Mark Infrastructure Pvt. Ltd. vs NBCC India ltd. and Anr. - In view of the foregoing discussion, we are of the considered opinion that the invocation of the Performance Bank Guarantee does not violate Section 14 of the IBC and the retention amount and deductions from RA bills are governed by contractual terms and cannot be directed to be refunded in the present proceedings. Further the disputes raised are predominantly contractual in nature and do not warrant interference under Section 60(5) of the Code.

 NCLT Hyd. (2026.02.24) in Mark Infrastructure Pvt. Ltd. vs NBCC India ltd. and Anr. [(2026) ibclaw.in 571 NCLT, IA No 109 of 2023 in CP (IB) No. 14/9/HDB/2021] held that;-.

• Section 14(3)(b) of the IBC clearly provides that the moratorium shall not apply to a surety in a contract of guarantee to a Corporate Debtor. Further, the proviso to Section 3(31) excludes performance guarantees from the ambit of “security interest.” A conjoint reading of the aforesaid provisions makes it clear that a Performance Bank Guarantee stands outside the purview of moratorium under Section 14. Therefore, invocation of the Performance Bank Guarantee by Respondent No.1 cannot be held to be illegal or in violation of the provisions of the Code.

• Admittedly, the project was not completed by the Corporate Debtor. The retention, being contractual in nature, cannot be directed to be refunded unless the contractual conditions are fulfilled. This Adjudicating Authority, exercising jurisdiction under Section 60(5), cannot rewrite the terms of the contract between the parties.

• It is well settled that this Adjudicating Authority, under Section 60(5) of the IBC, is not empowered to adjudicate purely contractual disputes unrelated to insolvency resolution. The jurisdiction under the Code is confined to matters arising out of or in relation to the insolvency of the Corporate Debtor. Determination of delay compensation, entitlement under RA bills, and consequences of contractual breach fall within the realm of contractual adjudication and cannot be conclusively determined in summary proceedings under the IBC.

• In view of the foregoing discussion, we are of the considered opinion that the invocation of the Performance Bank Guarantee does not violate Section 14 of the IBC and the retention amount and deductions from RA bills are governed by contractual terms and cannot be directed to be refunded in the present proceedings. Further the disputes raised are predominantly contractual in nature and do not warrant interference under Section 60(5) of the Code.

Excerpts of the Order;

# 1. This application is filed by the Resolution Professional of Mark Infrastructure Pvt Ltd under Section 60 (5) of IBC, 2016, r/w Rule 11 of NCLT Rules, 2016, seeking directions to Respondent No.1 to refund/ pay a sum of Rs. 6,15,49,971/- to the Corporate Debtor.

AVERMENTS IN THE APPLICATION:

# 2. The Tribunal had earlier initiated the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor vide order dated 30.12.2021 and appointed Mr. Ritesh Mittal as Interim Resolution Professional, who was subsequently replaced by Mr. Venu Gopal Kaspa and subsequently by Mr. Madasa Kumar as Resolution Professional.

# 3. It is stated that the Corporate Debtor, an MSME, had entered into a contract agreement with Respondent No. 1 for the construction of the remaining portion of the new campus for the National Institute of Design (NID), Vijayawada, Andhra Pradesh, at a contract value of approximately Rs. 44.70 crores.

# 4. In terms of the contract, the Corporate Debtor had furnished a Performance Bank Guarantee (PBG) issued by Punjab National Bank, vide BG No. 06871LG000319, for a sum of Rs. 2,23,48,322/- dated 07.01.2019, representing 5% of the bid value, to secure the due performance of contractual obligations.

# 5. It is stated that the Respondents No.1 and 2 retained 2.5% of each running account bill as retention money towards the Defect Liability Period (DLP) and released the balance payment for the work executed. Accordingly, a total sum of Rs. 1,49,07,328/- was retained by the Respondent No.1 from 22.03.2019 to 17.12.2021 under the DLP provisions.

# 6. The Applicant has detailed the total funds available with Respondent No.1 belonging to the Corporate Debtor, which amounts to Rs. 6,15,49,971/-, as under:

Details	Amount
RA Bills amount receivable	Rs.1,24,82,392/-
Hold amounts in RA Bills	Rs.1,18,11,929/-
Total pending RA Bills receivable	Rs.2,42,94,321/-
Retained security deposit	Rs.1,49,07,328/-
Total amount due and receivable from Respondent No.1	Rs.3,92,01,649/- plus PBG given by CD for Rs.2,23,48,322/- totalling to Rs.6,15,49,971/-

# 7. The grievance of the Applicant is that, despite the Corporate Debtor having executed approximately 95% of the work allotted under the contract satisfactorily, the Respondents, without considering the exceptional circumstances arising due to the COVID-19 pandemic, allegedly withheld payments for the work completed, and further threatened to cancel the contract and invoke the Performance Bank Guarantee (PBG) furnished by the Corporate Debtor.

# 8. Aggrieved by the actions of the Respondents, the Resolution Professional (RP), on behalf of the Corporate Debtor, filed IA 279/2022 against Respondents No.1 and 2, seeking the following reliefs:

• (a) To release the payment of pending invoices and amounts held by the Respondents in the running account bills, amounting to Rs. 2.43 crores, to the Corporate Debtor, since the funds of the Corporate Debtor with the Respondents are assets of the Corporate Debtor under the CIRP.

