SC orders fresh resolution process against Jaypee Infratech

New Delhi: In a setback to the Jaypee Group, the Supreme Court on Thursday ordered re-commencement of resolution process against Jaypee Infratech Ltd (JIL) and barred the firm, its holding company and their promoters from participating in the fresh bidding process.

The apex court also allowed the Reserve Bank of India (RBI) to direct the banks to initiate corporate insolvency resolution proceedings (CIRP) against Jaiprakash Associates Ltd (JAL), the holding company of JIL, under the Insolvency and Bankruptcy Code (IBC).

A bench headed by Chief Justice Dipak Misra said there was "no manner of doubt" that JAL and JIL lacked financial capacity and resources to complete unfinished housing projects in which 21,532 home buyers have not been given possession of their flats.

The bench, also comprising justices A M Khanwilkar and D Y Chandrachud, said that the initial period of 180 days for the conclusion of CIRP in respect of JIL would commence from today, and if it becomes necessary to apply for further extension of 90 days, the National Company Law Tribunal (NCLT), Allahabad, would pass appropriate orders in accordance with IBC provisions. It also directed that a committee of creditors (CoC) be constituted afresh in accordance with the provisions of the Insolvency and Bankruptcy (Amendment) Ordinance, 2018 which says that home buyers should also be included in it.

The top court permitted interim resolution professional (IRP) "to invite fresh expressions of interest for the submission of resolution plans by applicants, in addition to the three short-listed bidders whose bids or, as the case may be, revised bids may also be considered".

"The amount of Rs 750 crores which has been deposited in this court by JAL/JIL shall together with the interest accrued thereon be transferred to the NCLT and continue to remain invested and shall abide by such directions as may be issued by the NCLT," the bench said while disposing of the pleas pending before it.

The court noted in its order that during the arguments, there was a unanimity of opinion that liquidation of JIL would not subserve the interests of home buyers.

"The home buyers have made valuable investments by contributing hard earned monies in the hope of obtaining a roof over their heads. A home for the family is a basic human yearning. In diverse contexts it has been held by this Court to be a part of the right to life, as a fundamental constitutional guarantee," the bench noted in its 46-page judgement.

Referring to section 29A of the IBC, which deals with the issue of persons not eligible to be resolution applicant, the court said that Parliament had introduced this provision to ensure that those responsible for insolvency of corporate debtor do not participate in the resolution process.