2026 INSC 449Reportable IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO. 1526 OF 2023 Alpha Corp Development Private Limited … Appellant versus Greater Noida Industrial Development Authority (GNIDA) and others … Respondents with C.A. No. 1743 of 2023 C.A. No. 2491 of 2023 C.A. No. 2466 of 2023 C.A. Nos. 2406-2407 of 2023 C.A. No. 3438 of 2023 C.A. Nos. 3435-3437 of 2023 C.A.
No. 2756 of 2023 C.A. No. 2763 of 2023 C.A. No. 4619 of 2023 and C.A.(Diary) No. 19132 of 2023 2 J U D G M E N T SANJAY KUMAR, J 1. By judgment dated 30.01.2023, the National Company Law Appellate Tribunal, Principal Bench, New Delhi1, disposed of three company appeals filed by Greater Noida Industrial Development Authority (GNIDA), viz., Company Appeal (AT) (Ins) Nos. 180, 629 and 630 of 2022, and set aside the orders dated 05.04.2021, 08.06.2021 and 07.12.2021 passed by the National Company Law Tribunal, Bench III, New Delhi2.
2.
By the order dated 05.04.2021 passed in C.A. No. 751 of 2019 in CP(IB)-401(ND)/2017, the NCLT had approved the resolution plan submitted by Roma Unicon Designex Consortium (Roma). This order was challenged by GNIDA in Company Appeal (AT) (Ins) No. 630 of 2022. By its order dated 08.06.2021 in IA No. 05 of 2020 in CP(IB)-401(ND)/2017, the NCLT had approved the resolution plan submitted by Alpha Corp Development Private Limited (Alpha).
This order was assailed by GNIDA in Company Appeal (AT) (Ins) No. 629 of 2022. By the order dated 07.12.2021 in IA No. 4235 of 2021 filed by Roma in CP(IB)-401(ND)/2017, the NCLT directed GNIDA to give effect to the resolution plan approved by it by the order dated 05.04.2021. This order was challenged before the NCLAT by GNIDA in Company Appeal (AT) (Ins) No. 180 of 2022. 1 For short, ‘the NCLAT’ 2 For short, ‘the NCLT’ 3 3.
Aggrieved by the NCLAT’s judgment dated 30.01.2023, the present appeals were filed under Section 62 of the Insolvency and Bankruptcy Code, 20163. We may now note the details of these appeals. Civil Appeal Nos. 1526 and 1743 of 2023 were filed by Alpha and one Sanjay Bhalla respectively in so far as the judgment pertained to Company Appeal (AT) (Ins) No. 629 of 2022. Roma and Earth Towne Flat Buyers Welfare Association filed Civil Appeal Nos. 2491 and 2466 of 2023 respectively against the judgment in the context of Company Appeal (AT) (Ins) No. 630 of 2022.
Civil Appeal Nos. 2406-2407 of 2023 were filed by Earth Infrastructures Limited, the corporate debtor (CD), against the judgment in the context of Company Appeal (AT) (Ins) Nos. 629 and 630 of 2022. Civil Appeal No. 3438 of 2023 was filed by Earth Copia Owners Society in relation to Company Appeal No. (AT) (Ins) No. 629 of 2022. Civil Appeal Nos. 3435-3437 of 2023 were filed by Earth United Consumer Association assailing the judgment apropos all three appeals.
Civil Appeal No. 2756 of 2023 was filed by GNIDA aggrieved by denial of certain reliefs by the NCLAT in Company Appeal (AT) (Ins) No. 629 of 2022. Civil Appeal No. 2763 was also filed by GNIDA on similar grounds in relation to Company Appeal (AT) (Ins) No. 630 of 2022. Civil Appeal No. 4619 of 2023 was filed by Unific TechOne Patrons Independent Association (UTOPIA) against 3 For short, ‘the Code’ 4 the judgment insofar as it pertained to Company Appeal (AT) (Ins) No. 629 of 2022.
Lastly, Earth Property Buyers Association filed Civil Appeal (Diary) No. 19132 of 2023 in relation to all three appeals.
4. As regards the appeals filed under Civil Appeal (Diary) No. 19132 of 2023, we find that there is a delay of 34 days in their filing. These appeals were filed only on 04.05.2023 against the judgment dated 30.01.2023. Section 62(2) of the Code empowers this Court to condone delay in filing up to 15 days but not more.
These appeals are, thus, clearly barred by time and cannot be entertained. The appeals filed under Civil Appeal (Diary) No. 19132 of 2023 are, therefore, dismissed on this short ground.
