NCLAT Rules Monetisation of Unsold Units of Real Estate Project Impermissible without Revalidated Building Plan in Reverse CIRP [Read Order]
NCLAT held that monetisation of unsold units in a reverse CIRP cannot be allowed without a revalidated building plan, as it would not serve the purpose of project completion.
NCLAT - Taxscan
NCLAT - Taxscan
The National Company Law Appellate Tribunal (NCLAT) refused to allow the Interim Resolution Professional’s (IRP) request to monetise unsold units of the real estate project under a reverse Corporate Insolvency Resolution Process (CIRP), holding that such monetisation would not serve any purpose in the absence of a revalidated building plan.
In this case, a Section 7 application filed by homebuyers against Sequel Buildcon Pvt. Ltd. had earlier been admitted by the NCLT, leading to the initiation of a reverse CIRP. The project, known as “The Belvedere,” was being developed in Noida.
During the appeal filed by Anoop Kumar Srivastava, the suspended director of the company, the NCLAT had earlier approved a Memorandum of Understanding (MoU) dated 12 July 2023 between the homebuyers, the suspended promoter, and EKA Life Services, the strategic financier, for funding the construction. Directions were issued for completion of the project in phases under the supervision of the IRP, with the corporate debtor to be kept as a going concern.
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Subsequently, the IRP filed I.A. No. 4215 of 2025 seeking permission to monetise unsold inventory to generate funds for completing construction and paying dues owed to Noida Authority and Aditya Birla Finance Ltd.
The IRP explained that approximately 250 units remained unsold and that proceeds from their sale would be utilised for construction and settlement of liabilities. Noida Authority submitted that it had no objection to such monetisation, provided its dues were paid at the time of each sale.
But Aditya Birla Finance Ltd. objected, stating that it held a second charge over the land and an exclusive charge over receivables. It also argued that without a revalidated building plan from Noida Authority, construction could not legally proceed and monetisation would have no value.
The bench comprising Justice Ashok Bhushan (Chairperson) and Barun Mitra (Technical Member) observed that the building plan had not been revalidated, and a writ petition filed before the Allahabad High Court seeking revalidation had been dismissed.
The order of the High Court had been challenged before the Supreme Court, where notice had been issued but no final decision rendered.
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The NCLAT explained that when construction could not commence due to lack of a valid plan, monetisation of unsold units would not achieve the stated objective of completing the project. It further observed that Noida’s conditional consent did not address the core issue of map revalidation.
Based on these findings, the NCLAT dismissed the IRP’s application seeking permission to monetise the unsold units. It also disposed of a related application by homebuyers after recording the IRP’s statement that no unit would be cancelled.
The appeal was directed to be listed again on 6 October 2025 to consider whether the reverse CIRP should continue or be converted into a regular CIRP under the Insolvency and Bankruptcy Code, 2016.
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