Supreme Court Holds That The Corporate Veil Of Holding Companies May Be Lifted During The CIRP Where The Associated Or Group Companies Are Inextricably Connected So As To Form Part Of One Concern.

Supreme Court through its judgement dated 05.05.2026 in the matter of Alpha Corp Development Private Limited v Greater Noida Industrial Development Authority (GNIDA) and Others¹ held that the corporate veil of holding companies may be lifted during the Corporate Insolvency Resolution Process (“CIRP”) where subsidiary companies are inextricably connected so as to form part of one concern.

In the present matter Earth Infrastructure Limited (“EIL”), the corporate debtor was developing certain projects on the parcel of land allotted by Greater Noida Industrial Development Authority (“GNIDA”). However, the lease deeds for those parcels of land were leased to the subsidiary companies of EIL. Subsequently, when EIL was admitted into CIRP, GNIDA contended that the said parcel of lands which were leased to EIL’s subsidiary companies on which projects were being developed by EIL, cannot be part of EIL’s resolution plan.

Supreme Court observed that while the assets of subsidiary companies cannot be made a part of the assets of holding company that was subjected to CIRP proceedings, as Section 2(87) of the Companies Act, 2013 defines subsidiary company to be a separate legal entity. However, the concept of separate legal identity is a general rule, and it cannot be used to defeat public interest or the rights of homebuyers who invested their hard-earned money in such projects which are stalled. The Supreme Court held that the subsidiary companies of EIL who had leased the land for development of project by EIL were inextricably linked to each other.

Footnotes

^{1 Civil Appeal 1526 of 2023.}

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