCE MAJEURE HOWEVER IF THE UNFORESEEN EVENT CONTINUES BEYOND THE MAXIMUM DURATION THEN A FORCE MAJEURE CLAUSE WOULD IDEALLY CONTAIN AN OPTION OF TERMINATION WHICH WOULD BE CO TERMINUS WITH YOUR TERMINATION CLAUSE IN THE CONTRACT.

IF a contract does not have a Force Majeure Clause how would you face the current situation, this is where section 56 of the Indian Contract Act arises. Section 56 of the Indian Contract Act deals with contracts subsequent to entering onto which the performance becomes impossible

It states the following “Contract to do act afterwards becoming impossible or unlawful. A contract to do an Act which after the Contract is made becomes impossible or by reason of some event in lawful becomes void when the act becomes impossible or unlawful.

What would be the applicability of section 56 to make a contract void

IMPOSSIBILITY MEANS THAT THE ACT HAS BECOME SO IMPRACTICABLE NOW THAT IT HAS DEFEATED THE OBJECT OR THE PURPOSE OF THE CONTRACT ITSELF

GROUNDS FOR IMPOSSIBILITY – DESTRUCTION OF THE SUBJECT MATTER, CHANGE OF CIRCUMSTANCE. THE CONTRACT BECOMES VOID FROM THE DATE OF IMPOSSIBILITY. IF YOU ARE A BUYER AND IF YOU HAVE PAID ADVANCE PAYMENT THEN IN TERMS OF SECTION 56 YOU ARE LIABLE TO GET REFUND, HOWEVER DELAY AND IMPOSSIBILITY ARE TWO DIFFERENT THINGS. IN ORDER TO AVAIL SECTION 56 PERFORMANCE OF CONTRACT SHOULD HAVE BEEN IMPOSSIBLE. A MERE DELAY WOULD NOT CONSTITUTE IMPOSSIBILITY TO PERFORM.

UNFORESEEN EVENT MEANS AN EVENT WHICH COULD NOT BE FORESEEN BY THE PROMISOR ON THE DATE OF MAKING THE PROMISE OF PERFORMANCE. COVID 19 WILL FALL IN THE CATEGORY OF UNFORESEEN EVENT AS IT WAS IMPOSSIBLE FOR THE PROMISOR TO FORSEE SUCH EPIDEMIC AT THE TIME OF ENTERING INTO THE CONTRACT LET ALONE FORSEE THE CONSEQUENCES OF THE EPIDEMIC ON THE CONTRACT AND SUCH AN EVENT COULD NOT HAVE BEEN PREVENTED BY THE PROMISOR HOWEVER IF THE OTHER PARTY IS ABLE TO SHOW THAT THE PROMISOR COULD HAVE PREVENTED THE CONSEQUENCE OF THE UNFORESEEN EVENT , THE LEGAL CONSEQUENCE WOULD BE DIFFERENT.

IF YOU ARE THE DEFAULTING PARTY WHO COULD NOT PERFORM THE CONTRACT OWNING TO THE EPIDEMIC

EITHER INVOKE FORCE MAJEURE CLAUSE

ARGUE FOR FRUSTRATION OF THE CONTRACT

NEGOTIATE FOR EXTENSION OF TIME

IF TIME IS OF THE ESSENCE OF THE CONTRACT AND THE DEFAULTING PARTY HAS NOT HONORED THE SAME NEITHER INVOKED FORCE MAJEURE CLAUSE YOU MAY SUE THE DEFAULTING PARTY FOR BREACH.

The concept of adverse possession has a root in the aspect that it awards ownership of land to the person who makes the best or highest use of land. The possessor who maintains and improves the land has a more valid claim to the land that the owner who never visits or cares for the land and uses it, is of no utility.

Webster Law dictionary defines adverse possession as actual possession of another’s real property that is open, hostile, exclusive, continuous, adverse to the claim of the owner, often under a claim of right or color of title, and that may give rise to title in the possessor if carried out for a specific statutory period.

