NCLAT Rejects Monetisation of Unsold Units in Real Estate Project Without Revalidated Building Plan

The National Company Law Appellate Tribunal (NCLAT) has refused to allow the Interim Resolution Professional (IRP) to monetise unsold units of the 'The Belvedere' real estate project in Noida. The tribunal held that such monetisation would serve no purpose without a revalidated building plan.

The case pertains to a Section 7 application filed by homebuyers against Sequel Buildcon Pvt. Ltd., which led to the initiation of a reverse Corporate Insolvency Resolution Process (CIRP). The project, 'The Belvedere,' was under development in Noida when the issues arose.

During an appeal filed by Anoop Kumar Srivastava, the suspended director of Sequel Buildcon, the NCLAT had previously approved a Memorandum of Understanding (MoU) dated 12 July 2023. This MoU was between the homebuyers, the suspended promoter, and EKA Life Services, the strategic financier, for funding the construction. The NCLAT directed the completion of the project in phases under the supervision of the IRP, with the corporate debtor to be maintained 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 the Noida Authority and Aditya Birla Finance Ltd. The IRP explained that approximately 250 units remained unsold and that proceeds from their sale would be used for construction and settlement of liabilities. The 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 the 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.

This decision highlights the importance of regulatory compliance in real estate projects, especially during insolvency proceedings. It underscores the need for a revalidated building plan to ensure the legal and orderly progression of construction and monetisation activities.