The National Company Law Appellate Tribunal (NCLAT), Principal Bench comprising Justice Ashok Bhushan (Chairperson) and Barun Mitra and Arun Baroka (Technical Members) was hearing an appeal and held that the Resolution Professional (RP) is in the best position to decide on the Corporate Debtor's business operations during the corporate insolvency resolution process (CIRP).
In this National Company Law Appellate Tribunal (NCLAT) judgment, the appellant challenged the order of the National Company Law Tribunal (NCLT) dated 19.12.2023, which rejected the Interlocutory Applications (IAs) filed by the appellant. The appellant claimed to be an allottee of commercial space by the Corporate Debtor, Indirapuram Habitat Centre Pvt. Ltd., and sought the execution of a Conveyance Deed. The NCLAT examined the facts, including a Memorandum of Understanding (MoU) between the appellant and the Corporate Debtor.
The Corporate Insolvency Resolution Process (CIRP) was initiated against the Corporate Debtor, and various applications were filed by allottees seeking registration of shops. The appellant filed IA No. 4252/2020, requesting several reliefs, including the execution of the Conveyance Deed. The Adjudicating Authority, in its impugned order, rejected the appellant's prayer for the execution of the Conveyance Deed, relying on a previous order dated 31.08.2020.
The appellant contended that they had paid a significant portion of the amount and were willing to pay the balance for the execution of the Conveyance Deed. Moreover, the buyers of units in a real estate development do not have an automatic entitlement to demand the completion of the conveyance deed for their allotted units. The NCLAT noted the appellant's argument but upheld the Adjudicating Authority's decision, emphasizing that the Resolution Professional (RP) is the most suitable person to determine which aspects of the Corporate Debtor's operations should continue. The NCLAT Bench observed:
“There can be no dispute that by virtue of Section 17, 18 and 25, it is duty of the IRP to manage the affairs and take control of the assets over which the Corporate Debtor has ownership rights. The allottees, cannot as a right claim execution of Conveyance Deed, as has been prayed in the present case before the Adjudicating Authority. The RP, who is running the business of the Corporate Debtor is the best person to take a decision as to what part of the business of the Corporate Debtor can be can be carried out.”
In considering the Appellant's request, which resembles a claim for specific performance of a contract between the Appellant and the Corporate Debtor, the Bench made the following observation:
“The Appellant by making such payers are praying for specific performance of contract entered between the Appellant and the Corporate Debtor. What part of the contract has to be carried out and what part of contract cannot be carried out is in the domain of RP and there has to be reasons for issuing direction akin to order for allowing specific performance of contract. On the facts of the present case, we are of the view that Adjudicating Authority did not commit any error in not acceding the prayers of the Appellant for seeking direction to RP to execute a Conveyance Deed.”
The appellant also sought the release of monthly rent owed to them and other reliefs. The NCLAT observed that the RP had assured that the rent received from the shops allotted to the appellant would be kept in Fixed Deposit and disbursed according to the decision made during the CIRP. The Adjudicating Authority's order was deemed appropriate in protecting the appellant's interests in this regard.
In conclusion, the NCLAT dismissed the appeal, finding no grounds to interfere with the impugned order of the Adjudicating Authority. No costs were awarded in the matter.