Jaypee insolvency: NCLAT asks IDBI Bank to furnish conditions for fresh bidding

The National Company Law Appellate Tribunal (NCLAT) Wednesday directed IDBI Bank, the lead lender of debt-ridden Jaypee Infratech, to file an affidavit listing out new terms and conditions if a fresh bidding process is conducted. A two-member bench headed by Chairman Justice S J Mukhopadhaya has asked IDBI Bank to file an affidavit by Friday in this regard. The appellate tribunal has listed the matter for next hearing on Monday.

"We allow the learned counsel of the lenders (banks and financial institutions) to file an affidavit by 19th July, 2019, showing terms and conditions, as may be imposed, if fresh resolution plans are allowed to be accepted...," the bench said. In the second round of bidding, the committee of creditors (CoC) had first rejected the resolution plan of Suraksha Realty and then voted against state-owned NBCC's offer.

In the voting that took place on NBCC's bid, 34.75 per cent of home buyers voted in favour, 1.44 per cent voted against, whereas 23.8 per cent did not vote. All the 13 banks, which constitute 40.75 per cent of CoC, voted against the bid by the state-run firm to acquire Jaypee Infratech. Home buyers have nearly 60 per cent voting rights in the CoC.

In its hearing Wednesday, the appellate tribunal suggested some guidelines for new terms and conditions. "All allottees would be given flats according to their builder buyer agreement. If allottee not present then CoC has to decide how it has to be adjusted," the bench said.

"Land attached to the building and with common area amenities would remain with the allottees," it added. Meanwhile, NCLAT also orally suggested to the counsel representing the Adani Group to improve its bid. Adani has made an unsolicited offer to acquire the debt-laden realty firm.

During the proceedings, lenders submitted that the period between September 17, 2018 to June 4, 2019 should be excluded for the purpose of counting mandatory 270 days to complete the resolution process as the issue related to voting share of allottees was pending before the Allahabad bench of the National Company Law Tribunal (NCLT). Banks and financial institutions submitted that there was confusion regarding voting shares of the allottees and for its clarification they had approached the NCLT on September 17, 2018.

At NCLT, there was difference of opinion between members and it was referred to a third member and the issue was finally decided on June 4, 2019. It was submitted that if an order of exclusion of such period is passed, it will be advantageous to all the stakeholders, particularly the house allottees as Jaypee Infratech would not face any liquidation.

Jaypee Infratech went into insolvency in August 2017 after the National Company Law Tribunal (NCLT) 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. Later in October 2018, the IRP started the second round of bidding process.

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