The NCLAT, New Delhi vide its judgment in the matter of Real Estate Regulatory Authority vs. M/s D.B. Corp Limited and Anr., inter alia, dealt with the following questions:

  • firstly, whether amounts accruing on account of a barter agreement could be ascertained as an ‘Operational Debt’ for the purposes of maintainability of an application filed section 9 of the IBC; and
  • secondly, whether any party, as in the present case the RERA which was not involved in the proceedings before the adjudicating authority, had the locus to file an appeal under section 61(1) of the IBC.


The NCLAT answered both the questions in the affirmative and held that in so far as the issue of locus for appealing an order of the Adjudicating Authority is concerned, the expression “any person aggrieved by the order of the Adjudicating Authority” as used in section 61(1) of the IBC is not limited, and any person being affected by the decision of the Adjudicating Authority had the right to appeal before the NCLAT.


Further, while dealing with the issue of determining “Operational Debt” arising from a barter agreement, the NCLAT held that non-payment of debt is sine qua non for issuing demand notice under section 8 of the IBC. Hence, unless the Operational Creditor has the right to payment against the Corporate Debtor, no operational debt could arise to enable the Operational Creditor to take recourse under the IBC.


In this regard, the NCLAT then deliberated upon the expression ‘payment’ for the applicability of sections 8 and 9 of the IBC and relied upon the judgment of the Supreme Court in Jaypee Kensington Boulevard Apartments Welfare Association and Ors. v. NBCC (India) Ltd. and Ors. wherein the Supreme Court, while considered the expression ‘payment’ as used in section 30(2) of the IBC, held that the expression payment only refers to the payment of money and not anything of its equivalent. In view thereof, the NCLAT held that no operational debt was due by the Corporate Debtor.


By way of the said judgment, the NCLAT has circulated a flash warning to all the business developers, especially indulged in the real estate business to wary-off from entering into malicious contracts to defraud the investors and the regulatory authorities.