If a person holds a land for more than 12 years with the knowledge of true owner but without his permission and is in continuous possession of the said land acquires the title in respect of said land inspite of not being and owner. This concept is accepted and admitted by Court of law as ‘Law respect possession’. It was observed in Radhamoni Debi v. The Collector of Khulna & Ors.1 that to constitute a possessory title by adverse possession, the possession required to be proved must be adequate in continuity in publicity, and in the extent to show for a period of 12 years.
1(1900) ILR 27 Cal. 943

It is observed by Hon’ble Apex Court in Karnataka Board of Wakq v. Government of India2  that, in the eye of law, an owner would be deemed to be in possession of the property so long as there is no intrusion. Non-use of the property by the owner even for a long time won’t affect his title. But the position will be altered when another person takes possession of the property and asserts a right over it. Adverse possession is a hostile possession by clearly asserting hostile title in denial of the title of the true owner.

As observed by the Apex Court in State of Haryana v. Mahesh Kumar & Ors.3 the adverse possession confers negative and consequential right effected only as somebody else’s positive right to access the court is barred by operation of law. Right of the paper owner is extinguished and that competing rights evolve in favour of adverse possessor as he cared for the land, developed it as against the owner of the property who had ignored the property. The Apex Court in P. T. Munichikkanna Reddy v. Revamma4 observed that to understand the true nature of adverse possession, Fair weather v. St. Marylebone Property Co. Ltd. (1962) 2 All ER 288 (HL) can be considered where the House of Lords referring to Taylor v. Twinberrow (1930) 2 K.B. 16 termed adverse possession as a negative and consequential right effected only because somebody else’s positive right to access the court is barred by operation of law.

The Statute does not define adverse possession, it is a common-law concept, the period of which has been prescribed statutorily under the law of limitation. The concept of adverse possession is not defined under Law of Limitation nor Law contains a provision that the plaintiff cannot sue on basis of adverse possession.

The Limitation Act5 defines and specifies the period of limitation of suits and other proceeding and for purposes connected therewith. It deals only with limitation to sue and extinguishment of rights. Section 27 of the Act speaks about ‘Extinguishment of right to property’ i.e. if a person fails to institute a suit for recovery of possession within time specified in the Act then his right to recover possession of that property shall extinguish. When the original owner extinguishes his right on the said property the possessory owner steps in the shoe of original owner. This is where the concept and origin of adverse possession is found.
2(2004) 10 SCC 779
3(2011) 10 SCC 404
4(2007) 6 SCC 59
5Act No. XXXVI OF 1963 hereinafter referred to as ‘the Act’

This concept is further clarified in Article 64 and 65 of the Act. Under Article 64 of Limitation Act suit can be filed based on the possessory title. Law never intends a person who has perfected title to be deprived of filing suit, under Article 65 to recover possession and to render him remediless. The suit can be filed by a person who has perfected his title by adverse possession to question alienation and attempt of dispossession. Both the Article 64 and 65 be read with Section 27 of Act.

It is settled position of law laid down by the Privy Council in Perry v. Clissold6 that ‘it cannot be disputed that a person in possession of land in the assumed character of owner and exercising peaceably the ordinary rights of ownership has a perfectly good title against all the world but the rightful owner.  And if the rightful owner does not come forward and assert his title by the process of law within the period prescribed by the provisions of the statute of Limitations applicable to the case, his right is forever extinguished and the possessory owner acquires a absolute title.’ The above statement was quoted with the approval of Apex Court in Nair Service Society Ltd. v. K. C. Alexander7 and it was held that if rightful owner does not commence an action to take possession within the period of limitation, his rights are lost and person in possession acquires an absolute title.

The person claiming adverse possession on property of other must show that such possession is open, hostile, exclusive, continuous, adverse to the claim of the owner.

The law with regard to perfecting title by Adverse possession is well settled. The possessor must adverted to the ordinary classical requirement – that it should be nec vi, nec clam and nec precario – that is the possession required must be adequate in continuity, in publicity, and in extent to show that it is possession adverse to the competitor as observed in decision of Apex Court in P. Lakshmi Reddy v. L. Lakshmi Reddy8, it was also observed therein that whatever may be the animus or intention of a person wanting to acquire title by adverse possession, his adverse possession cannot commence until he obtains actual possession with the required animus.
61907 AC 73 (PC)
7AIR 1968 SC 1165
8AIR 1957 SC 314

It was observed by Hidayatullah J. (as he then was) in S. M. Karim v. Bibi Sakina9  by that adverse possession must be adequate in continuity, in publicity and extent and a plea is required at the least to show when possession becomes adverse so that the starting point of limitation against the party affected can be found. The same was accepted and followed by Coordinate bench of this Apex Court in Balkrishan v. Satyaprakash & Ors.10 The court laid down that the law concerning adverse possession has to prove three ‘neck’ – nec vi, nec clam and nec precario.

