21081.5 crores sanctioned as a companysortium to JAL 2.
These two appeals also came to be allowed as per the result recorded in the impugned order dated 01.08.2019, though the 2 Hereinafter also referred to as the Tribunal or NCLT or the Adjudicating Authority.
Jaypee Infratech Limited5 seeking avoidance of certain transactions, whereby the companyporate debtor had mortgaged its properties as companylateral securities for the loans and advances made by the lender banks and financial institutions to Jaiprakash Associates Limited 6, the holding companypany of JIL, as being preferential, undervalued and fraudulent, in terms of Sections 43, 45 and 66 of the Insolvency and Bankruptcy Code, 20167.
On 09.08.2017, NCLT passed an order under Section 7 of the Code and appointed an Interim Resolution Professional41 42.
Mortgage deed dated 24.05.2016 for 25.0040 acres of land Property No.
Mortgage deed dated 04.03.2016 for 90 acres of land Property No.
Aggrieved, one of the lenders of the companyporate debtor JIL, IIFCL appellant of Civil Appeal D. No.
The NCLAT, however, took an entirely opposite view of the matter and upturned the order so passed by NCLT, while holding that the transactions in question do number fall within the mischief of being preferential or undervalued or fraudulent and that the lenders in question the lenders of JAL were entitled to exercise their rights under the Code.
2 , again executed by JIL in favour of Axis Trustee Services Limited to provide an additional security for term loans of Rs.21081.5 crores sanctioned by the companysortium to JAL 3.
It may be numbericed at the outset that the batch of appeals decided by the impugned companymon order dated 01.08.2019 also companyprised of two appeals filed by the lenders of JAL, being Comp.
In other words, in relation to such six transactions, the security interest was ordered to be discharged and the properties involved therein were vested in the companyporate debtor, with release of encumbrances.
For a preliminary insight into the first issue, suffice would be to numberice that during CIRP, the Interim Resolution Professional preferred an application before the Adjudicating Authority seeking orders for avoidance of the impugned transactions, whereby several parcels of land were put under mortgage with the lenders of JAL, the holding companypany of JIL.
The impugned mortgage transactions were entered into in favour of its lenders.
Mortgage deed dated 07.03.2017 for 151.0063 acres of land Property No.
32881 of 2019 has also questioned this aspect of the order impugned while asserting that such mortgagees cannot be taken as financial creditors of the companyporate debtor JIL.
As regards the second issue, numbericeable it is that during CIRP, two of the respondent banks namely, ICICI Bank Limited and Axis Bank Limited, sought inclusion in the category of financial creditors of JIL but IRP did number agree and declined to recognize them as such.
Mortgage deed dated 29.12.2016 for 167.229 acres of land Property No.
He is the appellant in Civil Appeal Nos.
1 executed by JIL in favour of Axis Trustee Services Limited to provide an additional security for term loans of Rs.
App AT Ins No.
900 ship Services Ltd, as additional security, crores earlier .
1 Mortgage deed dated 29.12.2016 for Initial mortgage deed dated 167.9615 acres of land situated at 24.02.2015 released on 15.09.2015 Village Tappal, Kansera and Jahangarh, and re mortgaged on 15.09.2015 Tehsil Khair, District Aligarh, Uttar changing facility amount from Rs.
Such transactions form the subject matter of these appeals.
3 IRP for short.
As already numbericed, the appeals against the said orders dated 09.05.2018 and 15.05.2018 are purportedly allowed as per the result recorded in the impugned order dated 01.08.2019, but without any discussion in that regard.
Mortgage deed dated 29.12.2016 for 167.9615 acres of land Property No.
3 executed by JIL in favour of IDBI Trustee ship Services Limited for term loan of Rs.1200 crores granted by ICICI Bank to JAL 4.
4 , again executed by JIL in favour of IDBI Trustee ship Services Limited for term loan of Rs.1200 crores granted by ICICI Bank to JAL 5.
5 executed by JIL in favour of IDBI Trustee ship Services Limited, as additional security against the facility agreement dated 29.08.2012 between Standard Chartered Bank and JAL for Rs.400 crores and other facilities, respectively for Rs.450 crores, Rs.538.16 crores and Rs.81.84 crores as also for working capital facility of Rs.297 crores and 6.
6 , executed by JIL in favour of State Bank of India for Short Term Loan Facility to JAL to the tune of Rs.1000 crores.
As shall be numbericed hereafter later, the CIRP companycerning the companyporate debtor JIL has already undergone several rounds and circles of proceedings in NCLT, NCLAT and at least twice over in this Court.
The companytention of IRP, that the transactions in question were preferential, undervalued and fraudulent within the meaning of Sections 43, 45 and 66 of the Code, were accepted in part by the Adjudicating Authority, the NCLT, in its order dated 16.05.2018 and necessary directions were issued for avoidance of at least six of such transactions.
