NCLAT Rejects Monetisation of Unsold Real Estate Units Without Revalidated Building Plan
The National Company Law Appellate Tribunal (NCLAT) has denied the Interim Resolution Professional's (IRP) request to monetise unsold units of a real estate project, citing the lack of a revalidated building plan as a critical issue.
NclatReal EstateCirpMonetisationBuilding PlanReal Estate NewsSep 30, 2025
In this case, a Section 7 application filed by homebuyers against Sequel Buildcon Pvt. Ltd. had earlier been admitted by the National Company Law Tribunal (NCLT), leading to the initiation of a reverse CIRP. The project, known as “The Belvedere,” is being developed in Noida.
During the appeal filed by Anoop Kumar Srivastava, the suspended director of the company, the NCLAT had earlier approved a Memorandum of Understanding (MoU) dated 12 July 2023 between the homebuyers, the suspended promoter, and EKA Life Services, the strategic financier, for funding the construction. Directions were issued for the completion of the project in phases under the supervision of the IRP, with the corporate debtor to be kept as a going concern.
Subsequently, the IRP filed I.A. No. 4215 of 2025 seeking permission to monetise unsold inventory to generate funds for completing construction and paying dues owed to Noida Authority and Aditya Birla Finance Ltd. The IRP explained that approximately 250 units remained unsold and that proceeds from their sale would be utilised for construction and settlement of liabilities. Noida Authority submitted that it had no objection to such monetisation, provided its dues were paid at the time of each sale.
However, Aditya Birla Finance Ltd. objected, stating that it held a second charge over the land and an exclusive charge over receivables. It also argued that without a revalidated building plan from Noida Authority, construction could not legally proceed and monetisation would have no value.
The bench, comprising Justice Ashok Bhushan (Chairperson) and Barun Mitra (Technical Member), observed that the building plan had not been revalidated, and a writ petition filed before the Allahabad High Court seeking revalidation had been dismissed. The order of the High Court had been challenged before the Supreme Court, where notice had been issued but no final decision rendered.
The NCLAT explained that when construction could not commence due to the lack of a valid plan, monetisation of unsold units would not achieve the stated objective of completing the project. It further observed that Noida’s conditional consent did not address the core issue of map revalidation.
Based on these findings, the NCLAT dismissed the IRP’s application seeking permission to monetise the unsold units. It also disposed of a related application by homebuyers after recording the IRP’s statement that no unit would be cancelled. The appeal was directed to be listed again on 6 October 2025 to consider whether the reverse CIRP should continue or be converted into a regular CIRP under the Insolvency and Bankruptcy Code, 2016.
Frequently Asked Questions
What is the National Company Law Appellate Tribunal (NCLAT)?
The National Company Law Appellate Tribunal (NCLAT) is a statutory body established under the Companies Act, 2013, to hear appeals against orders passed by the National Company Law Tribunal (NCLT). It also deals with matters related to the Insolvency and Bankruptcy Code.
What is a reverse Corporate Insolvency Resolution Process (CIRP)?
A reverse Corporate Insolvency Resolution Process (CIRP) is a mechanism under the Insolvency and Bankruptcy Code (IBC) where the process is initiated to revive a project or company by addressing the issues that led to its insolvency, often involving the completion of ongoing projects or the sale of assets.
Why did NCLAT reject the monetisation of unsold units?
NCLAT rejected the monetisation of unsold units because the building plan for the project had not been revalidated, making it impossible to legally proceed with construction. Monetisation without a valid plan would not serve the purpose of completing the project.
Who is the Interim Resolution Professional (IRP)?
The Interim Resolution Professional (IRP) is appointed during the insolvency process to manage the affairs of the corporate debtor. The IRP's role includes taking control of the company's assets, preparing a resolution plan, and ensuring the company's operations continue smoothly during the insolvency process.
What is the significance of a revalidated building plan in real estate projects?
A revalidated building plan is crucial for real estate projects as it ensures that the project complies with current building regulations and zoning laws. Without a revalidated plan, construction cannot legally proceed, and any attempts to monetise unsold units would be futile.
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