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.

Resources

03 Jun 2026

Jyoti Structures Launches Heat Safety Drive Across Sites

Jyoti Structures (JSL) has strengthened heat safety measures across its project sites and manufacturing facilities as temperatures rise across India. The company has implemented a Summer Safety Plan covering all transmission line projects to address risks related to heat stress, dehydration and worker fatigue.The initiative includes rescheduling work away from peak afternoon temperatures, provision of drinking water, ORS and lemon-salt solutions, and installation of rest shelters near work areas. Daily toolbox talks, worker health monitoring, first-aid preparedness, emergency transport arrange..

Real Estate

03 Jun 2026

MHADA Declares 82 Buildings Most Dangerous in Central and South Mumbai

The Maharashtra Housing and Area Development Authority (MHADA) has declared 82 buildings as most dangerous across Central and South Mumbai and has appealed to residents to vacate immediately. The list, prepared after structural assessments by the authority, identifies buildings judged to pose imminent risk to occupants and to passersby. Local civic bodies have been asked to coordinate evacuations and to make arrangements for temporary shelter and rehabilitation for displaced households. Officials said the authority prioritised buildings with visible structural distress, severe cracking, tiltin..

Infrastructure Transport

03 Jun 2026

Damage Reported At Halwara Airport Terminal After First Rains

Severe damage was reported at the terminal of Halwara Airport during the first major rain spell of the season, prompting immediate concern among aviation and local authorities. Images from the site showed water ingress and visible deterioration of the terminal interior, affecting passenger areas and ancillary services. The airport authority suspended certain operations temporarily to assess structural safety and ensure passenger wellbeing. Preliminary inspections have prioritised electrical systems and roof seals to prevent further water ingress. State aviation officials ordered a formal inqui..