Banks and financial institutions (FIs), which have lent money to Jaiprakash Associates Limited (JAL), on July 17, 2018, urged the Supreme Court that the assets of holding firm JAL, should not be used for refunding money to home buyers of its subsidiary firm, Jaypee Infratech Ltd (JIL). JAL, which has already deposited Rs 750 crores with the apex court registry, had told the bench headed by chief justice Dipak Misra that it was willing to deposit Rs 600 crores more, to refund money to the home buyers, if it was allowed to dispose of its identified assets, including a cement plant at Rewa in Madhya Pradesh.
Senior advocate Shyam Divan, appearing for the consortium of banks and FIs led by ICICI Bank, said that while JAL has moved the National Company Law Tribunal (NCLT), Allahabad, with its restructuring plan, JAL’s subsidiary firm JIL owes money to home buyers and was undergoing liquidation process. Stressing the need for segregating the two issues, Divan told the bench, also comprising justices AM Khanwilkar and DY Chandrachud that the exposure of banks and FIs in JAL was to the tune of Rs 21,593 crores, out of which Rs 4,750 crores was of ICICI. “These are two (JAL and JIL) separate legal entities and if JAL was forced to pay for JIL, then, it will have an adverse impact on JAL,” he said, adding that JAL’s scheme on restructuring was pending with the NCLT and the RBI can also be taken on board in the matter.
Additional solicitor general Tushar Mehta, appearing for the Insolvency Resolution Professional (IRP), referred to the amended provision of the insolvency law and said that now, home buyers have also been included in the list of creditors, whose interests can be secured in the insolvency proceedings. The hearing on the pleas of home buyers remained inconclusive and will continue on July 18, 2018.
JAL had earlier told the court that it would deposit Rs 600 crores more, to refund the home buyers, if it was allowed to dispose of its identified assets, including a cement plant at Rewa in Madhya Pradesh. Senior advocate Fali S Nariman had said that JAL has already deposited Rs 750 crores with the apex court registry and for paying the principal amount to the home buyers, it would pay Rs 600 crores more, in seven installments.
The firm be granted a prior approval ‘to dispose of identified cement assets including its cement plant at Rewa, Madhya Pradesh’, he had said. “To enable JAL to do this, the National Company Law Tribunal (NCLT), Allahabad, may kindly be directed by this court to proceed forthwith to decide and pass appropriate orders on its (JAL) plea, for sanctioning the Scheme of Arrangement, propounded pursuant to the Master Restructuring Agreement, signed and accepted by all 32 creditors of JAL. The Scheme of Arrangement is already filed with the NCLT, Allahabad and the NCLT in its order, dated January 25, 2018, has sought for appropriate directions from this court,” Nariman had said.
He had also referred to the impediments in the timely delivery of homes to the home buyers and said now, the situation had become grave. Earlier, the bench had said it would ask the NCLT at Allahabad to expeditiously decide JAL’s plea, on restructuring of its subsidiary firm JIL, if they deposit Rs 600 crores for refunding the principal amount to home buyers who have opted out of its housing projects. Prior to this, it had directed JAL to deposit 1,000 crores, in addition to Rs 750 crores already deposited, by June 15, 2018, to provide refunds to the home buyers who had wished to opt out of its various housing schemes.
The home buyers had moved the apex court, stating that around 32,000 people had booked flats and were now paying instalments. The plea had also stated that hundreds of home buyers were left in the lurch after the NCLT, on August 10, 2017, admitted IDBI Bank’s plea, to initiate insolvency proceedings against the debt-ridden realty firm, for allegedly defaulting on a Rs 526-crore loan.