NCLAT Says GNIDA's Challenge To Swati Health Resolution Plan Barred By Res Judicata, Imposes ₹1 Lakh Cost

The National Company Law Appellate Tribunal (NCLAT) at Delhi has imposed costs of ₹1 lakh on the Greater Noida Industrial Development Authority (GNIDA) and dismissed its appeal arising from proceedings concerning implementation of the approved resolution plan of Swati Health and Education Services Pvt. Ltd.

The tribunal held that the appeal was barred by res judicata. It observed that the issues raised had already been decided and that the resolution plan had attained finality.

A bench of Judicial Member Justice N. Seshasayee and Technical Members Arun Baroka and Indevar Pandey held,

“We find that no new facts have been brought before us. The Appeal is challenging the same set of issues which have been challenged earlier, and the earlier Orders have attained finality. Against the principles of res-judicata the Appellant is re-agitating the issue and upset the Insolvency Resolution Proceedings. The Appellant has not been acting to withdraw the amount from the escrow account.”

The appeal arose from an October 3, 2024 order of the National Company Law Tribunal (NCLT), New Delhi.

Swati Health and Education Services Pvt. Ltd. was allotted 20,000 square metres of land on lease by GNIDA in 2013. Following defaults in payment obligations, insolvency proceedings were initiated against the company on March 4, 2022.

GNIDA submitted a claim of approximately ₹21.42 crore in the corporate insolvency resolution process. The Resolution Professional admitted approximately ₹18.25 crore.

A resolution plan submitted by a consortium comprising Sandeep Gupta, Shalini Gupta and Anoop Kumar Mittal was approved by the Committee of Creditors on November 24, 2022. The NCLT approved the plan on August 24, 2023. Under the approved plan, GNIDA was to receive ₹6.79 crore.

GNIDA opposed the resolution plan. It subsequently pursued multiple proceedings challenging aspects of its treatment under the plan.

Its appeal against the NCLT's August 24, 2023 order approving the resolution plan was rejected by the NCLAT on limitation. A subsequent appeal arising from proceedings concerning implementation of the plan was also dismissed. The Supreme Court later declined to interfere with that decision.

The NCLAT noted that the resolution plan approved on August 24, 2023 had attained finality. It further observed that no new facts had been brought before it in the present appeal.

“Therefore, by raising the issues which it had raised earlier also and which were taken up to the level of the Honourable Supreme Court of India, the Appellant has been wasting the precious judicial time and hindering implementation of the approved resolution plan. By raising the same issues once again before us, the present appeal is hit by res judicata. Therefore, this appeal deserves to be dismissed.”, it noted.

The tribunal further recorded that the Successful Resolution Applicant (SRA) had attempted to implement the resolution plan. However, it had not been successful due to GNIDA's “non-cooperation, lack of assistance and support”.

The NCLAT noted the SRA's submission that it had deposited ₹6.79 crore in an escrow account. It had also incurred CIRP costs of approximately ₹1 crore. In addition, it had furnished a bank guarantee of ₹2.55 crore.

The SRA contended that implementation of the plan was being hindered because GNIDA had not accepted the resolution-plan amount. It also contended that GNIDA had not issued the approvals envisaged under the plan.

The tribunal observed that GNIDA had continued litigating the matter despite the resolution plan having attained finality. It also observed that GNIDA had not been assisting in implementation of the plan.

“We don't have any hesitation to conclude that the GNIDA has not been cooperating in the implementation of the resolution plan and is derailing the successful implementation of the approved resolution plan in the guise of various applications and appeals. For this reason, we deem it appropriate to impose a cost of ₹1 lakh on GNIDA.”, it observed.

Accordingly, the NCLAT dismissed the appeal. It imposed costs of ₹1 lakh on GNIDA to be deposited in the PM CARES Fund. The tribunal also directed the authority to accept the resolution-plan amount. It directed GNIDA to issue the requisite No Objection Certificate and comply with directions issued for implementation of the resolution plan.