NCLAT Refuses Stay On Jaiprakash Associates' Insolvency Proceedings
Rajesh Kumar
12 Jun 2024 12:30 PM GMT
The National Company Law Appellate Tribunal (NCLAT) has declined to grant a stay on the National Company Law Tribunal's (NCLT) order admitting Jaiprakash Associates Limited (JAL) into the insolvency resolution process. The Allahabad bench NCLT held that the restructuring proposals and the financial health of JAL were insufficient reasons to delay insolvency proceedings. In 2017,...
The National Company Law Appellate Tribunal (NCLAT) has declined to grant a stay on the National Company Law Tribunal's (NCLT) order admitting Jaiprakash Associates Limited (JAL) into the insolvency resolution process.
The Allahabad bench NCLT held that the restructuring proposals and the financial health of JAL were insufficient reasons to delay insolvency proceedings. In 2017, JAL was listed among the 26 major loan defaulters by the Reserve Bank of India, making it a prime candidate for bankruptcy proceedings. Other entities within the Jaypee Group, such as Jaypee Cement Corporation and Jaypee Infratech, are also undergoing insolvency proceedings.
During the hearing on June 10, the NCLAT took note of the submission made by the Interim Resolution Professional (IRP) that the ongoing projects and the workforce of 25,000 employees would remain unaffected, as the IRP intended to continue the company's operations as a going concern.
The appeal was filed by Sunil Kumar Sharma, a suspended director of JAL, against the admission of the insolvency petition by the NCLT. He argued that the order of the NCLT jeopardized numerous infrastructure projects both in India and abroad. He highlighted that JAL had proposed a one-time settlement (OTS) plan, which could have resolved the matter within a short period. He contended that JAL already deposited Rs 200 crore out of the Rs 1200 crore it owed to ICICI Bank.
On the other hand, ICICI Bank contended that the insolvency proceedings should not be stayed. It pointed out that JAL owed over Rs 30,000 crore to various banks, including Rs 1,200 crore to ICICI Bank. Staying the proceedings, according to the bank, would set a wrong precedent and hinder the resolution of the debt issue that has been pending for a decade.
The NCLAT observed that the IRP assured that ongoing projects and the workforce of 25,000 employees would not be adversely affected. The NCLAT decided not to grant a stay on the insolvency proceedings. Instead, it directed the banks to respond to the appeal and consider JAL's OTS offer. The case is scheduled for further hearing on June 24.
Case Title: Sunil Kumar Sharma vs ICICI Bank Ltd & Anr
Case Number: COMPANY APPEAL (AT)(Insolvency) No.1158-1162 of 2024
Advocate for the Appellant: Mr. Sandeep Sethi, Senior Advocate Mr. Abhishek Anand, Mr. Karan Kohli, Ms Palak Kalra, Ms Nisha M Kumar, Ms Riya Kumar, Ms Ridhima, Advocates.
Advocate for the Respondent: Mr. Sanjiv Sen, Sr. Advocate, Mr. Madhav Kanoria, Ms Neha Shivhare, Ms Anjali Singh, Pragyan M;ishra, Mr Abhijeet Kashyap, Advocates. Mr. Sunil Fernandes, Sr. Advcoate, Mr Vaijayant Paliwal, Mr Anoop Rawat, Mr Nikhil Mathur, Ms Kirti Gupta, Mr. Aditya Marwah, Mr. Saurav Panda, Ms Anushri Joshi Advocates for R2. Mr Bhuvan Nadan, Mr Pradeep Mahajan Mr. GP Madan, Mr Tushar Mahajan, Advocates.
Date of Judgment: 10.06.2024
