Right To Shelter Part of Right To Life, Homebuyers Cannot Be Prejudiced by Internal Project Transfer: NCLT Indore

The National Company Law Tribunal (NCLT) at Indore has held that homebuyers cannot be prejudiced by an internal transfer of a real estate project, emphasising that their rights are not merely contractual but tied to the right to life.

A coram of Judicial Member Brajendra Mani Tripathi and Technical Member Man Mohan Gupta, underlining the constitutional dimension of such claims, observed that such rights cannot be viewed purely as contractual.

It said, “The Hon'ble Supreme Court has consistently observed that the right to shelter is an integral component of the right to life guaranteed under Article 21 of the Constitution of India. The right to have a roof over one's head is not merely a matter of contractual or civil entitlement, but constitutes a facet of the fundamental right to live with dignity. Therefore, the rights of plot or home buyers cannot be viewed in isolation as purely contractual claims. It is constitutional protected and deserve due consideration and safeguard by the Courts.”

Reinforcing this, the bench clarified that internal transfer of a project cannot prejudice such rights. It observed, “The Applicant, as a homebuyer, cannot be prejudiced by the internal transfer of the project from a proprietorship concern to a private limited company, especially when such transfer and its legal consequences are within the exclusive knowledge of the Corporate Debtor and its Resolution Professional."

The case arose from a plea by a plot purchaser who had booked a residential plot in the Pinnacle “D” Desire project, which was initially undertaken by JSM Developers and later continued by JSM Devcons India Private Limited. He said he had paid 20.40 lakh for the plot, including 6.93 lakh through banking channels and the rest in cash.

An allotment letter dated September 2, 2014 was issued under the company's seal. After insolvency proceedings began against the developer, he approached the tribunal, stating that the Resolution Professional intended to treat the plot as part of the company's assets and take possession, ignoring his claim.

The Resolution Professional opposed the claim, arguing that there was no proof of payment to the corporate debtor. It was pointed out that the only documented payment was 6.93 lakh, and that too had been made to JSM Developers, a different entity. The alleged cash component was unsupported by any receipt. The gap between the payment and the allotment letter was also highlighted, along with the similarity in names between the entities, to suggest that the claim was not backed by reliable evidence.

While examining these objections, the tribunal noted that the allotment letter issued under the company's seal could not be disregarded merely on denial and prima facie indicated recognition of the buyer's rights.

The tribunal said, “The issuance of such allotment letter under the seal of the Corporate Debtor prima facie indicates recognition of the Applicant's rights in the project after the alleged transition. The respondent/ RP has pleaded that the applicant has fabricated the documents but mere denial is not sufficient to prove the allotment letter is fabricated."

At the same time, the tribunal found that the buyer had failed to prove payment of the remaining Rs. 13.47 lakh. Addressing this, it held, "In the absence of cogent evidence establishing that the sum of Rs.13,47,000/- was in fact received by the Corporate Debtor, the alleged cash payment remains unsubstantiated. It is trite law that transfer of complete title and rights in respect of immovable property is contingent upon payment of the entire sale consideration.”

Given this, the tribunal said the buyer cannot claim full and absolute rights over the plot at this stage.

Balancing both aspects, the tribunal directed the buyer to deposit the remaining Rs 13.47 lakh with the Resolution Professional. Upon such payment, it said, he would be entitled to claim complete title and seek possession of the plot, and his claim as a plot buyer would stand admitted subject to this condition.