Supreme Court Stays Insolvency Of Lotus 300 Developer, Seeks Response On Why CBI Probe Should Not Be Ordered
The Supreme Court on Tuesday stayed the ongoing corporate insolvency resolution process against Hacienda Projects Private Ltd, the developer of the Lotus 300 housing project at Sector 107, Noida. It issued notice in appeals filed by the Lotus 300 Apartment Owners' Association challenging orders of the National Company Law Appellate tribunal.
“In the meantime, the CIRP process shall remain stayed.”, the court said.
A bench of Chief Justice Surya Kant and Justices Joymalya Bagchi, Vipul M. Pancholi was hearing appeals by IndusInd Bank Ltd, which had claimed a default of about Rs. 33 crores.
The bench also directed the builder-cum-developer, its directors, and the concerned financial institutions to explain why a separate investigation by the Central Bureau of Investigation should not be ordered in the matter.
“The builder-cum-developer and its Directors as well as the Financial Institutions, will show-cause as to why a separate investigation by the Central Bureau of Investigation be not directed by this Court.”, the court directed.
The dispute traces back to the launch of the Lotus 300 housing project in 2010 at Sector 107, Noida. The project comprised 330 residential apartments and was scheduled for completion by 2014.
Over the years, homebuyers invested substantial amounts in the project, with the Lotus 300 Apartment Owners' Association later claiming that buyers had collectively paid more than Rs. 636 crores. However, the project remained incomplete after the promoters allegedly abandoned construction.
Hacienda Projects financed the Lotus 300 project through credit facilities from IndusInd Bank Ltd. After repeated defaults, the bank classified the account as a non-performing asset on December 29, 2020, and moved the National Company Law Tribunal, New Delhi Bench, claiming a default of about Rs 33 crore.
The tribunal admitted the insolvency on November 11, 2022. The Lotus 300 Apartment Owners' Association challenged the admission. It said the project was largely complete. It was funded almost entirely by homebuyers. The association argued that insolvency proceedings would stall its completion.
In parallel, homebuyers also approached the Allahabad High Court. They alleged siphoning of funds, diversion of project land, and non-payment of dues to the Noida Authority. In an order dated February 29, 2024, the High Court described the matter as a “classic case of conning” and issued several directions to protect homebuyers' interests.
The association then took the dispute to the National Company Law Appellate Tribunal. It sought a pause on the insolvency process and permission for homebuyers to complete the remaining construction. The bank opposed the appeal. It maintained that debt and default were undisputed and that insolvency was the only viable course.
The NCLAT rejected the challenge. It held that once debt and default are established, the insolvency process must follow. This remains so regardless of the stage of the project. It added that homebuyers' interests could be protected within the process, particularly through their participation in the committee of creditors.
The Supreme Court has now stayed the insolvency process and directed the Noida Authority and the resolution professional to file fresh affidavits on compliance with the Allahabad High Court's earlier directions.
The matter is next listed on March 23.