• (b) To pass an order directing the Respondents to release the Performance Bank Guarantee (PBG) of Rs. 2.23 crores, since an amount of Rs. 1.49 crores is already retained as security deposit, which exceeds 3% of the contract value, in accordance with the Ministry of Finance, Government of India, Office Memorandum dated 12.11.2020.

• (c) To pass an order directing the Respondent No.1 to cooperate with the CD in completing the balance meagre work for smooth running of the business of the CD during the pendency of CIRP as the Civil Court has no jurisdiction in respect of the matters connected with the CD under CIRP as per the I&B Code.

a. To pass such order/orders as this Hon’ble Tribunal may deem fit and proper in the circumstances of the case in the interest of justice and equity

Interim Relief: Pending disposal of IA 279/2022, the RP sought an interim injunction restraining the Respondents or their officers/agents from invoking PBG No. 06871LG000319 dated 07.01.2019 for Rs. 2,23,48,322/-, and restraining Punjab National Bank from making any payment to Respondent No.1 in respect of the said PBG.

This Tribunal after careful consideration of the entire material before it, passed a detailed order in IA 279/2022 dtd. 08.06.2022, but the Respondents have willfully and deliberately failed to:

• (1) release the 25% amount from the 2% excess PBG amount as directed by this Hon’ble Adjudicating Authority;

• (2) issue to the Form III, a statutory requirement for the Applicant to get the labour license before initiating the work;

• (3) furnish the work schedule;

# 9. According to the Applicant, the Respondents, with an intention to gain time and to ensure that the Corporate Debtor did not complete the work within the three months as directed by this Adjudicating Authority, filed an appeal on 12.07.2022 before the Hon’ble National Company Law Appellate Tribunal against the order dated 08.06.2022 passed in IA 279/2022.It is further contended that the said appeal was subsequently withdrawn on 18.08.2022 before the Hon’ble Appellate Authority without assigning any reasons. Thereafter, immediately upon expiry of the three-month period, Respondent No.1 issued a termination letter dated 07.09.2022 to the Corporate Debtor.

# 10. The Applicant submits that pursuant to the order dated 08.06.2022 in IA 279/2022, it filed an undertaking affidavit on 15.06.2022 agreeing to complete the project within the time granted by this Adjudicating Authority, while requesting Respondent No.1 to fulfil certain reciprocal obligations necessary for commencement and smooth execution of the work. It is stated that time was the essence of the contract and the extended period had expired on 31.03.2022. Although the agreement dated 29.01.2019 permits recovery of delay compensation, Respondent No.1 had repeatedly modified and enlarged the scope of work and granted extensions, the last being on 29.10.2021 with time extended up to 31.03.2022. Apprehending recovery of delay compensation beyond 31.03.2022, the Applicant sought an unconditional extension of time in line with the order in IA 279/2022 and issuance of Form III for obtaining a labour licence, as conditions necessary to safeguard the interests of the Corporate Debtor.

# 11. The Applicant further undertook to commence the work forthwith, complete the works required for temporary functioning of the campus within 30 days, and finish the remaining work within three months from the date of undertaking. It also sought release of 25% from the 2% excess Performance Bank Guarantee amount to facilitate execution of the temporary works. Despite expressing readiness to complete the project, Respondent No.1 terminated the contract vide letter dated 07.09.2022.

# 12. Aggrieved by the aforesaid actions, the Applicant filed Contempt Petition No. 05/2022 before this Adjudicating Authority on 24.09.2022 and also instituted W.P. No. 36674 of 2022 before the Hon’ble High Court of Andhra Pradesh. By order dated 11.11.2022, the Hon’ble High Court held that the termination dated 07.09.2022 was contrary to the orders of this Adjudicating Authority and accordingly suspended the termination. Subsequently, on an application filed by the Respondents seeking vacation of the interim order, the Hon’ble High Court, by order dated 06.01.2023, vacated the stay granted on 11.11.2022.

# 13. The Applicant submits that although Respondent No.1 granted extension of time up to 30.03.2022, the Corporate Debtor was admitted into CIRP on the same date. Thereafter, the Respondents allegedly turned hostile, withheld payments even for certified works, and invoked the performance bank guarantee, thereby causing serious financial prejudice to the Corporate Debtor. The Applicant contends that such withholding of amounts due to the Corporate Debtor is unjust and illegal. Given that the Corporate Debtor is undergoing CIRP, retention of these funds would result in value erosion and defeat the fundamental objective of the Code, namely maximization of value and balancing the interests of all stakeholders.

COUNTER:-

# 14. The preliminary objection raised by Respondent No. 1 is that due to failure of the Corporate Debtor to perform its contractual obligations, the Performance Bank Guarantee was invoked strictly in accordance with due procedure. Further contention of Respondent No.1 is that invocation of a Performance Bank Guarantee is not barred by the moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016, as Section 14(3)(b) excludes guarantees given to a Corporate Debtor, and the proviso to Section 3(31) expressly excludes performance guarantees from the definition of “security interest.” A conjoint reading of these provisions, according to the Respondent, clearly places Performance Bank Guarantees outside the purview of moratorium.

