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Jaypee case: Supreme Court extends status quo on insolvency proceedings by a week

On August 2, the apex court had ordered status quo for two weeks on insolvency proceedings after Jaypee Group challenged the July 30 order of NCLAT.

The Supreme Court on August 22 extended the status quo on the insolvency proceedings in the Jaypee matter by a week.

A bench of Justices AM Khanwilkar and Dinesh Maheshwari has directed that the case be listed on August 29. "List after one week. Interim orders to continue till further orders," the bench said.

On August 2, the Supreme Court had ordered status quo for two weeks on the insolvency proceeding after Jaypee Group challenged the July 30 order of National Company Law Appellate Tribunal (NCLAT), which allowed fresh bidding for the cash-strapped Jaypee Infratech.

The NCLAT order had barred the parent company Jaypee Associates from bidding for embattled Jaypee Infratech.

The National Company Law Appellate Tribunal (NCLAT) on July 30 had allowed extension of the corporate insolvency resolution process of the embattled realty firm Jaypee Infratech by 90 days, clearing the decks for the resolution professional to call for fresh bids.

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The two-member NCLAT bench headed by Chairman Justice SJ Mukhopadhaya had in July this year allowed for a fresh expression of interest from bidders and directed the resolution professional (RP) and the Committee of Creditors (CoC) of the company to complete the entire process of selecting new bidders within 45 days.

The top court had earlier said that the new resolution plan has to be in accordance with the new amendments in the IBC.

The parliament has passed amendments to the Insolvency and Bankruptcy Code.

On July 11, the counsel appearing before the Supreme Court for the homebuyers had said that they apprehend that Jaypee Infratech Ltd (JIL) may be sent for liquidation to which the apex court observed that it may use its plenary power under Article 142 of the Constitution to protect the interest of around 23,000 homebuyers in the Jaypee Infratech case, if their grievances are not addressed.

The counsel then referred to the Unitech homebuyers' case where the government has indicated that it may take over the stalled projects and said that similar relief can be granted in the Jaypee case.

The top court had on July 9 asked the Centre to come out with a "uniform" proposal for all cases to resolve the difficulties being faced by lakhs of home buyers who have not yet got possession of flats despite paying huge amounts of money to real estate builders. "This issue will be bothering lakhs of home buyers. Within the IBC (Insolvency and Bankruptcy Code), we cannot do anything. But outside it, you (Centre) can suggest something. We can consider that," the court had said.

The court's observation had come during the hearing of a plea filed by Chitra Sharma and other homebuyers which has sought that JIL be not sent into liquidation, although the 270-day deadline for the corporate insolvency resolution process is over, as it would cause "irreparable loss" to thousands of homebuyers. The fresh plea filed in the top court has also sought a direction that an "independent and thorough forensic audit" of JIL should be conducted from the date of its incorporation.

Sharma was among the first few homebuyers who had moved the apex court in 2017 stating that around 23,000 people had booked flats and were now paying instalments, but their homes were not ready.

The apex court had on August 9, 2018, ordered re-commencement of the resolution process against JIL and allowed the Reserve Bank of India to direct banks to initiate corporate insolvency resolution proceedings (CIRP) against Jaiprakash Associates (JAL), the holding company of JIL, under the Insolvency and Bankruptcy Code (IBC).

Jaypee Infratech went into insolvency process in 2017 after the NCLT admitted an application by an IDBI Bank-led consortium seeking resolution of the realty firm. In the first round of insolvency proceedings, the Rs 7,350-crore bid of Lakshdeep, part of Suraksha Group, was rejected by lenders.

Later in October 2018, the Interim Resolution Professional (IRP) started the second round of bidding process to revive Jaypee Infratech on the direction of NCLT.

In the second round of bidding, the CoC had first rejected the resolution plan of Suraksha Realty and then voted against state-owned NBCC's offer.

In its revised offer, NBCC had proposed infusion of Rs 200 crore equity capital, transfer of 950 acres of land worth Rs 5,000 crore to banks and completing construction of flats by July 2023 to settle an outstanding claim of Rs 23,723 crore of financial creditors.

But it had put several conditions for the implementation of its plan, including a demand to extinguish an estimated income-tax liability of Rs 33,000 crore over a period of 30 years arising out of the transfer of land parcels from Yamuna Expressway Industrial Development Authority (YEIDA) to Jaypee Group and seeking permission from YEIDA for any business transfer.

On this bid, lenders had reservations on certain relief and concessions sought by NBCC and sought clarifications from the firm. Clarifications from the NBCC were sought in the wake of IRP Anuj Jain flagging to the lenders that the state-owned firm's bid was conditional and non-binding because of the two conditions.
Vandana Ramnani

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