Greater Noida Industrial Development Authority Versus Prabhjit Singh Soni

SUMMARY OF THE CASE GREATER NOIDA INDUSTRIAL DEVELOPMENT
AUTHORITY VERSUS PRABHJIT SINGH SONI & ANR.
Factual Background: The appellant, Greater Noida Industrial Development Authority,

leased land to a corporate debtor for a residential project. Disputes arose over payments,
leading to insolvency proceedings under the IBC. The land was allotted for a residential
project, with the corporate debtor charged a premium payable in instalments. The appellant
claimed a statutory charge over the assets of the corporate debtor.
NCLT's Order: The NCLT rejected the appellant's applications, citing the appellant's
inaction against the Resolution Professional (RP) for not deciding on its claim during the
Corporate Insolvency Resolution Process (CIRP). The NCLT deemed it impermissible to
decide on the claim post-plan approval, as the CIRP was complete. The NCLT highlighted
the appellant's awareness of the CIRP initiation and the delay in challenging the RP's actions.
The NCLT rejected the appellant's applications citing delay in challenging the RP's decision
and deemed the CIRP complete after plan approval. The appellant appealed to the NCLAT,
arguing:
As a financial creditor, they should have been part of the COC, rendering plan approval
invalid. They had a statutory charge over the CD's assets but were not treated as secured
creditors in the resolution plan.
Despite submitting a claim with proof, they were shown as having submitted none and were
not adequately informed or compensated. The NCLT overlooked and misunderstood their
arguments
Appeal Before NCLAT: The appellant appealed the NCLT's decision to the NCLAT,
arguing that as a financial creditor, it should have been a COC member. The appellant
contended that its absence from the COC rendered the resolution plan approval invalid. The
appellant raised concerns about the plan's feasibility, its statutory charge over the assets, and
the ex parte nature of the proceedings.
Findings of NCLAT: The NCLAT examined the appellant's claims, including its financial
creditor status, statutory charge, land ownership, and plan feasibility. The NCLAT noted the
appellant's submissions regarding non-compliance with IBC provisions and the ex parte
nature of the resolution plan approval process. The NCLAT found that the NCLT and
NCLAT did not adequately consider the appellant's arguments.
The NCLAT dismissed the appellant's appeal, citing several grounds:

The RP had informed the appellant to submit its claim as an operational creditor, but they
chose not to file it. Referring to a precedent (New Okhla Development Authority vs. Anand
Sonbhadra), it was held that the appellant did not qualify as a financial creditor as the lease
executed was not a financial or capital lease.
The appellant was not diligent in pursuing its rights, as evident from the delay in filing
relevant applications after being informed about the resolution plan.
No material irregularity was found in the approval of the resolution plan, and the commercial
wisdom of the COC was deemed non-justiciable.
The NCLAT heard arguments from the appellant's counsel, the counsel for the resolution
applicant, and the resolution professional.
Submissions on Behalf of the Appellant: The appellant argued that it was a financial
creditor with a statutory charge over the corporate debtor's assets. The appellant claimed that
the resolution plan did not conform to statutory requirements and was prepared and approved
ex parte, prejudicing its interests. The appellant highlighted the non-receipt of COC meeting
notices and the reduction in its outlay in the proposed plan.
Submissions on Behalf of the Respondent: The respondents countered the appellant's
claims, stating that the appellant's financial creditor plea was unsustainable. They argued that
the NCLT lacked the power to recall its approval order, and the appellant should have
appealed within the statutory timeframe. The respondents emphasized the commercial
wisdom of the COC and the appellant's delay in challenging the approval order.
Analysis:
The case at hand involves intricate legal and procedural nuances surrounding the insolvency
resolution process under the Insolvency and Bankruptcy Code (IBC). The analysis of this
case delves into various critical aspects that have significant implications on the rights of
creditors, the validity of the resolution plan, and the procedural fairness of the insolvency
proceedings.
One of the central issues in this case pertains to the appellant's classification as a creditor
within the insolvency framework. The appellant, the Greater Noida Industrial Development
Authority, asserted its claim as a financial creditor with a statutory charge over the assets of
the corporate debtor. The determination of the appellant's creditor status is pivotal as it
impacts the appellant's rights, including participation in the Committee of Creditors (COC)
and the approval process of the resolution plan. The courts scrutinized the appellant's claims
and the respondent's counterarguments to ascertain the appellant's rightful position within the
insolvency proceedings.
Furthermore, the procedural irregularities and discrepancies that emerged during the
insolvency resolution process. The appellant raised concerns regarding the non-receipt of
COC meeting notices, the ex parte nature of the proceedings, and the alleged failure to
consider the appellant's claim amount accurately. These procedural lapses not only raise
questions about the fairness of the process but also highlight the importance of transparency,
due process, and adherence to statutory requirements in insolvency proceedings.
Another critical aspect examined in this case is the compliance of the resolution plan with the
statutory provisions of the IBC. The appellant contended that the resolution plan did not meet
the requirements stipulated under Section 30 of the IBC read with Regulations 37 and 38 of
the CIRP Regulations, 2016. The courts analyzed the appellant's submissions in light of the
statutory provisions to determine the adequacy and legality of the resolution plan. This
scrutiny underscores the significance of ensuring that resolution plans adhere to the statutory
framework to protect the interests of creditors and promote the efficiency of the insolvency
resolution process.
Moreover, the analysis considered the commercial wisdom of the COC and the appellant's
delay in challenging the approval order. The respondent argued against the appellant's claims,
emphasizing the finality of the CIRP process and the statutory limitations on challenging
orders post-approval. The courts evaluated these arguments to balance the interests of all
stakeholders involved in the insolvency resolution process and uphold the integrity of the
statutory framework.
Judgment: In its judgment, the Supreme Court allowed the appeals of the appellant,
highlighting the failure of the NCLT and NCLAT to adequately address crucial issues such as
the appellant's non-receipt of COC meeting notices, the ex parte nature of proceedings,
discrepancies in claim amounts, and the plan's compliance with statutory requirements. The
Court deemed the recall application valid, emphasizing the necessity of considering all
pertinent factors in insolvency proceedings to safeguard the interests of creditors and ensure
procedural fairness in the resolution process.

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SUMMARY OF THE CASE GREATER NOIDA INDUSTRIAL DEVELOPMENT

AUTHORITY VERSUS PRABHJIT SINGH SONI & ANR.

Factual Background: The appellant, Greater Noida Industrial Development Authority,

The NCLAT dismissed the appellant's appeal, citing several grounds:

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