Similarly, the Hon’ble Apex Court in the matter of Parsinni (Dead) By LRs. & Ors v. Sukhi & Ors.11 laid the test for proving adverse possession. Possession is prima facie evidence of title. Burden of proof lies on the party claiming adverse possession. He must plead and prove that his possession must be nec vi, nec clam and nec precario i.e. peaceful, open and continuous. The possession must be adequate, in continuity, in publicity and in extent to show that their possession is adverse to the true owner.

There are few exceptions too for plea of adverse possession. Long possession was not necessarily an adverse possession and the prayer clause is not a substitute for a plea of adverse possession. Adverse possession cannot be decreed in a title which is not pleaded. Animus possidendi under hostile colour of title is required Trespasser’s long possession is not synonym with adverse possession. Trespasser’s possession is construed to be on behalf of the owner, the casual user does not constitute adverse possession. The owner can take possession from a trespasser at any point in time.

In Pannalal Bhagirath Marwadi v. Bhaiyalal Brindaban Pardeshi Teli12, it has been observed that in-between two trespassers, one who is wrongly dispossessed by the other trespasser, can sue and recover possession. A person in possession cannot be dispossessed otherwise than in due course of law and can sue for injunction for protecting the possession as observed in Krishna Ram Mahale (dead) by LRs v. Shobha Venkat Rao13 and State of U. P. v. Maharaja Dharmander Prasad Singh14.
9[1964] 6 SCR 780
10[2001] (2) SCC 498
11(1993) 4 SCC 375
12AIR 1937 Nagpur 281

The plea of adverse possession cannot be taken on land reserved for public utility such as road/ hospital etc. The right based on adverse possession would not accrue. Likewise, it is held by the Hon’ble Apex Court in Vidya Devi v. The State of Himachal Pradesh & Ors.15 that State cannot be permitted to perfect the title by Adverse Possession to grab the property of its own citizens.

The plea of adverse possession is different from permissive possession and cause of action arises to plaintiff only when defendant sets up adverse title as held by Hon’ble Bombay High Court in Balasaheb Govind Basugade v. Rajendra Shivaji Kumthekar16.

The Hon’ble Apex Court in its Constitutional Bench in M Siddiq (D) through LRs. v. Mahant Suresh Das & Ors17 have held that a plea of adverse possession is founded on the acceptance that ownership of the property vests in another, against whom the claimant asserts possession adverse to the title of the other. Earlier also in Annakili v. Vedanayagam18 the Apex Court emphasized that mere possession of land would not ripen into a possessory title. The possessor must have animus possidendi and hold the land adverse to the title of the true owner. Moreover, he must continue in that capacity for the period prescribed under the Limitation Act. The same is considered and confirmed by the Hon’ble Apex Court in Uttam Chand (D) through LRs. v. Nathu Ram (D) Through LRs & Ors.19 thereby holding that long continuous possession by itself cannot be termed as adverse possession and the question of adverse possession without admitting the title of the real owner is not tenable.

The Hon’ble Apex in its decision in Nand Ram (D) through LRs & Ors. v. Jagdish Prasad (D) Through Lrs.20 held that the Tenant can plead adverse possession against landlord only if he is able to prove continuous, open and hostile possession to the knowledge of true owner for a continuous period 12 years after surrendering possession as Tenant and asserting hostile possession.
13(1989) 4 SCC 131
14(1989) 2 SCC 505
15Order dated 08/01/2020 in Civil Appeal Nos. 60-61 of 2020
16(2019) SCC OnLine Bom 5608
17(2019) SCC OnLine SC 1440
18(2007) 14 SCC 308
19(2020) SCC OnLine SC 37
20Order dated 19/03/2020 in Civil Appeal N0. 9918 of 2011

The Hon’ble Supreme court of India in Gurudwara Sahab v. Gram Panchayat Village Sirthala21 referring to the decision of Punjab and Haryana High Court in Gurudwara Sahib Sannauli v. State of Punjab22,  opined that no declaration of title can be sought by a plaintiff on the basis of adverse possession in as much as adverse possession can be used as a shield by a defendant and not as a sword by a plaintiff. The Hon’ble Apex Court while deciding the question gave only reason by simply observing that there is “no quarrel” with the proposition to the extent that suit cannot be based by the plaintiff on adverse possession. Thus, this point was not contested in Gurudwara Sahab v. Gram Panchayat Village Sirthala (supra) when this Court expressed said opinion.

