NCLAT suggests terms for fresh bidding in Jaypee Infra case, shields buyers

Builder-buyer agreements not to suffer any changes; tribunal says will hear banks on July 22 on exclusion of 250 days from CIRP process

With the banks having rejected state-owned NBCC India’s plan for Jaypee Infratech, the National Company Law Appellate Tribunal (NCLAT) on Wednesday suggested terms for fresh bids to be considered for the latter. One of the primary conditions, the appellate tribunal observed, should be that the builder-buyer agreements that were originally signed must not undergo any changes.

“All the allottees will be given flats according to their builder-buyer agreements. The contract terms cannot be changed. If the allottee is not present, the Committee of Creditors (CoC) will decide on how the flat is to be adjusted,” a two-member Bench of the NCLAT led by Chairperson Justice S J Mukhopadhaya said.

Other than this, the land attached to the buildings and the common area amenities will also remain the allottees, the NCLAT observed would be a part of the terms for new bidders. Inviting fresh bids would mean that the door would be open for all and not just a select few, the appellate tribunal said. Apart from this, it also asked the banks, led by IDBI Bank, to file an affidavit listing out new terms and conditions if a fresh round of bidding was to be conducted.

The NCLAT will also consider on July 22, the next date of hearing, the plea of the Jaypee Infratech’s lenders to exclude a period of nearly 250 days from being considered a part of the Corporate Insolvency Resolution Process (CIRP). This period of nearly 250 days, between September 17, 2018 and June 4, 2019 was taken by the National Company Law Tribunal (NCLT) to decide on the voting rights of the homebuyers.

Following an application moved by the homebuyers, a two member bench of NCLT had given split opinion on whether homebuyers in the Jaypee Infratech case should be considered a part of the CoC and whether they should be construed as one or a be segmented class-wise, for computation of voting share. The application, initially moved in September 2018, was finally decided when a reference bench agreed with one of the members’ findings via an order on June 4 this year.

On Wednesday, the counsel for Adani also sought to be heard, following which the NCLAT said that company should improve its bid and agree to the terms and conditions set by the appellate tribunal if it wanted its bid to be considered. Gautam Adani-led Adani group had made non-binding bid to acquire Jaypee Infratech. The group had proposed to infuse up to Rs 1,700 crore to expedite the construction of stuck housing projects and deliver unfinished flats within nine months.

Adani had also offered to pay Rs 1000 crore in two tranches to settle claims of workmen and other financial creditors, besides meeting cost for insolvency proceedings. During the previous hearing on July 2, the NCLAT had observed that banks should not have engaged in “backdoor” negotiations with Adani group.

If the group had a good proposal to finish the project, it should file an intervention application and appear before the appellate tribunal, it had then said. It had then also said it would hear the banks on issues they had against NBCC’s plan and whether they could modify it appropriately so that it could meet the needs of all the stakeholders.

Jaypee was taken to the National Company Law Tribunal (NCLT) by an IDBI Bank-led consortium for failing to repay debt worth nearly Rs 24,000 crore. In the first round of insolvency proceedings conducted last year, the Rs 7,350-crore bid of Lakshdeep, part of Suraksha Group, was rejected by lenders. In October 2018, the RP of the company started a second round of bidding to revive Jaypee.