Suraksha’s resolution plan for Jaypee Infratech gets the NCLT green light

Jaypee Infratech: NCLT approves resolution plan for Jaypee Infratech. National Company Law Tribunal (NCLT) has approved the resolution plan of Suraksha Reality, and Lakshdeep Investments and Finance (resolution applicants) for Jaypee Infratech. The NCLT also passed order for reconciliation of amount of Rs 750 crore deposited by Jaiprakash Associates.

The National Company Law Tribunal has approved the resolution plan submitted by the Mumbai-based Suraksha Group for Jaypee Infratech through the insolvency process, raising hopes for more than 20,000 homebuyers waiting for their apartments in Noida for over a decade.

A two-member principal bench of the NCLT headed by Ramalingam Sudhkar approved the resolution plan on March 7 in a 491-page order and dismissed objections raised by Yamuna Expressway Industrial Development Authority and ICICI Bank.

It directed the interim resolution professional to set up an implementation monitoring committee within seven days. The committee is expected to include representatives of the Suraksha Group, insolvency resolution professional Anuj Jain, the lenders, and the authorised representative of the homebuyers.

The successful resolution applicant should deliver the units for possession by the homebuyers concerned as per the time frame promised in the resolution plan, the bench said.

“The Monitoring Committee(s) as provided in the Resolution Plan shall be set up by the Applicant within 07 days of passing of this Order, which shall take all necessary steps for expeditious implementation of the Resolution Plan as per approval,” the order, a copy of which is with Moneycontrol said.

“The SRA (successful resolution applicant) shall deliver/provide possession of the units to the Home Buyers/Allottees strictly as per the time frame promised in the Resolution Plan and approved by this Authority. The Monitoring Committee will supervise and monitor the progress of construction of units and related infrastructure developments on a day-to-day basis and file the progress report before this Adjudicating Authority on monthly basis,” the order said.

The order said that in case of non-compliance with any part of this order or withdrawal from implementing the Resolution Plan by the Successful Resolution Applicant, the Monitoring Committee shall forfeit the Performance Security furnished by the Resolution Applicant in the form of Performance Bank Guarantees and the Successful Resolution Applicant will be subject to such other action/actions as permissible under the law.

It said that the Interim Resolution Professional, Anuj Jain shall stand discharged from his duties immediately after constituting the Monitoring Committee(s) as provided in the Resolution Plan.

“He shall forthwith send a copy of this Order to the CoC, the SRA, and other parties for necessary compliance,” the order said.

NCLT also directed that JIL will get Rs 542.62 crore out of Rs 750 crore deposited by Jaiprakash Associates Ltd (JAL) in the registry of Supreme Court, while Rs 106.9 crore will go to an escrow account of homebuyers. JAL, the flagship firm of Jaypee Group, will get only Rs 100.48 crore.

As per the order of the Supreme Court, JAL had in 2018 deposited a total of Rs 750 crore in several tranches before the registry of the apex court.

"We direct the Registrar NCLT through Registry of NCLT, Allahabad that out of the total amount of Rs 750 crores and accrued interest thereon, an amount of Rs 649.52 crore along with proportionate interest shall be paid to the JIL/Homebuyers of JIL and the remaining amount of Rs 100.48 crores along with proportionate interest shall be returned to JAL, on receipt of such request from the parties," NCLT said.

Monthly reports

“The monitoring committee would supervise and monitor the progress of the construction of units, related infrastructure development on a day-to-day basis and file reports before this adjudicating authority on a monthly basis,” the NCLT added.

The bench had reserved its order on the Suraksha Group’s bid in November. The March 7 order is yet to be uploaded.

Jaypee Infratech informed the stock exchanges that the NCLT had pronounced its order on March 7, 2023, approving the resolution plan of Suraksha Reality and Lakshdeep Investments and Finance.

It said the NCLT also passed an order on the reconciliation of Rs 750 crore deposited by Jaiprakash Associates and the interest thereon between Jaypee Infratech/its homebuyers and Jaiprakash Associates. Jaiprakash Associates is the flagship construction company of the Jaypee Group.

“We shall provide/upload the copy of the order as soon as the same is provided to us,” Jaypee Infratech said.

Homebuyers generally welcomed the NCLT’s decision, although some expressed concern over prolonged legal battles ahead.

“We homebuyers, especially those whose project construction had stopped since 2014, have some hope of getting homes in the next 2.5 years,” said Jayashree Swaminathan, who booked a 2,100 square foot apartment in Kensington Park Heights in Noida in 2009.

“The insolvency process, which is supposed to be completed within a period of six months under the IBC Code, took six long and painful years in this case,” said Abhishek Dubey, a homebuyer in Jaypee Kosmos project. “While we homebuyers look forward to expedited construction under the ownership of Suraksha, we are also very sceptical as this order may again be challenged at NCLAT and then at the Supreme Court.”

Suraksha in driver’s seat

The Suraksha Group, in its resolution plan in 2021, offered secured financial creditors 2,552 acres of land and about Rs 1,300 crore through non-convertible debentures. It promised to immediately infuse Rs 300 crore if its bid was approved by the committee of creditors to ensure construction is not hampered while awaiting the NCLT’s approval of the resolution plan.

It also proposed to complete all unfinished apartments over the next four years.

The Suraksha Group decided to keep the Yamuna Expressway, which Jaypee had built, connecting Greater Noida and Agra. It proposed a line of credit of Rs 3,000 crore as working capital for the construction of projects and pledged to meet any shortfall to dissenting creditors.

According to the plan, the Mumbai-based company would complete the homebuyers project over 40 months.

On June 23, 2021, the financial creditors of Noida-based Jaypee Infratech chose the Suraksha Group of Mumbai over state-owned NBCC to take over the debt-laden developer and complete the unfinished apartments. The Suraksha Group received 98.66 percent of the votes compared with NBCC’s 98.54 percent. This was the fourth round of bidding to find a buyer for Jaypee.

In the first round of insolvency proceedings, the Rs 7,350-crore bid of Lakshdeep, a part of the Suraksha Group, was rejected by the lenders. The CoC rejected the bids of Suraksha and NBCC in the second round in May-June 2019.

In November 2019, the Supreme Court directed that revised bids be invited only from NBCC and Suraksha.

Then, in December 2019, the CoC approved the resolution plan of NBCC with a 97.36 percent vote in favour during the third round of the bidding process. In March 2020, NBCC got approval from the NCLT to acquire Jaypee Infratech.

However, the order was challenged before the National Company Law Appellate Tribunal and later in the Supreme Court. The apex court on March 24, 2021, ordered a fresh round of bidding between NBCC and the Suraksha Group only.