The Authorised Representative for Granite Gate Properties Private Limited, Ms. Rakesh Verma v. M/S New Okhla Industrial Development Authority and Ors.
[2026] 9 S.C.R. 434 : 2026 INSC 952
The Authorised Representative for Granite Gate
Properties Private Limited, Ms. Rakesh Verma
v.
M/s New Okhla Industrial Development Authority and Ors.
(Civil Appeal No. 3132 of 2026)
03 September 2026
[J.B. Pardiwala and K. Vinod Chandran,* JJ.]
Issue for Consideration
Issue arose as to whether the time extension charges are to be
treated as Corporate Insolvency Resolution Process-CIRP costs.
Headnotes†
Housing – Urban Housing – Time extension charges, if to be
treated as Corporate Insolvency Resolution Process-CIRP
costs – Housing project itself ran into difficulties, and lessee/
developer declared as a Corporate Debtor – Homebuyers
together pooled money to carry on the project during the
CIRP period – Resolution Plan of the SRA accepted by the
CoC consisting of the homebuyers alone – Numerous IAs
before the adjudicating authority – NCLT passed various
directions – Appeal filed by the Authorized Representative-AB
and NOIDA-lessor – Order by the NCLAT directing the time
extension charges with regard to both the lease deeds to be
treated as CIRP costs for the maximum period of three years
provided in the lease deed, for completion of the project –
Challenge before this Court by AR and NOIDA-respondent,
wherein case of the respondent that the time extension
charges are sought, not for three years alone, but for the
further period as introduced by office order which are also
to be included as CIRP costs – Correctness:
Held: Project was commenced to provide housing, an essential
part of development – Lured by the opportunity, many persons
had invested their savings with the intention of obtaining a roof
over their heads – Project was to be completed in the year 2016,
and despite another decade having passed, the homebuyers still
left in the lurch – Essential purpose of development would fail
if NOIDA brings in a stipulation of payment of default charges –
* Author
[2026] 9 S.C.R. 435
The Authorised Representative for Granite Gate Properties Private Limited,
Ms. Rakesh Verma v. M/s New Okhla Industrial Development Authority and Ors.
Default charges, as imposed in the lease deed as also now
introduced as per the new policy, specifies a percentage of the
lease premium to penalise a defaulting developer – Intention is also
to motivate completion within time lines and to act as a deterrent
to avoid time lags – On facts, defaulting developer is out of the
picture and the half baked project can be completed only if the
Resolution Plan is put into operation and completed – Thus, it
is only proper that NOIDA waives the penalty charges since it is
neither the default of the homebuyers nor the default of the SRA,
which led to the delay – Homebuyers and the SRA are sought to
be penalised for past sins of the Corporate Debtor, which cannot
be allowed, especially in the context of the authority imposing
penalty, i.e., the local authority being concerned essentially with
the development of the area under its control – Hence, the penalty
as imposed by the NOIDA on delay, now mulcted on the SRA
and the homebuyers, cannot be so validly imposed – Directions
to consider the time extension charges as CIRP costs set aside
and the impugned order modified to that extent – NOIDA’s appeal
praying for time extension charges even beyond the three years
upto the 10th year rejected. [Paras 13-16]
List of Acts
UP Industrial Area Development Act, 1976; Land Acquisition
Act, 1894.
List of Keywords
Time extension charges, if to be treated as Corporate Insolvency
Resolution Process-CIRP costs; Housing; Time extension charges;
Corporate Insolvency Resolution Process-CIRP costs; Housing
project; Corporate Debtor; Homebuyers; Resolution Plan of the
SRA.
Case Arising From
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3132
of 2026
From the Judgment and Order dated 17.07.2025 of the National
Company Law Appellate Tribunal in CAAT(I) No. 1479 of 2024
With
Civil Appeal No. 4207 of 2026
436 [2026] 9 S.C.R.
Supreme Court Reports
Appearances for Parties
Advs. for the Appellant(s):
Dhruv Mehta, Sr.Adv., Rachit Mittal, Yashraj Singh, Parish Mishra,
Kanishk Raj, Ms. Srishti Agrawaal, Abhishek Sinha, Ms. Aayushi
Kiran, Shivansh Bansal, Ravinder Singh, Ritvik Bharadwaj,
Ms. Nishita Kushwaha, Ms. Nishi, Ms. Garima Jain.
