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Judgment
[Per : Justice Sharad Kumar Sharma, Member (Judicial)]
This Tribunal is constrained to deliver this Judgment, in the three instant Company Appeals, with an anguished note, as to the manner in which the NCLT has proceeded to pass the Impugned Order, overlooking the implications of the interim order passed by this Appellate Tribunal. It is expected that the Tribunals or Courts, who are lower in hierarchy of judicial system, have to exercise certain sincere level of self-restraint in accordance with the norms settled by Bangalore Declaration, while sitting over or passing any orders, which are contrary to the orders that have already been passed by the Appellate Forums.
However, in the instant Company Appeals, the Orders, which are under challenge have been passed by the Learned Adjudicating Authority on the first hearing, without even considering the material on record, and even without recording its rationale finding on them and even without giving an opportunity the opposite side to file any objection to it, which is a matter of deep concern for us, as it reflects upon the judicial propriety and undisclosed concern too.
Company appeal, CA(AT)(Ins) No.311/2025 has been filed by Bhalakh Realtors Pvt. Ltd & Another, against the impugned order passed in IA(IBC)/784(CHE)/2025 in CP/IBC/889/CHE/2019, ordering Religare Finvest Ltd. to release its charge over 8.87 acres of land belonging to the Appellants and to hand over the title deeds to Respondent-2 (the successful Resolution applicant, Chennai Sheltrex Homebuyers Welfare Association). Company appeal CA(AT)(Ins) No.312/2025 has been filed by Religare Finvest Ltd. being aggrieved against the same aforesaid order dated 20.06.2025 that, was passed in IA(IBC)/784(CHE)/2025, directing it to release its charge and to hand over title deeds for the entire 8.87 acres to Respondent-2.
Company appeal CA(AT) (Ins) No. 313/2025 has been filed by Religare Finvest, advocating its grievances, being aggrieved against the order passed in IA 341/2025 dated 17.04.2025, directing Respondent-2 to make the full payment to the RP, as per the approved Resolution Plan by 5 PM on the same day. It is to note that the order challenged in CA(AT)(Ins) No. 313/2025 has been issued in furtherance of the implementation of the resolution plan and has since been subsumed by the subsequent order dated 20.06.2025 of Ld. NCLT, which is being independently challenged in CA(AT)(Ins) Nos. 311 and 312 of 2025. Since the impugned order has issued certain directions to Religare Finvest Ltd., who is the Appellant in CA(AT)(Ins) No. 312/2025, we will be taking up this company Appeal for consideration, at the first instance.
In the company appeal CA(AT)(Ins) No. 312/2025, the basic facts as involved are that the appellant provided term loan of ₹10 crore to the corporate debtor (CD) by way a loan facility agreement dated 29.02.2016 and obtained a mortgage deed in its favour for securing the repayment of said loan. Subsequently, the CD was admitted into CIRP process by order dated 10.12.2019, on an application that was filed by one homebuyer S. Balasubramaniam. During the CIRP proceedings, a resolution plan was submitted by respondent-1 (Chennai Sheltrex Home Buyers Welfare Association) and the same was approved by Ld. NCLT, vide its order dated 16.07.2024, as rendered in IA(IBC)/1729(CHE)/2023 in CP/IBC/889/(CHE)/2019 preferred under Section 30(6) & Section 31(1) of I & B Code, to be read with Regulation 39 of the CIRP Regulations, 2016, and Rule 11 of the NCLT Rules. The said order was challenged by the Appellant, Religare Finvest, praying for rejection of said resolution plan on the ground that the plan seeks to deprive him, the secured financial creator of his security, without complying with the provisions of section 30 of the code, under the garb of the principles of commercial wisdom of the COC. The said appeal CA(AT)(Ins) No.45/2025 is pending adjudication before this Appellate Tribunal.
