The National Company Law Tribunal (NCLT) has dismissed an intervention petition filed by property developer Surya Landmark Developers seeking directions to exclude its property, a prime 0.5-acre land parcel in Mumbai’s Lower Parel, from insolvency proceedings initiated by Asset Care and Reconstruction Enterprises (ACRE).
Surya Landmark argued that financial creditor ACRE lacks legal standing to initiate any action against the property, along with multiple structures known as ‘Bara Chawl’, as it doesn’t have any contractual agreement with the lender for the property.
The asset reconstruction company has taken over the debt and related case of property developer Rajesh Buildspace from erstwhile Altico Capital India.
Surya Landmark further alleged that Rajesh Buildspace had fraudulently obtained a mortgage loan on the said property. Instead, it had entered into an indenture of mortgage with Vistra ITCL (INDIA) in March 2018. Surya Landmark asserted that any legal rights over the property would rest solely with Vistra ITCL, which had already initiated actions under the SARFAESI Act in February 2022.
Additionally, Surya Landmark mentioned its ongoing efforts to cancel the joint development agreement with Rajesh Buildspace and plans to initiate criminal and civil proceedings against the corporate debtor.
Despite these assertions, the NCLT Mumbai bench found the intervention petition premature and not maintainable.
The tribunal’s decision, overseen by technical member Anil Raj Chellan and judicial member Kuldip Kumar Kareer, underscores critical procedural aspects of insolvency law.
The tribunal highlighted that the proceedings under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016, were still at a pre-admission stage. It noted that any claims regarding the property could be raised if a Corporate Insolvency Resolution Process (CIRP) was initiated later. The tribunal also emphasised that disputes concerning property titles cannot be resolved through summary proceedings under the IBC.
The bench asserted that no intervention is permissible by any party at the pre-admission stage in proceedings under Section 7 or 9 of the IBC, 2016. Consequently, the NCLT dismissed the intervention petition, marking it as premature and beyond the scope of permissible interventions at this stage of the proceedings.
