Greater Noida Industrial Development Authority vs. Prabhjit Singh Soni
Background
Greater Noida Industrial Development Authority (GNIDA), a statutory authority under the U.P. Industrial Area Development Act, 1976, leased land to M/s. JNC Construction Pvt. Ltd. (the corporate debtor) for a residential project. The corporate debtor defaulted on lease payments, leading GNIDA to file a claim of over ₹43 crore during the Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code, 2016 (IBC). The Resolution Professional classified GNIDA as an operational creditor, not a financial creditor, and both the National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT) upheld this view, approving a resolution plan that GNIDA argued undervalued and misclassified its claim567.
Key Legal Issues
Whether GNIDA’s statutory charge over the leased land made it a secured creditor, and if so, whether it was entitled to better treatment in the CIRP.
Whether the NCLT and NCLAT had the inherent power to recall an order approving a resolution plan if there were procedural irregularities or misclassification of claims34.
Whether the resolution plan complied with Section 30(2) of the IBC, which mandates fair and equitable treatment of creditors.
Supreme Court’s Analysis
The Supreme Court recognized GNIDA as a secured operational creditor, based on the statutory charge created by Sections 13, 13A, and 14 of the U.P. Industrial Area Development Act, 197625.
The Court found that the resolution plan had misclassified GNIDA’s claim and failed to treat it equitably, violating Section 30(2) of the IBC. The plan relied on GNIDA’s property but did not address necessary approvals or the statutory charge, making its implementation impractical and legally unsound56.
The Court affirmed that the NCLT and NCLAT possess inherent powers to recall their own orders in limited circumstances to prevent injustice and abuse of process, especially in the context of CIRP34.
The Supreme Court criticized the exclusion of GNIDA from Committee of Creditors (CoC) meetings and the lack of proper consideration of its substantial claims, which undermined procedural fairness and the integrity of the insolvency process5.
Judgment
The Supreme Court set aside the orders of the NCLT and NCLAT approving the resolution plan, holding that GNIDA was wrongly classified and its statutory rights were not respected57.
The case was remanded to the CoC for fresh consideration, with directions to ensure statutory compliance and fair treatment of GNIDA’s claims as a secured operational creditor.
The judgment reaffirmed the need for procedural integrity, proper creditor classification, and equitable treatment in the CIRP.
Significance
This decision is a landmark in Indian insolvency law, clarifying that statutory authorities with a charge over property must be treated as secured creditors and that procedural fairness is paramount in CIRP. The Supreme Court’s recognition of the NCLT and NCLAT’s inherent powers to recall orders in the interest of justice strengthens the checks and balances in insolvency proceedings.
Citation:
Greater Noida Industrial Development Authority vs. Prabhjit Singh Soni & Anr., [2024] 2 S.C.R. 258; 2024 INSC 102, Supreme Court of India, decided on February 12, 202457
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