JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE ASSOCIATION & ORS. v. NBCC (INDIA) LTD. & ORS.

A We would intend to make it absolutely clear that, for the present, we are only concerned with those homebuyers who intend to have refund. In the next phase, we may consider the grievances, if any, of the homebuyers who intend to have the flats. In that regard, we think it appropriate to hear Mr Parag P. Tripathi, learned Senior Counsel appearing for Interim Resolution Professional (IRP) and Mr Jayant Bhushan and Mr Sanjay Hegde and others, learned Senior Counsel appearing for some Associations of homebuyers who intend to have their flats. As our order for deposit of Rs 2000 crores has not been complied with, we intend to pass the following directions: (a) JAL shall deposit a further sum of Rs 200 crores in two instalments, as agreed by the Managing Director who is present in Court today. The first instalment of Rs 100 crores shall be deposited by 15-4-2018 and the second instalment of Rs 100 crores shall be deposited by 10-5- 2018; (b) It is submitted by Mr Pawanshree Agrawal, learned Amicus Curiae that as per his portal an amount of Rs 1300 crores, at present, is required to be refunded towards the principal sum for those homebuyers who, as of today, seek refund. The figure of Rs 1300 crores is as per the record of JAL. In view of the aforesaid, we would require Mr Agrawal to prepare a projectwise chart indicating the number of persons in respect of that project and the stage of completion of the respective projects so that appropriate order can be passed for disbursement of the amount on pro rata basis to the homebuyers; (c) Mr Agrawal, learned Amicus Curiae shall keep the portal operational. However, the requests of only those persons on the portal who have sought refund, as of today will be considered at this stage; (d) The submission of the homebuyers who are seeking refund is that the developer is making demands towards monthly instalments. We direct that no demand towards outstanding or

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 647 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

future instalments shall be raised by the developer to the flat buyers who have, as of today, expressed the option to obtain refund. The demands raised by the developer in respect of the homebuyers who have already opted for refund till today, shall remain stayed; (e) The IRP may proceed to finalise the resolution plan but the same shall be implemented after taking leave of this Court. B (f) The National Company Law Tribunal (NCLT) shall decide subject to the directions which we have given hereinabove. Before we fix the next date, we must note that we have been apprised that Mr Shekhar Naphade, learned Senior Counsel who was appointed to espouse the cause of the homebuyers before the Committee of Creditors has expressed his inability to continue as such. In view of the aforesaid, a need has arisen to appoint someone else in place of Mr Shekhar Naphade and accordingly we appoint Mr Gaurav Agrawal, Advocate. It is further clarified that Mr Gaurav Agrawal shall be guided by our previous orders. Let the matter be listed on 16-4-2018 so that this Court can take note of whether the developer has complied with the direction of depositing the first instalment and to pass directions with regard to disbursement of the amount deposited on pro rata basis on the basis of the report submitted by Mr Pawanshree Agrawal.” (emphasis in bold supplied) 20.7. On 16.04.2018, apart from dealing with two applications filed by the Managing Director and the Joint Managing Director of JAL F seeking permission to travel abroad, this Court took note of the deposit of INR 100 crores by JAL and directed that the second instalment of INR 100 crores be deposited by 10.05.2018. While reiterating liberty to IRP to finalise the resolution plan in terms of the earlier order, this Court also extended liberty to JAL to submit a representation to the competent authority without expressing any opinion on that count and leaving the G representation to be considered in accordance with law.33 33 As discussed a little later, it has appeared in the final judgment passed in the case of Chitra Sharma that the referred representation had been in relation to the prayer of JAL to participate as one of the intending bidders in the resolution plan which was being formulated by the IRP; and such a participation by JAL was impermissible in view of Section 29A introduced to the Code. H

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A 20.8. Thereafter, on 16.05.2018, apart from dealing with another application filed by an independent Director of JAL seeking permission to travel abroad, this Court took note of the fact that a sum of INR 750 crores was lying in deposit and it was observed that the same ‘has to be disbursed on pro rata basis amongst the homebuyers’. It was also directed that JAL, the holding company of JIL, shall deposit a further sum of INR 1,000 crores ‘jointly and severally’ by 15.06.2018 subject to which, stay was granted over further proceedings, only insofar as concerning the liquidation. The relevant part of this order dated 16.05.2018 reads as under: - “Having heard the learned counsel for the parties at length, it is directed that Jaiprakash Associates Ltd. (JAL), the holding company of Jaypee Infratech Ltd. (JIL) shall deposit a further sum of Rs 1000 crores jointly and severally by 15- 6-2018. Subject to the said deposit, there shall be a stay of further proceedings only insofar as the liquidation is concerned. In the meantime, Interim Resolution Professional (IRP) shall remain in management. If the amount is not deposited by 15-6-2018, the statutory proceedings shall continue. As far as Rs 750 crores, which is lying in deposit is concerned, it has to be disbursed on pro rata basis amongst the homebuyers.” E (emphasis in bold supplied) 20.9. Thereafter, on 13.07.2018, this Court took note of certain proposals made by JAL, which were opposed by the petitioners. While observing disinclination to entertain such proposals, this Court posted the matters on 16.07.2018 ‘exclusively for the purpose of considering the issue of the rights of the homebuyers and the capability of JAL and JIL to construct the projects’.

21Copy pinpoint21. After the aforesaid proceedings, the petitions were finally heard and disposed of by this Court by way of the judgement dated 09.08.2018. Before taking note of the significant features and attributes of the final judgement in the case of Chitra Sharma, but to keep feasible track of the chronology of events, we may indicate that parallel to the proceedings in this Court, NCLT continued with CIRP concerning the corporate debtor JIL and in that process, passed orders on 09.05.2018 and 15.05.2018, approving the decision of IRP rejecting the claims of two lenders of JAL to be recognised as financial creditors of the corporate debtor JIL on the H

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 649 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

strength of the mortgage created by the corporate debtor JIL as collateral security of the debts of its holding company JAL. Thereafter, on 16.05.2018, NCLT accepted an application, that was moved by IRP on 06.02.2018, for avoidance of certain transactions whereby the corporate debtor JIL had mortgaged its properties as collateral securities for the loans and advances made by the lender banks and financial institutions to JAL, as being preferential, undervalued and fraudulent. These aspects were finally dealt with by this Court in the judgement dated 26.02.2020, as shall be noticed later.

