The Allahabad bench of the National Company Law Tribunal (NCLT) on Thursday ordered that 858 acres of land of bankrupt Jaypee Infratech (JIL) which was transferred by the firm to its holding company Jaiprakash Associates (JAL) be transferred back to the former as the transfer was “fraudulent, preferential and undervalued”.
“We have found that corporate debtor (JIL) has by way of mortgage of unencumbered land created security interest in favour of lenders of JAL, which happens to be the holding company of JIL, without any consideration. We have also found that the corporate debtor was facing liquidity crunch and their accounts were declared as NPA (non-performing asset) and even after formation of joint lenders’ forum, without obtaining approval from the JLF, unencumbered land of the corporate debtor has been mortgaged in favour of lenders of JAL,” the NCLT order said.
The order was passed on the petition of the JIL resolution professional (RP) Anuj Jain who had alleged that the transfer of the land amounted to asset stripping. As is known, the NCLT had ordered the initiation of insolvency proceedings against JIL in August 2017.
The RP had alleged that that said land of JIL which was valued at around Rs 5,000-6,000 crore was mortgaged to secure loans taken by JAL from State Bank of India, ICICI Bank, IDBI Bank and Standard Chartered Bank. The transfer took place when the banks had started classifying JIL as an NPA due to loan defaults.
The RP’s contention was that the land could have been sold or mortgaged by JIL to raise funds and complete the construction of flats. The company was required to deliver around 33,000 flats of which more than 25,000 are yet to be completed.
Sources said that now the land will be transferred back to JIL, its value of around Rs 5,000 crore will be added to the company’s liquidation value.