Possession of Machinery Hypothecated Remains to Corporate Debtor in absence of Lease Deed By Third Party: NCLAT

The National Company Law Appellate Tribunal (NCLAT) has ruled that possession of machinery hypothecated to a financial institution remains with the corporate debtor in the absence of a lease deed by a third party. This ruling clarifies the ownership and possession rights of assets during insolvency proceedings. It emphasizes the importance of a formal lease agreement when a third party claims possession of hypothecated assets. This decision provides clarity for stakeholders involved in insolvency resolutions and helps protect the assets of the corporate debtor. The NCLAT's interpretation of the law ensures a balanced approach to creditor and debtor rights.