Development Rights Crystallised Before Termination Of Collaboration Agreement Form Part Of Corporate Debtor's Assets: NCLT New Delhi
Mohd Malik Chauhan
29 July 2025 3:55 PM IST
The National Company Law Tribunal (NCLT) New Delhi bench of Shri Manni Sankariah Shanmuga Sundaram (Judicial Member) and Shri Atul Chaturvedi (Technical Member) has held that developments rights crystallised before the termination of collaboration agreement can be included in the assets of the corporate debtor even though such termination of the agreement was later upheld by the...
The National Company Law Tribunal (NCLT) New Delhi bench of Shri Manni Sankariah Shanmuga Sundaram (Judicial Member) and Shri Atul Chaturvedi (Technical Member) has held that developments rights crystallised before the termination of collaboration agreement can be included in the assets of the corporate debtor even though such termination of the agreement was later upheld by the Arbitral Tribunal. These rights were exercised by the Corporate Debtor to develop the real estate project which holds relevance in the CIRP.
The present application has been filed under section 60(5) of the Insolvency and Bankruptcy Code, 2016 (IBC) seeking exclusion of the unsold inventory in the project spaze arrow from the valuation and Information Memorandum. It is further prayed that the subject property should be excluded from the valuation and the Information Memorandum.
The Applicant submitted that the corporate debtor has no rights over the subject property, the project or the unsold inventory therein. Therefore, these assets cannot be incorporated in the Information Memorandum and considered for the valuation as they do not form part of the corporate debtor's assets.
It was further submitted that the Corporate Debtor does not possess development rights in respect of the Subject Property. Therefore, treating the Subject Property as an asset of the Corporate Debtor would amount to a manifest misrepresentation of facts to any prospective resolution applicant.
Per contra, the Respondent submitted that the Applicant cannot seek exclusion of the properties of the Corporate Debtor from the purview of this Hon'ble Adjudicating Authority, as the Collaboration Agreement entered into between the Applicant and the Corporate Debtor was never cancelled.
It was further submitted that The Applicant, having relied upon the Award dated 14.09.2022 to assert that the Collaboration Agreement is inoperative, cannot now claim any right over the unsold inventory. It is not open to the Applicant to seek its exclusion from the Information Memorandum or valuation exercise.
The Tribunal observed that the Adjudicating Authority is not venturing into the merits of the Arbitral Award or contract law. It is just determining whether the development activity or rights of the corporate debtor in the project qualifies as an asset under the IBC. The NCLAT in K.H. Khan & Anr. v/s Art Constructions Pvt. Ltd. & Ors held that such issue falls within the remit of the Adjudicating Authority to determine whether the property should be included in the Information Memorandum.
In KH Khan, the Appellate Tribunal relied on its own judgment in Nilesh Sharma, RP of Today Homes v. Mordhwaj Singh & Ors. The facts of this are similar to the facts of the present case. In that case, the landowners sought to exclude the property developed under the Development Agreement from the Information Memorandum after the termination of Power of Attorney and arbitral proceedings. The Tribunal rejected the submission and allowed the Resolution Professional's decision to include the assets in the CIRP.
Based on the above, it held that “the Applicant's assertion that the Collaboration Agreement was terminated and upheld by the Arbitral Tribunal, though not denied, does not in itself extinguish the bundle of development rights which had already crystallised prior to the termination, and which were exercised by the Corporate Debtor to construct the real estate project in question.”
Accordingly, the present application was dismissed.
Case Title: Mr. ISHAN SINGH Vs. Mr. GAURAV KATIYAR
Case Number:IA 438/2025 IN CP: IB 284/ND/2021
Judgment Date: 10/07/2025