The decision of Gurudwara Sahab v. Gram Panchayat Village Sirthala (supra) has been relied upon in State of Uttarakhand v. Mandir Shri Lakshmi Siddh Maharaj23 and Dharampal (Dead) through LRs v. Punjab Wakf Board24  in both the decision of State of Uttarakhand (supra) and Dharampal (supra) there is no discussion on the aspect whether the plaintiff can later take the plea of adverse possession. The proposition was not contested and earlier binding decisions were also not placed for consideration of the Court.

There was no such decision before the aforesaid decision of the Hon’ble Apex Court holding that the suit cannot be filed by a plaintiff based on adverse possession. And hence the matter was referred to full bench to examine and interpret the law on this issue.

The question of law involved in the matter of Ravinder Grewal & Ors. v. Manjit Kaur & Ors.25 was, whether a person claiming the title by virtue of adverse possession can maintain a suit under Article 65 of Limitation Act for Declaration of title and for a permanent injunction seeking the protection of his possession thereby restraining the defendant from interfering in the possession or for restoration of possession in case of illegal dispossession by a defendant whose title has been extinguished by virtue of the plaintiff remaining in the adverse possession or in case of dispossession by some other person. The Hon’ble Apex Court has answered the said question in positive holding that plea of adverse possession can be used as sword as well as shield considering the Article 64 and Article 65 of the Limitation Act.
21(2014) 1 SCC 669
22(2009) 154 PLR 756
23(2017) 9 SCC 579
24(2018) 11 SCC 449
25(2019) 8 SCC 729

The law never held that plea of adverse possession cannot be taken by plaintiff. The large number of decisions of the Hon’ble Apex Court and various other decisions of Privy Council, High Courts and of English Courts which have been discussed by Hon’ble Apex Court and observations made in Halsbury laws based on various decisions indicate that suit can be filed by plaintiff on the basis of title acquired by way of adverse possession or on the basis of possession under Articles 64 and 65. There is no bar under Article 65 or any if the provisions of the Act as against a plaintiff who has perfected his title by virtue of adverse possession to sue to evict a person in possession acquires absolute tithe and if actual owner dispossesses another person after extinguishment of his title, he can be evicted by such a person by filing a suit under Article 65 of the Act.

Hence the decision of Gurudwara Sahib v. Gram Panchayat, Sirthala (Supra) and of Punjab & Haryana High Court cannot be said to be laying down the correct law. More so because of various decision of the Hon’ble Apex Court to the contrary.

The Apex Court have earlier observed that the plea of plaintiff filing a suit of the basis of adverse possession. A Three-Judge Bench decision in Sarangadeva Periya Matam & Anr. v. Ramaswami Gondar (Dead) by LRs.26 of the Apex Court in which the decision of Privy Council in Musumut Chundrabullee Debia v. Luchea Debia Chowdrain27 held that Plaintiff was in possession of the suit land until January 1950 when the ‘mutt’ obtained possession of the land. On February 18, 1954, plaintiff instituted the suit against the ‘mutt’ for “recovery of possession” of the suit land on the basis on an acquisition of title to land by way of “adverse possession” and held that the plaintiff acquired the title by his adverse possession and was entitled to recover the possession.
26AIR 1966 SC 1603
271865 SCC Online PC 7

The Hon’ble Apex court while settling the issue raised with regard to plea of adverse possession in Ravinder Grewal & Ors. v. Manjit Kaur & Ors. (supra) has held that person holding possessory title i.e. title by Adverse Possession can use the same as ‘sword’ as the Plaintiff and also as ‘shield’ as Defendant within ken of Article 65 of the Limitation Act, 1963 thereby overruled the decisions of Gurudwara Sahab v. Gram Panchayat Village Sirthala and decision relying on it in State of Uttarakhand v. Mandir Shri Lakshmi Siddh Maharaj (supra) and Dharampal (Dead) through LRs v. Punjab Wakf Board (supra) as they cannot be said to be laying down the law correctly. The Apex court opined that Plea of Adverse Possession can be taken by Plaintiff under Article 65 of the Limitation Act and there is no bar under the Limitation Act, 1963 to sue on the aforesaid basis in case of infringement of any rights of a plaintiff.

