NCLAT Dismisses SGN’s Appeal Over Tower 5 Rights in Morpheus Bluebell, Says Claims Belong in CIRP

NCLAT Dismisses SGN’s Appeal Over Tower 5 Rights in Morpheus Bluebell, Says Claims Belong in CIRP

Introduction

The National Company Law Appellate Tribunal, Delhi Bench, dismissed the appeal filed by SGN Universal Construction Company Pvt. Ltd. against observations made in the admission order of CIRP against Morpheus Prodevelopers Pvt. Ltd., holding that no findings had been returned on SGN’s alleged rights over Tower 5 and that such claims must be pursued within the insolvency resolution framework.

Factual Background

The dispute concerns the “Morpheus Bluebell” real estate project in Greater Noida (West), comprising Towers 3, 4, and 5, developed by M/s Morpheus Prodevelopers Pvt. Ltd. SGN Universal Construction Company claimed rights over Tower 5 based on development agreements executed in 2017 and 2020. It also relied upon interim orders passed by the Delhi High Court and an arbitral tribunal, contending that its rights in Tower 5 stood independently protected and ought not to be affected by the CIRP against the developer.

Procedural Background

CIRP against Morpheus Prodevelopers Pvt. Ltd. was admitted on an application filed by 40 homebuyers. During those proceedings, SGN had moved an application before the NCLT merely to place certain High Court and arbitral orders on record. However, it did not seek any substantive relief such as adjudication of title, recognition of exclusive development rights, or exclusion of Tower 5 from the CIRP. Aggrieved by certain observations in the admission order, SGN preferred the present appeal before the NCLAT.

Issues

1. Whether the NCLT had adjudicated or returned any finding on SGN’s alleged rights over Tower 5.

2. Whether claims concerning development rights over a part of the project could be examined at the stage of admission of CIRP.

3. Whether such claims are to be pursued before the Resolution Professional within the insolvency framework.

Contentions of Parties

The appellant, SGN, contended that it possessed enforceable development rights over Tower 5 under agreements executed in 2017 and 2020 and that the NCLT’s observations in the CIRP admission order adversely affected those rights. It relied upon interim protections granted by the Delhi High Court and arbitral proceedings to support its claim. The respondents, including the homebuyers and the Resolution Professional, argued that no adjudication of SGN’s rights had taken place in the admission order and that all such claims, if any, must be dealt with in accordance with the IBC process.

Reasoning and Analysis

The bench of Judicial Member Justice Mohammad Faiz Alam Khan and Technical Member Naresh Salecha observed that the Adjudicating Authority, while admitting CIRP, is only required to examine the existence of debt, default, and satisfaction of the statutory threshold. It found that these conditions were duly met in the case filed by the 40 homebuyers. The appellate tribunal further noted that SGN’s earlier application before the NCLT merely placed certain external orders on record and did not seek adjudication of title or exclusion of Tower 5 from CIRP. Consequently, no findings whether final or even preliminary had been returned on SGN’s alleged rights.

The Bench emphasized that the Morpheus Bluebell project is a single integrated development comprising multiple towers, and once CIRP commences, the insolvency framework overrides parallel claims and proceedings. Any assertion of development rights over Tower 5, therefore, must be examined before the Resolution Professional in the course of the CIRP.

Decision

The NCLAT dismissed SGN’s appeal and held that any claim regarding rights or development interests in Tower 5 must be pursued within the ongoing insolvency resolution process before the Resolution Professional.

In this case the appellant was represented by Senior Advocate Krishnendu Datta with Gaurav Mitra. Aakashi Lodha, Sanjeev Seshadi, Aiswarya Modi Seth and Nishitha Jindal.