# New Okhla Industrial Development Authority Vs. Anand Sonbhadra, Civil Appeal No. 2222, 2367-2369 of 2021

> SC judgment dated 2022-05-17. Citation: TCN-2022-SC-00044. The case involves a dispute over whether the New Okhla Industrial Development Authority (NOIDA)…

- **Court:** SC
- **Order date:** 17 May 2022
- **Citation:** TCN-2022-SC-00044
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/supreme-court-of-india/new-okhla-industrial-development-authority-vs-anand-sonbhadra-civil-appeal-no-22-16f7685d

## Summary

### Background

The case involves a dispute over whether the New Okhla Industrial Development Authority (NOIDA) should be considered a financial creditor in the Corporate Insolvency Resolution Process (CIRP) of a corporate debtor. NOIDA initially submitted a claim as an operational creditor but later insisted on being treated as a financial creditor. The adjudicating authority (NCLT) held that there was no financial lease in terms of the Indian Accounting Standards and no financial debt. NCLAT affirmed the view taken by the NCLT, leading to the appeal.

## Facts

The New Okhla Industrial Development Authority (NOIDA) entered into a lease agreement with a corporate debtor for the development of land. The lease deed stipulated that the lessee would construct residential flats on the land. NOIDA, as the lessor, retained significant control over the development, including the right to approve building plans, regulate the use of the land, and cancel the lease under certain circumstances. The lessee was required to pay a premium and lease rent to NOIDA. The lessee was also permitted to transfer the built-up flats to third parties through sub-leases, subject to NOIDA's approval. When the corporate debtor faced insolvency proceedings, NOIDA claimed to be a financial creditor based on the lease agreement. NOIDA initially submitted Form

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## Issues and analysis

### Issue 1: Whether the New Okhla Industrial Development Authority (NOIDA) can be considered a financial …

**Ratio:** To qualify as a financial debt under Section 5(8) of the IBC, there must be a debt

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**Reasoning:** The court reasoned that the lease agreement did not involve a disbursement of funds from

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**Interpretation:** The court interpreted Section 5(8) of the IBC to require a disbursement of

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**Application:** The court applied the ratio to the facts of the case, finding that NOIDA did

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## Parties

- **Judges:** K.M. Jo…
- **Appellants:** New Okhla…
- **Respondents:** Anand Son…
- **Other parties:** 7th Edition…; CIRP…; +10 more

## Timeline

- **2010-07-30 — Lease Agr…**: The lease agreement was entered into…
- **N/A — NCLT Dec…**: The NCLT held that there was no financial lease in terms of the Indian Accounting…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 5(8) — Definitions](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-5)

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