In view of the above and considering various Judgements and decision of Hon’ble Apex Court, the question whether possession is adverse or not is often one of simple fact but it may also be a conclusion of law or a mixed question of law and fact. The concept of adverse possession and its applicability can be seen in Article 64 and 65 of the Limitation Act. Possession is the root of title and is right like the property. Once a person acquires right, title or interest in property even by adverse possession same can be used as sword by the Plaintiff in view of Article 64 of the Limitation Act and it can be used as shield by the Defendant within ken of Article 65 the Limitation Act.

There are certain limitations such as adverse possession cannot be decreed on a title which is not pleaded. Trespasser’s long possession is construed to be on behalf of the owner, the casual user does not constitute adverse possession. Mere long possession also does not mean adverse possession. Also, it will not apply to property dedicated to public use and no rights can accrue by adverse possession on public property.

Therefore, person in possession cannot be ousted by another person except by due procedure of law and once 12-years period of adverse possession is over, even owner’s right to eject him is lost and the possessory owner acquires right, title and interest possessed by owner.  Thus, plea of acquisition of title by adverse possession can be taken by Plaintiff under Article 65 of the Limitation Act and there is no bar under Limitation Act, 1963 to sue in case of infringement of any rights of the Plaintiff.

1. Raised by Resolution Applicant

The Resolution Applicant assailed the Interim Order on the ground that when an efficacious alternative remedy is available under Section 61 of IBC, 2016, the High Court of Karnataka ought not to have entertained a writ petition and that too against an Order passed by the Chennai Bench of NCLT. The Resolution Applicant further contended that the IRP had a right to move the NCLT for appropriate reliefs for the preservation of the properties of the Corporate Debtor and therefore the only way the steps taken by the Resolution Professional could be set at naught, is to take recourse to the provisions of the IBC alone.

The Resolution Applicant contended that the NCLT has already approved the Resolution Plan, by an order dated 12/06/2019 and that therefore the High Court cannot do anything that will tinker with or destroy the very Resolution Plan approved by the NCLT

2. Raised by Resolution Professional

The Resolution Professional contended that the whole object of IBC, 2016 will get defeated, if the Orders of NCLT are declared amenable to review by the High Court under Article 226/227. The Resolution Professional also contended that the provisions of IBC, 2016 are given overriding effect under Section 238, over all other statutes. The Resolution Professional further contented that after taking a stand in their WP No.2 that the dispute relating to the refusal to grant deemed extension of the mining lease falls squarely within the jurisdiction of the Mining Tribunal and after raising a plea that the rejection of the benefit of deemed extension, ought to have been challenged by way of a revision before the Central Government under Section 30 of the MMDR Act, 1957 the State of Karnataka agreed to go back to the NCLT for raising all contentions. Therefore, it was not open to the Government to question the jurisdiction of the NCLT in the next round of litigation. The only ground on which the

Government of Karnataka opposed the Miscellaneous Application of the Resolution Professional was fraud and collusion on the part of the Corporate Debtor and the creditor who initiated the CIRP. The Resolution Professional further contented that in view of the sweep of the jurisdiction conferred upon NCLT under Section 60 (5) (c) of the IBC, 2016, the Tribunal was entitled to investigate even into allegations of fraud. Once it is conceded that NCLT will have jurisdiction even to enquire into allegations of fraud, then the question of invoking the jurisdiction of the High Court under Article 226 as against an order passed by NCLT does not arise. Any recognition by this court of the jurisdiction of the High Court under Article 226 to interfere with the Orders of the NCLT under IBC, 2016, would completely derail the resolution process which is bound to happen within a time frame.

3. Raised by Committee of Creditors

The Committee of Creditors submitted that IBC, 2016 being a complete code in itself does not provide any room for challenging the Orders of NCLT. What was sought by the Resolution Professional was a mere recognition of the statutory right of deemed extension of lease conferred by Section 8A of the MMDR Act, 1957 and that therefore NCLT cannot be taken to have exercised a jurisdiction not vested in it in law, so as to enable the High Court to invoke the jurisdiction under Article 226.

