NCLT has limited jurisdiction in approval of resolution plan under IBC: SC

Jaypee Kensington Boulevard Apartments Welfare Association & Ors. Vs. NBCC (India) Ltd. & Ors. (Supreme Court )

For what has been discussed and held on the relevant points for determination, our findings and conclusions are as follows:

A. The Adjudicating Authority has limited jurisdiction in the matter of approval of a resolution plan, which is well-defined and circumscribed by Sections 30(2) and 31 of the Code. In the adjudicatory process concerning a resolution plan under IBC, there is no scope for interference with the commercial aspects of the decision of the CoC; and there is no scope for substituting any commercial term of the resolution plan approved by Committee of Creditors. If, within its limited jurisdiction, the Adjudicating Authority finds any shortcoming in the resolution plan vis-à-vis the specified parameters, it would only send the resolution plan back to the Committee of Creditors, for re-submission after satisfying the parameters delineated by the Code and exposited by this Court.

B. The process of simultaneous voting over two plans for electing one of them cannot be faulted in the present case; and approval of the resolution plan of NBCC is not vitiated because of simultaneous consideration and voting over two resolution plans by the Committee of Creditors.

C. The stipulations in the resolution plan, as regards dealings with YEIDA and with the terms of Concession Agreement, have rightly not been approved by the Adjudicating Authority but, for the stipulations which have not been approved, the only correct course for the Adjudicating Authority was to send the plan back to the Committee of Creditors for reconsideration.

D. The Adjudicating Authority has not erred in disapproving the proposed treatment of dissenting financial creditor like ICICI Bank Limited in the resolution plan; but has erred in modifying the related terms of the resolution plan and in not sending the matter back to the Committee of Creditors for reconsideration.

E. The Adjudicating Authority has erred in issuing directions to the resolution applicant to make provision to clear the dues of unclaimed fixed deposit holders. Paragraph 125 of the impugned order dated 03.03.2020 is set aside.

F. The issues related with the objections of YES Bank Limited and pertaining to JHL, the subsidiary of the corporate debtor JIL, are left for resolution by the parties concerned, who will work out a viable solution in terms of paragraphs 141 and 142 of this judgment.

G. In the overall scheme of the resolution plan, the stipulation in Clause 21 of Schedule 3 thereof cannot be said to be unfair; and the observations in paragraphs 132 and 133 of the order dated 03.03.2020 justly take care of the right of any aggrieved party (agreement holder) to seek remedy in accordance with law and ensures viability of the resolution plan.

H. It cannot be said that the resolution plan does not adequately deal with the interests of minority shareholders. The grievances as suggested by the minority shareholders cannot be recognised as legal grievances. Their objections stand rejected.

I. The homebuyers as a class having assented to the resolution plan of NBCC, any individual homebuyer or any association of homebuyers cannot maintain a challenge to the resolution plan and cannot be treated as a dissenting financial creditor or an aggrieved person; the question of violation of the provisions of the RERA does not arise; the resolution plan in question is not violative of the mandatory requirements of the CIRP Regulations; and when the resolution plan comprehensively deals with all the assets and liabilities of the corporate debtor, no housing project of the corporate debtor could be segregated merely for the reason that same has been completed or is nearing completion.

J. (i) The amount of INR 750 crores (which was deposited by JAL pursuant to the orders passed by this Court in the case of Chitra Sharma) and accrued interest thereupon, is the property of JAL and stipulation in the resolution plan concerning its usage by JIL or the resolution applicant cannot be approved. The part of the order of NCLT placing this amount in the asset pool of JIL is set aside.

(ii) The question as to whether any amount is receivable by JIL and/or its homebuyers from JAL, against advance towards construction and with reference to the admitted liability to the tune of INR 195 crores as on 31.03.2020, shall be determined by NCLT after reconciliation of accounts in terms of the directions contained in paragraphs 189 to 191.1 of this judgment. The amount, if found receivable by JIL, be made over to JIL and the remaining amount together with accrued interest be refunded to JAL in an appropriate account. It is made clear that the present matter being related to CIRP of JIL, no other orders are passed in relation to the amount that would be refunded to JAL because treatment of the said amount in the asset pool of JAL shall remain subject to such orders as may be passed by the competent authority dealing with the affairs of JAL.

K. (i) Clause 23 of Schedule 3 of the resolution plan, providing for extinguishment of security interest of the lenders of JAL could not have been approved by the Adjudicating Authority, particularly in relation to the security interest that has not been discharged. This part of the order dated 03.03.2020 is set aside.

(ii) Adequate provision is required to be made in the resolution plan as regards utilisation of the land bank of 758 acres, that has become available to JIL free from encumbrance, in terms of the judgment dated 26.02.2020 of this Court in the case of Anuj Jain (supra).

L. (i) The impugned order dated 03.03.2020 shall be read as modified in relation to Clause 7 of Schedule 3 of the resolution plan; and the said clause shall stand approved.

(ii) As regards possession/control over the project sites/lands of JIL, it is left open for the resolution applicant to take recourse to the appropriate proceedings in accordance with law, whenever occasion so arise.

M. The Appellate Authority was not justified in providing for an Interim Monitoring Committee for implementation of the resolution plan in question during the pendency of appeals. The impugned order dated 22.04.2020 passed by NCLAT is set aside.

FULL TEXT OF THE SUPREME COURT JUDGEMENT

Permission to file special leave petition(s) and leave granted in respective Petition(s) for Special Leave to Appeal.

2. This batch of civil appeals, special appeals and transfer cases essentially relate to the resolution plan¹ in the corporate insolvency resolution process² under the Insolvency and Bankruptcy Code, 2016³ concerning the corporate debtor, Jaypee Infratech Limited⁴, whose activities do impact a large number of persons/entities, including the buyers of flats/apartments⁵ in its real estate development projects.

2.1. As shall be noticed hereafter, CIRP in relation to the corporate debtor JIL has been entangled in various disputes in the past and even when the resolution plan submitted by the resolution applicant, NBCC (India) Limited⁶ has been approved by the Committee of Creditors⁷ by a substantial majority of 97.36% of voting share of the financial creditors, several disputes/objections have come up from various stakeholders and role players, voicing the concerns of their own, like dissenting financial creditors, dissatisfied homebuyers, displeased land providing agency, disillusioned creditor of a wholly-owned subsidiary of the corporate debtor and disappointed minority shareholders. Apart from all these, the holding company of the corporate debtor, namely, Jaiprakash Associates Limited⁸ and its stakeholders have several questions over the resolution process in question and are particularly concerned with the sum of INR 750 crores, which was deposited by JAL pursuant to the orders passed by this Court in the first round of litigation.

3. Looking to a multiload of issues arising from variegated propositions/objections put forward by different parties, it appears appropriate to draw a brief outline and sketch of the matter at the outset.

Brief outline and sketch

4. The cases involved in this batch have got assimilated in this Court in the following circumstances:

4.1. The corporate insolvency resolution process in relation to the corporate debtor JIL got initiated on 09.08.2017 when the National Company Law Tribunal⁹, Allahabad Bench admitted the petition filed by one of the financial creditors, IDBI Bank Limited, under Section 7 of the Code. However, when the Interim Resolution Professional¹⁰ invited claims in this CIRP, the treatment of homebuyers became an issue contentious, because they were treated only as ‘other creditors’, not at par with financial and operational creditors.

4.2. The aforesaid position led to the proceedings in this Court, which were dealt with in a batch of petitions led by Writ Petition (Civil) No. 744 of 2017: Chitra Sharma and Ors. v. Union of India and Ors.¹¹ wherein, several orders were passed by this Court from time to time, inter alia, with directions to JAL, the holding company of JIL, for making deposits in the Court, particularly looking to the claim of refund being made by some of the homebuyers. While finally disposing of the matters on 09.08.2018, this Court took note of several factors, including the nature of projects, interests of a large number of homebuyers and unanimity amongst all the concerned that liquidation of the corporate debtor shall not be in the 9 Hereinafter also referred to as ‘the Adjudicating Authority’ or ‘NCLT’. As shall be noticed, the matter before the Allahabad Bench was later on transferred to the New Delhi Bench of the Tribunal. These expressions ‘the Tribunal’ or ‘NCLT’ or ‘the Adjudicating Authority’ refer to the said transferee Bench too, as per the given context. interest of any stakeholder. This Court also took note of the fact that even the statutorily extended period for concluding the CIRP was over but, there had been a relevant supervening event where, by way of an Amendment Ordinance that came into force on 06.06.2018, the doubts about the status of homebuyers were removed and they were expressly recognised as financial creditors. Having regard to the facts and circumstances, this Court issued a slew of directions for ensuring complete justice in the cause, while exercising its powers under Article 142 of the Constitution of India, by providing for further extended period for conclusion of CIRP; for constitution of CoC afresh; and permitting the IRP to invite fresh expressions of interest for the submission of resolution plans. This Court also provided that the amount of INR 750 crores, ‘which has been deposited in this Court by JAL/JIL shall together with the interest accrued thereon’ be transferred to NCLT, which would abide by the directions as may be issued by NCLT.

4.3. While the proceedings thus restored by this Court were pending, further question cropped up as to the manner of reckoning the voting percentage of homebuyers in CoC. Two members of NCLT differed in their opinion and the matter was referred to the third member. In the meantime, IDBI Bank sought exclusion, of the period of pendency of the application for such clarification as to the voting percentage, from the period of 270 days for completion of CIRP. While this application was pending, NCLT called upon the concerned parties to file reply on the necessity to proceed further with the CIRP, for considering the resolution plan received from the bidder, subject to the outcome of the pending application. The orders passed by NCLT in relation to these aspects were challenged before the National Company Law Appellate Tribunal, New Delhi¹². The Appellate Authority, by its judgment dated 30.07.2019, provided for exclusion of 90 days for the purpose of counting the total period of 270 days and disposed of the appeals with some more observations. This gave rise to further appeals in this Court, led by Civil Appeal No. 8437 of 2019 [@ D No. 27229 of 2019]: Jaiprakash Associates Limited and Anr. v. IDBI Bank Ltd. and Anr.¹³, which were decided on 06.11.2019. Therein, this Court found that delay in completion of CIRP was attributable to the process of law and neither the homebuyers nor any other financial creditor was to be blamed for pendency of the proceedings; and under the plenary powers, this Court passed yet further orders so as to ensure that an attempt was made for revival of the corporate debtor by submission of revised resolution plans.

4.4.Running parallel to the proceedings noticed hereinabove, there
had been another set of proceedings involving two issues: one, relating to an application filed by IRP before the Adjudicating Authority seeking orders for avoidance of the certain transactions, whereby several parcels of land were put under mortgage with the lenders of JAL, the holding company of JIL; and second, involving the claim of two of the lender banks of JAL to be included in the category of financial creditors of JIL. These two aspects eventually came up for adjudication of this Court in another batch of appeals led by Civil Appeal Nos. 8512-8527 of 2019: Anuj Jain, Interim Resolution Professional for Jaypee Infratech Limited v. Axis Bank Limited etc. etc., which were decided on 26.02.2020¹⁴. This Court held that six out of seven transactions in question were preferential within the meaning of Section 43 of the Code and the directions by NCLT for avoidance of such transactions were upheld. On the second issue, this Court held that the applicant banks were not the financial creditors of the corporate debtor JIL and the respective orders passed in that regard by NCLT were restored.

