Subsidiary land assets and leasehold rights cannot be transferred in CIRP without lessor approval and proper hearing.

In CIRP of a holding company, assets of subsidiary land-holding companies remain legally distinct and cannot be treated as corporate debtor assets merely because the holding company controls them. A resolution plan cannot validly require transfer of leased public land or leasehold rights where the lease deed makes the lessor's prior approval mandatory, and awareness of development activity does not amount to consent for such transfer. Where the plans directly affected the lessor's proprietary and contractual rights, it had to be heard before approval, and the resolution professional could not certify compliance without addressing these limits. The approvals were set aside and the matter was directed to proceed afresh.

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Issues: (i) Whether, in the CIRP of the holding company, the assets of its subsidiary land-holding companies could be treated as assets of the corporate debtor; (ii) whether the resolution plans could lawfully provide for transfer of the leasehold land in favour of the successful resolution applicants without the lessor's prior approval; (iii) whether the appellant was required to be impleaded and heard before approval of the plans dealing with the project land; (iv) whether the resolution professional acted within the Insolvency and Bankruptcy Code in certifying the plans as compliant; (v) whether the appellant's knowledge of development activity amounted to consent for transfer of land.

Issue (i): Whether, in the CIRP of the holding company, the assets of its subsidiary land-holding companies could be treated as assets of the corporate debtor.

Analysis: The statutory scheme under Section 18 of the Insolvency and Bankruptcy Code, 2016 draws a clear distinction between assets of the corporate debtor and assets of any Indian or foreign subsidiary. The project lands were held by separate land-holding companies under lease deeds, and the corporate debtor was only the developer with contractual development rights. A subsidiary retains a separate legal identity, and its assets cannot be folded into the holding company's CIRP merely because the holding company controls or owns most of its equity.

Conclusion: The subsidiary land-holding companies' assets could not be treated as assets of the corporate debtor.

Issue (ii): Whether the resolution plans could lawfully provide for transfer of the leasehold land in favour of the successful resolution applicants without the lessor's prior approval.

Analysis: The lease deeds themselves regulated transfer and made prior approval of the lessor a condition precedent. The resolution plans did not stop at dealing with development rights; they sought transfer of title and leasehold interest in favour of third parties. The Code does not authorize a resolution plan to override contractual and statutory restrictions governing transfer of leased public land, especially where the lessor is a statutory authority and the land could be transferred only on the terms imposed by it.

Conclusion: The plans could not lawfully require transfer of the leasehold land without the lessor's prior approval.

Issue (iii): Whether the appellant was required to be impleaded and heard before approval of the plans dealing with the project land.

Analysis: The resolution process directly affected the appellant's proprietary and contractual rights over the leased land and its dues. Since the plans proposed transfer of the project land and waiver of the authority's dues, the appellant was a necessary participant before any approval could validly be granted. Mere knowledge of development activity did not amount to consent to the transfer terms later incorporated in the plans.

Conclusion: The appellant ought to have been made a party to the CIRP proceedings before approval of the plans dealing with the project land.

Issue (iv): Whether the resolution professional acted within the Insolvency and Bankruptcy Code in certifying the plans as compliant.

Analysis: The resolution professional was aware from the information memorandum and the appellant's claim that the lands were leased and that the appellant's dues were outstanding. Even then, the plans were processed without securing the appellant's participation or addressing the legal requirement of the lessor's permission. Certification of compliance in such circumstances ignored the statutory limits on the treatment of third-party and subsidiary assets.

Conclusion: The resolution professional did not act within the ambit of the Code in certifying the plans as compliant.

Issue (v): Whether the appellant's knowledge of development activity amounted to consent for transfer of land.

Analysis: The appellant's awareness that the corporate debtor was carrying out development on the project lands was not the same as consent to transfer those lands or leasehold rights to a successful resolution applicant. Consent to transfer required compliance with the lease deed and the statutory framework, not merely knowledge of the project's execution by the developer.

Conclusion: The appellant's knowledge of development activity did not amount to consent for transfer of the land.

Final Conclusion: The impugned approvals were set aside, the appellant was brought into the CIRP process, and the matter was directed to proceed afresh with the appellant's dues first to be recalculated and the lessor's approval to be obtained before any fresh resolution plan could be considered.

Ratio Decidendi: In a CIRP, assets of a subsidiary company remain distinct from those of the holding company, and a resolution plan cannot validly compel transfer of leased public land or its leasehold rights without the lessor's prior approval.

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