Gir Vanvaso Resort vs Pancard Clubs Limited
- Court
- Supreme Court
Non-Reportable
2026 INSC 732
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
Civil Appeal No.14845 of 2025
GIR VANVASO RESORT
….APPELLANT
Versus
PANCARD CLUBS LIMITED
….RESPONDENT
J U D G M E N T
K. VINOD CHANDRAN, J.
The appellant resort is owned by Pancard Clubs Limited, the
respondent herein, who was under Corporate Insolvency Resolution
Process (CIRP), now taken over by the Successful Resolution
Applicant (SRA) as per the approval of the Resolution Plan by the
National Company Law Tribunal (NCLT) on 25/04/24. The resort is
st
represented by the 1 party in a Memorandum of Understanding
(MoU), in the present civil appeal, based on which it is asserted that
nd
the alleged authorized representative along with the 2 party in the
MoU is in possession and ownership of the resort. The Interim
Resolution Professional (IRP) who was later appointed as RP sought
Signature Not Verified
Digitally signed by
CHANDRESH
Date: 2026.07.22
16:17:38 IST
Reason:
for details of the property owned by the Corporate Debtor (CD),
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which were not fruitfully responded to in which circumstance an
application was filed before the NCLT seeking vacant possession of
the property and damages for usage of the property, which was a
fully developed resort with rooms and amenities like pool, gym
sauna etc. The NCLT by Annexure A7 order directed handing over
of the peaceful and vacant possession of the property and payment
of fair value of rent for usage of the property as determined by the
RP, before whom the respondent was also entitled to claim their
investments as set off.
2. An appeal was filed before the National Company Law
Appellate Tribunal (NCLAT) unsuccessfully. The NCLAT framed five
issues for its consideration:
i) Whether the Adjudicating Authority had the power to
decide the I.A. filed by the Resolution Professional by
order dated 11/09/2025 when the Resolution Plan was
approved by the Adjudicating Authority on 25/04/2024?
ii) Whether the Adjudicating Authority under the IBC had
the jurisdiction to decide upon the rights of the parties
under the MoU dated 16/12/2013?
iii) Whether the benefit of Section 53A of the Transfer of
Property Act claimed by the appellant based on the
alleged possession on the strength of the MoU since 2020
is valid?
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iv) The sustainability of the direction to vacate the
premises and handover possession?
v) The validity of the levy of usage charges of the resort
directed to be computed by the RP?
3. The NCLAT in answer to the first question found that, though it
was the RP who had filed an application on 25/08/2023 before the
Resolution Plan came to be approved, after its approval an I.A. was
filed to substitute the RP with the SRA which was allowed by order
dated 19/10/2024. The objection to jurisdiction on the basis of the
Resolution Plan put in motion while the matter was pending, was held
to be without any substance since the SRA had prosecuted the matter
after taking over the CD by substituting itself for the RP; rightly so
according to us.
4. The other questions were considered together since they were
interlinked and also held against the appellant herein. In considering
the jurisdiction of the Adjudicating Authority to enter into contractual
issues between parties, it was found that Gujarat Urja Vikas Nigam
1
Limited vs. Amit Gupta & Ors. held that “NCLT has jurisdiction to
adjudicate disputes, which arise solely from or which relate to the
insolvency of the corporate debtor” if the nexus with the insolvency of
1
(2021) 7 SCC 209
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the corporate debtor exists (para -69 ). Therein the fact of insolvency
itself constituted an event of default which led to the termination of
the Power Purchase Agreement (PPA). The PPA was terminated
solely on the ground of insolvency which clothes the NCLT with the
jurisdiction to decide on its validity, especially since it was the only
contract of sale of electricity. The termination would result in sure
death of the CD while NCLT is vested with the responsibility of
ensuring the continuation of the insolvency resolution process for
which the CD should be preserved as a going concern. However, it
was clarified that if the termination was on grounds unrelated to the
insolvency of the CD, the jurisdiction of the NCLT under Section
60(5)(c) of the Act cannot be invoked. It was also held that the NCLT
should be wary of exercising such jurisdiction to interfere with a
legitimate termination, which merely dilutes the value of the CD and
does not push it to corporate death.