4.5. We shall be dilating on the relevant attributes of the aforesaid previous rounds of litigation at the appropriate stage and juncture hereafter. Suffice it to notice for the purpose of brief outline that the resolution plans submitted by two applicants were put to vote of the Committee of Creditors and finally, the resolution plan submitted by NBCC (India) Limited was approved by the CoC on 17.12.2019, by a vast majority of over 97% of voting share of the financial creditors. Thereafter, on 19.12.2019, the Interim Resolution Professional moved an application before the National Company Law Tribunal, Allahabad Bench, being C.A. No. 5 of 2020 in CP (IB) No. 77/ALD/2017, for submission and approval of the resolution plan in terms of Section 30(6) read with Sections 31 and 60(5) of the Code and Regulation 39(4) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016¹⁵. Later on, the proceedings pending before the Allahabad Bench of the National Company Law Tribunal were transferred to its Principal Bench at New Delhi wherein, several objections/suggestions/propositions were submitted by different stakeholders, going for or against the resolution plan or even off on a tangent.

4.6. By its order dated 03.03.2020, the Adjudicating Authority (NCLT), proceeded to approve the resolution plan with some modifications and certain directions while accepting some of the objections like those of the dissenting financial creditor bank and the land providing agency but while rejecting some other, including those of the holding company of JIL and while leaving a few propositions open for adjudication in the appropriate forum¹⁶.

4.7. The resolution applicant NBCC preferred an appeal against the aforesaid order dated 03.03.2020 before the National Company Law Appellate Tribunal, New Delhi, being Company Appeal (AT) (Insolvency) No. 465 of 2020 wherein the Appellate Authority, while issuing notice to the unrepresented parties, made an interim order dated 22.04.2020 that the approved resolution plan may be implemented subject to the outcome of appeal but at the same time, also provided that IRP may constitute an ‘Interim Monitoring Committee’ comprising of the successful resolution applicant (NBCC) and three major institutional financial creditors, who were the members of CoC.

4.8.  As against the aforesaid order dated 22.04.2020, six associations of homebuyers in the real estate development projects of the corporate debtor and a few individual homebuyers approached this Court seeking permission to maintain their appeals under Section 62 of the Code. Notices were issued on the prayers so made, returnable on 06.08.2020.

4.9.  On 06.08.2020, it was urged before us that several appeals against the said order dated 03.03.2020 were pending before NCLAT; and the parties agreed that those appeals may be withdrawn to this Court and be heard alongwith the aforesaid appeals of the associations and homebuyers to avoid the likelihood of further delay in the matter. Acceding to the request, we had withdrawn the mentioned appeals for analogous hearing with the matters pending before us. By way of interim, while staying the operation of the impugned order dated 22.04.2020, we had provided that the IRP shall continue to manage the affairs of the subject company i.e., JIL. Accordingly, the appeals pending before the NCLAT, being Company Appeal (AT) (Insolvency) Nos. 486, 488, 475, 478, 480, 489, 506, 547, 544 and 630 of 2020 have been transferred to this Court and are registered as transferred cases. Further to this, three more matters have been filed directly in this Court, with the respective petitioners/appellants having different sets of grievances against the NCLT’s order dated 03.03.2020. A few impleadment/intervention applications have also been filed in these matters with the applicants seeking to project their own propositions/viewpoints and/or objections in relation to the resolution plan in question.

5. It is, therefore, apparent that the resolution plan, as approved by the CoC on 17.12.2019 and the order dated 03.03.2020, as passed by the Adjudicating Authority (NCLT) in approval of the resolution plan with certain directions and modifications, are the pivots of the present litigation and a subsidiary of these pivots is the interim order dated 22.04.2020, as passed by NCLAT in the appeal filed by the resolution applicant NBCC, providing for composition of an ‘Interim Monitoring Committee’ while implementing the resolution plan.

The parties and their respective roles and interests in the matter

6. For what has been noticed in the outline, and in view of the adjudication required of various issues raised and different reliefs claimed in these matters, with several parties carrying different roles and status, worthwhile it would be to narrate, in brief, the relevant particulars of the key parties involved, with their feasible classification in terms of their respective interests.¹⁷

6.1. The main parties before us in this batch, in terms of their respective stands, contentions and viewpoints vis-à-vis the aforementioned pivots could be broadly divided in two categories. One category is of the parties who stand for the resolution plan, as approved by the CoC but who state grievance against a few parts of the aforesaid orders dated 03.03.2020 and 22.04.2020, insofar as providing for modification of the resolution plan and modified mechanism for its implementation. The other category is of the parties who carry grievances against the resolution plan for one or more of its prescriptions or omissions; and/or who are dissatisfied with the order dated 03.03.2020 insofar as their objections have either been rejected or not taken into account; and/or who are dissatisfied with the order dated 22.04.2020 for the reasons different than those of the parties of first part.

The parties standing for the resolution plan

7. The two entities who need not, as such, be aligned with any of the other contesting parties but for practical purposes, stand for the resolution plan as approved by CoC are: (i) the corporate debtor company in whose relation the resolution plan has been adopted and approved; and (ii) the Interim Resolution Professional. They may be introduced as under:

7.1.  Jaypee Infratech Limited (JIL):

It is the corporate debtor company in whose relation CIRP has been taken up and the resolution plan has been made and approved. This company was essentially set up as a special purpose vehicle¹⁸ after its holding company Jaiprakash Associates Limited (JAL) was awarded the rights for construction of an Expressway from Noida to Agra; and a Concession Agreement¹⁹ was entered into with the Yamuna Expressway Industrial Development Authority²⁰. With setting up of this company JIL, apart from other projects, housing plans were envisaged for construction of real estate projects in two locations of the land acquired, one in Wish Town, Noida and another in Mirzapur. A substantial mass of disputes in the present matters has its roots in the dealings of this company JIL with the real estate development projects as also in its dealings with the homebuyers and the lending institutions.

7.2. The Interim Resolution Professional Anuj Jain (IRP):

He is the Interim Resolution Professional in CIRP concerning JIL. He has taken steps and proceedings from time to time as envisaged by the Code, including dealing with the claims of a variety of creditors; making an application for avoidance of certain transactions as being preferential, which was finally dealt with and accepted by this Court in the aforementioned judgment dated 26.02.2020; presenting the resolution plans for voting by CoC; and submitting the approved resolution plan to the Adjudicating Authority. In relation to the order dated 03.03.2020 as passed by NCLT, the appeal filed by him before NCLAT, essentially questioning the jurisdiction of NCLT to modify the resolution plan and to change the mode of payment to the dissenting financial creditors, being Company Appeal (AT) (Insolvency) No. 486 of 2020, stands transferred to this Court and is registered as T.C. (C) No. 234 of 2020. He is respondent in almost all other cases.

8. The major set of parties who stand for the approved resolution plan and seek its implementation while stating objections/grievances against the modification parts of the order dated 22.04.2020 as passed by NCLAT and the order dated 03.03.2020 as passed by NCLT are the following:

8.1. NBCC (India) Limited (NBCC):

NBCC (India) Limited is the resolution applicant and had prepared the resolution plan for JIL, which was approved by a majority of 97.36% of the voting share of the CoC. NBCC seeks setting aside of those parts of the order dated 03.03.2020 where the NCLT has modified some of the terms of resolution plan and/or has issued certain directions. The appeal filed by this company, being Company Appeal (AT) (Insolvency) No. 475 of 2020, stands transferred to this Court and is registered as T.C. (C) No. 236 of 2020. This company is also the respondent in various other appeals/petitions and has comprehensively opposed the objections raised against the resolution plan.²¹

8.2. IDBI Bank Limited:

This bank is standing in the capacity of an institutional financial creditor of the corporate debtor JIL. The corporate insolvency resolution process in relation to the corporate debtor JIL, which has culminated in the approval of the resolution plan submitted by NBCC, got initiated pursuant to an application moved by this bank under Section 7 of the Code before the NCLT. This bank leads a set of nine institutional financial creditors including itself, who have voted in favour of the resolution plan in question; and stands in support of the resolution plan while opposing the contentions urged on behalf of the parties on the other side.

8.3. Jaypee Kensington Boulevard Apartments Welfare Association and 5 others:

They are the associations of homebuyers who have invested in the housing projects floated by JIL. They are appellants in Civil Appeal No. 3395 of 2020²², questioning the order dated 22.04.2020 as passed by NCLAT and essentially submit that the resolution plan as approved by NCLT deserves to be implemented.

8.4. Ishwar Jha and 6 others:

They are individual homebuyers of the flats in the development projects initiated by JIL. They are appellants in Civil Appeal No. 3396 of 2020²³, questioning the order dated 22.04.2020 as passed by NCLAT and they also essentially submit that the resolution plan as approved by NCLT deserves to be implemented without further delay.

8.5. Krishna Dev Mishra and 2 others:

They are also individual homebuyers of the flats in the development projects initiated by JIL. They are applicants of I.A. No. 87967 of 2020 in Civil Appeal No. 3395 of 2020 and similarly submit that the resolution plan as approved by NCLT deserves to be implemented without further delay.

8.6. Major General Praveen Kumar and Colonel V.S. Gaur:

They are the homebuyers who have moved applications for impleadment/intervention in Civil Appeal No. 3395 of 2020, being I.A. Nos. 73323 of 2020 and 73330 of 2020 respectively, essentially seeking directions to NBCC to complete the remaining works on priority basis in Tower Nos. 5 to 12 and 14 to 16 in Kensington Park – 1, Jaypee Greens, Noida so that the possession of flats could be handed over to the buyers.

The objectors

9. The persons/entities who carry grievance/s against the resolution plan for one reason or the other; and/or who are dissatisfied with the order passed by the NCLT and/or by the NCLAT, may be grouped with reference to the objections/propositions they stand for.

10. The first set of objectors consists of such persons/entities who otherwise belong to the class of ‘homebuyers’ but have their own grievances in relation to the resolution plan and the subsequent orders. This set of parties could be introduced as follows:

10.1. Wish Town Home Buyers Welfare Society:

This is a society of homebuyers in the projects of JIL who seeks implementation of the projects but carries reservations on some of the terms of the resolution plan, where the requisite compensation in relation to the delayed implementation of the projects by JIL has not been provided, particularly in terms of Section 18 of the Real Estate (Regulation and Development) Act, 2016²⁴. It has also been suggested that the plan of another resolution applicant Suraksha Realty was far better than that of NBCC. This society also has the grievance that NBCC has failed to specify in the resolution plan the treatment and utilisation of the sum of INR 750 crores received from JAL as also 758 acres of land that had come to JIL after the judgment of this Court dated 26.02.2020. This society had filed Company Appeal (AT) (Insolvency) No. 506 of 2020 before NCLAT against the said order dated 03.03.2020 that stands transferred to this Court and is registered as T.C. (C) No. 243 of 2020. This society has also moved an application, I.A. No. 72707 of 2020 in Civil Appeal No. 3395 of 2020 with the submissions against continuation of NBCC in the proposed ‘Interim Monitoring Committee’.

10.2. Jaypee Aman Owners Welfare Association:

This is an association of homebuyers in one of the projects of JIL namely, Jaypee Greens Aman in Sector 151 Noida. This association maintains that in substance, ‘Project Aman’ stands completed; that Offer of Possession²⁵ has already been issued to the allottees of 22 Towers; that delayed penalty ought to be allowed in relation to Tower Nos. 23 and 24 for which, OOP has been issued by IRP; and that IRP ought to take steps for OOP for flats in Tower Nos. 25 and 27 for which, the application for Occupancy Certificate²⁶ has already been moved. This association is aggrieved of the projected date/s of completion and proportional increase in delay, as provided in the resolution plan. As against the said order dated 03.03.2020, this association had filed Company Appeal (AT) (Insolvency) No. 480 of 2020 before NCLAT that stands transferred to this Court and is registered as T.C. (C) No. 240 of 2020.

10.3. Ashish Mohan Gupta & Anr.:

These are the homebuyers who seek to oppose the resolution plan while raising questions over the proceedings of the Committee of Creditors as also on various other grounds, which may be running common to the grounds urged by the homebuyers/associations who are objecting to the plan and its approval. They had filed Company Appeal (AT) (Insolvency) No. 489 of 2020 before NCLAT that stands transferred to this Court and is registered as T.C. (C) No. 242 of 2020.

