Sujay Shankar Mukherjee vs Ashish Chawchharia, Resolution Professional Of Riverbank Developers Private Limited

Per: Smt. Bidisha Banerjee, Member (Judicial)

This Court convened through hybrid mode today.

Heard the Learned Counsels appearing for both the parties.

Canara Bank initiated insolvency proceedings against M/s. Riverbank Developers Private Limited (‘Corporate Debtor’/ ‘CD’). By an order dated 03.04.2024, this Tribunal admitted the petition and commenced the Corporate Insolvency Resolution Process (CIRP) against the CD.

The present application has been filed under section 60(5) of the IBC, 2016 read with Rule 11 of the NCLT Rules, 2016 by Mr. Sujay Shankar Mukherjee, (‘Allottee Applicant’/ ‘Applicant’) an allottee of one real estate project of the M/s. Riverbank Developers Private Limited (‘Corporate Debtor’/ ‘CD’), seeking for the following reliefs:

In March 2014, the Applicant, based upon the representations made by Corporate Debtor, expressed his desire to purchase one flat along with one covered car parking space in a real estate project developed by the Corporate Debtor under the name of “Hiland Greens”, at 1, New Bata Road, Maheshtala, Kolkata- 700140 (‘said real estate project’).

By an Allotment Letter dated 01.03.2014, Flat No. 2A6, situated on the second floor of Tower-17 and by an Allotment Letter dated 15.05.2014, a covered car parking space, both in the said real estate project (‘said units’), was allotted to the Allottee Applicant.

Under the terms of the Allotment Letter and by virtue of agreement between the parties, the Corporate Debtor issued demand letters and/or tax invoices upon the Applicant from time to time, and the Allottee Applicant, upon receipt of such demand letters/invoices, made the requisite payments. The Applicant has made an aggregate payment of Rs. 20,07,303/- (Rupees Twenty Lakh Seven thousand Three Hundred and Three only) towards the purchase of the said units and the receipts and ledger of the same issued by the Corporate Debtor has been annexed as Annexure B of the application petition.

On 10.12.2020, the Corporate Debtor called upon the Applicant to execute and register the Agreement for Sale. Subsequently, by a letter dated 27.02.2021, the Corporate Debtor purported to hand over physical possession of the said unit after payment of the final instalment by the Allottee Applicant, and further called upon the Allottee Applicant to execute the Deed of Conveyance.

A joint inspection of the apartment was conducted on 17.03.2021, during which several deficiencies were allegedly noticed, including the absence of the allotted covered parking space, incomplete bathrooms, balconies and floorings, and lack of electricity and water connections.

The Applicant alleges that despite verbal assurances from the CD with regard to completion of the pending construction and thereafter handing over possession, no further action was taken.

The Allottee Applicant subsequently sent an email dated 11.02.2022 expressing his intention to cancel the allotment and sought a refund Rs. 18 Lakhs from the Corporate Debtor. The Corporate Debtor, vide an email dated 12.02.2022, acknowledged the request of such cancellation and agreed to make the refund, but the same was never made. The mail requesting such refund reads as below:

The Corporate Debtor’s acknowledgement is as under:

Following the public announcement made by the RP, the Allottee Applicant submitted his proof of claim for Rs. 20,07,303/- before the Resolution Professional on 12.04.2024. Out of the said entire claim, only Rs. 18 Lakh was admitted by the Resolution Professional after verification.

The Applicant refrained from objecting to such partial acceptance of his proof of claim contending that he was allegedly informed that the allottees could apply for possession and registration by filling out a Google Form circulated by the Respondent’s office.

On 13.01.2025, when the Applicant allegedly visited the site office to verify the readiness of the flat, he was informed that his allotment had already been cancelled on the basis of his email dated 11.02.2022.

Thereafter, vide mail dated 24.06.2025, the Applicant apprised the Respondent RP with regards to the Applicant’s claim and requested him to reinstate the allotment, facilitate registration and hand over possession of the flat. The Resolution Professional did not accede to the request.

Aggrieved by the refusal to restore the allotment and facilitate possession, the Allottee Applicant has filed the present application under Section 60(5) of the Insolvency and Bankruptcy Code, 2016, seeking directions for inter alia for reinstatement of the allotment or re-allotment of another flat with a car parking space, execution of the conveyance deed and delivery of possession of the flat.

The Applicant in his present application has admitted that he is ready and willing to pay the balance consideration if any.

The Allottee Applicant primarily contends that the Applicant’s expression of interest to cancel the agreement was conditional upon the Corporate Debtor’s promise to refund the amount, and since no such refund was made, the Applicant’s right over the immovable property remained intact.

Further, the Applicant inter alia submits that he has availed loan from SBI for purchasing the said units and being the sole earning member in the family of four, the prolonged delay has caused immense financial and mental distress to him.

Further, that the burden of EMI payments without possession of the said flat had adversely affected his health and financial stability, and due to such hardship the Applicant was constrained to request for the said refund and cancellation.

The Respondent Resolution Professional, in his reply, admits that the requisite refund was not processed by the Corporate Debtor (in para 10 of reply) and inter alia submits that the cancellation of the allotment was made prior to the initiation of the CIRP and that, as an RP, being the facilitator of the CIR Process, has powers are limited to collation and verification of claims filed before him, he does not possess adjudicatory powers and cannot reverse the decision taken by the Corporate Debtor prior to initiation of CIRP with respect to cancellation of units purchased by homebuyers.

