Chandigarh Bench of NCLT rules that property title disputes pre-dating CIRP fall under civil court jurisdiction, not NCLT.
In a significant judgment, the Chandigarh Bench of the National Company Law Tribunal (NCLT) has dismissed an application by M/s GBP Developers Pvt. Ltd., seeking to exclude certain land from the Corporate Insolvency Resolution Process (CIRP) of M/s Gupta Builders and Promoters Private Limited. The tribunal, consisting of Sh. Khetrabasi Biswal and Sh. Shishir Agarwal, ruled that disputes regarding property title or allegations of fraud in property transfers prior to the initiation of CIRP fall exclusively within the jurisdiction of civil courts.
The controversy arose when GBP Developers claimed ownership of a parcel of land included in the CIRP estate, alleging that the land was wrongly attributed to the corporate debtor through a forged sale deed and an invalid board resolution. The applicant argued that the sale deed and board resolution were fabricated, claiming non-receipt of consideration and lack of proper authorization for the transaction.
However, the NCLT emphasized that such disputes require detailed examination of evidence, including cross-examinations and forensic scrutiny, which are beyond the tribunal's summary proceedings under the Insolvency and Bankruptcy Code (IBC). The tribunal cited the Supreme Court's verdicts in the Embassy Property and Gujarat Urja cases, reaffirming that the NCLT's jurisdiction does not extend to adjudicating civil disputes of this nature.
Furthermore, the tribunal clarified that the moratorium under Section 14 of the IBC does not transform the NCLT into a civil forum for adjudicating title disputes. The applicant's contention that the NCLT could decide whether the land formed part of the insolvency estate was dismissed, with the tribunal ruling that such determinations involving pre-CIRP transactions must be pursued in civil court.
The NCLT's decision underscores the delineation of jurisdictional boundaries under the IBC, reinforcing that civil courts are the appropriate venue for resolving disputes related to property title and corporate authorizations predating CIRP.
Bottom Line:
NCLT does not possess jurisdiction to adjudicate disputes relating to title, validity of sale deeds, or allegations of fraud in property transfers predating CIRP. Such matters fall exclusively within the domain of civil courts.
Statutory provision(s): Insolvency and Bankruptcy Code, 2016 Sections 14, 60(5)
M/s GBP Developers Pvt. Ltd. v. Mukesh Gupta, (NCLT)(Chandigarh Bench) : Law Finder Doc Id # 2830179