# 15. The Respondent further submits that no amounts are due to the Corporate Debtor. The retained sums pertain to defect liability and non-achievement of contractual milestones, and have been withheld strictly in terms of the agreement. Owing to persistent delays and poor performance, despite time being the essence of the contract under Clause 3.4 of the Agreement dated 29.01.2019, the Respondent had already terminated part of the works on 23.12.2021, prior to commencement of CIRP. As the project relating to the National Institute of Design, Vijayawada was required to commence operations in July 2022, and the Corporate Debtor failed to complete the works even after substantial delay, the Respondent was compelled to terminate the contract and engage third parties to complete the balance work.

BRIEF FACTS AS NARRATED BY RESPONDENT No.1 IN THE COUNTER

# 16. That Respondent No. 1 invited tenders vide NIT No. NBCC/CPG/ NID/Vijayawada/ 2018/165 dated 10.09.2018 for construction of balance works of National Institute of Design (NID), Vijayawada, on behalf of the Department of Industrial Policy and Promotion, New Delhi. The Corporate Debtor was awarded the contract valued at Rs. 44,69,66,450/- vide Letter of Award dated 27.11.2018, with an 8-month completion deadline (by 06.08.2019).

# 17. It is stated that when the Corporate Debtor failed to complete the project despite being granted multiple extensions, Respondent No. 1 issued several notices highlighting slow progress and non-adherence to revised schedules, including show cause notices dated 18.02.2021, 16.10.2021, 01.11.2021, 26.11.2021 and 09.12.2021. Owing to continued non-performance, Respondent No. 1 partly withdrew the scope of work on 23.12.2021. Further notices were issued over expired labour licence and workman’s compensation insurance, leading to issuance of another show cause notice dated 05.03.2022 following which the Performance Bank Guarantee was encashed on 25.03.2022.

# 18. It is further stated that the Corporate Debtor sought injunction vide IA No. 279/2022, against termination and release of payments. But upon failure to comply with this Tribunal’s conditional order dated 08.06.2022 to complete essential works within 30 days, NBCC issued a termination letter on 07.09.2022. The Corporate Debtor challenged this before the Andhra Pradesh High Court (W.P. No. 36674/2022), which, after initially granting an ex parte stay, ultimately upheld the termination and vacated the stay. Hon’ble High Court, after hearing, upheld the validity of the termination and vacated the interim stay.

PARA-WISE REBUTTAL BY RESPONDENT NO.1

# 19. It is stated that Paras 1–4 and 7 are matters of record and require no specific reply. The claims in Para 5 are denied as false and untenable, as any payment is contingent upon completion of contractual works, which according to Respondent No.1, the Corporate Debtor failed to achieve.

# 20. It is stated that the Retention Amount of Rs. 1,49,07,328/- was deducted as security deposit/retention money under Clause 3 of General Conditions of Contract GCC, refundable only after the defect liability period. Since the project was incomplete, according to R-1, no refund is due.

# 21. It is further stated that the Performance Bank Guarantee of Rs. 2,23,48,322/- was lawfully invoked on 25.03.2022 for non-performance and that its invocation is not hit by moratorium under Section 14 of IBC, in view of Section 14(3)(b) and Section 3(31), which exclude guarantees from the purview of moratorium.

# 22. The claim of Rs. 2,42,94,321/- towards pending RA bills is denied and contends that the deductions were made towards delay compensation under Clause 3 of the Special Conditions of Contract SCC (@0.5% per week). Further, RA Bill–31 dated 07.01.2022 was signed post-CIRP initiation by the previous management’s GPA holder, rendering it void. According to Respondent No.1, under Clause 23.1 of the GCC, running bills are only advance payments and do not signify completion or acceptance of work.

# 23. It is contended that quantity variations were disclosed in the tender and consented to by the Corporate Debtor. The COVID defence is rejected, as the original completion date was 06.08.2019, well before the pandemic.

# 24. It is stated that regarding the Order dated 08.06.2022, the undertaking filed was not unconditional and failed to address completion timelines for WTP, STP, and plumbing works. The Tribunal noted non-compliance on 21.06.2022, enabling Respondent No. 1 to invoke Clause 11 of GCC and terminate the contract on 07.09.2022, subsequently upheld by the Andhra Pradesh High Court.

# 25. The allegations in Paras 12–17 are denied by Respondent No.1 and submits that all retentions and deductions were done strictly as per contractual terms, and no amounts are due to the Corporate Debtor.

# 26. We have heard the Learned Counsel appearing for the Applicant/Resolution Professional and the Learned Counsel for Respondent No.1. We have perused the pleadings, documents placed on record, and the earlier orders passed by this Adjudicating Authority in IA No. 279/2022.

# 27. The present Application has been filed under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 seeking directions to Respondent No.1 to refund/pay a total sum of Rs. 6,15,49,971/-, comprising alleged pending RA bills, retention money, and the amount covered under the Performance Bank Guarantee.