The said order was also challenged by Bhalakh Realtors by filing a Company Appeal, being Company Appeal CA(AT) (CH) (Ins) No.301/2024, on the grounds that the approved resolution plan contains provision for transfer of an area of 8.87 acres to the SRA, though the Appellant had permitted the CD to construct and develop an area limited to 4.33 acres of the said land under the power of attorney dated 02.07.2015.
The facts under consideration in the said Company Appeal No.301/2024, were that a Deed of General Power of Attorney, was executed on 02.07.2015 by M/s. M.P. Living Space Private Limited, in favor of Sheltrex Developers Private Limited and certain rights were conveyed in relation to the subject property, for taking action for the purposes of development of the property as described in the schedule there under, the property thus divested, by the said Power of Attorney for development under the Development Agreement was of an area measuring about 4 Acres 33 Cents lying in the Appur village of Chengalpattu Taluk, Kanchipuram District, the General Power of Attorney dated 02.07.2015 permitted restricted exercise of rights in relation to the aforesaid land as given above, limited to the covenants of the terms of the attorney itself and it could not have been stretched or elongated to made applicable, beyond what was contained in the Power of Attorney. Further, a Development Agreement, was executed on 09.04.2014 between Bhalakh Realtors and the CD (Sheltrex Developers Private Limited) to the effect that, the CD would be entitled for developing the scheduled property by constructing residential and commercial buildings thereon under the name of Sheltrex City Oragadam. This Development Agreement found reference to the Attorney dated 02.07.2015, which was a registered Document No.7932/2015, authorizing the CD to develop the scheduled property and hence the signatories to the Power of Attorney of 02.07.2015, to the Development Agreement of 09.04.2014, and its consequential Addendum Agreement dated 29.01.2015, were bound by the terms and conditions and the limits of right conferred by the Deed that, will obviously be limited to be enforced to the extent of property defined and described under the Attorney dated 02.07.2015, which has been referred to above.
Thus, the Appellant Bhalakh Realtors had in the Company Appeal contended that the scope and area of operation of the Development Agreement could not have been extended by virtue of the approval of the Resolution Plan, beyond the area of 4.33 acres that was being conveyed through the aforesaid Power of Attorney for the purpose of construction of the residential project by M/s. M.P. Living Space Private Limited who was the owner of the land and who had granted the development rights to M/s. Bhalakh Realtors Private Limited, even though the said plan was approved by the order passed under Section 30(6) & Section 31(1) of I & B Code, to be read with Regulation 39 of the CIRP Regulations, 2016.
When the Appeal was argued on 22.08.2024, we had proceeded to pass the following orders in the presence of the Respondents who had participated in the proceedings of 22.08.2024. The order is extracted as under: -
“A very peculiar question which is under consideration in the instant Company Appeal is where the Appellant puts challenge to the Impugned Order dated 16th July 2024, as rendered by the Learned Adjudicating Authority in IA(IBC)/1729(CHE)/2023 in Company Petition IB/0889/2019. The Appellant contends that, he happens to be an owner of a piece of land in controversy i.e., 8.87 acres, and that while there is no dispute inter se between the parties that out of aforesaid piece of land, for an extent of land having an area of 4.33 acres, which has been described in the attorney of 2nd July 2015, a development right has been conferred upon the Respondent over which there is no cloud as such, the entire 8.87 acres of land has been made part of the Resolution Plan by the Respondent on the basis of the claim that the entire 8.87 acres of land was mortgaged to M/s. RELIGARE the Financial Creditor for the purposes of facilitating the development of the project of Phase-I.
It is argued by the Counsel for the Appellant that, taking advantage of the covenants of the Mortgage Deed of 30th March 2016 and its corelated redemption, for the land for 4.33 acres, the Respondent has brought entire 8.87 acres into the ambit of the Resolution Plan which now stands approved. The Respondent contends that, he has developed the charge, on the basis of the Mortgage Deed, over the balance land apart from 4.33 acres and hence, the same cannot be made as a subject matter of the dispute in respect of the project by virtue of the approval of the Resolution Plan, as it has been granted by the Learned Adjudicating Authority.
