The National Company Law Appellate Tribunal has clarified that orders passed by real estate regulatory authorities during the moratorium period under the Insolvency and Bankruptcy Code cannot create new liabilities against a corporate debtor. This judgment reinforces the principle that moratorium under Section 14 is absolute in preventing the creation of fresh claims, even where such claims arise from quasi-judicial adjudication.
Background & Facts
The Dispute
The respondent, Mysore Petro Chemicals Limited, entered into an agreement with Raguleela Builders Private Limited (the corporate debtor) on 02.07.2015 for the purchase of a commercial office unit. The agreement stipulated delivery of the unit by 30.09.2015. The respondent paid the full consideration of ₹12,93,60,000/- but the corporate debtor failed to deliver possession. The respondent filed a complaint with the Maharashtra Real Estate Regulatory Authority (RERA) on this breach.
Key Facts
- The agreement contained a clause permitting delay in possession due to regulatory delays in obtaining Occupancy Certificate.
- RERA dismissed the respondent’s complaint on 08.10.2020, holding that the delay was attributable to statutory delays beyond the promoter’s control.
- The respondent filed an appeal before the Maharashtra Real Estate Regulatory Appellate Authority (RERAA) on 17.12.2020.
- Notice of the appeal was served on the corporate debtor via speed post on 19.12.2020.
- Corporate Insolvency Resolution Process (CIRP) was initiated against the corporate debtor by order of the National Company Law Tribunal (NCLT) dated 04.10.2021, triggering moratorium under Section 14 of the IBC.
- The Resolution Professional (RP) issued a public notice on 21.10.2021 inviting claims, with the last date for submission set at 05.11.2021. The deadline for belated claims under Regulation 12 of the IBBI (CIRP) Regulations was 19.01.2022.
- RERAA passed its order on 30.06.2022, directing the corporate debtor to pay ₹5,28,22,000/- with interest at SBI’s Marginal Cost Lending Rate plus 2%.
- The respondent informed the RP via email on 01.07.2022 and followed up on 12.07.2022.
- The respondent filed its claim in Form B on 19.07.2022 - 198 days after the deadline for belated claims.
- The RP rejected the claim on two grounds: (i) the RERAA order was passed during moratorium, and (ii) the claim was belated.
- The Adjudicating Authority (NCLT Mumbai) allowed the respondent’s application on 18.12.2023, holding the claim valid and enforceable.
Procedural History
- 02.07.2015: Agreement for purchase of commercial unit executed
- 30.09.2015: Scheduled possession date (not fulfilled)
- 08.10.2020: RERA dismissed respondent’s complaint
- 17.12.2020: Appeal filed before RERAA
- 19.12.2020: Notice of appeal served on corporate debtor
- 04.10.2021: NCLT admitted CIRP against corporate debtor; moratorium under Section 14 IBC commenced
- 21.10.2021: RP issued public notice inviting claims; deadline: 05.11.2021
- 19.01.2022: Deadline for belated claims under Regulation 12
- 30.06.2022: RERAA passed order awarding ₹5,28,22,000/- plus interest
- 01.07.2022: Respondent emailed RP about RERAA order
- 12.07.2022: Reminder sent to RP
- 19.07.2022: Claim filed in Form B
- 20.10.2022: RP rejected claim
- 29.09.2022: NCLT passed interim order directing RP to consider claim
- 18.12.2023: NCLT admitted claim
- 18.03.2024: Appeal filed before NCLAT
- 27.05.2026: NCLAT judgment delivered
Relief Sought
The Resolution Professional sought to set aside the NCLT’s order dated 18.12.2023, arguing that the claim was invalid due to being founded on a post-moratorium order and being filed belatedly. The respondent sought enforcement of the RERAA award as a valid claim under the IBC.
The Legal Issue
Can a claim based on an order passed by RERAA during the moratorium period under Section 14 of the IBC be admitted as a valid financial debt, even if filed after the statutory deadline?
Arguments Presented
For the Appellant
The Resolution Professional contended that the RERAA order dated 30.06.2022 was void ab initio under Section 14 of the IBC, as it created a new liability during moratorium. Reliance was placed on P. Mohanraj & Ors. v. Shah Brothers Ispat Pvt. Ltd. [(2021) 6 SCC 258] and Real Estate Regulatory Authority v. M/s D.B. Corp Ltd. [CA(AT)(Ins) No. 1172-1173 of 2022], which hold that proceedings initiated or continued during moratorium are null and void. The claim was also belated, filed 198 days after the deadline under Regulation 12, and after the Information Memorandum had been circulated. The RP argued that newspaper publication under Regulation 6 constituted deemed notice, and the respondent’s failure to inform the RP or halt proceedings before RERAA amounted to suppression.
