A A Estates Private Limited vs. Kher Nagar Sukhsadan Co Operative Housing Society Ltd

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IN THE SUPREME COURT OF INDIA
2025 INSC 1366
CIVIL APPELLATE JURISDICTION
Civil Appeal No………………. of 2025
[Arising out of SLP (C) No. 10758 of 2025]
A A ESTATES PRIVATE LIMITED
THROUGH ITS RESOLUTION PROFESSIONAL
HARSHAD SHAMKANT DESHPANDE
AND ANOTHER … APPELLANT(S)
VERSUS
KHER NAGAR SUKHSADAN CO-OPERATIVE
HOUSING SOCIETY LTD & ORS. … RESPONDENT(S)
J U D G M E N T
R. MAHADEVAN, J.
Leave granted.
2. This Civil Appeal has been preferred against the final judgment and order
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dated 11.09.2024 passed by the High Court of Judicature at Bombay in Writ
Petition No. 3893 of 2024.
Signature Not Verified
Digitally signed by
BORRA LM VALLI
Date: 2025.11.28
17:00:14 IST
Reason:
1
Hereinafter referred to as “the High Court”

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3. Appellant No. 1 is the Corporate Debtor, which is presently undergoing
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Corporate Insolvency Resolution Process under the provisions of the
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Insolvency and Bankruptcy Code, 2016 . Appellant No. 2, Mr. Harshad
Shamkant Deshpande is the Resolution Professional appointed in respect of
Appellant No. 1 in the said proceedings. Before the High Court, they were
arrayed as Respondent Nos. 8 and 9 in the writ petition, out of which the present
appeal arises.
4. Respondent No. 1, Kher Nagar Sukhsadan Co-operative Housing Society
Ltd., preferred the aforesaid writ petition before the High Court against
Respondent Nos. 2 to 7 and the present appellants, inter alia seeking the
following reliefs:
(a) issuance of a writ of mandamus directing Respondent Nos. 2 to 7 to grant
Respondent No. 1 and/or Respondent No. 8 the requisite permissions and
approvals, in accordance with law, for redevelopment of Respondent No. 1
Society in furtherance of the Development Agreement dated 10.12.2023
executed with Respondent No. 8, within such period as the Court deems fit;
(b) issuance of a writ of mandamus directing Respondent Nos. 2 to 7 to
recognize and accept Respondent No. 8 as the duly appointed Developer of
Respondent No. 1 Society and to disregard / reject any claims or objections
raised by the appellants in relation thereto;
2
For short, “CIRP”
3
For short, “IBC”

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(c) issuance of a writ of mandamus directing Respondent Nos. 2 to 7 to grant
Respondent No. 1 and/or Respondent No. 8 the necessary permissions and
approvals, in accordance with law for redevelopment of Respondent No. 1
Society in furtherance of the Development Agreement dated 10.12.2023
executed with Respondent No. 8, within such period as the Court deems fit.
5. By the impugned judgment, the High Court made the Rule absolute in
terms of the aforesaid prayer clauses and accordingly, disposed of the writ
petition filed by Respondent No. 1.
Factual matrix
6. Originally, Respondent No. 1 Society and Respondent No. 3 Maharashtra
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Housing & Area Development Authority , had entered into a Lease Deed dated
12.02.1996 thereby leasing a plot of land admeasuring 1890.31 sq.m. along with
the building thereon known as “Kher Nagar Sukh Sadan” situated at Building
No. 33, Survey No. 341 (part), CTS No. 607 (part), Kher Nagar Mumbai
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Suburban District, Bandra (E), Mumbai in favour of Respondent No. 1 Society
for a period of 99 years with effect from 01.04.1980.
6.1. On 16.10.2005, Respondent No. 1 Society executed a registered
Development Agreement with Appellant No. 1 for redevelopment of the subject
project. Pursuant to the same, a Power of Attorney dated 23.12.2005 was also
4
For short, “MHADA”
5
For short, “the subject project”

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executed by Respondent No. 1 in favour of Appellant No. 1 and its directors.
After disputes and negotiations, a Supplementary Development Agreement
dated 09.04.2014 was executed, under which Appellant No. 1 was required to
complete redevelopment within 40 months from the receipt of the
commencement certificate. Appellant No. 1 obtained approvals, including No
Objection Certificate from Respondent No. 3, Intimation of Disapproval (IOD)
and Plan sanctions from the Municipal Corporation, after paying substantial
amounts of Rs. 4,02,20,590/- and Rs. 52,70,836/- towards infrastructure
charges.
6.2. However, redevelopment was stalled as the remaining 41 members failed
to vacate the premises, and the Society continued to raise repeated allegations
against Appellant No. 1. Appellant No. 1 also incurred expenses to carry out
necessary repairs to the existing building, but the Society persisted in attributing
the delays to the developer.
6.3. Disputes deepened, and in 2019, CIRP was initiated against Appellant
No. 1, but was set aside on 12.06.2020. Subsequently, by order dated
06.12.2022, CIRP was admitted against Appellant No. 1 at the instance of State
Bank of India, and Appellant No. 2 was appointed as the Resolution
Professional.
6.4. In the meanwhile, Respondent No. 1 Society disregarding its own lapses
and the statutory moratorium under Section 14 of the IBC, purported to
terminate the Development Agreement with Appellant No. 1 and, by executing a

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fresh Development Agreement and Power of Attorney dated 10.12.2023,
appointed Respondent No. 8 as a new developer. The Society also sought
approvals from MHADA in favour of Respondent No. 8. This was done despite
the express objections raised by Appellant No. 2 in his capacity as Resolution
Professional.
6.5. Thereafter, Respondent No. 1 Society filed WP. No. 3893 of 2024 which
was disposed of by the High Court, by the impugned judgment dated
11.09.2024. Aggrieved by the same, the appellants are before this Court with the
present appeal.
Contentions of the Parties
7. The learned senior counsel for the appellants submitted that the impugned
judgement is in manifest disregard of the principles of natural justice. The High
Court proceeded to hear the writ petition on 02.09.2024 and reserved it for
orders on the very next day, without affording the appellants an opportunity to
file their reply on record. Such undue haste has resulted in grave prejudice to the
appellants and is contrary to settled law.
7.1. It was submitted that Appellant No. 1 was vested with valid and
subsisting development rights in respect of the subject property arising from a
registered Development Agreement dated 16.10.2005 and a Supplementary
Agreement dated 09.04.2014. These rights were duly created and acted upon

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through substantial investment exceeding Rs. 10.82 crores, including payments
for additional buildable area, infrastructure charges, compensation to allottees,
and statutory approvals from MHADA and MCGM. These investments and
rights constitute valuable assets of the corporate debtor. However, delays and
disputes attributable to Respondent No. 1 Society, including the refusal by a
majority of members to vacate the premises and the legal proceedings initiated
by dissenting members, prevented redevelopment from progressing.
7.2. According to the learned senior counsel, the impugned judgment, granting
permission to Respondent No. 1 Society to appoint a new developer
(Respondent No. 8) for redevelopment of the subject property, ignored the
subsisting and registered Development Agreements and the statutory
moratorium imposed under Section 14 of the IBC. It has the effect of
extinguishing valuable development rights forming part of the estate of
Appellant No. 1, being the corporate debtor, in violation of both contract and
Code. The redevelopment dispute culminated in Respondent No. 1 Society
purportedly appointing a new developer, Respondent No. 8 in December 2023
during the pendency of the CIRP of Appellant No. 1, in contravention of the
moratorium imposed under Section 14 of the IBC. Instead of approaching the
adjudicating authority under the Code or resolving contractual disputes through
arbitration, Respondent No. 1 Society instituted a writ petition seeking a
mandamus to facilitate permissions in favour of Respondent No. 8. The High

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Court failed to appreciate that no document evidencing the termination of the
Development Agreement was ever placed on record.
7.3. The learned senior counsel further submitted that the impugned judgment
disregards binding precedent that prohibits adjudication of contractual disputes
under Article 226 of the Constitution in the face of an arbitration agreement and
wrongly validates an alleged termination that was neither effected in law nor on
fact. The judgment, in effect, deprives the corporate debtor of valuable
development rights recognized as assets under Section 3(27) of the IBC, at a
time when resolution plan proposing the revival of the subject project was
actively under consideration by the Committee of Creditors. In these
circumstances, the impugned judgment not only undermines the objective of the
Code but also frustrates the statutory mandate of maximizing the value of assets
during the CIRP. The present appeal, therefore, raises substantial questions of
law concerning the interplay between contract, moratorium, and constitutional
remedies, and deserves to be allowed.
7.4. It was further contended that the impugned judgment has a direct and
adverse impact on the CIRP of Appellant No. 1 by unilaterally extinguishing
valuable development rights held by the corporate debtor. These rights, arising
from duly executed and registered agreements, constitute “property” within the
meaning of Section 3(27) of the IBC, which includes all legal or equitable
interests, whether present or future, vested or contingent, tangible or intangible.