# 28. The principal issues that arise for consideration are:

• (1) Whether the invocation of the Performance Bank Guarantee amounting to Rs. 2,23,48,322/- is barred by the moratorium under Section 14 of the IBC, 2016?

• (2) Whether the retention amount and deductions from RA bills are liable to be released to the Corporate Debtor during CIRP?

ISSUE (1)

# 29. The Applicant contends that invocation of the PBG constitutes an action against the assets of the Corporate Debtor and is therefore hit by the moratorium. The Respondent No. 1, however, relies upon Section 14(3)(b) of the IBC and the proviso to Section 3(31), contending that performance guarantees are expressly excluded from the definition of “security interest” and are therefore outside the purview of moratorium.

# 30. Insofar as the Performance Bank Guarantee is concerned, it is an undisputed fact that the same was invoked on 25.03.2022. Section 14(3)(b) of the IBC clearly provides that the moratorium shall not apply to a surety in a contract of guarantee to a Corporate Debtor. Further, the proviso to Section 3(31) excludes performance guarantees from the ambit of “security interest.” A conjoint reading of the aforesaid provisions makes it clear that a Performance Bank Guarantee stands outside the purview of moratorium under Section 14. Therefore, invocation of the Performance Bank Guarantee by Respondent No.1 cannot be held to be illegal or in violation of the provisions of the Code.

ISSUE (2)

# 31. With regard to the retention amount of Rs.1,49,07,328/-, the same was deducted in terms of Clause 3 of the General Conditions of Contract towards security deposit/retention money, refundable only upon completion of the defect liability period. Admittedly, the project was not completed by the Corporate Debtor. The retention, being contractual in nature, cannot be directed to be refunded unless the contractual conditions are fulfilled. This Adjudicating Authority, exercising jurisdiction under Section 60(5), cannot rewrite the terms of the contract between the parties.

# 32. Further, as regards the claim of Rs. 2,42,94,321/- towards pending RA bills, Respondent No.1 has contended that the amounts were deducted towards delay compensation under the Special Conditions of Contract and that running account bills do not constitute final acceptance of work, as per Clause 23.1 of the GCC. The material placed on record indicates that the project suffered substantial delay, and part termination had already taken place prior to initiation of CIRP. The disputes raised pertain essentially to contractual performance, delay, and computation of payable amounts, which are matters requiring adjudication on evidence and interpretation of contractual clauses.

# 33. It is well settled that this Adjudicating Authority, under Section 60(5) of the IBC, is not empowered to adjudicate purely contractual disputes unrelated to insolvency resolution. The jurisdiction under the Code is confined to matters arising out of or in relation to the insolvency of the Corporate Debtor. Determination of delay compensation, entitlement under RA bills, and consequences of contractual breach fall within the realm of contractual adjudication and cannot be conclusively determined in summary proceedings under the IBC.

# 34. We further noted that pursuant to the earlier order dated 08.06.2022 in IA No. 279/2022, the Applicant was directed to file an unconditional undertaking to complete essential works within the stipulated time. The record reflects that the undertaking furnished was found non-compliant, and Respondent No.1 thereafter proceeded to terminate the contract on 07.09.2022. The said termination was subsequently upheld by the Hon’ble High Court of Andhra Pradesh.

# 35. In view of the foregoing discussion, we are of the considered opinion that the invocation of the Performance Bank Guarantee does not violate Section 14 of the IBC and the retention amount and deductions from RA bills are governed by contractual terms and cannot be directed to be refunded in the present proceedings. Further the disputes raised are predominantly contractual in nature and do not warrant interference under Section 60(5) of the Code. The Application is devoid of merit and is liable to be dismissed.

# 36. Accordingly, IA 109/2023 is dismissed. No order as to costs.

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M/s Sai Enterprises vs Sangeeta Ravi Punjabi & Ors - Suffice to note that, under Section 18 of the RERA, 2016, it is the choice of the Allottee to either seek a refund, alongwith interest and compensation, or seek the delivery of the apartment in accordance with the terms of the contract, and, in the latter case also the promoter is liable to pay interest at such rate as may be prescribed.

  HC Bombay (2026.04.22) in M/s Sai Enterprises vs Sangeeta Ravi Punjabi & Ors [2026:BHC-AS:19093, SECOND APPEAL NO. 153 OF 2026 WITH INTERIM APPLICATION (ST) NO. 9456 OF 2026] held that;-.

• On first principles, since the Allottees were not parties to the Development Agreement dated 17th October 2017, the contract can never be said to have been novated and, thus, the mutual understanding between the first and second developer would not impinge upon the rights of the Allottees.

• Under no circumstances, the promoter can be permitted to present a fait accompli to an Allottee in flagrant violation of the contractual and statutory obligations.

• Suffice to note that, under Section 18 of the RERA, 2016, it is the choice of the Allottee to either seek a refund, alongwith interest and compensation, or seek the delivery of the apartment in accordance with the terms of the contract, and, in the latter case also the promoter is liable to pay interest at such rate as may be prescribed.

• The choice given to the Allottee under the proviso to Section 18(1) of the RERA, 2016 cannot be diluted on the premise that the only right of the Allottee is to seek the refund of the amount paid along with interest. In substance, the right to seek the apartment, agreed to be sold, is the primary right of the Allottee.

