NCLT Delhi Reiterated Civil Court’s Decision Would not Change Transaction Fundamental Characteristics


Aastha Thakur

Published on: October 27, 2022 at 17:01 IST

The National Company Law Tribunal (NCLT) while deciding on the matter held that a civil court’s decision will not change the fundamental nature of a transaction. In order to adjudge the claim, the transaction must be taken into account. The Principal Bench was comprised of Justice Ramalingam Sudhakar (President) and Shri Avinash Kumar Srivastava (Technical Member).


M/s Jones Lang Lasalle Building Operations Pvt. Ltd. (“Operational Creditor”) had filed a application under Section 9 of the Insolvency and Bankruptcy Act, 2016 (“IBC”), requesting initiation of Corporate Insolvency Resolution Process (“CIRP”) against M/s Celebration City Projects Pvt. Ltd. (“Corporate Debtor”). The Corporate Debtor was admitted into CIRP.

The Corporate Debtor has allocated real estate to the Applicant. The Resolution Professional had denied the Applicant’s claim on the grounds that she was no longer a real estate allottee as an outcome of the Arbitral Award she got on October 25, 2018, which had been in her favour. According to the Award, the Corporate Debtor must provide the Applicant possession of the Unit and pay interest-bearing penalties for the delay.

The Award included a clause that gave the applicant the right to enforce the unit allotment within 60 days or, in the event of a default, to obtain the same by a money decree. As a result, the Applicant asserted its claim before the Resolution Professional, arguing that because it is a real estate allottee, it should be handled as such. As the award was in the form of a decree, the Resolution expert rejected the claim and instructed the applicant to file it as a financial creditor.

After that, the applicant submitted a request to the adjudicating authority to have her status as a class of allottees financial creditor of the corporate debtor recognised.

Issues Raised by the Applicant

The Applicant contended that the nature of the original document shows that she is a real estate allotteeResolution Professional shouldn’t be precluded from admitting a class of real estate allottees’ claim by the decree issue. The case cited hereby was Mukul Agarwal v Royale Resinex Pvt. Ltd., C.A. (AT) (Ins) No. 777 of 2020, wherein it was held that the decree of a civil court will not alter the basic nature of a transaction.

Decision Of NCLT

The Bench further cited the NCLAT ruling in Mukul Agarwal v. Royale Resinex Pvt. Ltd., C.A. (AT) (Ins) No. 777 of 2020, noting that NCLAT had ruled that a civil court’s decision would not change a transaction’s fundamental characteristics. For the purpose of deciding the claim, the transaction must be taken into consideration on a prima facie basis.

The court’s decree is a measure of debt, thus that is how it should be considered. Based on the aforementioned legal position, the Bench decided that the applicant should be recognized and dealt with as a real estate allottee/creditor in class.

The application was approved and dismissed.

Case Title: M/s Jones Lang Lasalle Building Operations Pvt. Ltd. v M/s Celebration City Projects Pvt. Ltd.

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