Advs. for the Respondent(s):
Krishnendu Datta, Sr.Adv., Ms. Garima Jain, Rachit Mittal, Yashraj
Singh, Parish Mishra, Kanishk Raj, Ms. Srishti Agrawaal, Abhishek
Sinha, Ms. Aayushi Kiran, Shivansh Bansal, Sumant Batra,
Som Raj Choudhury, Sanyam Saxena, Sahil Sethi, Ms. Shrutee
Aradhana, Prashant Kumar Nair, Ms. Elena Marin Mathew.
Judgment / Order of the Supreme Court
Judgment
K. Vinod Chandran, J.
Yet another case highlighting the plight of home buyers, who invest
their hard-earned life savings for a roof over their heads, on promises
of living in style and luxury, in grandiose high-rise buildings promised
by the developer, with exotic names, end up with the realization that
it was all a pipe dream.
2. Here, we are faced with a developer who took on perpetual lease,
at a high premium, two plots of land to put up highrise buildings;
apartment complexes thereon. On lease granted by the New
Okhla Industrial Development Authority (NOIDA), two projects were
advertised; one in Sector 100 and the other in Sector 110, called
project ‘Lotus Boulevard’ and project ‘Lotus Panache’ respectively.
3. The developer M/s Granite Gate Properties Private Limited, ran
into rough weather and was declared a Corporate Debtor (CD).
The Committee of Creditors (CoC) was constituted of the home
buyers who formed a Class of Financial Creditors. A Resolution Plan
was approved and is to be put in motion through the Successful
Resolution Applicant (SRA).
4. Numerous IAs were filed before the adjudicating authority, the NCLT,
which was disposed of together with an IA filed by the Resolution
[2026] 9 S.C.R. 437
The Authorised Representative for Granite Gate Properties Private Limited,
Ms. Rakesh Verma v. M/s New Okhla Industrial Development Authority and Ors.
Professional (RP) to approve the Resolution Plan of M/s SMV
Agencies Private Limited, who has now turned the SRA.
5. From amongst the various directions passed by NCLT, an appeal
was filed by the Authorized Representative for M/s Granite Gate
Properties Private Limited, essentially the home buyers (herein after
referred to as AR), NOIDA too filed an appeal.
6. In the appeal before us, the AR is concerned with the order of the
NCLAT which directed the time extension charges with regard to
both the lease deeds to be treated as CIRP costs for the maximum
period of three years provided in the lease deed, for completion of
the project. Insofar as NOIDA is concerned, they assert that the time
extension charges are sought, not for three years alone, but for the
further period as introduced by office order dated 18.10.2019, which
are also to be included as CIRP costs.
7. Mr. Dhruv Mehta, learned Senior Counsel appearing for the AR
submitted that during the CIRP, the home buyers pooled their own
resources as advance payment of the balance sale consideration
and carried out the construction as a going concern under the CoC
approved ‘Pool and Build’ mechanism. However, NOIDA sealed three
towers of the Lotus Panache on 16.10.2024 till a decision is arrived
on the time extension charges. As far as time extension charges are
concerned it does not come under Section 5(13)(c) of the Regulations
since neither is it incurred by the Resolution Professional nor does
it concern itself with the continuation of the project.
8. The time extension charges were claimed by NOIDA as dues
payable by the Corporate Debtor for the first year from December
2016 to December 2017, the second year from December 2017 to
December 2018 and in the third year from December 2018 up to the
insolvency commencement date on 10.01.2019. If at all, the time
extension charges are to be paid as CIRP costs only the remaining
period from 10.01.2019 would stand included. The time extension
charges in any event are penal in nature and the developer who
has caused the default having ended up in a CIRP, the inclusion as
CIRP costs would be unjust and misconceived. The default was of
the developer and homebuyers cannot be mulcted with that liability.
9. Mr. Rachit Mittal, learned counsel appearing for the appellant-NOIDA
in Civil Appeal No.4207 of 2026, on the other hand asserted that
without payment of the time extension charges, there is no question of
438 [2026] 9 S.C.R.
Supreme Court Reports
the project being continued and hence it has to be included as CIRP
costs. It is also pointed out from the lease deed that the lease would
be governed by the provisions of the UP Industrial Area Development
Act, 1976 as also by the Rules/Regulations made or directions issued
under this Act. NOIDA has come out with an office order dated
18.10.2019, as per the prevailing policy which, read with earlier office
order dated 18.06.2015 has stipulated time extension, even beyond
three years upto the 10th year. As per the new policy 7, 8, 9 and 10
percentage respectively for the first four years and thereafter at 1%
of the total premium per year upto the 10th year and cancellation
after that, which too has to be included as CIRP costs.