10.4. Jaypee Orchard Resident Welfare Society:

This is another society of homebuyers in the projects of JIL who seeks implementation of the projects of JIL but has its own reservations on the terms of the resolution plan where the requisite compensation in relation to the delayed implementation of the projects by JIL has not been provided in terms of RERA. This society has not filed the appeal before NCLAT but in view of other appeals having been withdrawn to this Court, has preferred the petition for special leave to appeal, being SLP Diary No. 18129 of 2020 in this Court, seeking to challenge the said order dated 03.03.2020.

10.5. Ishwar Kewalramani and 76 Others:

These are the applicants of another impleadment application being I.A. No. 88795 of 2020 in Civil Appeal No. 3395 of 2020; they are homebuyers of the projects undertaken by JIL and are aggrieved by the order dated 03.03.2020 insofar as NCLT has failed to specify the use of 758 acres of unencumbered land now available with JIL; and another grievance is that NBCC has violated the statutory provisions by not providing compensation to the homebuyers due to delayed possession. 10.6. Ashok Chandra:

He is another homebuyer who has moved I.A. No. 84309 of 2020 in Civil Appeal No. 3395 of 2020 and seeks direction to determine adequate and fair amount of compensation to be paid to the homebuyers due to the unreasonable delay in completion. He has also suggested that different mechanism is required to be provided for dealing with the CIRP in question, in displacement of the resolution plan of NBCC.

11. Other objectors to the resolution plan and the order of NCLT dated 03.03.2020 could be broadly sub-divided into three: one being the holding company of the corporate debtor JIL and the persons/entities related with these companies; second being the dissenting institutional financial creditor of the corporate debtor JIL; and third being the other stakeholders.

12. In the first sub-sect of objectors, the main parties before us are as follows:

12.1. Jaiprakash Associates Limited (JAL):

It is the holding company of the corporate debtor JIL; it had approximately 71.64% equity shareholding in JIL as on 31.03.2017. This company had deposited the sum of INR 750 crores as per the orders passed by this Court in the case of Chitra Sharma (supra). Apart from a few other objections, this company JAL is seeking refund of INR 750 crores with accrued interest; and it is contended that the said amount is not the property of the corporate debtor JIL and it cannot be utilised for the CIRP of JIL. This holding company had filed Company Appeal (AT) (Insolvency) No. 478 of 2020 before NCLAT against the said order dated 03.03.2020 that stands transferred to this Court and is registered as T.C. (C) No. 238 of 2020.

12.2. Pankaj Sharma and 3 others:

They are homebuyers of the projects being developed by JAL and are similarly contending that the said sum of INR 750 crores with accrued interest cannot be utilised for the CIRP of the corporate debtor JIL. They too had filed an appeal before NCLAT against the said order dated 03.03.2020, being Company Appeal (AT) (Insolvency) No. 544 of 2020 that stands transferred to this Court and is registered as T.C. (C) No. 237 of 2020.

12.3. Knights Court Social Welfare Association:

This is an association representing the homebuyers in the ‘Knights Court’ project of JAL who are aggrieved by the fact that the project has been left incomplete by JAL and who are equally aggrieved by the provision made in the resolution plan of JIL for utilisation of the said amount of INR 750 crores. This association has directly challenged the said order of NCLT dated 03.03.2020 in this Court by way of Special Leave Petition (Civil) No. 10543 of 2020.

12.4. Manoj Gaur, suspended MD of corporate debtor JIL:

He is the suspended Managing Director of the corporate debtor JIL and has also stated himself to be the Executive Chairman of JAL. He has been arrayed as third respondent in the appeal filed by IRP. It is also noticed that he, along with the holding company JAL, filed an impleadment application (I.A. No. 1508 of 2020) in the appeal filed by NBCC that was allowed by NCLAT on 15.07.2020 and that is how he became the seventh respondent in the appeal of NBCC. According to his submissions, the IRP failed to ensure that the resolution plan did not contravene the law for the time being in force; and that approval by CoC leaves much to be desired. Several of the stipulations and prescriptions in the resolution plan of NBCC are put to question by him.

13. The second sub-sect of objectors to the resolution plan consists of the institutional financial creditor of the corporate debtor JIL, being ICICI Bank Limited.

13.1. The directions issued by NCLT in modification of the resolution plan in regard to the claim of this bank for payment, in its capacity as the dissenting financial creditor of JIL, is one of the major grounds of challenge by the persons/entities standing in favour of the resolution plan in question. This bank has also objected to the clauses in the resolution plan in regard to the treatment of the said sum of INR 750 crores. In its another capacity as the lender of JAL and having mortgage over the land of JIL in security of such lending to JAL, this bank has levied another challenge to the resolution plan in regard to the release of its security interest. This bank had challenged the said order dated 03.03.2020 before NCLAT in Company Appeal (AT) (Insolvency) Diary No. 21936 of 2020 and has moved Transfer Petition (C) Diary No. 20274 of 2020 in this Court, seeking transfer of its appeal before NCLAT for analogous hearing with the present batch of matters.

14. The third sub-sect of the objectors to the resolution plan comprises of different entities/persons, mostly carrying their own claims/grievances. They are as follows:

14.1. Yamuna Expressway Industrial Development Authority:

This Authority, constituted under Section 3 of the Uttar Pradesh Industrial Area Development Act, 1976²⁷ was initially called Taj Expressway Industrial Development Authority²⁸; subsequently it was renamed as Yamuna Expressway Industrial Development Authority²⁹ by a notification dated 11.07.2018. It had been the land provider for execution of various projects by JAL/JIL under the Concession Agreement. The provisions in the resolution plan for dealing with the available parcels of land and for meeting with the contingent liability (as regards payment of additional compensation towards acquisition of land) are the main areas of concern of this Authority, who had filed its objections to the resolution plan. The directions issued in modification of the resolution plan in regard to YEIDA is also one of the major grounds of challenge by the persons/entities standing in favour of the resolution plan.

14.2. YES Bank Limited:

This bank is the financial creditor of a wholly-owned subsidiary of JIL, being Jaypee Healthcare Limited³⁰. This bank asserts that the assets of JHL, said to be mortgaged with it, are not within the purview of CIRP of JIL to be disposed by NBCC; and it seeks modifications in the resolution plan accordingly. This bank filed an appeal before NCLAT against the said order dated 03.03.2020, being Company Appeal (AT) (Insolvency) No. 488 of 2020 that stands transferred to this Court and is registered as T.C. (C) No. 235 of 2020.

14.3. Rajesh Gupta and 2 others:

These three persons, said to have entered into respective agreements with the corporate debtor, carry their own grievance against the prescription in the resolution plan where the resolution applicant has reserved its right to cancel such agreements/sub-lease deeds. They seek direction for entering into sale deed/s of plot/s in Jaypee Greens Wish Town or for refund. They had also filed an appeal before NCLAT against the said order dated 03.03.2020, being Company Appeal (AT) (Insolvency) No. 547 of 2020 that stands transferred to this Court and is registered as T.C. (C) No. 241 of 2020.

14.4. Raman Prakash Mangala and 29 others:

They are minority shareholders of JIL and their assertion is that the resolution plan approved by CoC ought to consider the interests of minority shareholders by giving fair market value of the equity shares held by them. Their appeal against the order dated 03.03.2020 before NCLAT, being Company Appeal (AT) (Insolvency) No. 630 of 2020, also stands transferred to this Court and is registered as T.C. (C) No. 239 of 2020.

14.5. Gyanendra Kumar Raveendra:

He is also a minority shareholder of JIL and has moved an application for impleadment in Civil Appeal No. 3395 of 2020, being I.A. No. 89429 of 2020. He is similarly aggrieved by the action of NBCC to extinguish the right of the minority shareholders without giving them a ‘fair value’ of their shares.

Points for determination

15. Having drawn a brief sketch and outline of the matter and having introduced the principal parties to this litigation with their respective interests, we may now indicate the major points, which arise for determination in view of diverse propositions advanced before us, coupled with the stipulations in the resolution plan in question and the modifications ordered by NCLT and NCLAT by way of the orders impugned. The principal points calling for determination in this batch are:

A. What is the extent of, and limitations over, the powers and jurisdiction of the Adjudicating Authority while dealing with the resolution plan approved by the Committee of Creditors?

B. As to whether approval of the resolution plan of NBCC is vitiated because of simultaneous voting over two resolution plans in the Committee of Creditors?

C. (i) As to whether the Adjudicating Authority has erred in not approving the stipulations in the resolution plan for meeting with the contingent liability of additional amount of land acquisition compensation; and has also erred in modifying these stipulations?

(ii)As to whether the Adjudicating Authority has erred in not approving the mechanism provided in the resolution plan for transfer, of the concessionaire’s rights and obligations under the Concession Agreement with YEIDA, to the SPVs proposed to be incorporated; and has also erred in modifying the relevant stipulations?

(iii) As to whether the Adjudicating Authority has erred in not approving the reliefs and concessions sought for in the resolution plan in relation to YEIDA?

D. As to whether the Adjudicating Authority has erred in not approving the treatment of dissenting financial creditor like ICICI Bank Limited in the resolution plan, as being not in accord with Section 30(2)(b) of the Code read with Regulation 38(1)(b) of the CIRP Regulations; and has erred in modifying the terms of resolution plan and in directing payment to the dissenting financial creditor in monetary terms?

E. As to whether the Adjudicating Authority has erred in modifying the step provided in the resolution plan in regard to the fixed deposit holders and in directing the resolution applicant to make provision towards the dues of unclaimed fixed deposit holders also?

F. (i) As to whether the resolution plan unauthorisedly purports to deal with the assets of Jaypee Healthcare Limited?

(ii) As to whether the Adjudicating Authority has erred in assuming that YES Bank Limited had agreed for constitution of a committee to take forward the disinvestment process of Jaypee Healthcare Limited?

G. As to whether the stipulation in the resolution plan for cancellation of certain agreements/sub-leases is unfair and the Adjudicating Authority has erred in not modifying the same?

H. As to whether the minority shareholders are entitled to state their claims/objections despite having not approached the Adjudicating Authority; and as to whether the resolution plan does not provide fair treatment to the minority shareholders?

I. (i) As to whether, after approval of the resolution plan of NBCC by the Committee of Creditors, where homebuyers as a class assented to the plan, any individual homebuyer or any association of homebuyers could maintain a challenge to the resolution plan and could be treated as a dissenting financial creditor or an aggrieved person?

(ii) As to whether the stipulations in the resolution plan stand in violation of the provisions of the Real Estate (Regulation and Development) Act, 2016?

(iii) As to whether the resolution plan is violative of the requirements of CIRP Regulations?

(iv) As to whether any housing project which has been completed or is nearing completion ought to be kept out of the purview of the resolution plan?

J. (i) As to whether the amount of INR 750 crores, which was deposited by JAL pursuant to the orders passed by this Court in the case of Chitra Sharma, and accrued interest thereupon, is the property of JAL and stipulation in the resolution plan concerning its usage by JIL or NBCC is impermissible?

(ii) As to whether any amount is receivable by JIL and/or

its homebuyers from JAL; and the accounts between JAL and JIL need reconciliation?

K. (i) As to whether Clause 23 of Schedule 3 of the resolution plan providing for extinguishment of security interest of lenders of JAL could not have been approved by the Adjudicating Authority?

(ii) As to whether adequate provision is required to be made in the resolution plan as regards utilisation of the land bank of 758 acres, that has become available to JIL in terms of the judgment dated 26.02.2020 by this Court?

L. What should be the appropriate orders on the other issues raised by the resolution applicant seeking clarification/directions?

M. As to whether the Appellate Authority was justified in providing for an Interim Monitoring Committee for implementation of the resolution plan in question during the pendency of appeals?

