[Tanishq Desai is a third-year B.A., LL.B. (Hons.) student at National Law University Delhi]
In a recent two–part piece on this forum, Prof. Varottil argued for a more principled approach to judicial veil piercing in insolvency, in the wake of the Supreme Court’s decision in Alpha Corp Development. This post examines a related but distinct question: what happens to the same doctrine outside insolvency, in execution? The most recent invocation of reverse piercing in that context arose in the Daiichi Sankyo matter before the Delhi High Court.
In May 2026, the Supreme Court in Alpha Corp Development Private Limited v. Greater Noida Industrial Development Authority, 2026 INSC 449, allowed the assets of a subsidiary company to be folded into the resolution plan of its insolvent parent. The Court reached this result by invoking what is termed “outsider reverse veil piercing” (“RVP”) by other jurisdictions, which disregards a company’s separate personality so that a third party can reach its assets to satisfy a promoter’s obligation, rather than the other way around. The ruling has drawn scrutiny for the looseness of its reasoning. However, this post seeks to examine whether the result it reached can travel beyond the forum in which it arose. Alpha Corp Development involved an insolvency proceeding, conducted before the National Company Law Tribunal (“NCLT”) under the oversight of a Committee of Creditors (“CoC”).
A creditor seeking the same outcome outside insolvency, through ordinary civil execution against judgment-debtor-controlled entities, would find no comparable institutional setting to rely on. In this post, I argue that outsider RVP’s tolerability in Alpha Corp Development stemmed not from the legal test the Court applied, but from the insolvency forum in which that test was applied and that nothing in the judgment would allow courts to extend the same reasoning to execution proceedings, where no such institutional setting exists.
The Facts and Reasoning in Alpha Corp Development
The case arose from the insolvency proceedings of Earth Infrastructures Limited (“EIL”), a real estate holding company facing corporate insolvency resolution before the NCLT under section 7 of the Insolvency and Bankruptcy Code, 2016 (“IBC”). EIL had several special purpose subsidiaries, including Earth Towne Infrastructures Private Limited (“ETIPL”). The Greater Noida Industrial Development Authority (“GNIDA”) executed a 90-year lease in ETIPL’s favour, while EIL under a separate, unregistered development agreement with ETIPL had retained the right to construct and deliver the actual housing units.
When the resolution professional invited plans for EIL’s insolvency, GNIDA objected that ETIPL’s lease obligations and assets could not properly form part of a resolution plan belonging to a different company. The National Company Law Appellate Tribunal (“NCLAT”) agreed, relying on the Supreme Court’s separate-personality reasoning inVodafone International Holdings BV v. Union of India and Jaypee Kensington Boulevard to hold that only EIL’s own assets, not ETIPL’s, belonged in EIL’s resolution plan.
The Supreme Court reversed the NCLAT’s decision holding that according to its ruling in LIC v. Escorts Ltd the corporate veil must be lifted where group companies are “inextricably connected so as to form part of one concern”. Moreover, in light of ArcelorMittal India v. Satish Kumar Gupta, the Court held that ETIPL’s lease rights could be folded into EIL’s resolution plan. The Court further found that EIL and ETIPL shared common directors, that EIL was ETIPL’s dominant shareholder, and that ETIPL’s only asset was the very land leased from GNIDA, meaning that the subsidiary companies were only a front.
This ruling reads on the face of it as an exercise in forward piercing; however, the actual transfer of value ran the other way. It was ETIPL’s lease rights, the subsidiary’s assets, that were made available to satisfy EIL’s resolution obligations for the benefit of a third party, the resolution applicant. Thus, while not explicitly saying so, the Court introduced outsider RVP in India. In the next section, I argue and ring a warning bell that this must be confined to the insolvency context and must not be extended to the context of execution proceedings.
Why Insolvency Absorbed the Risk
Outsider RVP makes a company’s assets available to fulfill obligations owed to creditors by the parent company, at the expense of parties such as the shareholders of the company whose veil is being pierced. These persons may have nothing to do with the underlying dispute, yet they are penalized – this is the distinct cost that accrues to the entity that shields another. This is the cost of entity shielding and is distinct from the cost that piercing imposed on the shareholder’s limited liability.
In Alpha Corp, the veils relating to three subsidiaries were pierced, being ETIPL, Neo Multimedia Limited, and Nishtha Software Private Limited, and the cost fell at the very least on whatever independent creditors each of those subsidiaries might have had. ETIPL carried an additional layer of risk, as it was a consortium vehicle in which Raus Infras Limited and Shalini Holdings Limited together held a minority stake (however small that may have become by the conclusion of the resolution plan).
