Homebuyers Are Vital Stakeholders; Their Concerns Should Be Primary Object Under Insolvency Resolution Process Of Real Estate Company: Allahabad High Court

The Petitioner had approached the High Court seeking issuance of a direction to the respondent to recalculate the pending dues of the petitioner in terms of the recitals made in the lease deed and extend the benefits of zero period admissible to the petitioner till June 29, 2015 and the period of Covid-19 pandemic.

The Single Bench of Justice Arun Kumar held, “In an insolvency resolution process of a real estate company the primary concern is the interest of a homebuyer in the real estate project. The homebuyers are vital stakeholders. The process of creditor insolvency resolution directly impacts upon their rights and interest. Concerns of homebuyer have to be the primary object under any insolvency resolution process. Without restoration of the cancelled plot any resolution plan cannot be approved by the Adjudicating Authority. Not just the plan submitted by the respondent no.4, would fail, even the claim of M/s Radhey Krishna Technobuild Private Limited, would also be rendered otiose. In the absence of any land available with the corporate debtor no revival of the housing plan and construction of apartments for the homebuyers, can be effectuated. As a result, the corporate debtor would be sent into liquidation which would adversely affect the interest of homebuyers.”

Advocate Prakhar Saran Srivastava represented the Petitioner, while Advocate Ayush Mishra represented the Respondent.

Factual Background

M/s Bulland Realtors Private Limited, a real-estate company incorporated under the provisions of the Company Act, 2013, was allotted a plot in Greater Noida, Gautam Buddh Nagar, by the second respondent, under a tripartite sub-lease, executed between the second respondent, the petitioner and M/s Echo Green Buildtech Private Limited, having an area of 19000 sq. Mtrs, for a Group Housing project. The possession was handed over to the petitioner company in 2015. The petitioner company defaulted in payment of lease rent, which was subsequently restructured, but could not be deposited in time. Ultimately, the sub-lease was cancelled. One of the financial creditors of the petitioner company, Nimble Credit Cooperative Society Limited, filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC), before the Adjudicating Authority, the National Company Law Tribunal, New Delhi (NCLT). The NCLT appointed an Interim Resolution Professional to take over the existing management of the petitioner company.

The Resolution Professional challenged the order cancelling lease deed of the land allotted to the corporate debtor, before the State Government, in revision under Section 41(3) of the U.P. Urban Planning and Development Act, 1973 read with Section 12 of the U.P. Industrial Area Development Act, 1976, on the ground that the cancellation order was passed without affording opportunity to the corporate debtor and the computation of dues was not in terms of the lease deed and Amitabh Kant Committee Report. The revision filed by the petitioner company came to be dismissed. The petition thus came to be filed before the High Court challenging the order dismissing the revision, and the order by which the lease deed of the petitioner was cancelled.

Reasoning

On a perusal of the facts of the case, the Bench noted that the petitioner company is under the Corporate Insolvency Resolution Process, where a Resolution Professional has been appointed. The resolution plan selected by the Resolution Professional has been approved by the CoC by not less than 66% of the voting share of the financial creditor. “Thus, rejection of claims as a homebuyer or a resolution applicant, was subject matter to be decided by the Adjudicating Authority under the provisions of IBC itself, and could not be looked into by this Court in exercise of powers under Article 226 of the Constitution of India, while considering the validity of the cancellation of lease deed in respect of the corporate debtor by the Greater Noida Industrial Development Authority”, it noted.

The Bench noticed that if a fresh agreement entered into between the parties to the writ petition was acted upon, it would result in the restoration of the lease deed in favour of the corporate debtor. The further action would shift to the Adjudicating Authority, which, while approving the resolution plan, would consider all the objections pending before it, as contemplated under the IBC.

The Bench further found that if the agreement arrived at by the Greater Noida Industrial Development Authority with the petitioner company, resolution applicant and the representative of homebuyers is accepted, it will infuse life into the insolvency resolution process.

The Bench thus set aside the order dismissing the revision of the petitioner, which was passed without considering the effect of the Government Order. Ordering the amount of 25% as agreed between the parties to be released in favour of the second respondent, on an appropriate application being made before the Registrar General of this Court, the Bench directed the second respondent to restore the lease deed, in favour of the petitioner company, in accordance with clause 17 of the Government Order.

Cause Title: Bulland Realtors Private Limited v. State Of U.P. (Neutral Citation: 2025:AHC:190531)

Appearance

Petitioner: Advocates Prakhar Saran Srivastava, Tarun Agrawal

Respondent: Advocates Ayush Mishra, Shreya Gupta, Abhinav Gaur, Anjali Upadhya, Atul Ojha, C.S.C., Namit Srivastava, Parul Srivastava, Pawan Kumar Tripathi, Prashant Mishra, Vineet Pandey

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