22Copy pinpoint22. We may now revert to the final judgement dated 09.08.2018 in the case of Chitra Sharma, and take into account the relevant features, which do have a bearing on the issues raised in the present litigation. C

22.1. In final judgement dated 09.08.2018 in the case of Chitra Sharma (supra), this Court took note of the past proceedings and also the fact that when resolution plans were considered and examined by the CoC, JAL too submitted its proposals which were rejected in view of the bar contained in Section 29A IBC as also for the reason that JAL D failed to convince the CoC of its ability to tie up the funds for construction. However, even the other plans could not muster the support of the requisite majority in CoC. Accordingly, IRP informed NCLT that no resolution plan was approved by the CoC even within the extended period for completing the CIRP, which came to an end on 12.05.2018. This Court E took note of the mandate of Section 33 IBC whereby liquidation follows upon rejection of a resolution plan but then, noticed unanimity of the parties during the course of hearing that the liquidation of JIL was not going to subserve the interests of the homebuyers who had made valuable investments by contributing their hard-earned money in the hope of obtaining a roof over their heads. This Court also observed that a home for the family was considered to be a part of the right to life and took note of the appeal made by the homebuyers to ensure complete justice rather than leaving them at the mercy of the liquidation process. While appreciating the substance of that plea, this Court nevertheless indicated the need to abide by the discipline of law and thereafter, proceeded to take a comprehensive view of the scheme of IBC; and also underscored the fact that though IBC, as originally enacted, did not contain express provisions in relation to the interests of homebuyers but, their concerns were sought to be assuaged in the amendment brought about by the Insolvency and Bankruptcy (Amendment) Ordinance, 2018, which came H

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A into force on 06.06.2018 and whereby, the homebuyers were expressly brought within the purview of financial creditors under the IBC. This Court pointed out that now being duly recognised as financial creditors, the homebuyers were necessarily a part of the CoC, constituted in terms of Section 21 IBC. This Court also took note of the relevant provisions in the Regulations relating to the voting share of the respective financial creditors in CoC and selection of an authorised representative34 to represent financial creditors in a particular class. 22.2. Proceeding further, this Court extensively referred to a variety of submissions made on behalf of JAL, seeking to explain the perspective of the developers with reference to the projects already accomplished by them and the projects being under execution; and their proposal to deposit post-dated cheques to the tune of INR 600 crores with the registry of this Court, if they were allowed to dispose of some of the assets. The Court also took note of the fact that JAL had sought directions to NCLT to decide an application for sanctioning the scheme of arrangement, propounded pursuant to a restructuring agreement accepted by 32 creditors. The request of JAL was to continue with the stay of liquidation proceedings against its deposit of post-dated cheques of INR 600 crores and also to stay the directions of this Court whereby IRP was allowed to remain in management of the corporate debtor. The Court recorded the propositions of JAL as follows: - E “36. …..JAL has sought to assure that it would double the strength of existing workers for the construction of its projects. JAL has also stated that it would deposit postdated cheques of Rs 600 crores with the Registry of this Court. However, this is subject to the condition that the Court should allow it to dispose of “identified F cement assets” including its cement plan (sic) at Rewa in Madhya Pradesh. In order to enable it to do so, JAL has sought a direction to the NCLT at Allahabad to decide the application filed before it for sanctioning a scheme of arrangement, propounded pursuant to a master restructuring agreement signed and accepted by the G 32 creditors. JAL seeks to continue the stay of liquidation proceedings against its deposit of postdated cheques of Rs 600 crores. JAL also seeks a stay on the direction of this Court allowing the IRP to remain in management.”

34 H ‘AR’ for short.

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 651 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

22.2.1. After careful consideration, this Court rejected the proposal A submitted on behalf of JAL while explaining that accepting any such proposal on behalf of JAL would cause serious prejudice to the discipline of IBC. In that regard, this Court referred to the provisions contained in Section 29A of the Code and the background in which certain specified persons were made ineligible to be the resolution applicants.35 This Court, B inter alia, observed and explained as under: - “39. Clauses (c) and (g) of Section 29-A would operate as a bar to the promoters of JAL/JIL participating in the resolution process. Under clause (c), a person who at the time of the submission of the resolution plan has an account which has been classified a non-performing asset under the guidelines of RBI or of a financial regulator is subject to a bar on participation for a stipulated period. Under clause (g), a person who has been a promoter or in the management or control of a corporate debtor in which a preferential transaction, undervalued transaction, extortionate credit transaction or fraudulent transaction has taken place and in respect of which an order has been made by the adjudicating authority under the IBC is prohibited from participating. The Court must bear in mind that Section 29-A has been enacted in the larger public interest and to facilitate effective corporate governance. Parliament rectified a loophole in the Act which allowed a backdoor entry to erstwhile managements in the CIRP. Section 30 IBC, as amended, also clarifies that a resolution plan of a person who is ineligible under Section 29-A will not be considered by the CoC:” 22.3. Apart from the above, this Court also took note of various grounds urged on behalf of the homebuyers in opposition to the proposal so submitted and, after examining the matter in its entirety, this Court F was convinced that JAL/JIL were lacking in financial capacity and resources to complete the unfinished projects; and allowing them to

35 We may point out that Section 29A was inserted to the Code along with a few other amendments by way of the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2017, promulgated on 23.11.2017. The Ordinance stated in its Preamble, inter alia, that G the same was being promulgated because it was considered necessary to provide for prohibition of certain persons from submitting a resolution plan who, on account of their antecedents, may adversely impact the credibility of the process under the Code. This Ordinance later on took the shape of the Insolvency and Bankruptcy Code (Amendment) Act, 2017 (No. 8 of 2018) that came into force with retrospective effect from 23.11.2017. H

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A participate in the process of resolution would render the statutory provisions nugatory. 22.3.1. Having regard to the issues involved herein, we are impelled to take note of the grounds so urged on behalf of the homebuyers and their due acceptance by this Court as follows: - B “40. Mr Anand Grover appearing on behalf of the homebuyers has opposed the proposal submitted by JAL/JIL on the following grounds: 40.1. Loans given to JAL have been classified as non-performing assets which renders JAL ineligible as a resolution applicant/new promoter under Section 29-A(b) IBC; 40.2. In addition to Section 29-A(b), JAL is also disqualified under Section 29-A(g) IBC. Section 29-A(g) provides that a person who is engaged in a fraudulent transaction should not be allowed to bid for another company as such a person may again engage in fraudulent transactions. In May 2018, the NCLT, Allahabad set aside a fraudulent transaction involving a mortgage of around 750 acres of JIL’s land in favour of the lenders of JAL. This mortgage was without any consideration and the land of 750 acres may be worth INR 5000 crores. The matter is now before the NCLAT, E which has specifically framed an issue in this regard; 40.3. RBI is already before this Court seeking initiation of insolvency proceedings against JAL. JAL’s proposal, although presented under the garb of protecting the interest of homebuyers, is aimed at the twin benefits of avoiding insolvency of JAL and regaining control of JIL, thereby defeating RBI’s application for insolvency proceedings of JAL as well as Section 29-A IBC; 40.4. The reasons pleaded by JAL/JIL to excuse their failure to complete the housing projects such as the stay order granted by the National Green Tribunal have been rejected by the orders of the National Consumer Disputes Redressal Commission as there was no stay. One such order was passed by NCDRC on 2-5- 2016, in Developers Township Property Owners Welfare Society v. Jaiprakash Associates Ltd.; 40.5. The contention of JAL that they faced impediments on account of the purported stay imposed by NGT is patently H