5. By order dated 13.04.2023 passed in Civil Appeal No. 1526 of 2023 and batch, this Court directed the parties to maintain status quo.
6. The ostensible genesis of this litigation is the corporate insolvency resolution process (CIRP) initiated by one Deepak Khanna, a financial creditor, against Earth Infrastructures Limited (EIL), the CD, vide Company Petition IB-401(ND)/2017, under Section 7 of the Code.
However, long prior thereto, GNIDA, an authority constituted under Section 3 of the Uttar Pradesh Industrial Area Development Act, 1976, allotted 73,942 square metres of land in Large Group Housing/Builders’ Residential Plot No. GH-04, Sector 01, Greater Nodia, Uttar Pradesh, to a consortium, comprising EIL, Raus Infras Limited and Shalini Holdings Limited, under allotment letter dated 19.03.2010. The letter indicated that 5 the Builders Scheme [Scheme Code BRS-01/2010-(I)] would form part of the allotment letter and would be binding on the allotees.
GNIDA had formulated this scheme for plots of over 60,000 square metres area, inviting tenders for allotment of such plots on lease for 90 years. The terms and conditions for allotment/lease of such plots were detailed in the scheme. In the event the bidder was a consortium, Clause 8 thereof had application. Clause 8 reads thus: - ‘8. In case bidders have formed a consortium: - (a) Members of the consortium will have to specify one Lead Member who alone shall be authorized to correspond with the Authority.
The Lead member should be the single largest shareholder having at least 26% share in the consortium. The shareholding of the lead member in the consortium shall retain at least 26% till the completion certificate of at least one phase of the project is obtained from the Greater Noida Authority. Each member of the consortium with equity stake of at least 10% will be considered as a "relevant member”.
The Lead Member of the consortium must necessarily be a Firm/Company registered in India with the appropriate statutory Authority.
(b) The lead member and the relevant members should jointly fulfil the minimum requirement of net worth, solvency, turnover and experience. In case the tenderer/consortium member is a company, the qualifications of the holding company(ies) of the lead member and the relevant members or their subsidiary companies shall also be considered as the qualifications of the applying company/consortium member.
(c) In case of a Consortium, the members shall submit a Memorandum of Agreement (MOA) conveying their intent to jointly apply for the scheme(s), and in case a plot is allotted to them, the MOA shall clearly define the role and responsibility of each member in the consortium, particularly with regard to arranging debt and equity for the project and its implementation.
MOA should be submitted in original duly registered/notarized with the appropriate authority.
(d) The members shall submit a registered/notarized Memorandum of Agreement (MOA) conveying their intent to jointly apply for the scheme, and in case a plot is allotted to them, to form Special Purpose Company(ies), hereinafter called SPCs, that will subsequently carryout all responsibilities as the allottee.
The registered MOA must specify the equity shareholding of each member of the Consortium in the proposed SPCs. The SPCs must necessarily be a Firm/Company registered in India with the appropriate statutory Authority. 6 (e) Execution of the lease deed will be made in favour of either the relevant member(s) or the Special Purpose Company(ies) (SPC)(s), which should be a registered firm or an incorporated company.
The relevant members/SPC's may, separately, or together in any combination, sub-divide this allotted plot. However, the area of each of such sub divided plots proposed for execution of lease deed, as described above, should not be less than 20,000 sq. mtrs and the said sub division should be in accordance with the planning norms of the GNIDA. The lead member of the consortium shall have to retain at least 26% of the shareholding as per MOA, till the completion certificate of at least one phase of the project is obtained from Greater NOIDA Authority.’ 7.
Thus, Clause 8(e) of the scheme required a consortium to form a ‘Special Purpose Company’ (SPC) to undertake development on the allotted plot. Accordingly, the consortium of EIL, Raus Infras Limited and Shalini Holdings Limited incorporated Earth Towne Infrastructures Private Limited (ETIPL) on 21.07.2010 as the SPC. Lease deed dated 01.09.2010 was thereupon executed by GNIDA leasing out the subject plot to ETIPL for 90 years, commencing from 01.09.2010.
The lease deed recorded that GNIDA had approved the name and status of ETIPL on the request of the consortium to develop and erect the project on the plot. It was also noted that the lessee, ETIPL, was a SPC, comprising EIL (78% shareholding – lead member), Raus Infras Limited (11% shareholding – relevant member) and Shalini Holdings Limited (11% shareholding – relevant member). The lease deed also recorded that GNIDA had been informed that the SPC members had agreed amongst themselves that EIL would always remain the lead member of the SPC and its shareholding therein would remain unchanged till the occupancy/completion certificate of at least one phase 7 of the project was obtained from GNIDA.
