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Last Updated : | Source: Moneycontrol.com

Exclusive | Construction of Jaypee projects may see delay as NBCC mulls NCLAT appeal

Legal experts said that timely compliance of the order is essential to ensure that projects are not delayed.

Jaypee homebuyers could be staring at a further delay in construction of flats with NBCC planning to move NCLAT over conditions related to payment to ICICI Bank and YEIDA for compensation to farmers in the March 3 order, sources told Moneycontrol.

Sources also said that as per the resolution plan, the embattled Jaypee Infratech had to be managed and controlled by the Monitoring Agency but that is yet to see the light of day despite a week passing by since the order was passed.

"This clearly indicates that NBCC may be planning to appeal in NCLAT," sources said, adding this may lead to delay in construction of housing projects.

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As per the Resolution Plan submitted by NBCC in December 2019: "On and from the approval date, the Company (Jaypee Infratech) will be managed and controlled by the Monitoring Agency/any other person appointed by the NBCC in consultation with the Steering Committee comprising of representatives of three Institutional Financial Creditors having the largest voting share in the admitted financial debt, on the basis of a letter of appointment/agreement.

During this period, the said monitoring agency/any other person appointed by the resolution applicant shall perform the same duties as the Interim/Resolution Professional is required to discharge under the provisions of the Code…The interim resolution professional as hitherto shall be required to provide necessary assistance and cooperation to the Resolution Applicant and the monitoring agency/other person appointed by the Steering Committee….," the plan had said.

NCLT on March 3 had directed NBCC to pay to ICICI Bank an amount that the private lender is entitled under the Insolvency and Bankruptcy Code (IBC) in 12 equal instalments along with interest. The payment has to be made from the seventh month to the 18th month of the date of the NCLT order.

In its final bid, NBCC had offered 1,526 acre to lenders under a land-debt swap deal. It offered to transfer the road asset to lenders but before that, it would take a loan of around Rs 2,500 crore against toll revenue to fund construction spend.

It remains to be seen how payment to ICICI is dealt with, said legal experts.

On the subject of additional compensation of 62.7 percent to farmers, the NCLT order has said that as and when the claim crystalises, YEIDA will have the right to collect the additional acquisition cost from the land bank SPV and the Expressway SPV, but not from homebuyers.

The NCLT order had said the bench cannot nullify the rights of YEIDA against the corporate debtor emanating from the concessionaire agreement. On the extension of the concession period, NCLT said it is for YEIDA to decide whether such an extension should be given.

This is another issue that may delay the process, sources said.

Legal experts said that timely compliance of the order is essential to ensure that projects are not delayed.

"NCLT has laid down several observations and directions while examining issues vis-à-vis the resolution plan. It has attempted to address the concerns raised by the various aggrieved stakeholders. Timely compliance without prolonging further litigation shall prove to be crucial for an effective and speedy resolution," said Yudhist N Singh, a Delhi-based advocate advising on insolvency matters.

The December round of voting was the third round of bidding process to find a buyer for Jaypee Infratech, which went into Corporate Insolvency Resolution Process (CIRP) in August 2017.

More than 10,000 homebuyers and major lenders of Jaypee Infratech, including IDBI Bank and State Bank of India, had voted in favour of the resolution plan submitted by the government's construction arm NBCC to acquire the embattled real estate firm.

NBCC has proposed to complete over 20,000 pending flats in the next three-and-a-half years. Homebuyers' claim amount to Rs 13,364 crore and lenders' claim worth Rs 9,783 crore have been admitted.

In its bid in December, NBCC had offered 1,526 acres of land to lenders under a land-debt swap deal. On Yamuna Expressway, NBCC has proposed to transfer the road asset to lenders but before that it would take a loan of around Rs 2,500 crore against toll revenue to fund construction spend.
First Published on Mar 11, 2020 06:37 pm
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