Corporate Veil Can Be Lifted To Include Assets Of Group Companies In CIRP Of Holding Company : Supreme Court

The Supreme Court on Tuesday (May 5) observed that for protecting the rights of the homebuyers and paving a way for completion of the stalled real estate projects, the corporate veil may be lifted during the Corporate Insolvency Resolution Process initiated against the holding company, by allowing the inclusion of the assets of the subsidiary companies.

Setting aside the NCLAT's decision, which had refused to treat a subsidiary company's assets as part of the holding company's assets during the latter's CIRP, a bench of Justice Sanjay Kumar and Justice Alok Aradhe provided relief to homebuyers who had invested amounts to purchase dwelling units in the real estate company's housing projects. These projects had stalled because the NCLAT's decision did not consider a resolution plan for the corporate debtor's subsidiary companies.

“…when, in reality, associated or group companies are inextricably connected so as to form part of one concern, the corporate veil should be lifted.”, observed the Court, while rejecting the NCLAT's view which held that assets of the subsidiary company cannot be treated as part of the holding company assets, when CIRP was initiated against the holding company.

The Case

The dispute arose from the insolvency of Earth Infrastructures Limited (EIL), a real estate developer whose multiple housing and commercial projects in the NCR region had stalled around 2016, leaving numerous homebuyers affected. EIL had structured its projects through subsidiary companies, which formally held leasehold rights over land allotted by the Greater Noida Industrial Development Authority.

For instance, the Earth Towne project was developed through Earth Towne Infrastructures Pvt. Ltd., in which EIL held about 98% shareholding, while other projects—Earth TechOne and Earth Sapphire Court—were executed through wholly owned subsidiaries, namely Neo Multimedia Ltd. and Nishtha Software Pvt. Ltd. Although these subsidiaries were the lessees, EIL remained the principal developer and controlling entity. Another project, Earth Copia in Gurugram, stood on freehold land and was directly linked to EIL.

In 2018, insolvency proceedings were initiated against EIL under the Insolvency and Bankruptcy Code. During the Corporate Insolvency Resolution Process (CIRP), the resolution professional invited claims from creditors, including GNIDA, which was both a lessor and a secured creditor in respect of the leased lands. However, GNIDA failed to submit its claims in a timely manner and responded belatedly, even after the Committee of Creditors had approved resolution plans.

Two separate resolution plans were approved—one by Roma Unicon for the Earth Towne project, and another by Alpha Corp for the remaining projects, including Earth TechOne, Earth Sapphire Court, and Earth Copia. These plans were subsequently approved by the National Company Law Tribunal in 2021.

GNIDA challenged these approvals before the appellate tribunal, contending that the assets of the subsidiary companies could not be treated as assets of EIL and that leasehold rights could not be transferred without its consent. The National Company Law Appellate Tribunal accepted this contention and set aside the approved resolution plans, directing a fresh process.

Aggrieved by this, the resolution applicants and other stakeholders approached the Supreme Court.

Decision

Allowing the appeal, the judgment authored by Justice Sanjay Kumar observed that the NCLAT erred in setting aside the approved resolution plan for EIL's subsidiary company, overlooking the fact that EIL was the main driving force in the development of the stalled projects.

“…we are of 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 observed.

The Court restored the NCLT's decision allowing the resolution plan to be applied to EIL's subsidiary companies.

“…the very aim of the CIRP proceedings initiated against EIL, the CD, we think that by adopting the policy to some extent to suit the present situation, the successful resolution applicants, Alpha and Roma, can be permitted to proceed with their resolution plans to complete the projects, viz., Earth Towne, Earth Sapphire Court and Earth TechOne, while protecting the interests of GNIDA also.”, the court observed.

In essence, the Court rejected the GNIDA's argument that the assets of subsidiary companies cannot be made part of the assets of the holding company, EIL, that was subjected to CIRP proceedings.

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

Citation : 2026 LiveLaw (SC) 460

Click here to download judgment

Appearance:

For Appellant(s) : Dr. Abhishek Manu Singhvi, Sr. Adv. Mr. Dhruv Mehta, Sr. Adv. Mr. Sameer Abhyankar, AOR Private Limited Mr. Sandeep Bhuraria, Adv. Ms. Vatsala Pandey, Adv. Mr. Rahul Kumar, Adv. Mr. Aakash Thakur, Adv. Mr. Somesh Dhawan, Adv. Mr. Sumit Srivaastava, AOR Mr. Satyam Sinha, Adv. Ms. Vagisha Kashyap, Adv. Sanjay Bhalla Mr. Sarvesh Singh Baghel, AOR Mr. Anshuman Sharma, Adv. Mr. Rahul Kumar, Adv. Mr. Vishesh Kumar, Adv. Ms. Prity Kumari, Adv. Mr. Jay Kishor Singh, AOR Mr. Devendra Kumar Shukla, AOR Mr. Shashank Raghav, Adv. Patrons Independent Ms. Shubhangini Yadav, Adv. Mr. Rakesh Kumar Tewari, Adv. Mr. Ankur Saraswat, Adv. Mr. Dinesh Kumar Bhati, Adv. Mr. Kanchan Kumar Jha, Adv. Mr. Shubhranshu Padhi, AOR Mr. Ekansh Sisodia, Adv. Consumer Association Mr. Jay Nirupam, Adv. Mr. D. Girish Kumar, Adv. Mr. Pranav Giri, Adv. Mr. Ritik Sharma, Adv. Dr. Menaka Guruswamy, Sr. Adv. Owners Society Mr. V.M. Kannan, AOR Mr. Mayank Singh, Adv. Mr. Nakul Dewan, Sr. Adv. Mr. Ekansh Mishra, AOR Ms. Meenakshi Arora, Sr. Adv. Mr. Mahesh Agarwal, Adv. Mr. Sumesh Dhawan, Adv. Association Mr. Ankur Saigal, Adv. Ms. Vastala Kak, Adv. Mr. Nishant Rao, Adv. Mr. Naman Gupta, Adv. Ms. Kavya Tekriwal, Adv. Mr. Shaurya Shyam, Adv. Mr. Sagar Thakkar, Adv. Mr. E.C. Agrawala, AOR Mr. Binay Kumar Das, AOR