The lease deed, however, permitted the SPC to transfer/sell up to 49% of its shareholding, again subject to the same aforestated condition. The total premium payable under the lease deed was ₹74,26,95,000/-. The lease deed noted that 10% of the premium plus the excess area amount, adding up to ₹7,46,91,000/-, was paid by the lessee, ETIPL. There was to be a moratorium of 24 months, during which period, only the interest was payable in half-yearly instalments and upon expiry of said period, the balance 90%, i.e., ₹66,84,25,500/-, was to be paid in 16 half-yearly instalments.
Instalment Nos. 1 to 4, the half-yearly interest payments, commenced from 19.09.2010, and the premium payments started from 19.09.2012, with the final instalment payable on 19.03.2020. After execution of the lease deed, an unregistered development agreement was entered into on 09.09.2010 between ETIPL and EIL, whereby ETIPL conferred the right to develop the land upon EIL. The area-sharing ratio was stipulated as 18% to ETIPL and 82% to EIL.
8.
Separately and much earlier, GNIDA had allotted 60,705 square metres of land in Plot No. 1 at Sector Tech Zone area in Greater Nodia Industrial Development Area, District Gautam Budh Nagar, to NIIT Multimedia Limited for development of IT industries and IT enabled services for 90 years. Pursuant thereto, lease deed dated 04.02.2008 was executed by GNIDA in favour of NIIT Multimedia Limited over a reduced 8 area of 58,866 square metres.
Pertinently, this company became a subsidiary of EIL in 2011 and its change of name as Neo Multimedia Limited was approved by GNIDA on 21.02.2011. Development Agreement dated 25.04.2011 was executed by and between Neo Multimedia Limited and EIL, whereby the development on the subject plot of land was to be undertaken by EIL.
9. GNIDA had also allotted 20,235 square metres of land in Plot No. 48, Sector Knowledge Park-V, in Greater Nodia Industrial Development Area, District Gautam Budh Nagar, to Nishtha Software Private Limited, another subsidiary of EIL, for development of facilities relating to IT and IT enabled services.
Pursuant thereto, GNIDA executed lease deed dated 01.09.2009 in its favour for 90 years for an increased area of 20,911.24 square metres. Memorandum of Understanding (MoU) dated 20.02.2010 was executed between Nishtha Software Private Limited and EIL, whereby development on the plot was to be undertaken by EIL.
10. In effect, EIL was to undertake the development on all three plots of land leased out by GNIDA.
The residential project on the land leased out to ETIPL was named ‘Earth Towne’ while the project to be developed on the land leased to Neo Multimedia Limited was named ‘Earth TechOne’ and the project on the land leased to Nishtha Software Private Limited was called ‘Earth Sapphire Court’. Building permissions were obtained by the respective lessees of these plots from GNIDA and a large number of 9 home/office space buyers booked homes/office spaces in these projects, paying substantial monies to the developer, EIL, and in some cases, to the lessees.
The projects were also registered with the Uttar Pradesh Real Estate Regulatory Authority.
11. While so, at the instance of Deepak Khanna, a financial creditor, CIRP was initiated against EIL. His application under Section 7 of the Code was admitted by the NCLT on 06.06.2018. Initially, one Surinder Kumar Juneja was appointed as the Interim Resolution Professional (IRP) for EIL, the CD. The NCLT caused public announcement of initiation of the CIRP against EIL under Section 13 of the Code on 12.06.2018.
The Committee of Creditors (CoC) was constituted and its first meeting was held on 05.12.2018. Later, Akash Singhal was substituted as the Resolution Professional (RP) by the CoC. The CoC comprised the HDFC Bank and 4,229 allottees, i.e., home/office space buyers.
12. ‘Invitation for Expression of Interest’ in Form G was issued by the RP on 19.04.2019 in respect of all the projects. However, there was no response thereto and the RP then invited resolution plans project-wise also, as an alternative, in addition to plans for all the projects.
The revised Form G was published on 22.05.2019. In this regard, we may refer to the ‘Clarification’ to Regulation 36A (1) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, whereby a Resolution Professional, after approval of 10 the CoC, is empowered to invite a resolution plan for each real estate project or group of projects of the corporate debtor.
This clarification was inserted with effect from 15.02.2024, vide Notification dated 15.02.2024. Even before this amendment, the NCLAT and this Court have affirmed that the CIRP in real estate cases can be project-specific, limiting such insolvency process to projects in default so as to ensure protection of homebuyers in other projects, which still remain viable. In Indiabulls Asset Reconstruction Company Limited vs.
