NCLAT Dismisses SGN Appeal On Its Claims Over Tower 5 Of Morpheus Bluebell In CIRP Against Its Developer

The National Company Law Appellate Tribunal (NCLAT) at Delhi has dismissed an appeal by SGN Universal Construction Company Pvt. Ltd. challenging observations made by the NCLT on its claimed rights over Tower 5 of the “Morpheus Bluebell” project in Greater Noida (West), developed by M/s Morpheus Prodevelopers Pvt. Ltd.

The appellate tribunal said the Adjudicating Authority had not returned any finding on those claims and that such issues fall for consideration within the insolvency process.

A bench of Judicial Member Justice Mohammad Faiz Alam Khan and Technical Member Naresh Salecha observed, “However, the Adjudicating Authority has not given its findings, not even preliminary finding, about the Appellant's alleged rights or claims over Tower 5. Therefore, we are not in position to accept the pleadings of the Appellant on this account.”

The matter arises from the admission of insolvency proceedings against M/s Morpheus Prodevelopers Pvt. Ltd., the Corporate Debtor, on an application filed by 40 homebuyers.

SGN questioned certain observations in that order concerning Tower 5. It claimed development rights under agreements executed in 2017 and 2020 and referred to interim orders passed by the Delhi High Court and an arbitral tribunal.

The tribunal noted that SGN had filed an application before the NCLT only to place those orders on record. No relief was sought for adjudication of title or for exclusion of Tower 5 from the insolvency process.

It held that, at the stage of admission of an application under insolvency law, the NCLT is required to examine the existence of debt, default, and the statutory threshold. These requirements stood satisfied in the present case.

The tribunal also noted that the project is a single integrated development comprising Towers 3, 4 and 5. It reiterated that once the corporate insolvency resolution process is initiated, the Insolvency and Bankruptcy Code prevails over other proceedings.

It further observed that any claim regarding development rights over Tower 5 has to be considered in accordance with the insolvency framework before the Resolution Professional.

The appeal was dismissed.