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The development rights bestowed upon Appellant No. 1 by Respondent No. 1
Society form part of the assets of the corporate debtor and are included in the
information memorandum. To divest the corporate debtor of these valuable
assets would have a detrimental effect on its revival and adversely impact the
interests of creditors, primarily public sector financial institutions.
7.5. The learned senior counsel placed reliance on Victory Iron Works Ltd v.
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Jitendra Lohia and another , wherein it was held that development rights are
“assets” within the meaning of Sections 18(f) and 25(2)(a) of the IBC. The
Resolution Professional is duty-bound to take custody and control of such
assets, and any extinguishment without due process undermines the object of the
Code and the ability of the Resolution Professional and the Committee of
Creditors to maximize asset value. Hence, the impugned judgment violates
Section 14(1)(b) of the IBC.
7.6. It was further submitted that the impugned judgment violates the statutory
moratorium under Section 14. The CIRP against Appellant No. 1 was admitted
on 06.12.2022, upon which a moratorium was imposed interdicting the
institution or continuation of proceedings against the corporate debtor. Despite
being fully aware of the moratorium and the appointment of the Resolution
Professional, Respondent No. 1 instituted Writ Petition No. 3893 of 2024
seeking to validate a fresh Development Agreement with Respondent No. 8. The
High Court’s directions, rendered during the subsistence of the moratorium, are
6
(2023) 7 SCC 227

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non est in law, as held in Alchemist Asset Reconstruction Co. Ltd v. Hotel
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Gaudavan (P) Ltd. and others , which emphasis that Section 14 creates a
statutory status quo to ensure the unhindered conduct of the insolvency process.
7.7. The learned senior counsel also highlighted the substantial financial
contributions made by Appellant No. 1 towards the project, including
Rs.4,02,20,590/- paid to Respondent No. 3 on 14.09.2011 towards the purchase
of additional buildable area of 2961.20 sq.m., whose current value is
Rs.12,78,57,213/-, and Rs.52,70,936/- paid to Respondent No. 7 on 19.10.2011
towards infrastructure charges. Further, Appellant No. 1 paid Rs. 5,66,46,428/-
towards compensation to allottees between 2008 and 2016, apart from rent
payments made at their request even before the IOD was issued. The cumulative
expenditure incurred by Appellant No. 1, valued at around Rs. 24 crores with
interest, has a direct bearing on its rights and equities in the project. The failure
of the High Court to consider these significant contributions renders the
impugned judgment legally unsustainable.
7.8. It was further pointed out that there exists a valid and subsisting
arbitration agreement between Appellant No. 1 and Respondent No. 1 Society,
which has already been invoked. Despite having agreed to arbitration vide letter
dated 06.11.2021, Respondent No. 1 deliberately chose to bypass the arbitral
mechanism and instead invoked the extraordinary writ jurisdiction. Such
conduct amounts to forum shopping, as writ jurisdiction cannot be invoked in
7
2017 SCC OnLine SC 1362

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matters arising from private contractual disputes, particularly where parties have
agreed to arbitration, as held in Empire Jute Co. Ltd and others v. Jute
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Corporation of India Ltd. and another , Joshi Technologies International Inc.
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v. Union of India and others , and Union of India and others v. Puna Hinda .
Respondent No. 1, despite having recourse to arbitration under the Development
Agreement and Supplementary Agreement, failed to exercise that remedy in a
timely manner. Instead, upon commencement of the CIRP and the imposition of
the moratorium, it approached the High Court to circumvent the statutory bar
under Section 14 of the IBC.
7.9. The learned senior counsel submitted that Respondent No. 1 Society was
fully aware of the CIRP proceedings and the appointment of the Resolution
Professional, having received communications dated 11.04.2023 and 19.08.2023
and hence, the writ petition filed by them was nothing but an attempt to bypass
the moratorium and abuse the process of law. It was also submitted that once the
CIRP had commenced, the appropriate forum for Respondent No. 1 Society to
raise its grievances was the Adjudicating Authority in accordance with the
framework of the Code and the failure to do so reinforces that the writ
proceedings were misconceived and not maintainable in law.
7.10. It was further submitted that the inordinate delay in execution and
completion of redevelopment of the subject project is wholly attributable to
8
(2007) 14 SCC 680
9
(2015) 7 SCC 728
10
(2021) 10 SCC 690

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Respondent No. 1 Society. From 2005 till the initiation of CIRP proceedings,
internal disputes among members, unreasonable demands for additional
benefits, and persistent obstruction in handing over possession repeatedly stalled
the project. These acts and omissions are recorded in contemporaneous
documents and show that delays were caused by the Society’s internal discord
and obstructionist behaviour, despite the appellant’s consistent readiness to
proceed. Out of 60 allottees, 41 refused to vacate the premises, litigation was
initiated by members, and several illegal constructions hampered progress.
Delays also arose due to late receipt of spill-over FSI clearance and persistent
demands for further revision of the redevelopment proposal between 2014 and
2019. Accordingly, no blame can be fastened on Appellant No. 1 and the delay
must be attributed solely to Respondent No. 1 Society.
7.11. The learned senior counsel further submitted that the High Court erred in
holding that the Development Agreement dated 16.10.2005 and the
Supplementary Agreement dated 09.04.2014 stood terminated pursuant to the
Special General Body Meeting of Respondent No. 1 Society held on
09.06.2019. This finding is patently erroneous, as no resolution effecting such
termination was passed in that meeting, and no document evidencing the same
was produced before the High Court. Even the alleged notice dated 02.12.2019
merely threatened termination, while the alleged public notice dated 31.12.2019
was issued during the moratorium period and without following due process. It
is well settled that a registered agreement cannot be terminated unilaterally;

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cancellation of such an instrument must be effected by a competent civil court.
Any unilateral act purporting to terminate a registered agreement is legally
untenable and without effect.
7.12. In conclusion, it was submitted by the learned senior counsel that the
impugned judgment dated 11.09.2024 passed by the High Court is unsustainable
in law and on facts and deserves to be set aside. The development rights of the
corporate debtor in the subject project, being valuable assets under the Code,
must be protected from arbitrary extinguishment in the interest of justice, equity,
and to safeguard the sanctity of the CIRP process.

8. Per contra, the learned senior counsel for Respondent No. 1 submitted
that the respondent is a registered Co-operative Housing Society comprising
about 60 members belonging to the lower-income group, including tailors,
stenographers, and drivers. The Society is located at Building No. 33, known as
Sukhsadan CHS situated at Kher Nagar, Bandra (East), Mumbai. The building
constructed in 1956, was declared a C-1 category (dangerous structure) under
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Section 264 of the Maharashtra Municipal Corporations Act, 1949 . Between
2006 and 2017, several notices were issued to Respondent No. 1 Society by the
Municipal Corporation of Greater Mumbai (MCGM) under Sections 353B, 354,
and 354A of the MMC Act as well as by MHADA, indicating that the structure
was dilapidated and required redevelopment.
11
For short, “the MMC Act”

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8.1. It was further submitted that a Development Agreement dated 16.10.2005
and a power of attorney dated 23.12.2005 were executed, requiring completion
of construction within 24 months (18 months plus 6 months’ grace), i.e., by
October 2007. Despite these timelines, no progress was made for almost two
decades. MHADA issued an offer letter on 24.08.2011 and a NOC on
05.01.2012. Clause 18 of the NOC mandated submission of building plans
within six months, failing which the NOC would stand cancelled. A
Supplementary Development Agreement dated 09.04.2014 again required
Appellant No. 1 to complete the project within 40 months from commencement,
pay transit rent, and provide compensation before vacating the premises. An
Intimation of Disapproval (IOD) was received only on 04.09.2014 i.e., almost
ten years later, subject to the condition requiring negotiation and provision of
alternate accommodation to the tenants. Between 01.07.2010 and 15.12.2018,
only 19 of the 60 members vacated their premises based on the transit rent paid
by Appellant No. 1. The payments were subsequently stopped, forcing re-
occupation of unsafe premises. Repeated correspondences were addressed to
Appellant No. 1 calling upon it to register the Supplementary Agreement,
execute Permanent Alternate Accommodation Agreements, and commence
construction, but no steps were taken. This compelled Respondent No. 1 Society
to terminate the Development and Supplementary Agreements by a resolution
dated 09.06.2019. The said decision was communicated to Appellant No. 1 by

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notice dated 02.12.2019 and reiterated by reply dated 06.11.2021. Consequently,
a public notice confirming termination was issued on 31.12.2019.
8.2. The learned senior counsel further submitted that the first CIRP against
Appellant No. 1 was initiated on 14.11.2019, but was subsequently vacated on
12.06.2020 after settlement. Despite this, Appellant No. 1 took no action to
restart the project. Thereafter, arbitration was invoked by Appellant No. 1 on
28.10.2021, admitting termination. In such circumstances, Respondent No. 1
appointed Respondent No. 8 as the new developer on 07.11.2021, and MHADA,
by letter dated 18.11.2021, permitted redevelopment through Respondent No. 8.
8.3. It was submitted that the second CIRP was initiated against Appellant
No.1 only on 06.12.2022 at the instance of State Bank of India for a debt of
Rs.130 crores, well after termination. Thereafter, on 10.12.2023, a Development
Agreement was executed between Respondent Nos. 1 and 8, and possession was
handed over. Respondent No. 8 commenced redevelopment, including
demolition, payment of transit rent, and piling work. Claiming protection under
moratorium, Appellant No. 2, the Resolution Professional, addressed letters to
MHADA not to entertain any proposal for redevelopment of Respondent No. 1.
Therefore, Respondent No. 1 filed Writ Petition No. 3893 of 2024 before the
High Court seeking directions to Respondent Nos. 2 to 7 (statutory authorities)
for redevelopment permissions. However, no relief was sought against the
appellants.

