The exclusion of assets from the definition of the expression “assets” through explanation under Section 18 of IBC does not extend to Section 25 of IBC – Victory Iron Works Ltd. Vs. Jitendra Lohia & Anr. – Supreme Court
Hon’ble Supreme Court held that from Sections 18 and 25 that the word “asset” and not the word “property” is what is used in these provisions, though the word “property” is defined in Section 3(27). But the said word “asset” used in Sections 18 and 25 is not defined in the IBC. While the definition of the word in the Recovery of Debts and Bankruptcy Act,1993 appears to be exhaustive, the definition in IBC is only inclusive. The word “asset” is not defined, either in IBC or in any of the seven enactments referred to in Section 3(37) of the Code. Since the expression “asset” in common parlance denotes “property of any kind”, the bundle of rights that the Corporate Debtor has over the property in question would constitute “asset” within the meaning of Section 18(f) and Section 25(2)(a) of IBC.
As rightly pointed out by the learned counsel for the Resolution Professional, the Explanation under Section 18 begins with a caveat namely “for the purposes of this Section”. Therefore, the exclusion of assets owned by a third-party, but in the possession of the Corporate Debtor held under contractual arrangements, from the definition of the expression “assets”, is limited to Section 18. In other words, the Explanation under Section 18 does not extend to Section 25.
