The Supreme Court has allowed the batch of civil appeals and set aside the judgment dated 30.01.2023 passed by the National Company Law Appellate Tribunal, Principal Bench, New Delhi in Company Appeal (AT) (Ins) Nos. 180, 629 and 630 of 2022. The Apex Court restored the orders dated 05.04.2021, 08.06.2021 and 07.12.2021 passed by the National Company Law Tribunal, Bench III, New Delhi approving the resolution plans submitted by Roma Unicon Designex Consortium and Alpha Corp Development Private Limited in the corporate insolvency resolution process initiated against Earth Infrastructures Limited. The Court held that when associated or group companies are inextricably connected so as to form part of one concern the corporate veil should be lifted to treat the assets of the subsidiary companies as part of the assets of the holding company undergoing CIRP particularly to protect the interests of homebuyers and to enable completion of stalled real estate projects.
The appeals arose out of the CIRP initiated by a financial creditor against Earth Infrastructures Limited. Greater Noida Industrial Development Authority had allotted large parcels of land on lease to special purpose companies which were subsidiaries or entities controlled by Earth Infrastructures Limited for development of residential and commercial projects namely Earth Towne, Earth TechOne and Earth Sapphire Court. A separate project Earth Copia was developed on freehold land in Gurugram. The resolution professional invited resolution plans project-wise. The Committee of Creditors approved the plan of Roma for Earth Towne and the plan of Alpha Corp for the remaining projects. These plans were approved by the National Company Law Tribunal. Greater Noida Industrial Development Authority challenged the approvals before the National Company Law Appellate Tribunal contending that the leasehold lands held by the subsidiary companies could not be treated as assets of the corporate debtor and could not be transferred without its prior permission.
The National Company Law Appellate Tribunal set aside the orders of the National Company Law Tribunal holding that the assets of the subsidiary companies could not be included in the resolution plans of the holding company and that Greater Noida Industrial Development Authority was not bound by the plans. It directed a fresh process after obtaining permission from the authority. Aggrieved by the same the successful resolution applicants homebuyers associations and other stakeholders approached the Supreme Court. The Supreme Court noted that Earth Towne Infrastructures Private Limited was incorporated as the special purpose company with Earth Infrastructures Limited holding majority shareholding which was later increased to 98 per cent. Similar structure existed for the other projects. The lease deeds executed by Greater Noida Industrial Development Authority in favour of the special purpose companies clearly recorded that Earth Infrastructures Limited was the lead member and the main developer.
After detailed examination the Supreme Court held that this was an eminently fit case for lifting the corporate veil as Earth Infrastructures Limited was the main driving force in the development of the projects and in payment of dues. The subsidiary companies were only a front with nominal capital and no independent business. The Court observed that the resolution plans were comprehensive and aimed at completion of the stalled projects. Greater Noida Industrial Development Authority was aware of the developments yet it did not file timely claims during the CIRP. The Supreme Court restored the approval of the resolution plans and permitted the successful resolution applicants to proceed with implementation upon payment or satisfactory arrangement for the recalculated dues of Greater Noida Industrial Development Authority without penal interest. The interim status quo order was modified accordingly. The appeals filed under Civil Appeal (Diary) No. 19132 of 2023 were dismissed as barred by time.
The judgment delivered by Justice Sanjay Kumar clarifies the position in group company insolvencies involving real estate projects and ensures that technical distinctions between holding and subsidiary companies do not defeat the object of the Insolvency and Bankruptcy Code. The orders of the National Company Law Tribunal stand restored with directions for implementation protecting the interests of homebuyers and other stakeholders.
Case Title: Alpha Corp Development Private Limited versus Greater Noida Industrial Development Authority (GNIDA) and others (with connected appeals)
Citation: 2026 INSC 449
Coram: Justice Sanjay Kumar and Justice Alok Aradhe
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