TaxTMI 
TaxTMI 
2026 (10) TMI 479
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....IV, National Company Law Tribunal, New Delhi ("Adjudicating Authority") in Restored Company 30 Petition (IBC) 9/ND/2025 [Old Case CP (IB) No.196/ND/2023] Earth Towne Infrastructure Private Limited is the Respondent No.1 herein. Mr. Rajiv Bajaj Resolution Professional of Earth Towne Infrastructure Private Limited is the Respondent No.2 herein. Satyabrata Mitra and other Financial Creditors of Earth Towne Infrastructure Private Limited is the Respondent No.3 herein. 2. The Appellant submitted that the present Appeal has been preferred against the Impugned Order dated 01.06.2026 passed by the Adjudicating Authority in Restored Company Petition (IBC) No.9/ND/2025 [Old C.P. (IB) No.196/ND/2023], whereby the application under Section 7 of the Insolvency and Bankruptcy Code, 2016 ("Code") filed against Earth Towne Infrastructure Private Limited ("ETIPL"/"Respondent No.1") was admitted and Corporate Insolvency Resolution Process ("CIRP") was initiated against it. The Appellant stated that ETIPL is the land-owning Special Purpose Company in respect of the land on which the "Earth Towne" project is situated and that the initiation of CIRP against ETIPL, subsequent to the Judgment....
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....ting the substantive role of EIL in the development and implementation of the project. The residential project developed upon the subject land was named "Earth Towne". The Appellant contended that building permissions were obtained from GNIDA and a large number of homebuyers and office-space buyers booked units in the project and paid substantial amounts to EIL and, in certain cases, to ETIPL. The project was also registered with the Uttar Pradesh Real Estate Regulatory Authority. Thus, according to the Appellant, the development of the project, the financial interests of the homebuyers and the obligations towards GNIDA were intrinsically connected with EIL and ETIPL and, more particularly, with the subject land upon which the entire project was founded. 5. The Appellant stated that CIRP was initially commenced against EIL at the instance of Deepak Khanna, a financial creditor, pursuant to an application filed under Section 7 of the Code, which was admitted by the Adjudicating Authority on 06.06.2018. Thereafter, an Interim Resolution Professional was appointed, public announcement was made under Section 13 of the Code, and the Committee of Creditors ("CoC") was constituted. The....
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....restored the Resolution Plans of Alpha and Roma and permitted the Successful Resolution Applicants to proceed with the Resolution Plans and complete the projects within the timelines indicated therein. The Appellant submitted that the aforesaid findings were binding and constituted a material development which necessarily ought to have been taken into consideration by the Adjudicating Authority while considering the subsequent Section 7 proceedings against ETIPL. 8. The Appellant further submitted that, after the aforesaid Judgment of the Hon'ble Supreme Court, Mr. Satyabrata Mitra, the Authorized Representative, along with 145 other homebuyers/financial creditors/allottees of ETIPL, instituted Restored Company Petition (IBC) No.9/ND/2025 [Old C.P. (IB) No.196/ND/2023] under Section 7 of the Code against ETIPL. The Appellant stated that the petition alleged a default of Rs. 28,64,48,786/- arising from the financial debt paid by the applicants towards purchase of their respective units and the non-delivery of flats/non-payment of the amounts paid by the applicants. The Adjudicating Authority reserved the matter for orders on 15.04.2026 and thereafter, vide Order dated 01.06.2026,....
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....ant. The Appellant emphasised that such impossibility was not attributable to any default, negligence, omission or unwillingness on their part but arose solely because the land-owning entity itself had subsequently been subjected to CIRP. 11. The Appellant further contended that the doctrine of lifting of the corporate veil, already applied by the Hon'ble Supreme Court, assumes particular significance in the present case. The Appellant submitted that once the Hon'ble Supreme Court had held EIL to be the real driving force behind the development of the project and the subsidiary companies, including ETIPL, to be merely a front, the CIRP of ETIPL could not have been considered in complete isolation from the restored Resolution Plan of EIL. According to the Appellant, the legal effect of the Judgment dated 05.05.2026 required the Adjudicating Authority to consider the relationship between EIL and ETIPL and the consequences of placing the land necessary for implementation of EIL's Resolution Plan into a separate insolvency estate. The Appellant stated that failure to consider this binding finding resulted in an order which frustrates the very implementation of the Resolution Plan re....
