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Informist, Tuesday, May 5, 2026

 

NEW DELHI – The Supreme Court on Tuesday held that assets of subsidiary companies can be included in the 

corporate insolvency resolution process of the parent if the two are inextricably linked. The apex court set aside a National Company Law Appellate Tribunal's order refusing to treat subsidiary companies' assets as part of the holding company's assets during the latter's insolvency proceedings.

 

The apex court said that the appellate tribunal erred in setting aside the approved resolution plan for Earth Infrastructures Ltd.'s projects. "... we are of the firm view that this was an eminently fit case for lifting the corporate veil, as EIL (Earth Infrastructures) was the main driving force in the development of the projects and in payment of GNIDA's (Greater Noida Industrial Development Authority) dues. The subsidiary companies were only a front," the top court said.

 

The court said that successful resolution applicants Alpha Corp Development Pvt. Ltd. and Roma Unicon Designex Consortium can be permitted to proceed with their resolution plans to complete the projects of Earth Towne Infrastructures Pvt. Ltd.'s 'Earth Towne', Nishtha Software Pvt. Ltd.'s 'Earth Sapphire Court' and Neo Multimedia Ltd.'s 'Earth TechOne' projects. Earth Towne Infrastructures, Nishtha Software and Neo Multimedia were subsidiaries of Earth Infrastructures.

 

The Greater Noida authority had allotted land to Earth Infrastructures and its subsidiaries. Earth Infrastructures had structured its projects through subsidiary companies. Thereafter, Earth Infrastructures went into insolvency in 2018. Although the leases were in the names of the subsidiaries, Earth Infrastructures was the lead member and developer for the company's projects. When Earth Infrastructures went into insolvency, its resolution professional invited resolution plans for these projects. Thereafter, the National Company Law Tribunal approved the plans of Roma and Alpha for the projects.

 

The Greater Noida authority, which had claims against Earth Infrastructures, challenged the approval of the resolution plans, arguing that the land belonged to the company's subsidiaries and not the debt-ridden company. Therefore, these assets could not be part of the resolution plan without the Greater Noida authority's permission, it said.  End

 

Reported by Surya Tripathi

Edited by Saji George Titus

 

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