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 653 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

incorrect as the stay by NGT was only on handing over possession A without an occupation certificate, which had no bearing on the construction. Moreover, JAL carried out construction during that period as is evidenced inter alia by the fact that they raised demands for construction linked payments during this period; 40.6. During the pendency of the CIRP from 9-8-2017, B construction work was done under the aegis of the IRP under whom JAL was a mere contractor; 40.7. The claim by JAL that flats have been delivered is a fractured claim as flats have been delivered in incomplete stages and are not in accordance with the allotment letters. The flooring C is not complete, doors and windows are missing, no-objection certificates have not been obtained from the Fire Department and the offer of possession is being made without the occupation certificate; 40.8. JAL does not have the capacity to deliver the flats and 22,000 D homebuyers are suffering due to delays of more than four years in completion of various projects of JAL and JIL; 40.9. Under the contracts, JAL and JIL are jointly and severally liable to deliver the flats. If JAL was serious about delivering the flats, the present situation would not have arisen. Further, JAL would have avoided the insolvency process of JIL and would not have cast the homebuyers to the uncertainties of insolvency; 40.10. There are serious doubts about the credentials of JAL which has diverted funds from JIL towards its other businesses. The applicant associations had appointed ASA Financial Services to conduct an audit of JIL’s financials and the audit report demonstrates that JAL may have diverted more than INR 10,000 crores from JIL; 40.11. JAL is undergoing a serious financial crisis. This is clear from the following facts: 40.11.1. JAL has not yet honoured the order of this Court asking it to deposit Rs 2000 crores for protection of the interest of the homebuyers. JAL has paid only Rs 750 crores out of Rs 2000 crores, after the expiry of almost 10 months H

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A from 11-9-2017 which was the date of the initial order of this Court; 40.11.2. JAL has failed to pay even the latest instalment of Rs 1000 crores by 15-6-2018 in accordance with the order of this Court dated 16-5-2018; B 40.11.3. JAL is a defaulter of more than 30 banks to the extent of around Rs 30,000 crores. JAL has also defaulted on fixed deposits, foreign currency convertible bonds and payments to Noida Authority; 40.11.4. Even in the latest proposal, the proposal to deposit C Rs 600 crores is spread over time indicating that JAL has no resources; and 40.11.5. The proposal of doubling the strength of workers from 4000 to 8000 would only mean doubling the strength from 17 workers per tower to 35 workers per tower (228 towers to be D built by 8000 workers). This would amount to 2 workers in each floor of 4 flats (21,532 flats in 228 towers by 8000 workers). At this rate, completion of flats may take several years.

41. Similar submissions have been urged on behalf of the homebuyers by other learned counsel. E

42. The bar under Section 29-A would preclude JAL/JIL from being allowed to participate in the resolution process. Moreover, the facts which have been drawn to the attention of the Court leave no manner of doubt that JAL/JIL lack the financial capacity and resources to complete the unfinished projects. To allow them to participate in the process of resolution will render the provisions of the Act nugatory. This cannot be permitted by the Court.” (emphasis in bold supplied) 22.4. It was, however, submitted on behalf of JAL/JIL that with expiry of timelines for CIRP, the only option would be to liquidate the corporate debtor which may not be in the interest of homebuyers and in that situation, the only way out would be to provide for an arrangement outside the provisions of IBC. It was also submitted that unless a group of independent professionals came to a conclusion that it was not financially viable for JAL/JIL to complete the remaining work in a time-

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 655 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

bound manner, their role as developers should not be discounted. Hence, A it was submitted that an independent committee of experts be constituted by the Court to evaluate the financial capability of JAL/JIL to continue executing the ongoing projects. It was also submitted that only 8% of the homebuyers had opted for refunds while 92% had chosen not to claim refunds, thereby implying a confidence in the ability of JIL/JAL to complete the project. However, on the other hand, the homebuyers uniformly opposed the submissions so made and it was urged before the Court that they had no confidence in the ability of either JIL or JAL to complete the outstanding projects. In the third dimension, it was submitted on behalf of the IRP that Court may revive the CIRP by extending the time specified in IBC in order to enable fresh consideration to be made of the prospect for a resolution which would take into account the interests of homebuyers under the amended IBC; and the second option would be to appoint a committee under the supervision of the Court to explore the possibility of a resolution which would obviate the need for liquidation. Having pondered over the diverse propositions, the requirement of balancing the discipline of the Code, to do complete justice and to secure the interests of all the concerned, this Court found it just and proper to accept the suggestion that CIRP be revived and CoC be reconstituted as per the amended provisions of IBC with recourse to the powers under Article 142 of the Constitution of India. This Court observed and held as under: - E “47. In considering the rival submissions, several important facets of the case need to be underscored. 47.1. First and foremost, the CIRP was initiated on 9-8-2017, following the order of NCLT admitting the proceedings. The period of 180 days for concluding the CIRP came to an end on 6-2-2018 F and the extended period ended on 12-5-2018. When the CIRP was initiated and until the period of 270 days concluded, the homebuyers did not have the status of financial creditors under the provisions of IBC. They had no statutory voting rights in the CoC. Under the interim directions of this Court, a workable G arrangement was sought to be put into place by appointing a representative of the homebuyers on the CoC to facilitate their interests being duly borne in mind. But the point to be noted is that in the absence of a statutory recognition of the position of the homebuyers as financial creditors, the law did not allow for real H