10. The SRA appears through Mr. Krishnendu Datta, learned Senior
Counsel who adopts the arguments of the AR but points out,
without prejudice, that in the resolution plan contingent protection
is capped at the overlap period balance alone and the resolution
plan itself records that unless specifically adjudicated to form part
of CIRP costs by a binding judicial pronouncement any cost above
Rs.3 crores estimate shall first be recovered from the allottees of
towers 17/18/19 of Lotus Panache as super area charge.
11. We are hence concerned with the issue as to whether the time
extension charges are to be treated as CIRP costs. We have looked
at the lease agreement produced as Annexure A1 in the appeal
filed by NOIDA. The lease deed indicates that the plot demised on
lease has been acquired under the Land Acquisition Act, 1894 for
development by NOIDA for the purpose of setting up an urban and
industrial township. Hence, the intention of NOIDA in entering into
such lease agreements is for development of urban and industrial
township. An overall development of the area under its control
to promote industrial and commercial enterprises as also build
homesteads in multi-storeyed buildings is the purpose behind the
acquisition and lease.
12. As the original lease deed existed, the stipulation for time extension
charges were at 4%, 5% and 6% in the first, second and the third
years of delay, respectively with only a stipulation for cancellation
of the lease itself after the three year period is over. It would result
in resumption of the properties to the NOIDA. The underlying
purpose of the lease itself is to provide adequate infrastructure for
the development of industries and commercial establishments as
also to provide housing by utilisation of lands, both as a welfare
[2026] 9 S.C.R. 439
The Authorised Representative for Granite Gate Properties Private Limited,
Ms. Rakesh Verma v. M/s New Okhla Industrial Development Authority and Ors.
measure and revenue generation to the local authority. When the
development fructifies, by virtue of the taxes and duties imposed
on the various activities as also housing there is considerable
generation of money, which is pumped into development activities
again. The authority surely is involved in a commercial venture, but
it cannot be divorced from the essential purpose which every local
authority pursues and advances, i.e.: welfare measures without a
mere profit motive. Development brings within its wake infrastructure
challenges and these are to be met from the taxes, cesses and
duties levied and collected, necessitating prudent financial and
economic measures too.
13. In the present case, we see that the project was commenced to
provide housing, an essential part of development. Lured by the
opportunity, many persons had invested their savings with the
intention of obtaining a roof over their heads. The project itself ran
into rough weather and at this point, the lessee/developer has been
declared as a Corporate Debtor. The homebuyers together have
pooled money to carry on the project during the CIRP period and now
a SRA has come into the picture. The Resolution Plan of the SRA
has been accepted by the CoC consisting of the homebuyers alone.
It is to be noted that the project was to be completed in the year
2016, and despite another decade having passed, the homebuyers
are still left in the lurch. The essential purpose of development would
fail if NOIDA brings in a stipulation of payment of default charges.
14. The default charges, as imposed in the lease deed as also now
introduced as per the new policy, specifies a percentage of the lease
premium to penalise a defaulting developer. The intention is also
to motivate completion within time lines and to act as a deterrent
to avoid time lags. In the present case, the defaulting developer is
out of the picture and the half baked project can be completed only
if the Resolution Plan is put into operation and completed.
15. In the peculiar circumstances of this case, we are of the opinion
that it is only proper that NOIDA waives the penalty charges since
it is neither the default of the homebuyers nor the default of the
SRA, which led to the delay. The homebuyers and the SRA are
sought to be penalised for past sins of the Corporate Debtor, which
cannot be allowed, especially in the context of the authority imposing
penalty, ie: the local authority being concerned essentially with the
development of the area under its control.
440 [2026] 9 S.C.R.
Supreme Court Reports
16. We hence, order that in the peculiar facts and circumstances of the
case, the penalty as imposed by the NOIDA on delay, now mulcted
on the SRA and the homebuyers, cannot be so validly imposed. We
set aside the directions to consider the time extension charges as
CIRP costs and modify the impugned order to that extent. NOIDA’s
appeal praying for time extension charges even beyond the three
years upto the 10th year also stands rejected.
17. Civil Appeal No.3132 of 2026 is allowed. Civil Appeal No.4207 of
2026 is dismissed.
18. Pending application(s), if any, shall stand disposed of.
Result of the case: Civil Appeal No. 3132 of 2026 allowed.
Civil Appeal No. 4207 of 2026 dismissed.
†Headnotes prepared by: Nidhi Jain