NCLT Kochi Directs Execution of Sale Deed for Homebuyer; Property in Possession Not Part of Liquidation Estate

April 23, 2026 : The Kochi Bench of the National Company Law Tribunal (NCLT) has ruled that a homebuyer who has paid the full sale consideration and has been placed in possession of a property is entitled to execution and registration of the sale deed, and such property cannot be treated as part of the liquidation estate under the Insolvency and Bankruptcy Code, 2016.

The decision was delivered by Judicial Member Shri Vinay Goel in Tom Thomas v. Annie Abraham & Ors. (In re: MIR Realtors Pvt. Ltd.), on an application filed under Section 60(5) of the Code seeking conveyance of a villa in the “MIR Greens” project of the corporate debtor, which is currently under liquidation.

The applicant had entered into a sale agreement and a construction agreement dated 22 August 2007 with the landowners and the corporate debtor for purchase of a villa along with land. He paid the entire consideration and was handed possession around 2015, but the sale deed was never executed. His claim was admitted during the Corporate Insolvency Resolution Process and again during liquidation.

The Liquidator did not dispute the transaction or admission of the claim but raised concerns regarding quantification, delay and procedural aspects. The landowners opposed the plea, contending that the agreements were not binding, that the developer lacked authority to convey title, and that subsequent arrangements had altered the original terms.

On examining the record, the Tribunal held that the Joint Venture Agreement between the landowners and the corporate debtor, along with the sale and construction agreements executed with the applicant, formed a single composite transaction. It observed that these agreements could not be read in isolation and together created enforceable third-party rights in favour of the homebuyer.

The Bench found that once development rights were vested in the corporate debtor and third-party interests had been created, subsequent disputes or modifications between the landowners and the developer could not defeat the rights of a bona fide purchaser. It also noted that the landowners had failed to file any claim during the CIRP or liquidation process, resulting in extinguishment of their rights under the framework of the Code.

Addressing the central issue, the Tribunal held that a homebuyer who has paid the entire consideration and is in possession stands on a distinct footing and is entitled to protection. Relying on Regulation 46A of the IBBI (Liquidation Process) Regulations, 2016, it ruled that once possession has been handed over to an allottee, such property does not form part of the liquidation estate and cannot be dealt with as an asset of the corporate debtor for distribution.

The Tribunal rejected objections relating to non-registration of agreements, limitation, and the presence of an arbitration clause, holding that such factors cannot override the substantive rights of a homebuyer in insolvency proceedings. It further clarified that disputes between the landowners and the corporate debtor cannot prejudice the rights already created in favour of third-party purchasers.

In view of the admitted position that the applicant had paid the full consideration and was in possession prior to initiation of CIRP, the Tribunal held that he was entitled to execution and registration of the sale deed to perfect his title. It directed the Liquidator to execute the conveyance in favour of the applicant, subject to payment of stamp duty, registration charges and incidental expenses. Upon execution, the applicant would acquire absolute title free from all encumbrances, and the landowners would have no subsisting rights in the property.

The application was accordingly allowed.

Case Title: Tom Thomas v. Annie Abraham & Ors. (In re: MIR Realtors Pvt. Ltd.)
Case No.: IA(IBC)/419/KOB/2024 in IBA/11/KOB/2020
Coram: Shri Vinay Goel, Member (Judicial)