For Respondent(s) : Mr. Birendra Kumar Mishra, AOR Mr. Sarvesh Singh Baghel, AOR Mr. Anshuman Sharma, Adv. Mr. Devendra Kumar Shukla, AOR Mr. Ravinder Kumar, Sr. Adv. Mr. Binay Kumar Das, AOR Mr. Nakul Dewan, Sr. Adv. Mr. Ekansh Mishra, AOR Mr. Gunjan Kumar, AOR Mr. Somesh Dhawan, Adv. Mr. Sumit Srivaastava, AOR Ms. Meenakshi Arora, Sr. Adv. Mr. Mahesh Agarwal, Adv. Mr. Sumesh Dhawan, Adv. Mr. Ankur Saigal, Adv. Ms. Vastala Kak, Adv. Mr. Nishant Rao, Adv. Mr. Naman Gupta, Adv. Ms. Kavya Tekriwal, Adv. Mr. Shaurya Shyam, Adv. Mr. Sagar Thakkar, Adv. Mr. E.C. Agrawala, AOR Mr. Dhruv Mehta, Sr. Adv. Mr. Sameer Abhyankar, AOR Mr. Sandeep Bhuraria, Adv. Ms. Vatsala Pandey, Adv. Mr. Rahul Kumar, Adv. Mr. Aakash Thakur, Adv. Mr. Pushpinder Singh, AOR Mr. Kumar Kartikay, Adv. Ms. Neelu Sharma, Adv. Mr. Kartik Hooda, Adv. Mr. E. Vinay Kumar, Adv. Ms. Surbhi Singh, Adv. Mr. Siddhartha Makhija, Adv. Mr. Ranjit Balasaheb Raut, AOR Mr. Sonit Sinhmar, Adv. Mr. Bhupender Dalal, Adv. Ms. Sunayana Pawar, Adv. Mr. Saurabh Trivedi, AOR Mr. Prashant Jain, Adv. Mr. Varun Garg, Adv. Mr. Shubham Paliwal, Adv. Mr. Bharat Sood, Adv. Mr. P.S. Sudheer, AOR Mr. Rishi Maheshwari, Adv. Ms. Anne Mathew, Adv. Ms. Sunaina Phul, Adv. Ms. Komal Bihani, Adv. Ms. Kinjal Sharma, Adv. Ms. Rupam Sharma, Adv. Mr. Shiv Mangal Sharma, Adv. Mr. Abhishek Sharma, Adv. M/s. Aura & Co., AOR Ms. Anuja Pethia, AOR Mr. Noor Shergill, Adv. Mr. Rishabh Nigam, Adv. Ms. Kshirja Agarwal, Adv. Mr. Rishabh Govila, Adv. Ms. Amisha Aggarwal, Adv. Mr. Prashant Jain, Adv. Mr. Varun Garg, Adv. Mr. Shubham Paliwal, Adv. Mr. Bharat Sood, Adv. Mr. P.S. Sudheer, AOR Mr. Rishi Maheshwari, Adv. Ms. Anne Mathew, Adv. Ms. Sunaina Phul, Adv. Ms. Komal Bihani, Adv. Ms. Kinjal Sharma, Adv. Ms. Rupam Sharma, Adv. Ms. Supriya Juneja, AOR Mr. Chakradhari Sharan Singh, Sr. Adv. Mr. Durga Dutt, AOR Mr. Priyanshu Upadhyay, Adv. Mr. Ajay Kumar, Adv. Mr. Pradeep Yadav, Adv. Mr. Susant Kumar Mallik, Adv. Mr. Rohit Priyadarshi, Adv. Mr. Devendra Rao Madhav, Adv. Mr. Amrendra Choubey, Adv. Mr. Himanshu Yadav, Adv. Mr. Satya Kam Sharma , AOR Mr. Anupam Lal Das, Sr. Adv. Mr. Anirudh Singh, Adv. Mr. Gunjan Sharma, Adv. Mr. Kumar Mihir, AOR Mr. Devendra Kumar Shukla, AOR