NCLT Rejects HDIL's Claim Over Real Estate Development Rights

Mumbai, Feb 10: The National Company Law Tribunal (NCLT) has declined to adjudicate competing claims over development rights and sale receivables arising from a Joint Venture Agreement (JVA) involving Housing Development and Infrastructure Limited (HDIL). The tribunal ruled that the dispute is contractual in nature and falls outside its insolvency jurisdiction.

The matter arose from interlocutory applications filed by the Resolution Professional (RP) of HDIL and Unity Small Finance Bank Ltd, which stepped in after the merger of Punjab and Maharashtra Cooperative Bank. The applicants sought declarations that HDIL was entitled to 55 per cent of the total sale receivables from a proposed real estate development on nearly 100 acres of land at Shamsguda in Balanagar Mandal, Telangana, based on a Joint Venture Agreement executed on September 26, 2015. They also sought injunctions restraining the land-owning cooperative society and subsequent developers from creating third-party rights.

In its application, the Resolution Professional contended that under the 2015 JVA, HDIL was granted 55 per cent of the total sale receivables from any development undertaken on the society’s land. The RP argued that these development rights constituted property of the Corporate Debtor and formed part of its asset pool. The plea further stated that in 2018, HDIL entered into an Assignment of Receivables Agreement, assigning its 55 per cent share of receivables to its lenders—Punjab and Maharashtra Cooperative Bank and later Unity Small Finance Bank—thereby creating a security interest in favour of the bank. The RP maintained that the rights arising from the JVA were valid, subsisting, and in existence at the time of initiation of the Corporate Insolvency Resolution Process (CIRP), and therefore required protection to ensure meaningful completion of the insolvency process.

The applications were opposed by the Telangana-based developer, which argued that the JVA predated the commencement of HDIL’s insolvency proceedings and was purely contingent in nature. The developer contended that the reliefs sought were declaratory and pertained to contractual rights and obligations that arose prior to CIRP, placing them beyond the scope of the NCLT’s jurisdiction. It was further submitted that the enforcement, performance, and alleged repudiation of the JVA, along with subsequent assignment agreements, required detailed evidence and adjudication, which could only be undertaken by a civil court. The developer also argued that no right, title, or interest in immovable property could be created or enforced on the basis of unregistered instruments, rendering HDIL’s alleged 55 per cent entitlement unenforceable in law.

According to the developer, the 2015 JVA contemplated several preconditions—including formation of an LLP, regulatory approvals, funding, and actual development of 73 acres of land—which were never fulfilled. No development took place, no receivables arose, and therefore no assignable security could have been created in favour of Unity Bank. It was also argued that the JVA had stood terminated due to efflux of time, following which fresh development agreements were executed in May 2023 and later cancelled, rendering the applications infructuous.

Accepting these submissions, the tribunal held that the issues raised involved disputed contractual rights requiring detailed examination, which could not be adjudicated under the summary jurisdiction of the NCLT under the Insolvency and Bankruptcy Code, 2016. Relying on Supreme Court judgments in Gujarat Urja Vikas Nigam Ltd. v. Amit Gupta and Tata Consultancy Services Ltd. v. Vishal Ghisulal Jain, the bench reiterated that the NCLT’s residuary jurisdiction under Section 60(5)(c) of the IBC extends only to disputes that arise out of or are directly connected with insolvency proceedings. Since the JVA and assignment of receivables predated HDIL’s insolvency and did not form the basis for initiation of CIRP, the claims were held to be outside the tribunal’s remit.

The bench also noted that Unity Small Finance Bank had already approached the Bombay High Court by filing a commercial suit in 2025 seeking declarations and injunctions relating to the assignment agreement, reinforcing the conclusion that the dispute was essentially civil in nature. Accordingly, the tribunal ruled that no interim relief could be granted in aid of final reliefs that were themselves not maintainable before the NCLT. Both interlocutory applications were dismissed, leaving the parties to pursue their remedies before appropriate civil fora.