Late Babu Lal Vs Jasrati Education Solutions Limited (NCLAT Delhi)
Conclusion: An unregistered Agreement to Sell (A2S) did not prevent recognition of asset transfer in the context of Corporate Insolvency Resolution Process (CIRP) as once consideration was paid and possession transferred, the sellers’ rights ended, and the Corporate Debtor acquired enforceable interests.
Held: In the instant case, appeal was filed by Sunder Lal, legal heir of late Babu Lal, challenging the order directing execution of a Sale Deed in favour of Jasrati Education Solutions Ltd., the Successful Resolution Applicant (SRA). Appellant argued that the A2S signed between Babu Lal and OSN Infrastructure was unregistered, and under the Supreme Court’s ruling in Suraj Lamps & Industries Pvt. Ltd. v. State of Haryana (2021), such documents could not confer title. He further contended that the subsequent Deed of Assignment transferring rights to Educomp Infrastructure was also unregistered, thereby invalid under Sections 17 and 49 of the Registration Act, 1908. According to him, the NCLT erred in relying on these instruments to compel execution of a Sale Deed. SRA countered that while the A2S was unregistered, subsequent registered documents, notably the Power of Attorney dated 08.04.2011 and the Deed of Possession dated 24.04.2011, clearly recorded receipt of full consideration and transfer of possession. These instruments, executed by all sellers, including Babu Lal, acknowledged that the Corporate Debtor had acquired rights and interests in the land. SRA emphasised that the land was reflected in the Corporate Debtor’s balance sheet and Information Memorandum during CIRP, evidencing its asset status. It was held by Tribunal that the chain of transactions, the MoU dated 25.08.2010 between sellers and OSN Infrastructure, A2S dated 16.03.2011 (unregistered), the Registered POAs appointing Shonu Chandra to execute Sale Deeds, Deed of Possession transferring actual possession to OSN, Deed of Assignment (unregistered) transferring OSN’s rights to Educomp. Tribunal noted that while the A2S was unregistered, the later registered POA explicitly acknowledged receipt of full consideration. The Deed of Possession further confirmed transfer of possession and divestment of rights. These subsequent instruments, being registered and executed after the A2S, carried greater evidentiary weight. Tribunal held that once consideration was paid and possession transferred, the sellers’ rights ended, and the Corporate Debtor acquired enforceable interests. When the subject land was depicted as an asset of the Corporate Debtor in the Information Memorandum; when the subject land also stood reflected in the balance sheet of the Corporate Debtor as an asset of the Corporate Debtor; when the Deed of Possession stood signed and even the Attorney had admitted that the possession had passed over from the sellers to him; it left no doubt in our minds that the subject land was already in possession of the Corporate Debtor. Adjudicating Authority in passing the impugned order has acted within the boundaries of jurisdiction conferred under Section 60(5) of the IBC as the subject matter of the title over the subject land was intrinsically interwoven in the present insolvency proceedings. Ultimately, NCLAT upheld the NCLT’s order, ruling that the unregistered A2S did not bar recognition of asset transfer. The registered POA and Deed of Possession, coupled with full consideration, established the Corporate Debtor’s rights. The SRA, having paid value under the resolution plan, was entitled to execution of Sale Deeds to perfect title.
