The Mumbai Bench of the National Company Law Tribunal (NCLT) has held that the liquidator cannot proceed to auction any property unless he has cogent evidences that MOU, Allotment Letter and Possession Letter are ingenuine and are subterfuge created to defeat the ownership entitlement of corporate debtor. It clarified that the powers of the Insolvency Professional under Section 18 and Section 25 of the Code, and of the Liquidator under Section 35, extend only to assets owned by the Corporate Debtor. The Code does not empower the RP/Liquidator to take control of assets belonging to third parties or deal with the rights of third parties in assets even if existing in name of the corporate debtor.
The Division Bench comprising Sushil Mahadeorao Kochey (Judicial Member) and Prabhat Kumar (Technical Member) observed that the Society’s maintenance claim and records in the name of the Corporate Debtor were not conclusive evidence that the property belonged to the Corporate Debtor. While the Society may levy dues from the recorded owner, mere recording in the Society’s records cannot conclusively determine ownership, especially where the Applicant’s rights flowed from the registered Development Agreement and were further supported by the MOU, Allotment Letter and Possession Letter, the authenticity of which had not been disputed by the Liquidator.
The Tribunal specifically observed that the Liquidator had made no inquiry from the signatory of the MOU, Allotment Letter and Possession Letter as to whether those documents were validly executed. It further noted that even in the SCC meeting dated October 06, 2025, the Liquidator had framed the issue by acknowledging the existence of an MOU under which SLDPL acknowledged financial liability to Manoj Jahagirdar and allotted Shop No. 004A in settlement thereof, though legal ownership had not yet been transferred.
The Tribunal held that the Liquidator could not proceed to auction the said property unless he had cogent evidence that the MOU, Allotment Letter and Possession Letter were ingenuine and were a subterfuge created to defeat the ownership entitlement of the Corporate Debtor. It found that the Liquidator had placed no cogent material on record to doubt the genuineness of those documents, and that his case rested only on levy of maintenance fees by the Society from the Corporate Debtor and the absence of a registered conveyance, although the Applicant’s entitlement was admittedly flowing from the registered Development Agreement.
The Tribunal observed that, in the facts and circumstances, the Liquidator could not include Shop No. 004A in the liquidation estate unless the MOU, Allotment Letter and Possession Letter were found to be ingenuine. It reiterated that the powers of the Insolvency Professional under Sections 18 and 25 of the Code, and of the Liquidator under Section 35, extend only to assets owned by the Corporate Debtor, and that the Code does not empower the RP/Liquidator to take control of assets belonging to third parties or deal with third-party rights in assets even if such assets stand in the name of the Corporate Debtor.
At the same time, the Tribunal clarified that it was not inclined to conclusively declare the Applicant’s ownership over the premises. It considered that the ends of justice would be met by protecting the possession of the Applicant, subject to final adjudication by a competent forum, and therefore directed the Liquidator to refrain from auctioning Shop No. 004A as property of the Corporate Debtor at present, while granting liberty to challenge the Applicant’s claim if cogent evidence was found.
Briefly, an interlocutory application was filed by Manoj Chandrakant Jagirdar under Section 60(5) of the Insolvency and Bankruptcy Code, 2016, seeking removal of Shop No. 004A on the ground floor, facing the road at Sanghvi Square Mall, Ghatkopar West, Mumbai, from the list of properties belonging to the Corporate Debtor in the liquidation proceedings of Sanghvi Land Developers Private Limited. The Applicant also sought quashing of the eviction notice, restraint against eviction, dispossession and auction, in respect of the said shop.
The Applicant, along with his wife, claimed to be the owner of Shop No. 004A in the commercial building developed by the Corporate Debtor. Bank of Baroda was the Financial Creditor which had initiated CIRP against the Corporate Debtor. The CIRP against the Corporate Debtor was admitted and thereafter a liquidation order was passed. The Applicant was thereafter issued an eviction notice, requiring handover of possession of the said shop on the basis that it formed part of the liquidation estate.
The Applicant claimed ownership, occupation, possession and enjoyment of the shop admeasuring approximately 150 sq. ft. on the strength of an Allotment Letter, Possession Letter, and Memorandum of Understanding. The Applicant’s case was that pursuant to a Will probated by the High Court, the property “Manoj Kutir” vested in him, and he thereafter entered into a Development Agreement with the Corporate Debtor, granting development rights and becoming entitled to 2700 sq. ft. of commercial area in the redeveloped project.
The Applicant further stated that the Corporate Debtor had also acquired development rights in the adjacent Bagwe Mansion property and developed both properties together. After redevelopment and issuance of the completion certificate, the Applicant was allotted certain premises, and according to him, the balance area of 805 sq. ft. built-up area remained to be allotted. The Applicant contended that, in partial settlement of this deficit, the Corporate Debtor executed the MOU and thereafter issued the Allotment Letter and Possession Letter in respect of Shop No. 004A, handing over possession thereof.
The Applicant stated that he replied to the eviction notice asserting his ownership and possession, but despite that, the Liquidator proceeded with further communications seeking eviction. The Applicant’s case was that the said shop was a third-party asset allotted long prior to initiation of CIRP and liquidation proceedings and therefore could not be treated as an asset of the Corporate Debtor.
Appearances:
Advocates Aman Kacharia and Sakshi Agarwal, for the Applicant
Advocate Gaurav Devdhekar, for the Respondent
