NCLT Permits Liquidator to Pursue Legal Proceedings Against Slum Rehabilitation Authority
Introduction
The National Company Law Tribunal (NCLT), Mumbai Bench has allowed ICICI Prudential Real Estate AIF I to institute, prosecute, and defend legal proceedings relating to the termination of a Letter of Intent (LOI) by the Slum Rehabilitation Authority (SRA) in the matter of ICICI Prudential Real Estate AIF I v. Sunshine Housing and Infrastructure Pvt. Ltd.
Factual Background
The Corporate Debtor, Sunshine Housing and Infrastructure Pvt. Ltd., was appointed as the developer for a Slum Rehabilitation project on a plot of land measuring 11,300.05 sq. mtrs. The SRA terminated the LOI on June 26, 2023. The Liquidator, Mr. Gaurav Adukia, filed an application before the NCLT seeking permission to pursue various proceedings in connection with the termination of the LOI.
Procedural Background
The application was filed under Section 33(5) of the Insolvency and Bankruptcy Code, 2016 (IBC) read with Rule 11 of the NCLT Rules, 2016. The matter was heard by a Bench comprising Shri Sushil Mahadeorao Kochey (Judicial Member) and Mr. Prabhat Kumar (Technical Member).
The Liquidator sought permission to:
- Pursue proceedings pending before the Apex Grievance Redressal Committee (AGRC) vide Appeal No. 182 of 2023
- Initiate fresh proceedings before the AGRC pertaining to the LOI
- Initiate proceedings before the Bombay High Court with regard to the plot of land
- Seek refund of the deposit amount lying with the SRA
Issues
1. Whether the Liquidator can institute, prosecute, and defend legal proceedings in relation to the termination of the LOI by SRA?
2. Whether the Liquidator can seek a refund of the deposit amount lying with SRA?
Reasoning and Analysis
The NCLT held that under Section 33(5) of the IBC, 2016, a Liquidator may institute or defend legal proceedings with the prior approval of the Adjudicating Authority.
Accordingly, the tribunal found that the Liquidator was entitled to:
- Challenge the termination of the LOI before the AGRC,
- Approach the Bombay High Court for relief regarding the plot of land,
- Seek refund of the deposit amount from the SRA, and
- Pursue any other proceedings necessary to safeguard the interests of the Corporate Debtor.
Outcome
The NCLT allowed the application and permitted the Liquidator to:
- Pursue pending AGRC proceedings (Appeal No. 182 of 2023)
- Initiate fresh proceedings before AGRC on the LOI
- File proceedings before the Bombay High Court regarding the land
- Seek refund of the deposit with the SRA
- Initiate any other proceedings required to protect the Corporate Debtor’s interests
Implications
This order reinforces the active role of the Liquidator in insolvency proceedings and clarifies that the NCLT’s approval empowers the Liquidator to pursue necessary litigation to protect the assets of the Corporate Debtor. It also highlights the NCLT’s facilitative role in ensuring that corporate disputes, especially involving public authorities like the SRA, are effectively addressed within the IBC framework.
Representation
In this case the appellant was represented by Ms. Mily Ghoshal along with Ms. Sophia Hussain, Advocate.