The Supreme Court on Wednesday rejected Jaiprakash Associates’ (JAL) proposal to “hive off” its multi-crore Yamuna Expressway toll asset rights to generate Rs 2,000 crore that it is supposed to deposit to cover part of its subsidiary Jaypee Infratech’s liability towards 32,000 homebuyers. However, it gave JAL time till November 5 to deposit the money, without further modifying or recalling its earlier September 11 order. A bench headed by Chief Justice Dipak Misra said that “we are not inclined to entertain the application for modification of the order… However, we extend the time to deposit the sum of Rs 2000 crores till November 5, 2017.” It also allowed the Axis Bank to be party in the case. During the hearing, the Bench had observed that it will only be able to ensure refund of money to the aggrieved Jaypee Infratech (JIL) homebuyers, but not delivery of flats, for which they can approach various consumer fora.
Senior lawyers Kapil Sibal and Mukul Rohtagi, appearing for the Jaypee group, argued that JAL may be permitted to transfer its rights under the Concession Agreement in respect of Yamuna Expressway. They argued that Jaypee needs approval to “hive off its operation, collection and maintenance rights for a limited period” to raise the funds. And for this the company has a concrete offer from a prospective buyer who is willing to pay Rs 2,500 crore for the expressway. JIL has 37 years licence period ending 2050 to operate and maintain the 165 km six-lane expressway connecting Noida to Agra. According to sources, its annual toll collections on the expressway is around Rs 200 crore. However, all the parties – home buyers, the insolvency resolution professional (IRP), IDBI Bank, and the Yamuna Expressway Industrial Development Authority (YEIDA) opposed JAL’s proposal, saying Yamuna Expressway being a property of JIL, which is under insolvency resolution proceedings, can not be sold by its parent company JAL.
IRP through senior counsel Parag P Tripathi,argued that the rights under the Concession Agreement in respect of Yamuna Expressway are of JIL, which is subject to proceeding under the Insolvency & Bankruptcy Code and, therefore, it cannot be transferred. IRP further said that out of 29,600 total number of flats only 4,083 are already done and another Rs 5,094 crore is required to finish all construction. Even counsel Ravinder Kumar, appearing for the Authority, submitted that the rights under the Concession Agreement, are non-transferable. Terming it contempt of court, IDBI said that JAL cannot be allowed to sell property which belongs to JIL. Besides, the Yamuna Expressway has been given as a security to 17 lenders, the third party rights have to be taken in consideration, he added. The apex court had on September 11 asked JAL, the parent company of Jaypee Infratech, to deposit `2,000 crore with its registry by October 27 to protect the interests of flat buyers. It had also asked the group to take approval of the the Insolvency Resolution Professional (IRP), appointed by the National Company Law Tribunal (NCLT), before selling any property and restrained the directors and managing directors of Jaypee Infratech and Jaypee Associates from traveling abroad without prior permission of the court.
Flat buyers had challenged the August 9 order of the Allahabad bench of the NCLT that admitted the IDBI Bank’s plea for initiating insolvency proceedings against the debt-ridden Jaypee Infratech for defaulting on a `526-crore loan. While initiating the liquidation proceedings under the Insolvency and Bankruptcy Code of India 2016, the tribunal had appointed the IRP to carry out the proceedings, as the board of directors of the company would remain suspended. Homebuyers, on their part, had objected to JAL’s proposal to significantly undervalue the Yamuna Expressway and hive it off for around Rs 2,500-3,000 crore will harm their interests.