5. In TATA Consultancy Services Limited vs. Vishal Ghisulal
2
Jain , the CD had entered into a build phase agreement followed by
a facilities agreement which obligated the CD to provide premises
with certain specifications and facilities, with option available to
2
(2021) ibclaw.in 167 SC
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either party to terminate the agreement. TCS Limited terminated the
agreement on 10.06.2019 and the CIRP was initiated on 29.03.2019.
The termination was on multiple breach in facilitation and after
repeated notices, prior to the CIRP, independent of the insolvency
proceedings, in which context it was held that the Adjudicating
Authority had no jurisdiction to enter into contractual issues between
the parties especially when the TCS was not supplying goods and
services to the CD. While finding lack of jurisdiction on the NCLT in
the facts of the case, it was cautioned that “even if contractual disputes
arise in relation to the insolvency, a party can be restrained from
terminating the contract only if it is central to the success of the CIRP”
(para-27).
6. In the present case, the resort admittedly belonged to the CD
and the possession and ownership claimed by the parties No.1 and 2
to the MoU was based on that document. The ownership of the
property is crucial and central to the insolvency of the CD and hence
the Adjudicating Authority has the jurisdiction to decide on the
dispute raised on the strength of the MoU; on its interpretation as also
the statutory benefit claimed under Section 53A of the TP Act. The
exclusion of the property from the resolution plan would dilute the
valuation of the CD and not push it to corporate death but the crucial
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issue is whether the contract itself was legitimate or a devise
employed to absolve the property from the resolution process.
7.
As rightly found by the NCLAT, the RP had repeatedly issued
notices on the strength of the CD’s ownership of the resort, which was
responded to at first, by questioning the authority to call for the
details and then far later by production of the MoU in the reply filed
before the NCLT, which takes us to the interpretation of the MoU. The
NCLAT in addition to the adamant failure of the parties in possession
of the resort to respond to the various queries of the RP also
emphasized that the contention was of Rs.80,00,000/- having been
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paid by cash to the Director; the 3 Party in the MoU, of Pancard
Clubs Limited, as per the MoU dated 04.12.2013. We also read the
MoU to understand what it entails.
8. Parties No.1 and 2 were said to be engaged in partnership, the
details of which are not coming forth in the MoU. Party No.3 was said
to have the status of Director in Pancard Clubs Limited. Party No.3,
the Director of Pancard Clubs Limited is said to have invited parties
No.1 and 2 to participate in a scheme running in the company to
which end Rs.80,00,000/- was handed over to the Director, by cash.
The terms of the agreement were that Rs.1,60,00,000/-; double the
amount handed over, would be reimbursed in a period of 6 years 3
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months. On failure, there are terms indicated, facilitating both a right
to ownership of the resort and for administration of the resort to
recoup the invested amount with interest from the proceeds of its
operation. The alternative stipulation was for recouping the amounts
invested by parties No.1 and 2 fully, with yield at 11% per annum,
derived from the profits of the resort, till which time the resort will
continue in the possession of parties No.1 and 2. Even if the above
terms are deemed to be options available to the parties 1 & 2, there
is nothing on record to show such option having been exercised.
9. We cannot but notice that the agreement is neither here nor
there; with no clarity as to whether, on failure to repay double the
investment in 6 years and three months, the ownership would stand
transferred by due execution of a sale deed or whether the
possession alone would be conceded so as to recoup the investment,
with interest from the proceeds of the operation of the resort. More
importantly, the MoU; which spoke of investment of Rs.80,00,000/-
with a promise to return double the amount within the stipulated time
and on failure a transfer of ownership or possession for the purpose
of operation to recoup the investment with interest, was not
registered. The NCLAT noticed Act 7 of 1982 of the State of Gujarat,
which introduced clause (aa) of Section 17 of The Registration Act,
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1908 mandating compulsory registration of ‘ instruments which
purport or operate to effect any contract for transfer of immovable
property’ . The above amendment required the MoU to be
compulsorily registered, in which event the parties in possession
claimed the benefit of Section 53A of the TP Act.
10. Section 53A protects any transferee, who in part performance
of a contract takes possession of a property or part thereof and has
done some act in furtherance of the contract and has also performed
or is willing to perform his part of the contract. The party found in
such possession is absolved from the provisions of the TP Act and the
Registration Act to facilitate the defense of part performance to be
established as held in Giriyappa and Anr. vs. Kamalamma and
3
Ors. . As rightly found by the NCLAT the pre-condition under
Section 53A is that there should be a contract to transfer for
consideration any immovable property and the protection under
Section 53A, despite the instrument of transfer or the transfer having
not been completed in the manner prescribed therefor by the law for
the time being in force, can only inure when part performance is
established.