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A and substantive entitlements to them in the CoC. These statutory entitlements have been brought in by the Ordinance in order to recognise the vital interests of the homebuyers in a real estate project and to allow them a statutory status in the insolvency resolution process. Unfortunately by the time that the Ordinance came into being on 6-6-2018, the period of 270 days had expired; B the resolution plan of Lakshdeep was rejected and the IRP informed NCLT that no resolution plan had been approved within the extended period of 270 days on 12-5-2018. 47.2. Having regard to the material change which has been brought about by the amendment of the IBC by the C Ordinance and the fact that this Court has been in seisin of the proceedings to ensure that the homebuyers are protected, we are of the view that it is but appropriate and to do complete justice to secure the interests of all concerned that the CIRP should be revived and CoC D reconstituted as per the amended provisions to include the homebuyers. In the facts of the present case, recourse to the power under Article 142 would be warranted to render complete justice. Parliament has undoubtedly provided a period of 180 days and an extended period of 90 days to complete the process. But in the present case a peculiar situation has arisen as a result of which the status of the homebuyers which had not been recognised prior to 6-6-2018 has now been expressly recognised as a result of the amending Ordinance. 47.3. The learned counsel for the IRP submitted that in the CoC which will be reconstituted under the amended IBC, the homebuyers would have a substantial voting power so as to be able to effectively protect their interests. Moreover, this Court should follow the discipline of IBC which has been enacted by Parliament specifically to streamline the resolution of corporate insolvencies. Matters involving corporate insolvencies require expert determination. The legislature has made specific provisions which are conceived in public interest and to facilitate good corporate governance. The Court should not take upon itself the burden of supervising the intricacies of the resolution process. Accepting the suggestion of Mr Nariman (and one of the two options proposed by Mr Tripathi) of the Court appointing a H

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 657 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

committee to supervise the resolution process outside IBC will A involve the Court in an insuperable burden of evaluating intricate matters of financial expertise on which Parliament has legislated to create specific mechanisms. 47.4. We are emphatically of the view that it would not be appropriate for the Court to appoint a committee to oversee the B CIRP and assume the task of supervising the work of the Committee. We must particularly be careful not to supplant the mechanisms which have been laid down in the IBC by substituting them with a mechanism under judicial directions. Such a course of action would in our view not be consistent with the need to ensure complete justice under Article C 142, under the regime of law. Hence, the power under Article 142 should be utilised at the present stage for the limited purpose of recommencing the resolution process afresh from the stage of appointment of IRP by the order dated 9-8-2017 and resultantly renew the period which has been prescribed for the completion of the resolution process. We have furnished above, the reasons for doing so. Chief amongst them is the fact that in the present case the period of 270 days expired before the Ordinance conferring a statutory status on homebuyers as financial creditors came into existence. In the circumstances, it would be necessary to revive the period prescribed by the statute by another 180 days commencing from the date of this order. During this period, the IRP shall follow the provisions of the IBC afresh in all respects. A new CoC should be constituted in accordance with the amended provisions IBC to enforce the statutory status of the allottees as financial creditors. We also clarify that apart from the three bidders whose bids were found to be eligible by the IRP, it would be open to the IRP to invite fresh bids to facilitate a wider field of choice before the CoC. In that process, the offers made by the intervenors in these proceedings can also be considered by CoC anew. We are not inclined to evaluate the merits of the bids submitted by the bidders who were left in the fray, two of whom have intervened. All bids must follow the discipline IBC. We have, however, not accepted the submission to allow JIL or JAL and the erstwhile promoters to participate in the process. Their participation is expressly prohibited by Section 29-A and H

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A we decline to make any exception which would breach a salutary and express provision made in the IBC.” (emphasis in bold supplied) 22.5. Thereafter, this Court also took into consideration the submissions made on behalf of some of the homebuyers for issuance of directions to facilitate pro rata disbursement of INR 750 crores lying in deposit pursuant to the interim directions. This Court observed that even when the claim of the refund seekers was to be considered with empathy, such request could not be acceded to and specified four major reasons for declining this prayer. The consideration of this Court in relation to the said sum of INR 750 crores, being also directly relevant for the present purpose, could be usefully extracted as under: - “48. As we have stated earlier, an amount of Rs 750 crores is lying in deposit before this Court pursuant to the interim directions, on which interest has accrued. The homebuyers have earnestly sought the issuance of interim directions to facilitate a pro rata disbursement of this amount to those of the homebuyers who seek a refund. We are keenly conscious of the fact that the claim of the homebuyers who seek a refund of monies deserves to be considered with empathy. Yet, having given our anxious consideration to the plea and on the balance, we are not inclined to accede to it for more than one reason. 48.1. Firstly, during the pendency of the CIRP, it would as a matter of law, be impermissible for the Court to direct a preferential payment being made to a particular class of financial creditors, whether secured or unsecured. For the present, we leave open the question as to whether the homebuyers are unsecured creditors (as was urged by Mr Tripathi) or secured creditors (as was urged by counsel appearing for them). Directing disbursement of the amount of Rs 750 crores to the homebuyers who seek refund would be manifestly improper and cause injustice to the secured creditors since it would amount to a preferential disbursement to a class of creditors. Once we have taken recourse to the discipline IBC, it is necessary that its statutory provisions be followed to facilitate the conclusion of the resolution process.

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 659 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

48.2. Secondly, the figures which have been made available presently, following the opening of the web portal by the Amicus Curiae, indicate that 8% of the homebuyers have sought a refund of their monies while 92% would evidently prefer possession of the homes which they have purchased. We cannot be unmindful of the interests of 92% of the homebuyers many of whom would also have obtained loans to secure a home. They would have a legitimate grievance if the corpus of Rs 750 crores (together with accrued interest) is distributed to the homebuyers who seek a refund. The purpose of the process envisaged by IBC for the evaluation and approval of a resolution plan is to form a composite approach to deal with the financial situation of the corporate debtor. Allowing a refund to one class of financial creditors will not be in the overall interest of a composite plan being formulated under the provisions of the IBC. 48.3. Thirdly during the course of the hearing, the Court has been apprised of the concerns of the secured creditors, chief among them being IDBI Bank Ltd. In its submissions before this Court, IDBI Bank has emphasised that one of the major reasons for the enactment of IBC was to protect the interest of lenders. The debt owing to the banks and financial institutions has been secured by the assets of JIL, to protect their interests. This debt originates in the public deposits of the banks and financial institutions, who are answerable to their stakeholders. 48.4. Fourthly, RBI has moved this Court for permission to initiate an insolvency resolution process. Parliament enacted the Banking Regulation (Amendment) Act 2017 by introducing Section F 35-AA and Section 35-AB into the Banking Regulation Act 1949. The amendment empowers the Central Government to authorise RBI to issue directions to any banking company to initiate an insolvency resolution process in respect of a default as understood under the IBC. Such an order was issued by the Central G Government on 5-5-2017. The RBI constituted an Internal Advisory Committee (IAC) consisting primarily of its independent Directors. The IAC took up for consideration accounts which were classified either partly or wholly non-performing from amongst the top 500 exposures in the banking system as on 31-3-2017. As a first step, H

