NCLAT: NCLT Can Direct Legal Heirs, Power Of Attorney Holders To Execute Sale Deeds For Corporate Debtor’s Assets
Pranav B Prem
The National Company Law Appellate Tribunal (NCLAT), Principal Bench, New Delhi, comprising Justice Ashok Bhushan (Chairperson) and Barun Mitra (Member-Technical), held that the Adjudicating Authority is empowered under Section 60(5) of the Insolvency and Bankruptcy Code (IBC), 2016, to direct legal heirs and power of attorney holders to execute sale deeds to perfect the title of a corporate debtor’s asset.
The appeal arose from an order passed by the National Company Law Tribunal (NCLT), Chandigarh Bench, which had directed the legal heirs and the person holding the power of attorney of the original land seller to sign and execute the sale deed in favour of the Successful Resolution Applicant (SRA) in order to regularize the title of the property belonging to the corporate debtor, M/s Educomp Infrastructure.
In the present case, Late Babu Lal and his sons had executed an agreement to sell and a power of attorney to transfer certain agricultural lands to an entity which subsequently assigned its rights to the corporate debtor. When the corporate debtor went into Corporate Insolvency Resolution Process (CIRP), the SRA discovered that the formal sale deeds for the land had not been executed. To rectify this, the SRA approached the NCLT under Section 60(5) of the IBC seeking a direction to complete the execution of the sale deeds. The NCLT allowed the plea, prompting the legal heirs of Late Babu Lal to file the present appeal.
The appellants contended that they were not made parties to the NCLT proceedings, violating the principles of natural justice. They argued that the power of attorney became void upon the death of Mr. Babu Lal as per Section 201 of the Indian Contract Act, 1872. It was further submitted that the unregistered agreement to sell and the deed of assignment could not confer ownership as per the provisions of the Registration Act, 1908. Relying on the decision in Suraj Lamp & Industries Pvt. Ltd. v. State of Haryana [(2012) 1 SCC 656], the appellants asserted that the NCLT had no jurisdiction to grant specific performance of a contract, which is a matter for the civil courts. They also raised the plea of limitation.
The Tribunal, however, noted that full consideration had already been paid to the sellers and possession of the land had been transferred to the corporate debtor. Therefore, the corporate debtor had acquired rights, entitlements, and interests in the said property. It further observed that the power of attorney, having been executed after payment of the full consideration as part of a commercial transaction, remained valid and could not be treated as revoked merely due to the death of Mr. Babu Lal.
Addressing the applicability of the Suraj Lamp decision, the NCLAT clarified that the ruling could be applied only prospectively and did not affect transactions executed before its pronouncement. It also relied on the Supreme Court’s decision in Gujarat Urja Vikas Nigam Ltd. v. Amit Gupta [(2021) 7 SCC 209], which recognized the wide jurisdiction of the NCLT under Section 60(5) of the IBC to adjudicate disputes that arise from or relate to the insolvency process. Since the execution of the sale deed was necessary for the implementation of the approved resolution plan, the NCLT had acted within its jurisdiction. Accordingly, the NCLAT upheld the NCLT’s order and directed the legal heirs of Late Babu Lal to execute the sale deed within 30 days in favour of the corporate debtor or the Successful Resolution Applicant.
Appearance
For Appellant: Mr. Anil K. Airi, Sr. Advocate with Mr. Mudit Ruhella, Mr. Vishal Tyagi, Mr. Harsh Gautam, Advocates.
For Respondent: Mr. Abhijeet Sinha, Sr. Advocate with Mr. Shashank Agarwal, Mr. Saikat Sarkar, Mr. Abhishek Taneja, Mr. Sahil Sharma, Mr. A. Raghav, Advocates for R-1 to R-6. Mr. Rohit Khanna, Advocates for Erstwhile RP.
Cause Title: Late Babu Lal Through its legal heir, Mr. Sunder Lal v. Jasrati Education Solution Limited and Anr.
Case No: Company Appeal (AT) (Insolvency) No. 1293 of 2025
Coram: Justice Ashok Bhushan (Chairperson), Barun Mitra (Member-Technical)
