The decision of the National Company Law Appellate Tribunal in SGN Universal Construction Company Pvt. Ltd. v. Shailendra Kumar Singh & Ors. presents a layered dispute at the intersection of real estate development arrangements, arbitration proceedings, and insolvency law. A structured understanding of the ruling requires a clear segregation of the factual matrix, the issues that arose for consideration, and the findings returned by the Appellate Tribunal.
The factual background of the case reveals that the Corporate Debtor, M/s Morpheus Prodevelopers Pvt. Ltd., was developing a real estate project known as “Morpheus Bluebell” comprising multiple towers, including Towers 3, 4, and 5. The Appellant, SGN Universal Construction Company Pvt. Ltd., was initially engaged in relation to construction works and claimed that dues owed to it were subsequently adjusted through a Development Rights Agreement dated 22.02.2017. By virtue of this agreement, along with a Power of Attorney and an addendum dated 15.10.2020, the Appellant asserted that it had acquired exclusive and irrevocable development and alienation rights in respect of Tower 5, including entitlement to sale proceeds of units therein.
The Appellant further contended that it had invested substantial sums and carried out significant construction in Tower 5, and that its rights were protected through interim orders passed by the Delhi High Court and later by a Sole Arbitrator in proceedings initiated under the Arbitration and Conciliation Act, 1996. These interim orders restrained the Corporate Debtor from creating third-party rights in Tower 5.
Parallelly, homebuyers of Towers 3 and 4 initiated proceedings under Section 7 of the Insolvency and Bankruptcy Code, 2016 seeking commencement of CIRP against the Corporate Debtor. The Adjudicating Authority admitted the petition on 19.11.2024. During these proceedings, the Appellant filed an interlocutory application only to place on record the interim arbitral and High Court orders, without seeking adjudication of its rights or exclusion of Tower 5 from the asset pool.
However, in the impugned order, the Adjudicating Authority made certain observations concerning the Development Rights Agreement and included Tower 5 as part of the Corporate Debtor’s assets while examining the statutory threshold under Section 7. Aggrieved by these observations, the Appellant preferred an appeal before the NCLAT, without challenging the initiation of CIRP itself.
Against this factual backdrop, the primary issue that arose for consideration before the Appellate Tribunal was whether development rights claimed by the Appellant in respect of Tower 5 could be treated as independent of the Corporate Debtor’s assets and thereby excluded from the CIRP. Closely connected to this was the question whether such development rights constitute “property” within the meaning of the Code.
A further issue concerned the legal effect of interim orders passed in arbitration proceedings. The Tribunal was required to examine whether such interim protections could override or restrict the insolvency process, particularly in light of the moratorium under Section 14 and the overriding provision contained in Section 238 of the Code.
Another aspect that fell for consideration was the scope of the Adjudicating Authority’s observations in the impugned order. The Appellant contended that such observations amounted to adverse findings affecting its substantive rights without affording an opportunity of hearing, thereby violating principles of natural justice.
Upon consideration of the rival submissions, the NCLAT upheld the impugned order and dismissed the appeal. The Tribunal held that development rights, being a bundle of interests arising out of immovable property, fall within the wide definition of “property” under Section 3(27) of the Code and consequently constitute assets of the Corporate Debtor. In doing so, it relied upon the settled position laid down by the Supreme Court in Victory Iron Works Ltd. v. Jitendra Lohia, which recognises development rights as property capable of forming part of the insolvency estate.
The Tribunal further held that the Resolution Professional is statutorily obligated to take control and custody of all assets of the Corporate Debtor, including those over which ownership may be disputed or subject to adjudication. Accordingly, Tower 5 could not be excluded from the CIRP merely on the basis of the Appellant’s asserted rights.
On the interplay between arbitration and insolvency, the Tribunal reiterated that interim orders are provisional in nature and cannot determine final rights. It was held that such orders operate in personam and cannot override insolvency proceedings, which are proceedings in rem. The Tribunal also reaffirmed that the moratorium under Section 14 extends to arbitration proceedings and that Section 238 of the Code ensures its overriding effect over inconsistent laws.
With respect to the impugned observations, the Tribunal clarified that they were merely tentative and contextual, lacking any conclusive determination of rights. It noted that the Appellant had neither sought adjudication of title before the Adjudicating Authority nor filed its claim before the Resolution Professional, and therefore could not assail incidental observations made in the course of admission of the Section 7 application.
The Tribunal also placed emphasis on the integrated nature of the project, observing that Towers 3, 4, and 5 formed part of a single RERA-registered development with common infrastructure and facilities. This reinforced the conclusion that Tower 5 could not be treated as a standalone asset outside the CIRP framework.
In effect, the NCLAT reaffirmed the primacy and comprehensive sweep of the insolvency regime. It held that individual contractual arrangements, interim arbitral protections, or parallel proceedings cannot be permitted to fragment the asset pool or impede the collective resolution process under the Code.
Cause Title: SGN Universal Construction Company Pvt. Ltd. v. Shailendra Kumar Singh & Ors.
Comp. App. (AT) (Ins) No. 2207 of 2024; Judgment dated: 30.03.2026
