Rs 310 cr loan case: NCLT brings Madhapur land into Butta Infra liquidation estate | Hyderabad News

Hyderabad: A prime 9,559 square yard property at Khanamet in Madhapur has been brought into the liquidation estate of Butta Infrastructure Private Limited after the National Company Law Tribunal (NCLT) ruled that LIC Housing Finance failed to establish that it had realised its security interest within the time prescribed under insolvency regulations.In a significant order that could impact recovery proceedings linked to the developer’s insolvency, the Hyderabad bench-I of the NCLT held that the lender had neither completed recovery of the asset nor produced documentary evidence to prove that such recovery efforts had culminated in realisation of the secured property.The bench, comprising judicial member Rajeev Bhardwaj and technical member Sanjay Puri, allowed an application filed by liquidator Gonugunta Murali on Oct 7, directing that the Madhapur property be treated as part of the company’s liquidation estate.The dispute stems from a ₹310 crore loan availed by Butta Infrastructure, which was secured against properties in Banjara Hills and Madhapur. While the company entered the corporate insolvency resolution process (CIRP) on March 1, 2021, liquidation was ordered on Feb 24, 2022.LIC Housing Finance had relinquished its security interest over a 5,426 square yard property in Banjara Hills but opted to pursue separate recovery of the Madhapur asset under Section 52 of the Insolvency and Bankruptcy Code, which permits secured creditors to realise their security interest outside the liquidation process.The lender argued that its recovery efforts were delayed due to litigation. It pointed to a stay granted by Telangana high court in favour of lessee Meridian Educational Society against possession proceedings. The stay remained in force until Nov 14, 2022.LIC Housing Finance also cited a “nil” valuation assigned to the Madhapur property, attributing it to pending proceedings before the Supreme Court. It further questioned the liquidator over the failure to sell the Banjara Hills property.Murali, however, contended that the valuation exercise was incomplete as the valuer did not have access to all relevant documents. He argued that inclusion of the survey number in the prohibited properties list was one of the reasons for the ‘nil’ valuation. The liquidator also alleged that the lender’s insistence on fixing a reserve price of ₹117 crore had prevented the sale of the Banjara Hills asset and sought inclusion of the Madhapur property in the liquidation estate under Regulation 21A.After examining the record, the tribunal found no material to support LIC Housing Finance’s contention that it had initiated and completed recovery through sale of the secured asset. The bench noted that even the lender’s claim regarding proceedings before a magistrate was unsupported by documentary evidence.The tribunal further held that even if the 180-day period prescribed under Regulation 21A was calculated from the date the high court stay was lifted, the deadline would have expired on May 13, 2023.Holding that the lender had failed to comply with the regulatory requirements governing realisation of secured assets, the NCLT directed that the Madhapur property be included in the liquidation estate. The order does not record any completed sale of the asset and does not deal with separate litigation concerning the properties.