NCLT Directs Kotak Mahindra Bank to Release Title Deeds After Full Resolution Plan Payment by Corporate Debtor [Read Order]

The case originated when Kotak Mahindra Bank, as a financial creditor, filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC), leading to the admission of Arun Shelters Pvt. Ltd. into the Corporate Insolvency Resolution Process (CIRP) on 31 January 2020.

A resolution plan submitted on 27 January 2021 was approved by the Committee of Creditors and sanctioned by the Tribunal on 4 November 2022, with a condition that the bank would retain its charge over the Arun Aurovilla project until full payment was made.

In compliance, the resolution applicant paid ₹53.42 crore to creditors, including Kotak Mahindra Bank, and additionally remitted ₹4.55 crore towards interest under protest to avoid default. Despite acknowledging receipt of the entire payment, the bank refused to release the title deeds, citing pending appeals. But in this interlocutory application, it appeared that the respondent opposing release of documents.

The resolution applicant contended that it had fully discharged all liabilities under the resolution plan, including the disputed interest component, and therefore the bank was bound to release the title deeds and security papers. It alleged that the bank was obstructing implementation of the plan by withholding documents and coercing withdrawal of its statutory appeal before the NCLAT concerning waiver of interest. The applicant sought directions for immediate release of the property papers to ensure smooth execution of the resolution plan.

The financial creditor, Kotak Mahindra Bank, argued that the application was premature, as the issue of interest waiver was still pending before the NCLAT. It maintained that until all proceedings concluded, the resolution plan could not be treated as fully implemented. The bank asserted that the applicant was attempting to twist the narrative and mislead the Tribunal, and urged dismissal of the application.

The Bench comprising Judicial Member Sunil Kumar Aggarwal and Technical Member Radhakrishna Sreepada noted that the applicant had paid both the principal amount and the accrued interest, even while challenging the interest component before the appellate forum.

The Tribunal held that the bank had no valid basis to retain custody of the title deeds, as the pendency of an appeal did not prejudice its rights. It emphasized that whatever the outcome of the appeal, the bank would still have to return the documents, since the resolution plan had been substantially implemented.

Allowing the application, the NCLT directed Kotak Mahindra Bank to hand over the original title deeds, charge‑release documents, and other securities relating to the Arun Aurovilla project to the resolution applicant within 15 days.