Case Note & Summary
The appeal was filed against an order dated 10.07.2025 by the National Company Law Tribunal (NCLT) rejecting the Appellant's application to exclude unsold inventory from the valuation of the Corporate Debtor, Spaze Arrow. The Appellant, Ishaan Singh, had entered into a Collaboration Agreement on 19.06.2010 for the development of a commercial complex, Spaze Arrow, but later cancelled the powers of attorney given to the Corporate Debtor due to disputes. The Corporate Debtor initiated proceedings under the Arbitration and Conciliation Act, 1996, and an arbitration award was issued on 14.09.2022, which rejected the Corporate Debtor's claims and awarded compensation to the Appellant. The NCLT admitted a Section 7 application filed by allottees on 21.10.2024, leading to the current appeal. The Appellant contended that the NCLT erred in including the unsold inventory in the valuation, as the Collaboration Agreement was deemed inoperative by the arbitration award. The Respondent, representing the Resolution Professional, argued that the Collaboration Agreement was still valid as per RERA's directions. The Tribunal noted that the RERA Authority had directed both the Corporate Debtor and the landowner to complete the project, indicating that the Collaboration Agreement was still in effect. The Tribunal ultimately dismissed the appeal, affirming that the unsold inventory was part of the project and could not be excluded from the valuation.
Headnote
A) Insolvency Law - Valuation of Corporate Debtor - Inclusion of Unsold Inventory - Insolvency and Bankruptcy Code, 2016, Section 7 - The Appellant sought exclusion of unsold inventory from the valuation of the Corporate Debtor, arguing that the Collaboration Agreement was inoperative. The Tribunal held that the unsold inventory was part of the project and could not be excluded from valuation as per the directions of the RERA Authority and the binding arbitration award (Paras 22-27).
Issue of Consideration
Whether the unsold inventory in the project can be excluded from the valuation of the Corporate Debtor and Information Memorandum.
Final Decision
The Tribunal dismissed the appeal, affirming the NCLT's order rejecting the exclusion of unsold inventory from the valuation of the Corporate Debtor. The Tribunal found that the unsold inventory was part of the project and could not be excluded based on the ongoing obligations under the Collaboration Agreement and RERA directions.
Law Points
- Insolvency proceedings
- Corporate Debtor valuation
- Collaboration Agreement
- Arbitration award
- RERA directions
