Allahabad High Court Facilitates Revival of Bulland Realtors' Stalled Real Estate Project

Court Orders Restoration of Lease Deed and Financial Resolution in Insolvency Case, Prioritizing Homebuyers’ Interests

In a landmark judgment, the Allahabad High Court has paved the way for the revival of a stalled real estate project by Bulland Realtors Private Limited, emphasizing the protection of homebuyers' interests during insolvency proceedings. The court has directed the restoration of a canceled lease deed, crucial for the approval of a resolution plan under the Insolvency and Bankruptcy Code (IBC), 2016.

The judgment, delivered by Justice Arun Kumar, addressed the complexities surrounding the insolvency resolution process of Bulland Realtors, a real estate company that defaulted on lease payments for a plot in Greater Noida, leading to the cancellation of its lease by the Greater Noida Industrial Development Authority (GNIDA). The company, undergoing Corporate Insolvency Resolution Process (CIRP) initiated by Nimble Credit Cooperative Society Limited, faced hurdles in including the canceled plot in its resolution plan pending before the National Company Law Tribunal (NCLT).

Acknowledging the significance of the canceled lease deed, the court emphasized that restoring the land is essential before adjudicating any resolution plan. The judgment underscored the importance of homebuyers, who are vital stakeholders in real estate insolvency resolutions, stating that their interests must be prioritized to avoid liquidation of the corporate debtor, which would adversely affect them.

The court also highlighted the adherence to the Government Order dated December 21, 2023, and the Amitabh Kant Committee Report, which provide guidelines for reviving stalled real estate projects. An agreement between Bulland Realtors, GNIDA, and the resolution applicant, Saviour Builders Private Limited, was recognized as a hopeful step towards resolving outstanding dues and restoring the lease deed.

Justice Kumar ordered the release of 25% of the calculated dues, amounting to Rs. 20,00,43,153, deposited in court, to GNIDA, facilitating the restoration of the lease deed under clause 17 of the Government Order. The remaining amount is to be paid in installments, ensuring compliance with the agreement and government guidelines.

In rejecting impleadment applications by unsuccessful resolution applicants and homebuyers with claims against the corporate debtor, the court affirmed that such disputes fall under the jurisdiction of the NCLT as per the IBC provisions.

This judgment marks a significant step in ensuring the revival of stalled real estate projects, emphasizing the protection of homebuyers while balancing the interests of creditors and resolution applicants within the legal framework of the IBC.

Bottom Line:

Insolvency Resolution Process - Restoration of canceled lease deed essential for approval of resolution plan under IBC to protect homebuyers' interests.

Statutory provision(s): Insolvency and Bankruptcy Code, 2016 Sections 25(h), 30(4), 31, Article 226 of the Constitution of India, Section 60(5) of IBC, U.P. Urban Planning and Development Act, 1973 Section 41(3), U.P. Industrial Area Development Act, 1976 Section 12

Bulland Realtors Private Limited v. State of U.P., (Allahabad) : Law Finder Doc Id # 2803048