The Supreme Court ordered completion of the Interim Resolution Professional (IRP) of Jaypee Infratech Ltd. (JIL) within 90 days from 6th November 2019 (date of passing order). A bench of Justices A. M. Khanwilkar and Dinesh Maheshwari turned down the plea of Jaiprakash Associates Ltd. (JAL) group for participating in the auction of its debt-ridden group firm, JIL.IDBI Bank had filed...
The Supreme Court ordered completion of the Interim Resolution Professional (IRP) of Jaypee Infratech Ltd. (JIL) within 90 days from 6th November 2019 (date of passing order). A bench of Justices A. M. Khanwilkar and Dinesh Maheshwari turned down the plea of Jaiprakash Associates Ltd. (JAL) group for participating in the auction of its debt-ridden group firm, JIL.
IDBI Bank had filed an application excluding the period of pendency of the application for clarification regarding the manner of counting votes of the concerned financial creditors from the period of 270 days of Corporate Insolvency Resolution Process (CIRP). The National Company Law Appellate Tribunal (NCLAT) granted relief as sought for by IDBI Bank to exclude period from 17th September, 2018 till 4th June, 2019 for the purpose of counting 270 days Corporate Resolution Process period and issued consequential directions.
JAL preferred an appeal before the Supreme Court urging two principal questions of law –
(a) Whether the NCLAT had power or authority in law to exclude 90 days from the statutory period of the CIRP, much less for the reasons stated in the impugned judgment.
(b) Whether despite rejection of resolution plans of Suraksha Realty and NBCC by the Committee of Creditors (CoC) on 5th May, 2019 and 10th June, 2019 respectively, could the NCLAT, after excluding 90 days period from the total CIRP period, again start the CIRP afresh by allowing the two bidders to submit their revised resolution plans and/or invite fresh resolution plan from eligible persons and to call upon the CoC to reconsider the same, if so required, after negotiations.
The home buyers’ Association - Wish Town Home Buyers Welfare Society also questioned the power of NCLAT to disregard the mandatory provisions of IBC and to issue directions for inviting fresh resolution plans after expiry of the statutory period for completion of the CIRP.
The Supreme Court noted that “in view of the recent legislative changes, the scope of resolution plan stands expanded which may now include provision for restructuring the corporate debtor including by way of merger, amalgamation and demerger and more so the power bestowed on the CoC to consider not only the feasibility and viability of the resolution plan but also the manner of distribution proposed, which may take into account the order of priority amongst the creditors. Additionally, the recently inserted Section 12A in the IBC enables the adjudicating authority to allow the withdrawal of an application filed under Section 7 or Section 9 or Section 10, on an application made by the applicant with the approval of 90% voting share of the CoC. Similarly, sub-clause (7) of Regulation 36B inserted with effect from 4th July, 2018, dealing with the request for resolution plans unambiguously postulates that the Resolution Professional may, with the approval of the Committee, reissue request for resolution plans, if the resolution plans received in response to earlier request are not satisfactory, subject to the condition that the request is made to all prospective resolution applicants in the final list.”
Further, the Court applying the principle underlying Regulation 36B(7), permitted the IRP to reissue request for resolution plans to the two bidders (Suraksha Realty and NBCC) and/or to call upon them to submit revised resolution plans.
The Court held that “in the first 45 days, it will be open to the IRP to invite revised resolution plan only from Suraksha Realty and NBCC respectively, who were the final bidders and had submitted resolution plan on the earlier occasion and place the revised plan(s) before the CoC, if so required, after negotiations and submit report to the adjudicating authority NCLT within such time. In the second phase of 45 days commencing from 21st December, 2019, margin is provided for removing any difficulty and to pass appropriate orders thereon by the Adjudicating Authority.”
The Supreme Court directed that the CIRP concerning JIL shall be completed within a period of 90 days from today (date of order).