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8.4. It was submitted that after serving an advance copy of the writ petition
and in the presence of the counsel for appellants, the High Court by judgment
dated 11.09.2024, disposed of the writ petition and directed the authorities to
grant approvals for redevelopment within two months. Pursuant thereto,
Respondent No. 8 entered into agreements for alternate accommodation with
members in January and February 2025, demolished the building, and
commenced the redevelopment work. In April 2025, a commencement
certificate was obtained by Respondent No. 8, and piling work was underway.
While so, this Court issued notice and directed the parties to maintain status quo
on 15.04.2025, in consequence of which, MHADA revoked the commencement
certificate granted to Respondent No. 8 citing the interim order of this Court.
According to the learned senior counsel, the present appeal filed belatedly on
10.02.2025, i.e., seven months after demolition, was clearly an afterthought to
obstruct redevelopment.
8.5. The learned senior counsel contended that the submission of the
appellants that their development rights are assets protected under Section 14 of
the IBC is clearly misconceived. The development agreements stood terminated
by valid resolutions long before the second CIRP (December 2022), possession
of the property always remained with the Society, and no physical possession
was ever given to Appellant No.1. Therefore, no “asset” or “occupied property”
of the corporate debtor existed to attract moratorium protection.

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8.6. The learned senior counsel relied on Rajendra K. Bhutta v. Maharashtra
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Housing and Area Development Authority and another to contend that the
moratorium under section 14(1)(d) extends only to properties “occupied” by the
corporate debtor – requiring actual physical possession – which never occurred
in the present case. It was further submitted that the ratio of Victory Iron works
is inapplicable both on facts and in law to the present case as that case involved
a composite arrangement including financial assistance, shareholding, sale
certificates, and possession, thereby conferring quasi-ownership rights. None of
these features exist here – no financial assistance was given by Appellant No. 1
to Respondent No. 1, no shareholding or transfer of interest occurred, the
Development Agreement was terminated, and possession was never delivered.
8.7. It was further pointed out that the same appellant and Resolution
Professional previously relied on an identical plea of moratorium in another
redevelopment (Govind Tower) which tragically collapsed in Mumbai. The
Bombay High Court rejected that contention, permitting redevelopment through
a new developer, and this Court upheld the said decision by order 07.02.2025 in
SLP (C) No. 18909 of 2024. In yet another matter concerning Tagore Nagar,
Appellant No. 1 failed to redevelop a society and claimed immunity under the
IBC. The High Court, by its judgment dated 21.03.2024, noted the chronic
failures of Appellant No.1 and permitted redevelopment through another
developer. The SLP filed against the same was dismissed as withdrawn on
12
(2020) 13 SCC 208

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28.04.2025 in SLP (C) No. 24807 of 2024. All these orders have been
suppressed by the appellants, thereby disentitling them to any relief under
Article 136 as held in G. Narayanaswamy Reddy (Dead) By LRs. and another
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v. Government of Karnataka and another .
8.8. According to the learned senior counsel, the appellants’ plea of breach of
natural justice is unfounded. The writ petition was served in advance, the
appellants were represented, and they neither filed a counter-affidavit nor sought
time. They consciously chose not to respond, thereby waiving their right to
reply. The High Court correctly recorded their appearance and submissions.
Hence, there is neither procedural irregularity nor prejudice.
8.9. It was further submitted that for nearly two decades, Appellant No. 1
failed to fulfil its two core obligations viz. , (i) payment of transit rent and
(ii)timely completion of redevelopment. Out of 60 members, 41 never received
any rent; 19 received it only briefly before stoppage. This forced members to
reoccupy unsafe premises despite repeated demolition notices under the MMC
Act. Appellant No.1’s conduct has been exploitative and obstructive, depriving
low-income members of their fundamental right to life and shelter under Article
21 of Constitution of India. In contrast, Respondent No. 8 has provided alternate
accommodation, paid transit rent, and commenced redevelopment work. To stall
this project now would cause grave and irreparable hardship to innocent
members.
13
(1991) 3 SCC 261

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8.10. It was lastly submitted that Appellant No. 1’s development rights were at
best contingent upon fulfilment of contractual obligations. With total failure of
consideration, no enforceable or vested rights accrued. Therefore, the appeal is
devoid of merit – factually and legally – and any interference at this stage would
unjustly penalize 60 low-income families who have already vacated and are
awaiting their rehabilitated homes.
9. The learned counsel appearing for Respondent No. 8 – Tri Star
Development LLP, submitted that Respondent No. 8 is the duly appointed
developer of Respondent No. 1 Society and has acquired lawful rights to
undertake redevelopment of the subject property. By the impugned judgment
dated 11.09.2024, the High Court directed Respondent Nos. 2 to 7 to grant
necessary permissions and approvals for the redevelopment of the Society to
Respondent No. 8.
9.1. It was further submitted that the writ petition before the High Court
became necessary due to the conduct of Appellant No. 2, who, in his capacity as
Resolution Professional of Appellant No. 1, had addressed communications to
various authorities seeking to obstruct the redevelopment being carried out by
Respondent No. 8.
9.2. The learned counsel submitted that Respondent No. 8 has achieved
substantial progress in the project that Appellant No. 1 failed to execute for
nearly two decades. Respondent No. 8 has demolished the old unsafe structure,

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paid transit rent for one year from 01.11.2024, disbursed corpus amounts to the
original occupants, many of whom belong to modest means such as drivers and
tailors, expended about Rs. 33.65 crores towards redevelopment works, and
obtained all requisite permissions and approvals from statutory authorities.
9.3. It was further submitted that the development agreement is not an asset or
property of Appellant No. 1 (corporate debtor). The contention of Appellant
No.1 that the Development Agreements of 2005 and 2014 conferred exclusive
and subsisting rights forming part of the assets to be included in any resolution
plan is wholly untenable, as those agreements had been terminated on three
distinct occasions viz., on 09.06.2019, 02.12.2019, and 06.11.2021 – all prior to
the initiation of the second and subsisting CIRP, and none during the operation
of any moratorium under Section 14 of the IBC. Consequently, in the absence of
a subsisting development agreement, the appellants can claim no right, title or
interest in the redevelopment project, nor can the same be treated as part of the
assets of the corporate debtor.
9.4. The learned counsel contended that the reliance placed by the appellants
on Victory Iron Works is misconceived, as in that case, the corporate debtor
possessed a bundle of extant rights in immovable property arising from several
agreements with the landowner, which collectively partook the character of
ownership rights and were rightly treated as assets in insolvency. In the present
case, however, no such subsisting rights exist.

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9.5. Lastly, it was submitted that the contention of the appellants regarding
violation of natural justice is equally untenable, since the appearance of their
counsel and their participation in the High Court proceedings were duly
recorded in the impugned judgment.
9.6. On these grounds, it was prayed that the appeal be dismissed, affirming
the impugned judgment of the High Court dated 11.09.2024, and Respondent
No. 8 be permitted to continue and complete redevelopment in accordance with
law.
Analysis and Determination
10. We have heard the learned counsel appearing for all the parties and
perused the materials available on record.
11. This Court, by order dated 15.04.2025, directed all the parties to maintain
status quo with respect to the subject property and the redevelopment work .
12. The undisputed facts reveal that Appellant No. 1 is a developer, who had
originally entered into a Development Agreement with Respondent No. 1
Society on 16.10.2005. Under the said agreement, Appellant No. 1 was required
to demolish the existing building and reconstruct a new building in its place. To
facilitate vacant possession of the existing structure, the developer was obligated
to pay rent compensation and transportation charges to the members of the

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Society. The redevelopment was stipulated to be completed within a period of
18 months, with an additional grace period of 6 months, making a total of 24
months. For better appreciation, the relevant clauses of the Development
Agreement are reproduced below:
“13……..
(a) The Developers shall be given the possession on the said plot of land for the
purposes of the development of the said plot of land.
(b) The society and the members shall vacate the said building and move to the
temporary alternative accommodation of their choice as per mutually agreed
terms for the purpose of development of the said plot of land within 30 days of
intimation received from the Developers. However, the Developers shall provide
monthly compensation and also shifting charges to each member separately
towards vacating the existing Nat and going to temporary alternative
accommodation and returning back to the new permanent accommodation in the
newly constructed building. At the time of shifting the Developer has agreed to
give each members rent compensation of Rs.10,000/- per month for the period of
18 months plus transportation charges of Rs.5,000/- totaling to Rs.1,85,000/-
(Rupees One Lakh Eighty Five Thousand Only). It is hereto agreed that if the
redevelopment work is prolonged beyond a period of 18 months then the
Developer shall be entitled to pay the rent for additional period at the rate of Rs.
10,000/- per month to each of the member till the date of completion of project.
If for any reason the work gets prolonged beyond a period of 18 months then the
Developer shall be able to pay the rent for additional period beyond the
stipulated period of 18 months at the rate of Rs.12,000/- per month to the
existing members till the date of handing over possession of their premises.

…
e) In the event of failure on the part of the developer to complete the work within
a period of 18 months plus a grace period of 6 months totaling to a total
duration of 24 months, society shall be entitled to take following, action
a) issue of notice of 30 days to the developer to complete balance work
within a reasonable time.
b) In the event of failure of Developer to expedite the progress of work
within a reasonable time of 3 months, take following action by passing a
unanimous resolution in its General Body.
i) Appoint jointly chartered value to work out the balance cost of
construction work of rehab building for which the profession fees will be
borne by the developer.