4. Raised by the Attorney General (Respondent)

The Respondent submitted that if a case falls under the category of inherent lack of jurisdiction on the part of a Tribunal, the exercise of jurisdiction by the Tribunal would certainly be amenable to the jurisdiction of the High Court under Article 226. Since the contours of jurisdiction of NCLT are defined in Clauses (a), (b) and (c) of Subsection (5) of Section 60 and also since the powers of the NCLT are defined in Subsection (4) of Section 60, to be akin to those of the Debts Recovery Tribunal under the Recovery of Debts Due to Banks and Financial Institutions Act of 1993 (hereinafter referred to as DRT Act, 1993), it was contended by the Respondent that the jurisdiction of the NCLT is confined only to contractual matters interparties. The Respondent further contented that the NCLT would have no power of judicial review

of such orders. On the basis of the decision in Barnard and Others v. National Dock Labour Board and Others [1 (1953) 2 WLR 995], when an inferior tribunal passes an order which is a nullity, the superior court need not drive a party to the appellate forum stipulated by an act. Therefore, the Government of Karnataka did not have to resort to approaching the NCLAT.

• IBC, 2016 is a single Unified Umbrella Code, covering the entire gamut of the law relating to insolvency resolution of corporate persons and others in a time bound manner. The code provides a three tier mechanism namely
• the NCLT, which is the Adjudicating Authority
• (ii) the NCLAT which is the appellate authority and
• (iii) this court as the final authority, for dealing with all issues that may arise in relation to the reorganisation and insolvency resolution of corporate persons.
• The Supreme Court has clearly observed the scope of the jurisdiction and the nature of the powers exercised by –

1. the High Court under Article 226 of the Constitution and
2. the NCLT and NCLAT under the provisions of IBC, 2016

After referring several judgments on Article 226 of the Constitution and decision rendered by the House of Lords, by a majority of 3:2 in Anisminic Ltd. vs. Foreign Compensation Commission, the Supreme Court observed that in so far as the question of exercise of the power conferred by Article 226, despite the availability of a statutory alternative remedy, is concerned, Anisminic cannot be relied upon. The distinction between the lack of jurisdiction and the wrongful exercise of the available jurisdiction, should certainly be taken into account by High Courts, when Article 226 is sought to be invoked bypassing a statutory alternative remedy provided by a special statute. The Supreme Court further considering the contention made by the Respondent that the decision of the Government of Karnataka to refuse the benefit of deemed extension of lease, is in the public law domain, rightly and held the correctness that the said decision can be called into question only in a superior court which is vested with the power of judicial review over administrative action. The NCLT, being a creature of a special statute to discharge certain specific functions, cannot be elevated to the status of a superior court having the power of judicial review over administrative action. The Supreme Court further held that the NCLT is not even a Civil Court, which has jurisdiction by virtue of Section 9 of the Code of Civil Procedure to try all suits of a civil nature excepting suits, of which their cognizance is either expressly or impliedly barred. Therefore NCLT can exercise only such powers within the contours of jurisdiction as prescribed by the statute, the law in respect of which, it is called upon to administer.

