NCLT voids Rs 525-cr guarantee, Mumbai land transfer in JLS Realty dispute

Mumbai: The National Company Law Tribunal (NCLT) invalidated a series of transactions involving JLS Realty Pvt Ltd, including the transfer of a prime redevelopment land parcel in Mumbai to Spenta Suncity and a mortgage and corporate guarantee linked to Rs 525 crore in financing involving IIFL.

In an order pronounced on October 23, the Mumbai bench of the tribunal also invalidated the appointment of two IIFL-linked employees as directors, declared the attempted removal of an existing director illegal, reversed disputed share transfers and ordered restoration of the company's land.

The Bench, comprising Judicial Member K R Saji Kumar and Technical Member Anil Raj Chellan, held that the sequence of events was "demonstrative of a deliberate design", constituting oppression marked by a "lack of probity and fair dealing".


The ruling follows five years of litigation initiated by Moniveda Consultants LLP and Rajat Jhunjhunwala against Shajas Developers, JLS Realty, and other respondents.

The dispute concerns the Shankarwadi slum-redevelopment project in Jogeshwari East, Mumbai, spread over approximately 21,727 square metres, with estimated saleable development potential of about 11 lakh square feet.

The tribunal's findings concern a series of transactions through which JLS Realty's redevelopment land was transferred to Spenta, while the company assumed substantial financial obligations linked to borrowings raised by the latter.

The business transfer agreement, disclosed by Spenta only during final arguments in June 2026, recorded cash consideration of merely Rs 1 lakh, alongside the assumption or settlement of liabilities of about Rs 330 crore.

On September 9, JLS Realty also purportedly created a mortgage and corporate guarantee securing Rs 525 crore in non-convertible debentures associated with Spenta.

The tribunal observed that there was "no apparent rational commercial benefit" to JLS Realty, which was left without its principal asset while assuming substantial financial obligations.

The bench also observed that Spenta had "benefited from its own default" and could not claim to be an innocent third-party purchaser in the circumstances.

The tribunal declared the business transfer agreement and conveyance void and directed restoration of the land to JLS Realty, subject to securities and obligations existing on the date of transfer.

Separately, it declared the mortgage and corporate guarantee null and void and of no legal effect.

Meanwhile, the tribunal examined changes in JLS Realty's management following a purported extraordinary general meeting on February 24, 2021, through which Mamta Digvijay Singh and Mohammed Shahid were appointed directors.

Jhunjhunwala, who was a director at the time, disputed the validity of the meeting and subsequent steps taken to remove him.

The tribunal found that the respondents had not established the validity of the meeting and the process through which the appointments were made. It declared the meeting and its resolutions null and void.

The dispute also involved a claim by Indian financial services group IIFL that it held more than 95 per cent of JLS Realty's shares following the invocation of a share pledge.

The tribunal found that the respondents had failed to establish the transfer of the shares from the debenture trustee to IIFL, including by producing the original physical share certificates and transfer documents despite directions during the proceedings.

It consequently declared the transfers arising from the pledge invocation, along with subsequent transfers, null and void and directed restoration of the earlier shareholding position.

The ruling, however, preserved the debenture trustee's right to pursue any permissible claim in the insolvency proceedings.