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2025 Supreme(Online)(NCLT) 2639
NATIONAL COMPANY LAW TRIBUNAL
Smt. Madhu Sinha, Member (Technical), Shri. Vinay Goel, Member (Judicial)
M/s. MIR Realtors Private Limited – Appellant
Versus
Annie Abraham, Liquidator, (MIR Realtors Private Limited) – Respondent
IA(IBC)/415/KOB/2023 | IBA/11/KOB/2020
For the Appellants/Petitioners: Mr. Bijoy Pulipra
For the Respondents: Mr. Kevin Thomas, Mr. Mohan Jacob George
For the Respondent No. 4: None appeared
Unregistered agreements for sale do not create valid security interests, and ownership of property remains with the Corporate Debtor, thus applicants cannot exclude their apartments from the liquidation estate.
Headnote:(A) Insolvency and Bankruptcy Code, 2016 - Sections 36 and 60(5) - Real Estate (Regulation and Development) Act, 2016 - Definition of 'Liquidation Estate' - Applicants, homebuyers of Haritham Tower, sought exclusion of their apartments from the liquidation estate citing prior agreements and payments made, asserting their rights as Financial Creditors. The Tribunal ruled that the agreements were unregistered and did not create a valid charge over the property, as ownership remained with the Corporate Debtor. The Tribunal emphasized that the mortgage in favor of the Bank was valid and that the applicants, having filed claims during CIRP, would receive due amounts from the liquidation proceeds. (Paras 1, 36, 107)
(B) Security Interests - Creation and Prioritization - The Tribunal held that unregistered agreements do not confer ownership rights or create valid security interests. The applicants' claims were subordinate to the valid mortgage held by the Bank, and the Tribunal noted the need for compliance with regulatory requirements in proving security interests. (Paras 21, 100, 101)
(C) Liquidation Proceedings - The Tribunal stated that the liquidation process must proceed without delay, as the IBC provides a structured mechanism for addressing creditor claims, and the applicants cannot claim exclusion from the liquidation estate. (Paras 108, 109)
Key Points: - The judgment analyzes whether unregistered sale agreements create valid security interests and whether homebuyers’ apartments/UDS can be excluded from the liquidation estate (!) (!) (!) . - It references Section 36 of the IBC 2016 to define the liquidation estate and what assets may be excluded (!) (!) . - It cites Regulation 46A of IBBI (Liquidation Process) Regulations 2016 permitting exclusion of allottee possession assets from the liquidation estate in real estate projects (!) (!) (!) . - The court holds that the mortgage in favor of Federal Bank is valid and that homebuyers’ claims are subordinate to that mortgage, with claims admitted under CIRP and paid via waterfall, not excluding the assets from liquidation (!) (!) (!) (!) . - It concludes that unregistered agreements cannot confer a valid security interest, and that the assets (apartments/UDS) do not form part of the liquidation estate if possession has been given or rights recognized, but here the assets are contested under Section 36(4) and Regulation 21 of IBBI Regulations (!) (!) (!) (!) . - The tribunal dismisses the application for exclusion of flats from the liquidation estate, noting limited locus and the need to follow IBC rules and regulatory provisions (!) (!) (!) . - The decision emphasizes priority of the secured creditor’s mortgage and that homebuyers’ rights are to be resolved within the liquidation process under the IBC framework (!) (!) (!) . - The Tribunal notes that the homebuyers’ association’s role is acknowledged but does not grant relief to exclude Schedule B properties from liquidation (!) (!) . - The order directs the registry to send copies to parties and states that a certified copy may be issued upon compliance (!) .
Question 1?
Question 2?