N. What should be the final order and relief?

Relevant factual and background aspects

16. For determination of the points so arising, we need to examine the relevant provisions contained in IBC and CIRP Regulations and apply the same to the process related with consideration and approval of the resolution plan in question; and to the terms, prescriptions and stipulations of the impugned resolution plan as also to the modifications, as ordered (or as declined) by the Adjudicating Authority (NCLT) in the impugned order dated 03.03.2020. However, in the given set of facts and circumstances, before examining the relevant provisions and before dilating on the relevant features of the resolution plan and the order impugned, it is expedient to take note of the crucial background aspects relating to the present CIRP and key attributes of the orders passed by this Court in previous rounds of litigation concerning this very CIRP.

17. For a clearer picture of the subject matter of this litigation, a few glimpses of the relevant history shall be apposite.

17.1. By way of a notification dated 24.04.2001, the Government of Uttar Pradesh, in exercise of its powers under Section 3 of the U.P. Act of 1976, proceeded to set up Taj Expressway Industrial Development Authority (‘TEA’) for anchoring development of Taj Expressway Project, being that of a six-lane 160 km long Super Expressway with service roads and associated facilities connecting Noida and Agra, passing through a so-called virgin area along the river Yamuna.

17.2. At the initial stages, the said Taj Expressway Industrial Development Authority invited bids for selecting the entity for execution of the project. In this process, ultimately, the company known as Jaiprakash Industries Limited came out as the successful bidder. This company, Jaiprakash Industries Limited, is now named as Jaiprakash Associates Limited (‘JAL’).

17.3. After the said bidding process, a Concession Agreement dated 07.02.2003 was executed between the principal TEA and the successful bidder Jaiprakash Industries Limited, who came to be referred to as the “concessionaire”. Various terms and stipulations of this Concession Agreement form the subject matter of one segment of dispute in the present litigation, as discussed at the relevant stages hereafter. At the present stage, worthwhile it is to notice that under this CA, the concessionaire was to be provided land for constructing Expressway and its allied facilities; and was also to be provided other land for development. In this regard, the concessionaire was given lease of Expressway land with a right to collect toll from the users of the road for 36 years; and the land adjacent to the road was provided to the concessionaire for commercial exploitation on a lease for 90 years. As regards premium for the land being so transferred, the stipulations in the CA had been to the effect that such premium shall be equivalent to acquisition cost plus a lease rent of INR 100 per hectare per year. In Clause 18.1 of CA, it was also agreed to between the parties that in case the concessionaire and TEA would consider it necessary to transfer the rights and obligations of concessionaire to a special purpose vehicle (‘SPV’), the concessionaire would do so in a reasonable time for which, documents as may be required shall be executed amongst the concessionaire, the TEA and the SPV. For accomplishment of the project, the Government of Uttar Pradesh proceeded to acquire land for laying of the Expressway; and also proceeded to acquire additional land along the road for development of the same for commercial, amusement, industrial, institutional and residential purposes.

17.4. Coming on the heels of this project and in terms of the said Clause 18.1 of CA, the corporate debtor Jaypee Infratech Limited (‘JIL’) was set up as a special purpose vehicle by the concessionaire and thereafter, the rights and obligations under CA were transferred to JIL by way of an assignment agreement dated 19.10.2007 and deed of agreement dated 27.11.2007. In this manner, the corporate debtor JIL came to be accepted as the concessionaire. Later on, by way of a notification dated 11.07.2008, Taj Expressway Industrial Development Authority was renamed as Yamuna Expressway Industrial Development Authority (‘YEIDA’). The net result of the dealings aforesaid has been that the rights and obligations under the said Concession Agreement dated 07.02.2003 now relate to the corporate debtor JIL as the concessionaire and YEIDA as the land providing agency.

17.5. As noticed, the corporate debtor JIL was set up as the SPV by the original concessionaire JAL; and JAL had approximately 71.64% equity shareholding in JIL as on 31.03.2017. Admittedly, JAL had been the holding company of JIL. When JIL was set up as an SPV for the purpose of execution of the project/s under the said CA, finances were obtained from a consortium of banks against the partial mortgage of land acquired and a pledge of 51% of the shareholding held by JAL. Accordingly, JIL took up those two projects; the Expressway was laid and JIL also started developing real estate projects in two locations of the land acquired, one in Wish Town, Noida and another in Mirzapur.

17.6. However, JIL defaulted in several of its obligations, including those in completion of the real estate projects as proposed and in payment of dues of the lender financial institutions.

18. The default on the part of JIL in payment of its dues led the lender bank, IDBI Bank Limited, instituting a petition under Section 7 of the Code before the NCLT, for initiation of the corporate insolvency resolution process against JIL. The applicant bank alleged that JIL had committed a default in repayment of its dues to the tune of INR 526.11 crores. JIL filed its objections to the petition but later on, withdrew the objections and furnished its consent for resolution plan under the provisions of the Code. 18.1. In view of the above, on 09.08.2017, NCLT initiated the CIRP in respect of JIL. An order of moratorium was issued under Section 14 of the Code by which, the institution of suits and continuation of pending proceedings, including execution proceedings, were prohibited and an Interim Resolution Professional was appointed. On 14.08.2017, IRP, in pursuance of the order of NCLT, called for submissions of claims by financial creditors in Form-C, by operational creditors in Form-B, by the workmen and employees in Form-E and by other creditors in Form-F. On 16.08.2017, the Insolvency and Bankruptcy Board of India³¹ made an amendment to its Regulations whereby, Regulation 9(a) was inserted to include the claims by other creditors; and then, on 18.08.2017, the Board released a press note that the homebuyers could fill in Form-F, as they could not be treated at par with financial and operational creditors.

19. The aforesaid position led to several petitions in this Court, particularly by the aggrieved homebuyers. As noticed, those petitions were dealt with by this Court as a batch, led by the case of Chitra Sharma (supra). Several orders were passed by this Court in the said batch of petitions from time to time, inter alia, to the effect that IRP was permitted to take over the management of JIL and was directed to ensure that necessary provisions were made to protect the interests of homebuyers. Various orders were also made with directions to JAL, as holding company of JIL, for making deposits in the Court, particularly looking to the claim of refund being made by some of the homebuyers. While finally disposing of the matters, this Court took note of the interests of homebuyers as also the creditors of JAL and JIL; and also took note of the status of proceedings and the statutory provisions as then obtaining, including the fact that the statutory period of 180 days, and even the extended period of 90 days, for concluding the CIRP had come to an end but then, by way of the Insolvency and Bankruptcy (Amendment) Ordinance, 2018, which came into force on 06.06.2018, the doubts about the status of homebuyers were removed and they were expressly recognised as financial creditors of the corporate debtor. In the given set of facts and circumstances, this Court provided a reprieve to the CIRP in question while making further orders in the interests of homebuyers and other creditors.

19.1. The proceedings and the orders passed by this Court in the said case of Chitra Sharma are of material bearing in the present case and, therefore, may be usefully recounted in necessary details.

Orders and directions in the case of Chitra Sharma

20. As noticed, this Court was moved in the case of Chitra Sharma (supra) essentially for the reason that a large number of homebuyers, who had invested in the real estate projects proposed by JAL and JIL, were feeling distressed in the wake of the proposed CIRP concerning JIL and who were likely to be left in the lurch because, at the given stage, while IBC recognised three categories of stakeholders namely, (i) corporate debtors; (ii) financial creditors; and (iii) operational creditors but, the homebuyers, otherwise having a direct and substantial interest in CIRP with investment of lifetime, were being treated only as ‘other creditors’. In the given scenario, on being moved, this Court issued notice on 04.09.2017 in the said batch of petitions; the proceedings before the NCLT at Allahabad were stayed until further orders; a copy of the proceedings was ordered to be served on the office of the learned Attorney General for India; and the applications for impleadment and intervention were allowed.

20.1. Thereafter, on 11.09.2017, while dealing with an application moved by IDBI Bank Limited for vacation of the ad-interim order dated 04.09.2017, several facets of the matter and ramifications of the stay order passed by this Court were projected with reference to the scheme of the provisions contained in the Code. On the other hand, it was argued on behalf of the homebuyers that they were of lower and middle income groups, who had invested their life savings with JIL and JAL and their interests were required to be protected. It was argued that if CIRP was restored, there should be a representative from the homebuyers or the Court may appoint someone on CoC to espouse the interests of the homebuyers.

20.1.1. Taking note of the submissions so made and in order to safeguard the interests of stakeholders, this Court modified the earlier order dated 04.09.2017 and issued material directions, inter alia, to the effect that: (i) IRP shall take over the management of JIL and formulate interim resolution plan with necessary provision to protect the interests of homebuyers; (ii) Mr. Shekhar Naphade, learned senior counsel along with Ms. Shubhangi Tuli, AOR shall participate in the meetings of CoC to espouse the cause of the homebuyers and to protect their interests; the Director or Managing Director of JIL or JAL on the date of institution of insolvency proceedings as also on the date of order, except the nominee Directors of lending institutions, shall not leave the country without prior permission of the Court; and all the suits and proceedings against JIL shall remain stayed in terms of Section 14(1)(a) of the Code. In addition, this Court also directed JAL to deposit a sum of INR 2,000 crores and provided that if any assets or property of JAL had to be sold for the purpose, that should be done after obtaining prior approval of this Court. For its relevance, the aforesaid order dated 11.09.2017, carrying significant observations and material directions of this Court, which are of bearing on a substantial part of the present litigation, could be extracted, in extenso, as under: –

“All the applications for intervention/impleadment are allowed.

IA No. 87575 of 2017 in SLPs (C) Nos. 24001- 24002 of 2017 (D. Nos. 27277, 27579 and 27624 of 2017)

The present interlocutory application has been filed by the IDBI Bank Ltd. in the special leave petitions which have been registered as SLPs (C) Nos. 24001 and 24002 of 2017.

This is an application for vacating/modification of the order dated 4-9-2017. On that day, this Court while issuing notice, had passed the following order:

“2. …. In the meantime the impugned order(s) passed by the National Company Law Tribunal, Allahabad shall remain stayed until further orders. A copy of the special leave petition be served on the office of learned Attorney General for India. All applications for impleadment/intervention stand allowed.”

Mr K.K. Venugopal, learned Attorney General for India appearing for Respondents 1 and 2 submitted that the order passed by this Court on 4-9-2017 needs to be vacated or modified because the consequence of the stay would be that the Management of Respondent 3, Jaypee Infratech Ltd. would stand restored. This was not a consequence intended by this Court. It is urged by him that if the erstwhile Management of the said company continues, it will affect the rights of the creditors and the consumers as well.

In the course of the hearing, we have been informed that after the order of stay was passed by this Court, the Interim Resolution Professional (IRP) has handed over records to Respondent 3, Jaypee Infratech Ltd. (“JIL”). It is submitted by Mr K.K. Venugopal, learned Attorney General that some time should be granted to the IRP to formulate at least a preliminary scheme so that the interest of all stakeholders is protected. He has also shown his concern for the interest of the homebuyers.

Dr Abhishek Manu Singhvi, learned Senior Counsel appearing for IDBI Bank Ltd., (Respondent 6 in the writ petition) submits that under the statutory scheme, the IRP has to take over otherwise the letter and spirit of the Act is likely to be affected.

The learned counsel appearing for the homebuyers, in contra, submits that they belong to the lower and middle income group and have invested life savings with JIL and with its holding company, Jai Prakash Associates Ltd. (“JAL”). It has been assiduously urged that the investments of flat purchasers are with JIL and JAL and, therefore, the interest of the purchasers may be protected. It is also argued that if the IRP is restored, there should be a representative from the homebuyers or this Court may appoint someone on this Committee of Creditors and espouse the interests of the homebuyers.

