Alpha Corp Development Private Limited v. Greater Noida Industrial Development: Findings on Lifting Corporate Veil of Companies and Subsidiary Companies

Jojy George Koduvath

In Alpha Corp Development Private Limited v. Greater Noida Industrial Development (Sanjay Kumar Alok Aradhe, JJ.), 2026 INSC 449, the Supreme Court of India considered – Lifting Corporate Veil of Companies and Subsidiary Companies.

Findings in a Nutshell

  • 1. Each case that comes before a Court, in the context of lifting of the corporate veil, would have to turn upon its own individual facts.
  • 2. In BRS Ventures Investments Limited vs. SREI Infrastructure Finance Limited and another,  (2025) 1 SCC 456, it is reiterated that a holding company and its subsidiaries are distinct legal entities and merely because the holding company owns the entire shareholding in the subsidiary company, it would not dilute its separate legal existence. No doubt, the concept of holding companies and subsidiary companies is firmly entrenched in our corporate scenario and once it is established that the holding and subsidiary companies are independent legal entities in their own right, the sanctity of such legal status has to be maintained unless circumstances exist that require lifting/piercing of the corporate veil.”
  • 3. In Life Insurance Corporation of India vs. Escorts Ltd. and others (1986) 1 SCC 264  in the context of lifting of the corporate veil:
    • “…..Generally and broadly speaking, we may say that the corporate veil may be lifted where a statute itself contemplates lifting the veil, or fraud or improper conduct is intended to be prevented, or a taxing statute or a beneficent statute is sought to be evaded or where associated companies are inextricably connected as to be, in reality, part of one concern.”
  • 4. In ArcelorMittal India Private Limited vs. Satish Kumar Gupta and others, (2019) 2 SCC 1, this Court affirmed that where protection of public interest is of paramount importance or where a company has been formed to evade obligations enforced by law and by the Courts, the Court would disregard the corporate veil.
  • 5. In reality, associated or group companies are inextricably connected so as to form part of one concern, the corporate veil should be lifted.

The relevant paragraphs are 53 to 56. They read as under:

  • “53. “The sheet anchor of GNIDA’s case (Greater Noida Industrial Development Authority) is that the assets of subsidiary companies cannot be made part of the assets of the holding company that was subjected to CIRP proceedings. Section 2(87) of the Companies Act, 2013, defines a subsidiary company or subsidiary to mean a separate legal entity. Reliance was placed by GNIDA upon the recent judgment of this Court in BRS Ventures Investments Limited vs. SREI Infrastructure Finance Limited and another  (2025) 1 SCC 456, which reiterated that a holding company and its subsidiaries are distinct legal entities and merely because the holding company owns the entire shareholding in the subsidiary company, it would not dilute its separate legal existence. No doubt, the concept of holding companies and subsidiary companies is firmly entrenched in our corporate scenario and once it is established that the holding and subsidiary companies are independent legal entities in their own right, the sanctity of such legal status has to be maintained unless circumstances exist that require lifting/piercing of the corporate veil. The question that arises is whether this was a fit case to lift the corporate veil. Though the NCLAT was averse to doing so, we are inclined to hold otherwise. In that regard, we may refer to the observations of a Constitution Bench in Life Insurance Corporation of India vs. Escorts Ltd. and others (1986) 1 SCC 264  in the context of lifting of the corporate veil:
    • ‘…..Generally and broadly speaking, we may say that the corporate veil may be lifted where a statute itself contemplates lifting the veil, or fraud or improper conduct is intended to be prevented, or a taxing statute or a beneficent statute is sought to be evaded or where associated companies are inextricably connected as to be, in reality, part of one concern. It is neither necessary nor desirable to enumerate the classes of cases where lifting the veil is permissible, since that must necessarily depend on the relevant statutory or other provisions, the object sought to be achieved, the impugned conduct, the involvement of the element of public interest, the effect on parties who may be affected, etc.’
  • 54. As is clear from the aforestated observations when, in reality, associated or group companies are inextricably connected so as to form part of one concern, the corporate veil should be lifted. Applying this principle in ArcelorMittal India Private Limited vs. Satish Kumar Gupta and others (2019) 2 SCC 1, this Court affirmed that where protection of public interest is of paramount importance or where a company has been formed to evade obligations enforced by law and by the Courts, the Court would disregard the corporate veil. It was further observed that this principle would be applied even to group companies so that one is able to look at the economic entity of the group as a whole.
  • 55. Neo Multimedia Limited and Nishtha Software Private Limited were both wholly owned subsidiaries of EIL (Earth Infrastructures Limited), the CD (Earth Infrastructures Limited, the corporate debtor). They had leases over the lands in which EIL was to develop the projects, viz., Earth TechOne and Earth Sapphire Court. ETIPL was incorporated only to enable GNIDA’s leasing of land for development of Earth Towne and was controlled by EIL, with a 98% shareholding. ETIPL, therefore, stands on a different footing from the other two companies, insofar as GNIDA is concerned. In any event, we may note that all three companies either share common directors with EIL and/or have their relations as directors. The only assets of the three companies were the lands leased out to them by GNIDA for these projects. The companies’ shareholdings indicate that EIL was the dominant and majority shareholder.
  • 56. Further, GNIDA was clearly aware that it was EIL, the CD, that was developing the projects on the lands leased out by it to the three companies. GNIDA cannot claim ignorance of this on the mere ground that it was not a party to the development agreements/MoU. This was the situation in relation to two projects – Earth Sapphire Court as well as Earth TechOne. Insofar as Earth Towne is concerned, as already stated, GNIDA itself required the consortium of the three companies to incorporate a SPC and it was pursuant to this requirement, that ETIPL was brought into existence. Further, the lease deed executed by GNIDA in favour of ETIPL made it clear that EIL was to be the lead member of ETIPL, retaining its majority shareholding as well as its lead role. It is an admitted fact that EIL, which had a 78% shareholding in ETIPL, increased it to 98%. ETIPL executed an agreement conferring the right to develop the project on the leased land in favour of EIL. GNIDA cannot, therefore, look askance at the role played by EIL in the development of Earth Towne. More so, in the light of its own letter to the police authorities acknowledging EIL’s role in the development of Earth Towne, which we have already referred to. In effect, GNIDA cannot claim ignorance of the constructions by EIL in relation to all three projects. Each case that comes before a Court, in the context of lifting of the corporate veil, would have to turn upon its own individual facts. Given the facts obtaining presently, we are of the firm view that this was an eminently fit case for lifting the corporate veil, as EIL was the main driving force in the development of the projects and in payment of GNIDA’s dues. The subsidiary companies were only a front. In the light of this finding, we deem it unnecessary to deal with the issue raised in the context of Sections 18 and 25 of the Code, apropos the scope of the term ‘assets’.”

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