Corporate veil in insolvency can be lifted for integrated housing projects, while late penal levies and individual dissent may fail.

In insolvency proceedings involving stalled housing projects, the corporate veil may be lifted where wholly owned or controlled subsidiaries function only as vehicles for holding leasehold rights and the corporate debtor is the real driver of the projects, allowing related assets and development rights to form part of the resolution process subject to lease conditions. Late claims for penal interest, penal charges and time-extension penalties may be disallowed where the authority was repeatedly notified but failed to act promptly, though principal dues remain recoverable on recalculation without penal components. An approved resolution plan could not be disturbed by objections to an unrelated project or by individual allottees where the class had voted through its authorised representative.

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Issues: (i) Whether the leasehold lands held through wholly owned or controlled subsidiary companies could be treated as assets of the corporate debtor and brought within the resolution plans without the lessor's consent; (ii) Whether GNIDA's belated claims and demand for penal interest, penal charges and time-extension penalties could be sustained; (iii) Whether the resolution plan for the project unconnected with GNIDA and the voting/class objections of individual allottees could defeat the approved plans.

Issue (i): Whether the leasehold lands held through wholly owned or controlled subsidiary companies could be treated as assets of the corporate debtor and brought within the resolution plans without the lessor's consent.

Analysis: The subsidiary companies were separate legal entities in form, but the projects and leasehold lands were effectively controlled and developed by the corporate debtor. GNIDA had full knowledge that the corporate debtor was the real driving force behind the projects, and the facts disclosed that the subsidiaries were only vehicles used for holding the leasehold rights. The Court applied the doctrine of lifting the corporate veil in light of the inextricable connection between the group entities and the larger public interest in completing stalled housing projects. At the same time, the lessor's rights under the lease deeds remained relevant for the purpose of implementation and transfer of the leasehold lands.

Conclusion: The corporate veil could be lifted on the facts of the case, and the assets and development rights connected with the subsidiary-held projects could be treated as part of the resolution process for the corporate debtor, subject to the legal position of the lessor and the lease conditions.

Issue (ii): Whether GNIDA's belated claims and demand for penal interest, penal charges and time-extension penalties could be sustained.

Analysis: GNIDA had been repeatedly informed of the insolvency proceedings and had also been called upon to submit its dues, yet it remained largely inactive and filed claims late or not at all. Its notices to the lessees were sporadic and the authority did not act with promptness to protect its own dues or to ensure timely completion of the projects. The Court held that GNIDA could not, at such a late stage, insist upon penal interest and allied penal charges when its own inaction had materially contributed to the delay and uncertainty. However, the principal amounts due to GNIDA were not extinguished and had to be recalculated without the penal components.

Conclusion: GNIDA was not entitled to recover penal interest, penal charges or time-extension penalties, but it was entitled to recalculation and recovery of the principal dues.

Issue (iii): Whether the resolution plan for the project unconnected with GNIDA and the voting/class objections of individual allottees could defeat the approved plans.

Analysis: Earth Copia was a project on freehold land that had no nexus with GNIDA, so GNIDA had no legitimate grievance in relation to that part of the resolution plan. As to the objections of individual homebuyers, the Court held that allottees constituted a class and had to sail with the majority decision taken through the authorised representative under the Code. Individual dissenters could not reopen a plan approved by the requisite majority when their class had voted in favour of it. The Court also declined to entertain belated or repetitive interventions from parties whose objections had already been rejected and had attained finality.

Conclusion: The resolution plan could not be disturbed on the basis of Earth Copia objections or individual dissent within the buyer class; the approved plans were restored for implementation.

Final Conclusion: The appeals resulted in restoration of the approved resolution plans, removal of penal levies, and recalculation of GNIDA's principal dues, while preserving the majority-backed class decisions and the viability of the stalled projects.

Ratio Decidendi: Where group companies are functionally inseparable and the corporate debtor is the real mind and driver of the projects, the corporate veil may be lifted in insolvency proceedings to protect completion of the projects and public interest, but the resolution applicant remains bound to honour the principal dues of the authority without belated penal exactions caused by the authority's own inaction.

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