Having heard the learned counsel for the parties at length, in modification of the order dated 4-9-2017, we issue the following directions:

a) The IRP shall forthwith take over the Management of JIL. The IRP shall formulate and submit an interim resolution plan within 45 days before this Court. The interim resolution plan shall make all necessary provisions to protect the interests of the homebuyers;

b) Mr Shekhar Naphade, learned Senior Counsel along with Ms Shubhangi Tuli, Advocate-on-Record, shall participate in the meetings of the Committee of Creditors under Section 21 of the Insolvency and Bankruptcy Code, 2016 to espouse the cause of the homebuyers and protect their interests;

c) The Managing Director and the Directors of JIL and JAL shall not leave India without the prior permission of this Court;

d) JAL which is not a party to the insolvency proceedings, shall deposit a sum of Rs 2000 crores (Rupees two thousand crores) before this Court on or before 27-10-2017. For the said purpose, if any assets or property of JAL have to be sold, that should be done after obtaining prior approval of this Court. Any person who was a Director or Managing Director of JIL or JAL on the date of the institution of the insolvency proceedings against JIL as well as the present Directors/Managing Director shall also not leave the country without prior permission of this Court. The foregoing restraint shall not apply to nominee Directors of lending institutions (IDBI/ICICI/SBI);

e) All suits and proceeding instituted against JIL shall in terms of Section 14(1)(a) remain stayed as we have directed the IRP to remain in Management.

Be it clarified that we have passed this order keeping in view the provisions of the Act and also the interest of the homebuyers.

IA stands disposed of accordingly.

The matter be listed at 2.00 p.m. on 13-11-2017.

The prior date given by this Court i.e. 10-10-2017 stands cancelled.”

(emphasis in bold supplied)

20.1.2. It could be readily noticed that in formulating the directions aforesaid, this Court initiated steps to protect the interests of homebuyers essentially for the reason that, at the given stage, homebuyers were not regarded as financial creditors and they were not represented in the CoC. Significantly, while evolving a workable and protective mechanism, this Court also took note of the crucial background aspects and the fact that JIL was essentially an alter ego of JAL; and thus, even while consciously noting that JAL was not a party to the insolvency proceedings, directed that JAL shall deposit a sum of INR 2,000 crores and restraints were also put over disposal of assets or property of JAL and over the movement of the Directors/Managing Directors of JIL or JAL away from the country. 20.2. JAL moved an application (I.A. No. 102471 of 2017) for modification/recall of the aforesaid direction for deposit of INR 2,000 crores or for a modification that would enable it to transfer the rights under the Concession Agreement in respect of the Yamuna Expressway. This application was considered and rejected by the Court on 25.10.2017 after noticing the submissions in opposition by the learned Attorney General as also by the learned counsel appearing on behalf of IDBI Bank and YEIDA. It was also submitted by the counsel for IRP that the rights under the Concession Agreement belonged to JIL, which was subject to proceedings under the IBC and therefore, such a request could not be granted. However, the time for depositing INR 2,000 crores was extended until 05.11.2017. The relevant part of order dated 25.10.2017 reads as under: –

“It is submitted by Mr Kapil Sibal and Mr Mukul Rohatgi, learned Senior Counsel appearing for the applicant that JAL may be permitted to transfer its rights under the concession agreement in respect of Yamuna Expressway. The same is seriously opposed by Mr K.K. Venugopal, learned Attorney General for India, Dr Abhishek Manu Singhvi, learned Senior Counsel appearing for the IDBI Ltd. and Mr Ravindra Kumar, learned counsel appearing for the Yamuna Expressway Industrial Development Authority.

It is also submitted by Mr Parag P. Tripathi, learned Senior Counsel representing the Interim Resolution Professional (IRP) that the rights under the concession agreement in respect of Yamuna Expressway are of Jaypee Infratech Ltd. (JIL), which is subject to proceeding under the Insolvency and Bankruptcy Code and, therefore, it cannot be transferred. Mr Ravinder Kumar, learned counsel appearing for the Authority has submitted that the rights under the concession agreement, are non-transferable.

We have also heard Mr Ajit Kumar Sinha, learned Senior Counsel appearing for some of the homebuyers. There are other counsel who are representing the homebuyers who are interested in having their flats. We do not want to address the said aspect today.

We are not inclined to entertain the application for modification of the order dated 11-9-2017. However, we extend the time to deposit the sum of Rs 2000 crores (Rupees two thousand crores) till 5-11-2017.”

20.3. Then, on 13.11.2017, this Court appointed learned counsel Mr. Pawanshree Agarwal as the amicus curiae, who was to open a web portal on which details of homebuyers could be uploaded. All the Directors of JAL, except institutional Directors were ordered to remain present before the Court on the next date with the affidavits disclosing their personal assets. This order dated 13.11.2017 reads as under: –

“All the applications for impleadment/intervention stand allowed. The homebuyers are directed to approach Mr Pawanshree Agarwal, learned counsel, who is appointed as the Amicus Curiae in the matter to assist the Court and he shall open a web portal so that the homebuyers can give their details to Mr Pawanshree Agarwal. Let the matter be listed on 22-11-2017. On that day, all the Directors except institutional Directors of Jaiprakash Associates Ltd. (JAL) shall remain personally present in the Court with the affidavits disclosing their personal assets.”

20.4. On the next date, 22.11.2017, eight independent Directors and five promoter Directors were present before the Court. On a statement made on behalf of JAL, this Court permitted JAL to deposit INR 275 crores during the course of the day and directed further deposit, of INR 150 crores by 13.12.2017 and INR 125 crores by 31.12.2017. A restraint was imposed on the alienation of properties and assets of the Directors and their families while maintaining the earlier direction for the deposit of INR 2,000 crores; and the Directors concerned were directed to remain present on the next date. The amicus curiae was asked to create a web portal within a week; and for that matter, learned counsel appearing for JAL was to provide all the details as required by the amicus and also to provide him a sum of INR 5 lakhs. The relevant part of order dated 22.11.2017 reads as under: –

“It is submitted by learned Senior Counsel appearing for Jaiprakash Associates Ltd. (JAL) that the company is ready with Rs 275 crores. The homebuyers raised their concern about the realisation of the amount. This Court appreciates the grievance and the concern of the homebuyers. We think it would be appropriate to direct as follows:

(a) A demand draft of Rs 275 crores be deposited by Mr Anupam Lal Das, learned counsel appearing for the company, before the Registry of this Court, today.

(b) A sum of Rs 150 crores be deposited by 13-12-2017.

(c) A further sum of Rs 125 crores be deposited by 31-12-2017.

(d) Neither the independent Directors nor the promoter Directors shall alienate their personal properties or assets in any manner, and if they do so, they will not only be liable for criminal prosecution but contempt of the court.

(e) That apart, we also direct that the properties and assets of their immediate and dependent family members should also not be transferred in any manner, whatsoever.

Needless to say that direction for deposit of Rs 2000 crores shall remain as it is. The only indulgence is to pay the same in instalments.

Mr Pawanshree Agrawal, who had been appointed as Amicus Curiae on an earlier date, shall create a portal within a week and do the needful as he has done in similar matters. Mr Anupam Lal Das, learned counsel shall provide all the details as required by Mr Pawanshree Agrawal. Mr Anupam Lal Das shall provide a sum of Rs 5 lakhs to Mr Pawanshree Agrawal for creation of the portal and to carry on the consequential activities. Matters be listed on 10-1-2018. On that day, all the independent Directors and promoter Directors of Jaiprakash Associates Limited, shall remain present. Copies of the affidavits deposed by all the five promoter Directors, shall be served on the Central Agency, so that the learned Attorney General can be made aware of that. Call on the date fixed.”

20.5. Next to the above, the matter was considered on 15.12.2017, when the deposited INR 150 crores were ordered to be kept in a short-term deposit and the time (for further payment) was extended until 25.01.2018. Further to that, on 10.01.2018, this Court took note of the submissions made on behalf of the homebuyers of JAL as also an application made by Reserve Bank of India³² seeking leave to move the NCLT against JAL and issued the directions, inter alia, to the effect that JAL shall file an affidavit disclosing its housing projects throughout the country and the stage of their construction; the amicus shall open an independent web portal for the homebuyers of JAL; the application of RBI shall be considered at a later stage; and the Directors concerned need not remain personally present before the Court unless so directed but shall not leave the country. The relevant part of this order dated 10.01.2018 reads as under: –

“Having heard the learned counsel for the parties, we are inclined to pass the following directions:

(i) Jaiprakash Associates Ltd. (JAL) shall file an affidavit stating therein as to how many housing projects it has throughout the country and the stage of their construction. The said affidavit shall be filed within a week hence.

(ii) Mr Pawanshree Agarwal, learned Amicus Curiae shall create an independent web portal in respect of the homebuyers of JAL, which shall reflect the details of the homebuyers.

(iii) The web portal created by Mr Pawanshree Agarwal qua Jaypee Infratech Ltd. (JIL) shall be kept alive.

(iv) The application filed by Reserve Bank of India seeking permission to move NCLT shall be considered at a later stage.

(v) The independent Directors of JAL need not remain personally present on every date of hearing unless so directed by this Court. The independent Directors shall not leave the country without leave of this Court.

(vi) The earlier order of injuncting JAL to create any kind of third-party interest in the assets is reiterated.

(vii) The applications for impleadment/intervention and directions filed before this Court shall be served on Mr Pawanshree Agarwal.”

20.6. Further effective proceedings took place on 21.03.2018 when it was stated on behalf of JAL that INR 550 crores had already been deposited and that only about 8% of homebuyers were interested in seeking refund while others were desirous of seeking possession of their flats. This Court indicated that at the given stage, only the matter in relation to the homebuyers seeking refund was being examined and other grievances shall be examined in the next phase of proceedings. Since the order for deposit of INR 2,000 crores had not been complied with despite the end of deadline, the Court issued directions for further deposit of INR 200 crores, as agreed to by the Managing Director of JAL present in the Court, where the first instalment of INR 100 crores was to be deposited by 15.04.2018 and the second instalment in the like amount was to be deposited by 10.05.2018. The amicus curiae informed the Court, with reference to his portal and the record of JAL, that a sum of INR 1,300 crores was required to be refunded by way of principal alone to the homebuyers who were seeking refunds, whereupon the amicus was requested to submit a project-wise chart, indicating the number of persons and the stage of completion. Taking note of the grievances of the homebuyers that the developer was demanding monthly instalments despite being unable to complete construction, the developer was restrained from raising demands towards outstanding or future instalments in respect of those buyers who had expressed a desire to obtain refunds. Further to that, the IRP was permitted to finalise the resolution plan, to be implemented only with the leave of the Court. This Court also took note of the inability expressed by the learned senior counsel, who was earlier requested to espouse the cause of homebuyers in CoC and, in his place, Mr. Gaurav Agarwal Advocate was appointed for the purpose. This order dated 21.03.2018 reads as under: –

“Heard Mr Anupam Lal Das, learned counsel appearing for Respondent 4 Jaiprakash Associates Ltd. (JAL). Though many a contention has been raised by Mr Das, yet, we are not inclined to entertain the same keeping in view our orders dated 11-9-2017 and 25-10-2017. We have been told by Mr Das that JAL has deposited a sum of Rs 550 crores before the Registry of this Court. It is submitted by Mr Das that only 8% of the homebuyers/allottees are inclined to take refund whereas others have expressed their inclination to have the flats.

We would intend to make it absolutely clear that, for the present, we are only concerned with those homebuyers who intend to have refund. In the next phase, we may consider the grievances, if any, of the homebuyers who intend to have the flats. In that regard, we think it appropriate to hear Mr Parag P. Tripathi, learned Senior Counsel appearing for Interim Resolution Professional (IRP) and Mr Jayant Bhushan and Mr Sanjay Hegde and others, learned Senior Counsel appearing for some Associations of homebuyers who intend to have their flats.