Ram Kishore Arora and others4, this Court refused to interfere with the NCLAT’s order permitting insolvency process project-wise. More recently, in Mansi Brar Fernandes vs. Shubha Sharma and another5, this Court observed that resolution of real estate insolvency should, as a rule, proceed on a project-specific basis rather than against the corporate debtor in its entirety, unless circumstances justify otherwise, as this would protect solvent projects and genuine homebuyers from collateral prejudice.
13.
Pursuant to the revised Form G, three resolution applicants came forward, viz., BPT Infra Projects Private Limited, Roma and Alpha. BPT Infra Projects Limited’s plan was rejected by the CoC. Roma’s resolution plan for ‘Earth Towne’ was approved by the CoC in its 14th meeting held on 26.08.2019. After the CoC’s approval, GNIDA addressed letter dated 4 AIR 2023 SC 2273 5 (2025) 259 Comp Cas 769 = 2025 SCC OnLine SC 1972 11 18.09.2019 to the RP, stating that the dues payable to it by ETIPL were ₹148,37,46,148/-.
The NCLT approved the acceptance of Roma’s resolution plan, vide order dated 05.04.2021 passed in C.A. No. 751 of 2019 in CP (IB)-401(ND)/2017.
14. At this stage, we may note that, apart from the projects that were to be developed by EIL on the plots leased out by GNIDA, a separate project named ‘Earth Copia’ was also being undertaken by it on freehold land in Sector 112, Gurugram, Dwarka Expressway, Haryana.
This land had nothing to do with GNIDA and, in consequence, no dues were payable to it in relation thereto. Alpha’s resolution plan covered four projects of EIL, including Earth Copia. Alpha’s resolution plan was approved by the CoC at its 19th meeting held on 11.11.2019. Thereafter, it was approved by the NCLT on 08.06.2021 in relation to three projects, viz., Earth TechOne, Earth Sapphire and Earth Copia.
The fourth project, viz., Earth Iconic, was dealt with separately by the NCLT in another CIRP initiated by Celestial Estates Private Limited and Alpha’s resolution plan was approved for that project in that case. The order dated 08.06.2021 passed by the NCLT, therefore, covered the remaining three projects. However, as stated earlier, Earth Copia had nothing to do with GNIDA. Notably, one of the appeals filed before the NCLAT by GNIDA assailed NCLT’s order dated 08.06.2021, but no distinction was drawn by GNIDA between the projects that it had an interest in and Earth Copia, which had nothing to do with it. 12 The impugned judgment dated 30.01.2023 passed by the NCLAT also lost sight of this aspect, as reference was made therein to only two projects, i.e., Earth Sapphire and Earth TechOne, as being the subject matter of NCLT’s order dated 08.06.2021 in the context of Alpha’s resolution plan.
15.
IA No. 4235 of 2021 was filed by Roma in CP (IB) No. 401(ND)/2017 seeking a direction to GNIDA to transfer the leased land in its favour. The application was opposed by GNIDA contending that such transfer would be against the terms of ETIPL’s lease deed. However, the NCLT allowed the IA by order dated 07.12.2021, leading to GNIDA challenging it by way of Company Appeal (AT) (Ins) No. 180 of 2022. The NCLAT passed an interim order on 01.06.2022 in GNIDA’s appeals to the effect that GNIDA was not obliged to transfer the leasehold lands in favour of the successful resolution applicants pursuant to the NCLT’s orders.
This interim order attained finality on 14.07.2022, when this Court dismissed Civil Appeal No. 4748 of 2022 filed by Earth Towne Flat Buyers Welfare Association.
16. The above sequence of events indicates that the land leases were in favour of the CD’s two subsidiaries. As regards Earth Towne, the land allotment was in favour of the consortium, comprising EIL, Raus Infras and Shalini Holdings Limited.
However, as per GNIDA’s own scheme, the SPC, viz., ETIPL, came to be incorporated and a lease was executed by GNIDA in its favour. The lease deed, however, made it clear that the lead member, EIL, was to retain the major shareholding therein, initially shown 13 as 78%, and was to retain its status as the lead member till issuance of the occupancy/completion certificate in relation to at least one phase of the project.
We may also note that EIL, the lead member with 78% shareholding in ETIPL, thereafter increased it to 98%. As per the lease deed, it was the lessee, ETIPL, that was to undertake payment of the interest/premium as per the schedule therein. The paid-up capital of ETIPL was, however, only ₹1 lakh and it was EIL that paid ₹51.88 crores to GNIDA against the interest/premium payable under the lease deed. Admittedly, there was default thereafter in such payments.