• The alleged impossibility of performance, now sought to be urged, was thus brought about by disingenuous conduct of the Appellant and Respondent No.2, which commenced with terming the Allottees as "investors".

Excerpts of the Order;

# 1. This Appeal is directed against a judgment and order dated 26 th November 2025 passed by the Maharashtra Real Estate Appellate Tribunal, Mumbai ("the Appellate Tribunal"), whereby the Appeal preferred by Respondent No.1-allottee against an order dated 3 rd August 2021 passed by the Maharashtra Real Estate Regulatory Authority ("the Authority") in Complaint No. CC006000000057896, came to be allowed and the Respondents therein including Respondent No. 8-the Appellant herein have been directed to allot a flat admeasuring 775 sq ft and execute a registered Agreement for Sale in favour of Allottee in "Sethia Imperial Avenue" ("the project"), upon receipt of balance consideration, and also to pay interest to the Allottee on the amount of Rs. 12,78,750/- parted with by the Allottee from 26th September 2013 till the delivery of possession of the subject flat, at the rate of State Bank of India's Marginal Cost of Lending Rate plus 2%.

# 2. The Appeal arises in the backdrop of the following facts. 2.1 M/s Super Constitution, Respondent No.2, had started development of a project known as "Sun Gates" on the plot of land bearing CTS No. 9, 9-A, 9A/1 to 57, 123A and 123B of village Bandongiri, Malad (East), Taluka Borivali, under a slum rehabilitation scheme.

2.2 Upon receipt of part consideration of Rs.12,78,750/-, Respondent No.2 issued an allotment letter, thereby allotting Flat No. 1701, admeasuring 775 sq ft at the rate of Rs.5,500/- per sq ft, aggregating to the value of Rs.42,62,500/-, upon the terms and conditions incorporated therein, on 25th September 2010.

2.3 On 28th April 2013, Respondent No.2 executed a Development Agreement with the Appellant and thereunder sold 50% FSI of the sale component of the said project to the Appellant. Under a further Agreement dated 5th April 2016, Respondent No.2 sold the balance 50% FSI also to the Appellant.

2.4 Pursuant to the aforesaid Agreements, a Development Agreement dated 17th October 2017, came to be executed between Respondent Nos. 3 and 4, the owners of the subject land, Respondent No.2-first developer, and the Appellant-the second developer. 

2.5 In accordance with the terms of the said Development Agreement dated 17th October 2017, the Appellant claims, Respondent No.2-first developer had agreed to settle all the debts and claims of the investors and the Appellant was only to provide the agreed consideration for refund of the amount along with interest to the parties with whom the first developer had entered into the transactions. 

2.6 Thus, on 23rd March 2018, Respondent No.2 informed Respondent No.1-Allottee that the project was stalled, it was handed over to the Appellant and the Allottee shall approach either Respondent No. 2 or the Appellant, for refund of the amount paid by the Allottee. In response, as emerges from the record, the Allottee addressed communications on 27th April 2018 and 18th June 2018 conveying her willingness to complete the transaction and accept the flat after payment of balance consideration.

2.7 On 29th January 2019, the Appellant addressed a communication to the Allottee (R2) apprising her that on account of the passage of time and phenomenal increase in the construction cost, it was impossible to complete the transaction on the agreed terms. Thus, the Allotment dated 25th September 2010 was sought to be terminated and the Allottee (R1) was called upon to collect the amount paid by her along with interest at the rate of 10.55% per annum. It was further added that if the Allottee wished to purchase the flat in the project, the Appellant would allot the same to the Allottee by giving a discount of 10% on the then prevailing price of the flat.

2.8 The Allottee filed a complaint, being Complaint No. CC006000000057896, before the Authority. By an order dated 3rd August 2021, the Authority disposed the Complaint directing the parties to act in accordance with the terms and conditions of the Development Agreement dated 17th October 2017, executed by and between the Appellant-Respondent No.2 and Respondent Nos 3 and 4, the owners. 

2.9 Being aggrieved, the Allottee preferred an Appeal before the Appellate Tribunal.

2.10 By the impugned order, the Appellate Tribunal was persuaded to allow the Appeal. It was inter alia held that the Appellant was bound by the allotment made by Respondent No.2, the first developer under the terms of the Development Agreement dated 17 th October 2017 itself, the Appellant had undertaken the responsibility to discharge the debts and liabilities of the Allottees of Respondent No.2. The contentions of the Appellant that there was no privity of contract, the complaint was barred by the law of limitation, and that it was impossible to perform the contract on account of the subsequent developments, were repelled by the Appellate Tribunal.

2.11 Being aggrieved by, and dissatisfied with, the impugned order, the Appellant-second developer is in Appeal.

# 3. Heard Mr. Rubin Vakil, the learned Counsel for the Appellant, and Mr. Manish Gala, the learned Counsel for the Respondent No.1. With the assistance of the learned Counsel for the parties, I have perused the material on record.