As our order for deposit of Rs 2000 crores has not been complied with, we intend to pass the following directions:

(a) JAL shall deposit a further sum of Rs 200 crores in two instalments, as agreed by the Managing Director who is present in Court today. The first instalment of Rs 100 crores shall be deposited by 15-4-2018 and the second instalment of Rs 100 crores shall be deposited by 10-5-2018;

(b) It is submitted by Mr Pawanshree Agrawal, learned Amicus Curiae that as per his portal an amount of Rs 1300 crores, at present, is required to be refunded towards the principal sum for those homebuyers who, as of today, seek refund. The figure of Rs 1300 crores is as per the record of JAL.

In view of the aforesaid, we would require Mr Agrawal to prepare a projectwise chart indicating the number of persons in respect of that project and the stage of completion of the respective projects so that appropriate order can be passed for disbursement of the amount on pro rata basis to the homebuyers;

(c) Mr Agrawal, learned Amicus Curiae shall keep the portal operational. However, the requests of only those persons on the portal who have sought refund, as of today will be considered at this stage;

(d) The submission of the homebuyers who are seeking refund is that the developer is making demands towards monthly instalments. We direct that no demand towards outstanding or future instalments shall be raised by the developer to the flat buyers who have, as of today, expressed the option to obtain refund. The demands raised by the developer in respect of the homebuyers who have already opted for refund till today, shall remain stayed;

(e) The IRP may proceed to finalise the resolution plan but the same shall be implemented after taking leave of this Court.

(f) The National Company Law Tribunal (NCLT) shall decide subject to the directions which we have given hereinabove. Before we fix the next date, we must note that we have been apprised that Mr Shekhar Naphade, learned Senior Counsel who was appointed to espouse the cause of the homebuyers before the Committee of Creditors has expressed his inability to continue as such.

In view of the aforesaid, a need has arisen to appoint someone else in place of Mr Shekhar Naphade and accordingly we appoint Mr Gaurav Agrawal, Advocate. It is further clarified that Mr Gaurav Agrawal shall be guided by our previous orders.

Let the matter be listed on 16-4-2018 so that this Court can take note of whether the developer has complied with the direction of depositing the first instalment and to pass directions with regard to disbursement of the amount deposited on pro rata basis on the basis of the report submitted by Mr Pawanshree Agrawal.”

(emphasis in bold supplied)

20.7. On 16.04.2018, apart from dealing with two applications filed by the Managing Director and the Joint Managing Director of JAL seeking permission to travel abroad, this Court took note of the deposit of INR 100 crores by JAL and directed that the second instalment of INR 100 crores be deposited by 10.05.2018. While reiterating liberty to IRP to finalise the resolution plan in terms of the earlier order, this Court also extended liberty to JAL to submit a representation to the competent authority without expressing any opinion on that count and leaving the representation to be considered in accordance with law.³³

20.8. Thereafter, on 16.05.2018, apart from dealing with another application filed by an independent Director of JAL seeking permission to travel abroad, this Court took note of the fact that a sum of INR 750 crores was lying in deposit and it was observed that the same ‘has to be disbursed on pro rata basis amongst the homebuyers’. It was also directed that JAL, the holding company of JIL, shall deposit a further sum of INR 1,000 crores ‘jointly and severally’ by 15.06.2018 subject to which, stay was granted over further proceedings, only insofar as concerning the liquidation. The relevant part of this order dated 16.05.2018 reads as under: –

“Having heard the learned counsel for the parties at length, it is directed that Jaiprakash Associates Ltd. (JAL), the holding company of Jaypee Infratech Ltd. (JIL) shall deposit a further sum of Rs 1000 crores jointly and severally by 15-6-2018. Subject to the said deposit, there shall be a stay of further proceedings only insofar as the liquidation is concerned. In the meantime, Interim Resolution Professional (IRP) shall remain in management. If the amount is not deposited by 15-6-2018, the statutory proceedings shall continue. As far as Rs 750 crores, which is lying in deposit is concerned, it has to be disbursed on pro rata basis amongst the homebuyers.”

(emphasis in bold supplied)

20.9. Thereafter, on 13.07.2018, this Court took note of certain proposals made by JAL, which were opposed by the petitioners. While observing disinclination to entertain such proposals, this Court posted the matters on 16.07.2018 ‘exclusively for the purpose of considering the issue of the rights of the homebuyers and the capability of JAL and JIL to construct the projects’.

21. After the aforesaid proceedings, the petitions were finally heard and disposed of by this Court by way of the judgement dated 09.08.2018. Before taking note of the significant features and attributes of the final judgement in the case of Chitra Sharma, but to keep feasible track of the chronology of events, we may indicate that parallel to the proceedings in this Court, NCLT continued with CIRP concerning the corporate debtor JIL and in that process, passed orders on 09.05.2018 and 15.05.2018, approving the decision of IRP rejecting the claims of two lenders of JAL to be recognised as financial creditors of the corporate debtor JIL on the strength of the mortgage created by the corporate debtor JIL as collateral security of the debts of its holding company JAL. Thereafter, on 16.05.2018, NCLT accepted an application, that was moved by IRP on 06.02.2018, for avoidance of certain transactions whereby the corporate debtor JIL had mortgaged its properties as collateral securities for the loans and advances made by the lender banks and financial institutions to JAL, as being preferential, undervalued and fraudulent. These aspects were finally dealt with by this Court in the judgement dated 26.02.2020, as shall be noticed later.

22. We may now revert to the final judgement dated 09.08.2018 in the case of Chitra Sharma, and take into account the relevant features, which do have a bearing on the issues raised in the present litigation.

22.1. In final judgement dated 09.08.2018 in the case of Chitra Sharma (supra), this Court took note of the past proceedings and also the fact that when resolution plans were considered and examined by the CoC, JAL too submitted its proposals which were rejected in view of the bar contained in Section 29A IBC as also for the reason that JAL failed to convince the CoC of its ability to tie up the funds for construction. However, even the other plans could not muster the support of the requisite majority in CoC. Accordingly, IRP informed NCLT that no resolution plan was approved by the CoC even within the extended period for completing the CIRP, which came to an end on 12.05.2018. This Court took note of the mandate of Section 33 IBC whereby liquidation follows upon rejection of a resolution plan but then, noticed unanimity of the parties during the course of hearing that the liquidation of JIL was not going to subserve the interests of the homebuyers who had made valuable investments by contributing their hard-earned money in the hope of obtaining a roof over their heads. This Court also observed that a home for the family was considered to be a part of the right to life and took note of the appeal made by the homebuyers to ensure complete justice rather than leaving them at the mercy of the liquidation process. While appreciating the substance of that plea, this Court nevertheless indicated the need to abide by the discipline of law and thereafter, proceeded to take a comprehensive view of the scheme of IBC; and also underscored the fact that though IBC, as originally enacted, did not contain express provisions in relation to the interests of homebuyers but, their concerns were sought to be assuaged in the amendment brought about by the Insolvency and Bankruptcy (Amendment) Ordinance, 2018, which came into force on 06.06.2018 and whereby, the homebuyers were expressly brought within the purview of financial creditors under the IBC. This Court pointed out that now being duly recognised as financial creditors, the homebuyers were necessarily a part of the CoC, constituted in terms of section 21 IBC. This Court also took note of the relevant provisions in the Regulations relating to the voting share of the respective financial creditors in CoC and selection of an authorised representative³⁴ to represent financial creditors in a particular class.

22.2. Proceeding further, this Court extensively referred to a variety of submissions made on behalf of JAL, seeking to explain the perspective of the developers with reference to the projects already accomplished by them and the projects being under execution; and their proposal to deposit post-dated cheques to the tune of INR 600 crores with the registry of this Court, if they were allowed to dispose of some of the assets. The Court also took note of the fact that JAL had sought directions to NCLT to decide an application for sanctioning the scheme of arrangement, propounded pursuant to a restructuring agreement accepted by 32 creditors. The request of JAL was to continue with the stay of liquidation proceedings against its deposit of post-dated cheques of INR 600 crores and also to stay the directions of this Court whereby IRP was allowed to remain in management of the corporate debtor. The Court recorded the propositions of JAL as follows: –

“36. …. JAL has sought to assure that it would double the strength of existing workers for the construction of its projects. JAL has also stated that it would deposit postdated cheques of Rs 600 crores with the Registry of this Court. However, this is subject to the condition that the Court should allow it to dispose of “identified cement assets” including its cement plan (sic) at Rewa in Madhya Pradesh. In order to enable it to do so, JAL has sought a direction to the NCLT at Allahabad to decide the application filed before it for sanctioning a scheme of arrangement, propounded pursuant to a master restructuring agreement signed and accepted by the 32 creditors. JAL seeks to continue the stay of liquidation proceedings against its deposit of postdated cheques of Rs 600 crores. JAL also seeks a stay on the direction of this Court allowing the IRP to remain in management.”

22.2.1. After careful consideration, this Court rejected the proposal submitted on behalf of JAL while explaining that accepting any such proposal on behalf of JAL would cause serious prejudice to the discipline of IBC. In that regard, this Court referred to the provisions contained in Section 29A of the Code and the background in which certain specified persons were made ineligible to be the resolution applicants.³⁵ This Court, inter alia, observed and explained as under: –

“39. Clauses (c) and (g) of Section 29-A would operate as a bar to the promoters of JAL/JIL participating in the resolution process. Under clause (c), a person who at the time of the submission of the resolution plan has an account which has been classified a non-performing asset under the guidelines of RBI or of a financial regulator is subject to a bar on participation for a stipulated period. Under clause (g), a person who has been a promoter or in the management or control of a corporate debtor in which a preferential transaction, undervalued transaction, extortionate credit transaction or fraudulent transaction has taken place and in respect of which an order has been made by the adjudicating authority under the IBC is prohibited from participating. The Court must bear in mind that Section 29-A has been enacted in the larger public interest and to facilitate effective corporate governance. Parliament rectified a loophole in the Act which allowed a backdoor entry to erstwhile managements in the CIRP. Section 30 IBC, as amended, also clarifies that a resolution plan of a person who is ineligible under Section 29-A will not be considered by the CoC:”

22.3. Apart from the above, this Court also took note of various grounds urged on behalf of the homebuyers in opposition to the proposal so submitted and, after examining the matter in its entirety, this Court was convinced that JAL/JIL were lacking in financial capacity and resources to complete the unfinished projects; and allowing them to participate in the process of resolution would render the statutory provisions nugatory.