GNIDA issued notices to ETIPL in that regard on 04.04.2019, 16.07.2019, 29.01.2020 and 01.05.2020. By the year 2016, EIL had constructed only twelve towers and completed foundation work of five towers in Earth Towne.
17. GNIDA’s complaint before the NCLAT was that the RP did not keep it informed of the proceedings in the CIRP and it was only after approval of Roma’s resolution plan, vide order dated 05.04.2021, that GNIDA was informed of the same by the RP, vide letter dated 26.07.2021.
As per GNIDA, as on 31.03.2022, ETIPL was to pay it ₹215,87,18,190/-. GNIDA also claimed that, as on 24.03.2022, Neo Multimedia Private Limited was liable to pay it ₹19,76,10,064/- and Nishtha Software Private Limited had to pay it ₹11,15,15,009/-. That apart, additional compensation and lease rentals were also allegedly payable. GNIDA claimed that several notices of defaults in payment were issued to these lessees also. 14 18.
Per contra, the other side contended before the NCLAT that GNIDA was fully aware of the fact that the projects were being executed by EIL, as evidenced by its letter dated 11.05.2015 to the Senior Superintendent of Police, Gautam Budh Nagar, wherein GNIDA itself mentioned that EIL was engaged in the construction work. In this context it was argued before the NCLAT that ETIPL was nothing but an alter ego of EIL and this was a fit case to pierce and lift the corporate veil.
It was also contended that the companies had common directors and promoters and ETIPL had no separate business of its own. It was pointed out that the RP sought relevant information/documents from GNIDA in respect of all three projects, viz., Earth TechOne, Earth Sapphire Court and Earth Towne, under his letter dated 28.05.2019 and, therefore, GNIDA could not claim ignorance of the CIRP proceedings.
On this basis, it was argued that GNIDA, having kept silent all through the proceedings, could not seek to overturn the orders passed by the NCLT approving the resolution plans, which were binding on all the stakeholders. Alpha contended before the NCLAT that its resolution plan had been approved at the 19 th CoC meeting held on 11.11.2019 with a whopping 91.39% vote share. According to it, GNIDA filed its claim at a belated stage only on 11.11.2021 with the IRP and not the RP, despite being aware of the CIRP proceedings.
19.
Earth Towne Flat Buyers Welfare Association got impleaded before the NCLAT. Its grievance was that the construction of Earth Towne stood 15 stalled since 2016 and members of the association, being homebuyers, were suffering irreparable loss. The association pointed out that the RP had admitted the claims of 1,878 homebuyers, amounting to ₹438 crore. It stated that its members had met the Additional Chief Executive Officer of GNIDA on 28.06.2017, long before initiation of the CIRP against EIL, but despite the same no steps were taken by GNIDA to either recover its dues or hasten completion of the project.
According to it, the Additional Chief Executive Officer of GNIDA had told them that it would recalculate the principal and interest and check if it could waive the penal interest from 2016 onwards, so as to bring in a new developer for a settlement.
20. The NCLAT also permitted Earth TechOne Patrons Independent Association and Sapphire Patrons Independent Common Association, which claimed to be registered associations of office space buyers in those projects, to participate in the proceedings.
Their complaint was that Earth Sapphire Court had been launched in the year 2010 while Earth TechOne was commenced in the year 2012, whereupon EIL had collected monies from the prospective buyers in both projects. According to them, EIL had promised 12% assured returns which were paid till September, 2015, but no payments were made thereafter. They claimed that a meeting had been held on 20.05.2016, wherein the Chief Executive Officer of GNIDA had warned EIL that action would be taken against it in the light of the grievances put forth by the members of the associations. 16 They further claimed that they had given a representation on 27.07.2016 to GNIDA praying that strict action be taken against EIL, followed by meetings on 08.05.2017 and 16.05.2017.
They claimed that despite such steps being taken, GNIDA had failed to take action against EIL. They contended before the NCLAT that Alpha’s resolution plan contemplated waiver of the dues payable to GNIDA, but if GNIDA refused to waive such dues, the office space buyers undertook to bear the liability. They pointed out that Alpha undertook to complete construction and deliver units to the buyers in five years but the same stood compromised by GNIDA’s stance.
21.
Though it was also argued by the contesting respondents before the NCLAT that GNIDA’s appeals were time-barred, in terms of Section 61(2) of the Code, the NCLAT rejected their contention, as extension of time had been granted by this Court, by freezing limitation, in Suo Moto Writ Petition (Civil) No. 3 of 2020, titled ‘In re: Cognizance for Extension of Limitation’, owing to the Covid-19 pandemic. The appeals were, therefore, held to be within time.
