2 August 2019: Jaiprakash Associates, the parent company of embattled Jaypee Infratech (JIL), on Thursday moved the Supreme Court challenging the National Company Law Appellate Tribunal’s (NCLAT) on Tuesday order that allowed fresh bidding for the debt-laden real estate firm and also barred promoters from participating in the fresh auction.
JAL and Manoj Gaur, the CMD of the suspended management of JIL, in their joint appeal told the apex court that the NCLAT exceeded its jurisdiction and disregarded the strict and mandatory provisions of the IBC by giving another opportunity to the other resolution applicants, including state-owned NBCC and Adani, to resubmit their resolution plans, even though the same have been repeatedly been rejected.
A bench led by justice AM Khanwilar is likely to hear the case on Friday.
While challenging the NCLAT order that held JAL ineligible to submit fresh bids, Gaur asked the apex court to “exercise its extra-ordinary jurisdiction to continue with the restructuring/revival of JIL with an equitable view and consider the settlement proposal” submitted by the promoters wherein they have “strived to optimally utilise the assets of the corporate debtor to run it as going concern and settle the claims of all the stakeholders holistically without providing for any haircuts, while considering the primary objective of the IBC”.
It said that the SC had once permitted JAL to present its proposal before the committee of creditors (CoC) of JIL, but the same was merely rejected as a statutory bar stipulated under the IBC.
JAL had earlier submitted its bid to regain control over its subsidiary and had offered to pay the 100% outstanding amount to creditors without any haircut. It had also offered to complete the unfinished flats within three years.
To enable the fresh bidding process, the NCLAT had also extended the Corporate Insolvency Resolution Process (CIRP) period of JIL for another 90 days, which includes a 45-day window for the resolution professional and lenders of the debt-ridden firm to invite fresh bids. Forty five days would be used to finalise new bids and the rest to cure any discrepancies in the bids.
The appeal stated that the NCLAT had “erroneously and arbitrarily and without any adequate jurisdiction” decided on the exclusion of time especially when an application in this regard was pending before the NCLT. It said that the appellate tribunal had usurped the jurisdiction of the NCLT while holding that total 260 days out of 270 days can be excluded and also by passing an order of exclusion of 90 days from the CIRP of JIL.
Lenders had requested NCLAT to exclude the period from September 17, 2018, from the stipulated period for CIRP, as this time was taken by the NCLT to decide on the voting rights of the homebuyers. However, JAL stated that CIRP of JIL was not stalled at any point of time and this was evident from the fact that the CoC meetings were being duly conducted and decisions with regard to the operations and the resolution process were being taken regularly.
The IDBI Bank-led consortium had initiated insolvency proceedings against JIL for failing to repay debt of around Rs 24,000 crore. The NCLT, Allahabad, had admitted the plea.
In the first round of insolvency proceedings conducted last year, the Rs 7,350-crore bid of Lakshdeep, part of Suraksha Group, was rejected by lenders. In October 2018, the RP had started second round of bidding. While state-owned NBCC’s plan to complete the pending projects was rejected by the lenders, the Adani group is also now in the fray with its unsolicited bid.
Of the total votes polled on the NBCC’s plan, nearly 34.75% of homebuyers had voted in favour, while 1.44% had voted against. As much as 23.8% of the homebuyers had abstained from the voting process. While the homebuyers comprise 59% of the CoC, the 13 banks comprising the other 40.755 had voted against the NBCC’s bid.