Realtor-to-owner loan is operational debt: Tribunal

21 Jan 2021 CW Staff

NCLT admitted a petition filed by Sunteck Realty against Goodwill Theatres for initiating a corporate insolvency resolution process and has also declared a moratorium under Section 14 of the IBC.

As per the terms, the termination could be avoided if both the parties mutually extend the pact in writing and the landlord or corporate debtor repays the advance along with interest.

The term sheet was terminated for some reason, and the development management agreement was never executed between the parties. However, according to the petition filed by Sunteck Realty, the advance paid to the corporate debtor was not returned despite repeated reminders.

A demand notice was also issued to recover nearly Rs 3.06 crore including interest, and after this, the developer moved the NCLT against Goodwill Theatres.

Goodwill Theatres responded by denying the term sheet's termination and asserted that Sunteck Realty was not an operational creditor within IBC as it had not provided any goods or services to it.

It was also pointed out that the term sheet was not a binding agreement and was just an agreement to enter into an agreement.

Sunteck claimed that under the term sheet, the property owner had agreed to appoint and engage the company for the performance of the services and the advance paid for availing goods and services was debt under IBC.

Goodwill Theatres had claimed that the developer relied upon a specific date in October 2018, as the date of termination.

However, there was no communication regarding such termination on that date, and hence the petition needed to be dismissed.

As part of its order, NCLT stated that under the binding term sheet, the property owner or corporate debtor had agreed to appoint the developer as its project manager for the performance of the project's services.

The court also concluded that Rs 2.51 crore paid to Goodwill Theatres was part of the service rendered by Sunteck Realty to the landlord and therefore qualified as operational debt in terms of Section 5(21) IBC.

In a precedent-setting verdict, the National Company Law Tribunal (NCLT) has deemed that a real estate company's advance to a property's owner for the proposed development qualifies as an operational debt under the Insolvency and Bankruptcy Code (IBC).NCLT admitted a petition filed by Sunteck Realty against Goodwill Theatres for initiating a corporate insolvency resolution process and has also declared a moratorium under Section 14 of the IBC. As per the terms, the termination could be avoided if both the parties mutually extend the pact in writing and the landlord or corporate debtor repays the advance along with interest. The term sheet was terminated for some reason, and the development management agreement was never executed between the parties. However, according to the petition filed by Sunteck Realty, the advance paid to the corporate debtor was not returned despite repeated reminders. A demand notice was also issued to recover nearly Rs 3.06 crore including interest, and after this, the developer moved the NCLT against Goodwill Theatres. Goodwill Theatres responded by denying the term sheet's termination and asserted that Sunteck Realty was not an operational creditor within IBC as it had not provided any goods or services to it. It was also pointed out that the term sheet was not a binding agreement and was just an agreement to enter into an agreement. Sunteck claimed that under the term sheet, the property owner had agreed to appoint and engage the company for the performance of the services and the advance paid for availing goods and services was debt under IBC. Goodwill Theatres had claimed that the developer relied upon a specific date in October 2018, as the date of termination. However, there was no communication regarding such termination on that date, and hence the petition needed to be dismissed. As part of its order, NCLT stated that under the binding term sheet, the property owner or corporate debtor had agreed to appoint the developer as its project manager for the performance of the project's services. The court also concluded that Rs 2.51 crore paid to Goodwill Theatres was part of the service rendered by Sunteck Realty to the landlord and therefore qualified as operational debt in terms of Section 5(21) IBC.

Infrastructure Urban

11 Mar 2026

India Expands Semiconductor Training To 500 Institutions

Under the Chips to Startups programme of the India Semiconductor Mission, the Union minister responsible for Railways, Information and Broadcasting, and Electronics and IT reported notable progress in talent development. He indicated that over the past four years substantial steps have been taken towards a 10-year target of training 85,000 engineers in semiconductor design. World-class EDA tools have been deployed in 315 academic institutions across the country to provide students with practical exposure to chip design. These EDA tools are supported by leading global firms and are accessible t..

Infrastructure Urban

11 Mar 2026

Delhi Institutions Support India Semiconductor Mission

The Government of India has prioritised talent development through training, upskilling and workforce development under the Chips to Startups initiative of the India Semiconductor Mission, with officials noting progress in four years towards a 10-year target of training 85,000 engineers in semiconductor design. Electronic design automation tools provided by Synopsys, Cadence, Siemens, Renesas, Ansys and AMD have been deployed in 315 academic institutions, enabling students to gain practical chip design experience. Chips have been fabricated and tested at the Semiconductor Laboratory, Mohali, a..

Infrastructure Urban

11 Mar 2026

NHA Announces Winners Of NHCX Hackathon At IIT Hyderabad

The National Health Authority (NHA) has concluded the NHCX Hackathon under the Ayushman Bharat Digital Mission (ABDM) to stimulate innovation around the National Health Claims Exchange (NHCX). The winning teams presented their solutions at the NHCX Innovation Meet held at IIT Hyderabad during a two-day event in March 2026 that also served as the hackathon grand finale. The hackathon itself ran from 22 to 28 February 2026 and aimed to accelerate paperless, transparent claims processing across India. The event was organised with a range of ecosystem partners, including the Insurance Regulatory a..