# 4. Mr. Rubin Vakil, the learned Counsel for the Appellant, mounted multi-pronged challenges to the impugned order. First, Mr. Vakil would urge, the Appellate Tribunal committed a manifest error in law in fastening the liability on the Appellant in the absence of any privity of contract between the Appellant and the Allottee. Second, the Appellate Tribunal completely misconstrued the nature of the Development Agreement dated 17th October 2017. The Appellant was not a transferee in interest of Respondent No.2, the first developer. The Appellant had only purchased the FSI in the sale component in two tranches. Third, even if the Development Agreement dated 17 th October 2017 is construed rather generously, yet, no prudent person can infer that the Appellant had agreed to provide apartments to the purported Allottees of the first developer (R2). Fourth, the Appellate Tribunal completely misread the termination letter dated 29 th January 2019 to infer an obligation on the part of the Appellant to allot an apartment to the Allottee. Lastly, the Appellate Tribunal completely lost sight of the fact that the identity of the project, which was then being developed by the first developer (R2), was completely lost and no flat of the dimension agreed to be allotted to the Allottee was available in the buildings constructed in accordance with the approval of the Planning Authority.

# 5. In the above circumstances, the Appellate Tribunal could not have directed the Appellant to allot the flat and execute the Agreement and also pay interest on the consideration parted with by the Allottee, submitted Mr. Vakil.

# 6. In opposition to this, Mr. Gala, the learned Counsel for Respondent No.1-Allottee, submitted that the defence of the Appellant is dishonest and mala fide. On 30th September 2025, the Appellant had disclosed the inventory of unsold flats in the project. Sensing the fact that the Appellant may be called upon to allot the flat, post-haste the unsold flats were shown to have been sold surprisingly on the same day, i.e., 14th November 2025, a fortnight prior to the impugned judgment and order. The impossibility of performance thus sought to be pleaded was brought about by deceitful means.

# 7. Mr. Gala took the Court through the recitals in the Development Agreement dated 17th October 2017 to bolster up the case that under the terms of the very Agreement, the Appellant had undertaken the responsibility to not only discharge the liabilities of the first developer (R2) but even indemnify the first developer (R2) and the owners (R3 and R4). In no circumstances, the Allottee's rights can be extinguished by referring to the an instrument to which the Allottee was never a party. The Appellate Tribunal was thus fully justified in directing the Appellant to discharge its statutory and contractual obligations. Thus, no substantial question of law arises for consideration, submitted Mr. Gala.

# 8. At the outset, it is necessary to note that there is no dispute over the fact that the first developer (R2) had agreed to allot Flat No. 1701, admeasuring 775 sq ft for a consideration of Rs.42,62,500/- under the Allotment Letter dated 25th September 2010, and accepted a consideration of Rs.12,78,750/-, which constituted 30% of the agreed consideration. Nor there is any controversy over the fact that the said Agreement to allot was subsisting, on the date the Respondent No.2 addressed a letter dated 23rd March 2018 to the Allottee expressing its inability to develop the project and calling upon the Allottee to accept the refund. Incontrovertibly, the Allottee expressed her willingness to complete the transaction, pay the balance consideration and accept the delivery of the flat. Thus, on 29th January 2019, the Appellant professed to terminate the allotment dated 25 th September 2010 vide communication dated 29th January 2019.

# 9. Cumulatively, the aforesaid facts lead to an inescapable inference that the Agreement to allot the subject flat continued to subsist till 29 th January 2019, at the least. Implicit in the action of the Appellant of termination of the allotment is an admission that the said Agreement to allot did subsist. In this backdrop, the submissions primarily premised on the absence of privity of contract between the Appellant and the Allottee, which constituted the fulcrum of the Appellant's defence, deserve to be appreciated.

# 10. Mr. Vakil placed reliance on Clauses 10 to 12 of the Development Agreement dated 17th October 2017 to drive home the point that the liability of the Appellant was restricted to the discharge of debts and claims of investors, whose names were mentioned in the Annexure VII to the said Development Agreement. Indubitably, the name of the Allottee forms part of the said Annexure VII.

# 11. In addition to the Clauses 10 to 12 of the Development Agreement, it would be contextually relevant to note the recitals (EE) and Clause 4 of the said Development Agreement. They read as under:

• "EE" (A) SECOND DEVELOPER shall irrevocably agree and undertake to takeover, pay, discharge and settle, within period of 12 months from date hereof, the debts and liabilities of the First Developer towards the investors etc. to the tune of Rs.17,94,00,325/- (Seventeen Crores Ninety Four Lakhs and Three Hundred Twenty Five Only) out of that the owners, First Developer and Second Developer has already paid Rs.5,25,16,370/- (Five Crores Twenty Five Lakhs Sixteen Thousand and Three Hundred Seventy Only) to the investors as mentioned in Annexure 'VII' (Part 1 and Part 2) and the liabilities as mentioned in Annexure VII (Part 3) annexed hereto or more in lieu of the liability of the Second Developer to pay to the First Developer towards full satisfaction of the balance consideration of Rs.13,90,94,988/- (Thirteen Crores Ninety Lakhs Ninety Four Thousand and Nine Hundred Eighty Eight Only) under the First Agreement within the period of 12 months (twelve months). In the event, if any investor (s) is/are unable to get settled due to his absence or due to any unreasonable demand, the Second Developer shall take over the liability and hereby indemnifies and keep indemnified the owners and First Developer.