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....tory by a subsequent event without the competent forum examining the effect of such event upon the restored plan. The Appellant stated that while Section 31 makes an approved Resolution Plan binding, the insolvency framework also empowers the adjudicatory forums to issue appropriate directions where subsequent supervening circumstances fundamentally alter the factual and legal basis upon which implementation of the plan depends. The Appellant therefore submitted that the appropriate course was to preserve the efficacy of the restored Resolution Plan and harmonise the competing proceedings rather than permitting circumstances which make its implementation impossible. 15. The Appellant further stated that, being the Monitoring Committee constituted pursuant to the approved Resolution Plan, it was directly entrusted with supervision, monitoring and facilitation of implementation of the Resolution Plan of EIL. Therefore, once the commencement of CIRP against ETIPL created a direct impediment to such implementation, the Monitoring Committee was required to seek appropriate directions from the competent forum. The Appellant submitted that the Monitoring Committee accordingly held a me....
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...., legality and implementation of the restored Resolution Plan. 18. The Appellant further contended that the Impugned Order fails to appreciate the consequences flowing from Sections 18, 25, 30 and 31 of the Code. It was submitted that once the CIRP of ETIPL commenced, the project land came within the insolvency estate under the control and custody of the Resolution Professional, whereas the Resolution Plan of EIL requires the same land to be available for project implementation. Therefore, continuation of the CIRP against ETIPL directly obstructs implementation of the Resolution Plan restored by the Hon'ble Supreme Court. The Appellant stated that the legislative intent underlying Sections 30 and 31 would be defeated if an approved and restored Resolution Plan could be rendered incapable of implementation merely because of a subsequent insolvency proceeding concerning an entity whose asset constitutes the very foundation of the project contemplated under that plan. 19. The Appellant submitted that the principle lex non cogit ad impossibilia is attracted to the facts of the present case, since the law does not compel a party to perform an act which has become impossible due to....
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....d with and set aside by this Appellate Tribunal in exercise of its jurisdiction under Section 61 of the Code, and that appropriate directions ought to be issued so as to harmonise the insolvency proceedings, give effect to the binding Judgment of the Hon'ble Supreme Court and preserve the implementation of the approved Resolution Plan. 22. Concluding arguments, the Appellant requested this Appellate Tribunal to set aside the Impugned Order and allow the present Appeal. Findings 23. At the outset, we note that by the Impugned Order, the Adjudicating Authority admitted the application filed under Section 7 of the Code by Mr. Satyabrata Mitra and 145 other homebuyers of the project "Earth Towne" and initiated the CIRP against Earth Towne Infrastructure Private Limited ("ETIPL"/ "the Corporate Debtor"). The Appeal, therefore, raises a question of some consequence at the intersection of group insolvency and the finality of resolution: whether, after the Hon'ble Supreme Court has, by its judgment dated 05.05.2026, restored the resolution plan for the Earth Towne project in the CIRP of the holding company, Earth Infrastructures Limited ("EIL"), and has lifted the corporate veil b....
