Home buyer cannot demand conveyance deed execution or rent payment from corporate debtor during insolvency proceedings

NCLAT dismissed appeal by home buyer seeking direction for conveyance deed execution and rent payment from corporate debtor under CIRP. Tribunal held that allottees cannot claim conveyance deed execution as a right during insolvency proceedings. Resolution Professional has discretion to manage corporate debtor's business operations. While allottees' rights must be protected during CIRP, the manner of protection depends on case-specific facts and RP's management decisions. Regarding rent payments, NCLAT noted that rent from allotted units was kept in fixed deposit for disbursement per law, adequately protecting allottees' interests. Adjudicating Authority's order was upheld as it appropriately balanced stakeholder interests during ongoing resolution process.

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Issues Involved:
1. Execution of the Conveyance Deed.
2. Entitlement to receive payment of rent as assured in the MoU.

Summary:

Issue 1: Execution of the Conveyance Deed
The Appellant, an allottee of commercial space by Indirapuram Habitat Centre Pvt. Ltd., challenged the order dated 19.12.2023 by the National Company Law Tribunal (NCLT), which rejected their applications seeking a direction to execute the Conveyance Deed. The Appellant argued that they had paid about 95% of the amount and were ready to pay the balance for the execution of the Conveyance Deed. The NCLT had earlier noted that the RP initiated a Forensic Audit to verify titles before taking further steps. The Appellant relied on a previous order dated 31.08.2020, which directed the RP to verify claims and declare ownership. The RP contended that the Appellant was not entitled to the Conveyance Deed as the prayer was not initially made in the applications, and the amount due was kept in Fixed Deposit Receipts to be disbursed as per the Adjudicating Authority's orders. The Tribunal held that the Adjudicating Authority did not err in rejecting the prayer for the Conveyance Deed, as the RP is responsible for managing the Corporate Debtor's assets and business, including deciding on contract performance during CIRP.

Issue 2: Entitlement to Receive Payment of Rent
The Appellant sought payment of rent for the commercial units as per the MoU, which was not paid after the initiation of CIRP. The RP argued that the rent was paid till June 2018, over a year before CIRP commenced, and the arrangement was not in force at the time of CIRP initiation. Moreover, the rent received from lessees was less than the agreed amount in the MoU. The Tribunal noted that the Adjudicating Authority recorded the RP's statement that the rent received was kept in Fixed Deposit and would be disbursed in accordance with law. The Tribunal held that the Adjudicating Authority's order protected the Appellant's interests and did not warrant interference, as the ultimate decision on rent disbursement would depend on the CIRP's outcome.

Conclusion:
The Tribunal dismissed the Appeal, finding no grounds to interfere with the Adjudicating Authority's order, and upheld the decision to reject the execution of the Conveyance Deed and defer rent payment decisions until the appropriate stage in the CIRP.

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