Further the Supreme Court observed on the jurisdiction and powers of the NCLT/NCLAT and considered that NCLT and NCLAT are constituted, not under the IBC, 2016 but under Sections 408 and 410 of the Companies Act, 2013. Sections 420 and 424 of the Companies Act, 2013 indicate merely the procedure to be followed by the NCLT and NCLAT before passing orders. However, there are no separate provisions in the Companies Act, exclusively dealing with the jurisdiction and powers of NCLT. Sub-sections (4) and (5) of Section 60 of IBC, 2016 give an indication respectively about the powers and jurisdiction of the NCLT. Sub-section (4) of Section 60 of IBC, 2016 states that the NCLT will have all the powers of the DRT as contemplated under Part III of the Code for the purposes of Sub-section (2). The Supreme Court observed that if the object of Subsection (2) of Section 60 is to ensure that the insolvency resolutions of the corporate debtor and its guarantors are dealt with together, then the question that arises is as to why there should be a reference to the powers of the DRT in Sub- section (4). The answer to this question is to be found in Section 179 of IBC, 2016. Under Section 179 (1), it is the DRT which is the Adjudicating Authority in relation to insolvency matters of individuals and firms. This is in contrast to Section 60(1) which names the NCLT as the Adjudicating Authority in relation to insolvency resolution and liquidation of corporate persons including corporate debtors and personal guarantors.  Therefore the object of Sub-section (2) of Section 60 is to avoid any confusion that may arise on account of Section 179(1) and to ensure that whenever a CIRP is initiated against a corporate debtor, NCLT will be the Adjudicating Authority not only in respect of such corporate debtor but also in respect of the individual who stood as surety to such corporate debtor, notwithstanding the naming of the DRT under Section 179(1) as the Adjudicating Authority for the insolvency resolution of individuals.  Sub-section (2) of Section 179 confers jurisdiction upon DRT to entertain and dispose of (i) any suit or proceeding by or against the individual debtor (ii) any claim made by or against the individual debtor and (iii) any question of priorities or any other question whether of law or facts arising out of or in relation to insolvency and bankruptcy of the individual debtor. Clauses (a), (b) and (c) of Sub-section (2) of Section 179 are identical to Clauses (a), (b) and (c) of Subsection (5) of Section 60. Therefore the only reason why Subsection (4) is incorporated in Section 60 is to ensure that NCLT will exercise jurisdiction – (1) not only to entertain and dispose of matters referred to in Clauses (a), (b) and (c) of Sub-section (5) of Section 60 in relation to the corporate debtor, (2) but also to entertain and dispose of the matters specified in Clauses (a), (b) and (c) of Sub-section (2) of Section 179, whenever the contingency stated in Section 60(2) arises.

 The Supreme Court further observed that there are separate provisions both in Part II and Part III of IBC, 2016 ousting the jurisdiction of civil courts. While Section 63 contained in Part II bars the jurisdiction of a civil court in respect of any matter on which NCLT or NCLAT will have jurisdiction, Section 180 contained in Part III bars the jurisdiction of civil courts in respect of any matter on which DRT or DRAT has jurisdiction. Sub-Section (4) of Section 60 is vesting upon the NCLT all the powers of DRT.

The Supreme Court held that the only provision that could help outline the scope of jurisdiction of the NCLT in respect of decisions taken under the MMDR Act was section 60(5) of the IBC. Section 60(5) of the IBC, was recognized to be very broad in its sweep, conferring jurisdiction upon the NCLT in respect of any question of law or fact, arising out of or in relation to insolvency resolution. However, the Supreme Court held that any decision taken by a government or statutory authority in relation to a matter which was in the realm of public law cannot by any stretch of imagination be brought within the fold of the phrase “arising out of or in relation to the insolvency resolution”.

If NCLT has been conferred with the jurisdiction to decide all types of claims to property, of the corporate debtor, section 18(f) (vi) of the IBC would not have made the task of an interim resolution professional in taking control and custody of an asset over which the corporate debtor has ownership rights, subject to the determination of ownership by a court or other authority. Even though section 20(1) of the IBC conferred a duty upon an interim resolution professional to preserve the value of the property of a corporate debtor, the duties of an interim resolution professional are entirely different from what comprises the exact jurisdiction and powers of the NCLT.

The Supreme Court also considered section 25(2)(b) of the IBC, wherein, a resolution professional was duty bound to represent and act on behalf of a corporate debtor with third parties and exercise rights for the benefit of the corporate debtor in judicial, quasi-judicial and arbitration proceedings. The Supreme Court held that this would mean that whenever a corporate debtor had to exercise rights in judicial, quasi-judicial proceedings, a resolution professional cannot short circuit that procedure and bring a claim before NCLT by taking advantage of the broad sweep of powers conferred upon the NCLT within section 60(5) of the IBC.

Further, whenever a corporate debtor has to exercise a right that fell outside the purview of IBC, especially in the realm of public law, no bypass can be undertaken by going to the NCLT. The Supreme Court held that in the present case, the IRP, clearly understood this legal position. This was mainly because when the Government of Karnataka refused to grant the benefit of deemed extension, the IRP moved WP No. 1 before the High Court of Karnataka instead of the NCLT, as he understood that such manner of right could not be enforced before the NCLT. Whence after filing of the Writ Petition No. 1, the Government of Karnataka rejected the claim of the IRP, the latter withdrew the WP No. 1. If the NCLT was not considered by the IRP in the very first instance, to be empowered to issue a declaration of deemed extension of lease, NCLT could not be considered to have power of judicial review over the Government Order.