For the Respondent
The respondent argued that the RERAA proceedings were initiated before CIRP (in December 2020) and were merely concluded during moratorium. Reliance was placed on ABG Shipyard Liquidator v. Central Board of Indirect Taxes & Customs [(2023) 1 SCC 472], which permits adjudication of quantum during moratorium, provided recovery is prohibited. The claim crystallized only upon the RERAA order, and filing immediately thereafter (within 19 days) was not belated. The respondent further argued that the RP had a statutory duty under Sections 18, 25, and 29 of the IBC and Regulation 36 to identify all claims, including those arising from pending litigation. The RP’s failure to act on known facts could not be used to deny the claim.
The Court's Analysis
The NCLAT examined the legislative intent behind Section 14 of the IBC, which aims to preserve the corporate debtor’s assets and liabilities during CIRP to enable a fair resolution process. The Tribunal emphasized that the moratorium is not merely procedural but substantive - it prohibits not only enforcement but also the creation of new liabilities.
"Section 14 of the IBC prescribes a moratorium on the initiation of CIRP proceedings and its effects. One of the purposes of the moratorium is to keep the assets of the corporate debtor together during the insolvency resolution process and to facilitate orderly completion of the processes envisaged under the statute."
The Tribunal distinguished ABG Shipyard, noting that while adjudication of quantum (e.g., customs duty assessment) may continue during moratorium, the creation of a new enforceable liability - such as a compensation award - is prohibited. The RERAA order, which directed payment of ₹5,28,22,000/- plus interest, was not merely an assessment but a binding adjudication creating a fresh financial obligation. This fell squarely within the prohibition of Section 14.
The Tribunal further held that the timing of the claim’s filing was immaterial once the underlying basis of the claim - the RERAA order - was invalid. However, the Court took a significant step beyond the narrow legal issue. It observed that the RP, as a fiduciary under the IBC, had a statutory duty under Section 18(1) to identify and list all assets and liabilities of the corporate debtor. The respondent had paid ₹12,93,60,000/- for a commercial unit, a fact ascertainable from the corporate debtor’s records. The RP did not dispute the allotment or payment. The Tribunal held that the IBC is not an expropriatory statute and must recognize legitimate pre-CIRP rights, even if formal claims are not filed.
"IBC is keen to recognize every right to claim a debt, which it defines as debt, even though it holds no promise to any creditor that the debt due to him will be paid."
The Court concluded that while the RERAA-based claim could not be admitted, the underlying debt - the payment made by the respondent for the unit - was a valid financial debt that the RP was obligated to identify and include in the list of creditors, irrespective of the RERAA order.
The Verdict
The appeal was allowed. The NCLAT set aside the NCLT’s order dated 18.12.2023 admitting the claim based on the RERAA order. However, the Tribunal directed the Resolution Professional to verify the respondent’s payment of ₹12,93,60,000/- to the corporate debtor and include the claim as a financial debt under Section 5(8) of the IBC, based on the original transaction, not the RERAA award. The RP was directed to complete this verification and inclusion within 30 days of the judgment.
What This Means For Similar Cases
RERAA Orders During Moratorium Are Not Enforceable Claims
- Practitioners must treat any RERA/RERAA order passed after the commencement of CIRP as void for the purpose of claim admission under the IBC.
- Creditors cannot rely on post-moratorium adjudications to establish financial debt; the debt must predate the CIRP.
- Claims based on such orders will be rejected, regardless of timeliness.
RP Must Proactively Identify Pre-CIRP Payments, Even Without Formal Claims
- Resolution Professionals have a statutory duty under Section 18(1) to identify all liabilities, including those arising from unfiled but verifiable transactions.
- If a creditor has paid for a property or service and the corporate debtor’s records confirm the payment, the RP must include the claim - even if no Form B was filed.
- Failure to do so may expose the RP to liability for breach of fiduciary duty.
IBC Is Not a Tool for Dispossessing Innocent Allottees
- The NCLAT reaffirmed that the IBC protects the rights of bona fide allottees, even if they fail to file claims.
- Practitioners should argue for inclusion of pre-CIRP payments as financial debts under Section 5(8), particularly in real estate cases, irrespective of RERA proceedings.
- This creates a new pathway for homebuyers and commercial allottees to assert claims based on payment records, not adjudicatory orders.
