The case Greater Noida Industrial Development Authority v. Prabhjit Singh Soni and Another revolves around the classification of creditor claims during a Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code, 2016 (IBC).
Brief Facts
- Lease Agreement: The Greater Noida Industrial Development Authority (GNIDA) leased a plot to a corporate debtor for a residential project. The corporate debtor defaulted on instalment payments, leading GNIDA to issue a demand-cum-pre-cancellation notice.
- Initiation of CIRP: Subsequently, a Company Petition was filed to initiate CIRP against the corporate debtor, which was admitted. GNIDA submitted its claim for unpaid instalments, asserting its status as a financial creditor.
- Claim Classification: The Resolution Professional (RP) classified GNIDA as an operational creditor and requested that GNIDA resubmit its claim in Form B. GNIDA did not file a fresh claim.
- Approval of Resolution Plan: During this period, the Committee of Creditors (CoC) approved a resolution plan, which the National Company Law Tribunal (NCLT) subsequently accepted.Upon learning of the plan’s approval, GNIDA challenged both the resolution plan and its classification as an operational creditor. The NCLT dismissed GNIDA’s applications, noting the seven-month delay between GNIDA’s claim submission and the resolution plan’s approval.
Final Judgment
- Supreme Court’s Decision: GNIDA appealed to the Supreme Court, which examined whether the NCLT possessed the inherent power to recall its order approving a resolution plan and whether GNIDA’s claim was correctly classified. The Supreme Court ruled in favour of GNIDA, emphasizing that the NCLT has inherent powers to recall its orders in the interest of justice. The Court found that the misclassification of GNIDA’s claim and non-compliance with procedural requirements under the IBC warranted the invalidation of the resolution plan. Consequently, the resolution plan was set aside, and the matter was remanded to the CoC for reassessment.
This judgment underscores the importance of accurate claim classification and adherence to due process during CIRP, reaffirming the NCLT’s inherent powers to ensure justice.