NCLT Orders Kotak Mahindra Bank to Release Arun Aurovilla Title Deeds After Full Resolution Plan Payment

June 15, 2026 : In a significant ruling reinforcing the sanctity of approved resolution plans under the Insolvency and Bankruptcy Code (IBC), the National Company Law Tribunal (NCLT), Bengaluru Bench, has directed Kotak Mahindra Bank to hand over the original title deeds and security documents of the Arun Aurovilla project to the successful resolution applicant after finding that all payment obligations under the approved resolution plan had been fulfilled.

The order was passed on June 15, 2026, in IA (IBC) No. 1002/2025 arising out of CP (IB) No. 305/BB/2019. The dispute stemmed from the Corporate Insolvency Resolution Process (CIRP) of Arun Shelters, which had been admitted into insolvency proceedings under Section 7 of the Insolvency and Bankruptcy Code, 2016, on the petition of Kotak Mahindra Bank.

According to the tribunal, the resolution applicant’s plan had earlier been approved by the Committee of Creditors and subsequently sanctioned by the NCLT on November 4, 2022. At the time of approving the plan, the tribunal had specifically directed that Kotak Mahindra Bank would retain charge over the land and building of the Arun Aurovilla project only until full payment under the resolution plan was made.

The successful resolution applicant argued that it had fully complied with the approved resolution plan by paying approximately ₹53.42 crore to creditors, including Kotak Mahindra Bank. In addition, despite an ongoing dispute regarding the applicability of interest under Clause 14.1(e) of the resolution plan, the applicant also remitted an additional ₹4.55 crore towards interest under protest to avoid any allegation of default and ensure uninterrupted implementation of the plan.

After making the payments, the applicant sought release of the original title deeds and security documents relating to the Arun Aurovilla project. However, the bank declined to release the documents, citing pending litigation, including IA No. 248/2024 concerning waiver of interest and a challenge to the approved resolution plan by the erstwhile promoter before appellate forums. The applicant contended that these proceedings could not justify continued retention of the documents after full payment had been made under the approved plan.

The resolution applicant further relied upon proceedings before higher judicial forums, arguing that the implementation of the resolution plan had already been substantially completed. It alleged that the bank was effectively attempting to pressure it into withdrawing an appeal pending before the National Company Law Appellate Tribunal (NCLAT) regarding the interest dispute.

Kotak Mahindra Bank opposed the application, maintaining that the issue of interest waiver remained pending before the NCLAT and that complete closure of all disputes was necessary before the release of security documents. The bank argued that the pending appeal could affect the implementation of the resolution plan and that the application seeking release of documents was premature.

After examining the record, the NCLT noted that the applicant’s earlier plea seeking waiver of interest had been dismissed and that an appeal against that decision remained pending before the NCLAT. Nevertheless, the tribunal found that the disputed interest amount had already been paid under protest and that the bank had received the entire amount payable under the approved resolution plan.

Explaining its reasoning, the tribunal observed that the pendency of an appeal regarding interest could not provide a legal basis for withholding title deeds and other security documents once the bank had received full payment. The bench stated that the bank’s continued possession of the documents lacked justification because its financial claims under the approved plan had already been satisfied.

In an important observation, the NCLT held: “The respondent bank having received full payment under the approved resolution plan has no basis to retain custody of title documents and other securities of project Arun Aurovilla.” The tribunal further clarified that “Only because the issue of payment of interest is still live in an appeal, does not provide foothold to the respondent not to part with the custody and control of vital documents unto the applicant.”

The bench also emphasized that irrespective of the eventual outcome of the pending appeal, the bank would ultimately be required to return the title deeds and charge-release documents. Consequently, no prejudice would be caused to the bank by releasing the documents immediately to the resolution applicant, who had become entitled to them under the approved resolution plan.

Allowing the application, the NCLT directed Kotak Mahindra Bank to hand over the original title deeds, security papers, and charge-release documents relating to the land and building of the Arun Aurovilla project within 15 days.

The ruling is significant for insolvency jurisprudence because it reinforces the principle that once a successful resolution applicant fulfils its obligations under an approved resolution plan, creditors cannot continue to retain control over secured assets or title documents merely because collateral disputes remain pending. The decision strengthens certainty in the implementation phase of resolution plans and underscores the binding nature of approved plans under the Insolvency and Bankruptcy Code, 2016. For stakeholders in insolvency proceedings, including lenders, resolution applicants, homebuyers, and investors, the judgment highlights that implementation of a resolution plan cannot be obstructed by withholding essential project documents after payment obligations have been discharged.

Case Reference: IA (IBC) No. 1002/2025 in CP (IB) No. 305/BB/2019, Kotak Mahindra Bank v. Arun Shelters.