Tribunal upholds NCLAT's findings, directs recovery of Rs. 24.45 crores from Dev Land and Housing Pvt. Ltd. and Respondent No.5 with 12% interest for fraudulent transaction under IBC Section 66.
In a significant judgment dated June 30, 2026, the National Company Law Tribunal (NCLT) Mumbai Bench-I, comprising Mr. Prabhat Kumar and Mr. Sushil Mahadeorao Kochey, has declared a transaction involving M/s Dev Land and Housing Pvt. Ltd. as fraudulent under Section 66 of the Insolvency and Bankruptcy Code, 2016 (IBC). The transaction pertains to a Rs. 29.35 crore advance given by the corporate debtor, Satra Properties (India) Limited, for property rights, which was forfeited without acquisition of the property.
The NCLT's decision follows the order from the National Company Law Appellate Tribunal (NCLAT) dated July 3, 2025, which identified the transaction as fraudulent and directed further action. The NCLT has now mandated M/s Dev Land and Housing Pvt. Ltd. and Respondent No.5, jointly or severally, to remit Rs. 24.45 crores to the corporate debtor within 30 days. Failure to comply will attract an interest of 12% per annum on the outstanding amount.
The Tribunal's order comes after a detailed examination of the transaction, which was characterized by an unregistered and allegedly forged Memorandum of Understanding (MoU) dated August 18, 2015, and a Deed of Cancellation dated March 20, 2020. The NCLAT had found the MoU to lack commercial logic, with one-sided clauses favoring the vendor, and no evidence of any property being acquired by the corporate debtor despite the substantial advance payment. The MoU allowed for the forfeiture of the advance without recourse for the corporate debtor, a clause deemed unusual and indicative of fraudulent intent.
The Tribunal also noted the inter-se relationship between the corporate debtor and Dev Land and Housing Pvt. Ltd., through common directorship by Mr. Vijay T. Thakkar, which further raised concerns about the transaction's legitimacy. Despite arguments from the respondents challenging the NCLAT's findings, the NCLT, adhering to judicial discipline, refrained from re-examining the evidence and submissions, opting to follow the appellate tribunal's directive.
Additionally, the NCLT addressed the issue of a settlement proposal by Respondent No.5, which had the backing of a majority of the Committee of Creditors (CoC). However, the Tribunal ruled that such a settlement could not be imposed on dissenting creditors, especially given the finding of fraud.
This judgment underscores the NCLT's commitment to upholding the principles of the IBC, ensuring accountability for fraudulent transactions, and protecting the interests of creditors.
Bottom line:-
Section 66 of the Insolvency and Bankruptcy Code, 2016 empowers the Resolution Professional to seek contribution from parties involved in fraudulent transactions to compensate creditors for losses suffered.
Statutory provision(s):
Insolvency and Bankruptcy Code, 2016 Section 66
