Statutory Handover Mandated: NCLAT Orders YG Estates to Transfer Supertech Project Maintenance to RWAs Within 30 Days

Statutory Handover Mandated: NCLAT Orders YG Estates to Transfer Supertech Project Maintenance to RWAs Within 30 Days

Introduction

The National Company Law Appellate Tribunal (NCLAT) has directed YG Estates Facilities Management Pvt. Ltd. to hand over maintenance of Supertech Ecociti and Supertech 34 Pavilion to their respective registered apartment owners’ associations within 30 days. The Bench comprising Justice Ashok Bhushan (Judicial Member) and Barun Mitra (Technical Member) held that once 99% of homebuyers had taken possession and associations were duly registered, maintenance was required to be transferred under Section 14(5) of the Uttar Pradesh Apartment Act.

Factual Background

The applications were filed by the apartment owners’ associations of Supertech Ecociti and Supertech 34 Pavilion in the insolvency proceedings of Supertech. The Ecociti association was registered on January 3, 2022, and informed the Tribunal that 99% of its 2,147 flats were occupied. The Noida Authority had also written to Supertech directing transfer of maintenance to the association. In respect of 34 Pavilion, the association’s registration was renewed on March 1, 2025. The Interim Resolution Professional (IRP) stated that 99% of the 262 flats across four towers had already been handed over to buyers. The associations sought transfer of maintenance from YG Estates, which was managing the projects.

Procedural Background

The matter arose during the corporate insolvency resolution process of Supertech. The registered apartment owners’ associations moved applications seeking transfer of maintenance under the statutory framework. YG Estates opposed the applications, while the IRP supported the transfer, submitting that it would be just and proper to remove YG Estates as the maintenance agency in view of the statutory mandate and the formation of registered associations. The NCLAT examined the statutory provisions, rival submissions, and the factual matrix before passing its order.

Issues

1. Whether maintenance of the projects was required to be transferred to the registered apartment owners’ associations under Section 14(5) of the Uttar Pradesh Apartment Act.

2. Whether absence of a completion certificate barred transfer of maintenance.

3. Whether objections regarding validity of registration and Rule 55 of the 2010 Rules prevented the associations from seeking such relief.

Contentions of the Parties

The apartment owners’ associations contended that since 99% of the homebuyers had taken possession and the associations were duly registered, maintenance was statutorily required to be handed over to them. They relied upon Section 14(5), which provides that upon formation of an association, management of common areas stands transferred from the promoter to the association.

YG Estates opposed the pleas, arguing that a completion certificate, and not merely an occupancy certificate, was necessary before maintenance could be transferred. It further questioned the validity of the associations’ registration and raised objections under Rule 55 of the 2010 Rules. The Interim Resolution Professional supported the transfer, stating that the overwhelming possession by homebuyers and statutory formation of associations warranted handing over maintenance.

Reasoning and Analysis

The Tribunal observed that 99% of the homebuyers in both projects had taken possession and that registered associations had been formed under the Uttar Pradesh Apartment Act. Relying on Section 14(5), the Bench held that once an association is formed, management of common areas is deemed to transfer from the promoter to the association by operation of law. The statutory mandate did not require further conditions once the association stood validly registered and possession was substantially complete.

The Tribunal rejected the contention that absence of a completion certificate barred transfer of maintenance. It also held that Rule 55 pertains to execution of deeds and does not prevent filing of applications seeking transfer of maintenance. Further, the Bench clarified that a pending challenge to the registration of an association does not take away its status as a registered body unless set aside by a competent authority. In view of the statutory scheme and factual position, the Tribunal concluded that maintenance must be handed over to the respective associations.

Decision

Allowing both applications, the NCLAT directed YG Estates Facilities Management Pvt. Ltd. to complete the handover of maintenance of Supertech Ecociti and Supertech 34 Pavilion within 30 days under the supervision of the Interim Resolution Professional. The Tribunal clarified that YG Estates would be at liberty to take steps in accordance with its contract to recover any outstanding dues.

In this case the appellant was represented by Advocates Gaurav Mitra, Adarsh Rai, Lavanya and Nandita.