Further Delay: Supreme Court rejects NBCC’s resolution plan for JIL

By: |
March 25, 2021 5:00 AM

Asks RP to invite fresh bids & complete insolvency process within 45 days

The Supreme Court had in August last year transferred to itself all the appeals pending before National Company Law Appellate Tribunal (NCLAT) to ensure that there was no further delay in execution of the approved resolution plan of NBCC.The Supreme Court had in August last year transferred to itself all the appeals pending before National Company Law Appellate Tribunal (NCLAT) to ensure that there was no further delay in execution of the approved resolution plan of NBCC.

Noting some inconsistencies, the Supreme Court on Wednesday rejected state-owned NBCC’s resolution plan for the bankrupt Jaypee Infratech (JIL) and directed the interim resolution professional to invite fresh bids and complete the insolvency process in 45 days. However, the court ruled that only NBCC and Suraksha Realty – the two bidders who had submitted plans earlier – can submit fresh resolution plans within two weeks. After receiving the resolution plans, the IRP has been directed to take steps to complete the voting process of committee of creditors (CoC) and submit the report to the National Company Law Tribunal for adjudication. The NCLT was also directed to take a final decision expeditiously.

This development would further delay the completion of around 20,000 flats in Noida, which have been stuck for long.

The main objection of the court to the current resolution plan was that Rs 750 crore, which was deposited by Jaiprakash Associates (JAL), the parent firm of JIL, pursuant to its order in an earlier round of litigation, cannot be part of the NBCC’s resolution plan. It said that NBCC cannot use this money for construction of the housing project.

In an earlier order the court had directed JAL to transfer 758 acres land bank back to JIL. JAL had mortgaged the land bank to secure loan of Rs 20,510 crore from a consortium of around 20 banks, including SBI, Axis Bank, ICICI Bank and Standard Chartered Bank.

In December 2019, the CoC comprising 13 banks and around 21,000 homebuyers had approved NBCC’s resolution plan for takeover of the project in the third round of bidding process. The government had also supported the NBCC takeover of JIL’s unfinished projects and had told the SC that it would waive taxes, running into crores, if NBCC was to take over the bankrupt real-estate firm.

The Supreme Court had in August last year transferred to itself all the appeals pending before National Company Law Appellate Tribunal (NCLAT) to ensure that there was no further delay in execution of the approved resolution plan of NBCC.

IDBI Bank-led consortium had initiated insolvency proceedings against JIL for failing to repay total debt of around Rs 24,000 crore. The NCLT, Allahabad, on August 9, 2018, had admitted the consortium’s plea.

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