IDBI Bank, the lead lender to real estate developer Jaypee Infratech, on Tuesday asked the Supreme Court to restore insolvency proceedings against the defaulting real estate developer.
IDBI Bank, the lead lender to real estate developer Jaypee Infratech, on Tuesday asked the Supreme Court to restore insolvency proceedings against the defaulting real estate developer. On Monday, the apex court had stayed the order given by the Allahabad bench of the National Company Law Tribunal (NCLT) on August 9 to initiate insolvency proceedings.
Senior counsel AM Singhvi, appearing for the bank, argued that the stay order had put the company’s management once again in charge. The decision had, Singhvi argued, reversed the position, unintentionally benefiting the defaulting promoters and defeating the entire process of insolvency proceedings.
IDBI Bank pleaded it would like the interim resolution professional (IRP) appointed by the NCLT to help it recover its loans and also work out a solution for flat buyers. Singhvi argued that the bank’s money was public money. The lender, he said, wanted a modification to Monday’s order so as to give the insolvency resolution process, which may ultimately turn out to be good for the flat buyers too, a chance.
Speaking to FE, Singhvi pointed out that IDBI Bank, which has loaned the company Rs 4,000 crore of the total exposure of Rs 10,000 crore, represents public money. “The lender is acting under RBI (Reserve Bank of India) guidelines as custodian of public monies. A blanket SC stay has the wholly unintended effect of restoring company to hands of Jaypee,” Singhvi said. A bench led by Chief Justice Dipak Misra posted IDBI Bank’s application for hearing on September 11.
Singhvi further said the insolvency professional is much better equipped to deal with claims and counter-claims of home owners. “This would be better than handing the company back to Jaypee which is the principal perpetrator of home-owner distress and borrower of `10,000 crore of public monies,” he said.
Senior advocate Ajit Sinha, appearing for some flat owners, vehemently opposed the bank’s prayer, saying the flat owners were happy with the apex court’s order. Around 32,000 buyers have booked flats across 27 different housing projects of Jaypee Infratech. Colonel SK Nagrath, president, Jaypee Aman Owner Welfare Association, said IDBI Bank could negotiate the loan with Jaypee. “The Rs 526-crore loan amount is not bigger than thousands of home buyers. The builder has to pay the amount to the bank by 2034, its just 2017 now. Insolvency here is self-generated,” Nagrath said.
The Supreme Court had on Monday stayed the insolvency resolution proceedings against Jaypee Infratech on a batch of petitions by flat buyers, restoring the developer’s original board of directors and ordering resumption of all consumer cases filed against the company and its promoters.
The Allahabad bench of the NCLT had on August 9 admitted IDBI Bank’s plea for initiating insolvency proceedings against the debt-ridden Jaypee Infratech, a subsidiary of Jaiprakash Associates, for defaulting on a Rs 526-crore loan. While initiating the liquidation proceedings under the Insolvency and Bankruptcy Code, 2016, the tribunal had appointed Anuj Jain, a chartered accountant, as the IRP to carry out the proceedings, as the board of directors of the company would remain suspended. The IRP was given 270 days to turn the company’s finances around and assess if a resolution of the company’s debt was possible, failing which the company’s assets were to be liquidated.