M. Govind Reddy Vs State of Karnataka (Karnataka High Court)
Summary: The petitioners challenged the Public Auction Notice dated 06.06.2026 bearing No. MSC/RERA/CR/32/23-24, issued by the Special Tahsildar pursuant to a Recovery Certificate under Section 41 of the Real Estate (Regulation and Development) Act, 2016 (RERA). The petitioners claimed ownership of the subject property and stated that they had entered into a Joint Development Agreement with respondent No.5, the developer. Respondent No.5 had subsequently been admitted into Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code, 2016 (IBC), by order dated 04.06.2025, with proceedings pending before the National Company Law Tribunal (NCLT) in C.P. (IB) No.88/2025. The petitioners contended that the rights of respondent No.5 arising under the Joint Development Agreement formed part of the insolvency proceedings and that enforcement of the RERA Recovery Certificate and consequential auction would amount to parallel recovery proceedings outside the insolvency framework.
The petitioners relied upon the Supreme Court decision in Vishal Chelani & Ors. Vs. Debashis Nanda [Civil Appeal No.3806 of 2023] and the decision in M/s. Dreams Infra India Pvt. Ltd. Vs. Competent Authority Dreamz Infra India Pvt. Ltd. [W.P. No.13477/2020, dated 24.05.2021]. The submissions relied upon the overriding effect of Section 238 of the IBC and the provisions concerning moratorium under Section 14, contending that proceedings affecting assets or rights of the corporate debtor should be dealt with within the insolvency framework.