At this stage, in order to balance the equities of all the parties, since, as already recorded, the parties are not in contest with regards to the land covered by the power of attorney document dated 2nd July 2015, having an area of 4.33, which is the land which stands demarcated as per the terms of the deed itself, it will be open for the Respondent to develop the said land in accordance to the sanctioned plan, as per the Resolution Plan, in accordance with Law.
As far as the balance land, that is, (8.87 – 4.33) acres is concerned, which is not the subject matter of the Attorney of 8th July 2015, the parties would maintain a status quo till the next date of listing.
The Respondent who have already put in appearance may file their Counter Affidavit within a period of 3 weeks from today. List as soon as the counter Affidavit is filed by the Respondent. List the Appeals on 03.10.2024, as prayed for by both the parties”.
The implication of the aforesaid interim order was that the right of utilization or to develop the land by the SRA is to be and was restricted to the land having an area of 4.33 acres only, for the time being till the Appeal is finally decided and that, a status quo for the remaining land of 4.54 acres (=8.87-4.33) was directed to be maintained. The said Appeal is still pending consideration before this Tribunal, in which the Resolution Professional and Chennai Sheltrex Homebuyers Welfare Association, are the parties, who had already put an appearance and are presently contesting the matter.
In the meanwhile, Respondent-1 (SRA) filed an application, being IA(IBC)/784(CHE)/2025 in CP/IB/889/(CHE)/2019 by invoking the provision contained under Section 60(5) of I & B Code, to be read with Rule 11 & 14 of NCLT Rules, wherein the Applicant/Respondent herein in Comp App (AT) (CH) (Ins) No.312/2025, had prayed for the following reliefs: -
“In view of the facts and circumstances mentioned in Paragraph 5 above, it is most humbly prayed that this Hon’ble Tribunal may be pleased to pass the following orders:
a. To direct the 1st Respondent herein to accept the sum of Rs.88,000/- as per the approved Resolution Plan;
b. To direct the 1st Respondent herein to release the charge over the entire extent of 8.87 Acres of land and hand over the original Title Deeds pertaining to the Chennai Project to the Resolution Applicant;
c. Pass any such further or other orders as the Hon’ble Tribunal may deem fit and proper in the facts and circumstances of the case thus, render justice”.
The Applicant to said Application, is the Respondent-1 herein and also Respondent No.2 in the Comp App (AT) (CH) (Ins) No.301/2024 and there would be a deeming presumption that, they had participated in the proceedings of Company Appeal on 22.08.2024, they are in the knowledge of passing of the Interim Order by this Tribunal on 22.08.2024. Even then, they prayed for a direction for Religare Finvest, Appellant herein, to “release the charge over the entire property” i.e., total of 8.87 acres and further and to surrender the title deeds pertaining to the said entire land covered by the mortgage deed. The question would be as to whether in the light of the Interim Order passed by us on 22.08.2024, this relief was at all maintainable in respect of the part of the land for which status quo has already been directed to be maintained and whether the charge over the remaining land excluding the land covered by the power of attorney can be released despite the Interim Order passed by us being in operation and prior to filing of the application, there was no classification or modification of the order was sought, hence it remained undisturbed.
It is to be noted that in the said Application thus preferred by the Respondent-1 herein, Sheltrex Homebuyers Welfare Association, consciously and with a knowledge had made a reference of the Interim Order dated 22.08.2024 in para 5 (IV) of the said application, which is extracted hereunder: -
“It is hereby submitted that with respect to the Phase-II of the Project of the Resolution Plan, there was a status quo granted by the Hon’ble NCLAT, Chennai Bench, vide order dated 22.08.2024 (copy of the interim stay order dated 22.08.2024 passed by the Hon’ble NCLAT, Chennai Bench in Company Appeal (AT) (CHE)/(IBC)/301/2024 is annexed herewith as Annexure-A3”.
