Collaboration agreement and project assets remain part of CIRP valuation when termination is not legally established

Where a collaboration agreement has not been lawfully terminated and the real estate regulator continues to treat the landowner and developer as promoters responsible for completing the project, the project assets remain attributable to the corporate debtor for insolvency purposes. An arbitral award that does not declare lawful termination of the agreement, and that rejects transfer of the project land, does not establish the debtor's lack of continuing interest. On those facts, the unsold inventory and subject property could not be excluded from valuation or from the Information Memorandum in CIRP, and the request for exclusion was rightly rejected.

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Issues: Whether the unsold inventory and subject property in the real estate project could be excluded from the valuation of the corporate debtor and from the Information Memorandum on the ground that the collaboration agreement had ceased to operate.

Analysis: The project had been undertaken under a collaboration agreement under which the corporate debtor had developed the project and made allotments to numerous allottees. Regulatory orders under the real estate authority treated the landowner and the corporate debtor as promoters and directed both to complete the project, which showed that the collaboration arrangement was still being acted upon. The arbitral award relied on by the appellant did not grant a declaration that the collaboration agreement had been lawfully terminated by the landowner, and it also rejected the prayer seeking transfer of the project land. In these circumstances, the argument that the corporate debtor had no continuing interest so as to justify exclusion of the unsold inventory from CIRP valuation was not accepted.

Conclusion: The prayer to exclude the unsold inventory and subject property from valuation and the Information Memorandum was rightly rejected, and the appeal failed.

Final Conclusion: The project assets remained part of the corporate debtor's estate for insolvency purposes, and the impugned order declining exclusion of the unsold inventory was sustained.

Ratio Decidendi: Where a collaboration agreement has not been lawfully terminated and the project continues to be recognised by the regulatory authority as jointly attributable to the landowner and developer, the unsold inventory forming part of the project cannot be excluded from the corporate debtor's valuation or Information Memorandum in CIRP.

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