Immovable Property Cannot Form Part of Resolution Plan Without Registered Ownership Transfer – Agreement to Sell Does Not Confer Title

NCLAT held that immovable property cannot form part of the resolution plan unless there is a registered transfer of ownership, as an agreement to sell does not confer title in law.

Today, the National Company Law Appellate Tribunal (NCLAT), New Delhi Bench comprising Justice Yogesh Khanna (Judicial Member) and Mr. Ajai Das Mehrotra (Technical Member) held that an immovable property cannot be treated as an asset of the Corporate Debtor under a Resolution Plan unless ownership has been transferred through a duly registered sale deed, as an agreement to sell does not confer title or interest under Section 54 of the Transfer of Property Act, 1882. The Tribunal further observed that the Resolution Professional must seek specific performance through a competent civil court.

The appeal was filed challenging the order dated 23rd July 2024 passed by the National Company Law Tribunal (NCLT), New Delhi Bench V, which dismissed IA No. 3085/2022 in Company Petition (IB)2083/ND/2019. The appellant argued that the Adjudicating Authority failed to properly interpret the Explanation to Section 18 of the Insolvency and Bankruptcy Code, 2016 (IBC), and also ignored its previous order dated 27.09.2021, which had been affirmed by the National Company Law Appellate Tribunal (NCLAT) on 02.12.2021.

The appellant had originally acquired ownership rights of the subject immovable property on 07.08.2015. Subsequently, through a Take Over Agreement dated 16.12.2016, the business of the appellant's proprietorship concern, KPG Industries, was taken over by the Corporate Debtor. Although the agreement reflected an intent to pledge/mortgage the property in favour of the Corporate Debtor, no registered sale deed transferring title was ever executed. On 17.04.2017, the appellant mortgaged the property to a bank to secure loans for the Corporate Debtor. CIRP was initiated on 27.01.2020, and while the appellant was abroad due to COVID-19 restrictions, the Resolution Professional (RP) took steps to include the subject property in the Information Memorandum, despite there being no legal title in the name of the Corporate Debtor.

The NCLT, by its earlier order dated 27.09.2021, had clearly held that an agreement for sale does not create any interest or title in favour of the Corporate Debtor. It was observed that a registered sale deed is essential under Section 54 of the Transfer of Property Act, 1882, to confer ownership rights, and that the proper remedy was to file for specific performance in a competent civil court. This decision was upheld by the NCLAT in appeal, where it was reiterated that the Adjudicating Authority's view could not be faulted and the RP was at liberty to pursue legal remedies for specific performance.

Despite this, the RP later filed IA No. 912/2022 with similar prayers as the earlier IA, which was withdrawn. Thereafter, the appellant filed IA No. 3085/2022 seeking possession of the property. However, in its impugned order, the NCLT deviated from its previous findings and gave weight to the Takeover Agreement, suggesting it implied transfer of assets, including the disputed property, to the Corporate Debtor, despite the lack of a registered sale deed. This observation was strongly contested by the appellant, who maintained that such a view contradicted settled legal principles and previous judicial pronouncements, including the NCLAT order dated 02.12.2021 and the Supreme Court’s ruling in Indian Overseas Bank v. MAS Subramanian and Others, REEDLAW 2025 SC 01606, which reaffirmed that mere agreements to sell do not transfer title in immovable property.

Further reliance was placed on State Bank of India v. Arvind Kumar, Liquidator of Bhagat Ram Motorways Pvt. Ltd. & Anr., REEDLAW 2024 NCLAT Del 11590, where the Tribunal emphasised the need for documentary evidence establishing title or ownership before property could be treated as belonging to the Corporate Debtor in insolvency proceedings. The appellant argued that despite the inclusion of the property in the Resolution Plan and valuation processes, no title had passed to the Corporate Debtor, and therefore the NCLT erred in dismissing IA No. 3085/2022. The NCLAT’s detailed review ultimately underscored that the property remained under the legal ownership of the appellant, and any attempt to transfer or register it in favour of the Corporate Debtor without due legal process was untenable.

Mr. Abhinav Vasisht, Sr. Advocate and Mr. Kanwal Chaudhary, Advocate, represented the Appellant.

Mr. Sunil Fernandes, Sr Advocate, with Mr Manoj Kumar Garg and Mr Kundan, Ms Diksha Dadu, Advocates, appeared for the Respondent.

Mr. Sunil Kumar Agarwal, Respondent, was present in person.

---

Subscribers can access the Case, including Case Analysis, Ratio Decidendi, Headnotes, Briefs, Case Research, Cited Case Laws, Case Law Cross-references, and the latest updates on Statutes, Notifications, Circulars, Guidelines, Press Releases and more.

Click on the following Citation/Link to access these resources:

REEDLAW 2025 NCLAT Del 04553