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A the IAC recommended all such non-performing asset accounts with fund and non-fund based outstandings exceeding Rs 5000 crores. The IAC has initially taken up twelve accounts involving total exposure of Rs 1,79,769 crores. JIL was one of the twelve accounts in respect of which directions have been issued to banks for initiating insolvency resolution. Subsequently, the IAC B recommended that in respect of those accounts where 60% or more had been classified as NPAs as on 30-6-2017, banks may be directed to implement a viable resolution plan within six months failing which the accounts may be directed for a reference under the IBC by 31-12-2017. JAL was one such entity. No viable C resolution plan could be found as a result of which it is also required to be referred for CIRP. RBI has carried out this exercise as a matter of economic policy in its capacity as the prime banking institution in the country, entrusted with a supervisory role, and the power to issue binding directions……..” D (emphasis in bold supplied) 22.6. Having said so, this Court acceded to the request made on behalf of the RBI to initiate a CIRP against JAL under IBC and thereafter proceeded to conclude on the matter with the following directions: - “50. We, accordingly, issue the following directions: E 50.1. In exercise of the power vested in this Court under Article 142 of the Constitution, we direct that the initial period of 180 days for the conclusion of the CIRP in respect of JIL shall commence from the date of this order. If it becomes necessary to apply for a further extension of 90 days, we permit the NCLT to pass appropriate orders in accordance with the provisions of the IBC; 50.2. We direct that a CoC shall be constituted afresh in accordance with the provisions of the Insolvency and Bankruptcy (Amendment) Ordinance, 2018, more particularly the amended definition of the expression “financial creditors”; 50.3. We permit the IRP to invite fresh expressions of interest for the submission of resolution plans by applicants, in addition to the three shortlisted bidders whose bids or, as the case may be, revised bids may also be considered;

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 661 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

50.4. JIL/JAL and their promoters shall be ineligible to participate in the CIRP by virtue of the provisions of Section 29-A; 50.5. RBI is allowed, in terms of its application to this Court to direct the banks to initiate corporate insolvency resolution proceedings against JAL under the IBC; 50.6. The amount of Rs 750 crores which has been deposited in this Court by JAL/JIL shall together with the interest accrued thereon be transferred to NCLT and continue to remain invested and shall abide by such directions as may be issued by NCLT.” (emphasis in bold supplied) C

23Copy pinpoint23. Thus, the ternary, of anxiety on the part of stakeholders to avoid liquidation of the corporate debtor JIL; of due recognition by the legislature of the homebuyers as financial creditors; and concern of this Court to do complete justice in the cause while maintaining the discipline of law, led to the improvisation in Chitra Sharma, as noticeable in the preceding paragraphs, with revival of CIRP in relation to the corporate debtor JIL and re-constitution of CoC with the basic aim to ensure the resolution of insolvency of the corporate debtor JIL by way of the methods envisaged by, and permissible under, the Code. Another round in this Court and further enlargement of time for CIRP in question.

24Copy pinpoint24. However, this resolution process concerning the corporate debtor JIL again landed in rough weather, now due to passage of time at different stages while dealing with another grey area i.e., method of counting of votes in the Committee of Creditors, which led to another round of litigation; and this Court had to again invoke its plenary powers to salvage the situation in the judgment dated 06.11.2019 in the case of Jaiprakash Associates Ltd. (supra). For their relevance, the observations made and directions issued in that case may also be recapitulated. G

25Copy pinpoint25. The second round of litigation concerning this CIRP came up to this Court in the following circumstances: 25.1. Consequent to the aforesaid directions in the case of Chitra Sharma, the matter proceeded before the NCLT being the Adjudicating Authority. The IRP issued public notice inviting claims from all the H

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A stakeholders of JIL, including the homebuyers and submitted his report on formation of the Committee of Creditors before the Adjudicating Authority on the following basis: 37.3% in case of financial institutions, 62.3% homebuyers, and B 0.4% fixed deposit holders. 25.2. However, on 17.09.2018, an application came to be made before the Adjudicating Authority by one of the associations of homebuyers seeking clarification as to the manner in which the voting percentage of the homebuyers would be reckoned. The two members of NCLT expressed difference of opinion on the issue as a result of which, reference was made to the President of NCLT to place the matter before the third member. Eventually, an order was passed by the third member on 24.05.2019. This order was challenged by one of the associations of homebuyers before NCLAT. In the meantime, IDBI Bank filed an application before NCLT for excluding the period of pendency of the said application for clarification regarding the manner of counting the votes of the concerned financial creditors, from the period of 270 days for completion of CIRP. However, during the pendency of such an application, the NCLT, by its order dated 06.05.2019, called upon the authorities, the representatives of allottees and others to file reply on the necessity to proceed further with CIRP for considering the resolution plan received from the concerned bidder. The IDBI Bank assailed this order of NCLT by way of another appeal before the NCLAT. 25.3. The aforesaid two appeals were decided together by F NCLAT by way of its judgment dated 30.07.2019. The NCLAT took note of the fact that no regulation had been framed under the Code as to how the voting share of thousands of allottees (homebuyers) would be counted when all of them fell within the meaning of ‘financial creditors’ and hence, were the members of CoC. The NCLAT observed that this had been an extraordinary situation where the law was silent and there G was no guideline which led to difference of opinion between the two members and the matter was finally decided by the third member. The NCLAT opined that in the given situation, certain period could be excluded while counting the total period of 270 days. In this judgement dated 30.07.2019, NCLAT provided for exclusion of 90 days for the purpose of counting 270 days of CIRP from the date of receipt of the copy of its H

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 663 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

judgement. The NCLAT also commented that the aforesaid exclusion A was being provided to enable calling of fresh resolution plans but reiterated that no liberty was available to JAL in view of the observations and decision of this Court in Chitra Sharma (supra). 25.3.1. Those observations and directions of NCLAT in its judgment dated 30.07.2019, as reproduced in the judgement of this Court B dated 06.11.2019, could be usefully recounted as follows: - “22. In view of the aforesaid extraordinary situation, we are of the view that the period from 17-9-2018 i.e. the date of application filed by the association of the allottees for clarification for the order and till the final decision i.e. 4-6-2019 i.e. the date the matter C was finally decided by the Third Hon’ble Member (total 260 days), can be excluded for the purpose of counting the 270 days. However, as the matter is pending since long, we are not inclined to exclude the total period of 260 days and instead in the interest of the allottees, we exclude 90 days for the purpose of counting the period of 270 days of “corporate insolvency resolution process”, D which should be counted from the date of receipt of the copy of this order.

