Supreme Court Extends Status Quo By A Week On Jaypee’s Insolvency Resolution Process

The Supreme Court on Thursday extended by a week the status quo on the insolvency process on Jaypee Group's plea challenging the National Company Law Appellate Tribunal order allowing fresh bidding for debt-laden Jaypee Infratech Ltd.

A bench of Justices AM Khanwilkar and Dinesh Maheshwari was told by senior advocate Fali S Nariman, appearing for Jaypee Group, that a batch of 18-19 petitions have been filed challenging the new amendments to the Insolvency and Bankruptcy Code.

The pleas have been listed for September before another bench of the top court, Nariman said.

The bench then enquired about Additional Solicitor General Madhavi Divan, who is assisting the court on behalf of Centre in the case.

A counsel informed the bench that she was arguing a part-heard case in another court, after which the top court posted the matter for further hearing on Aug. 29.

"List after one week. Interim orders to continue till further orders," the bench said.

On Aug. 2, the Supreme Court had ordered status quo for two weeks on the insolvency proceeding after Jaypee Group challenged the July 30 order of NCLAT, which allowed the fresh bidding for the cash-strapped Jaypee Infratech.

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

Earlier, Divan had told the bench that Parliament has passed the amendments in IBC, which would address various concerns of homebuyers.

She had said that a meeting of various stakeholders with the Finance Ministry was scheduled to be held in first week of August to resolve taxation and other related issues.

On July 30, the NCLAT had allowed fresh bidding for the cash-strapped Jaypee Infratech but barred its promoter Jaypee Group from participating in the auction.

To enable the fresh bidding process, the NCLAT extended the resolution period of Jaypee Infratech for another 90 days, which includes a 45-day window for the resolution professional and lenders of the debt-ridden firm to invite fresh bids.

The NCLAT direction came in view of lenders rejecting the resolution plan of state-owned NBCC and Suraksha Realty in the second round of bidding.

Jaypee Infratech went into insolvency in August 2017 after the National Company Law Tribunal admitted an application filed by an IDBI Bank-led consortium.

In the first round of insolvency proceedings conducted last year, the Rs 7,350-crore bid of Lakshdeep, part of Suraksha Group, was rejected by lenders.

The NCLAT had asked state-owned NBCC, whose bid was rejected by the Committee of Creditors of Jaypee Infratech, to submit fresh resolution plan for the debt-ridden company.

The appellate tribunal has also rejected the plea of Jaiprakash Associates Ltd., the promoters of Jaypee Infratech, to be eligible to submit a bid.

On June 18, the Centre had informed the apex court that fresh amendments to the IBC give appropriate weightage to homebuyers to protect their interest.

The Lok Sabha on earlier passed amendments to the IBC, with the government asserting that the spirit behind the law is not to allow companies to die.

Rajya Sabha has already passed the bill and with its passage in the lower house, the Insolvency and Bankruptcy Code is set to be amended.

The top court had earlier said it may use its plenary power under Article 142 of the Constitution to protect the interest of over 21,000 homebuyers in the JIL case, if their grievances are not addressed.

The court is hearing a plea which has sought that JIL be not sent into liquidation, although the deadline for the corporate insolvency resolution process is over, as it would cause "irreparable loss" to thousands of homebuyers.

On Aug. 9 last year, the apex court ordered re-commencement of the resolution process against JIL and barred the firm, its holding company and promoters from participating in fresh bidding process.

It allowed the Reserve Bank of India to direct banks to initiate corporate insolvency resolution proceedings against Jaiprakash Associates, the holding company of JIL, under the IBC.