Quick answer: In The Authorised Representative for Granite Gate Properties Private Limited v. New Okhla Industrial Development Authority and Others (Civil Appeal No. 3132 of 2026, with Civil Appeal No. 4207 of 2026), decided on 3 September 2026, the Supreme Court held that “time extension charges” claimed by the New Okhla Industrial Development Authority (NOIDA) under its lease deeds for a developer’s delay in completing a housing project cannot be treated as costs of the Corporate Insolvency Resolution Process (CIRP) recoverable from the homebuyers or the Successful Resolution Applicant (SRA). The developer, M/s Granite Gate Properties Private Limited, had taken two plots on perpetual lease from NOIDA to build the “Lotus Boulevard” and “Lotus Panache” projects before being declared a Corporate Debtor. Justice K. Vinod Chandran, writing for a Bench that also included Justice J.B. Pardiwala, held that penalty charges attributable to the developer’s own default cannot be “mulcted” on homebuyers who pooled their savings to keep construction alive during insolvency, or on the SRA that took over the stalled project, since neither caused the delay. The Court set aside the National Company Law Appellate Tribunal’s (NCLAT) direction treating the charges as CIRP costs even for the three-year period the original lease contemplated, and separately rejected NOIDA’s claim to have a further extension period, introduced by a later office order, also included as a CIRP cost.
Key Takeaways
- A lessor authority cannot recover a defaulting developer’s penal lease charges from the resolution process of an insolvent project. Time extension or default charges imposed under a lease deed for delay attributable to the Corporate Debtor are not automatically costs of the CIRP, even where the underlying lease itself would otherwise be at risk of cancellation.
- Fault matters as much as the text of the CIRP-costs definition. The Court’s reasoning turned on who caused the delay — the developer, now removed from the picture — rather than on a close textual reading of what falls within “insolvency resolution process costs” under the scheme of the Insolvency and Bankruptcy Code, 2016.
- Homebuyers who pool their own money to complete a stalled project under a CoC-approved “Pool and Build” mechanism get a real benefit from this ruling: the authority that leased the land cannot use its cancellation and penalty powers to claw back, from that very pool, charges that accrued because of the original developer’s failure.
- NOIDA’s attempt to extend its own recovery window through a later office order — allowing time extension charges up to the tenth year rather than the three years fixed in the original lease deed — was rejected outright, not merely capped at the earlier three-year period the NCLAT had allowed.
- The judgment is expressly tied to the “peculiar circumstances of this case” and does not purport to lay down a general rule insulating every category of statutory dues owed by an insolvent lessee from the CIRP-costs analysis.
1. Introduction
Real estate projects built on leasehold land allotted by state industrial development authorities are a familiar feature of the National Capital Region, and NOIDA — the New Okhla Industrial Development Authority, constituted under the Uttar Pradesh Industrial Area Development Act, 1976 — is among the largest such lessors. Its standard lease deeds for group housing plots typically require the developer to complete construction within a fixed period, failing which escalating “time extension charges” fall due, with cancellation and resumption of the land to the authority as the ultimate sanction. That structure works reasonably well when the developer remains solvent and simply runs late. It works far less well when the developer collapses into insolvency partway through construction, leaving the authority, the homebuyers who have already paid for their flats, and a resolution process all competing over the same stalled project.
The Authorised Representative for Granite Gate Properties Private Limited v. New Okhla Industrial Development Authority and Others is exactly that scenario. The developer took two plots on perpetual lease from NOIDA for the “Lotus Boulevard” and “Lotus Panache” projects, was declared a Corporate Debtor, and saw its homebuyers reconstitute themselves as a Committee of Creditors, pool their own money to keep construction going, and eventually approve a Resolution Plan under a new developer. NOIDA, meanwhile, continued to press for the delay charges that had accrued under the lease — charges it said had to be paid before the project, or at least three sealed towers of it, could proceed. Two cross-appeals, one by the homebuyers’ Authorised Representative and one by NOIDA, brought the question of who bears that bill before the Supreme Court.
This article sets out the facts and the course of the litigation before the National Company Law Tribunal (NCLT) and NCLAT, examines the Supreme Court’s reasoning for why the developer’s penalty cannot travel with the project once homebuyers and a new resolution applicant have taken over, and considers what the ruling means for leasehold-based real estate insolvencies more broadly.
