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2025 Supreme(All) 2838
IN THE HIGH COURT OF ALLAHABAD
MAHESH CHANDRA TRIPATHI, PRASHANT KUMAR, JJ.
M/s Arena Superstructures Pvt Ltd And Another - Appellants
Versus
State of U.P. and Another - Respondents
WRIT - C No. - 8447 of 2024, Writ - C No. - 6041 of 2024
Decided on : 24-02-2025
Advocate Appeared:
For the Appellant : Ami Tandon
For the Respondent: C.S.C., Kaushalendra Nath Singh
Salomon vs. A. Salomon & Co. Ltd. , 1897 AC 22
The court emphasized that insolvency proceedings should not be exploited to evade liabilities, confirming the necessity to protect homebuyers' interests and investigate corporate fraud.
Headnote:(A) Insolvency and Bankruptcy Code, 2016 - Section 7 - Writ petitions filed against the refusal of Noida Authority to revalidate layout maps for a sports city project, which was stalled due to non-compliance by developers - The court found that the developers had siphoned funds and failed to fulfill obligations under the lease deed, leading to a fraudulent insolvency process. The court emphasized the need for the Noida Authority to comply with the NCLT's resolution plan and protect the interests of homebuyers. (Paras 1-196)
(B) Corporate Fraud - The court held that the corporate veil could be pierced to expose fraudulent activities by the management, as it was essential to prevent evasion of liabilities. (Paras 104-112)
(C) Public Interest - The court reaffirmed the necessity of safeguarding homebuyers' interests and ensuring that the developers fulfill their obligations under the lease and resolution plan. (Paras 166-171)
(D) Enforcement Directorate - The court directed the ED to investigate the siphoned funds and ensure recovery for the affected parties. (Paras 194-196)
| Table of Content |
|---|
| 1. background of the case and relevant facts. (Para 1 , 3 , 4 , 5 , 6 , 7 , 8 , 10 , 11 , 13 , 14 , 15 , 16 , 17 , 18) |
| 2. arguments presented by the petitioners. (Para 41 , 42 , 43 , 44 , 46 , 47 , 48 , 49 , 50 , 51 , 52 , 53 , 54 , 56 , 58) |
| 3. homebuyers' plight and arguments. (Para 60 , 61 , 62 , 63 , 64 , 66 , 67 , 68 , 69 , 70) |
| 4. arguments from noida authority. (Para 72 , 73 , 74 , 75 , 76 , 78 , 79 , 80 , 81) |
| 5. court's observations on facts and legal principles. (Para 124 , 125 , 126 , 128 , 129 , 130 , 132) |
| 6. legal conclusions drawn by the court. (Para 151 , 152 , 153 , 154 , 155 , 156 , 157 , 158) |
| 7. final conclusion and order. (Para 195 , 196) |
JUDGMENT :
TABLE OF CONTENTS
| S.N. | Heading | Page Nos. | Para Nos. |
| 1 | Factual Matrix of the Case | 03-08 | 03-19 |
| 2 | Insolvency Proceedings | 08-17 | 20-40 |
| 3 | Argument of the Petitioners (Writ-C No.6041 of 2024) | 18-22 | 41-59 |
| 4 | Argument of the Petitioners (Writ-C No.8447 of 2024) | 22-26 | 60-71 |
| 5 | Argument on behalf of Noida Authority | 27-36 | 72-101 |
| 6 | Insolvency Proceedings | 36-37 | 102-104 |
| 7 | Piercing of Corporate Veil | 37-40 | 105-116 |
| 8 | Non-Development of the Sports Facilities | 40-41 | 117-119 |
| 9 | Interest of Homebuyers | 41-41 | 120-120 |
| 10 | Notice for Payment of Instalments | 41-42 | 121-121 |
| 11 | Change in Shareholdings of Various Companies | 42-50 | 122-122 |
| 12 | Analysis | 50-50 | 123-124 |
| 13 | I-Pre-Insolvency Part | 50-53 | 125-128 |
| 14 | Criminal Complaint/Charge-Sheet | 53-54 | 129-132 |
| 15 | Piercing of Corporate Veil | 55-57 | 133-142 |
| 16 | Money Laundering | 57-61 | 143-150 |
| 17 | II-Post Insolvency | 61-63 | 151-158 |
| 18 | Fraud | 63-66 | 159-165 |
| 19 | Interest of the Homebuyers | 66-68 | 166-174 |
| 20 | High Court’s Interference | 68-70 | 175-183 |
| 21 | Conclusion | 71-71 | 183-183 |
| 22 | Effect on Consortium When a Member of the Consortium goes into the Insolvency | 71-75 | 184-196 |
1. Both the writ petitions have been clubbed and heard together as they involve similar issue, and hence, they are being decided by this common judgement and order.
2. Heard Sri Shashi Nandan, Senior Advocate assisted by Sri Ami Tandon, learned counsel for the petitioners, Sri Ritaj Vikram Singh, learned counsel for the petitioner in the connected petition (Writ-C No. 8447 of 2024), Sri Mohan Srivastava, learned Standing Counsel for the State- respondents and Sri Kaushalendra Nath Singh and Ms. Anjali Gokhlani, learned counsel for respondent-NOIDA.
FACTUAL MATRIX OF WRIT-C NO.6041 OF 2024
3. The instant writ petition has been preferred by the petitioners M/s Arena Superstructures Pvt. Ltd.[ASPL] and M/s Purvanchal Project Pvt. Ltd.[PPPL]through their authorised signatory.
4. Some time in the year 2010-2011, New Okhla Industrial Development Authority[NOIDA]conceived a Policy to develop Sports City in Sector Nos. 78, 79, 101 and 150 and thereafter, a scheme was floated and brochure was issued. In pursuance there of, applications were invited by the developers. A Consortium seems to have applied for the allotment of this land and the same was allotted to the Consortium of the Xanadu Estates Private Limited on 04.05.2011. Later, on the request of lead consortium members, NOIDA sub-divided the plots into six parts. Out of these six parts. The division was as follows:-
1). . SC-01/A Sector -79 M/s Sequel Buildcon Pvt. Ltd. - 1,00,000 Sq
2). . . SC-01/B Sector -79 M/s Sequel Buildcon Pvt. Ltd. - 48,000 Sqm.
3). SC-01/C Sector -79 M/s Three C green Developer – 2,50,027.5 sq mts.
4). SC-01/D Sector -79 M/s Kindle Developers Pvt. Ltd. - 1,00,000 Sqm.
5). SC-01/E Sector -79 M/s Xanadu Realcon Pvt. Ltd. - 80,000 Sqm.
6). SC-01 Sector -78 M/s Xanadu Infratech Pvt. Ltd. - 14,272.50 Sqm,
5. The Plot No. SC-01/A, Sector-79 was allotted to M/s Sequel Building Concept Pvt. Ltd. with an area of 1,00,000 square metres, where the promoters were Nirmal Singh, Vidur Bhardwaj and Surpreet Singh Suri and the shareholding of M/s Sequel Building Concept Pvt. Ltd. was 99.99% and 0.01% with Surpreet Singh Suri as nominee on behalf of M/s Three C Universal Developers Pvt. Ltd.
6. M/s Sequel Buildcon Pvt. Ltd. again asked the NOIDA to further sub-divide the plot into two parts of measuring 50,000 square metres each;
i) First plot of 50,000 sq m