22.3.1. Having regard to the issues involved herein, we are impelled to take note of the grounds so urged on behalf of the homebuyers and their due acceptance by this Court as follows: –

“40. Mr Anand Grover appearing on behalf of the homebuyers has opposed the proposal submitted by JAL/JIL on the following grounds:

40.1. Loans given to JAL have been classified as non performing assets which renders JAL ineligible as a resolution applicant/new promoter under Section 29-A(b) IBC;

40.2. In addition to Section 29-A(b), JAL is also disqualified under Section 29-A(g) IBC. Section 29-A(g) provides that a person who is engaged in a fraudulent transaction should not be allowed to bid for another company as such a person may again engage in fraudulent transactions. In May 2018, the NCLT, Allahabad set aside a fraudulent transaction involving a mortgage of around 750 acres of JIL’s land in favour of the lenders of JAL. This mortgage was without any consideration and the land of 750 acres may be worth INR 5000 crores. The matter is now before the NCLAT, which has specifically framed an issue in this regard;

40.3. RBI is already before this Court seeking initiation of
insolvency proceedings against JAL. JAL’s proposal, although presented under the garb of protecting the interest of homebuyers, is aimed at the twin benefits of avoiding insolvency of JAL and regaining control of JIL, thereby defeating RBI’s application for insolvency proceedings of JAL as well as Section 29-A IBC;

40.4. The reasons pleaded by JAL/JIL to excuse their failure to
complete the housing projects such as the stay order granted by the National Green Tribunal have been rejected by the orders of the National Consumer Disputes Redressal Commission as there was no stay. One such order was passed by NCDRC on 2-5-2016, in Developers Township Property Owners Welfare Society v. Jaiprakash Associates Ltd.;

40.5. The contention of JAL that they faced impediments on account of the purported stay imposed by NGT is patently incorrect as the stay by NGT was only on handing over possession without an occupation certificate, which had no bearing on the construction. Moreover, JAL carried out construction during that period as is evidenced inter alia by the fact that they raised demands for construction linked payments during this period;

40.6. During the pendency of the CIRP from 9-8-2017, construction work was done under the aegis of the IRP under whom JAL was a mere contractor;

40.7. The claim by JAL that flats have been delivered is a fractured claim as flats have been delivered in incomplete stages and are not in accordance with the allotment letters. The flooring is not complete, doors and windows are missing, no-objection certificates have not been obtained from the Fire Department and the offer of possession is being made without the occupation certificate;

40.8.JAL does not have the capacity to deliver the flats and 22,000 homebuyers are suffering due to delays of more than four years in completion of various projects of JAL and JIL;

40.9. Under the contracts, JAL and JIL are jointly and severally liable to deliver the flats. If JAL was serious about delivering the flats, the present situation would not have arisen. Further, JAL would have avoided the insolvency process of JIL and would not have cast the homebuyers to the uncertainties of insolvency;

40.10. There are serious doubts about the credentials of JAL which has diverted funds from JIL towards its other businesses. The applicant associations had appointed ASA Financial Services to conduct an audit of JIL’s financials and the audit report demonstrates that JAL may have diverted more than INR 10,000 crores from JIL;

40.11. JAL is undergoing a serious financial crisis. This is clear from the following facts:

40.11.1. JAL has not yet honoured the order of this Court asking it to deposit Rs 2000 crores for protection of the interest of the homebuyers. JAL has paid only Rs 750 crores out of Rs 2000 crores, after the expiry of almost 10 months from 11-9-2017 which was the date of the initial order of this Court;

40.11.2. JAL has failed to pay even the latest instalment of Rs 1000 crores by 15-6-2018 in accordance with the order of this Court dated 16-5-2018;

40.11.3. JAL is a defaulter of more than 30 banks to the extent of around Rs 30,000 crores. JAL has also defaulted on fixed deposits, foreign currency convertible bonds and payments to Noida Authority;

40.11.4. Even in the latest proposal, the proposal to deposit Rs 600 crores is spread over time indicating that JAL has no resources; and

40.11.5. The proposal of doubling the strength of workers from 4000 to 8000 would only mean doubling the strength from 17 workers per tower to 35 workers per tower (228 towers to be built by 8000 workers). This would amount to 2 workers in each floor of 4 flats (21,532 flats in 228 towers by 8000 workers). At this rate, completion of flats may take several years.

41. Similar submissions have been urged on behalf of the homebuyers by other learned counsel.

42. The bar under Section 29-A would preclude JAL/JIL from being allowed to participate in the resolution process. Moreover, the facts which have been drawn to the attention of the Court leave no manner of doubt that JAL/JIL lack the financial capacity and resources to complete the unfinished projects. To allow them to participate in the process of resolution will render the provisions of the Act nugatory. This cannot be permitted by the Court.”

(emphasis in bold supplied)

22.4. It was, however, submitted on behalf of JAL/JIL that with expiry of timelines for CIRP, the only option would be to liquidate the corporate debtor which may not be in the interest of homebuyers and in that situation, the only way out would be to provide for an arrangement outside the provisions of IBC. It was also submitted that unless a group of independent professionals came to a conclusion that it was not financially viable for JAL/JIL to complete the remaining work in a time-bound manner, their role as developers should not be discounted. Hence, it was submitted that an independent committee of experts be constituted by the Court to evaluate the financial capability of JAL/JIL to continue executing the ongoing projects. It was also submitted that only 8% of the homebuyers had opted for refunds while 92% had chosen not to claim refunds, thereby implying a confidence in the ability of JIL/JAL to complete the project. However, on the other hand, the homebuyers uniformly opposed the submissions so made and it was urged before the Court that they had no confidence in the ability of either JIL or JAL to complete the outstanding projects. In the third dimension, it was submitted on behalf of the IRP that Court may revive the CIRP by extending the time specified in IBC in order to enable fresh consideration to be made of the prospect for a resolution which would take into account the interests of homebuyers under the amended IBC; and the second option would be to appoint a committee under the supervision of the Court to explore the possibility of a resolution which would obviate the need for liquidation. Having pondered over the diverse propositions, the requirement of balancing the discipline of the Code, to do complete justice and to secure the interests of all the concerned, this Court found it just and proper to accept the suggestion that CIRP be revived and CoC be reconstituted as per the amended provisions of IBC with recourse to the powers under Article 142 of the Constitution of India. This Court observed and held as under: –

“47. In considering the rival submissions, several important facets of the case need to be underscored.

47.1. First and foremost, the CIRP was initiated on 9-8-2017, following the order of NCLT admitting the proceedings. The period of 180 days for concluding the CIRP came to an end on 6-2-2018 and the extended period ended on 12-5-2018. When the CIRP was initiated and until the period of 270 days concluded, the homebuyers did not have the status of financial creditors under the provisions of IBC. They had no statutory voting rights in the CoC. Under the interim directions of this Court, a workable arrangement was sought to be put into place by appointing a representative of the homebuyers on the CoC to facilitate their interests being duly borne in mind. But the point to be noted is that in the absence of a statutory recognition of the position of the homebuyers as financial creditors, the law did not allow for real and substantive entitlements to them in the CoC. These statutory entitlements have been brought in by the Ordinance in order to recognise the vital interests of the homebuyers in a real estate project and to allow them a statutory status in the insolvency resolution process. Unfortunately by the time that the Ordinance came into being on 6­6-2018, the period of 270 days had expired; the resolution plan of Lakshdeep was rejected and the IRP informed NCLT that no resolution plan had been approved within the extended period of 270 days on 12-5-2018.

47.2. Having regard to the material change which has been brought about by the amendment of the IBC by the Ordinance and the fact that this Court has been in seisin of the proceedings to ensure that the homebuyers are protected, we are of the view that it is but appropriate and to do complete justice to secure the interests of all concerned that the CIRP should be revived and CoC reconstituted as per the amended provisions to include the homebuyers. In the facts of the present case, recourse to the power under Article 142 would be warranted to render complete justice. Parliament has undoubtedly provided a period of 180 days and an extended period of 90 days to complete the process. But in the present case a peculiar situation has arisen as a result of which the status of the homebuyers which had not been recognised prior to 6-6-2018 has now been expressly recognised as a result of the amending Ordinance.

47.3. The learned counsel for the IRP submitted that in the CoC which will be reconstituted under the amended IBC, the homebuyers would have a substantial voting power so as to be able to effectively protect their interests. Moreover, this Court should follow the discipline of IBC which has been enacted by Parliament specifically to streamline the resolution of corporate insolvencies. Matters involving corporate insolvencies require expert determination. The legislature has made specific provisions which are conceived in public interest and to facilitate good corporate governance. The Court should not take upon itself the burden of supervising the intricacies of the resolution process. Accepting the suggestion of Mr Nariman (and one of the two options proposed by Mr Tripathi) of the Court appointing a committee to supervise the resolution process outside IBC will involve the Court in an insuperable burden of evaluating intricate matters of financial expertise on which Parliament has legislated to create specific mechanisms.

47.4. We are emphatically of the view that it would not be appropriate for the Court to appoint a committee to oversee the CIRP and assume the task of supervising the work of the Committee. We must particularly be careful not to supplant the mechanisms which have been laid down in the IBC by substituting them with a mechanism under judicial directions. Such a course of action would in our view not be consistent with the need to ensure complete justice under Article 142, under the regime of law. Hence, the power under Article 142 should be utilised at the present stage for the limited purpose of recommencing the resolution process afresh from the stage of appointment of IRP by the order dated 9-8-2017 and resultantly renew the period which has been prescribed for the completion of the resolution process. We have furnished above, the reasons for doing so. Chief amongst them is the fact that in the present case the period of 270 days expired before the Ordinance conferring a statutory status on homebuyers as financial creditors came into existence. In the circumstances, it would be necessary to revive the period prescribed by the statute by another 180 days commencing from the date of this order. During this period, the IRP shall follow the provisions of the IBC afresh in all respects. A new CoC should be constituted in accordance with the amended provisions IBC to enforce the statutory status of the allottees as financial creditors. We also clarify that apart from the three bidders whose bids were found to be eligible by the IRP, it would be open to the IRP to invite fresh bids to facilitate a wider field of choice before the CoC. In that process, the offers made by the intervenors in these proceedings can also be considered by CoC anew. We are not inclined to evaluate the merits of the bids submitted by the bidders who were left in the fray, two of whom have intervened. All bids must follow the discipline IBC. We have, however, not accepted the submission to allow JIL or JAL and the erstwhile promoters to participate in the process. Their participation is expressly prohibited by Section 29-A and we decline to make any exception which would breach a salutary and express provision made in the IBC.”

(emphasis in bold supplied)

22.5. Thereafter, this Court also took into consideration the submissions made on behalf of some of the homebuyers for issuance of directions to facilitate pro rata disbursement of INR 750 crores lying in deposit pursuant to the interim directions. This Court observed that even when the claim of the refund seekers was to be considered with empathy, such request could not be acceded to and specified four major reasons for declining this prayer. The consideration of this Court in relation to the said sum of INR 750 crores, being also directly relevant for the present purpose, could be usefully extracted as under: –

“48. As we have stated earlier, an amount of Rs 750 crores is lying in deposit before this Court pursuant to the interim directions, on which interest has accrued. The homebuyers have earnestly sought the issuance of interim directions to facilitate a pro rata disbursement of this amount to those of the homebuyers who seek a refund. We are keenly conscious of the fact that the claim of the homebuyers who seek a refund of monies deserves to be considered with empathy. Yet, having given our anxious consideration to the plea and on the balance, we are not inclined to accede to it for more than one reason.

48.1. Firstly, during the pendency of the CIRP, it would as a matter of law, be impermissible for the Court to direct a preferential payment being made to a particular class of financial creditors, whether secured or unsecured. For the present, we leave open the question as to whether the homebuyers are unsecured creditors (as was urged by Mr Tripathi) or secured creditors (as was urged by counsel appearing for them). Directing disbursement of the amount of Rs 750 crores to the homebuyers who seek refund would be manifestly improper and cause injustice to the secured creditors since it would amount to a preferential disbursement to a class of creditors. Once we have taken recourse to the discipline IBC, it is necessary that its statutory provisions be followed to facilitate the conclusion of the resolution process.

48.2. Secondly, the figures which have been made available presently, following the opening of the web portal by the Amicus Curiae, indicate that 8% of the homebuyers have sought a refund of their monies while 92% would evidently prefer possession of the homes which they have purchased. We cannot be unmindful of the interests of 92% of the homebuyers many of whom would also have obtained loans to secure a home. They would have a legitimate grievance if the corpus of Rs 750 crores (together with accrued interest) is distributed to the homebuyers who seek a refund. The purpose of the process envisaged by IBC for the evaluation and approval of a resolution plan is to form a composite approach to deal with the financial situation of the corporate debtor. Allowing a refund to one class of financial creditors will not be in the overall interest of a composite plan being formulated under the provisions of the IBC.

48.3. Thirdly during the course of the hearing, the Court has been apprised of the concerns of the secured creditors, chief among them being IDBI Bank Ltd. In its submissions before this Court, IDBI Bank has emphasised that one of the major reasons for the enactment of IBC was to protect the interest of lenders. The debt owing to the banks and financial institutions has been secured by the assets of JIL, to protect their interests. This debt originates in the public deposits of the banks and financial institutions, who are answerable to their stakeholders.

