NCLAT Slams GNIDA with Costs for Obstructing Insolvency Resolution

In a stern rebuke to the Greater Noida Industrial Development Authority (GNIDA) , the National Company Law Appellate Tribunal (NCLAT) has dismissed the authority’s latest appeal and imposed cost of ₹1 lakh. The tribunal found that GNIDA’s persistent litigation attempts were effectively derailing the successful implementation of a resolution plan for M/s Swati Health and Education Services Private Limited , which had already attained finality.

A Cycle of Endless Litigation

The dispute arose following the corporate insolvency resolution process (CIRP) of the Corporate Debtor, Swati Health and Education Services, which formally entered the process in March 2022. While the resolution plan was approved by the Adjudicating Authority—the National Company Law Tribunal (NCLT) —as early as August 2023, GNIDA has repeatedly challenged the plan’s provisions, specifically on the grounds that it should be treated as a "secured operational creditor."

Despite having these claims rejected by the NCLAT on grounds of limitation and seeing the matter reach the Supreme Court —where a similar civil appeal was dismissed—GNIDA launched fresh interlocutory applications before the NCLT and subsequent appeals before the NCLAT. The current appeal, CA (AT) (Ins) No. 322/2025, sought to challenge an October 2024 order that had effectively directed GNIDA to comply with the plan by accepting funds deposited in an escrow account.

The Tribunal’s Verdict: Finality Must Prevail

The NCLAT bench, comprising Justice N. Sesha Sayee, Mr. Arun Baroka, and Mr. Indevar Pandey, expressed significant frustration with the appellant's conduct. The Court highlighted that the resolution plan’s approval had attained legal finality, and that GNIDA's attempts to re-agitate settled issues were in violation of the principles of res judicata .

"The Appellant has been litigating it on one pretext or the other in various fora even after the approval of the resolution plan," the Bench noted in its judgment. The tribunal further emphasized that by ignoring the orders of the Supreme Court and this appellate body, GNIDA has been effectively "wasting the precious judicial time and hindering implementation of the approved resolution plan."

Key Observations

• On the finality of the resolution plan: "Plan approval on 24.08.2023 having attained finality, we do not find any error in the view taken by the Adjudicating Authority that the said Order has become final."
• On the abuse of process: "Against the principles of res-judicata the Appellant is re-agitating the issue and upset the Insolvency Resolution Proceedings."
• On the cost to the debtor: "Revival of the debtor company will become impossible if the SRA is sprung with the surprise debts which are not part of the resolution."

Practical Implications and Next Steps

The decision underscores a hardening judicial stance against authorities who impede the successful revival of defaulting companies. By rejecting the arguments of the Successfully Resolution Applicant (SRA) to make the plan implementation "conditional" while simultaneously penalizing the appellant for non-cooperation, the NCLAT cleared the path for the SRA to regain possession of the Corporate Debtor’s assets.

The Tribunal directed GNIDA to deposit the ₹1 lakh cost into the PM Cares Fund and emphasized the requirement for immediate issuance of necessary No Objection Certificates (NOCs) to allow the resolution process to finally reach its conclusion. The order sends a clear signal that once the insolvency process reaches the stage of an approved plan, local authorities cannot use their status to stall the economic rehabilitation of a corporate entity.

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