Having considered the matter on merits, the NCLAT framed the following issues for consideration: (I) Whether in the CIRP proceedings of the Corporate Debtor, i.e. Earth Infrastructures Limited, the assets of the land holding companies, i.e., subsidiary of the Corporate Debtor can be treated to be assets of the Corporate Debtor? (II) Whether, in the Resolution Plans submitted by the Successful Resolution Applicants, i.e., Roma Unicon Designex Consortium and Alpha Corp Development Private Limited, the assets of the subsidiary, 17 i.e., lease lands could have been dealt and the Resolution Plan could legally contain a clause for transfer of the lease hold rights by the Appellant in favour of Successful Resolution Applicant without there being any prior permission from the Appellant? (III) Whether assets of the subsidiary companies can be dealt with in Corporate Insolvency Resolution Process of holding Company? (IV) Whether the Appellant was required to be made party to the CIRP proceedings and heard before approval of any resolution plan dealing with the Project land? (V) Whether, Resolution Professional acted within the ambit of I & B Code in giving a certificate that Resolution Plans submitted by Roma Unicon Designex Consortium and Alpha Corp Development Private Limited are in accordance with the provisions of the Code? (VI) Whether Appellant was aware of the development carried out by the Corporate Debtor on the lease land before commencement of the CIRP of the Corporate Debtor? (VII) What is the way out in the facts and circumstances of the present case? 22.
Issues I, II and III were taken up together. The NCLAT noted that, in terms of the ‘Explanation’ to Section 18, the assets of a subsidiary of the corporate debtor could not be included within the term ‘assets’. This observation was made in the context of the leasehold rights having been conferred by GNIDA, not upon EIL, the CD, but upon ETI, which was practically its subsidiary. The same logic was applied to the leasehold rights held by the other subsidiary companies of EIL, viz., Neo Multimedia Limited and Nishtha Software Private Limited.
23.
The NCLAT also noted that the Information Memorandum brought out by the RP did not include the project lands as the assets of EIL. The 18 NCLAT, therefore, opined that there was no occasion for the resolution applicants to include such project lands in their resolution plans. According to the NCLAT, the resolution plans sought to transfer not only the development rights over the project lands but also the title over the lands in favour of third parties, without obtaining prior approval of the lessor, GNIDA.
The NCLAT noted that transfer of lands by GNIDA was subject to the terms in the lease deeds and the permission to transfer the lands was to be granted by GNIDA on fulfilment of the conditions mentioned therein. Ignoring the same, the resolution plans contained provisions, whereby GNIDA was obligated to transfer the project lands to the successful resolution applicants. Observing that GNIDA was not a party to the development agreements/MoU that EIL had with the lessees, its subsidiaries, whereby it undertook the development on the subject lands, the NCLAT held that GNIDA was neither the creditor of EIL, the CD, nor was it a stakeholder in the resolution plans and was, therefore, not bound by them in any manner.
24.
Adverting to the contention that this was a fit case for lifting the corporate veil, reference was made by the NCLAT to the decision of this Court in Vodafone International Holdings BV vs. Union of India and another6, which took note of the legal status of holding companies and 6 (2012) 6 SCC 613 19 subsidiary companies as they were, in essence, separate legal entities. Reference was also made to Jaypee Kensington Boulevard Apartments Welfare Association and others vs.
NBCC (India) Limited and others7, wherein this Court held that only the assets of the corporate debtor could be subjected to the resolution plan and not the assets of its subsidiary. That was also a case involving the grant of leasehold rights to a corporate debtor by the Yamuna Expressway Industrial Development Authority (YEIDA), an authority constituted under Section 3 of the Uttar Pradesh Industrial Area Development Act, 1976, like GNIDA.
This Court held that, without the approval of that authority, no transfer could have taken place even by way of a sub-lease. Reference was also made to the decision of this Court in Municipal Corporation of Greater Mumbai (MCGM) vs. Abhilash Lal and others8, which held to the same effect.
25. The NCLAT then referred to the condition pertaining to transfer in the lease deed dated 01.09.2010 and opined that the resolution plan could not have contained a clause for transfer of that land without GNIDA approving such transfer.
The NCLAT, accordingly, answered Issue No. I, holding that the assets of the three subsidiary companies of EIL, the CD, could not be treated as its assets. Issue No. II was also answered in the negative, holding that the resolution plans of Roma and Alpha could not 7 (2022) 1 SCC 401 = 2021 SCC OnLine SC 253 8 (2020) 13 SCC 234 20 have dealt with the project lands which were leased out to EIL’s subsidiary companies by GNIDA.