23. The aforesaid period is excluded to enable the “resolution professional”/”committee of creditors” to call for fresh “resolution plans” and to consider them, if so required after negotiations pass E appropriate order under sub-section (5) of Section 30 of the I&B Code preferably within a period of 45 days. Rest of the period of 45 days margin is given to remove any difficulty and appropriate order as may be passed by the adjudicating authority. The voting share of the allottees should be counted in terms of F “I&B Code” as existing on the date of voting/”Regulation” and/ or in accordance with majority decision of the adjudicating authority.

24. It is made clear that all the earlier “resolution plan(s)” including the plan submitted by the “NBCC”, cannot be considered, having G been rejected by the “committee of creditors”. However, it will be open to the “NBCC” to file a fresh improved “resolution plan”. It is informed that “Adani Infra (I) Ltd.” also proposed to file “resolution plan” but we are not expressing any opinion with regard to the same. We have given opportunity to all the eligible persons H

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A to file “expression of interest”/(improved) “resolution plan”, individually or jointly or in concert with any person, but those who are ineligible in terms of Section 29-A, are barred from filing such plan. No liberty is given to “Jaiprakash Associates Ltd.”, in view of the aforesaid observation and decision of Hon’ble Supreme Court in Chitra Sharma.” B

26Copy pinpoint26. The aforesaid judgement of NCLAT was assailed in this Court by JAL and by the Wish Town Homebuyers’ Welfare Society. These appeals raised essentially two issues before this Court: one, as to whether NCLT or NCLAT had the power to exclude any period from the statutory period in exercise of inherent powers sans any express provision in the C Code in that regard; and second, whether it was open to allow the bidder whose resolution plan had already been rejected by CoC, to submit revised plan or to invite fresh resolution plans to be considered by CoC after the statutory period specified for submission of such plans?

27Copy pinpoint27. After cogitating over the submissions made in support of the D appeals, it was clear that the inevitable fallout of accepting the stand taken by the appellants would be to set aside the impugned judgment and relegate the parties to a situation where the only option would be to proceed with the liquidation process concerning JIL on the premise that no resolution plan was received before the expiry of the period of CIRP E or being a case of rejection of the resolution plan under Section 31 of the Code. However, during the arguments, there was complete unanimity (again) between all the stakeholders, including the appellants before this Court, that the liquidation of JIL must be eschewed as it would do more harm to the interests of the stakeholders, in particular the large number of homebuyers. F

28Copy pinpoint28. In the given set of circumstances and considering the position taken by the stakeholders, this Court found it neither necessary nor appropriate to dilate on the issues as urged and instead, proceeded to again exercise the plenary powers under Article 142 of the Constitution of India in order to ensure substantial justice in the cause. In the process, this Court, of course, rejected the suggestions given by a section of homebuyers to keep the entire process outside the dispensation under the Code with reference to the observations already made in the case of Chitra Sharma (supra), but found it justified to modulate a part of such directions, to the extent such modulation would not stand in conflict with the legislative intent and subserve the cause of justice, by providing a

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 665 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

window to find out a viable solution. This Court also took note of various amendments brought about to the Code and the CIRP Regulations; and the overall circumstances of the case, where delay in completion of CIRP relating to JIL was attributable to law’s delay and neither homebuyers nor other financial creditors were to be blamed for pendency of proceedings before NCLT and before NCLAT. In the peculiar, rather extraordinary, situation obtaining in the matter, this Court considered it appropriate to ensure that an attempt was made for revival of the corporate debtor JIL, lest it was exposed to liquidation process and for that matter, to permit IRP to reissue the request for resolution plan to the two bidders who had earlier submitted the plans and to call upon them to submit revised resolution plans, which could be placed before CoC. In C the process, this Court also took note of the time limit for completion of insolvency resolution process as per third proviso to Section 12(3) of the Code, which came into effect from 16.08.2019. The relevant observations of this Court could be usefully reproduced as under: - “16. Suffice it to note that an extraordinary situation had arisen because of the constant experimentation which went about at different level due to lack of clarity on matters crucial to the decision-making process of CoC. Besides that, in view of the recent legislative changes, the scope of resolution plan stands expanded which may now include provision for restructuring the corporate debtor including by way of merger, amalgamation and demerger and more so the power bestowed on CoC to consider not only the feasibility and viability of the resolution plan but also the manner of distribution proposed, which may take into account the order of priority amongst the creditors. Additionally, the recently inserted Section 12-A enables the adjudicating authority to allow the withdrawal of an application filed under Section 7 or Section 9 or Section 10, on an application made by the applicant with the approval of 90% voting share of the CoC. Similarly, sub-clause (7) of Regulation 36-B inserted with effect from 4-7-2018, dealing with the request for resolution plans unambiguously postulates that the resolution professional may, with the approval of the G Committee, reissue request for resolution plans, if the resolution plans received in response to earlier request are not satisfactory, subject to the condition that the request is made to all prospective resolution applicants in the final list. In the present case, finally only two bidders had participated and submitted their resolution H

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A plan which was placed before CoC and stated to have been rejected. However, applying the principle underlying Regulation 36-B(7), we deem it appropriate to permit IRP to reissue request for resolution plans to the two bidders (Suraksha Realty and NBCC) and/or to call upon them to submit revised resolution plan(s), which can be then placed before CoC for its due consideration.

17. In the present case, as aforementioned, there is unanimity amongst all the parties appearing before this Court including the resolution applicant that liquidation of JIL must be eschewed and instead an attempt be made to salvage the situation by finding out some viable arrangement which would subserve the interests of all concerned.

18. In view of the legislative changes referred to above, we are of the considered opinion that we need to and must exercise our plenary powers to make an attempt to revive the corporate debtor D (AIL), lest it is exposed to liquidation process under Chapter III of Part II of the I & B Code. We are inclined to do so because the project has been implemented in part and out of over 20,000 homebuyers, a substantial number of them have been put in possession and the remaining work is in progress and in some cases at an advanced stage of completion. In this backdrop, it would be in the interest of all concerned to accept a viable plan reflecting the recent legislative changes.