From this, it will have to be deemed inferred that Ld. NCLT. did had the knowledge of passing of the Interim order of 22.08.2024 that was passed by us in CA(AT)(CH)(Ins) No.301/2024, since being part of the pleadings of IA(IBC)/784(CHE)/2025 and since the applicant’s counsel Mr. Kaushik N Sharma, before this tribunal had been also the counsel on record in the proceedings before the Learned NCLT. Even then, Learned Tribunal, has proceeded to pass the following impugned order: -
“In the instant case there is no directions from the Appellate Court in this regard. Let the amount be deposited in the ESCROW account with liberty to R1 to withdraw the amount. The Respondent No.1 is directed to release the charge over the entire extent of 8.87 acre of land and hand over the original title deeds pertaining to the Chennai project to SRA/ Homebuyers association within a week”.
The order passed by the Tribunal, on the face of it, is in derogation to the Interim Order passed by us on 22.08.2024, by giving direction for releasing the charge to the entire extent of 8.87 acres of land, which was uncalled for and against judicial propriety and discipline. It is possible that since Bhalakh realtors, in whose favour the interim order was passed by us on 22.08.2024, was not a party to the proceedings and since the dispute before Ld. NCLT was between the appellant, Religare Finvest, and the respondent-1, Sheltrex Homebuyers Welfare Association, NCLT, has proceeded to pass such an order because of the fact that M/s. Religare Finvest was not cooperating with respondents 1& 2 herein and that in the appeal preferred by Religare Finvest against the approved resolution plan, there was no stay, Ld. NCLT proceeded to pass such an order, which it should not have done in the first place. The order passed is having a direct bearing and in derogation to the Interim Order, which had directed to maintain a status quo for the balance land of 4.54 acres, because a surrender of the charge of the land for which there operates a status quo order by an Appellate Forum would amount to nullifying the effect of the said Interim Order dated 22.08.2024.
Ld. NCLT should have provided an opportunity of hearing to the other side, for filing of objection, or at least should have sought for solicited clarification from this Appellate Tribunal or from the parties concerned too at least before proceeding to pass an order. A bare adjudications procedural necessity to attach fairness to an order is that the parties are required to be heard, which was not followed and adhered to by the Tribunal, while passing the Impugned Order, because the order itself does not disclose or record any finding that an objection was ever called and even it does not disclose the application of mind by the Tribunal of assigning reasons to the impugned order, while dealing with the contents of the IA preferred by Respondent No.1, which contained the reference to the Interim Order passed by us on 22.08.2024, in a prior pending Company Appeal, where the Applicant to the IA was already contesting the proceedings. Ld. NCLT was in all its fairness was expected to give fair hearing to any person or a party who is likely to be affected by the orders to be passed by it, and particularly when the details of such affected party was already available in the pleadings of the application, which was for its own reasons was overlooked by Ld. NCLT.
We don’t see any logic or an apparent application of mind as to how the Tribunal could be ignorant to not to consider the pleading or not to taking a precaution of seeking clarification of the order dated 22.08.2024, before passing of the Impugned Order of 20.06.2025, which would be having an overriding effect of the Interim Order already passed by us on 22.08.2024 in Comp App (AT) (CH) (Ins) No.301/2024. Further, as the impugned order happens to be in derogation of the Principles of Natural Justice, without considering the pleadings that were raised by the parties to the Application and without even assigning any reasons, hence the same would stand quashed and Ld. NCLT will pass a fresh orders if required after taking into account the implications of the interim orders passed by us on 22.08.2024 in CA(AT)(Ins) No.301/2024.
In Comp App (AT) (CH) (Ins) No.313/2025, Religare Finvest Limited has challenged the order of 17.04.2025, passed by the Learned NCLT in IA(IBC)/341(CHE)2025 in CP/IBC/889/(CHE)2019. This Company Appeal is accompanied with an application for Condonation of Delay in refiling of the Appeal, being IA No.937/2025. Having considered the reasons which have been given in para 2 & 2.4 and upon been satisfied with the same, coupled with the fact that the issue of refiling happens to be an issue, which is exclusively between the Appellant and the Tribunal, the delay in refiling of the Company Appeal, would stand condoned and IA No.937/2025 would stand allowed.