48.4. Fourthly, RBI has moved this Court for permission to initiate an insolvency resolution process. Parliament enacted the Banking Regulation (Amendment) Act 2017 by introducing Section 35-AA and Section 35-AB into the Banking Regulation Act 1949. The amendment empowers the Central Government to authorise RBI to issue directions to any banking company to initiate an insolvency resolution process in respect of a default as understood under the IBC. Such an order was issued by the Central Government on 5-5-2017. The RBI constituted an Internal Advisory Committee (IAC) consisting primarily of its independent Directors. The IAC took up for consideration accounts which were classified either partly or wholly non-performing from amongst the top 500 exposures in the banking system as on 31-3-2017. As a first step, the IAC recommended all such non-performing asset accounts with fund and non-fund based outstandings exceeding Rs 5000 crores. The IAC has initially taken up twelve accounts involving total exposure of Rs 1,79,769 crores. JIL was one of the twelve accounts in respect of which directions have been issued to banks for initiating insolvency resolution. Subsequently, the IAC recommended that in respect of those accounts where 60% or more had been classified as NPAs as on 30-6-2017, banks may be directed to implement a viable resolution plan within six months failing which the accounts may be directed for a reference under the IBC by 31-12-2017. JAL was one such entity. No viable resolution plan could be found as a result of which it is also required to be referred for CIRP. RBI has carried out this exercise as a matter of economic policy in its capacity as the prime banking institution in the country, entrusted with a supervisory role, and the power to issue binding directions….. .”

(emphasis in bold supplied)

22.6. Having said so, this Court acceded to the request made on behalf of the RBI to initiate a CIRP against JAL under IBC and thereafter proceeded to conclude on the matter with the following directions: –

“50. We, accordingly, issue the following directions:

50.1. 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;

50.2. 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”;

50.3. 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;

50.4. JIL/JAL and their promoters shall be ineligible to participate in the CIRP by virtue of the provisions of Section 29-A;

50.5. 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;

50.6. 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 NCLT and continue to remain invested and shall abide by such directions as may be issued by NCLT.”

(emphasis in bold supplied)

23. Thus, the ternary, of anxiety on the part of stakeholders to avoid liquidation of the corporate debtor JIL; of due recognition by the legislature of the homebuyers as financial creditors; and concern of this Court to do complete justice in the cause while maintaining the discipline of law, led to the improvisation in Chitra Sharma, as noticeable in the preceding paragraphs, with revival of CIRP in relation to the corporate debtor JIL and re-constitution of CoC with the basic aim to ensure the resolution of insolvency of the corporate debtor JIL by way of the methods envisaged by, and permissible under, the Code.

Another round in this Court and further enlargement of time for CIRP  in question.

24. However, this resolution process concerning the corporate debtor JIL again landed in rough weather, now due to passage of time at different stages while dealing with another grey area i.e., method of counting of votes in the Committee of Creditors, which led to another round of litigation; and this Court had to again invoke its plenary powers to salvage the situation in the judgment dated 06.11.2019 in the case of Jaiprakash Associates Ltd. (supra). For their relevance, the observations made and directions issued in that case may also be recapitulated.

25. The second round of litigation concerning this CIRP came up to this Court in the following circumstances:

25.1. Consequent to the aforesaid directions in the case of Chitra Sharma, the matter proceeded before the NCLT being the Adjudicating Authority. The IRP issued public notice inviting claims from all the stakeholders of JIL, including the homebuyers and submitted his report on formation of the Committee of Creditors before the Adjudicating Authority on the following basis:

37.3% in case of financial institutions,

62.3% homebuyers, and

0.4% fixed deposit holders.

25.2. However, on 17.09.2018, an application came to be made before the Adjudicating Authority by one of the associations of homebuyers seeking clarification as to the manner in which the voting percentage of the homebuyers would be reckoned. The two members of NCLT expressed difference of opinion on the issue as a result of which, reference was made to the President of NCLT to place the matter before the third member. Eventually, an order was passed by the third member on 24.05.2019. This order was challenged by one of the associations of homebuyers before NCLAT. In the meantime, IDBI Bank filed an application before NCLT for excluding the period of pendency of the said application for clarification regarding the manner of counting the votes of the concerned financial creditors, from the period of 270 days for completion of CIRP. However, during the pendency of such an application, the NCLT, by its order dated 06.05.2019, called upon the authorities, the representatives of allottees and others to file reply on the necessity to proceed further with CIRP for considering the resolution plan received from the concerned bidder. The IDBI Bank assailed this order of NCLT by way of another appeal before the NCLAT.

25.3. The aforesaid two appeals were decided together by NCLAT by way of its judgment dated 30.07.2019. The NCLAT took note of the fact that no regulation had been framed under the Code as to how the voting share of thousands of allottees (homebuyers) would be counted when all of them fell within the meaning of ‘financial creditors’ and hence, were the members of CoC. The NCLAT observed that this had been an extraordinary situation where the law was silent and there was no guideline which led to difference of opinion between the two members and the matter was finally decided by the third member. The NCLAT opined that in the given situation, certain period could be excluded while counting the total period of 270 days. In this judgement dated 30.07.2019, NCLAT provided for exclusion of 90 days for the purpose of counting 270 days of CIRP from the date of receipt of the copy of its judgement. The NCLAT also commented that the aforesaid exclusion was being provided to enable calling of fresh resolution plans but reiterated that no liberty was available to JAL in view of the observations and decision of this Court in Chitra Sharma (supra).

25.3.1. Those observations and directions of NCLAT in its judgment dated 30.07.2019, as reproduced in the judgement of this Court dated 06.11.2019, could be usefully recounted as follows: –

“22. In view of the aforesaid extraordinary situation, we are of the view that the period from 17-9-2018 i.e. the date of application filed by the association of the allottees for clarification for the order and till the final decision i.e. 4-6-2019 i.e. the date the matter was finally decided by the Third Hon’ble Member (total 260 days), can be excluded for the purpose of counting the 270 days. However, as the matter is pending since long, we are not inclined to exclude the total period of 260 days and instead in the interest of the allottees, we exclude 90 days for the purpose of counting the period of 270 days of “corporate insolvency resolution process”, which should be counted from the date of receipt of the copy of this order.

23.The aforesaid period is excluded to enable the “resolution professional”/“committee of creditors” to call for fresh “resolution plans” and to consider them, if so required after negotiations pass appropriate order under sub-section (5) of Section 30 of the I&B Code preferably within a period of 45 days. Rest of the period of 45 days margin is given to remove any difficulty and appropriate order as may be passed by the adjudicating authority.

The voting share of the allottees should be counted in terms of “I&B Code” as existing on the date of voting/“Regulation” and/or in accordance with majority decision of the adjudicating authority.

24. It is made clear that all the earlier “resolution plan(s)” including the plan submitted by the “NBCC”, cannot be considered, having been rejected by the “committee of creditors”. However, it will be open to the “NBCC” to file a fresh improved “resolution plan”. It is informed that “Adani Infra (I) Ltd.” also proposed to file “resolution plan” but we are not expressing any opinion with regard to the same. We have given opportunity to all the eligible persons to file “expression of interest”/(improved) “resolution plan”, individually or jointly or in concert with any person, but those who are ineligible in terms of Section 29-A, are barred from filing such plan. No liberty is given to “Jaiprakash Associates Ltd.”, in view of the aforesaid observation and decision of Hon’ble Supreme Court in Chitra Sharma.”

26. The aforesaid judgement of NCLAT was assailed in this Court by JAL and by the Wish Town Homebuyers’ Welfare Society. These appeals raised essentially two issues before this Court: one, as to whether NCLT or NCLAT had the power to exclude any period from the statutory period in exercise of inherent powers sans any express provision in the Code in that regard; and second, whether it was open to allow the bidder whose resolution plan had already been rejected by CoC, to submit revised plan or to invite fresh resolution plans to be considered by CoC after the statutory period specified for submission of such plans?

27.  After cogitating over the submissions made in support of the appeals, it was clear that the inevitable fallout of accepting the stand taken by the appellants would be to set aside the impugned judgment and relegate the parties to a situation where the only option would be to proceed with the liquidation process concerning JIL on the premise that no resolution plan was received before the expiry of the period of CIRP or being a case of rejection of the resolution plan under Section 31 of the Code. However, during the arguments, there was complete unanimity (again) between all the stakeholders, including the appellants before this Court, that the liquidation of JIL must be eschewed as it would do more harm to the interests of the stakeholders, in particular the large number of homebuyers.

28.  In the given set of circumstances and considering the position taken by the stakeholders, this Court found it neither necessary nor appropriate to dilate on the issues as urged and instead, proceeded to again exercise the plenary powers under Article 142 of the Constitution of India in order to ensure substantial justice in the cause. In the process, this Court, of course, rejected the suggestions given by a section of homebuyers to keep the entire process outside the dispensation under the Code with reference to the observations already made in the case of Chitra Sharma (supra), but found it justified to modulate a part of such directions, to the extent such modulation would not stand in conflict with the legislative intent and subserve the cause of justice, by providing a window to find out a viable solution. This Court also took note of various amendments brought about to the Code and the CIRP Regulations; and the overall circumstances of the case, where delay in completion of CIRP relating to JIL was attributable to law’s delay and neither homebuyers nor other financial creditors were to be blamed for pendency of proceedings before NCLT and before NCLAT. In the peculiar, rather extraordinary, situation obtaining in the matter, this Court considered it appropriate to ensure that an attempt was made for revival of the corporate debtor JIL, lest it was exposed to liquidation process and for that matter, to permit IRP to reissue the request for resolution plan to the two bidders who had earlier submitted the plans and to call upon them to submit revised resolution plans, which could be placed before CoC. In the process, this Court also took note of the time limit for completion of insolvency resolution process as per third proviso to Section 12(3) of the Code, which came into effect from 16.08.2019. The relevant observations of this Court could be usefully reproduced as under: –

“16. Suffice it to note that an extraordinary situation had arisen because of the constant experimentation which went about at different level due to lack of clarity on matters crucial to the decision-making process of CoC. Besides 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 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 12-A 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 36-B inserted with effect from 4-7-2018, 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. In the 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 the principle underlying Regulation 36-B(7), we deem it appropriate to permit 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 plan(s), which can be then placed before CoC for its due consideration.

17. In the present case, as aforementioned, there is unanimity amongst all the parties appearing before this Court including the resolution applicant that liquidation of JIL must be eschewed and instead an attempt be made to salvage the situation by finding out some viable arrangement which would subserve the interests of all concerned.

18. In view of the legislative changes referred to above, we are of the considered opinion that we need to and must exercise our plenary powers to make an attempt to revive the corporate debtor (AIL), lest it is exposed to liquidation process under Chapter III of Part II of the I & B Code. We are inclined to do so because the project has been implemented in part and out of over 20,000 homebuyers, a substantial number of them have been put in possession and the remaining work is in progress and in some cases at an advanced stage of completion. In this backdrop, it would be in the interest of all concerned to accept a viable plan reflecting the recent legislative changes.

19. Indeed, the third proviso to Section 12(3) predicates time-limit for completion of insolvency resolution process, which has come into effect from 16-8-2019. The same reads thus:

“Provided also that where the insolvency resolution process of a corporate debtor is pending and has not been completed within the period referred to in the second proviso, such resolution process shall be completed within a period of ninety days from the date of commencement of the Insolvency and Bankruptcy Code (Amendment) Act, 2019.”

Taking an overall view of the matter, we deem it just, proper and expedient to issue directions under Article 142 of the Constitution of India to all concerned to reckon 90 days’ extended period from the date of this order instead of the date of commencement of the Insolvency and Bankruptcy Code (Amendment) Act, 2019. That means, in terms of this order, the CIRP concerning JIL shall be completed within a period of 90 days from today.