In a significant ruling impacting hundreds of homebuyers, the Supreme Court restored the resolution plans for stalled projects on lands leased by Greater Noida Industrial Development Authority (GNIDA). The Court strongly criticised the GNIDA for its prolonged inaction and held that homebuyers’ interests must take precedence in insolvency proceedings.
Brief Facts
The dispute arose out of the corporate insolvency resolution process (CIRP) initiated against Earth Infrastructures Limited (EIL), a real estate developer, under the Insolvency and Bankruptcy Code, 2016, at the instance of a financial creditor. EIL was involved in developing multiple real estate projects in Greater Noida on lands leased by the GNIDA to its subsidiary companies and a special purpose vehicle (SPV), with GNIDA retaining control over transfer and compliance conditions. EIL undertook development across these projects, attracting substantial investments from homebuyers.
During CIRP, resolution plans submitted by two developers were approved by the Committee of Creditors (CoC) and subsequently by the National Company Law Tribunal (NCLT) in 2021. These plans contemplated transfer and development rights over project lands, including those leased by GNIDA to EIL’s subsidiaries.
Aggrieved, GNIDA challenged the NCLT approvals before the National Company Law Appellate Tribunal (NCLAT), contending that:
- The leased lands belonged to subsidiary entities and not to EIL (the corporate debtor);
- The resolution plans improperly dealt with these lands without GNIDA’s consent;
- GNIDA was neither made a party to the CIRP nor adequately informed.
The NCLAT accepted GNIDA’s contentions, set aside the NCLT orders, and issued directions for a fresh resolution process involving GNIDA. This led to multiple appeals before the Supreme Court by resolution applicants, homebuyer associations, GNIDA, and other stakeholders, culminating in the present case.
Supreme Court’s Observations
The Supreme Court found that the project was wrongly impacted by litigation concerning GNIDA’s leased lands.
On lifting the Corporate Veil-
The top court relied on observations of a Constitution Bench in Life Insurance Corporation of India v. Escorts Ltd. and others, which said, “Generally and broadly speaking… the corporate veil may be lifted where… associated companies are inextricably connected so as to be, in reality, part of one concern… the involvement of the element of public interest, the effect on parties who may be affected etc.”
It further said, “Where protection of public interest is of paramount importance or where a company has been formed to evade obligations… the Court would disregard the corporate veil… even to group companies so that one is able to look at the economic entity of the group as a whole.”
Coming to the facts of the present case, the Supreme Court took the firm view that this was an eminently fit case for lifting the corporate veil, as EIL was the main driving force in the development of the projects and in payment of GNIDA’s dues. The subsidiary companies “were only a front”.
The Court noted that all three subsidiary companies were wholly owned subsidiaries of EIL itself. They had no independent business beyond holding the leased lands, and the control rested with EIL. “GNIDA cannot claim ignorance of this position,” the Court said.
Criticising GNIDA’s conduct, the Court said, “GNIDA contributed greatly to the present imbroglio by its persistent inaction and ineptitude all through. The inertia on the part of GNIDA and its failure to protect the interests of the home/office space buyers, apart from its own interests, clearly disentitles it from levying penal interest/penal charges.”
On Authorised Representative’s Vote & Class Voting-
The homebuyers, represented by their Authorised Representative, voted in favour of the resolution plan by two bidders.
Explaining the weightage of Authorised Representative’s vote, the Court said, “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%… there is no possibility for the dissenting financial creditors in that class to maintain a separate voice of dissent against the majority vote.”
The Court further explained, “Section 25A(3A) of the Code assumes importance. It provides that an authorised representative under Section 21(6A) 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.”
Majority Vote vs Minority Dissent-
The Court emphasised the binding nature of majority decisions within a class of financial creditors, “It is... 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.”
The Court added, “A few persons within such class cannot dissent with the majority vote in favour of the resolution plan… 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.”
“If some of the homebuyers had not voted in favour of the plan, they still had to sail with the majority… procedural violations alleged by them were not sufficient to interfere with the approval of the resolution plan,” the Court said.
Supreme Court’s Decision
- The Court restored the resolution plans of the two bidders approved earlier by the NCLT.
- GNIDA was held entitled only to principal dues, excluding penal interest, penalties, and time-extension charges.
- The dues are to be recalculated and paid in 24 monthly instalments, starting July 7, 2026.
- The Court directed that homebuyers should not be burdened with GNIDA dues.
- It permitted continuation of the projects and directed that registrations be completed only after dues are cleared.
- Multiple appeals filed by homebuyer associations and resolution applicants were allowed, while GNIDA’s appeals were dismissed.
Case Title: Greater Noida Industrial Development Authority (GNIDA) v. Various Homebuyer Associations & Resolution Applicants (Batch Matters involving EIL Projects)
Case Details: Civil Appeal No. 1526 of 2023
Bench: Justice Sanjay Kumar and Justice Alok Aradhe
Judgement Date: May 05, 2026
Click here to read the Judgement @LatestLaws.com