• ... ... …

• (4) The Owners and the First Developer have agreed to accept consideration in following manner:

• The Allottee and Second Developer shall irrevocably agree and undertake to takeover, pay, discharge and settle, within period of 12 months from date hereof, the debts and liabilities of the First Developer towards the investors etc to the tune of Rs.17,94,00,325/- (Seventeen Crores Ninety Four Lakhs and Three Hundred Twenty Five Only) out of that the owners, First Developer and Second Developer has already repaid R.5,25,16,370/- (Five Crores Twenty Five Lakhs Sixteen Thousand and Three Hundred Seventy OnlY0 to the investors as mentioned in Annexure 'VII' (Part 1 and Part 2) and the liabilities as mentioned in Annexure VII (Part 3) annexed hereto or more in lieu of the liability of the Second Developer to pay to the First Developer towards the balance consideration of Rs.13,90,94,988/- (Thirteen Crores Ninety Lakhs Ninety Four Thousand and Nine Hundred Eighty Eight Only) under the First Agreement within the period of 12 months (Twelve months). In the event, if any investor (s) is/are unable to get settled dues in his absence or due to any unreasonable demand, the Second Developer shall take over the liability and hereby indemnifies and keep indemnified the Owners and the First Developer, if the payment of amount of settlement exceeds Rs.13,90,94,988/- than such excess payable towards settlement shall be borne and paid by the Second Developer alone.

• ... .... …

• 10. That it is mutually agreed and understood between the first developer and second developer that with effect from 1 st April 2016, the First Developer in consultation with the Second Developer will settle all the claims ___ investors as per the list annexed herewith as "Annexure VII", herein referred to as the said ___ to whom they have given allotment in writings of their cumulative investments or otherwise. The Funds as may be required for such settlement _____ defined in clause 4(a) will be provided by the Second Developer along with any additional amount payable to them as may be settled with the Second Developers and such investor with consultation of the First Developer. Such claims shall be settled by the Second Developer within period of 12 months from the date of this Deed and that the Second Developer shall provide proof of payment/settlement to the First Developer.

• 11. It is agreed by the parties hereto that in the event the investors of the First Developer as per list Annexed herewith desire to continue of his/her/their investment with the Second Developer when the balance receivable consideration & all other charges under the MOFA, shall be receivable by the Second Developer of such terms and conditions which may agree upon between such investor/s and the Second Developer and further writings. MoU or Agreements will be executed between the Second Developer. It is agreed, admitted and confirmed by the Second Developer that the Owners/First Developer or their nominees has made payment of Rs.21,69,500/- for such settlement on behalf of Second Developer and that the Second Developer shall reimburse the same to the Owners/First Developer or their nominees of confirmation of the same on execution of this Agreement. The Second Developer do hereby agree and undertake to indemnify and keep indemnified the Owners/First Developers including the respective heirs, executors, administrators and/or successors against any loss, damage, fine, penalties, legal proceedings and expenses that may be suffered by, imposed on or taken against the Owners/First Developer by any of the investors/creditors mentioned in Annexure 'VII'.

• 12. The Owners/First Developer hereby confirm and record that there is no other investors save and accept shown in investors' list being Annexure VII hereto and the First Developer further undertake that if any investor left or whose name is not in the list shall be settled by the First Developers only at their own cost and expenses."

# 12. A conjoint reading of the aforesaid clauses indicates that the parties had agreed that the Appellant (Second Developer) shall pay, discharge and settle, within a period of 12 months from the date of the said Agreement, the debts and liabilities of the first developer towards the investors to the tune of Rs. 17,94,00,325/-. Part of the said amount was already paid. The balance amount was to be paid by the second developer for the said purpose.

# 13. What followed is of critical salience. The parties agreed that "if any investor (s) is/are unable to get settled due to his absence or due to any unreasonable demand, the second developer shall take over the liability." This recital clearly indicates that the parties were alive to the fact that some of the investors may not agree to the settlement of their claim in the manner proposed by Respondent No.2 and the Appellant and, thus, a provision was made that the second developer-Appellant would take over the liability arising out of the said claim.

# 14. The aforesaid intent of the parties is further fortified by the express 'indemnity' given by the second developer. The Appellant further agreed that it would indemnify and keep indemnified the owners and first developer against any loss, damage, fine, penalties, legal proceedings and expenses that may be suffered by, imposed on or taken against the owners/first developer by any of the investors/creditors mentioned in Annexure VII.

# 15. In the face of the aforesaid clear and explicit recitals in the Development Agreement, the submission on behalf of the Appellant that the liability of the Appellant-second developer was confined to payment of the consideration to facilitate the refund of the amount calculated by the first developer (R1) cannot be acceded to, even without delving into the aspect of the binding character of the said Development Agreement inter se developers on the rights of Allottees.

# 16. On first principles, since the Allottees were not parties to the Development Agreement dated 17th October 2017, the contract can never be said to have been novated and, thus, the mutual understanding between the first and second developer would not impinge upon the rights of the Allottees.