We have heard the Learned Counsels appearing for both the parties and perused the documents placed on record

It is evident from the communications extracted hereunder that the applicant had simply expressed his intention to seek cancellation of allotment, and that he was never issued any formal cancellation order/letter. The communications go thus:

A demand letter dated 27.02.2021 from Hiland, extracted hereunder, demanding Rs. 2,57,800 and Rs. 1,76,105.00/- as 8^th and final instalment before deemed possession date of 14.03.3021.

A joint inspection memo dated 17.03.2021 where the applicant’s observations read as under:

On 11.05.2021 having noted non completion of flat, the Applicant gave the following letter with an intention to rescind/cancel allotment and refund of entire consideration amount within 15 days. Relevant extract reads as follows:

It was thus communication of the applicants’ intention to cancel the agreement with Hiland. The sales & marketing office responded to the request for cancellation on 12.02.2022 as follows:

Applicants’ communication dated 11.02.2022 that reads as follows:

The communication shows that settlement is not final and is subject to refund.

Mail from Hiland dated 25.09.2021 with no attachments whatsoever:

The chain of correspondence as enumerated above explicitly demonstrate that the cancellation was never finalised and that cancellation could not have been finalised without the refund.

Given the factual background as above, the primary issues arising for our consideration is (i) whether the cancellation of allotment prior to initiation of CIRP was final and conclusive, (ii) if not, whether the cancellation of the allotment was conditional upon the actual payment of the refund of Rs. 18 Lakh to be made by the Corporate Debtor to the Applicant, and (iii) In that event, whether the Applicant, deserves to be adequately compensated since his allotted unit stands allotted to another allottee.

To address this issue, we shall first note the observation of the Hon’ble Telangana Real Estate Appellate Tribunal, Hyderabad in M/s Aliens Developers Private Limited v. Telangana Real Estate Regulatory Authority & Anr. (T.A. No. 8 of 2026) having noted that the developer had not refunded the amount due upon cancellation, which is as follows:

It is an admitted position that the Applicant expressed his intention to rescind and/or cancel the allotment simultaneous with refund of Rs. 18 Lakh, but the Corporate Debtor did neither issue a a formal communication of cancellation of allotment not refunded any amount towards such cancellation, as such the cancellation of allotment was never conclusive and effected.

Coming to the second issue, it is noted that irrefutably and undeniably the applicant allottee had made full payment/substantial payment towards the allotment made in favour of the Allottee Applicant of the unit being Flat- 2A6 in Tower-17 of Hiland Greens Phase- I together with the covered garage. The cancellation of the allotment of the said unit after receipt of a significant sum duly paid by the Applicant over a period of time and without refund of the sum the allottee had paid for acquiring the unit in question, would be inequitable and highly unfair.

The Hon’ble NCLAT in Puneet Kaur vs. K V Developers Private Limited & Ors. (2022) ibclaw.in 416 NCLAT noted the vulnerabilty of the homebuyers and considered them with a compassionate and liberal view in inter alia the following words:

It is an admitted position that the Applicant was deprived of rightful timely possession of the allotted unit despite making due payments. In view of the prevailing uncertainty coupled with the financial burden he had to face, the constraint faced by the Applicant homebuyer to decide on forfeiting the flat for recovering the sum paid by it is completely justified as any prudent person would do.

It is evident that the intention of the Applicant to cancel the allotment was proposed to be acted upon and completed with the act of refund of consideration of money, but the cancellation was not finalized and communicated and no refund was made. In terms of the Ld. Telengana Real Estate Appellate Tribunal noted supra coupled with the decision of the Hon’ble NCLAT as noted above, it is in the interest of justice to conclude that cancellation of the allotment was conditional upon the actual payment of the refund of Rs. 18 Lakh to be made by the Corporate Debtor to the Applicant. Hence, such cancellation if any recorded by the CD is ought to be treated as invalid.

The reliance on the Hon’ble NCLAT’s ruling in Supriya Singh and Ors. v. Ansal Urban Condominiums Pvt. Ltd. and Anr. by the Respondents, to contend that the RP has no power to reverse a cancellation effected by the erstwhile management of the CD, is of no assistance as this is not the question before us. The present issue for consideration is whether the cancellation effected by the erstwhile management is valid in the first place. Having held such cancellation to be invalid, there is no cancellation left for the RP to reverse. Hence, the reliance placed on this precedent, being misplaced, is accordingly rejected.

Once we treat such cancellation to be invalid, for the subsequent allotment and grant of possession of the same unit to a third party, we are of the considered opinion that present Allottee Applicant deserves to be compensated adequately.

Regulation 4E of the IBBI (Insolvency Resolution Process For Corporate Persons) Regulations, 2016 empowers the RP to allot apartment to the allottee who has requested the same and performed his part under the agreement. It envisages as follows:

Having held the cancellation of allotment without refund of money as invalid and void, we pass the following order:

a. The Applicant shall be at liberty to either seek-

b. In the event the Applicant seeks alternative allotment as granted in a(i) hereinabove-

Accordingly, the IA stands allowed and disposed of.

Urgent Certified Copies of this order, if applied for, shall be furnished by the Registry upon compliance of all the requisite formalities.