19. Indeed, the third proviso to Section 12(3) predicates time-limit for completion of insolvency resolution process, which has come into effect from 16-8-2019. The same reads thus: “Provided also that where the insolvency resolution process of a corporate debtor is pending and has not been completed within the period referred to in the second proviso, such resolution process shall be completed within a period of ninety days from the date of commencement of the Insolvency and Bankruptcy Code (Amendment) Act, 2019.” Taking an overall view of the matter, we deem it just, proper and expedient to issue directions under Article 142 of the Constitution of India to all concerned to reckon 90 days’ extended period from the date of this order instead of the date of commencement of the H

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Insolvency and Bankruptcy Code (Amendment) Act, 2019. That A means, in terms of this order, the CIRP concerning JIL shall be completed within a period of 90 days from today.

20. We do not deem it necessary to dilate on the arguments of the respective counsel for the nature of order that we intend to pass, including about the locus standi of JAL which, in our opinion, B already stands answered against JAL by virtue of Section 29-A of the Act as expounded in Chitra Sharma.”

29Copy pinpoint29. In the given circumstances, this Court passed the following order for the purpose of substantial and complete justice and in the interest of all the stakeholders: - C “21. Accordingly, we pass the following orders to do substantial and complete justice to the parties and in the interest of all the stakeholders of JIL: 21.1. We direct the IRP to complete the CIRP within 90 days from today. In the first 45 days, it will be open to the IRP to invite revised resolution plan only from Suraksha Realty and NBCC respectively, who were the final bidders and had submitted resolution plan on the earlier occasion and place the revised plan(s) before CoC, if so required, after negotiations and submit report to the adjudicating authority NCLT within such time. In the second phase of 45 days commencing from 21-12-2019, margin is provided for removing any difficulty and to pass appropriate orders thereon by the adjudicating authority. 21.2. The pendency of any other application before the NCLT or NCLAT, as the case may be, including any interim direction given therein shall be no impediment for the IRP to receive and process the revised resolution plan from the above named two bidders and take it to its logical end as per the provisions of the I & B Code within the extended timeline prescribed in terms of this order. 21.3. We direct that the IRP shall not entertain any expression of interest (improved) resolution plan individually or jointly or in concert with any other person, much less ineligible in terms of Section 29- A of the I & B Code. 21.4. These directions are issued in exceptional situation in the facts of the present case and shall not be treated as a precedent. H

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A 21.5. This order may not be construed as having answered the questions of law raised in both the appeals, including as recognition of the power of NCLT/NCLAT to issue direction or order not consistent with the statutory timelines and stipulations specified in the I & B Code and the Regulations framed thereunder.”

30Copy pinpoint30. The passages above-quoted give insight as to what had been the concern of all and what had been the intent of the orders passed by this Court in its plenary powers. It is not far to seek that even where CIRP in relation to JIL had been facing one hurdle after another, the principal part of delay was not attributable to any of the stakeholders; and then, all through, there had been unanimity that liquidation of JIL C was to be avoided and a viable solution ought to be searched. The aforesaid directions in the judgement dated 06.11.2019 ultimately led the revised resolution plans by the two applicants being placed before CoC and voting of CoC in favour of the resolution plan proposed by NBCC which is the bone of contention in this batch of matters.

31Copy pinpoint31. For completion of the narrative in regard to the second round of litigation, we may also point out that after the judgment dated 06.11.2019, even though the process relating to the submission of revised plans and consideration by CoC took place, but culmination of the proposal in approval of the resolution plan got delayed. Hence, IRP filed one miscellaneous application in this Court (M.A. No. 540 of 2020), pointing out various difficulties and unavoidable circumstances which had caused the delay though the proposal was submitted within the time frame prescribed. While accepting the reasons stated in the application so filed by the IRP, this Court, by another order dated 03.02.2020, extended the time by four weeks for approval of the resolution plan. This is how the process of approval of resolution plan culminated in the impugned order dated 03.03.2020 by the Principal Bench of NCLT at New Delhi.36

32Copy pinpoint32. Before dilating on the resolution plan in question, it appears just and proper to narrate the features relating to yet another litigation directly impacting the CIRP concerning the corporate debtor JIL. As G indicated, that litigation had been in relation to the application made by 36 It may be indicated in the passing that later on, a few miscellaneous applications as also interlocutory applications were filed in relation to the case of Chitra Sharma (supra), most of which were disposed of by this Court on 18.12.2019, in view of the aforesaid order dated 06.11.2019. Having regard to the points requiring determination herein, it is not necessary to dilate on those applications.

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 669 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

IRP for avoidance of certain transactions as preferential; and in relation to the claim of some of the lender institutions of JAL to be recognised as financial creditors of JIL on the strength of the mortgage transactions whereby the property of JIL was mortgaged to secure the debts of JAL. Yet another litigation in this Court relating to preferential transactions and lenders of JAL B

33Copy pinpoint33. The other litigation concerning this CIRP, leading to the judgment dated 26.02.2020 in the case of Anuj Jain (supra), came up in the following circumstances: 33.1. As already noticed, even during the pendency of proceedings in this Court in the case of Chitra Sharma (supra), the IRP had filed an application on 06.02.2018 seeking avoidance of certain transactions, whereby the corporate debtor had mortgaged several parcels of its land as collateral security for the loans and advances made by the lender banks and financial institutions to the holding company JAL. The IRP alleged that the transactions in question were preferential, undervalued and fraudulent, in terms of Sections 43, 45 and 66 of the Code. By its order dated 16.05.2018, the NCLT accepted the application so made by IRP in relation to six out of seven transactions that were put in question and held that those transactions were to be avoided as being fraudulent, preferential and undervalued. 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 corporate debtor, with release of encumbrances. In appeal, the NCLAT, however, took an entirely opposite view of the matter and by its judgement dated 01.08.2019, upturned the order so passed by NCLT, while holding that the transactions in question do not 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. Aggrieved, the IRP as also one of the creditors of the corporate debtor JIL and the associations of homebuyers preferred appeals in this Court. G 33.2. Apart from the above, during the course of CIRP, two of the lender banks of JAL sought inclusion in the category of financial creditors of JIL but IRP did not agree and declined to recognise them as such. Being aggrieved, the said banks preferred separate applications under Section 60(5) of the Code before NCLT while asserting their H

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A claim to be recognised as financial creditors of the corporate debtor JIL, on account of the securities provided by JIL for the facilities granted to JAL. The NCLT rejected the applications so filed by the said banks, by way of its orders dated 09.05.2018 and 15.05.2018, while concluding that on the strength of the mortgage created by the corporate debtor JIL, as collateral security of the debt of its holding company JAL, the B lenders of JAL could not be categorised as financial creditors of JIL. The appeals filed by the aggrieved lenders of JAL against the said orders dated 09.05.2018 and 15.05.2018 were purportedly allowed as per the result recorded in the impugned order dated 01.08.2019. Aggrieved, one of the lenders of the corporate debtor JIL preferred an appeal in this C Court, while asserting that such mortgagees could not be taken as financial creditors of the corporate debtor JIL.

