Embattled company Jaiprakash Associates on Monday informed the Supreme Court that it would deposit Rs 600 crore in seven installments in the court registry to refund homebuyers. The condition though is that the company is given permission to dispose of its cement plant at Rewa in Madhya Pradesh.
The company also asked the court to direct the National Company Law Tribunal (NCLT) Allahabad for a stay of ‘liquidation proceedings and a stay of the direction that the interim resolution professional shall remain in management’.
The bench comprising Chief Justice Dipak Misra, Justices A M Khanwilkar, and DY Chandrachud, was informed by Senior Advocate Fali S Nariman, who was representing JAL, that the company had already deposited Rs 750 crore with the court registry for paying the principal amount to the home buyers and that it would deposit Rs 600 crore more in seven installments.
“In order that the actual total deposit of Rs 600 crore is realised on the due dates, it is prayed that prior approval may be granted by the court for JAL to dispose of identified cement assets including its cement plant at Rewa, Madhya Pradesh
"To enable JAL to do this, the National Company Law Tribunal (NCLT), Allahabad may kindly be directed by this court to proceed forthwith to decide and pass appropriate orders on its (JAL) plea for sanctioning the Scheme of Arrangement, propounded pursuant to Master Restructuring Agreement signed and accepted by all 32 creditors of JAL…The Scheme of Arrangement is already filed with the NCLT, Allahabad and the NCLT in its Order dated January 25, 2018, has sought for appropriate directions from this Court," the bench was informed.
JAL’s counsel also requested the order pertaining to the continuation of the IRP should be stayed, said Pawanshree Agarwal, amicus in the case.
“Since JAL has already undertaken to deposit post-dated cheques with the registrar of Supreme Court aggregating to Rs 600 crore …the stay of liquidation proceedings will continue and there shall also be a stay of the direction that ‘the interim resolution professional shall remain in management’”, the bench was told.
Nariman also gave a background of JAL and its subsidiary Jaypee Infratech Ltd (JIL) which has been facing proceedings in the NCLT and in the apex court due to the litigations initiated by banks, financial institutions (FIs) and the home buyers.
Nariman said that first impediment was between 2009 and 2011 and because of the Commonwealth Games, the building contractors, who had been engaged by JAL/JIL for construction, transferred a substantial workforce from the housing projects to work for the CWG under the orders of the Centre.
"The second impediment leading to temporary disruption of work at the site was an ex-parte order issued by National Green Tribunal on January 11, 2013, restraining all builders of Noida and Greater Noida area from extracting any quantity of underground water for the purposes of construction or otherwise," he said.
"The third impediment (for 2 years) was another order issued by NGT dated August 14, 2013, to the effect no further construction was to be done within 10 km radius of Okhla Bird Sanctuary without obtaining proper environment clearance," he said, adding the obstacle was later removed by the Centre.
Nariman, who would resume arguments tomorrow, said that up to the initiation of the insolvency proceedings, 307 towers were under various stages of construction and up to July 15, 79 towers have been completed and possession handed over to 11,200 buyers. The remaining 21,532 buyers have still to be accommodated in 228 towers which are under various stages of construction.
“The expectation and undertaking is to accommodate approximately 500 buyers out of the remaining 21,532 every single month starting from July 2018,” the bench was informed.
“The Yes Bank has been approached and it is confidently expected that a further loan of Rs 2700 crore will be forthcoming against permission requested from the court to monetize the toll receivables (for 10 years) in favour of Yes Bank,” the court was informed.
At the last hearing on July 4, the apex court had asked the firm to prove its bonafide by coming up with a credible financial plan with a bank and deposit at least Rs 650 crore for a refund of the principal amount to homebuyers.
A bench headed by Chief Justice Dipak Misra had on May 16 directed JAL to deposit Rs 1,000 crore with the registry by June 15 and said on submission of the amount, the liquidation proceedings against JIL shall remain stayed. The company had failed to deposit the said amount. This amount was in addition to Rs 750 crore that the company had already deposited with the court’s registry for ensuring refund to homebuyers.
Lawyers had said JAL wants to hive off cement assets for which they have filed an application in NCLT Allahabad. NCLT has not approved the scheme in the context of SC's order last year that restrains JAL from transferring any of its assets without leave of the apex court.
It was in this context that JAL had earlier this month sought permission from SC to transfer those assets so that it could satisfy the deposit Rs 1,000 crore. But the court had not allowed the sale of assets. It had only agreed to reduce the amount and asked the company’s lawyer to seek instructions to pay up at least Rs 600 crore to refund the principal amount to homebuyers.
The NCLT on August 10 last year, admitted IDBI Bank’s plea to initiate insolvency proceedings against the JIL for defaulting on an Rs 526-crore loan. While admitting the plea of IDBI Bank, the NCLT had appointed Anuj Jain as Interim Resolution Professional (IRP) to manage the company’s business.
The IRP has also invited bids from investors interested in acquiring JIL and completing the stuck real estate projects in Noida and Greater Noida. Consequently, Lakshadweep -- a joint venture between the Sudhir Valia-led Suraksha Asset Reconstruction Company and Mumbai-based Dosti Realty -- emerged as a front-runner to acquire JIL with Rs 7,350 crore bid.
However, JIL's lenders rejected the Lakshadweep's bid as they found it inadequate.
The lenders did not consider the bid of Jaypee Group promoter Manoj Gaur who made an offer of over Rs 10,000 crore to revive JIL. It also offered 2,000 shares to every home buyers.
On July 2, homebuyers stuck in Jaypee projects for almost a decade had demanded that Jaiprakash Associates Limited should not be allowed to regain control of Jaypee Infratech Limited (JIL) as JAL neither has any intent nor any financial strength to complete construction of remaining flats in the stalled projects.
Allowing JAL to regain control of JIL will go against the spirit of IBC and would open floodgates for other promoters to challenge takeover of their companies by third parties which would result in chaos, they had said.
“Jaypee has not been able to complete construction till date nor will it be able to do so in future. A private company such as Suraksha or Kube or a government agency such as NBCC should come forward. They are only waiting for instructions from the government and the Supreme Court to complete the projects so that the projects are handed over in time. There are 20,000 units left out of 35,000 booked. These can be completed in the shortest possible time under the direct supervision of the Supreme Court and under the monitoring committee formed by the Supreme Court within a timeframe and with the involvement of homebuyers,” homebuyers had told reporters at a conference organised by a consortium of nine associations consisting of around 5,000 buyers.