NCLAT rules developer has no ownership rights in Ananta Residencies but may complete construction during CIRP.

May 25, 2026 : In a significant ruling on the intersection of real estate development agreements and insolvency proceedings, the National Company Law Appellate Tribunal (NCLAT) has held that a developer engaged to complete a real estate project cannot claim ownership rights over the project or its unsold units merely on the basis of a development agreement, power of attorney, and consortium arrangement. At the same time, the appellate tribunal permitted the developer to continue construction of the project while directing that the Resolution Professional (RP) remains entitled to seek all records and information necessary for the Corporate Insolvency Resolution Process (CIRP).

The judgment was delivered by a Bench led by Justice Ashok Bhushan in a batch of appeals arising from the insolvency proceedings of Andes Town Planners Pvt. Ltd., the developer of a large township project in Lucknow. The dispute revolved around the Ananta Residencies project, also referred to as the New Tower or Stylus Tower project, being developed on a portion of land owned by the corporate debtor.

The controversy traces back to a loan facility of Rs. 90 crore extended in 2014 by Dewan Housing Finance Corporation Ltd. (DHFL), whose rights were subsequently transferred to other lenders. To secure the facility, the corporate debtor executed a registered mortgage over the entire project land, including unsold units and future receivables. Several years later, in January 2018, Andes Town Planners entered into a Development Management Agreement with Halwasiya Developments Pvt. Ltd. for completion, marketing, and management of the Ananta Residencies project.

After CIRP was initiated against Andes Town Planners under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC), the Resolution Professional sought possession of the project and requested all relevant documents from Halwasiya. The RP also moved an application under Sections 19(2) and 60(5) of the IBC seeking directions to stop construction activities and hand over project control. The National Company Law Tribunal (NCLT) had rejected the RP’s application and granted relief to Halwasiya, prompting multiple appeals before the NCLAT by the financial creditor, the Resolution Professional, homebuyers, and other stakeholders.

Examining the statutory framework under Sections 18, 19 and 25 of the IBC, the appellate tribunal emphasized that the Resolution Professional is legally obligated to take custody and control of the corporate debtor’s assets and preserve them for the benefit of all stakeholders. The NCLAT held that Halwasiya, being a party to a development arrangement with the corporate debtor, falls within the category of “any other person required to assist or cooperate” under Section 19(2) of the Code. Consequently, the RP’s application seeking cooperation and project-related information was maintainable.

Rejecting the NCLT’s finding that the dispute was merely contractual and outside the insolvency process, the appellate tribunal observed that the Resolution Professional was fully justified in seeking records and information relating to the project for conducting the CIRP. The NCLAT concluded that the RP had successfully established a case for grant of reliefs sought in the application.

One of the central issues before the tribunal was whether Halwasiya acquired ownership rights over the project through the Development Management Agreement, the Power of Attorney dated January 19, 2018, and the Consortium Agreement dated September 5, 2020. The NCLAT answered this question in the negative. It held that while the agreements conferred development rights and contractual entitlements, they did not transfer ownership of either allotted units or unsold units in the project. The tribunal categorically ruled that “M/s Halwasiya Developments Pvt. Ltd. cannot claim any ownership rights in the project – Ananta Residencies with respect to allotted Units and unsold Units.”

The appellate tribunal also attached significance to the mortgage created in favour of the lender in 2014. It noted that the mortgage covered the entire land parcel, unsold inventory and receivables. The mortgage deed specifically prohibited creation of third-party interests without lender approval. Importantly, the development agreement itself required the corporate debtor to obtain a no-objection certificate (NOC) from DHFL. However, no such NOC was ever obtained. The tribunal therefore held that the lender’s charge over the project continued and remained enforceable despite the subsequent development arrangements.

In a key observation, the NCLAT held that “the charge of lenders continues on the project Ananta Residency and Halwasiya cannot claim to have acquired any exclusive rights to sell any unsold Units.” This finding is likely to have significant implications for real estate insolvency cases where developers seek to assert rights over project inventory without formal transfer of ownership or lender consent.

At the same time, the tribunal declined to halt ongoing construction. Taking note of the fact that the project was substantially complete and that continuation of construction would benefit allottees and stakeholders, the NCLAT held that Halwasiya was entitled to complete the project under the existing development and consortium agreements. However, it clarified that such permission does not dilute the Resolution Professional’s authority to obtain information, documents, and project records required for the insolvency process.

The tribunal also refrained from deciding the separate dispute regarding conversion of the project from a residential-cum-commercial tower into a fully commercial development. Since that issue was already pending before the Allahabad High Court and had not been adjudicated by the NCLT in the underlying proceedings, the NCLAT declined to express any opinion on its legality.

The ruling is expected to serve as an important precedent in insolvency matters involving real estate projects. It reinforces that development rights do not automatically translate into ownership rights, particularly where prior mortgages exist. The judgment also strengthens the powers of Resolution Professionals under Sections 19 and 25 of the IBC to secure cooperation from third parties involved in project execution, while balancing the interests of homebuyers by allowing construction activities to continue where project completion remains feasible.

Case Reference: Phoenix ARC Pvt. Ltd. v. Halwasiya Developments Pvt. Ltd. & Ors., Company Appeal (AT) (Insolvency) Nos. 164-166 of 2025 along with Company Appeal (AT) (Insolvency) Nos. 266-268, 295 & 365 of 2025