NCLAT Upholds GNIDA's Classification as Operational Creditor: Lease Deed Does Not Qualify as Financial Lease.
The National Company Law Appellate Tribunal (NCLAT), New Delhi Bench comprising Justice Rakesh Kumar Jain (Judicial Member) and Indevar Pandey (Technical Member) was hearing an appeal and observed that the Appellant-Greater Noida Industrial Development Authority (GNIDA) was appropriately classified as an Operational Creditor rather than a Financial Creditor, as the lease deed upon which GNIDA relied did not constitute a financial lease and the classification was consistent with established judicial precedents.
The National Company Law Appellate Tribunal (NCLAT) has recently adjudicated an appeal filed by the Greater Noida Industrial Development Authority (GNIDA), challenging an order dated March 9, 2021, from the National Company Law Tribunal (NCLT). The appeal pertains to the dismissal of GNIDA's application (I.A. No. 2002 of 2020) under Section 60(5)(c) of the Insolvency and Bankruptcy Code (IBC), 2016, seeking to be recognized as a Financial Creditor rather than an Operational Creditor.
GNIDA's application sought several remedies, including the quashing of the resolution professional's actions, the reversal of GNIDA’s classification from Financial to Operational Creditor, and the replacement of the resolution professional for alleged misconduct. GNIDA argued that the lease deed supporting its claim should qualify it as a Financial Creditor, entitling it to participate in creditor meetings and decision-making processes.
The NCLAT upheld the NCLT’s order, finding no error in the decision. The tribunal noted that GNIDA's lease deed did not constitute a financial lease, and thus, GNIDA's claim fell under the category of dues of a statutory body, similar to other Operational Creditors. This determination was consistent with the precedent established in New Okhla Industrial Development Authority v. Anand Sonbhadra and Another, REEDLAW 2022 SC 05503, where the Supreme Court had previously classified Noida Authority as an Operational Creditor based on similar grounds.
The NCLAT also considered GNIDA's reliance on the Supreme Court’s recent decision in Greater Noida Industrial Development Authority v. Prabhjit Singh Soni and Another, REEDLAW 2024 SC 02527, but found that the specific issues raised in that case, including procedural irregularities and the classification of secured creditors, did not directly impact the classification of GNIDA as a Financial Creditor in the present matter. The tribunal highlighted that a secured creditor could be both an Operational and Financial Creditor, but the specific nature of the claim and the relevant legal precedents determined its classification.
In conclusion, the NCLAT dismissed the appeal, affirming that GNIDA's status as an Operational Creditor was justified based on the legal and factual context, with no grounds found for altering the NCLT's decision.
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