Allotment Of Commercial Space By Corporate Debtor Through Unregistered Allotment Letter Remains Their Asset, Can't Be Excluded From Resolution Plan: NCLAT

The NCLAT New Delhi held that commercial spaces allotted by a corporate debtor through unregistered documents like allotment letters or lease deeds remain the assets of the corporate debtor and cannot be excluded from the resolution plan. This decision was made in the case of M/s IP Construction Pvt. Ltd., where the corporate debtor had issued allotment letters for office spaces. The appellants, who were commercial space buyers, argued that they were entitled to execution of sale deeds for the spaces. However, the NCLAT ruled that the unregistered allotment letters did not divest the corporate debtor of ownership. The resolution plan approved by the Committee of Creditors offered payment of 50% of the principal amount to the commercial space buyers or equivalent commercial space at alternate locations. The NCLAT emphasized that the assets must be included in the resolution plan to ensure the corporate debtor’s economic rehabilitation.