In a significant ruling that could reshape how property transactions linked to corporate insolvencies are enforced, the National Company Law Appellate Tribunal (NCLAT), New Delhi, has held that even if one of the original landowners has passed away, their legal heirs are bound to execute the sale deed if the transaction was already concluded.
The verdict came in the case of Late Babu Lal (through his legal heir, Sunder Lal) versus Jasrati Education Solutions Ltd., the Successful Resolution Applicant (SRA) for Educomp Infrastructure & School Management Ltd. The tribunal directed Sunder Lal and others to execute the pending sale deed for the Alwar land parcel in Rajasthan, within 30 days.
Background of the Case: From Educomp’s Land Deal to Insolvency
- In 2010, Late Babu Lal and his four sons signed MoUs with OSN Infrastructure & Projects Pvt Ltd. to sell agricultural land in Alwar, Rajasthan.
- In March 2011, the parties executed Agreements to Sell (A2S) — unregistered, but later backed by registered Power of Attorneys (POAs) authorising an Educomp director, Shonu Chandra, to execute final sale deeds.
- The land possession was formally handed over in April 2011, and OSN assigned the rights to Educomp Infrastructure & School Management Ltd., which later entered insolvency in 2018.
- Jasrati Education Solutions Ltd. emerged as the Successful Resolution Applicant (SRA) and discovered that the sale deeds for the land were never registered.
Legal Twist: Seller Died Before Deed Was Registered
Babu Lal died in March 2017, and his heir Sunder Lal argued that the Power of Attorney expired upon his death, making any future deed invalid. He also contended that the full sale consideration had not been paid, and that disputes of land ownership should fall under civil courts, not under the Insolvency & Bankruptcy Code (IBC).
However, the Tribunal found that:
- The Power of Attorney explicitly recorded that full consideration had been paid.
- The Deed of Possession confirmed that land possession was handed over to the buyer.
- The transaction was concluded before the Supreme Court’s 2011 Suraj Lamp ruling, which restricted sale via POA—thus it remained valid.
- The property appeared in Educomp’s balance sheet and Insolvency Information Memorandum, proving the asset belonged to the Corporate Debtor.
Tribunal’s Key Findings
- The Adjudicating Authority (NCLT Chandigarh) acted within its jurisdiction under Section 60(5) of IBC, which allows it to issue directions related to insolvency resolution, including execution of sale deeds.
- The delay in appeal (11 days beyond 30-day limit) was condoned, but the Tribunal found no merit in the heir’s objections.
- Legal heirs must step in to execute sale deeds where the original executants are deceased.
- The transaction remains valid, as the buyer paid full consideration and took possession long before litigation began.
Final Order
The NCLAT dismissed the appeal and directed Sunder Lal (legal heir) and POA holder Shonu Chandra to execute the sale deed in favour of Jasrati Education Solutions Ltd., the new owner of the land, within 30 days.
What This Means for Property Owners & Legal Heirs
This ruling is a warning for landowners and heirs:
- Once consideration is received and possession handed over, the sale cannot be undone by citing technicalities like unregistered A2S or death of executant.
- Legal heirs inherit obligations as well as rights.
- For insolvency cases, the NCLT/NCLAT can direct execution of sale deeds to complete transactions tied to a corporate debtor’s assets.
Also Read: NCLAT Ruling: Claims Arising Post-CIRP Cannot Be Entertained by Resolution Professionals