2. Case summary and background
M/s Granite Gate Properties Private Limited had taken two plots of land on perpetual lease from NOIDA at a high premium, to construct high-rise apartment complexes: one in Sector 100, advertised as “Lotus Boulevard,” and another in Sector 110, advertised as “Lotus Panache.” The developer ran into financial difficulty and was declared a Corporate Debtor under the Insolvency and Bankruptcy Code, 2016. Its homebuyers — the flat purchasers who had already paid substantial sums toward their units — constituted the Committee of Creditors as a class of Financial Creditors. A Resolution Plan proposed by M/s SMV Agencies Private Limited was approved by the CoC and by the NCLT, and SMV Agencies became the Successful Resolution Applicant tasked with completing the stalled towers.
During the CIRP itself, and evidently before the Resolution Plan took full effect, the homebuyers pooled their own resources — advancing money toward the balance of their sale consideration — to carry on construction as a going concern, under what the judgment describes as a CoC-approved “Pool and Build” mechanism. NOIDA, however, sealed three towers of the Lotus Panache project on 16 October 2024, pending resolution of its claim to time extension charges under the lease deeds.
The dispute over those charges reached the NCLT through numerous interlocutory applications, which were disposed of together with the Resolution Professional’s application to approve SMV Agencies’ Resolution Plan. On appeal to the NCLAT, that tribunal directed that time extension charges under both lease deeds be treated as CIRP costs, but only “for the maximum period of three years provided in the lease deed” for completion of the project — the period the original lease deed itself contemplated before a right of cancellation would arise. Both sides appealed further to the Supreme Court. The Authorised Representative for the homebuyers (Civil Appeal No. 3132 of 2026) contested the inclusion of the time extension charges as CIRP costs at all. NOIDA (Civil Appeal No. 4207 of 2026) contested the NCLAT’s cap, arguing that a later office order extended the chargeable period well beyond three years, and that this longer period should also be reckoned as a CIRP cost.
Before the Supreme Court, senior counsel Mr. Dhruv Mehta, appearing for the Authorised Representative, argued that the time extension charges were claimed by NOIDA for three annual periods — December 2016 to December 2017, December 2017 to December 2018, and December 2018 up to the insolvency commencement date of 10 January 2019 — and that, even if any part of the charge were properly a CIRP cost, only the period after the insolvency commencement date could qualify, since the earlier periods predated the CIRP altogether. He further argued that the charges did not fall within the statutory description of CIRP costs relied on by NOIDA, since they were neither incurred by the Resolution Professional nor concerned with keeping the project a going concern, but were instead penal charges for the original developer’s own default — a liability that should not be transferred onto the homebuyers. Mr. Rachit Mittal, for NOIDA, argued the opposite: that without payment of the time extension charges the project could not lawfully continue at all, and that NOIDA’s office order of 18 October 2019 — read with an earlier order of 18 June 2015 — permitted time extension up to the tenth year under a graduated scale, with that entire extended liability also properly forming part of the CIRP costs. Senior counsel Mr. Krishnendu Datta, for the SRA, adopted the Authorised Representative’s position, while noting that the approved Resolution Plan itself capped the SRA’s contingent exposure at the “overlap period balance” and provided that, absent a binding judicial determination that a cost above ₹3 crore formed part of CIRP costs, any such excess would first be recovered from the allottees of towers 17, 18 and 19 of Lotus Panache as a “super area charge.”
3. Legal analysis
3.1 The lease as an instrument of public development, not a purely commercial contract
The Supreme Court’s starting point was the lease deed itself, produced as Annexure A1 in NOIDA’s appeal. The plots had been acquired under the Land Acquisition Act, 1894, for NOIDA to develop an urban and industrial township — a purpose the Court treated as central to how the lease’s default provisions should be read. The original lease deed stipulated time extension charges at 4%, 5% and 6% of the premium for the first, second and third years of delay respectively, with the ultimate consequence of cancellation and resumption of the land to NOIDA if construction remained incomplete after the third year. NOIDA’s later office orders — of 18 June 2015 and 18 October 2019 — introduced a more elaborate schedule permitting extension up to the tenth year, at rates of 7%, 8%, 9% and 10% of the premium for the first four years and 1% per year thereafter, with cancellation only after the tenth year.
The Court characterised NOIDA’s role as more than that of an ordinary commercial lessor extracting a penalty for late performance. Because the underlying purpose of the lease was to provide infrastructure for industry, commerce and housing — “both a welfare measure and revenue generation” for the local authority — the Court treated the default charges as serving a regulatory function: motivating developers to complete projects on time and deterring the kind of prolonged delay that leaves land undeveloped. That framing set up the central question the Court had to resolve: whether a charge designed to discipline a defaulting developer could, once that developer had been removed from the picture through insolvency, be redirected onto the very homebuyers and successor developer the charge was never meant to burden.
