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Noida Special Economic Zone Authority vs. Manish Agarwal & Ors.

Not available · 2024 INSC 839Decided 5 Nov 2024
Not available
Justice Abhay S. Oka · Justice Augustine George Masih

Background

NOIDA Special Economic Zone Authority (NSEZ) had sub-leased a large plot of land to Shree Bhoomika International Limited, which later defaulted on lease payments and stopped operations. NSEZ, as an operational creditor, triggered insolvency proceedings (CIRP) against the company. When the Committee of Creditors approved a resolution plan that gave NSEZ only Rs. 50 lakh against its admitted claim of over Rs. 6.29 crore, NSEZ objected, both before the insolvency tribunal (NCLT) and on appeal (NCLAT), but lost at both stages.

Decision Breakdown

The Supreme Court upheld the dismissal of NSEZ's appeals. It held that valuation of a distressed company's assets is a factual matter that courts should not disturb when based on proper material, and that a resolution plan approved by the Committee of Creditors reflects "commercial wisdom" that courts and tribunals should not interfere with except on narrow statutory grounds. The Court also held that the Insolvency and Bankruptcy Code overrides other special laws (like the Special Economic Zone Act) under Section 238, so NSEZ could not insist on its own zone rules or fees overriding the resolution plan. Since NSEZ had already accepted a payment under the plan, its appeal was found meritless.

Lesson Learnt

Once a resolution plan is approved by a company's creditors in an insolvency process, government bodies and other creditors have very limited scope to challenge it in court: the insolvency law's commercial resolution process takes precedence over sector-specific rules and fees.

Official source (sci.gov.in)View Judgment (PDF)

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