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ii) Appoint a contractor to complete the balance work of rehab Wing only
and charge the same to the Developer.
iii) Developer shall make the payment of balance work of rehab building to
the Society within 30 days time after completion of work and its intimation
to the developer. In case of failure of payment to the Society the society
reserves the right to encash the Bank Guarantee.
iv) The rights of developer on his quota of flats shall remain intact on
payment of construction cost of balance work to the society. It is however
specifically agreed that the responsibility and right of completing the
balance work of sale building as also the rights of sale in Sale building shall
continue to remain with the developer and society shall not obstruct the
developer in any way of continue the work nor the sale of sale building. The
Power of Attorney issued to the Developer shall continue to remain in force.
….
(m)…….
That in consideration of the Developers agreeing to construct/reconstruct the
said new building and their agreement to incur the costs and expenditures as
listed in clauses (a) to (m) hereinabove the society and the granted/
allotted/transferred development rights to the Developers of the said plot of land
and the said building and the rights to develop an construct the said new
building on the said plot of land and the right to construct and develop and
retain and sale and appropriate sale processed of the balance area remaining
(which balance area is hereinafter referred to as the "said area available for
sale") after accommodating the members as per the terms and conditions of
these presents.
…”
12.1. Admittedly, Appellant No. 1 failed to complete the redevelopment within
the stipulated time. It was only in 2012 that Appellant No. 1 obtained the
requisite NOC for redevelopment, nearly seven years after execution of the
original agreement. Thereafter, on 09.04.2014, a Supplementary Development
Agreement was executed between the parties, extending the completion period
to 40 months from the date of receipt of the commencement certificate from
Respondent No. 7 (the Planning Authority), and revising the rent and hardship

23
compensation payable to the Society members. The relevant clauses of the
Supplementary Development Agreement read as under:
“5.1. Pay the following amounts:-
5.1.1. HARDSHIP COMPENSATION:- The hardship compensation as stated in
clause (c) on page 8 of development agreement dated 16.10.2005, be further
revised to Rs. 35,00,000/- (Rupees Thiry five lakhs Only) to each member in lieu
of the earlier agreed amount of Rs. 2,50,000/- (Rupees two lakh fifty thousand
only) per member. The said hardship compensation to be paid as per schedule
mentioned herein below:-
5.1.2. 70% (Rs. 24,50,000/-) of total hardship compensation as mentioned
herein above shall be paid within 7 days after the last member has vacated their
premises and society has handed over the possession of all the premises and the
building and the plot to the developer for carrying out redevelopment work.
Developer will start demolition of the building only after giving the initial
corpus fund as mentioned herein above.
5.1.3. Balance hardship compensation (Rs. 10,50,000/-) shall be paid to the
members at the time of possession of permanent alternative accommodation in
the new building.
5.1.4….
5.2. RENT COMPENSATION:- The Developer shall not be responsible to
provide any temporary alternate accommodation during the period of
redevelopment of the said property and the Members shall procure the same at
their entire cost and expense. However the Developer shall pay to all the
Members rent / compensation for accruing the temporary alternate
accommodation in the following manner:
5.2.1. Rent compensation payable under clause (b) on page no. 7 of the
development agreement dated 16.10.2005 be revised to Rs. 35,000/- (Rupees
Thirty five thousand only) per month for 24 months as follows:-
(a) Developer shall pay 12 month rent in advance @ Rs. 35,000/- per month for
amounting to Rs. 4,20,000/- to each member with effective from date of vacating
and handing over possession of existing premises to the developer.
(b) Developer shall pay balance 12 months rent by way of post dated cheques
(PDC)
It is clarified that 19 members out of 60 have already vacated the
respective premises and handed over possession of their premises to the
developer after taking rent compensation and Developer is paying rent
compensation regularly for 19 members. The schedule of vacating balance 41
members is as follows:
(a) Rent compensation to be taken by the members after obtaining the IOD from
MCGM. Accordingly developer shall give 1 month notice to the members for
collecting the rent and vacated their premises

24
(b) To vacate the respective premises and handover peaceful possession to the
developer after taking rent compensation
(c) Developer shall issue 1 month advance post dated cheques before expiry of
rent compensation of 24 months for further rent.
5.2.2. The above rent compensation shall be paid and be effective from the date
of vacating and handing over possession of existing premises to the Developer.
Developer shall increase 10% rent after completion of 30 months period from
the date of commencement certificate. If the construction work of proposed
rehab building is not completed within 40 months from the date of
commencement certificate, increase rent after 40 months to be decided mutually.
Developer shall pay rent compensation in extended period until delivering of
possession by the Developer of new flat in new building.
5.2.3. BROKERAGE & SHIFTING CHARGES:- Developer shall pay an
amount of Rs. 1,00,000/- (Rupees One lakh only) towards brokerage charges,
shifting, re-shifting during the entire period of construction and same to be
given along with rent compensation to each member on handing over vacate
possession of premises by individual members.
….
6.1. The Developer shall complete the project in the manner provided in this
agreement by the Completion Date. It is clarified that the completion of the
project by the Completion Date shall also mean the obligation of the Developer
to provide to each of the Members, possession of the premises comprised in the
society’s premises (i.e. rehab building) and the Car Parking Spaces comprised
in the Society’s Car Parking Spaces to be allotted as per norms of MCGM with
occupation certificate within 40 months from the date of commencement
certificate from MCGM.”
Despite these modifications, the reconstruction work did not commence due to
disputes between the parties.
12.2. Subsequently, on 14.11.2019, Corporate Insolvency Resolution Process
was initiated against Appellant No. 1, which was, however, set aside on
12.06.2020 pursuant to a settlement between the parties. Meanwhile,
Respondent No. 1 Society issued communication(s) / notice(s) terminating the

25
development agreement entered into with Appellant No. 1, and on 07.11.2021,
appointed Respondent No. 8 as the new developer for the subject project. A
second CIRP proceedings were initiated against Appellant No. 1 and Appellant
No. 2 was appointed as the Resolution Professional on 06.12.2022. Thereafter,
Respondent No. 1 executed a fresh Development Agreement with Respondent
No. 8 on 10.12.2023. However, owing to the pendency of the second CIRP and
the moratorium operating under Section 14 of the IBC, the authority concerned
revoked the permission already granted, due to which, Respondent No. 8 was
unable to proceed with the redevelopment work. Therefore, Respondent No.1
Society filed W.P. No. 3893 of 2024 to direct the authorities concerned to grant
approvals / permissions to Respondent No. 8. The High Court disposed of the
writ petition in favour of Respondent No. 1. Challenging the same, the present
appeal came to be filed.

13. On the basis of the pleadings and the rival submissions, the following
issues arise for consideration in this appeal:
(i) Whether the termination of the Development Agreement dated
16.10.2005 and Supplementary Agreements dated 23.12.2005 and
09.04.2014 by Respondent No. 1 Society prior to the initiation of the
second CIRP was valid and effective in law.
(ii) Whether the aforesaid Development Agreement and the
Supplementary Agreements constitute “assets” or “property” of the

26
corporate debtor so as to attract the protection of moratorium under
Section 14 of the IBC.
(iii) Whether the High Court was justified in allowing the writ petition
filed by Respondent No. 1 Society and directing the statutory
authorities to process and grant approvals in favour of Respondent
No.8 for redevelopment of the subject project.
(iv) Whether the proceedings before the High Court stood vitiated by
violation of the principles of natural justice, as alleged by the
appellants.
14. We shall now discuss the issues in detail as follows:
Issue No. 1
Whether the termination of the Development Agreement dated 16.10.2005
and Supplementary Agreements dated 23.12.2005 and 09.04.2014 by
Respondent No. 1 Society prior to the initiation of the second CIRP was
valid and effective in law.
15. According to the appellants, the termination of the Development
Agreement dated 16.10.2005 and the Supplementary Agreements dated
23.12.2005 and 09.04.2014 by Respondent No. 1 Society was arbitrary, invalid,
and contrary to the contractual terms. It was contended that once the agreement
conferred an exclusive right upon the developer to undertake redevelopment,
such right could not be unilaterally withdrawn. It was further submitted that the

27
Society’s subsequent appointment of a new developer amounts to interference
with the corporate debtor’s assets, which are protected under the IBC.
15.1. Conversely, the Society asserts that the termination was validly and
lawfully effected after prolonged and repeated defaults on the part of the
developer. The record indicates that despite the execution of the Development
Agreement and subsequent Supplementary Agreements, the developer did not
commence or complete any substantial portion of the redevelopment work,
thereby defeating the very object of the project. The stipulated period of forty
months from the receipt of the commencement certificate had long expired, and
no satisfactory explanation was offered for such an inordinate delay.
15.2. The correspondence exchanged between the parties demonstrates that the
Society repeatedly called upon the developer to fulfil its obligations. Notices of
default and reminders were issued over several years, culminating in termination
notices dated 09.06.2019, 02.12.2019, and 06.11.2021. These communications
specifically cited persistent non-performance, failure to pay transit rent, and
failure to commence redevelopment. Out of 60 members, 41 received no rent
while 19 received it only intermittently. Such chronic default justified the
Society’s decision to terminate, which was duly communicated and never
revoked.
15.3. In contract law, time is of the essence in a redevelopment agreement,
whose object is timely rehabilitation of displaced members. Prolonged delay
defeats the foundation of the contract and constitutes a material breach entitling

