Liquidation Of Kindle Developers Stayed By Supreme Court Till Allahabad HC Decides Writ Petition Filed By Certain Homebuyers
|The Supreme Court recently came to the rescue of homebuyers associated with Kindle Developers Private Limited. On 20th January 2025, the Apex Court, through an interim order, stayed the liquidation proceedings of Kindle Developers Private Limited until the Allahabad High Court decided the writ petition filed by certain homebuyers challenging the cancellation of the lease by the Noida Authority.
The Division Bench of Justice Abhay S. Oka and Justice Ujjal Bhuyan ordered, "In the meanwhile, direction issued in clause (iii) of paragraph 56 will remain stayed."
Clause (iii) of paragraph 56 read, "(iii) CIRP period having long expired, Order under Section 33(1) is passed requiring the Corporate Debtor to be liquidated. From the list of Insolvency Professional maintained by the IBBI, Mr. Vikram Bajaj (Registration No.:IBBI/IPA-002/IP N00003/2016-2017/10003, Email [email protected]) is appointed as Liquidator to carry forward the process of Liquidation of the Corporate Debtor."
In this case, Noida Authority executed a lease deed on 24th October 2011 in favour of Kindle Developers Private Limited, which is the corporate debtor in question. Subsequently, a correction deed dated 19th October 2012 was issued. However, due to non-payment of lease rentals, the Noida Authority claimed to have cancelled the lease on 27th January 2015. Despite the alleged lease cancellation, Kindle Developers Private Limited continued to raise funds from homebuyers, collecting over 180 crores from 651 homebuyers.
The Company later entered insolvency on 9th March 2018. Notices were reportedly issued to the Noida Authority to file their claims, but no claims were submitted. When the Committee of Creditors (CoC) approved a resolution plan in 2019 and submitted it for approval the approval of the National Company Law Tribunal (NCLT), the Noida Authority filed an application seeking the exclusion of the leased land from the Corporate Insolvency Resolution Process (CIRP), citing the lease cancellation in 2015.
The National Company Law Tribunal (NCLT) accepted Noida Authority’s plea and excluded the land from the CIRP. This order was subsequently affirmed by the National Company Law Appellate Tribunal (NCLAT). During proceedings before the NCLAT, a submission was made that the land should remain part of the CIRP and resolution plan until the Allahabad High Court decides the writ petition challenging the lease cancellation. However, the NCLAT dismissed this appeal and upheld the NCLT’s order, further directing the corporate debtor into liquidation and appointing a liquidator.
Aggrieved by the NCLAT’s decision, the homebuyers who formed a part of the Committee of Creditors and the Successful Resolution Applicant approached the Supreme Court.
On 20th January 2025, the Supreme Court observed that prima facie, if the writ petition pending before the Allahabad High Court is allowed, the corporate debtor's lease rights could be restored, thereby enabling the land to form part of the resolution process. Consequently, the Court stayed the liquidation process referenced in paragraph 56 of the NCLAT judgment till the Allahabad High Court decided the pending writ petition in accordance with law.
This interim relief offers hope to the homebuyers, as the liquidation process without the leased land would have significantly reduced the value of the semi-constructed towers. The Supreme Court’s direction ensures that liquidation remains subject to the outcome of the Allahabad High Court’s decision, providing a potential opportunity for the resolution process to include the leased land, thereby protecting the interests of the homebuyers, in case the Allahabad High Court set asides the cancellation of the lease by Noida Authority.
Cause Title: Lords Social Welfare Association v. New Okhla Industrial Development Authority & Ors.
Appearance:
Petitioner: Sr. Advocate Sunil Fernandes along with Advocates Aishvary Vikram, Vikash C. Shukla (AOR), Rajshree Choudhary, Diksha Dadu, Lucky Sharma, Silpi Sucharita, Aditya Nayyar, Farhat Jahan Rehmani (AOR) and Devansh Gupta.
Respondents: Advocates Rachit Mittal (AOR), Parish Mishra, Kanishk Raj, Adarsh Srivastava, Abhishek Sinha, Abhishek Anand, Karan Kohli, Palak Kalra, Ridhima Mehrotra, Pallavi Pratap (AOR)
Click here to read/download Order