{"id":625,"date":"2026-07-08T11:18:40","date_gmt":"2026-07-08T11:18:40","guid":{"rendered":"https:\/\/mudralegal.com\/blog\/?p=625"},"modified":"2026-07-08T11:54:37","modified_gmt":"2026-07-08T11:54:37","slug":"can-a-bank-claim-money-from-flats-already-sold-to-homebuyers-understanding-the-nclat-judgment-in-kotak-mahindra-bank-v-resolution-professional-of-universal-buildwell-pvt-ltd","status":"publish","type":"post","link":"https:\/\/mudralegal.com\/blog\/can-a-bank-claim-money-from-flats-already-sold-to-homebuyers-understanding-the-nclat-judgment-in-kotak-mahindra-bank-v-resolution-professional-of-universal-buildwell-pvt-ltd\/","title":{"rendered":"Can a Bank Claim Money from Flats Already Sold to Homebuyers? Understanding the NCLAT Judgment in Kotak Mahindra Bank v. Resolution Professional of Universal Buildwell Pvt. Ltd."},"content":{"rendered":"\t\t
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When a real estate company enters insolvency, a common conflict arises between banks<\/strong> and homebuyers<\/strong>. Banks often claim that properties mortgaged to them should be sold to recover outstanding loans, while homebuyers argue that they have already paid for their flats and should not lose their rights.<\/span><\/p>\n

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This exact issue came before the National Company Law Appellate Tribunal (NCLAT)<\/strong> in Kotak Mahindra Bank Limited v. Resolution Professional of Universal Buildwell Private Limited (Company Appeal (AT) (Insolvency) No. 661 of 2021)<\/strong>, decided on 11 April 2023<\/strong>.<\/span><\/p>\n

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The judgment is significant because it clarifies that units already allotted to homebuyers through Builder Buyer Agreements cannot be treated as free assets available for repayment of a bank’s debt<\/strong>, even if the sale deed has not yet been executed.<\/span><\/p>\n

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In this article, we explain the judgment in simple language and discuss its implications for homebuyers, banks, builders, and insolvency professionals.<\/span><\/p>\n

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Background of the Case<\/strong><\/span><\/h3>\n

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Universal Buildwell Private Limited, a real estate developer, underwent the Corporate Insolvency Resolution Process (CIRP)<\/strong> under the Insolvency and Bankruptcy Code, 2016 (IBC).<\/strong><\/span><\/p>\n

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During the insolvency process, a Resolution Professional (RP) was appointed to manage the affairs of the company and prepare a Resolution Plan for revival.<\/span><\/p>\n

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One of the secured financial creditors was Kotak Mahindra Bank Limited<\/strong>, which had financed the developer and held a mortgage over one of its commercial projects known as Universal Business Park<\/strong>.<\/span><\/p>\n

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As required under the IBC, two registered valuers were appointed to determine the fair value<\/strong> and liquidation value<\/strong> of the company’s assets.<\/span><\/p>\n

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However, when the valuation reports were prepared, the liquidation value assigned to Kotak Mahindra Bank’s security interest in the Universal Business Park project was shown as NIL (Zero).<\/strong><\/span><\/p>\n

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The Bank challenged this finding before the NCLAT.<\/span><\/p>\n

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Why Did Kotak Mahindra Bank Challenge the Resolution Plan?<\/strong><\/span><\/h3>\n

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Kotak Mahindra Bank argued that the valuation reports themselves identified unsold commercial space worth approximately \u20b923.31 crore<\/strong>.<\/span><\/p>\n

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According to the Bank:<\/span><\/p>\n

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