New Delhi, Aug 9: The Supreme Court on Thursday said the promoters of Jaiprakash Associates (JAL) and Jaypee Infratech (JIL) cannot bid for Jaypee Infratech, which is facing insolvency proceedings initiated by the IDBI bank before National Company Law Tribunal (NCLT). "JIL/JAL and their promoters shall be ineligible to participate in the Corporate Insolvency Resolution Process (CIRP), by virtue of the provisions of Section 29A," the court said in its judgment. The bench of Chief Justice Dipak Misra, Justice A.M.Khanwilkar and Justice D.Y.Chandrachud said that the "bar under Section 29A of the Insolvency and Bankruptcy Code 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," said the judgment by the bench. Speaking for the bench, Justice Chandrachud said, "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."
The court directed the recommencing of the resolution process afresh from August 9, 2017 when Allahabad Bench of NCLT had appointed an Interim Resolution Professional. "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 Committee of Creditors (CoC) is reconstituted as per the amended provisions to include the home buyers," the judgment said.
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", the court directed. Having directed the constitution of fresh Committee of Creditors that would also include the representatives of the home buyers, the court permitted the IRP to invite fresh bids in addition to the "three short-listed bidders whose bids or, as the case may be, revised bids, may also be considered."
Taking recourse to Article 142 of the constitution that confers plenary powers to the top court to tide over any situation, the court said that the mandatory period of 180 days to complete the insolvency proceedings by the Interim Resolution Professional would commence from today. The court permitted the NCLT to pass appropriate orders in accordance with the provisions of the Insolvency and Bankruptcy Code (IBC) if it was necessary to apply for a further extension of 90 days to complete the resolution process.
Besides the slew of direction relating to insolvency proceedings against JIL, the court allowed the Reserve Bank of India (RBI) to direct the banks to initiate corporate insolvency resolution proceedings against JAL under the IBC. It further directed that Rs 750 crore which was deposited by the JAL/JIL in the top court along with interest be transferred to the NCLT and "continue to remain invested and shall abide by such directions as may be issued by the NCLT."