Execution Of Sale Deed Is Permitted During CIRP If Possession Was Handed Over Before Its Commencement: NCLT Indore

The NCLT, Indore Bench, comprising Mohan P. Tiwari (Member-Judicial) and Sanjeev Sharma (Member-Technical), has held that the moratorium doesn't prohibit the execution of sale deeds during CIRP if the possession was handed over to allottees prior to commencement of CIRP. The JSM Devcons Pvt. Ltd. (Corporate Debtor) is engaged in developing the housing project, Pinnacle D Dreams. In furtherance to a section 7 petition filed by the Motel Rahans Pvt. Ltd., the CIRP of the corporate debtor was admitted. Devvrat Developers turned out to be the successful resolution applicant, whose resolution plan was modified after the approval. The applicant is a homebuyer in the project, and he possessed the flat before the commencement of the CIRP. The application was filed to seek clarification that the applicant's flat does not form part of the assets of the corporate debtor, and consequently, the applicant cannot be dispossessed therefrom. It also prayed that the response be directed to execute the sale deed in favor of the applicant. The applicant contended that it had a valid allotment letter and had taken lawful possession before the CIRP commencement. The flat was not part of the corporate debtor asset; thus, the applicant cannot be evicted. It argued that the flat already allotted and in possession of the third party shall not be included in the assets of the CD in CIRP. The applicant relied on the ruling of Pradip Kumar Chaudhuri vs. Dagcon (India) (P) Ltd., 2020 SCC online NCLAT 860, to argue that the moratorium doesn't apply to allottees in whose favor possession has been granted. Also, there is no bar on the execution of sale deeds in their favor. Per contra, the respondent argued that the applicant failed to submit its claim before the resolution professional, despite the public announcement. The present application has been filed after a delay of 2.5 years, and the resolution plan has been approved and is under implementation. Relying on the rulings of Vadilal Industries Ltd vs FanendraMunot and Ors by the Hon'ble NCLAT in CA AT (Ins) No 748 of 2023, it argued that once the CoC approves the resolution plan, no further claim can be admitted. Observations of the NCLT The NCLT observed that as per the judgments of the Hon'ble Apex Court and NCLAT, the properties fall outside the assets of the corporate debtor if its possession had already been granted to the allottees. The bench observed that the subsequent modification of the resolution plan will not apply here; therefore, the moratorium will not apply. Thus, the sale deed can be executed even during the CIRP. Further, the bench reiterated that if the substantial payment has been made and possession has been delivered before the CIRP commencement, there is no requirement to file the claim before the resolution professional. The only obligation that remains is the execution of the sale deed upon payment of the balance amount. The bench also discussed the ruling of “AU Small Finance Bank Ltd. vs. Coral InfragoldPvt. Ltd. (IA No. 237/JPR/2021 In CP No. (IB)- 170/7/JPR/2019] NCLT Jaipur Bench”, where the NCLT Jaipur Bench allowed the registration of the flats already allotted to home buyers subject to statutory compliances. With the above observations, the NCLT allowed the application. Case Name: Harminder Singh Bhatia V/s Devvrat Developers Pvt Ltd & Ors Case No.: IA/389(MP)2024 in C.P.(IB)/56(MP)2021 For Applicant: Mr. Rohit Dubey, Adv a.w. Ms. Raji Nema, Adv Coram: Mohan P. Tiwari (Member-Judicial) and Sanjeev Sharma (Member-Technical) Order Date: 18.09.2025 Click Here To Read/Download The Order

Execution Of Sale Deed Is Permitted During CIRP If Possession Was Handed Over Before Its Commencement: NCLT Indore

Mohd.Rehan Ali

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