Supreme Court Lifts Corporate Veil in Earth Infrastructures Insolvency, Prioritises Homebuyers Over GNIDA Dues

News Citation : 2026 LN (SC) 449

May 6, 2026 : In a significant ruling impacting thousands of stalled-project homebuyers, the Supreme Court has held that lands leased to subsidiary companies can be treated as assets connected to the holding company during insolvency proceedings where the entities are “inextricably connected” and function as one concern.

A Bench of Justice Sanjay Kumar and Justice Alok Aradhe set aside the National Company Law Appellate Tribunal’s (NCLAT) January 30, 2023 judgment and restored the resolution plans concerning stalled projects developed by Earth Infrastructures Limited (EIL).

The Court ruled that the technical distinction between EIL and its subsidiaries could not be used to obstruct insolvency resolution and completion of projects involving thousands of homebuyers.

Observing that the subsidiaries were merely a “front”, the Bench held:

“Where, in reality, associated or group companies are inextricably connected so as to form part of one concern, the corporate veil should be lifted.”

The Court further stated that EIL was the “main driving force” behind the projects and payment obligations to Greater Noida Industrial Development Authority (GNIDA), while the subsidiaries existed only as special purpose entities holding lease rights.

Background of the Dispute

The case arose from insolvency proceedings initiated against EIL in 2018 under the Insolvency and Bankruptcy Code (IBC). EIL had undertaken development of three major projects in Greater Noida:

• Earth Towne
• Earth TechOne
• Earth Sapphire Court

Although the projects were developed by EIL, the lease deeds for the project lands stood in the names of subsidiary companies including Earth Towne Infrastructures Private Limited (ETIPL), Neo Multimedia Limited, and Nishtha Software Private Limited.

GNIDA argued that these lands belonged exclusively to the subsidiaries and therefore could not form part of EIL’s corporate insolvency resolution process (CIRP). It also claimed substantial dues along with penal interest and penalties dating back to 2010-2013.

The NCLT had earlier approved resolution plans submitted by Roma Unicon Designex Consortium and Alpha Corp Development Private Limited. However, the NCLAT later set aside those approvals, holding that subsidiary assets could not be dealt with in the CIRP of the holding company without GNIDA’s consent.

Supreme Court Criticises GNIDA’s Conduct

The Supreme Court sharply criticised GNIDA for its prolonged inaction despite being fully aware of EIL’s role in developing the projects and the mounting grievances of homebuyers.

The Bench noted that GNIDA had received repeated communications regarding the insolvency proceedings but failed to take timely steps either to protect its interests or ensure completion of the projects.

The Court observed:

“GNIDA cannot claim ignorance of the constructions by EIL in relation to all three projects.”

It further remarked that GNIDA could not portray itself as an “uninformed and injured victim at this late stage” after allowing “so much water to flow under the bridge”, causing prejudice not only to itself but also to innocent homebuyers who invested their life savings.

The Court also pointed to GNIDA’s inconsistent conduct, including filing delayed claims and even addressing one such claim to the Interim Resolution Professional long after a Resolution Professional had been appointed.

Relief to Thousands of Homebuyers

The judgment is expected to provide major relief to buyers in long-stalled projects that have remained incomplete since 2016.

The Bench noted that:

• Earth Towne involved 4,229 allottees, with claims of 1,878 homebuyers amounting to approximately ₹438 crore admitted during CIRP.
• Earth Copia comprised 536 units involving hundreds of homebuyers.

The Court restored the approved resolution plans and directed GNIDA to recalculate its dues within two weeks, excluding:

• penal interest,
• penal charges, and
• time-extension penalties.

The successful resolution applicants have been directed to clear the principal dues in equated monthly instalments over 24 months beginning July 7, 2026. The Court also clarified that these liabilities cannot be passed on to homebuyers.

Project completion timelines are scheduled to commence from June 1, 2026.

Court Upholds Project-Specific Insolvency Resolution

The Bench reiterated that insolvency proceedings in real estate matters may proceed on a project-specific basis to protect viable projects and homebuyers. It also upheld the validity of Alpha Corp’s resolution plan concerning the Earth Copia project in Gurugram, noting that GNIDA had no connection whatsoever with that development.

Appearances

Senior Advocates Dr. Abhishek Manu Singhvi, Dhruv Mehta, Menaka Guruswamy and Meenakshi Arora appeared for the appellants.

Senior Advocates Chakradhari Sharan Singh, K. Parmeshwar, Anupam Lal Das, Anand Padmanabhan, Nakul Dewan and Ravindra Kumar appeared for the respondents.

Case Details

Case Title: Alpha Corp Development Private Limited v. Greater Noida Industrial Development Authority (GNIDA) & Others