3
2024 SCC OnLine SC 3849
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11. As we noticed from the MoU the payment of Rs.80,00,000/- is
said to be in cash, clearly in violation of the provisions of the Income
Tax Act, 1961. The receipts produced of cash payments are at best
collusive self-serving receipts issued by the CD, not reflected in its
accounts. The property was also under attachment of the Securities
and Exchange Board of India (SEBI), which order categorically refers
to and relies on the Second Schedule of the Income Tax Act,
specifically Rule 48, which prohibits any defaulter from transferring
or charging the property in any way and prohibiting all persons from
taking any benefit under the transfer or charge. The MoU was in the
year 2013 and the time stipulated for refund without any scheme of
installment specified is of six years and three months. The expiry, if
at all, can only be in the year 2019, before which the attachment order
of the SEBI came into force in 2016.
12. It is also not clear as to when the agreement was terminated and
the possession was taken over. The parties to the MoU do not speak
of any default having been notified or a termination notice having
been effected as per the terms of the MoU. Pertinent is also the fact
that there is neither any statement as to the date on which possession
was taken over and the management commenced of the resort as also
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the proceeds obtained from the resort having been applied to the
alleged investment made of Rs.80 lakhs.
13.
The Tribunal has also looked into the resolution accompanying
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the MoU to find that it does not authorize the 3 party to execute the
MoU with private individuals or corporate entities or accept money,
charging the property of the Company. The resolution as extracted
in the impugned order speaks only of dealing with the statutory
authorities in obtaining approvals, permissions, no objections etc.
from any such statutory or departmental authorities.
14. In addition to the above, we cannot but notice that though there
was a stipulation for transfer of ownership by execution of a deed,
there is no attempt made by the parties No.1 and 2 to the MoU to sue
for specific performance of the agreement to sell; if it can be so
styled. More particularly, the terms on default clearly indicate that
on such claim of ownership being exercised the balance amounts;
purportedly the balance of the sale consideration, after deducting
the invested amounts as per the MoU would be paid to party No.3,
the willingness and readiness to which has not at all been pleaded by
parties No.1 and 2 on whose behalf party No.1 is allegedly
representing the appellant as an authorized representative. There is
absolutely no cause to find the benefit of Section 53A of the TP Act
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and we concur with the decision of the NCLT and NCLAT that the MoU
is suspect and is not contemporaneous to the date on which it is said
to have been executed or alleged to be in operation.
15. The CIRP having culminated in the appointment of the SRA, the
NCLT was perfectly within its jurisdiction to order handing over of the
vacant possession of the property to the SRA. The possession
admittedly in the hands of the parties No.1 and 2 to the MoU, which
as rightly found by the NCLAT puts the entity in possession, liable to
pay usage charges akin to rental value to the rightful owner, which
even a rank trespasser asserting possession would be liable.
16. We find absolutely no reason to interfere with the order of the
NCLAT. Before we leave the matter, we have to notice that though
the MoU speaks of handing over of Rs.80,00,000/- as per Clause (1),
it is affixed with only a stamp of Rs.300/-, evident from Clause (I),
which we are sure would be gross undervaluation under the Stamp
Act. The undervalued instrument having been produced before the
NCLT we direct the NCLT to take up the matter and peruse the
document with reference to the Stamp Act applicable to the State of
Gujarat and take appropriate proceedings for defective stamping, if
it is found undervalued, which any Authority/Court/Tribunal is
obliged to do when a defectively stamped instrument is produced
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before it. If stamping is found to be undervalued, then the same shall
be referred to the District Collector or the concerned Adjudicating
Authority for proper stamping, with penalty if any. Party No.1 who
allegedly represented the appellant before the NCLAT shall be
entitled to appear before the NCLT to raise his contentions before the
Tribunal confined to the defective stamping or undervaluation of the
instrument.
17. The appeal stands rejected with the above observations.
18. Pending applications, if any, shall stand disposed of.
.……………………………... J.
(J. B. PARDIWALA)
..………….…………………. J.
(K. VINOD CHANDRAN)
NEW DELHI;
JULY 22, 2026.
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