Corporate Debtor Gains Ownership Despite Unregistered Sale Deed Under Takeover Agreement
- REEDLAW
- Sep 27
- 3 min read
REEDLAW Legal News Network reports: In a significant decision, the National Company Law Appellate Tribunal (NCLAT), New Delhi Bench, ruled that transfer of an industrial property under a takeover agreement, coupled with share allotment and the consistent treatment of the asset as corporate property, created enforceable ownership in favour of the corporate debtor. The Tribunal held that even without a registered sale deed, the transferor could not reclaim possession of the property during the Corporate Insolvency Resolution Process (CIRP).
The National Company Law Appellate Tribunal (NCLAT), New Delhi Bench, comprising Justice Yogesh Khanna (Judicial Member) and Mr. Ajai Das Mehrotra (Technical Member), while adjudicating a Company Appeal, held that the transfer of an industrial property under a takeover agreement, followed by share allotment and consistent treatment of the asset as corporate property, creates enforceable ownership in favour of the corporate debtor despite the absence of a registered sale deed, thereby barring the transferor from reclaiming possession during the Corporate Insolvency Resolution Process.
The Appellate Tribunal recorded that the Appellant had originally acquired the subject industrial property by a registered sale deed and later entered into a Take Over Agreement under which the entire business, including assets and liabilities, of the Appellant’s sole proprietorship was transferred to the Corporate Debtor. In consideration, the Appellant received equity shares and admitted in CoC meetings that the property was intended to vest with the Corporate Debtor, though a registered sale deed was never executed. The property was subsequently mortgaged to secure credit facilities for the Corporate Debtor and shown in its financial statements as a corporate asset.
The Tribunal observed that the Appellant had consistently acted in furtherance of the Take Over Agreement, allowed the Resolution Professional to take possession during the CIRP, and participated in the approval of the resolution plan, which included the property. The Appellant later sought restoration of possession, relying on an earlier NCLT order which had declined to direct registration of the sale deed.
Rejecting the plea, the Tribunal held that despite the absence of a registered conveyance, the Appellant had received full consideration through allotment of shares and had treated the property as belonging to the Corporate Debtor for several years. The imperfect title could be perfected by the Successful Resolution Applicant through appropriate civil proceedings, and restoration of possession to the Appellant would result in unjust enrichment. Consequently, the appeal challenging the NCLT order dismissing the Appellant’s application for possession was dismissed.
Mr. Abhinav Vasisht, Sr. Advocate, with Mr. Kanwal Chaudhary, Advocate, represented the Appellant.
Mr. Sunil Fernandes, Sr Advocate, with Mr. Manoj Kumar Garg, Mr. Kundan and Ms. Diksha Dadu, Advocates, appeared for the Respondent.
Mr. Sunil Kumar Agarwal, Respondent in person, presented.
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