NCLAT Delhi Admits YEIDA’s Appeal Against Jaypee Infratech Resolution Plan On Additional Compensation To Farmers
The National Company Law Appellate Tribunal (“NCLAT”), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson) and Shri Barun Mitra (Technical Member), while adjudicating an appeal filed in Yamuna Expressway Industrial Development Authority v Monitoring Committee of Jaypee Infratech Ltd. & Ors., has admitted the appeal filed by the Yamuna Expressway Industrial...
The National Company Law Appellate Tribunal (“NCLAT”), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson) and Shri Barun Mitra (Technical Member), while adjudicating an appeal filed in Yamuna Expressway Industrial Development Authority v Monitoring Committee of Jaypee Infratech Ltd. & Ors., has admitted the appeal filed by the Yamuna Expressway Industrial Development Authority (“YEIDA”) against the approved resolution plan of M/s. Suraksha Realty Ltd. and M/s. Lakshdeep Investments & Finance Pvt. Ltd. for Jaypee Infratech Ltd. YEIDA has challenged the approved Resolution Plan on limited ground of allocation of Rs. 10 Lakhs as against a claim for Rs. 1,689.017 Crores for paying additional compensation to the farmers.
The Bench has passed an interim order stating, ““We are of the view that the impugned judgment of the Adjudicating Authority, insofar as determination of the claim of the Appellant regarding additional compensation, shall not be relied for any determination between the Appellant and the Corporate Debtor regarding liability and entitlements of respective parties in respect of bearing of the additional farmers compensation claim.”
It has been clarified that during the pendency of the appeal, the interim order may not be treated as any restraint in implementation of the other aspects of the Resolution Plan.
Background Facts
Jaypee Infratech Limited (“Corporate Debtor”) is an infrastructure development company which is engaged in the development and maintenance of the Yamuna Expressway, on a build-transfer-operate basis, as well as development of five integrated townships along the Expressway.
YEIDA had acquired the land belonging to farmers and the latter had claimed additional compensation. An Expert Committee constituted by the State Government submitted a Report recommending grant of additional compensation to the extent of 64.7%. Accordingly, the State Government issued a Government Order dated 29.08.2014 for providing additional compensation for 64.7%. YEIDA leased the concerned land to the Corporate Debtor for development of the real estate project.
In an arbitration proceeding, the award was delivered in favour of the Corporate Debtor while holding that Corporate Debtor is not liable to pay additional compensation. The Award was challenged by YEIDA before the Commercial Court under Section 34 of the Arbitration and Conciliation Act, 1996, which is pending adjudication.
The Corporate Debtor was admitted into Corporate Insolvency Resolution Process (“CIRP”) on 09.08.2017. Subsequently, a consortium comprising of M/s. Suraksha Realty Limited and M/s. Lakshdeep Investments and Finance Pvt. Ltd. (collectively “Successful Resolution Applicant”) submitted its Resolution Plan for the Corporate Debtor.
The total financial outlay of the Resolution Plan amounts to Rs. 20,363.36 Crores. YEIDA being an Operational Creditor, was proposed to be paid Rs. 20 Lakhs as against an outstanding of Rs. 6,111.60/- Crores. The Plan proposed to pay Rs. 10 Lakhs to YEIDA towards the Additional Compensation of Rs. 1,689 Crores payable to the farmers and further Rs. 10 Lakhs towards the claim of External Development Charges.
The Committee of Creditors approved the Plan with 98.66% votes and passed the Plan. Accordingly, the Interim Resolution Professional of Corporate Debtor filed an application before the NCLT for approval of the Resolution Plan.
Objections Raised By YEIDA
Yamuna Expressway Industrial Development Authority (YEIDA) raised the following objections to the Resolution Plan:
- Meagre provision of Rs. 10 Lakhs for payment to YEIDA towards the claim of External Development Charges, results in tinkering with the terms of the Concession Agreement.
- Meagre provision of Rs. 10 Lakhs in the Resolution Plan for payment to YEIDA towards the Additional Compensation of Rs 1689 Crores payable to the farmers violates the Supreme Court judgment in Jaypee Kensington Boulevard Apartments Welfare Association & Ors. Vs. NBCC (India) Ltd. & Ors., Civil Appeal No. 3395 of 2020;
- The Reliefs and Concession sought in the Resolution Plan tinkers with the terms of the Concession Agreement; and
- The Resolution Applicant cannot transfer and pass on beneficial interest in land parcels to the Assenting Financial Creditors.
Proceedings Before NCLT
The Bench dismissed the objections raised by YEIDA and upheld payment of Rs. 10 Lakhs each towards External Development Charges (EDC) of YEIDA and towards Additional Compensation payable to farmers. It was further held that the transfer of beneficial interest to the Assenting Financial Creditors has been proposed in accordance with the terms of the Concession Agreement. The NCLT approved the Resolution Plan submitted by Successful Resolution Applicant for the Corporate Debtor.
Proceedings Before NCLAT
YEIDA field an appeal before the NCLAT against the NCLT’s order approving the resolution plan. However, the challenge is confined to the extent the NCLT upholds the provision of Resolution Plan dealing with the claims of YEIDA.
The NCLAT Bench has admitted the appeal and issued notice to the Respondents. The homebuyers have also been granted liberty to file intervention application in the appeal.
The following interim order has been passed:
“We are of the view that the impugned judgment of the Adjudicating Authority, insofar as determination of the claim of the Appellant regarding additional compensation, shall not be relied for any determination between the Appellant and the Corporate Debtor regarding liability and entitlements of respective parties in respect of bearing of the additional farmers compensation claim……………..In the meantime, we direct that impugned order dated 07.03.2023 insofar as it determines the claim of the Appellant regarding additional farmers compensation shall not be relied in determination of rights and liabilities of the Appellant and the Corporate Debtor in the pending proceedings in Arbitration Case No.03 of 2020 pending before the Commercial Court.”
It has been clarified that during the pendency of the appeal, the interim order may not be treated as any restraint in implementation of the other aspects of the Resolution Plan.
The next date of hearing is 29.05.2023.
Case Title: Yamuna Expressway Industrial Development Authority v Monitoring Committee of Jaypee Infratech Ltd. & Ors.
Case No.: Company Appeal (AT) (Insolvency) No. 493 of 2023
Counsel For Appellant: Shri N. Venkataraman, ASG & Mr. Gopal Jain, Sr. Advocate with Mr. Amar Gupta, Mr. Divyam Agarwal and Mr. Aniket Aggarwal, Advocates.
Counsel for Respondents: Mr. Sumant Batra, Mr. Sanjay Bhatt, Ms. Ruchi Goyal, Ms. Aishwary, Advocates for R-1 (Monitoring Committee). Mr. Amit Sibal, Sr. Advocate with Ms. Geetika Sharma. Mr. Sagar Bansal, Mr. Eshna Kumar, Mr. Aditya Maheshwari, Mr. Paras Mittal and Ms. Kashish Chauhan, Advocates for R-2&3. Mr. Amit Kumar Mishra, Ms. Evneet Uppal, Ms. Gauri Goburdhun, Mr. Kunal Chatterji, Advocates for Intervenors.