An IA(IBC)/341(CHE)/2025 was preferred by the Resolution Professional under Section 60(5) of the I & B Code, alleging non-implementation of the resolution plan by the SRA, as per plan in respect of the Sheltrex Developers Private Limited. The relief, which was thus claimed therein was to the following effect: -
“Under the above facts and circumstances, the Applicant humbly prays that this Hon’ble Tribunal may be pleased to consider and pass order
a)Based on above facts on non-implementation of the plan and to give further directions to the Resolution Applicant CSHBWA
b)Direct the Resolution Applicant to pay an amount of Rs.38,40,000/- to Erstwhile RP and authorized signatory of monitoring Committee towards CIRP and other expenses incurred from the time of Filing of resolution plan to till date.
c)Direct the Resolution Applicant to pay Rs.88,500/- as their share of cost towards fees of transaction auditor
d)Pass such further or other orders/reliefs as may be deemed fit and proper in the facts and circumstances of the case and thus render justice”.
This Application was preferred on 13.02.2025, and therein, the RP/ the Applicant to the IA No.341/2025, submitted the fact of passing of the Interim Order, passed by us on 22.08.2024 in Comp App (AT) (CH) (Ins) No.301/2024, seeking for issue of further directions to the SRA for implementation of the resolution plan, apart from praying for reimbursement of the expenditure already incurred. The pleading made in para eight of the said application is given below:-
“8.An application was filed by JD partner and landlord Bhalakh realtors Pvt Ltd before Honourable NCLAT Chennai vide CA(AT)(CH)(Ins) No.301/2024 wherein during the hearing held on 22.08.2024, Honourable NCLAT, Chennai ordered for interim stay in respect of land of 5.3 acres. However, currently CHSBA is left with 3.87 acres. It is to be noted that during 2022, CHSBA submitted plan for only 3.87 acres based on which resolution plan was filed before honourable tribunal vide IA/102/2022, which was rejected with liberty to refile consequent to admission of claims of the two corporate guarantors and subsequently submitted plan for 9.30 acres in August 2023, which was filed before the tribunal wide IA/1729/2023. Last hearing was on 7.02.2025 and the next date of hearing of under Chennai and the said subject matter is on 05.03.2025. (Refer annexure-6).”
It can be seen that the Learned Tribunal in haste for reasons known to it and without even going through the contents of the Application, had cursorily proceeded to pass the Impugned Order, directing the SRA to make the payment as per the plan without own considering the prayer of RP that was sought to give necessary direction to the SRA to take action based on the interim order of this Appellate Tribunal. This order also does not seem from the face of it to have been passed after hearing the respondent, that is, SRA and after taking into account the implications of the interim order passed by us on 22.08.2024, and hence will be considered to be suffering from judicial vices, procedural vices, and vices of Audi Alteram Partem. Thus, the Impugned decision, reflects non-application of mind, as it is based upon the non-consideration of the entire facts on record and would be deemed to be overriding the Interim Order of 22.08.2024 passed by us in Comp App (AT) (CH) (Ins) No.301/2024. Hence, the same would stand quashed to the extent that it has ordered the implementation of the approved resolution plan without taking into account the implication of the aforesaid interim order passed by us. The Company Appeal would stand allowed accordingly.
In Comp App (AT) (CH) (Ins) No.311/2025, where the Appellant Bhalakh Realtors Private Limited has challenged the Impugned Order dated 20.06.2025, as it was passed in IA(IBC)/784(CHE)/2025, which we have quite elaborately dealt with while considering Comp App (AT) (CH) (Ins) No.312/2025. Therefore, much deliberation is not required to be made by way of repetition. Hence, this Company Appeal too would stand allowed for the reasons, which we have already assigned, while deciding the Comp App (AT) (CH) (Ins) No.312/2025. The Company Appeal would stand allowed. The Impugned Order would stand quashed. All pending interlocutory applications would stand closed.