The reasoning the Court used to get there was admittedly thin; as has been pointed out elsewhere, the Court treated common directorships and majority shareholding as sufficient, without the closer alter-ego enquiry of separate bank accounts, employees, premises that would ordinarily be required in other jurisdictions, and without asking whether piercing the veil was even necessary, like the UK Supreme Court’s analysis in Prest v. Petrodel Resources Limited, given that the same outcome was achievable through the existing development agreement alone.
What makes this reasoning tolerable is the unique context that it was applied in. EIL’s insolvency proceeded before the NCLT under the supervision of a CoC constituted under section 21 of the IBC, with the resolution plan itself subject to approval under section 30 and appellate scrutiny before the NCLAT. Any prejudice to ETIPL’s minority shareholders or creditors was capable, at least in principle, of being raised within that very process through objections to the resolution plan, through appeal, or through the claims-verification machinery the IBC builds into every corporate insolvency resolution plan. Whether those parties in fact availed of these avenues is a separate question and is beside the point, but what makes the doctrine viable for a Court to apply is that the forum ‘absorbs the shocks’ that it creates.
The Problem with Execution
However, when this same tool is used in execution, there are no similar ‘shock absorbers.’ Execution is structured nothing like insolvency. A decree-holder seeking to recover under a money decree or, as in Daiichi’s position, under anarbitral award enforced as a decree under section 36 of the Arbitration and Conciliation Act, 1996, proceeds underOrder 21 of the Code of Civil Procedure, 1908 against a named judgment-debtor. When the decree-holder wishes to reach assets held by a company, the judgment-debtor controls the proceeding, and the proceeding still remains bilateral with the decree-holder on one side and the judgment-debtor on the other. The company whose assets are sought to be attached is not a party to the underlying decree at all (at best, it may step in under Order 21 Rule 58 to object that the property attached is its own and not liable to be taken in execution of someone else’s decree) nor are the interests of minority shareholders or creditors taken into account in this bilateral process.
This objection mechanism is the sole safeguard execution offers, and it falls well short of what insolvency provides. Nothing in the executing court’s process requires notice to, or representation of, anyone else with a stake in that company, or the company’s own separate creditors, who have no decree against them and no occasion to even learn that their company’s assets are at risk until an attachment is already underway. There is no CoC-equivalent body whose function is to weigh collective claims before assets move, nor is there a statutory claims-verification step. There is also no appellate body tasked with reviewing whether piercing the veil in this instance unfairly burdens parties uninvolved in the underlying dispute: only the ordinary route of appeal or revision available to whichever party happens to contest the order, which in practice is likely to be the company itself, defending its own interest and not the interests of its other stakeholders.
This is precisely the posture a Daiichi-type execution application would take. If a decree-holder sought to reach assets held by entities a judgment-debtor controls, the executing court would face the identical question Alpha Corp faced whether there is indeed one concern. But that would be with none of the apparatus that made Alpha Corp’s thin reasoning survivable. With no CoC to register an objection on behalf of the company’s other creditors; no resolution-plan approval process in which prejudice to minority stakeholders could be raised as of right; no NCLAT standing ready to review the outcome on a complete record built for that purpose. The executing court would be asked to do, alone and on a summary application, what an entire statutory framework does in insolvency contexts like Alpha Corp.
Conclusion
Alpha Corp Development may yet prove useful to creditors and counsel arguing for veil piercing in other insolvency matters, whatever its analytical shortcomings. But its usefulness should stop at the door of the forum that produced it. The judgment does not travel independently of the institutional setting in which it was applied and nothing in its reasoning suggests the Court turned its mind to what would happen if the same logic were invoked where no CoC, no resolution-plan scrutiny, and no claims-verification process stood ready to absorb the consequence.
Should an enforcement creditor in Daiichi’s position ask an executing court to reach assets held by entities the judgment-debtor controls, the temptation to treat Alpha Corp as authority will be real, and the underlying corporate-group structure does indeed invite a fair comparison. However, any such attempt must be dissuaded because it fails to account for stakeholders other than the judgment-debtor. Until Indian courts develop a forum-specific necessity test for outsider reverse piercing in execution, something closer to what Prest and Salgaocar already require elsewhere, that gap should limit courts from extending Alpha Corp’s result beyond insolvency.
– Tanishq Desai