NCLT Mumbai Lifts Interim Injunction Over HDIL Land, Holds Relief Cannot Survive Without Jurisdiction

On 9 February, the National Company Law Tribunal (NCLT), Mumbai, lifted an interim injunction that had blocked third-party rights over land linked to Housing Development and Infrastructure Ltd (HDIL), ruling that the Tribunal cannot extend temporary protection if it lacks jurisdiction to grant final relief.

A Bench comprising Judicial Member Sushil Mahadeorao Kochey heard the matter following a reference under Section 419(5) of the Companies Act, arising from a split decision in an earlier NCLT Mumbai Bench. The Technical Member had concluded the tribunal lacked jurisdiction, while a Judicial Member had proposed making the interim order absolute.

Agreeing with the Technical member, Mr. Kochey noted:

“As regards granting of Interim Injunction is concerned, once, the Tribunal has come to the conclusion that the substantive relief of declaration and injunction as sought in the Applications cannot be granted for lack of jurisdiction; granting of Interim Relief would certainly amount to granting the whole Relief, without Trial. Therefore, there is no cause or justification for continuing the Interim Relief.”

The case arose from applications filed by the Resolution Professional of HDIL and Unity Small Finance Bank Ltd., seeking declarations that HDIL was entitled to 55% of total sale receivables under a Joint Venture Agreement dated 26 September 2015 and a subsequent assignment of receivables in 2018, along with related injunctive relief.

The respondents argued that HDIL never performed its obligations and the agreement was effectively repudiated.

The Tribunal held that the claims were declaratory and arose dehors the insolvency of HDIL. Relying on Supreme Court precedents including Gujarat Urja Vikas Nigam Limited and Tata Consultancy Services, it observed that disputes over the existence, validity, or enforceability of such agreements fall outside the NCLT's summary jurisdiction under Section 60(5)(c) of the IBC and must be resolved by a civil court.

Accordingly, the Tribunal dismissed the applications as infructuous or non-maintainable and vacated the November 2023 injunction, observing that an interim relief can only support final relief.

Unity Bank has since filed a Commercial Suit in the Bombay High Court pursuing the same claims.

For Resolution Professional: Advocates Chaitanya Chavan, Sagar Parab, Darshan Suvarna, C.G. Shanker i/b Vigil Juris

For Unity Small Finance Bank: Advocates Shyam Kapadia, Naveli Reshamwala i/b Dhir&Dhir Associates

For Respondents: Senior Advocate Chetan Kapadia with Advocates Mr. Rohan Agarwal, Sabeena Mahadik, Pankaj Uttaradhi, Ranjeev Carvalho, Sunil Humbre, Pankaj Uttaradhi