Issue No. III was answered on the same lines, holding that the assets of the subsidiary companies could not have been dealt with in the CIRP of the holding company, EIL, without the permission of the lessor, GNIDA.
26. On Issue No. IV, the NCLAT held that GNIDA ought to have been made a party to the CIRP proceedings before approval of any resolution plan involving GNIDA’s project lands. On Issue No.
V, the NCLAT found fault with the RP for not keeping GNIDA informed of the progress of the CIRP despite GNIDA’s letter dated 18.09.2019. The NCLAT concluded that the RP failed to act within the ambit of the Code while certifying that the resolution plans submitted by Roma and Alpha were in accordance with the provisions thereof. The NCLAT, accordingly, directed its Registry to forward a copy of the judgment to the IBBI to examine the work and conduct of the RP and take action as it deemed fit and proper.
On Issue No. VI, the NCLAT held that knowledge of GNIDA about the development being carried out by EIL was not sufficient to be treated as consent for transfer of the lands to the successful resolution applicants.
27. On Issue No. VII, the NCLAT took note of the fact that the homebuyers had approached the Allahabad High Court, which passed an order on 23.02.2016 directing them to represent the matter to the Chief Executive Officer of GNIDA, which was then required to deal with the 21 matter.
Pursuant thereto, complaints were made by two associations of buyers, i.e., of Earth Sapphire Court and Earth TechOne, to the Chief Executive Officer of GNIDA on 27.07.2016, 02.08.2016 and 20.06.2017. Reference was also made to the meeting held with the Chief Executive Officer of GNIDA and the Minister concerned on 11.05.2017. Despite the buyers doing all this, no action was taken by GNIDA. The NCLAT also noted that during the meetings held with the allottees, it was stated on behalf of GNIDA that the issue of penal interest would be considered favourably.
The NCLAT also noted that one of the obligations under the lease deeds that GNIDA had executed in favour of the lessees was that GNIDA would monitor development of the projects. The obligation to monitor the projects, per the NCLAT, included the obligation to ensure that the projects were completed in time and that necessary action would be initiated against defaulting parties. Reference was made by the NCLAT to the decision of this Court in Noida Entrepreneurs Association vs.
Noida and others9, wherein this Court had observed the ‘public trust doctrine’ is a part of the law of the land and has grown from Article 21 of the Constitution. It was noted therein that the power vesting in a public authority should be viewed as a trust coupled with duty, to be exercised in larger public and social interest, and public authorities could not play fast 9 (2011) 6 SCC 508 22 and loose with the powers vested in them.
The NCLAT observed that the facts brought on record demonstrated that hundreds of crores were received from the allottees, who were waiting for the past several years to take possession of the units allotted to them, but the projects stood stalled since 2016. The NCLAT also noted the offer made by the associations of buyers of Earth Sapphire Court and Earth TechOne that they were ready to pay the dues of GNIDA in the interest of development of the projects.
The NCLAT concluded that GNIDA had not been diligent in taking steps for recovery of its dues and was, therefore, not entitled to charge penal interest. The NCLAT, accordingly, directed GNIDA to waive the penal interest and recalculate its dues.
28. The NCLAT opined that the way out for the RP was to make an application along with the associations of buyers of the respective projects to GNIDA, seeking permission for transfer of the lands to prospective resolution applicants who were then to execute the projects after payment of GNIDA’s dues.
The NCLAT left it open to GNIDA to enter into arrangements with such resolution applicants and buyers’ associations for payment of the dues, whereupon it could transfer the lands so that the projects could be developed by the resolution applicants. The RP was directed to publish a fresh Form G, inviting resolution plans with the specific condition that the resolution plans would be presented to the CoC for consideration only after GNIDA’s dues were paid and its permission 23 was obtained for transfer of the leasehold lands.
Roma and Alpha were also permitted to file their resolution plans. GNIDA was directed to recalculate its dues and communicate the same to the RP and the associations, without charging penal interest, within a time frame. The fresh resolution plans submitted by the resolution applicants were to be examined by the RP and placed before the CoC for consideration and approval. GNIDA was made a party to the CIRP proceedings and was held entitled to participate in the process thereafter.
The steps to be taken pursuant to the judgment, till submission of an application by the RP to the NCLT for approval of the plans, if any, were to be completed within six months. The CIRP period was extended by six months from that date. The appeals were disposed of with these directions, setting aside the orders dated 05.04.2021, 08.06.2021 and 07.12.2021 passed by the NCLT.