Further, the Supreme Court held that moratorium provided for as per section 14 of the IBC would not have any impact on the right of the Government of Karnataka to refuse extension of lease. Basically, the right to not to be dispossessed under section 14 of the IBC had nothing to do with the rights conferred by a mining lease on a government land. As such, what was prohibited under section 14 of the IBC was only the right not to be dispossessed. It however, did not imply the right to have renewal of a lease. Therefore, section 14 of the IBC may not have an application in cases of rights conferred by way of a mining lease especially on a government land.

In view of the aforesaid, the Supreme Court with respect to the first question held that NCLT did not have jurisdiction to entertain an application against the Government of Karnataka for a direction to execute Supplemental Lease Deeds for the extension of the mining lease. Since NCLT chose to exercise a jurisdiction not vested in it in law, the High Court of Karnataka was justified in entertaining the writ petition, on the basis that NCLT was coram non judice.

With respect to second question, the Supreme Court also perused the submission of the Government of Karnataka regarding the fraudulent and collusive manner in which the CIRP was initiated. The Government of Karnataka had submitted that it had chosen to challenge 2^nd Order before the High Court of Karnataka instead of the NCLAT, as the CIRP was initiated by one of the related parties to the Corporate Debtor. In view of the averments pleaded in the WP No. 2, the Government of Karnataka thought fit to invoke the jurisdiction of the High Court under Article 226 without taking recourse to the statutory alternative remedy of appeal before the NCLAT. But the contention of the appellants (i.e. Resolution Professional, Resolution Applicant and Committee of Creditors) herein is that allegations of fraud and collusion can also be inquired into by NCLT and NCLAT and that therefore the Government could not have bypassed the statutory remedy.

The Supreme Court held that the fraudulent trading carried out by the Corporate Debtor during the insolvency resolution can be inquired into by the Adjudicating Authority under section 66. Section 69 makes an officer of the corporate debtor and corporate debtor liable for punishment for carrying on transaction with a view to defraud creditors. The Supreme Court held that the contention raised by the Government of Karnataka would fall squarely within the mischief addressed by Section 65 (1). Therefore, the Supreme Court made it clear that the NCLT has jurisdiction to enquire into allegation of fraud. As a corollary, NCLAT will also have jurisdiction. Hence, fraudulent initiation of CIRP cannot be ground to bypass the alternative remedy of appeal provided in Section 61.

NCLT and NCLAT would have jurisdiction to enquire into questions of fraud but the tribunal would have jurisdiction to adjudge upon the disputes arsing under MMDR Act, 1957, especially when the disputes revolve around the decision of statutory or quasi-judicial authorities which can be corrected only by way of judicial review of administrative action. Hence the High Court of Karnataka in WP No. 3 rightly entertained the said WP No.3.

This judgment has undertaken notable steps by defining the precise scope of NCLT’s jurisdiction in respect of the issues pertaining to public law wherein the corporate debtors are undergoing CIRP.

This judgment has also pointed out that the decision with respect to public law domain, can be called into question only in a superior court which is vested with the power of judicial review over administrative action. The NCLT can exercise only such powers within the contours of jurisdiction as prescribed by the statute, the law in respect of which, it is called upon to administer.

This judgment has also pointed out that Section 60 is to ensure that NCLT will exercise jurisdiction to entertain and dispose of the matter referred in 60(5) and also the matter specified in section 179(2), whenever the contingency stated in Section 60(2) arises. Under Section 179 (1), it is the DRT which is the Adjudicating Authority in relation to insolvency matters of individuals and firms.

This judgment points out that Section 63 contained in Part II bars the jurisdiction of a civil court in respect of any matter on which NCLT or NCLAT will have jurisdiction and Section 180 contained in Part III bars the jurisdiction of civil courts in respect of any matter on which DRT or DRAT has jurisdiction. Section 60(4) has vested upon the NCLT all the powers of DRT.

In view of the above, it can be said that the IBC confers a sweep of jurisdiction on NCLT/NCLAT but it does not imply that all the issues would fall under the purview of the NCLT/NCLAT.

It can be concluded in the end that disputes revolving around decisions of statutory or quasi-judicial authorities, can be resolved only by judicial review of administrative action.