28
the owner to terminate. The right to terminate for default was expressly reserved
in the Development Agreement and the Supplementary Agreements.
15.4. The termination was thus effected after due notice and prolonged default,
and cannot be termed arbitrary or mala fide. The Society, being the owner of the
property and guardian of the members’ welfare, cannot be compelled to
indefinitely await performance from a defaulting developer. The IBC is not
intended to freeze urban welfare projects or protect commercial indolence at the
cost of citizens awaiting rehabilitation.
14
15.5. In Gujarat Urja Vikas Nigam Ltd v. Amit Gupta and others , this Court
examined the NCLT’s jurisdiction under Section 60(5)(c) of the IBC and held
that the power to restrain or set aside termination is confined to cases where –
(i) the termination is solely on account of insolvency (for example, by an
ipso facto clause); and
(ii) such termination would inevitably result in the corporate death of the
debtor by depriving it of its sole or central contract essential to the
success of the CIRP.
The Court cautioned that the NCLT must refrain from interfering with valid
contractual terminations, based on breaches unrelated to insolvency. The
following observation is pertinent:
“176.  Given that the terms used in Section 60(5)(c) are of wide import, as
recognised in a consistent line of authority, we hold that NCLT was empowered
to restrain the appellant from terminating PPA. However, our decision is
14
(2021) 7 SCC 209

29
premised upon a recognition of the centrality of PPA in the present case to the
success of CIRP, in the factual matrix of this case, since it is the sole contract
for the sale of electricity which was entered into by the corporate debtor. In
doing so, we reiterate that NCLT would have been empowered to set aside the
termination of PPA in this case because the termination took place solely on the
ground of insolvency. The jurisdiction of NCLT under Section 60(5)(c) of IBC
cannot be invoked in matters where a termination may take place on grounds
unrelated to the insolvency of the corporate debtor. Even more crucially, it
cannot even be invoked in the event of a legitimate termination of a contract
based on an ipso facto clause like Article 9.2.1(e) herein, if such termination
will not have the effect of making certain the death of the corporate debtor. As
such, in all future cases, NCLT would have to be wary of setting aside valid
contractual terminations which would merely dilute the value of the corporate
debtor, and not push it to its corporate death by virtue of it being the corporate
debtor's sole contract (as was the case in this matter's unique factual matrix).”
15.6. The above reasoning was reiterated in Tata Consultancy Services Ltd v.
15
SK Wheels Pvt. Ltd. Resolution Professional, Vishal Ghisulal Jain , where
this Court held that NCLT’s residuary jurisdiction cannot be invoked if the
termination of a contract arises from deficiencies or defaults independent of
insolvency. Intervention is justified only where the termination would make
certain the corporate death of the debtor. The following paragraphs are apposite
in this regard:
“ 28. In Gujarat Urja [Gujarat Urja Vikas Nigam Ltd. v. Amit Gupta, (2021) 7
SCC 209 : (2021) 4 SCC (Civ) 1, the contract in question was terminated by a
third party based on an ipso facto clause i.e. the fact of insolvency itself
constituted an event of default. It was in that context, this Court held that the
contractual dispute between the parties arose in relation to the insolvency of
corporate debtor and it was amenable to the jurisdiction of NCLT under Section
60(5)(c). This Court observed that : (SCC pp. 262-63, para 69)
“69. … NCLT has jurisdiction to adjudicate disputes, which arise solely
from or which relate to the insolvency of corporate debtor… The nexus
with the insolvency of corporate debtor must exist.”
(emphasis supplied)
15
(2022) 2 SCC 583

30
Thus, the residuary jurisdiction of NCLT cannot be invoked if the termination
of a contract is based on grounds unrelated to the insolvency of corporate
debtor.
29.   It is evident that the appellant had time and again informed corporate
debtor that its services were deficient, and it was falling foul of its contractual
obligations. There is nothing to indicate that the termination of the facilities
agreement was motivated by the insolvency of corporate debtor. The trajectory
of events makes it clear that the alleged breaches noted in the termination
notice dated 10-6-2019 were not a smokescreen to terminate the agreement
because of the insolvency of corporate debtor . Thus, we are of the view that
NCLT does not have any residuary jurisdiction to entertain the present
contractual dispute which has arisen dehors the insolvency of corporate debtor.
In the absence of jurisdiction over the dispute, NCLT could not have imposed an
ad interim stay on the termination notice. NCLAT has incorrectly upheld [Tata
Consultancy Services Ltd. v. Vishal Ghisulal Jain, 2020 SCC OnLine NCLAT
484] the interim order [BMW Financial Services (P) Ltd. v. S.K. Wheels (P)
Ltd., 2019 SCC OnLine NCLT 28273] of NCLT.
30.  While in the present case, the second issue formulated by this Court has no
bearing, we would like to issue a note of caution to NCLT and NCLAT regarding
interference with a party's contractual right to terminate a contract. Even if the
contractual dispute arises in relation to the insolvency, a party can be restrained
from terminating the contract only if it is central to the success of CIRP.
Crucially, the termination of the contract should result in the corporate death of
corporate debtor.”
15.7. Applying these principles, the termination in the present case was not
occasioned by the insolvency of the corporate debtor but by its persistent non-
performance. Letters issued by the Society, including one dated 31.05.2019,
record that continuation of the agreement was conditional upon compliance by
the developer, failing which the contract would stand cancelled. These defaults
occurred well before initiation of the CIRP. Thus, the termination was based on
legitimate grounds unrelated to insolvency.

31
15.8. Moreover, the redevelopment agreement was not the sole or life-
sustaining contract of the corporate debtor. Appellant No. 1 (AA Estates) was
engaged in multiple projects; continuation of this particular redevelopment was
not significant to the success of the CIRP. The Expression of Interest issued by
the Resolution Professional did not even list this project among the corporate
debtor’s assets. Hence, termination of the contract neither arose from insolvency
nor imperiled the corporate debtor’s survival. It was a lawful termination for
non-performance, falling outside the jurisdiction of the NCLT under Section
60(5)(c).
15.9. The contention raised on behalf of the appellants that the termination
became ineffective upon initiation of the first CIRP in 2019 is untenable. The
said CIRP was set aside in 2020 upon settlement, and no act of revival or
affirmation of the terminated contract occurred thereafter. Consequently, the
subsequent termination notices stood valid and operative in their own right.
15.10. Reliance placed on Rajendra K. Bhutta (supra) , is wholly
misplaced. In that case, Section 14(1)(d) of the IBC applied because the
corporate debtor was in actual occupation of the property under a subsisting
joint development licence, and the termination sought to recover such occupied
property during the moratorium. In the present case, as mentioned earlier,
Appellant No. 1 – AA Estates never obtained physical possession. The Society
and its members remained in continuous occupation. Termination was effected
before the CIRP and was not a recovery during moratorium.

32
15.11. Section 52 of the Indian Easements Act, 1882 defines a “licence” as a
right to do something upon immovable property of another without creating an
easement or interest therein. In Associated Hotels of India Limited v. R.N.
16
Kapoor , this Court clarified that a licence merely permits use of premises for a
particular purpose while possession and control remain with the owner. The
relevant paragraph of the said judgment is extracted below:
“28. Under the aforesaid section, if a document gives only a right to use the
property in a particular way or under certain terms while it remains in
possession and control of the owner thereof, it will be a licence. The legal
possession, therefore, continues to be with the owner of the property, but the
licensee is permitted to make use of the premises for a particular purpose. But
for the permission, his occupation would be unlawful. It does not create in his
favour any estate or interest in the property.”
17
15.12. Similarly, in Qudrat Ullah v. Municipal Board, Bareilly , it was held
that where exclusive possession is not transferred, the transaction is a licence,
not a lease.
15.13. In light of these authorities and the terms of the Development
Agreement, the developer was granted only a limited licence to enter and use
the land for redevelopment. No estate, proprietary right, or transferable interest
was created; ownership and legal possession always remained with the Society.
Consequently, the so-called “development rights” of the corporate debtor
constitute, at best, a contractual permission and not an “interest in property”
within the meaning of Section 14(1)(d) of the IBC.
16
AIR 1959 SC 1262
17
(1974) 1 SCC 202

33
15.14. Accordingly, this Court holds that the termination of the Development
Agreement dated 16.10.2005 and the Supplementary Agreements dated
23.12.2005 and 09.04.2014 by Respondent No. 1 Society was valid, lawful, and
effective in law. No subsisting contractual or proprietary right survived in
favour of the corporate debtor on the date of initiation of the second CIRP.
Consequently, the NCLT lacked jurisdiction under Section 60(5)(c) of the IBC
to interfere with such termination.
Issue No. 2
Whether the Development Agreement and the Supplementary Agreements
constitute “assets” or “property” of the corporate debtor so as to attract
the protection of moratorium under Section 14 of the IBC.
16. The learned senior counsel for the appellants contended that the rights
arising from the Development Agreement executed between Appellant No. 1
(developer) and Respondent No. 1 Society constitute an “asset” or “property” of
the corporate debtor within the meaning of Section 14 of the IBC, thereby
attracting the protection of moratorium upon commencement of the CIRP.
16.1. It is not in dispute that the corporate debtor is entitled to the protection of
Section 14 of the IBC, which mandates that on the insolvency commencement
date, the Adjudicating Authority shall by order declare a moratorium
prohibiting, inter alia –

34
(a) the institution or continuation of suits or proceedings against the
corporate debtor including execution of any judgment, decree or
order in any court of law, tribunal, arbitration panel or other
authority;
(b)the transfer encumbrance, alienation or disposal by the corporate
debtor of any of its assets or any legal right or beneficial interest
therein;
(c) any action to foreclose, recover or enforce any security interest
created by the corporate debtor in respect of its property; and
(d)the recovery of any property by an owner or lessor where such
property is occupied by or in the possession of the corporate debtor.
16.2. The object of Section 14 is to maintain the corporate debtor’s estate as a
going concern and to preserve its assets so as to facilitate resolution. The term
“property” under Section 3(27) of the IBC is defined in the widest terms to
include money, goods, actionable claims, land and every description of movable
or immovable, tangible or intangible property, and extends to deeds and
instruments evidencing title or interest therein. However, for the purposes of
Section 14, only such property or assets which form part of the corporate
debtor’s estate as on the insolvency commencement date are protected. Mere
expectant, contingent or uncrystallized contractual rights do not constitute
“assets” within the meaning of the Code.