3.2 Fault, not classification, as the deciding principle
Counsel had joined issue on a comparatively technical question — whether the time extension charges fell within the statutory description of insolvency resolution process costs relied upon by NOIDA, and if so, for what period. The Authorised Representative’s argument that the charges were not incurred by the Resolution Professional and did not concern the continuation of the project, and NOIDA’s argument that the charges were an unavoidable precondition to the project’s continuation, both invited the Court to resolve the dispute by parsing that statutory language closely.
The judgment does not take that route. Instead, the Court reasoned from the purpose the default charges serve and from who actually caused the underlying default. Having recorded that “the project was to be completed in the year 2016,” and that “despite another decade having passed, the homebuyers are still left in the lurch,” the Court held that “the essential purpose of development would fail if NOIDA brings in a stipulation of payment of default charges” against the parties who were not responsible for the delay. It went on to hold, in terms, that the default charges “penalise a defaulting developer” and are meant “to motivate completion within time lines and to act as a deterrent” — but that “in the present case, the defaulting developer is out of the picture,” leaving only the homebuyers and the SRA, whose interest lies in completing what the judgment calls the “half baked project.” On that footing, the Court concluded 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,” and that homebuyers and the SRA “are sought to be penalised for past sins of the Corporate Debtor, which cannot be allowed.”
This is a materially different mode of reasoning from a strict classification exercise under the insolvency framework’s cost provisions. Rather than asking whether the charges technically satisfy the definition of a resolution-process cost — a definition that, as a matter of general background to the scheme of the Insolvency and Bankruptcy Code, 2016, is built around amounts genuinely necessary to preserve the Corporate Debtor as a going concern during the CIRP — the Court asked who was at fault for the underlying default and declined to let that liability travel to parties who were not. The result displaces, on the specific facts, both sides’ competing readings of the technical cost provisions: the Authorised Representative’s argument prevails in substance, but by a route that rests on equity and causation rather than on the narrower point about which period, if any, fell after the insolvency commencement date.
3.3 Rejecting NOIDA’s extended timeline outright, not merely capping it
A further feature of the ruling is its treatment of NOIDA’s claim to the longer, ten-year extension period introduced by its 2019 office order. The NCLAT had already confined any CIRP-cost treatment to the three-year period fixed in the original lease deed, implicitly rejecting NOIDA’s argument for the longer period. The Supreme Court did not merely leave that three-year cap undisturbed while addressing the homebuyers’ appeal; it went further and set aside the NCLAT’s direction “to that extent” as well, holding that the time extension charges — for any period — could not be treated as CIRP costs at all, and separately dismissing NOIDA’s appeal for the extended, ten-year period outright. NOIDA is left with no part of its time extension claim surviving as a charge on the CIRP or on the homebuyers, whether measured over three years or ten.
3.4 What the ruling leaves unresolved
The judgment is notably free of reliance on prior precedent; it does not cite, distinguish or apply any earlier decision on what constitutes an insolvency resolution process cost, nor does it engage in detail with the statutory language both sides had argued from. Its operative holding is expressly confined to the “peculiar circumstances of this case,” language that signals a fact-driven equitable outcome rather than a general rule of interpretation. That leaves several questions unresolved for future disputes of the same kind. The judgment does not address what would happen if a resolution applicant, rather than the original homebuyers acting through a CoC of Financial Creditors, were an unrelated third party with no equitable claim to sympathy of the kind the Court extended here. It also does not address whether NOIDA retains any other route to recover the accrued time extension charges — for instance, as a claim against the Corporate Debtor’s estate in the ordinary insolvency waterfall, rather than as a first-charge CIRP cost or a direct levy on the homebuyers — since the judgment simply holds that NOIDA must “waive” the charges rather than analysing where, if anywhere, that liability might otherwise be recovered from. Practitioners advising other leasehold-based projects in insolvency should treat this ruling as a strong indication of how courts will likely resolve the same tension between a lessor authority’s contractual and statutory recovery rights and the interests of homebuyers and resolution applicants who did not cause the underlying default, rather than as a settled, generally applicable rule displacing the statutory definition of CIRP costs in every case.
4. Practical significance
For homebuyers and their counsel in stalled projects built on leasehold land from development authorities such as NOIDA, Greater Noida Industrial Development Authority or the Yamuna Expressway Industrial Development Authority, the ruling is a significant protection. Where a CoC composed of homebuyers pools its own resources to keep a project alive under a “Pool and Build” or comparable arrangement, the authority that leased the underlying land cannot use its contractual default-charge and cancellation powers to recover, from that same pool of homebuyer money, penalties that accrued because of the original developer’s delay. Counsel structuring or defending such arrangements now have a clear basis to resist an authority’s insistence that unsealing towers or resuming construction is conditional on first clearing the defaulting developer’s accumulated penalty.
