SC refuses approval to NBCC resolution plan for Jaypee Infra, remits it back to creditors

By: |
March 24, 2021 10:05 PM

The top court directed that the resolution shall be completed within a period of 45 days from the date of this judgment.

Jaypee InfratechIn August 2017, Jaypee Infratech went into the insolvency process after the NCLT admitted the application by an IDBI Bank-led consortium.

The Supreme Court Wednesday refused to approve the resolution plan of state-owned NBCC for the debt-ridden Jaypee Infratech Ltd (JIL) for its shortcoming in fulfilling the parameters of IBC and remitted it back to the Committee of Creditors (CoC) for its nod.

The top court directed that the resolution shall be completed within a period of 45 days from the date of this judgment.

A bench of Justices A M Khanwilkar, Dinesh Maheshwari and Sanjiv Khanna used the top court’s plenary powers under Article 142 of the Constitution to do “substantial and complete justice to the parties and in the interest of stakeholders of JIL”.

“The net result of the discussion and findings hitherto is that some of the terms and stipulations of the resolution plan of NBCC, which was voted for approval by 97.36 per cent of the voting share of the Committee of Creditors, do not meet with approval,” it said.

The bench said the terms and stipulations of the resolution plan which do not meet approval are concerning — the land providing agency, the dissenting financial creditor and the undischarged security interest of the lender of JAL.

It said that except for these terms and stipulations in the resolution plan, all others stand approved.

The bench said that no new expression of interest will be entertained for taking over the firm and only state-owned NBCC and Suraksha Realty may file revised proposals.

“Taking all the facts and circumstances into account and in keeping with the spirit and purport of the orders passed in the past, we are inclined to again exercise the powers under Article 142 of the Constitution of India and to enlarge the time for completion of CIRP concerning JIL while extending opportunity to the said resolution applicants Suraksha Realty and NBCC to submit modified/fresh resolution plans, which are compliant with the requirements of the Code and the CIRP Regulations and are in accord with the observations and findings in this judgment,” it said.

The bench further added that it will be open to the Interim Resolution Professional (IRP) to invite modified/fresh resolution plans only from Suraksha Realty and NBCC respectively, giving them time to submit the same within 2 weeks from the date of this judgment.

The top court, which passed its verdict on a batch of appeals against the NCLAT’s last year order and fresh petitions, said: “It is made clear that the IRP shall not entertain any expression of interest by any other person nor shall be required to issue any new information memorandum”.

The bench directed the IRP to complete the Corporate Insolvency Resolution Process (CIRP) within the extended time of 45 days from Wednesday.

“The matter regarding approval of the resolution plan stands remitted to the Committee of Creditors of JIL and the time for completion of the process relating to CIRP of JIL is extended by another period of 45 days from the date of this judgment,” the bench said in its 375-page verdict.

It also held that Rs 750 crore deposited by Jaypee group in the top court and later transferred to NCLT is the property of Jaiprakash Associates Ltd (JAL) and the stipulations in the resolution plan concerning its usage by JIL or the resolution applicant cannot be approved.

It said, “However, the final treatment of the said amount of Rs 750 crores with accrued interest shall be determined by NCLT after the reconciliation of accounts between JAL and JIL and in terms of the directions contained in this judgment”.

The bench, which decided the case in fourth round of litigation reaching the top court, said that the resolution applicants will be expected to proceed on the basis of the information memorandum already issued by IRP and also take into account the facts noticed and findings recorded in this judgment.

It added that the IRP shall take all further steps in the manner that the processes of voting by the Committee of Creditors and his submission of report to the Adjudicating Authority (NCLT) are accomplished in all respects within the extended period of 45 days from the date of this judgment.

“The Adjudicating Authority shall take final decision in terms of Section 31 of the Code (Insolvency and Bankruptcy Code) expeditiously upon submission of report by the IRP,” the bench said.

It said that National Company Law Tribunal (NCLT) has limited jurisdiction in the matter of approval of a resolution plan, which is well-defined and circumscribed by IBC.

“In the adjudicatory process concerning a resolution plan under IBC, there is no scope for interference with the commercial aspects of the decision of the CoC; and there is no scope for substituting any commercial term of the resolution plan approved by CoC,” the bench said.

With regard to objections raised by home buyers on the NBCC’s resolution plan, the bench said, “the home buyers as a class having assented to the resolution plan of NBCC, any individual home buyer or any association of home buyers cannot maintain a challenge to the resolution plan and cannot be treated as a dissenting financial creditor or an aggrieved person”.

On August 6 last year, the top court had transferred to itself the appeals pending before the National Company Law Appellate Tribunal (NCLAT) and stayed its order by which it had given conditional go-ahead to NBCC to acquire JIL.

In August 2017, JIL went into the insolvency process after the NCLT admitted the application by an IDBI Bank-led consortium.

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