# 17. From a perusal of the Development Agreement dated 17 th October 2017, it also becomes abundantly clear that Respondent No. 2 and the Appellant intended to run roughshod over the rights of the Allottees by terming them as investors. True, in the ultimate analysis, the nomenclature is of no consequence. However, the repeated reference to the Allottees, from whom the first developer (R2) had accepted valuable consideration many years ago, and had also issued the allotment letter with particulars of the apartment and the dimensions thereof, as "investors" betrayed a devious design to trample upon the rights of the Allottees.

# 18. In Clause(d) of Section 2 of the Real Estate (Regulation and Development) Act, 2016 ("the RERA, 2016"), "allottee" in relation to a real estate project inter alia means a person to whom a plot, apartment or building, as the case may be, has been allotted, sold (whether as freehold or leasehold) or otherwise transferred by the promoter. Respondent No.1 was thus an Allottee as all the attributes of allotment of the apartment were squarely met.

# 19. The thrust of the submission of Mr. Vakil that, under the terms of the Development Agreement dated 17th October 2017, the liability of the Appellant was restricted to refunding the amount along with interest, is not borne out by the very terms of the Development Agreement. Moreover, the submission is in the teeth of the statutory mandate contained in the RERA, 2016 and, in fact, has the propensity to render the protection to the consumers in the real estate sector envisaged by the RERA, 2016, completely nugatory. Under no circumstances, the promoter can be permitted to present a fait accompli to an Allottee in flagrant violation of the contractual and statutory obligations.

# 20. Suffice to note that, under Section 18 of the RERA, 2016, it is the choice of the Allottee to either seek a refund, alongwith interest and compensation, or seek the delivery of the apartment in accordance with the terms of the contract, and, in the latter case also the promoter is liable to pay interest at such rate as may be prescribed.

# 21. The decision of the Supreme Court in the case of Newtech Promoters and Developers Private Limited Vs State of Uttar Pradesh and Ors,1 underscores an absolute and unqualified right of the Allottee to be paid interest on the amount paid by Allottee in the event the Allottee elects to seek the refund. The choice given to the Allottee under the proviso to Section 18(1) of the RERA, 2016 cannot be diluted on the premise that the only right of the Allottee is to seek the refund of the amount paid along with interest. In substance, the right to seek the apartment, agreed to be sold, is the primary right of the Allottee. Therefore, the submission on behalf of the Appellant that the Appellate Tribunal could not have directed the Appellant to deliver the possession of the apartment to the Allottee does not merit countenance.

# 22. The desperate submissions on behalf of the Appellant that the apartment, of the dimension agreed to be allotted to the Allottee by the first developer, is not available in the buildings constructed by the Appellant in accordance with the sanctioned plan, and that before the passing of the impugned order all the apartments in the project have been sold and, therefore, it is is impossible for the Appellant to comply with the directions of the Appellate Tribunal, can only be said to be disingenuous.

# 23. Firstly, it is imperative to note, the first developer professed to offer a refund of the amount paid by the Allottee by expressly conceding that the project could not be developed on account of operational difficulties and paucity of funds to develop the project. Secondly, the Appellant professed to terminate the allotment on the specious ground that it was impossible to allot the apartment to the Allottee at the agreed consideration in view of the increase in the cost of construction. Alleged impossibility of performance was thus a subterfuge. Financial unviability can never be a ground to sustain the defence of impossibility of performance. No case of supervening impossibility so as to attract the doctrine of frustration of contract was sought to be urged on behalf of the Appellant. (Delhi Development Authority Vs Kenneth Builders And Developers Private Limited and Ors)2

# 24. What exacerbates the situation is the manner in which the unsold apartments were shown to have been sold on 14 th November 2025, a fortnight before the passing of the impugned order. In the disclosure made on 30th September 2025, a number of apartments were shown as unsold. In the further disclosure, many of those apartments were shown to have been sold on the same day, i.e., 14 th November 2025. Thus, I find substance in the submission of Mr. Gala that the clearance of the entire inventory cannot be a matter of sheer coincidence.

# 25. Mr. Vakil attempted to salvage the position by canvassing a submission that there was no restraint on the sale of the unsold units. This submission is required to be noted to be repelled.

# 26. Having clearly undertaken the liability to satisfy the claims of the Allottees, who did not agree to settle their claims and having also agreed to indemnify the first developer and the owners, it would be naive to believe that the Appellant could not foresee the situation that may unfold. The alleged impossibility of performance, now sought to be urged, was thus brought about by disingenuous conduct of the Appellant and Respondent No.2, which commenced with terming the Allottees as "investors".

# 27. For the foregoing reasons, this Court does not find any infirmity in the impugned order. No question of law, much less a substantial question of law, arises for consideration. The Appeal, therefore, deserves to be dismissed with costs.

# 28. Hence, the following order:

ORDER:

(i) The Appeal stands dismissed with costs of Rs. 1,00,000/- (Rupees One Lakh), to be paid by the Appellant to Respondent No.1, within a period of four weeks from today.

(ii) In view of the dismissal of the Second Appeal, the Interim Application does not survive and accordingly stands dismissed.

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