INTRODUCTION

One critical case connected with bankruptcy and liquidation code (IBC) in India in 2020 is the

Jaypee Infratech Ltd. case.

Jaypee Infratech Limited, a subordinate or subsidiary of Jaiprakash Associates Ltd. was

engaged with improvement and development of real estate and projects including the

development of the Yamuna expressway highway. Be that as it may, the organization

confronted monetary hardships and couldn't finish its tasks, prompting various complaints

from the creditors as well as homebuyers.

In the month of August of 2017, the NCLT conceded a bankruptcy appeal against Jaypee

Infratech Ltd. documented and filed by the IDBI Bank consortium. The case was then taken

over by the IBC, which intends to give a time period bound resolution process for stressed

organizations.

Corporate Governance Failures

It has been over a long time since many Jaypee Infratech Limited (JIL) home buyers in Noida

were sufferer of the mother of all land and real estate collapses in India. The long-drawn

arguments in court are continuous, leaving in excess of 20,000 Jaypee home seekers running

from one place to another and many succumbed.

Jaypee received the place that is known for the wish town as a trade-off for building the Noida

interstate for Rs 400 crores. The organization sent off 32000 home units, still, 70% of home

units are in the under-development stage. This plan gave no indications of status for the date

of completion. Around 90% of buyers made their installment, yet it was as yet guaranteed that
headway has been made on this plan, in spite of the fact that pretty much nothing remained to

be displayed for it.

A sum of 18,767 individuals paid a sum of Rs.8,676 crores to the organization. 1410

individuals got ownership worth 528 crores without any enlistments. 413 individuals dropped

their booking and their discount of Rs 64 crores is as yet forthcoming.

Factors behind the failure :

The following factors contributed to Jaypee's real estate failure:

The money that homebuyers had paid was used to fund other initiatives by the Jaypee Group.

The company used the funds to fund other ventures.

Early stages of the Jaypee Insolvency case in 2017

Assurances are receive affter the NCLT accepted the petition, Jaypee Infratech was required to

settle the debt within 180 days or pay the remaining balance in full. By August 24, 2017, the

homebuyers and banks of Jaypee might file claims and the window could be extended by an

additional 90 days. Anuj Jain was also named by the NCLT as the CEO of Jaypee Infratech,

with responsibility for managing the insolvency procedures.

CM of UP established a committee

Yogi Adityanath, the chief minister of Uttar Pradesh, created a three-person committee to

investigate the complaints of homebuyers. Members of the group were the state minister for

cane development and sugar mills, Suresh Rana, the urban housing minister Suresh Khanna,
and the industries minister Satish Mahana. After much deliberation, the committee suggested

that co-developers be brought in to finish the projects.

SC limits directors' and MDs' freedom of movement

By October 27, 2017, the Supreme Court ordered JAL to deposit Rs 2,000 crore.

2018

On May 16, the SC stayed Jaypee's liquidation proceedings. SC requested that NCLT

should speed up the case. Jaypee located assets to sell in order to return money to homebuyers.

Lakshadweep Pvt Ltd, a joint venture between Mumbai-based Dosti Realty and Sudhir Valia-

led Suraksha Asset Reconstruction Company, won the competition with a bid of Rs 7,350

crores. Jaypee rejects Lakshadweep's offer because it is too low. The liquidation value of

Jaypee was estimated by two independent valuers to be between Rs 12,469 and Rs 14,798

billion.

2019

NBCC, a state-owned company, and Suraksha Group are vying to buy Jaypee Infratech. JAL

also submitted a proposal, but at this time, lenders had not taken it into account. May 14: The

creditors' panel of the indebted Jaypee Infratech chooses to vote on the amended offer from

NBCC after more than 20,000 home buyers supported it despite bankers' disagreements. The

SC heard an appeal to stop the liquidation of Jaypee Infratech.