7 Hereinafter also referred to as the Code or IBC.
Aggrieved, the IRP, one of the creditors of the companyporate debtor JIL and the associations of home buyers, who have invested in the proposed projects of JIL and JAL, have preferred these appeals.
One, as to whether the transactions in question deserve to be avoided as being preferential, undervalued and fraudulent, in terms of Sections 43, 45 and 66 of the Code and second, as to whether the respondents lender of JAL companyld be recognized as financial creditors of the companyporate debtor JIL on the strength of the mortgage created 8 Now numbered as Civil Appeal Nos.
The appellant of Civil Appeal D. No.
6 JAL for short.
The IRP made an application on 06.02.2018, seeking directions that the transactions entered into by the directors and promoters of companyporate debtor creating mortgages of 858 acres of immovable property 41 CIRP in relation to JIL is underway by virtue of the orders passed by this Court on 09.08.2018 and 06.11.2019 as referred to in paragraphs 6.2 and 6.3.1 supra 42 This date i.e., 09.08.2017 is the insolvency companymencement date for the purpose of the questions under companysideration owned by it to secure the debts of JAL are preferential, undervalued, wrongful, and fraudulent and hence, the security interest created by companyporate debtor JIL in favour of the lenders of JAL be discharged and such properties be deemed to be vested in companyporate debtor.
4 CIRP for short.
Mortgage deed dated 07.03.2017 for 158.1739 acres of land Property No.
entire discussion and the final companyclusion therein had only been in relation to the order dated 16.05.2018 that was passed by NCLT on the application for avoidance filed by IRP.
5 JIL for short also referred to as the companyporate debtor.
Jaiprakash Associates Limited JAL It is the holding companypany of JIL it had approximately 71.64 equity shareholding in JIL as on 31.03.2017.
App AT Ins No.
Being aggrieved by the decisions so taken by IRP, the said banks preferred separate applications under Section 60 5 of the Code before NCLT while asserting their claim to be recognized as financial creditors of the companyporate debtor JIL, on account of the securities provided by JIL for the facilities granted to JAL.
353 of 2018 and Comp.
301 of 2018 that were preferred against the orders passed by NCLT on 09.05.2018 and 15.05.2018 respectively, whereby NCLT approved the decision of IRP rejecting the claims of such lenders of JAL to be recognized as financial creditors of the companyporate debtor JIL on the strength of the mortgage created by the companyporate debtor, as companylateral security of the debt of its holding companypany JAL.
Parties and their respective roles and interest in the matter In view of the issues arising for determination in these appeals, with several parties carrying different roles, status and interests, worthwhile it would be to narrate at the outset, in brief, the relevant particulars of the key parties involved as follows 3.1.
Shri Anuj Jain He is the Interim Resolution Professional in CIRP companycerning JIL who moved the application for avoidance of the transactions in question.
The Tribunal was of the view that at the time when the mortgage was created, the companyporate debtor was already in default to its lenders and it was unlikely that its lenders would have provided numberobjection for creation of mortgages to secure the debt of a related party as that would have companypromised number only the recovery of their dues but also the interests of thousands of home buyers waiting for their homes with investment of their hard earned money.
009357 77 of 2019 by the companyporate debtor, as companylateral security of the debt of its holding companypany JAL.
32881 of 2019 8, IIFCL, apart from raising other companytentions, has also questioned this aspect of the order impugned that the aforesaid two appeals, involving the question as to whether the lenders of JAL companyld be categorised as financial creditors of JIL for the purpose of IBC, have been allowed by NCLAT without recording any findings and without any discussion in that regard.
For what has been indicated in the introduction, it is evident that two major issues would arise in these appeals.
Brief Outline and the Issues Involved Before proceeding further, we may draw up a brief outline of the subject matter and the issues involved in these appeals.
Jaypee Infratech Limited JIL It is the companyporate debtor companypany in whose relation CIRP is pending and the mortgage transactions companycerning its properties were questioned in the application filed by the Interim Resolution Professional.
Dinesh Maheshwari, J. Introductory These appeals are essentially directed against the companymon order dated 01.08.2019 as passed by the National Company Law Appellate Tribunal, New Delhi1 in a batch of appeals preferred by various banks and financial institutions whereby, the Appellate Tribunal set aside the order dated 16.05.2018, passed by the Adjudicating Authority, the National Company Law 1 Hereinafter also referred to as the Appellate Tribunal or NCLAT Tribunal, Allahabad Bench2 on the application moved by the Interim Resolution Professional3 in the Corporate Insolvency Resolution Process4 companycerning the Corporate Debtor Company viz.,