29. This being the factual milieu, we may first take up the issue of EIL’s Gurugram project, viz., Earth Copia.
The land on which Earth Copia was to be developed was acquired by Aurochem Buildtech Private Limited, a wholly owned subsidiary of EIL, through Collaboration Agreement dated 30.07.2010 with eight landowners. Tripartite Agreement dated 04.05.2012 was then executed, whereby possession and full development rights were transferred to EIL and the landowners’ claims stood fully settled. According to Earth Copia Owners Society, the appellant in Civil Appeal No. 3438 of 2023, it comprised 393 homebuyers of 536 units in Earth 24 Copia and majority of those homebuyers voted in favour of Alpha’s resolution plan dated 15.10.2019.
Earth Copia Owners Society pointed out that GNIDA’s appeals before the NCLAT were only in relation to lands leased out by it to the subsidiary companies of EIL and, therefore, Earth Copia was not part of that litigation. It further pointed out that Alpha’s resolution plan dated 15.10.2019 was severable, as it provided that any portion thereof which was held invalid would not affect the remaining parts, which would survive independently.
It also pointed out that three blocks of the project had been completed up to 90% and the remaining blocks were still in the range of 40-80% completion. The Society contended that the NCLAT erroneously set aside the approval of Alpha’s entire resolution plan without noticing that the order dated 08.06.2021 passed by the NCLT included approval of that resolution plan in relation to Earth Copia also, which had nothing whatsoever to do with GNIDA.
We find considerable force in this argument, as GNIDA had no grievance apropos this project and ought to have clarified this aspect in its appeal before the NCLAT filed against the NCLT’s order dated 08.06.2021.
30. An intervenor, Earth Buyers Association for Justice, seeks to come on record before us so as to challenge Alpha’s resolution plan in so far as it relates to Earth Copia also. Alpha’s resolution plan had been approved by 91.39% voting share of the CoC and the intervenor, was not a member of the CoC.
Twenty-nine homebuyers who had not voted for the plan are 25 members of the intervenor. In this regard, Section 25A(3A) of the Code assumes importance. It provides that an authorised representative under Section 21(6A) of the Code would cast his vote on behalf of the class of financial creditors he represents, such as homebuyers, in accordance with the decision taken by a vote of more than 50% of the voting share of the financial creditors he represents, who have cast their vote.
The homebuyers of Earth Copia were, accordingly, represented by their authorised representative, who voted in favour of Alpha’s resolution plan dated 15.10.2019, as per the desire of majority of those homebuyers as a class. It is, therefore, not open to individual homebuyers, who may have been part of the minority that dissented thereto, to gain a foothold by opposing the majority’s decision. A few persons within such class cannot dissent with the majority vote in favour of the resolution plan.
In Jaypee Kensington Boulevard Apartments Welfare Association (supra), this Court held that allottees, even if not a homogeneous group, could vote either to approve or disapprove the resolution plan and even if divergence of views within the class may exist, when casting a vote in the CoC, the vote would have to be cast as a class.
31. Significantly, this intervenor had raised objections to the approval of Alpha’s resolution plan but the same were rejected by the NCLT in its order dated 08.06.2021.
Aggrieved thereby, the intervenor filed Company Appeal (AT) (Ins) No. 283 of 2022 but the same was dismissed by the 26 NCLAT, vide order dated 12.10.2022. Therein, the NCLAT noted that, if some of the homebuyers had not voted in favour of the plan, they still had to sail with the majority and the procedural violations alleged by them were not sufficient to interfere with the order approving the resolution plan.
The NCLAT noted that the resolution plan was approved by 91.39% voting share in the CoC and the Earth Buyers Association for Justice was not a member of the CoC. Out of the 35 homebuyers who were sought to be brought on record individually by way of an application, 29 homebuyers had not voted for the plan. The NCLAT referred to Section 25A(3A) of the Code and observed that once the authorised representative of that class of voters cast his vote on behalf of the financial creditors he represents as per the decision taken by a vote of more than 50% of the voting share of those financial creditors, who had cast their vote, there is no possibility for the dissenting financial creditors in that class to maintain a separate voice of dissent against the majority vote.
The NCLAT, accordingly, held that no grounds were made out to interfere with the order approving the resolution plan and dismissed the intervenor’s appeal. This order attained finality as the intervenor did not choose to approach this Court by filing an appeal against the said dismissal order.
32. Though Earth Buyers Association for Justice claims that it represents 949 buyers in EIL’s four projects, as of April, 2025, the fact remains that it was unsuccessful in its attempts before the NCLT and the 27 NCLAT in raising objections against Alpha’s resolution plan.
We are, t