india

Updated: Nov 07, 2019 16:45 IST

New Delhi:

In a setback to Jaypee Infratech Limited (JIL), the Supreme Court on Wednesday ordered the completion of the insolvency proceedings against the real estate firm within 90 days and barred JIL’s parent company, Jaypee Associates Limited (JAL), from participating in the bidding process.

A bench led by Justice AM Khanwilkar said the revised resolution plan will be invited by state-owned company NBCC (India) Limited and Suraksha Realty only as it directed the two to present their fresh bids within 45 days.

The order is likely to bring some relief to homebuyers who had almost two years ago challenged the resolution proceedings initiated against JIL, dragged by IDBI bank for defaulting a loan of Rs 526 crore. The flat owners had rued the fact that the insolvency law did not recognise them as secured creditors, as a result of which they would have no say in the bidding process and no redressal against JIL that had failed to deliver them possession of their houses within the promised time frame.

In August 2018, however, the court referred the matter back to the insolvency tribunal and allowed the homebuyers to have its representatives as members of the committee of creditors. This was done when the government amended the insolvency law to include homebuyers as financial creditors under the Insolvency Bankruptcy Code (IBC).

The matter landed in the top court’s jurisdiction again after JAL challenged NCLAT’s July 30 order debarring it from participating in the auction of its debt-ridden JIL. NCLAT had allowed fresh bidding for JIL but disallowed JAL’s request to participate in the auction.

The top court said on Wednesday that the pendency of any application before the NCLAT or appellate tribunal will not stall the insolvency proceedings. Even an interim direction shall be no impediment for the insolvency resolution professional (IRP) to receive and process the revised resolution plan from the two bidders.

The court clarified its order, which allows more time to wrap up the insolvency proceedings, will not be a precedent. The directions have been passed in an “extraordinary circumstances,” the court said. The reason why SC made such a remark in its judgment is because the IBC sets a 180-day period for insolvency proceedings to end, which in JIL’s case has already expired.

“In view of the legislative changes referred to above, we are of the considered opinion that we need to and must exercise our plenary powers to make an attempt to revive the corporate debtor (JIL). We are inclined to do so because the project has been implemented in part and out of over 20,000 home buyers, a substantial number of them have been put in possession and the remaining work is in progress and in some cases at an advanced stage of completion. In this backdrop, it would be in the interest of all concerned to accept a viable plan reflecting the recent legislative changes,” the court ordered.

“We direct the IRP to complete the CIRP within 90 days from today. In the first 45 days, it will be open to the IRP to invite revised resolution plan only from Suraksha Realty and NBCC respectively, which were final bidders and had submitted resolution plan on earlier occasion and place the revised plan(s) before the Committee of Creditors (CoC), if so required, after negotiations and submit report to adjudicating authority NCLT within such time,” the apex court order said.

“In the second phase of 45 days commencing from December 21 2019, margin is provided for removing any difficulty and to pass appropriate orders thereon by the adjudicating authority,” read the order.

Advocate Ashwarya Sinha, representing homebuyers in the case, termed the verdict as unprecedented. “The court has exercised its special powers to give another 90 days to complete the resolution process. The flat buyers are positive about receiving their flats now.”