35
18
16.3. In Sushil Kumar Agarwal v. Meenakshi Sadhu and others , this Court
observed that “development agreements” are not of a uniform kind. While some
merely create contractual rights to construct without any proprietary interest,
others may, depending upon their terms, confer valuable proprietary or
possessory rights in land or the constructed area. The Court emphasized that the
determination depends on the nature and extent of rights created under the
specific agreement, and whether such rights are capable of being specifically
enforced or transferred. The relevant extracts are as follows:
“17. The expression “development agreement” has not been defined statutorily.
In a sense, it is a catch-all nomenclature which is used to be describe a wide
range of agreements which an owner of a property may enter into for
development of immovable property. As real estate transactions have grown in
complexity, the nature of these agreements has become increasingly intricate.
Broadly speaking, (without intending to be exhaustive), development agreements
may be of various kinds:
(i) An agreement may envisage that the owner of the immovable property
engages someone to carry out the work of construction on the property for
monetary consideration. This is a pure construction contract;
(ii) An agreement by which the owner or a person holding other rights in an
immovable property grants rights to a third party to carry on development for a
monetary consideration payable by the developer to the other. In such a
situation, the owner or right holder may in effect create an interest in the
property in favour of the developer for a monetary consideration;
(iii) An agreement where the owner or a person holding any other rights in an
immovable property grants rights to another person to carry out development.
In consideration, the developer has to hand over a part of the constructed area
to the owner. The developer is entitled to deal with the balance of the
constructed area. In some situations, a society or similar other association is
formed and the land is conveyed or leased to the society or association;
(iv) A development agreement may be entered into in a situation where the
immovable property is occupied by tenants or other right holders. In some
cases, the property may be encroached upon. The developer may take on the
entire responsibility to settle with the occupants and to thereafter carry out
construction; and
18
(2019) 2 SCC 241

36
(v) An owner may negotiate with a developer to develop a plot of land which is
occupied by slum dwellers and which has been declared as a slum. Alternately,
there may be old and dilapidated buildings which are occupied by a number of
occupants or tenants. The developer may undertake to rehabilitate the occupants
or, as the case may be, the slum dwellers and thereafter share the saleable
constructed area with the owner.
18. When a pure construction contract is entered into, the contractor has no
interest in either the land or the construction which is carried out. But in
various other categories of development agreements, the developer may have
acquired a valuable right either in the property or in the constructed area. The
terms of the agreement are crucial in determining whether any interest has
been created in the land or in respect of rights in the land in favour of the
developer and if so, the nature and extent of the rights.
19. In a construction contract, the contractor has no interest in either the land
or the construction carried out on the land. But, in other species of development
agreements, the developer may have acquired a valuable right either in the
property or the constructed area. There are various incidents of ownership of in
respect of an immovable property. Primarily, ownership imports the right of
exclusive possession and the enjoyment of the thing owned. The owner in
possession of the thing has the right to exclude all others from its possession and
enjoyment. The right to ownership of a property carries with it the right to its
enjoyment, right to its access and to other beneficial enjoyments incidental to it.
(B Gangadhar v BG Rajalingam, (1995) 5 SCC 239). Ownership denotes the
relationship between a person and an object forming the subject matter of the
ownership. It consists of a complex of rights, all of which are rights in rem,
being good against the world and not merely against specific persons. There are
various rights or incidents of ownership all of which need not necessarily be
present in every case. They may include a right to possess, use and enjoy the
thing owned; and a right to consume, destroy or alienate it. (Swadesh Ranjan
Sinha v Haradeb Banerjee, (1991) 4 SCC 572). An essential incident of
ownership of land is the right to exploit the development, potential to construct
and to deal with the constructed area. In some situations, under a development
agreement, an owner may part with such rights to a developer. This in essence is
a parting of some of the incidents of ownership of the immovable property.
There could be situations where pursuant to the grant of such rights, the
developer has incurred a substantial investment, altered the state of the property
and even created third party rights in the property or the construction carried
out to be carried out. There could be situations where it is the developer who by
his efforts has rendered a property developable by taking steps in law. In
development agreements of this nature, where an interest is created in the land
or in the development in favour of the developer, it may be difficult to hold that
the agreement is not capable of being specifically performed. For example, the

37
developer may have evicted or settled with occupants, got land which was
agricultural converted into non-agricultural use, carried out a partial
development of the property and pursuant to the rights conferred under the
agreement, created third party rights in favour of flat purchasers in the
proposed building. In such a situation, if for no fault of the developer, the owner
seeks to resile from the agreement and terminates the development agreement, it
may be difficult to hold that the developer is not entitled to enforce his rights.
This of course is dependent on the terms of the agreement in each case. There
cannot be a uniform formula for determining whether an agreement granting
development rights can be specifically enforced and it would depend on the
nature of the agreement in each case and the rights created under it.”
16.4. The above exposition clarifies that whether a development agreement
constitutes an “asset” of the corporate debtor depends on whether it creates a
proprietary, possessory or enforceable right in its favour at the relevant time.
Not every executory or conditional contract amounts to an asset. The protection
of Section 14 is confined to existing, subsisting and enforceable rights as on the
date of commencement of the CIRP.
16.5. In Rajendra K. Bhutta (supra) , this Court held that termination of a joint
development agreement during the subsistence of moratorium under Section 14
was impermissible since the corporate debtor was in occupation and possession
of the property. The Court explained that where the developer is “in occupation”
or has entered upon the property pursuant to the agreement, such occupation
attracts the protection of Section 14(1)(d). Conversely, where termination
occurred prior to CIRP and the developer was never in possession, the
moratorium would not apply. The following paragraphs are apposite in this
regard:

38
“23. The conspectus of the aforesaid judgments would show that the expression
“occupied by” would mean or be synonymous with being in actual physical
possession of or being actually used by, in contra-distinction to the expression
“possession”, which would connote possession being either constructive or
actual and which, in turn, would include legally being in possession, though
factually not being in physical possession. Since it is clear that the joint
development agreement read with the deed of modification has granted a licence
to the developer (corporate debtor) to enter upon the property, with a view to do
all the things that are mentioned in it, there can be no gainsaying that after such
entry, the property would be “occupied by” the developer. Indeed, this becomes
clear from the termination notice dated 12-1-2018, issued by MHADA to the
developer, in which it is stated:
“35. This is therefore to inform you that on the expiry of 30 days from the
date of receipt of this notice, the joint development agreement dated
10-4-2008 and deed of confirmation and modification dated 3-11-2011
and letter dated 18-1-2014 stand terminated and you will not be allowed
to enter the property and your authority/licence to enter the property or
remain thereupon is terminated. MHADA thereupon will not allow you to
do anything on or in relation to the property and MHADA shall take
possession of all the structures standing at whatever stage they are
situated at Goregaon (West) and bearing CTS No. …”
16.6. Similarly, in Tata Consultancy Services Ltd (supra) , this Court held that
the Resolution Professional cannot compel continuation of a contract that was
validly terminated prior to initiation of CIRP. Once a contract stands lawfully
terminated, it ceases to exist and cannot be treated as an “asset” or “property” of
the corporate debtor. The moratorium under Section 14 does not have the effect
of reviving or re-creating contractual rights that have been extinguished before
insolvency.
16.7. As already stated, in the present case, it is evident that the Development
Agreement dated 16.10.2005 and the Supplementary Agreements dated
23.12.2005 and 09.04.2014 stood terminated by Respondent No. 1 Society on

39
account of persistent default and failure of the developer to commence or
complete the project. The termination was duly communicated through letters
dated 09.06.2019, 02.12.2019 and 06.11.2021 – each preceding the initiation of
the second CIRP on 06.12.2022. No subsisting challenge to such termination
was pending when CIRP commenced. Upon such termination, the corporate
debtor was left, at best, with a claim for damages, which is a mere unsecured
monetary claim and not a proprietary right capable of protection under Section
14.
16.8. The Development Agreement expressly stipulates that redevelopment of
accommodation for the society members was a contractual obligation of the
developer and did not create any proprietary right in its favour. Only upon full
and proper performance would the developer earn a “free-sale” entitlement,
which alone could be treated as an asset. As the developer failed to perform its
obligations, no contingent or beneficial right ever crystallized in its favour.
16.9. The record further reveals that possession of the property at all times
remained with Respondent No. 1 Society. No actual, constructive, or juridical
possession was ever transferred to Appellant No. 1. The developer never
commenced demolition, construction, or payment of rent and compensation as
required under the agreement. In absence of possession or any incident of
ownership, Section 14(1)(d) has no application.

