The Supreme Court has dismissed the appeal from the NOIDA Special Economic Zone Authority, stating that the resolution plan approved by the Committee of Creditors takes priority over the SEZ Act and claims for statutory dues.

The Supreme Court rejected the appeals from the NOIDA Special Economic Zone Authority, stating that an approved resolution plan takes precedence over the Special Economic Zone Act and claims for statutory dues. The Court upheld the National Company Law Appellate Tribunal’s (NCLAT) ruling, which confirmed a Resolution Plan that favored the commercial judgment of the Committee of Creditors (CoC). It emphasized that the Insolvency and Bankruptcy Code, 2016 (IBC 2016) has priority over other laws, including the Special Economic Zone Act, 2005 (SEZ Act, 2005). Justices Abhay S. Oka and Augustine George Masih noted that claims related to transfer fees should not be challenged by courts, as they pertain to the CoC’s commercial decisions. They stated that any interference is not justiciable except as allowed by Section 30(2) of IBC 2016. The Court found no breach of law or procedure regarding the approved Resolution Plan, which was deemed appropriate and should remain unchanged. The financial choices made by the Committee of Creditors, particularly regarding the plan’s viability, are to be respected.

Shree Bhoomika International Limited (the Corporate Debtor) was given a sub-lease for a property in the NOIDA Special Economic Zone (NSEZ) by the appellant. The Corporate Debtor failed to make lease payments starting in 1999 and stopped all operations on the land by 2003-2004, leading to financial losses for the Government and claims of violations of Special Economic Zone regulations.A Resolution Plan was approved by the Committee of Creditors (CoC) and subsequently sanctioned by the National Company Law Tribunal (NCLT). The appellant challenged this decision, demanding the full amount of Rs. 6.29 crores, claiming the right to recover the entire admitted claim.

After the NCLT rejected the appellant’s objections, the NOIDA Special Economic Zone Authority took the matter to the National Company Law Appellate Tribunal (NCLAT), disputing the approval of the Resolution Plan. The NCLAT also dismissed these appeals. The Supreme Court rejected the appellant’s argument about inadequate notification regarding auction proceedings, finding no procedural errors. It stated that “all dues, including statutory dues” prior to the Resolution Plan approval were settled, with no further actions permitted. The Bench also found no reason to challenge the CoC’s business decisions, as these are based on the “commercial wisdom” of the CoC and are considered “non-justiciable.”

Thus, the Court stated, “The argument from the Learned Senior Counsel that exemptions from NSEZ payments, including any fees or penalties for renewing sub-leases or for transfer charges related to changes in directorship or shareholding in favor of the Resolution Applicant must be addressed according to Clause 10.9 of the Resolution Plan cannot be accepted. This is in light of Section 238 of the IBC 2016, which asserts that the provisions of IBC 2016 take precedence over other laws. Therefore, the implications are that the provisions of the SEZ Act 2005 must yield to IBC 2016.” As a result, the Supreme Court dismissed the appeals.

Cause Title: Noida Special Economic Zone Authority v. Manish Agarwal & Ors. (Neutral Citation: 2024 INSC 839)
Appearance:
Appellant: Senior Advocate Manish Singhvi; AOR Manju Jetley; Advocates Anshul Rawat and Saurabh George
Respondents: Senior Advocate Gopal Jain; AOR Mithu Jain and Karan Batura; Advocates Abhishek Anand, Karan Kohli, Krishna Sharma, Kunal Godhwani and Kinjal Chadha