The New Delhi Principal Bench of the National Company Law Appellate Tribunal (NCLAT) has held that where a real estate project has been undertaken under a collaboration arrangement, substantial construction has been carried out, allotments have been made to allottees, and neither HARERA nor the arbitral tribunal has accepted that the underlying Collaboration Agreement stood validly terminated, the unsold inventory and the subject project property cannot be excluded from the valuation of the corporate debtor or from the Information Memorandum in CIRP.
The NCLAT asserted that merely because the arbitral tribunal found that the Collaboration Agreement could not be specifically enforced and described it as inoperable for that purpose, it did not follow that the project assets ceased to form part of the corporate debtor’s estate for insolvency purposes, particularly when the landowner’s specific prayer for declaration of lawful termination and for transfer of the project back to him had been refused, and the rights of allottees remained statutorily protected.
Accordingly, the NCLAT upheld the rejection of the appellant’s application seeking exclusion of the unsold inventory and subject property from the CIRP process.
The Division Bench comprising Justice Ashok Bhushan (Chairperson) and Barun Mitra (Technical Member) observed that the HARERA order dated Feb 09, 2022 had treated both the corporate debtor and the landowner as promoters of the project and had directed both of them to commence and complete the construction/development, while also recording that the inter se disputes between the landowner and the developer could not prejudice the statutory rights of innocent allottees.
The Tribunal further noted that the arbitral award dated Sep 14, 2022 did not grant the landowner’s prayer for a declaration that the Collaboration Agreement and subsequent addenda stood lawfully terminated; rather, the arbitral tribunal only held that the agreements were inoperable for purposes of specific enforcement and restrained the corporate debtor from acting upon the powers of attorney.
The Tribunal also emphasized that the arbitral tribunal had specifically rejected the appellant’s prayer for transfer of the project land and project-related documents in his favour. On that basis, it held that this was not a case where termination of the Collaboration Agreement had been accepted by a competent forum. The NCLAT also pointed out that the present matter involved a project where development had been undertaken, construction had been raised, allotments had been made to 147 allottees, and the rights of such allottees had acquired statutory protection.
Briefly, the appellant, Ishaan Singh, was the landowner of land at Village Naurangpur, Gurugram, on which a commercial project, “Spaze Arrow,” was to be developed under a Collaboration Agreement dated June 19, 2010 entered into with the corporate debtor, SP AZE Towers Pvt Ltd. Pursuant to that arrangement, the appellant had also executed powers of attorney in favour of the corporate debtor.
Disputes later arose between the parties, and the appellant purported to cancel the powers of attorney in December 2018. Meanwhile, the project had been registered with HARERA, revised building plans had been approved, and 147 units had already been allotted to allottees. Proceedings then ensued before multiple forums, including Section 9 arbitration proceedings, arbitral proceedings, HARERA, and finally insolvency proceedings under Section 7 of the IBC, which were admitted against the corporate debtor on Oct 21, 2024.
Thereafter, the appellant filed application seeking exclusion of the unsold inventory in the project and the subject property from the valuation of the corporate debtor and from the Information Memorandum. That application was rejected by the NCLT on July 10, 2025.