The Supreme Court has decided to hear a case brought by a home buyer who wants Jaypee

Infratech Ltd. to undergo a forensic audit and avoid going out of business. Even though the

time for the corporate insolvency resolution procedure has passed, the Supreme Court heard a
petition in the second week of July 2019 asking that Jaypee Infratech Ltd not be put into

liquidation since doing so would result in "irreparable loss" for thousands of homebuyers. The

270-day deadline for finishing CIRP, as instructed by the supreme court, expired on May 6,

2019. NBCC receives authorization to take over indebted Jaypee Infratech : The approval of

financial creditors for state-owned NBCC to acquire indebted Jaypee Infratech Ltd. has

reignited hopes that homebuyers will finally receive their promised apartments over the next

four years. Over 21,000 homebuyers and up to 13 banks were eligible to vote in the

Committee of Creditors (CoC). Lenders hold 42.21% of the vote, fixed deposit holders 0.13%,

and buyers 57.66%. A majority of 66% votes is needed for a proposal to pass. For a period of

two weeks, SC limits new bids for Jaypee Infratech.

For a period of two weeks, the SC has imposed a "status quo," thereby preventing further bids

for the heavily indebted Jaypee Infratech. The SC cited the necessity for time to consider the

changes to the Insolvency and Bankruptcy Code as its justification. The cash-strapped Jaypee

Infratech was subject to new bidding on July 30, 2019, but its promoter Jaypee Group was not

permitted to participate in the auction. The Insolvency and Bankruptcy Code was amended by

the Lok Sabha on August 1, 2019, according to the government, who claimed that the goal of

the law was to prevent enterprises from going out of business.

November: According to the SC, only NBCC and Suraksha Realty would be invited to submit

revised resolution plans. The Supreme Court sets a 90-day deadline for the resolution of

Jaypee's insolvency procedure.

2020

The NCLAT declined to postpone the implementation of the settlement plan put out by NBCC

for the completion of 20,000 Jaypee Group units that were in limbo. Anuj Jain, a resolution

expert, has also been instructed to establish an interim monitoring committee, which will

include members of NBCC and its three key lenders, IDBI Bank, IIFCL, and LIC.

The National Company Law Tribunal's directed through the order that Jaiprakash Associates

Ltd. release land that had been pledged with multiple banks to its indebted company Jaypee

Infratech Ltd. has been reinstated by the Supreme Court.

2021

April 14, 2021, update:

The Jaypee case had a 45-day limit imposed by the Supreme Court (SC) in a prior decision.

The Insolvency Resolution Professional (IRP) can invite modified or new resolution plans

from NBCC, and Suraksha Realty can submit new resolution plans, according to the highest

court's ruling on March 24, 2021. The creditor's committee examined the offers in accordance

with the instructions.

The Corporate Insolvency Resolution Process (CIRP) bidding process was extended by

Jaypee's lenders on May 27, 2021, allowing both businesses to submit their updated offers to

purchase the builder by June 4, 2021.

In a letter to the IRP, it stated that giving the other resolution applicant the opportunity to have

their plan, revision, or addendum taken into consideration after the CoC decided to put our

resolution plan up for voting would be unfair and make a mockery of the entire process.
Resolution Plan by Suraksha for Jaypee

The Sudhir Valia-promoted Suraksha has offered to pay Rs 125 crore upfront to complete the

group's unfinished housing projects and to inject Rs 3,000 crore within 90 days of the approval

date to finish the stalled projects. Suraksha has pledged to deliver all unfinished housing units

of JIL within 42 months. In addition, it will include Rs 300 crores in receivables from

Jaiprakash Associates for unfinished housing projects.

Resolution plan by NBCC for Jaypee

A 42-month timetable has also been set by government-owned NBCC, which has also been

awarded the contract to build the unfinished projects of the now-defunct Amrapali Group, in

its resolution plan for JIL.

Effect on Insolvency Proceedings

Reassessing transactions involving third-party securities: Given the court's justification for

dismissing the JIL Mortgage, it's possible that resolution experts will reevaluate whether the

NCLT should be used in Section 43-based bankruptcy procedures. It is also important to note

that the Supreme Court left open the legal issues of whether or not Sections 44 or 66 of the

IBC applied to the JIL Mortgage, leaving it up to resolution professionals to decide whether or

not third party security transactions should be evaluated in light of these provisions (in

addition to Section 43).

