The National Company Law Tribunal’s (NCLT) Mumbai bench has recenyly dismissed an application seeking to conclude the transfer agreement of a project by Housing Development & Infrastructure Ltd (HDIL).
HDIL had executed an agreement to transfer the project, HDIL Majestic Tower, in Mumbai’s Nahur suburb before the initiation of Corporate Insolvency Resolution Process (CIRP) against it. This was done after taking approval of Suraksha Asset Reconstruction, which was the exclusive charge holder of the project.
Around 400 homebuyers and Suraksha ARC had filed an application before the NCLT seeking directions to conclude the transfer, as that would allow them to raise working capital to complete the project. Bank of India, one of HDIL’s lenders, had opposed the application.
Dismissing the plea, the NCLT bench said carving out the project would benefit only one lender and disadvantage the other creditors.
Suraksha ARC, the exclusive lender to the project, and the homebuyers are planning to appeal the order before an appropriate forum.
HDIL had aggregated various land parcels of about 8.32 acres till 2008 and submitted a rehabilitation project proposal to the Slum Rehabilitation Authority (SRA), which was approved in October 2009.
As per the deed, SRA appointed HDIL as the developer to construct four rehabilitation buildings and one sale building with four wings under the slum rehabilitation scheme.
In March 2011, HDIL Majestic Tower was launched with a completion timeline by December 2013. The plan was to construct 1,000 flats, of which around 400 were sold till 2017. The developer could not complete the project within the set timeline; homebuyers had paid around Rs 220 crore out of Rs 330 crore payable as per the individual sale agreements.
Through a revival plan in June 2019, HDIL suggested that the project could be completed by transferring it, along with certain liabilities, to its wholly owned subsidiary, Mazda Estate.
Suraksha ARC and the developer’s board approved the plan in August 2019.
However, HDIL was later admitted into the CIRP and the closure formalities of this transaction remained pending.
HDIL went into insolvency when NCLT admitted a petition by Bank of India to recover dues worth Rs 522 crore.
Nishit Dhruva, managing partner of law firm MDP & Partners, along with Rohan Agarwal represented Bank of India, while homebuyers were represented by Rohit Gupta and senior counsel Venkatesh Dhond argued for Suraksha ARC.
