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Can landowners exclude their land from the Corporate Debtor’s insolvency process and the approved resolution plan by relying on a unilateral termination of the Development-cum-Collaboration Agreement shortly before commencement of CIRP? The issue lies at the intersection of proprietary rights, contractual autonomy, the Real Estate (Regulation and Development) Act, 2016 (“RERA”), and the Insolvency and Bankruptcy Code, 2016 (“IBC”). In Brajesh Kumar Tripathi & Anr. v. Hasti Mal Kachhara (Resolution Professional) & Ors.1, the National Company Law Appellate Tribunal (“NCLAT”), Principal Bench, New Delhi, held that once land forms an integral part of a sanctioned composite township, statutory approvals have been obtained and homebuyer rights have crystallised, a belated attempt to terminate the agreement cannot be permitted to derail the CIRP or frustrate implementation of an approved Resolution Plan.
Factual Matrix
The dispute arose from a registered Development-cum-Collaboration Agreement dated 29 January 2010 between the appellants, Brajesh Kumar Tripathi and Abhishek Tripathi, and Pushp Ratna Realty Pvt. Ltd., the Corporate Debtor, for development of land situated at Village Khajrana, Indore. Under the agreement, ownership of the land remained with the appellants while the Corporate Debtor undertook to develop the property, with the developed area to be shared in the ratio of 37:63. The agreement further authorised the Corporate Debtor to obtain the statutory approvals necessary for implementation of the project while clarifying that the arrangement did not constitute a partnership or joint venture.
The appellants contended that the agreement envisaged development only of their land and that, without their knowledge or consent, the Corporate Debtor integrated it into a larger township project known as “Lush by Pushpratna”, obtained approvals from the Town and Country Planning Department, the Municipal Corporation and the RERA, and marketed the project as a single integrated development. They further alleged that several statutory approvals had been obtained without their consent, no construction was undertaken on their parcel of land, their contractual share was never identified, the RERA registration expired in 2019, and the Municipal Corporation revoked the building permission in July 2023. Consequently, they issued a termination notice on 6 August 2024, obtained a status quo order under Section 9 of the Arbitration and Conciliation Act, 1996, and shortly thereafter the Corporate Debtor was admitted into the CIRP on 16 October 2024.
Before the Adjudicating Authority, the appellants sought exclusion of the subject land from the Information Memorandum, the insolvency estate and the approved Resolution Plan. They argued that ownership of the land had never vested in the Corporate Debtor, that its contractual development rights stood extinguished upon termination prior to commencement of the CIRP, and that the land, being third-party property, could not form part of the insolvency estate under Sections 18 and 36 of the IBC. They further contended that the Committee of Creditors’ commercial wisdom could not override their proprietary rights protected under Article 300A of the Constitution or convert third-party property into an asset of the Corporate Debtor. According to the appellants, the Resolution Plan was commercially unviable in view of the revoked approvals, the expired RERA registration and the subsisting status quo order.
The Resolution Professional and the Successful Resolution Applicant opposed the appeals, submitting that the subject land formed an inseparable part of the sanctioned layout of the integrated township, where more than forty homebuyers had already acquired vested rights. They argued that the Information Memorandum adequately recognised the appellants’ entitlement under the Development-cum-Collaboration Agreement, that the appellants qualified as “promoters” under Section 2(zk) of the RERA and consequently owed statutory obligations towards allottees, and that the registered agreement contained an express non-termination clause intended to safeguard project continuity. Excluding the land, they contended, would fundamentally impair implementation of the approved Resolution Plan and prejudice the interests of homebuyers.
The Adjudicating Authority dismissed the appellants’ application seeking exclusion of the land from the insolvency process and subsequently approved the Resolution Plan. Aggrieved by these orders, the appellants preferred appeals before the NCLAT.
The NCLAT dismissed the appeals, holding that the subject land had formed part of the sanctioned composite layout since 2013 and that the appellants had not objected to its inclusion until issuance of the termination notice in August 2024, despite the relevant approvals remaining in the public domain. Their prolonged conduct and silence amounted to waiver and acquiescence, attracting the doctrine of approbation and reprobation. The Tribunal noted that the Development-cum-Collaboration Agreement contained seemingly inconsistent provisions, one permitting termination upon delay and another expressly prohibiting termination. However, it held that the appellants’ conduct over the intervening years rendered the purported termination legally unsustainable. Having allowed the project to progress until statutory approvals had been obtained and third-party rights had crystallised in favour of homebuyers, the appellants could not subsequently invoke contractual remedies to defeat the insolvency process. The Tribunal therefore held that the unilateral termination could not be permitted to derail the CIRP or frustrate implementation of the approved Resolution Plan.
The Tribunal also observed that, in the facts of the present case, a registered Development-cum-Collaboration Agreement could not ordinarily be rescinded through a unilateral notice after statutory approvals had been obtained and third-party rights had crystallised. It rejected reliance on the Commercial Court’s status quo order, holding that upon commencement of the CIRP, the moratorium under Section 14 of the IBC governed proceedings concerning the Corporate Debtor and that, following approval of the Resolution Plan, pre-CIRP claims and liabilities stood extinguished under the “clean slate” principle except to the extent recognised under the approved Resolution Plan. Since the project had been conceived, approved and marketed as a single integrated township, exclusion of an individual land parcel would undermine the sanctioned layout, prejudice homebuyers and frustrate implementation of the Resolution Plan. The Tribunal further observed that, as promoters under the RERA, the appellants remained subject to statutory obligations towards allottees and that Section 14 of the RERA restricted alterations to sanctioned layouts without the consent of at least two-thirds of the allottees.
In reaching its conclusions, the Tribunal relied upon Victory Iron Works Ltd. v. Jitendra Lohia & Anr.2 and Gujarat Urja Vikas Nigam Ltd. v. Amit Gupta & Ors.3 to reinforce that contractual and development rights forming part of the Corporate Debtor’s business warrant protection during the insolvency resolution process. It also relied upon Namdeo Ramchandra Patil v. Vishal Ghisulal Jain4 to reaffirm that landowners participating in joint development arrangements may qualify as promoters under the RERA, and Pioneer Urban Land and Infrastructure Ltd. v. Union of India5 to reiterate the protected status of homebuyers as financial creditors under the IBC.
Conclusion
The judgment clarifies that although ownership of land may continue to vest with a landowner, contractual remedies arising under a development agreement, including unilateral termination cannot be exercised in isolation once the land has become an integral component of a sanctioned composite real estate project and substantial third-party rights have accrued. By emphasising waiver, acquiescence, the statutory obligations of promoters under the RERA and the collective objectives of the IBC, the NCLAT reaffirmed that insolvency resolution in the real estate sector requires a careful balance between proprietary rights, project continuity and stakeholder protection. The decision is particularly significant for integrated township projects, illustrating how insolvency tribunals may balance individual contractual rights against the collective interests of stakeholders once the project enters the CIRP. It further reaffirms that attempts to withdraw land from an integrated project will be subject to close judicial scrutiny where they threaten implementation of an approved Resolution Plan or prejudice the rights of homebuyers and other stakeholders.
Citations
Expositor(s): Adv. Jahnobi Paul
