Secured claim treatment in insolvency upheld for farmers' compensation, while external development charges were partly unsecured.

A statutory authority's claim for additional farmers' compensation was held to have a secured character because the relevant statutory scheme and concession agreement placed the acquisition-related liability on the corporate debtor. That claim had to be considered in the CIRP, and deductions from it were rejected, so the proposed settlement did not amount to full discharge. By contrast, external development charges were not treated as a statutory secured claim because they did not fall within the charge-creating categories under the Act; the payable amount was reconciled at Rs. 525.91 crores, subject to future development-linked payments. Creditor consent was not required for the resolution plan's treatment of claims or for transfer of the corporate debtor's leasehold rights.

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Issues: (i) Whether the appellant authority was a secured creditor in respect of the claim for additional farmers' compensation; (ii) whether the claim for additional farmers' compensation of Rs. 1,689 crores had to be considered in the insolvency process and whether the plan treatment adopted by the adjudicating authority was sustainable; (iii) whether deductions of Rs. 330 crores and Rs. 143 crores from the additional compensation claim were permissible and whether the settlement offer of Rs. 1,216 crores amounted to full payment; (iv) whether the external development charges claim was a secured claim and what amount was payable; and (v) whether the appellant's consent was required for treatment of its claims or for transfer of leasehold rights under the resolution plan.

Issue (i): Whether the appellant authority was a secured creditor in respect of the claim for additional farmers' compensation.

Analysis: The statutory scheme of the Uttar Pradesh Industrial Area Development Act, 1976, particularly the provisions creating a charge over amounts payable to the Authority, and the Concession Agreement allocating acquisition cost to the concessionaire, showed that the additional compensation component formed part of the acquisition cost borne by the corporate debtor. The earlier Supreme Court rulings on the same project had also recognised that the liability for additional compensation attached to the concessionaire and that contractual obligations relating to the land could not be ignored. The claim for additional farmers' compensation therefore stood on a secured footing rather than as a mere unsecured operational claim.

Conclusion: The appellant was held to be a secured creditor in respect of the additional farmers' compensation claim.

Issue (ii): Whether the claim for additional farmers' compensation of Rs. 1,689 crores had to be considered in the insolvency process and whether the plan treatment adopted by the adjudicating authority was sustainable.

Analysis: The claim had been submitted in the CIRP and was not to be disregarded merely because related litigation was pending. Once the liability had been judicially crystallised in the project-related litigation, the claim required consideration in the insolvency process. Treating the appellant only as an operational creditor and confining it to a nominal amount was inconsistent with the statutory charge, the contractual allocation of liability, and the earlier Supreme Court observations that existing liabilities under the concession framework could not be extinguished by a resolution plan without lawful basis.

Conclusion: The claim of Rs. 1,689 crores had to be considered in the CIRP, and the adjudicating authority's treatment of that claim was unsustainable.

Issue (iii): Whether deductions of Rs. 330 crores and Rs. 143 crores from the additional compensation claim were permissible and whether the settlement offer of Rs. 1,216 crores amounted to full payment.

Analysis: The proposed deduction of Rs. 330 crores on the ground that some land had already been sub-leased to third parties was rejected because the liability to bear acquisition-related compensation remained with the concessionaire under the contractual framework. The proposed deduction of Rs. 143 crores relating to land arranged from another authority was also rejected. As a result, the figure of Rs. 1,216 crores could not be treated as complete satisfaction of the full claim of Rs. 1,689 crores. The offer was only a part-payment proposal and not full discharge of the secured claim.

Conclusion: The deductions were held impermissible, and the offer of Rs. 1,216 crores was not full payment of the additional compensation claim.

Issue (iv): Whether the external development charges claim was a secured claim and what amount was payable.

Analysis: The external development charges did not fall within the categories in the statute that created a charge over the property, because they were neither consideration money for transfer, nor rent, nor a fee or tax levied under the Act. They arose under the concession arrangement and therefore did not acquire the character of a statutory secured charge. On the quantum, the appellant's own reconciliation revised the payable amount to Rs. 525.91 crores, subject to amounts relatable to the Tappal and Agra parcels being paid as and when development thereon was undertaken in accordance with the concession framework.

Conclusion: The external development charges claim was not a secured claim, and the reconciled amount was Rs. 525.91 crores subject to the stated future payment component.

Issue (v): Whether the appellant's consent was required for treatment of its claims or for transfer of leasehold rights under the resolution plan.

Analysis: The insolvency framework requires creditors to submit claims and have them dealt with under the resolution plan, but it does not generally require creditor consent for the plan's treatment of claims. The earlier Supreme Court observations about YEIDA's consent were linked to impermissible tinkering with the concession agreement and to reliefs that would alter contractual rights; they did not create a general veto over the plan's treatment of claims or over transfer of the corporate debtor's leasehold rights. Since the plan dealt only with the corporate debtor's leasehold interests and did not transfer the authority's ownership rights, no consent requirement arose on that count.

Conclusion: Consent of the appellant was not required for treatment of its claims or for transfer of the corporate debtor's leasehold rights under the resolution plan.

Final Conclusion: The appeal succeeded only in part. The plan approval was interfered with only to the extent of the additional farmers' compensation claim, which was directed to be treated as a secured operational debt and paid on the same percentage basis as other secured creditors, while the rest of the resolution plan approval was maintained.

Ratio Decidendi: Where a statutory authority's claim is supported by a statutory charge and the contractual allocation of liability makes the corporate debtor responsible for the underlying amount, the claim cannot be treated as a mere unsecured operational debt in insolvency and must be given plan treatment consistent with its secured character; creditor consent is not a universal precondition to plan treatment unless the plan impermissibly alters the underlying contract or statutory rights.

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