Question 3?
| Table of Content |
|---|
| 1. the applicants are financial creditors. (Para 1 , 2 , 3 , 4) |
| 2. corporate debtor's insolvency resolution process. (Para 5 , 6 , 7 , 8) |
| 3. joint venture agreement details. (Para 9 , 10 , 11 , 12 , 13 , 14) |
| 4. sale agreements and payment confirmations. (Para 15 , 16 , 17 , 18 , 19) |
| 5. loan violations and fraud allegations. (Para 20 , 21 , 22 , 23 , 24) |
| 6. mortgage creation and its implications. (Para 25 , 26 , 27 , 28 , 29) |
| 7. rights of subsequent homebuyers. (Para 30 , 31 , 32 , 33 , 34) |
| 8. liquidation estate exclusions. (Para 35 , 36 , 37 , 38 , 39) |
| 9. charge creation upon payment. (Para 40 , 41 , 42 , 43 , 44) |
| 10. trust relationship between parties. (Para 45 , 46 , 47 , 48 , 49) |
| 11. liquidator's responsibilities. (Para 50 , 51 , 52 , 53 , 54) |
| 12. mortgage validity and loan details. (Para 55 , 56 , 57 , 58 , 59) |
| 13. disputes over mortgage and agreements. (Para 60 , 61 , 62 , 63 , 64) |
| 14. rights of applicants in the liquidation process. (Para 65 , 66 , 67 , 68 , 69) |
| 15. limitations on challenging mortgage validity. (Para 70 , 71 , 72 , 73 , 74) |
| 16. homebuyers association's role. (Para 75 , 76 , 77 , 78 , 79) |
| 17. negotiations for settlement. (Para 80 , 81 , 82 , 83 , 84) |
| 18. homebuyers' rights and claims. (Para 85 , 86 , 87 , 88 , 89) |
| 19. issues surrounding property charges. (Para 90 , 91 , 92 , 93 , 94) |
| 20. court's analysis and findings. (Para 95 , 96 , 97 , 98) |
| 21. legal principles regarding property ownership. (Para 100 , 101 , 102 , 103 , 104) |
| 22. final conclusions on the case. (Para 105 , 106 , 107 , 108 , 109) |
| 23. order for further proceedings. (Para 110) |
ORDER
Per: Coram
1. The application has been filed by the allottees of the ’Haritham’residential tower in the real-estate project "THE GREENS" of MIR Realtors Private Limited (Corporate Debtor or ’CD’). The Applicants are allottees of the ’Haritham’ residential tower, who are Financial Creditors. within the meaning of the Insolvency and Bankruptcy Code, 2016, and have filed this application under section 60(5) of the Insolvency and Bankruptcy Code, 2016, and Rule 32 of the National Company Law Tribunal Rules, 2016, seeking the following reliefs: -
a) Direct the Respondent No. 1 to exclude the Apartments and proportionate undivided share of land of the Applicants against which the agreement for sale was executed and consideration was paid, from the scope and ambit of ’Liquidation Estate’.
b) Direct the Respondent No. 1 to reject the application filed by Respondent No. 3 Bank for enforcing their rights under Section 52 of the Code.
c) Direct the Respondent No. 3 from taking any coercive steps under Section 52 of the Code to enforce the Security interest created over the assets of the Applicants.
SUBMISSIONS MADE BY THE APPLICANTS
2. The Applicants state that they are aggrieved by the actions of Respondent No. 1 in permitting Respondent No. 3 Bank to enforce the security interest created by the latter over 87 cents of land and the apartments in Haritham Tower. This security interest was allegedly based on a fraudulent loan extended to the Corporate Debtor (CD), in complete violation of the Master Circular and Prudential Norms issued by the Reserve Bank of India.
3. Respondent No. 1 failed to exercise due diligence or verify relevant records before taking such steps. In doing so, Respondent No. 1 overlooked the fact that the Applicants had already created an interest/charge over the respective apartments and the proportionate undivided share of the land prior to the charge created by the 3rd Respondent.
4. The actions of Respondent No. 1, in allowing the Bank to enforce the security interest over the assets of the CD, are highly detrimental and prejudicial to the interests of the Applicants. Hence, this petition has been filed.
5. Application No. IBA/11/KOB/2020 was filed under Section 7 of the Insolvency and Bankruptcy Code, 2016 ("the Code") by Federal Bank Limited ("the Financial Creditor") to initiate the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor. The