40
16.10. Reliance on Victory Iron Works (supra) is misconceived and
inapplicable to the present case. In that case, the corporate debtor had a
demonstrable proprietary and financial interest in the project property, having
advanced funds and obtained development rights. Whereas, the present case is
materially different; the agreements here were purely executory, conditional
upon performance, and never resulted in any proprietary or possessory right
being created in favour of the developer.
16.11. It is well settled that the moratorium under Section 14 does not revive
terminated contracts or protect rights that have ceased to exist prior to
insolvency. The protection is intended to preserve the existing value of the
corporate debtor’s estate, not to resurrect lapsed or extinguished interests.
Extending moratorium to such non-existent rights would defeat commercial
certainty and the sanctity of lawful termination under general law.
16.12. Accordingly, we hold that the Development Agreement dated
16.10.2005 and the Supplementary Agreements dated 23.12.2005 and
09.04.2014 do not constitute “assets” or “property” of the corporate debtor
within the meaning of Section 14 of the IBC, as the same stood terminated prior
to initiation of the second CIRP. No proprietary, possessory, or enforceable
right subsisted in favour of the corporate debtor on the insolvency
commencement date. The moratorium declared under Section 14 would
therefore not restrain Respondent No. 1 Society or its members from proceeding
with redevelopment in accordance with law.

41
Issue No. 3
Whether the High Court was justified in allowing the writ petition filed by
Respondent No. 1 Society and directing the statutory authorities to process
and grant approvals in favour of Respondent No. 8 for redevelopment of
the subject project.
17. With respect to the maintainability of the writ petition, the principal
grievance of the appellants is that the High Court exceeded its jurisdiction in
entertaining the writ petition filed by Respondent No. 1 Society and issuing
directions to the planning and municipal authorities to process and grant
approvals in favour of Respondent No. 8. The appellants contend that once the
CIRP had commenced against the corporate debtor, the High Court ought to
have deferred to the jurisdiction of the National Company Law Tribunal and
refrained from passing any order that could interfere with the moratorium under
Section 14 of the IBC. The appellants further state that the writ petition involved
disputed questions of fact concerning the validity of termination and ownership
of redevelopment rights, which could not have been adjudicated in proceedings
under Article 226 of the Constitution.
17.1. On the other hand, Respondent No. 1 Society contends that the High
Court’s intervention was necessitated by the paralysis caused by the pendency
of CIRP and the refusal of the statutory authorities to process its proposal for
redevelopment through the newly appointed developer, Respondent No. 8. The

42
Society submits that, being the absolute owner of the land, it was entitled, after
valid termination of the earlier agreements, to appoint a new developer to
safeguard the interests of its members. It was argued that the High Court merely
directed the statutory authorities to process the Society’s proposal in accordance
with law, without adjudicating any private contractual dispute.
17.2. It is well settled that while Section 14 of the IBC bars the institution or
continuation of suits and proceedings during the moratorium, the constitutional
jurisdiction of this Court and the High Courts under Articles 32 and 226 cannot
be curtailed by statute. In Embassy Property Developments Pvt. Ltd. v. State of
19
Karnataka and others , this Court held that the NCLT, being a creature of a
special statute to discharge specific functions, cannot be elevated to the status of
a superior court exercising powers of judicial review over administrative or
statutory action. Matters in the public law domain do not “arise out of or relate
to” insolvency proceedings within the meaning of Section 60(5) of the IBC. The
Court further observed that decisions taken by governmental or statutory
authorities in the realm of public law may be corrected only through the High
Court’s power of judicial review. The following paragraphs are relevant in this
context:
“ 13. What is recognizedby Article 226 (1) is the power of every High Court to
issue (i) directions, (ii) orders or (iii) writs. They can be issued to (i) any person
or (ii) authority including the Government. They may be issued (i) for the
enforcement of any of the rights conferred by Part III and (ii) for any
other purpose. But the exercise of the power recognized by Clause (1) of Article
226, is restricted by the territorial jurisdiction of the High Court, determined
19
(2020) 13 SCC 308

43
either by its geographical location or by the place where the cause of action, in
whole or in part, arose. While the nature of the power exercised by the High
Court is delineated in Clause (1) of Article 226, the jurisdiction of the High
Court for the exercise of such power, is spelt out in both Clauses (1) and (2) of
Article 226.
14. Traditionally, the jurisdiction under Article 226 was considered as
limited to ensuring that the judicial or quasijudicial tribunals or administrative
bodies do not exercise their powers in excess of their statutory limits. But in
view of the use of the expression “any person” in Article 226 (1), courts
recognized that the jurisdiction of the High Court extended even over private
individuals, provided the nature of the duties performed by such private
individuals, are public in nature. Therefore, the remedies provided under Article
226 are public law remedies, which stand in contrast to the remedies
available in private law.
28.  As we have indicated elsewhere, the MMDR Act, 1957 is a Parliamentary
enactment traceable to Entry 54 in List I of the Seventh Schedule. This Entry 54
speaks about regulation of mines and development of minerals to the extent to
which such regulation and development under the control of the Union, is
declared by Parliament by law to be expedient in public interest. In fact the
expression “public interest” is used only in 3 out of 97 entries in List I, one of
which is Entry 54, the other two being Entries 52 and 56. Interestingly, Entry 23
in List II does not use the expression “public interest”, though it also deals with
regulation of mines and mineral development, subject to the provisions of List I.
It is this element of “public interest” that finds a place in Section 2 of the
MMDR Act, 1957, in the form of a declaration…..
29.  Therefore as rightly contended by the learned Attorney General, the decision
of the Government of Karnataka to refuse the benefit of deemed extension of
lease, is in the public law domain and hence the correctness of the said decision
can be called into question only in a superior court which is vested with the
power of judicial review over administrative action. The NCLT, being a creature
of a special statute to discharge certain specific functions, cannot be elevated to
the status of a superior court having the power of judicial review over
administrative action…”
17.3. A perusal of the judgment impugned herein reveals that the High Court
recorded a categorical finding that the Development Agreement with Appellant
No. 1 stood validly terminated prior to the initiation of the second CIRP. Once

44
the High Court found that the termination preceded the CIRP and that no
subsisting right of the corporate debtor survived in the project, it correctly
concluded that the bar under Section 14 of the IBC was inapplicable.
Accordingly, the High Court directed the planning and municipal authorities to
consider the Society’s redevelopment proposal in favour of the new developer
(Respondent No. 8) in accordance with law.
17.4. The approach adopted by the High Court cannot be faulted. The
jurisdiction under Article 226 is wide enough to ensure that statutory authorities
perform their public duties and do not withhold approvals without legal
justification. The High Court did not usurp the jurisdiction of the NCLT or
interfere with any matter directly arising from the insolvency process. Its
directions were confined to ensuring that the Society’s rights as owner of the
land were not indefinitely suspended due to the pendency of CIRP proceedings
against a developer who no longer had any subsisting contractual or proprietary
interest in the project.
17.5. This Court has consistently affirmed that the IBC does not oust the
constitutional jurisdiction of the High Courts, particularly where intervention is
sought against administrative or statutory inaction in the public law domain,
provided such intervention does not obstruct or undermine the insolvency
process. (See Embassy Property Development Pvt. Ltd (supra); and

45
Ghanashyam Mishra & Sons Pvt. Ltd v. Edelweiss Asset Reconstruction Co.
20
Ltd. )
17.6. It is also significant to note that the High Court did not direct the
authorities to grant approvals as a matter of right; it merely required them to
consider and process the Society’s application on its own merits. Such an order
is procedural in nature and ensures that the statutory authorities discharge their
duties in accordance with law. It neither prejudices the CIRP proceedings nor
affects any stakeholder’s rights under the IBC.
17.7. Furthermore, the record discloses that Respondent No. 8 has already
commenced redevelopment pursuant to a fresh agreement executed in December
2023 and achieved substantial progress, including demolition of the existing
structure and payment of rent to the members. The High Court rightly took note
of these developments and passed the impugned judgment to prevent
administrative paralysis and to protect the rehabilitation rights of the residents
who had long awaited redevelopment.
17.8. In light of the above, this Court holds that the High Court was justified in
entertaining the writ petition and issuing directions to the statutory authorities to
process and consider the redevelopment proposal of Respondent No. 8 in
accordance with law. These directions do not encroach upon the jurisdiction of
the NCLT nor offend the moratorium under Section 14 of the IBC.
20
(2021) 9 SCC 657

46
Issue No. 4
Whether the proceedings before the High Court stood vitiated by breach of
the principles of natural justice, as alleged by the appellants.
18. According to the appellants, the impugned judgment of the High Court
stands vitiated for non-observance of the principles of natural justice. It was
specifically contended that the writ petition was taken up for hearing on
02.09.2024 and reserved for orders on the very next day, without affording the
appellants adequate opportunity to file their reply or place their defence on
record. Such undue haste resulted in serious prejudice and contravened the
settled principles of procedural fairness implicit in the exercise of jurisdiction
under Article 226 of the Constitution of India.
18.1. Per contra, the learned senior counsel for Respondent No. 1 Society
submitted that the appellants were duly served with notice and had knowledge
of the proceedings before the High Court. The matter was listed on several
occasions prior to the final hearing, and the appellants neither sought time nor
placed on record any material explaining their inability to file a reply. It was
further submitted that the High Court, being satisfied that the relevant
documents were already before it, proceeded to decide the matter on merits after
hearing all parties represented. Hence, no procedural irregularity or denial of
opportunity can be alleged.

