Homebuyer Who Has Paid Full Consideration And Is In Possession Entitled To Sale Deed: NCLT Kochi

The Kochi Bench of the National Company Law Tribunal (NCLT) on 23 April, held that a homebuyer who has paid the entire consideration and is placed in possession of the property is entitled to execution of the sale deed, and such property cannot form part of the liquidation estate of the corporate debtor under the Insolvency and Bankruptcy Code framework.

A Bench comprising Judicial Member Vinay Goel allowed an application filed by Tom Thomas seeking execution and registration of a sale deed in respect of a villa in the “MIR Greens” project developed by MIR Realtors Private Limited during liquidation proceedings. He held:

“… the rights of homebuyers, who have paid the entire agreed consideration and have been placed in possession, deserve protection in insolvency proceedings.”

Thomas had entered into a sale agreement and a construction agreement in 2007 with the landowners and the corporate debtor for a villa in the project. He stated that he paid the entire consideration and received possession of the villa around 2015.

Insolvency proceedings commenced against the corporate debtor in 2021 and culminated in liquidation in 2023. The applicant's claim as a homebuyer stood admitted during the CIRP and liquidation process. However, the sale deed remained unexecuted, prompting the present application.

The Liquidator did not dispute the underlying transaction but raised objections relating to quantification, delay, and procedural compliance. The landowners opposed the application, contending that the agreements were not binding on them and that the corporate debtor lacked authority to convey title.

On the issue of execution of the sale deed, the Tribunal noted that the Joint Venture Agreement reflected a development arrangement where the landowners contributed land and the corporate debtor undertook development, marketing, and sale of units.

The Bench held that the sale and construction agreements executed with the applicant arose from this arrangement and must be read together as a composite transaction creating enforceable third-party rights. It observed:

“…the three agreements cannot be read in isolation but must be construed together as forming a unified commercial arrangement giving rise to enforceable third-party rights.”

The Tribunal further held that once development rights were created and third-party interests were carved out, subsequent arrangements between the landowners and the corporate debtor could not defeat or prejudice the vested rights of bona fide allottees.

It also observed that the landowners failed to file their claims during the insolvency process, resulting in extinguishment of their rights. It noted:

“Their inaction attracts the consequences of limitation and extinguishment of claims. In contrast, the Applicant, being a homebuyer who has paid the entire consideration and is in possession of the property, stands on a distinct footing and is entitled to a liberal and equitable approach.”

Significantly, the Bench reiterated that where possession has already been handed over, such property stands excluded from the liquidation estate under the IBC framework.

Holding Thomas to be a bona fide homebuyer, the Tribunal directed the Liquidator to execute the sale deed in his favour. It further clarified that upon execution, the applicant would acquire absolute title over the property free from all encumbrances, and the landowners would have no surviving rights.

Accordingly, the NCLT allowed the application.

For Applicant: Advocate Riji Rajendran

For Respondents: Advocates Kevin Thomas, Annie Abraham, Anil Abey and Chandapillai Abraham