A) ABSTRACT / HEADNOTE

The case Greater Noida Industrial Development Authority v. Prabhjit Singh Soni & Anr., explores the inherent powers of the National Company Law Tribunal (NCLT) and its ability to recall orders under the Insolvency and Bankruptcy Code, 2016 (IBC). Key issues included whether the NCLT could recall an order of approval passed under Section 31(1) of the IBC, the maintainability of a recall application under Section 60(5), and the sufficiency of the resolution plan under Section 30(2) read with CIRP Regulations 37 and 38. The Supreme Court held that the NCLT has inherent powers preserved under Rule 11 of the NCLT Rules, 2016, allowing recall of orders on limited grounds such as procedural lapses, fraud, or violation of natural justice. The judgment also clarified the criteria for verifying claims under the IBC, emphasizing the need for substantive rather than formal compliance.

Keywords: Inherent power of NCLT, Resolution Plan, Section 30(2) IBC, Claim Verification, Recall Application.

B) CASE DETAILS

i) Judgement Cause Title
Greater Noida Industrial Development Authority v. Prabhjit Singh Soni & Anr.

ii) Case Number
Civil Appeal Nos. 7590-7591 of 2023

iii) Judgement Date
12 February 2024

iv) Court
Supreme Court of India

v) Quorum
Dr. D.Y. Chandrachud (CJI), J.B. Pardiwala, and Manoj Misra JJ.

vi) Author
Manoj Misra, J.

vii) Citation
[2024] 2 S.C.R. 258 : 2024 INSC 102

viii) Legal Provisions Involved

• Insolvency and Bankruptcy Code, 2016 (Sections 30(2), 31(1), 60(5))
• Insolvency and Bankruptcy Board of India (CIRP) Regulations, 2016 (Regulations 7, 8, 37, 38)
• National Company Law Tribunal Rules, 2016 (Rule 11)
• Code of Civil Procedure, 1908 (Section 151)

ix) Judgments Overruled by the Case (if any)
None explicitly stated.

x) Case Related to Which Law Subjects
Insolvency Law, Corporate Law, Procedural Law.

C) INTRODUCTION AND BACKGROUND OF JUDGMENT

The appeal arises from an order of the National Company Law Appellate Tribunal (NCLAT), affirming the NCLT’s dismissal of applications filed by the Greater Noida Industrial Development Authority (GNIDA). The case centers on GNIDA’s treatment as an operational creditor, alleged non-compliance with claim verification norms, and lack of participation in the Committee of Creditors (CoC) meetings. The primary contention was whether the NCLT could recall its order approving a resolution plan that excluded GNIDA’s substantial claims.

D) FACTS OF THE CASE

GNIDA leased land to M/s JNC Construction Pvt. Ltd., the corporate debtor, for a residential project. Default occurred in installment payments, prompting GNIDA to file claims amounting to ₹43.4 crore. The Resolution Professional (RP) treated GNIDA as an operational creditor and requested resubmission of claims in a specified form. GNIDA did not comply but maintained its claim. The approved resolution plan significantly undervalued GNIDA’s claims and excluded it from CoC deliberations. GNIDA sought recall of the NCLT’s approval order, arguing procedural lapses, lack of notice, and substantive non-compliance with statutory requirements.

E) LEGAL ISSUES RAISED

i) Whether the NCLT can exercise inherent powers to recall an order approving a resolution plan under Section 31(1) of the IBC?
ii) Whether GNIDA’s application for recall was barred by time?
iii) Whether the resolution plan met the statutory requirements of Section 30(2) read with CIRP Regulations 37 and 38?
iv) What relief, if any, GNIDA was entitled to?

F) PETITIONER’S ARGUMENTS

The petitioner, GNIDA, argued:

1. Its claim, supported by proof, classified it as a financial creditor, granting CoC membership.
2. The RP’s failure to consider its claim and notify CoC meetings invalidated the resolution process.
3. The resolution plan failed to provide priority for its secured dues as required under Section 30(2).
4. Procedural lapses and ex parte proceedings violated principles of natural justice.

G) RESPONDENT’S ARGUMENTS

Respondents contended:

1. GNIDA was correctly treated as an operational creditor per IBC definitions.
2. The resolution plan adhered to commercial wisdom of the CoC, shielded from judicial review.
3. GNIDA’s application was delayed and barred by limitation.
4. The recall application lacked merit, as statutory compliance was met in approving the resolution plan.

H) JUDGEMENT

a. RATIO DECIDENDI

1. Inherent Power of NCLT: NCLT retains inherent powers under Rule 11 of the NCLT Rules, 2016, to recall orders, provided procedural errors or substantive violations are proven.
2. Claim Verification: Submission forms under CIRP Regulations are directory, not mandatory; claims must be evaluated substantively based on proof.
3. Resolution Plan Validity: The plan failed to meet statutory benchmarks under Section 30(2) IBC and CIRP Regulations 37 and 38.

b. OBITER DICTA

The decision reinforces the tribunal’s responsibility to ensure fair adjudication and substantive justice, highlighting limitations on procedural rigidity.

c. GUIDELINES (IF ANY)

• Resolution Professionals must substantively verify claims, prioritizing their merit over formal compliance.
• Tribunals must exercise inherent powers judiciously to rectify gross procedural or substantive errors.

I) CONCLUSION & COMMENTS

The Supreme Court remitted the resolution plan to the CoC for re-submission after addressing statutory compliance. The judgment underscores the balance between procedural regularity and substantive fairness under the IBC framework.

J) REFERENCES

a. Important Cases Referred

1. Ghanashyam Mishra & Sons (P) Ltd. v. Edelweiss Asset Reconstruction Co. Ltd., (2021) 9 SCC 657.
2. Jaypee Kensington Boulevard Apartments Welfare Association v. NBCC (India) Ltd., (2022) 1 SCC 401.
3. Manohar Lal Chopra v. Rai Bahadur Rao Raja Seth Hiralal, AIR 1962 SC 527.

b. Important Statutes Referred

1. Insolvency and Bankruptcy Code, 2016
2. National Company Law Tribunal Rules, 2016
3. Code of Civil Procedure, 1908