47
18.2. The principles of natural justice act as fundamental safeguards ensuring
fairness, equity, and reasonableness in decision making. The twin pillars – nemo
judex in causa sua (no one shall be a Judge in their own cause) and audi alteram
partem (the right to be heard) – are essential components of the rule of law.
However, their application depends upon the context and nature of the
21
proceedings. As held in Union of India and another v. W.N. Chadha , and
22
Canara Bank and others v. Debasis Das and others , the principles of natural
justice are not rigid rules of universal application; they are flexible, contextual,
and aimed at preventing real, not theoretical, injustice. The touchstone is not
whether every procedural formality was observed, but whether the party
complaining has suffered actual prejudice or denial of a fair opportunity.
18.3. In the present case, the writ petition filed by Respondent No. 1 Society
was pending before the High Court for a considerable period prior to its final
hearing. The record shows that the appellants were duly represented by counsel
throughout and were aware of the proceedings. No application for adjournment
or extension of time to file a reply was made. The proceedings on 03.09.2024
were conducted in the presence of the counsel for the Resolution Professional,
whose submissions were duly recorded in the impugned judgment. In these
circumstances, it cannot be said that the High Court acted in undue haste or
deprived the appellants of a reasonable opportunity of being heard.
21
1993 Supp (4) SCC 260
22
(2003) 4 SCC 557

48
18.4. Notably, the writ petition did not seek any direct relief against the
appellants. The prayer was confined to a mandamus directing the statutory
authorities to process and grant redevelopment approvals in favour of
Respondent No. 8, the newly appointed developer. The High Court’s directions
were limited to the administrative authorities and did not adjudicate upon
private contractual disputes or alter the rights inter se between the Society and
the appellants.
18.5. The questions before the High Court were essentially legal in nature –
relating to the applicability of the moratorium under Section 14 of the IBC and
the validity of termination of the redevelopment agreement – both turning upon
undisputed documents. No complex factual adjudication was required. Even
before this Court, the appellants have failed to point out any specific prejudice
or material that they were prevented from placing before the High Court.
18.6. The principles of natural justice are intended to ensure fairness, not to
operate as technical obstacles. They cannot be invoked as empty ritual where no
real injustice has occurred. The grievance of the appellants is, therefore, more
formal than substantive. Having been duly represented and having failed to
demonstrate any actual prejudice, the appellants cannot now be permitted to
impugn the judgment on grounds of procedural technicality.
18.7. In any event, the conduct of the appellants does not inspire equity. The
record discloses persistent defaults in payment of transit rent, repeated delays,
and failure to commence redevelopment despite multiple extensions. The

49
Society, acting in the collective interest of its members, lawfully terminated the
agreement and appointed a new developer who has since made substantial
progress. The invocation of Section 14 of the IBC to obstruct rehabilitation of
residents was a misconceived attempt to shield inaction under the guise of
moratorium protection.
18.8. This pattern of defaults on the part of Appellant No. 1 is not isolated. In
23
Manohar M. Ghatalia and others v. State of Maharashtra and others , and
Tagore Nagar Shree Ganesh Krupa CHS Ltd v. State of Maharashtra and
24
others , the same developer defaulted in payment of transit rent and failed to
commence or complete redevelopment despite contractual obligations. The
Courts consistently held that a defaulting developer cannot invoke the
moratorium under Section 14 of the IBC to perpetuate inaction or defeat the
legitimate rights of residents. The rights of a developer are purely contingent
upon due performance, and no subsisting “asset” or “proprietary right” survives
once termination has lawfully occurred.
18.9. These repeated defaults and prolonged inaction reveal a consistent lack of
bona fides on the part of the appellants. The High Court’s intervention in the
present case was therefore not only legally sustainable but also necessary to
safeguard the rights of the residents and to ensure that the appellants did not
23
2023: BHC – OS: 15669 arising out of which SLP. (C) No. 18909 of 2024 decided on 07.02.2025
titled ‘A A Estates Pvt. Ltd. v. Bhavana Manohar Ghatalia’
24
W.P. No. 1349 of 2024, BHC, arising out of which SLP (C) No. 24807 of 2024 decided on
28.04.2025 titled ‘A A Estates Pvt. Ltd v. Tagore Nagar Shree Ganesh Krupa Co-operative Housing
Society Ltd.’


50
misuse the pendency of insolvency proceedings to indefinitely stall
redevelopment.
18.10. Accordingly, we hold that the proceedings before the High Court were
conducted in substantial compliance with the principles of natural justice. The
appellants were duly represented, were not denied any reasonable opportunity of
hearing, and have failed to establish any demonstrable prejudice. The plea of
violation of natural justice is therefore devoid of substance and stands rejected.
Conclusion
19. In the present case, Appellant No. 1 – corporate debtor failed to take any
meaningful steps towards fulfilling its obligations under the Development
Agreement and Supplementary Agreements. Consequently, the slum dwellers
and members of Respondent No. 1 Society – among the most vulnerable
sections of society – continue to be deprived of their right to proper housing and
rehabilitation. Such conduct cannot be permitted to take refuge under the
moratorium provisions of Section 14 of the IBC. A clear distinction must,
therefore, be maintained between corporate debtors who have acted bona fide
and those who have merely secured development rights in form but never acted
in substance.
20. As indicated earlier, the moratorium under Section 14 protects only
existing, enforceable, and subsisting rights – not inchoate or forfeited rights

51
arising from default or non-performance. Development rights of a defaulting
developer who neither secured possession nor undertook any redevelopment
activity cannot be elevated to the status of an “asset” or “property” within the
meaning of Section 3(27) of the IBC.
21. Upon a comprehensive consideration, the conclusions of this Court on the
issues framed are as follows:
(i) The termination of the Development Agreement dated 16.10.2005 and
Supplementary Agreements dated 23.12.2005 and 09.04.2014 by
Respondent No. 1 Society was valid, lawful, and effective in law,
having been carried out after due notice and in consequence of
prolonged and inexcusable default by the developer. The Society, as
the owner of the land, was entitled to revoke the contract and appoint a
new developer to protect the interest of its members.
(ii) The aforesaid Development Agreement and the Supplementary
Agreements do not constitute “assets” or “property” of the corporate
debtor within the meaning of Section 14 of the IBC. The said
agreements stood validly terminated prior to the initiation of the
second CIRP, and hence, no subsisting or enforceable right survived in
favour of the corporate debtor.
(iii) The High Court was justified in entertaining the writ petition filed by
Respondent No. 1 Society and directing the statutory authorities to

52
process and grant approvals in favour of Respondent No. 8, subject to
compliance with law. Such directions were procedural in nature, did
not encroach upon the jurisdiction of the NCLT, and did not
contravene the moratorium under Section 14 of the IBC.
(iv) The proceedings before the High Court were conducted in substantial
compliance with the principles of natural justice. The appellants were
afforded a fair opportunity of hearing, and no real prejudice or failure
of justice has been demonstrated.
22. Accordingly, this appeal is devoid of merit and is liable to be dismissed.
23. This case highlights the larger human dimension underlying urban
redevelopment – the right of citizens to live with dignity in safe and habitable
dwellings. Slum redevelopment projects are not mere commercial ventures but
social welfare initiatives aimed at transforming unsafe tenements into dignified
homes. The role of a developer in such projects carries a public character; it
entails a responsibility to fulfil the collective aspirations of hundreds of families
awaiting rehabilitation and cannot be viewed solely through a profit-driven lens.
23.1. When such projects are delayed or abandoned, it is the residents – often
living in hazardous or temporary conditions – who suffer the greatest hardship.
In this context, the invocation of insolvency proceedings or the moratorium
under the Insolvency and Bankruptcy Code, 2016 cannot become a legal device
to indefinitely stall redevelopment or to obstruct the legitimate rights of slum

53
dwellers and cooperative housing societies. The Code was never intended to be
used as a shield for non-performance at the cost of human rehabilitation.
23.2. Courts, while dealing with disputes arising from slum redevelopment,
must therefore adopt a purposive and welfare-oriented approach, ensuring that
the statutory objective of insolvency resolution does not defeat the social
purpose of urban renewal. The balance of equities must tilt in favour of the
residents who have waited for years for a roof over their heads. The law cannot
countenance a situation where insolvency protection becomes an instrument to
perpetuate displacement or to defer the promise of dignified housing guaranteed
under Articles 19(1)(e) and 21 of the Constitution.
23.3. The IBC was never designed to serve as a refuge for corporate debtors
who, by their conduct, display no bona fide intention to fulfil contractual or
statutory obligations. Its purpose is to revive viable entities and ensure equitable
resolution of insolvency – not to extend protection to those who have
persistently defaulted, abandoned performance, or frustrated projects of public
significance. Urban redevelopment projects, particularly those involving
cooperative housing societies, are exercises in social rejuvenation that seek to
restore dignity, safety, and belonging to citizens. The law must, therefore,
balance commercial rights with human realities and ensure that economic
revival does not eclipse the constitutional promise of dignified living.

54
24. In fine, the instant appeal is dismissed. The directions of the High Court
shall be complied with within a period of two months from today. Needless to
state, the appellants may work out their remedy with respect to the amount
alleged to have been expended in the subject project, in the manner known to
law. In the facts and circumstances of the case, there shall be no order as to
costs.
25. All pending application(s), if any, stand disposed of.
.…………………………J.
[J.B. PARDIWALA]
.…………………………J.
[R. MAHADEVAN]
NEW DELHI;
NOVEMBER 28, 2025