For successful resolution applicants taking over leasehold projects, the judgment removes a significant contingent liability from the calculus of what a Resolution Plan must provide for. Where a plan, as here, capped contingent exposure to disputed authority charges and provided a fallback mechanism — recovery from specific towers’ allottees as a “super area charge” — pending judicial determination, an SRA can now treat that contingency as resolved in its favour on materially similar facts, rather than continuing to reserve for it.
For development authorities and their counsel, the ruling counsels caution before invoking cancellation or resumption clauses, or insisting on payment of accrued default charges, once a developer has been replaced through insolvency by a CoC of homebuyers and an incoming resolution applicant. An authority in that position should consider pursuing any genuine arrears through the ordinary insolvency claims process against the Corporate Debtor’s estate, rather than through direct enforcement against the continuing project, since the latter route risks being characterised — as it was here — as visiting the original developer’s default on innocent successors.
For conveyancing and transactional counsel advising purchasers or financiers in NOIDA-model leasehold developments generally, the case is a reminder to examine, at the due-diligence stage, the specific default and time-extension clauses in the governing lease deed and any subsequent office orders varying them. Such clauses can escalate substantially over the life of a delayed project, and while this judgment shields homebuyers and resolution applicants from that escalation once a Corporate Debtor has been replaced, purchasers in projects that have not yet reached insolvency proceedings remain exposed to the underlying contractual risk in the ordinary course.
5. Conclusion
The Authorised Representative for Granite Gate Properties Private Limited v. New Okhla Industrial Development Authority and Others resolves a dispute that sits at the intersection of leasehold real estate development and insolvency law: once a developer holding land on lease from a public development authority collapses into insolvency, and homebuyers and a resolution applicant step in to complete the project, can the authority still recover the developer’s accumulated default charges from them? The Supreme Court’s answer is that it cannot — not because the charges fall outside some technical definition of insolvency resolution process costs, but because the charges are penal in character, designed to discipline a defaulting developer, and that developer is no longer the party bearing the consequence. For NOIDA and comparable industrial development authorities, the ruling is a check on using cancellation and penalty powers against parties who did not cause a project’s delay. For homebuyers who have already pooled their own money once to save a stalled project, it is confirmation that a second, unrelated bill for someone else’s default should not follow. Because the Court has tied its reasoning explicitly to the facts before it rather than to a general rule of statutory interpretation, authorities and resolution applicants in future leasehold insolvencies will need to argue this ruling by analogy rather than treat it as a settled interpretation of what counts as a cost of the insolvency resolution process.
Citations
Primary judgment
- The Authorised Representative for Granite Gate Properties Private Limited v. New Okhla Industrial Development Authority and Others, Civil Appeal No. 3132 of 2026, with Civil Appeal No. 4207 of 2026, Supreme Court of India, 2026 INSC 952, Reportable, decided 3 September 2026 (Coram: J.B. Pardiwala, J. and K. Vinod Chandran, J.; judgment authored by K. Vinod Chandran, J.). Source: Indian Kanoon, accessed 5 September 2026.
Legislation
- Insolvency and Bankruptcy Code, 2016 — the statutory scheme governing Financial Creditors, the Committee of Creditors, Resolution Plans and insolvency resolution process costs, as engaged by the arguments recorded in the judgment.
- Uttar Pradesh Industrial Area Development Act, 1976 — the statute under which the New Okhla Industrial Development Authority is constituted and under which the governing lease deed and NOIDA’s office orders operate, as stated in the judgment.
- Land Acquisition Act, 1894 — noted in the judgment as the statute under which the leased plots were originally acquired for development.
General background (not from the judgment)
- Section 5(13) of the Insolvency and Bankruptcy Code, 2016 defines “insolvency resolution process cost” to cover amounts such as interim finance and interest, Resolution Professional’s fees and expenses, and costs incurred in running the Corporate Debtor as a going concern during the CIRP. This general statutory framework is noted here as background to the parties’ arguments and is not attributed to the judgment beyond what the judgment itself records of counsel’s submissions.
- The classification of homebuyers as Financial Creditors, and their participation in a project’s Committee of Creditors, follows from amendments made to the Insolvency and Bankruptcy Code, 2016 in 2018 in response to stalled real estate projects generally; this background is noted to situate the case and is not a holding of the judgment discussed.
This article is not legal advice and does not create an attorney–client relationship. Readers should verify the certified copy of the judgment and any subsequent clarificatory orders before relying on it, and consult a qualified advocate on the facts of their matter.