On 3 September 2026, a Supreme Court bench of Justice J.B. Pardiwala and Justice K. Vinod Chandran held that time extension charges levied by the New Okhla Industrial Development Authority (NOIDA) on an insolvent developer cannot be recovered as corporate insolvency resolution process (CIRP) costs. The appeal was filed on behalf of the homebuyers of Granite Gate Properties Private Limited (Civil Appeal No. 3132 of 2026), whose projects in Sectors 100 and 110, Noida, had been stalled for years.
What was decided
Granite Gate was due to complete the projects by 2016 but did not, and was admitted into insolvency in 2019. A resolution plan was approved with homebuyers as financial creditors, and buyers pooled funds to continue construction. NOIDA’s lease deed provides for time extension charges as a percentage of the lease premium for each year of delay. The NCLT and NCLAT had treated such charges for up to three years as CIRP costs.
The Supreme Court held that these charges are penal, meant to deter delay, and that imposing them on homebuyers and the successful resolution applicant would punish them for the developer’s “past sins”. It noted that the authority’s purpose is development, not profit. The Court set aside the directions treating the charges as CIRP costs, held that NOIDA should waive the penalty, and dismissed NOIDA’s appeal seeking charges for up to ten years.
Why it matters
Authority dues are among the largest obstacles to reviving stalled housing projects in Noida, Greater Noida and the Yamuna Expressway area. Treating penal charges as CIRP costs gives them priority and can make a resolution plan unviable. This judgment removes that burden in such cases and protects the funds that homebuyers contribute to completion.
For resolution applicants and committees of creditors, it means penal levies relating to the developer’s pre-insolvency delay should not be loaded onto the resolution process. Separately, in a September 2026 ruling involving another developer, the NCLAT held that NOIDA and GNIDA are not secured creditors and that their “first charge” covers only their share of the unearned increase in land value, which is also relevant to plan structuring.
Practical points
- Homebuyers should file and update their claims with the resolution professional on time.
- Review authority demands in a CIRP and identify which components are penal.
- Resolution applicants should model plans on the basis of this ruling and record it in plan terms.
- Keep allotment letters, payment receipts and correspondence with the developer and authority organised.
- Watch for authority policies and orders implementing the judgment.
Sources: Supreme Court record of proceedings, 3 Sep 2026; ThePrint, 4 Sep 2026; Bar & Bench, 4 Sep 2026.
For a confidential discussion on homebuyer claims and real estate insolvency, see IBC and NCLT Matters.
General legal information only; not legal advice or solicitation.
