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SUPREME COURT OF INDIA
A.M. Khanwilkar, Dinesh Maheshwari, JJ.
Jaiprakash Associates Ltd & Anr. – Appellant
Versus
IDBI Bank Ltd. & Anr. – Respondents
CIVIL APPEAL NO. OF 2019 (D. NO.27229 of 2019) WITH CIVIL APPEAL NO. 6486 of 2019
Decided On : 06-11-2019
Insolvency and Bankruptcy Code, 2016 – Sections 12(3), Proviso and 29A – Corporate Insolvency Resolution Process – Power of NCLAT to exclude 90 days from statutory period of CIRP – In view of recent legislative changes, scope of resolution plan stands expanded which may now include provision for restructuring corporate debtor including by way of merger, amalgamation and demerger and more so power bestowed on Committee of Creditors (CoC) to consider not only feasibility and viability of resolution plan but also manner of distribution proposed, which may take into account order of priority amongst creditors – In present case, finally only two bidders had participated and submitted their resolution plan which was placed before CoC and stated to have been rejected – However, applying principle underlying Regulation 36B(7), it is appropriate to permit Interim Resolution Professional to reissue request for resolution plans to two bidders and/or to call upon them to submit revised resolution plan(s), which can be then placed before CoC for its due consideration – There is unanimity amongst all parties appearing before this Court including resolution applicant that liquidation of JIL must be eschewed and instead an attempt be made to salvage situation by finding out some viable arrangement which would subserve interests of all concerned – Court need to and must exercise plenary powers to make an attempt to revive corporate debtor (AIL), lest it is exposed to liquidation process under Chapter III of Part II of I & B Code – It would be in interest of all concerned to accept a viable plan reflecting recent legislative changes – It is just, proper and expedient to issue directions under Article 142 of Constitution of India to all concerned to reckon 90 days extended period from date of this order instead of date of commencement of Insolvency and Bankruptcy Code (Amendment) Act, 2019 – In terms of this order, CIRP concerning JIL shall be completed within a period of 90 days from today. (Paras 16, 17, 18, 19 and 21)
Facts of the case:
Present appeals emanate from Corporate Insolvency Resolution Process (CIRP) concerning Jaypee Infratech Ltd. (JIL) wherein National Company Law Appellate Tribunal, New Delhi (NCLAT) disposed of Company Appeal (AT)(INS) No.536 of 2019 and Company Appeal (AT)(INS) No.708 of 2019 and applications therein by a common judgment and order dated 30th July, 2019. By this judgment, 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. Limited issue that needs to be examined in these appeals is about power of NCLT or NCLAT, to exclude any period from statutory period in exercise of inherent powers sans any express provision in I & B Code in that regard.
Findings of Court:
Project has been implemented in part and out of over 20,000 home buyers, a substantial number of them have been put in possession and remaining work is in progress and in some cases at an advanced stage of completion. In this backdrop, it would be in interest of all concerned to accept a viable plan reflecting the recent legislative changes.
Result : Appeals disposed of with directions.
ORDER
1. Permission to file the appeal is granted in Diary No.27229/2019.
2. These appeals emanate from the Corporate Insolvency Resolution Process (‘CIRP’ for short) concerning Jaypee Infratech Ltd. (‘JIL’ for short) wherein the National Company Law Appellate Tribunal, New Delhi (‘NCLAT’ for short) disposed of Company Appeal (AT)(INS) No.536 of 2019 and Company Appeal (AT)(INS) No.708 of 2019 and applications therein by a common judgment and order dated 30th July, 2019. By this judgment, the NCLAT granted relief as sought for by the 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.
3. Shorn of unnecessary details, the IDBI Bank had filed an application being CP No. (I&B) 77/ALD/2017 under Section 7 of the Insolvency and Bankruptcy Code, 2016 (for short, ‘the I & B Code’) against JIL before the National Company Law Tribunal, Allahabad (‘NCLT’ for short), as the JIL had turned NPA (NonPerforming Asset). During the pendency of the said application, writ petitions were filed in this Court by the home buyers concerning the stated project of JIL, which came to be disposed of on 9th August, 2018 in the case of Chitra Sharma & Ors. vs. Union of India & Ors., 2018 (9) SCALE 490. This Court issued the following directions :
“42. We, accordingly, issue the following directions:
(i) In exercise of the power vested in this Court under Article 142 of the Constitution, we direct that the initial period of 180 days for the conclusion of the CIRP in respect of JIL shall commence from the date of this order. If it becomes necessary to apply for a further extension of 90 days, we permit the NCLT to pass appropriate orders in accordance with the provisions of the IBC;
(ii) We direct that a CoC shall be constituted afresh in accordance with the provisions of the Insolvency and Bankruptcy (Amendment) Ordinance, 2018, more particularly the amended definition of the expression “financial creditors”;
(iii) We permit the IRP to invite fresh expressions of interest for the submission of resolution plans by applicants, in addition to the three shortlisted bidders whose bids or, as the case may be, revised bids may also be considered;
(iv) JIL/JAL and their promoters shall be ineligible to participate in the CIRP by virtue of the provisions of Section 29A;
(v) RBI is allowed, in terms of its application to this Court to direct the banks to initiate corporate insolvency resolution proceedings against JAL under the IBC;
(vi) 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.”
4. Consequent thereto, the matter proceeded before the NCLT being the adjudicating authority. The Interim Resolution Professional (‘IRP’ for short) had issued public notice inviting claims from all JIL’s stakeholders including the home buyers. IRP submitted his report on formation of Committee of Creditors (‘CoC’ for short) before the adjudicating authority on the following basis :
37.3% in case of Financial Institutions.
62.3% home buyers and
0.4% Fixed Deposit holders
5. One of the home buyers’ Association filed application before the NCLT seeking clarification as to the manner in which the voting percentage of the allottees (home buyers) will be reckoned. That application was filed on 17th September, 2018 before the NCLT. After hearing the concerned authorities, the members of NCLT expressed difference of opinion on the issue as a result of which reference was made to the President of the NCLT, to place the matter before the third Member. Eventually, an order was passed by the third Member on 24th May, 2019. The said order dated 24th May, 2019 had been challenged by Jaypee Green Krescent House Buyers Welfare Associations before the NCLAT being Company Appeal (AT)
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