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....e CIRP of EIL without the consent of GNIDA. Civil Appeals were preferred before the Hon'ble Supreme Court, including Civil Appeal No. 2466 of 2023 by the Earth Towne Flat Buyers Welfare Association. e) During the pendency of the Civil Appeals, Mr. Satyabrata Mitra and other homebuyers of Earth Towne ("the Financial Creditors" / "the Homebuyers") filed C.P. (IB) No. 196/ND/2023 under Section 7 of the Code against ETIPL. The Appellant has asserted, and it is not shown to be otherwise, that the petition was filed because the Homebuyers were uncertain of the fate of the Civil Appeals. The petition was dismissed by the Adjudicating Authority on 21.10.2024 on the ground that the threshold under the second proviso to Section 7(1) of the Code was not met. f) That order was set aside by this Appellate Tribunal by judgment dated 04.09.2025 in Company Appeal (AT) (Ins.) No. 2171 of 2024 (Mr. Satyabrata Mitra & Ors. v. Earth Towne Infrastructure Pvt. Ltd.). This Appellate Tribunal held that the threshold was to be tested at the stage of filing and with reference to the units of ETIPL, and that it was met. It is of significance that this Appellate Tribunal expressly confined i....
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....s. 2,00,000/- directed by the Adjudicating Authority towards CIRP expenses; and (iii) the Master Data of ETIPL on the MCA portal reflects its status as "Struck Off", with the last financial statements filed being for the year ended 31.03.2014. 26. We note that the Adjudicating Authority, in the Impugned Order, noticed that EIL is the holding company of ETIPL, that ETIPL was incorporated as a Special Purpose Company for the purpose of the Earth Towne project, and that the petitioning homebuyers are the same set of creditors who are creditors of EIL, so that the debt of ETIPL and of EIL is related to one project, "Earth Towne". Having so noticed, the Adjudicating Authority nevertheless proceeded to admit the application due to established debt and default. The Impugned Order proceeds on the premise that the CIRP of EIL and the Section 7 application against ETIPL could run side by side, as two independent processes. That premise may have held good while the resolution plan for Earth Towne stood set aside and the Civil Appeals were pending. The Impugned Order, however, contains no consideration of the position after 05.05.2026, when the Hon'ble Supreme Court restored the plan ....
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.... procedure is the handmaid of justice. 32. We also observe that the IRP has not opposed the Appeal. His stand, as reflected in I.A. No. 2986/2026, is that the Hon'ble Supreme Court Judgment has a direct and substantial bearing on the present CIRP. He has submitted that the leasehold land of ETIPL is the substratum of the Earth Towne project covered by the restored plan; that the moratorium under Section 14 of the Code, now in force against ETIPL and its assets, and the obligation of the successful resolution applicant to complete the project from 01.06.2026 operate over the same subject matter and are capable of coming into direct conflict; and that the Supreme Court Judgment, had it been considered ny the Adjudicating Authority, may have materially influenced the decision on admission. The IRP has, however, fairly stated that he places the judgment on its own terms and does not express any independent opinion on its interpretation. 33. Upon consideration of various submissions, as noted above, the following issues arise for determination: Issue I: Whether the Appeal at the instance of the Monitoring Committee is maintainable, and whether this Appellate Tribunal may take i....
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....isation on the part of the appellant, itself, that the Adjudicating Authority but perhaps could not revisit its order. Nor does the pendency of I.A. No. 2986/2026 file by the IRP bar this Appeal. The Appellant is not the applicant in that I.A., and the question whether the Adjudicating Authority possesses the power to recall an order of admission on the ground canvassed therein is itself open to serious doubt. The statutory appellate remedy under Section 61 is the appropriate forum for the challenge. 37. As regards the Hon'ble Supreme Court Judgment not having been placed before the Adjudicating Authority, it is settled that an appellate forum may take notice of subsequent events and developments which have a bearing on the relief, so as to shorten litigation and to do complete justice. The present case is a fortiori, for the Supreme Court Judgment is not a subsequent event at all; it was pronounced on 05.05.2026, nearly four weeks prior to the Impugned Order, and it concerns the very project of which the Financial Creditors are allottees. Being a law declared by the Hon'ble Supreme Court and a direction issued by it in respect of the very subject matter, it binds all courts and....
