Alpha Corp Development Private Limited versus Greater Noida Industrial Development Authority (GNIDA) and others

What happened

GNIDA allotted 73,942 square metres for the Earth Towne housing project to a consortium including Earth Infrastructures Limited (EIL) under its builders' scheme, which required a special purpose company; Earth Towne Infrastructures Private Limited (ETIPL) was incorporated and took a 90-year lease from 1 September 2010, EIL holding first 78 per cent and later 98 per cent. Neo Multimedia Limited (formerly NIIT Multimedia) and Nishtha Software Private Limited, EIL subsidiaries, held GNIDA leases for Earth TechOne and Earth Sapphire Court, with development agreements in favour of EIL. The NCLT admitted a CIRP against EIL on 6 June 2018 on the petition of Deepak Khanna, and the committee of creditors comprised HDFC Bank and 4,229 buyers. The IRP wrote to GNIDA on 19 December 2018 and the RP on 28 May 2019, and GNIDA filed no claim; Roma's plan for Earth Towne was approved by the committee on 26 August 2019, GNIDA claimed Rs. 148,37,46,148/- on 18 September 2019, and Alpha's plan was approved with 91.39 per cent. The NCLT approved the plans on 5 April 2021 and 8 June 2021 and on 7 December 2021 directed GNIDA to implement Roma's plan. The NCLAT on 30 January 2023 held the subsidiaries' assets were not those of the corporate debtor, GNIDA had not been heard and the RP erred, set aside the approvals, waived penal interest and ordered fresh plans. GNIDA claimed Rs. 215,87,18,190/- from ETIPL and later dues of Rs. 309,79,44,038/-. The Court held other appeals barred as 34 days late beyond the 15-day condonation under section 62(2).

Questions before the court

• Could the resolution plans of EIL deal with development of land leased to its subsidiaries by GNIDA, and what is to happen to GNIDA's dues and penal interest?

Why the court ruled this way

The Court noted that real estate insolvency can be project-wise and that Earth Copia, on freehold land in Gurugram, had nothing to do with GNIDA, and that GNIDA's appeal could not unsettle it (paragraphs 12, 14 and 29). Homebuyers vote as a class through their authorised representative under section 25A(3A), so a dissenting minority and the Earth Buyers Association for Justice, whose appeal had failed, have no standing (paragraphs 30 to 32). GNIDA, an operational creditor entitled to file claims under section 60(5)(b), filed none within time, wrote to the displaced IRP in 2021, projected itself as financial creditor, and was informed by letters of 19 December 2018 and 28 May 2019, so under RPS Infrastructure v. Mukul Kumar it cannot complain (paragraphs 36 to 38, 45 to 51). The Information Memorandum and the plans covered only development rights and not title to the land, which remains with GNIDA with buyers as sub-lessees (paragraphs 44 and 46). This was a fit case for lifting the veil because EIL was the main driving force, held 98 per cent of ETIPL and the subsidiaries had no assets but the leases (paragraphs 53 to 56). The Court found GNIDA's persistent inaction, with sporadic notices over years and approbating and reprobating, disentitled it to penal interest, and adopted the Uttar Pradesh policy for stalled projects in part (paragraphs 47 to 51, 64 to 68).

Controlling point

The plans could deal with the project lands because of the lifting of the veil, GNIDA was bound and not entitled to penal charges, and its principal dues were to be paid by the resolution applicants over twenty-four months.

Order and next steps

The directions in the Result were issued: the plans of Alpha and Roma were restored, time frames to run from the 1st day of June, 2026, intervention applications were rejected or closed, the status quo order ceased, the erstwhile IRP's fee application was left to the NCLT, and parties were to bear their own costs.

Practical implications

A development authority that leases land to a developer's subsidiaries should file its claims in the developer's CIRP in time; a homebuyers' class and a resolution applicant can rely on this judgment to resist a lessor's late objection and penal levies on stalled projects.

Limits of this ruling

• The Court expressly did not decide the question on the meaning of assets under sections 18 and 25 and decided on facts suited to veil-lifting; the relief depended on the applicants' commitments to bear GNIDA's dues, and the policy relief was applied in part only.