Summary of the NCLT Delhi's order approving Suraksha Realty Limited's Resolution

Plan for Jaypee Infratech Limited's Resolution, which was issued on March 7, 2023
On March 7, 2023, a special NCLT Delhi bench made up of the Hon. President, Justice

Ramalingam Sudhakar, and Shri. L. N. Gupta, an honorary member, approved the resolution

plan submitted by Suraksha Realty for the resolution of Jaypee Infratech Limited. The bench

also instructed the SRA to deliver the units to the home buyers and allottees strictly within the

time frame specified in the resolution plan and approved by this authority. The NCLT also

ordered that the Monitoring Committee oversee and keep an eye on the daily process of

building new units and developing relevant infrastructure while submitting a monthly progress

report to this adjudicating authority.

The CoC accepted the Resolution plan with 98.55% of the vote (Para 14, Page 11).

The plan was challenged by YEIDA (Yamuna Motorway Industrial Development Authority),

ICICI Bank, JAL (Jaiprakash Associates Limited), and Sh. Manoj Gaur.

YEIDA

In response to YEIDA's objection, NCLT determined that YEIDA is not a secured creditor and

that the State Tax Officer v. Rainbow Papers Limited judgement of the Hon'ble Supreme

Court is not applicable to the facts of YEIDA (Paras. 90–91).

ICICI

A grievance from ICICI Bank

A financial creditor who disagreed with the plan, ICICI Bank, was to be compensated by

asserting a security interest in respect of 180 acres of land in Tappal.

The Hon'ble Supreme Court's judgement in the case of Ram Kishun and Ors. vs. State of U.P.

Civil Appeal No. 6204 of 2009 dated 24.05.2012, where the following is noted, was held by

the NCLT with regard to the objection of ICICI Bank:

It goes without saying that public funds should be recovered as soon as possible. However,

this does not imply that the financial institutions, which are only interested in getting their

loans paid back, may act like real estate agents or dispose of the secured assets in any way that

is arbitrary or unreasonable, blatantly violating legal provisions.

Hence, The NCLT rejected the ICICI Bank's application.

JAL/ Manoj Gaur

Following its consideration of all of JAL's arguments, NCLT reached the following

conclusion.

Referring to the observations made by the Hon. Supreme Court in the Jaypee Kensington

(Supra) case regarding the role of the adjudicating authority in maximising asset value:

In accordance with the Code's design, the determination of whether a particular resolution

plan and its recommendations will result in the asset value being maximised or not will always

be subjective, and the Committee of Creditors will be the only group to investigate and make

this decision. The adjudicatory process, whether by the Adjudicating Authority or the

Appellate Authority, cannot enter into any quantitative analysis to adjudicate as to whether the

prescription of the resolution plan results in the maximisation of the value of assets or not

when the Committee of Creditors takes the decision in its commercial wisdom and by the

necessary majority and there is no valid legal reason to question the decision so taken by the
Committee of Creditors. A case of interference in the decision made by the Committee of

Creditors in its business wisdom is not made out by the broad representations and complaints

made in connection to this aspect of value maximisation.

Conclusion

For upcoming insolvency cases, particularly those involving the real estate industry, the

Jaypee Infratech case has established important precedents. The ways in which resolution

proposals are assessed and homebuyer rights are upheld have been impacted by the court's

actions and directives. This case has raised awareness of the difficulties facing the real estate

industry and the requirement for industry-specific measures in insolvency laws.

The insolvency case served as a showcase for the difficulties and complications involved in

handling significant insolvency cases, particularly those involving the real estate industry. The

case demonstrated the significance of prompt resolution, improved protections for

homebuyers, open review procedures, and ongoing insolvency framework enhancement to

successfully address sector-specific difficulties.