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....ciation represents about 1,600 of the approximately 1,878 homebuyers of Earth Towne, that this majority supports Roma's resolution plan, and that Roma does not propose to pass GNIDA's dues on to the homebuyers. We also note that judgement records that securing completion of the stalled projects was "the very aim" of the CIRP against EIL, and permits the successful resolution applicants to proceed with their plans to complete, inter alia, Earth Towne and directed that the resolution plans "shall stand restored" and that the time frames for completion "shall commence from the 1st day of June, 2026". 41. We also note that the Hon'ble Supreme Court did not decide the case on the narrow question of whether the leasehold interest was an "asset" of EIL within Sections 18 and 25 of the Code. It found it unnecessary to do so precisely because it rested its conclusion on a broader foundation, namely, that the corporate veil between EIL and ETIPL deserved to be lifted, EIL being the main driving force and ETIPL being "only a front". The consequence of lifting the veil is that, for the purposes of the resolution of the Earth Towne project, EIL and ETIPL are treated as one economic entity, a....
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....s non-payment of a debt when the whole or any part or installment of the amount of debt has become due and payable. This Appellate Tribunal, in JC Flowers (supra), has held that the words "due and payable" mean that the debt in respect of which default is alleged must be a subsisting debt, and that the creditor must establish not merely the existence of a debt but a default in respect of it. What, then, was the "debt" of the Financial Creditors? It is common ground that they are allottees of units in Earth Towne, a single residential project developed by EIL on the land of ETIPL, and that their monies were paid to EIL as developer. Their claim, in substance, is for the delivery of their units or the refund of the monies paid for them. The Adjudicating Authority itself found, in the Impugned Order, that the Financial Creditors are the same set of creditors who are creditors of EIL, and that the debt of ETIPL and EIL relates to one project, "Earth Towne" [Impugned Order, paras 8, 11 and 13]. The record further indicates that the claims of a substantial number of the petitioning homebuyers had been admitted in the CIRP of EIL [NCLT order dated 09.07.2024 in C.P. (IB) No. 196/ND/2023 r....
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....d other stakeholders involved in the resolution plan." The allottees of Earth Towne are, by any reckoning, "stakeholders involved in the resolution plan" of Roma, which is a plan for the completion of their very project. The binding effect of Section 31(1) thus operates upon them, and the restoration of the plan by the Hon'ble Supreme Court revives that binding effect in full. 49. We acknowledge the fact that the Appellant has fairly conceded that there is no bar in law to two petitions being filed in respect of the same claim, one against the developer and the other against the landowner. We agree with the proposition, but the question here is different. It is not whether the Financial Creditors could file the petition in 2023, when the resolution plan for Earth Towne stood set aside and its future was uncertain; it is whether the petition could be admitted on 01.06.2026, after the plan had been restored by the Hon'ble Supreme Court and the land of ETIPL had been brought within it. The maintainability of the application at the time of filing does not answer the question whether, at the time of admission, a default subsisted which justified the initiation of a CIRP. The Adjudica....
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....an application; it is not a finding that a default exists which justifies admission. The earlier judgment of this appellate Tribunal, therefore, does not foreclose the enquiry undertaken by us. Issue III is answered in favour of the Appellant as on the date of the Impugned Order there was no default of ETIPL, distinct from the claims resolved under the restored resolution plan, capable of founding a separate CIRP under Section 7 of the Code. 52. Issue IV: Whether the continuation of the CIRP against ETIPL is compatible with the Hon'ble Supreme Court Judgment and the scheme of the Code. 53. It needs to be appreciated clearly that even apart from the question of default, the continuation of the CIRP against ETIPL would bring it into direct collision with the Supreme Court Judgment. Upon admission, the moratorium under Section 14 of the Code was attached to ETIPL and its assets. Section 14(1)(b) of the code prohibits the transferring, encumbering, alienating or disposing of any of its assets or any legal right or beneficial interest therein; the management of ETIPL vests in the IRP; and a fresh process for resolution of ETIPL, with its own committee of creditors and its own r....