Insolvency process: NCLAT stays NCLT order on Jaiprakash Associates land

In a relief to Jaiprakash Associates, the National Company Law Appellate Tribunal today stayed the NCLT order which had directed the realty firm to return nearly 760-acre land to its subsidiary Jaypee Infratech.
 

The appellate tribunal also admitted the petition filed by the three lenders — Axis Bank, Standard Chartered Bank and ICICI Bank, and issued notices to the resolution professional (RP) of the Jaypee Infratech.
 

A two member NCLAT bench headed by  said that the finding of NCLT that fraud has been committed on the mortgaged property by Jaiprakash Associates to the banks was not based on ‘evidence’ or ‘in accordance with law’.
 

“The impugned order dated.... passed by designated authority (NCLT) Allahabad in so far as direction to ROC is concerned remains stayed,” the appellate tribunal said.
 

NCLAT has also said that Anuj Jain, RP of debt-ridden Jaypee Infratech, may file reply, including evidence if any that mortgage is fraudulent or that mortgage was created in collusion with the directors or partners of the company.
 

It further said: “During the pendency of appeal Corporate insolvency resolution process (CIRP) would continue”.
 

During the proceedings, the tribunal also observed: “NCLT is not a civil court...it has no right to declare an instrument illegal”.
 

NCLAT has posted the matter on July 13 for next hearing. Passing an order on May 16 NCLT had asked JAL to return nearly 760 acre land to its subsidiary Jaypee Infratech, declaring the transfer of the land as “fraudulent” and “undervalued”.
 

NCLT had directed JP Group’s flagship firm Jaiprakash Associates to release and discharge interest created over the patch of land to lenders, including ICICI Bank.
 

The order had come over a petition filed by Jaypee Infratech’s resolution professional (RP) Anuj Jain in the NCLT, seeking direction over the transactions entered by the company’s promoters, creating mortgage on its 858 acre to secure debt for Jaiprakash Associates.
 

In the 77-page order, the tribunal had listed out the details of six parcels of land totalling 759 acres land in Agra and Aligarh district of Uttar Pradesh. However, the NCLT directed to return only 759 acre out of total 858 acre as it found that the transaction related to 100 acre in Aligarh district was entered before the start period of CIRP .