An auction purchaser of real estate inherits financial obligations towards home allottees, affirming the binding nature of agreements despite prior judicial restraints.

JUDGMENT

ASHOK BHUSHAN, J.

This Appeal by Suspended Director of the Corporate Debtor has been filed challenging the order dated 26.09.2023 passed by National Company Law Tribunal, New Delhi Bench, Court-V admitting Section 7 Application filed by Respondents – allottees herein. The Appellant aggrieved by the order admitting Section 7 Application has come up in this Appeal.

2. Brief facts of the case, necessary for deciding this Appeal are:

(i) On 31.10.2003, the land in question was purchased by one M/s Subros Ltd. from various land holders. On 27.08.2004, a Notification under Section 4 of Land Acquisition Act, 1894 was issued by the Govt. of Haryana, proposing to acquire certain land for setting up Industrial Township. The land in question was initially part of the above Notification, however, M/s Subros Ltd. applied to the Government of Haryana for release of property from land acquisition proceedings and filed a Writ Petition (CWP) No.2787 of 2006 before the Punjab and Haryana High Court, challenging the acquisition dated 27.08.2004. M/s Subros Ltd. received a letter from Govt. of Haryana on 22.08.2007 for release of the land owned by Subros from the land acquisition proceedings. On that basis, the Writ Petition filed by M/s Subros Ltd. was withdrawn on 20.09.2007. On 29.01.2010, a decision was taken by Govt. of Haryana to drop/close the acquisition proceedings.

(ii) On 23.01.2012, M/s Subros Ltd. sold the land along with licnese to develop to M/s Akme Projects Ltd. vide registered Sale Deed.

(iii) In 2015, Rameshwar & Ors. Vs. State of Haryana, a SLP was filed (which was converted into Civil Appeal No.8788 of 2015) by certain farmers challenging the action of Haryana Government in initiation and subsequent dropping of land acquisition proceedings. Before the Hon’ble Supreme Court, it was contended that due to issuance of Notification on 27.08.2004, farmers were induced to sell their lands to developers/ builders at cheap prices and subsequently, the Haryana Government closed the land acquisition proceedings. On 24.04.2015, the Hon’ble Supreme Court passed an interim order, directing ban on the construction of the land that was covered under acquisition proceedings.

(iv) On 12.03.2018, the Hon’ble Supreme Court passed the final order holding that the state machinery was used to further private ends and that the decision to withdraw from acquisition was a fraud on power under the Acquisition Act. The judgment invalidated all transfers effect from the date of publication under Section 4 , to the date of publication of the State’s decision to revoke the acquisition i.e. from 27.08.2004 to 29.01.2010.

(v) The Akme Projects Ltd. (“Akme”) has obtained loan from YES Bank. Default was committed by Akme, due to which YES Bank initiated proceedings under the SARFAESI Act, 2002 and in the SARFAESI proceedings, auction sale notice was issued on 02.04.2016. The Grandstar Realty Pvt. Ltd. (“Grandstar”) – Corporate Debtor participated in the auction and submitted a bid of Rs.40.75 Crores. On 17.06.2016 and 19.07.2016, YES Bank issued Sale Confirmation Advice/ Sale Certificate respectively after receiving the full payment.

(vi) Akme filed Writ Petition, challenging the auction sale proceedings, where on 05.10.2016, the Hon’ble High Court of Delhi directed to maintain the status quo with regard to sale in favour of the Corporate Debtor.

(vii) A Corporate Insolvency Resolution Process (“CIRP”) was commenced against Akme, in which Respondent – home allottees filed the claim on 09.05.2018. The Appellant also filed proceedings before the Debt Recovery Tribunal in