34Copy pinpoint34. The aforesaid two appeals, relating to avoidance of preferential transactions and the claim of lender banks of JAL to be recognised as financial creditors of JIL, were considered together and allowed by this D Court by way of the common judgement dated 26.02.2020 in the case of Anuj Jain (supra). 34.1. As regards the transactions in question, this Court held that they had been of deemed preference to related party by the corporate debtor JIL during the look-back period of two years and were covered within the period envisaged by Section 43(4) of the Code. This Court also held that clause (a) of sub-section (3) of Section 43 of the Code called for purposive interpretation so as to ensure that the provision operates in sync with the intention of legislature; and therefore, the expression “or”, appearing as disjunctive between the expressions “corporate debtor” and “transferee”, ought to be read as “and”; so as to be conjunctive of the two expressions i.e., “corporate debtor” and “transferee”. Having interpreted the provision so, this Court held that the impugned transactions did not fall within the ordinary course of business of the corporate debtor JIL and hence, were not of excepted transfers in terms of Section 43(3) of the Code. Accordingly, this Court held as under:- G “Summation: The transactions in question are hit by Section 43 IBC

30. For what has been discussed hereinabove, we are clearly of the view that the transactions in question are hit by Section 43 of the Code and the adjudicating authority, having rightly held so, H

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had been justified in issuing necessary directions in terms of Section A 44 of the Code in relation to the transactions concerning Properties Nos. 1 to 6. NCLAT, in our view, had not been right in interfering with the well-considered and justified order passed by NCLT in this regard.” 34.2. As regards the second question concerning the status of B the lenders of JAL, this Court observed that when the transactions in question were found preferential and hit by Section 43 of the Code, they were denuded of their value and worth; and the security interest created by the corporate debtor JIL over the property involved in those transactions stood discharged in whole; and, therefore, such lenders of JAL cannot claim any status as creditors of the corporate debtor JIL C much less as financial creditors. However, the question as regards the status of such lenders of JAL qua the corporate debtor JIL was examined independent of the findings that the transactions in question were hit by Section 43 of the Code, with the following observations: - “34.4. We may, of course, reiterate that in view of the conclusion that we have reached in relation to the principal issue, the transactions in question are denuded of their value and worth, per the force of the order by NCLT under Section 44 of the Code, which has been approved by us. To be most specific, the security interests created by the corporate debtor JIL over the properties in question stand discharged in whole. Therefore, the respondent lenders cannot claim any status as creditors of the corporate debtor JIL and there could arise no question of their making any claim to be treated as financial creditors as such. However, for its relevance, we deem it appropriate to determine the issue as to whether the lenders of JAL, because of creation of the mortgages in question, could be treated as financial creditors of JIL, independent of the finding that the transactions in question are hit by Section 43 of the Code.” 34.3. Thereafter, this Court dealt with the rival submissions relating to the status of such lenders of JAL and held that they, on the strength of the mortgages in question, might fall in the category of secured creditors but, for the reason that the corporate debtor did not owe them any financial debt, such lenders of JAL were not falling in the category of financial creditors of the corporate debtor JIL. This Court summed up the conclusion on this issue in the following terms: - H

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A “Summation on second issue

57. For what has been discussed hereinabove, on the issue as to whether lenders of JAL could be treated as financial creditors, we hold that such lenders of JAL, on the strength of the mortgages in question, may fall in the category of secured creditors, but such B mortgages being neither towards any loan, facility or advance to the corporate debtor nor towards protecting any facility or security of the corporate debtor, it cannot be said that the corporate debtor owes them any “financial debt” within the meaning of Section 5(8) of the Code; and hence, such lenders of JAL do not fall in the category of the “financial creditors” of the corporate debtor JIL.” C

35Copy pinpoint35. It would be relevant to notice that the parcels of land forming the subject of seven questioned transactions were admeasuring about 858 acres; and while leaving 100 acres of land forming the subject of seventh transaction, which was not declared as preferential, a chunk of 758 acres of land, which earlier carried encumbrances because of the D mortgages in favour of the lenders of JAL, got released with the judgement delivered by this Court and stood vested in JIL free from encumbrances. The judgement was delivered by this Court on 26.02.2020, after voting by CoC on the resolution plan in question but before the impugned order of NCLT dated 03.03.2020.

36Copy pinpoint36. The foregoing narrative in relation to the past litigations has essentially been to flag and accentuate those attributes of the decisions of this Court which carry their own relevance, bearing and implications on the issues involved in the present batch of matters.

37Copy pinpoint37. Continuing with the narrative, we may now take up the impugned resolution plan, propounded by the resolution applicant NBCC and voted in favour by CoC with an overwhelming majority of 97.36%. The Resolution Plan

38Copy pinpoint38. As noticed, by the order dated 06.11.2019, this Court directed IRP to complete the CIRP within 90 days from the date of the order; and for that matter, it was provided that in the first 45 days, it would be open to the IRP to invite revised resolution plans only from the two applicants namely Suraksha Realty and NBCC, who were the final bidders and had submitted resolution plans on the earlier occasion, and to place the revised plan(s) before the CoC. H

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38.1. From the facts stated before us, it is borne out that the revised resolution plans were called from the said applicants and were placed for consideration in the 16th Meeting of CoC held on 07.12.2019. Having considered the resolution plans, the members of CoC requested the resolution applicants to improve their offers and thereupon, both the resolution applicants agreed to submit addendums to their revised resolution plans. Accordingly, Suraksha Realty submitted an addendum to the resolution plan on 07.12.2019 and NBCC submitted its addendum to the resolution plan on 08.12.2019. Then, with the certificate dated 08.12.2019 from IRP that the resolution plans submitted by Suraksha Realty and NBCC were fully compliant under Section 30(3) of the Code read with Regulation 39(2) of the CIRP Regulations, the plans along with the respective addendums were put to e-voting from 9 a.m. of 10.12.2019, until 11.59 p.m. of 16.12.2019. 38.2. In the voting by CoC, the resolution plan submitted by NBCC along with addendum was approved by a vote of 97.36% of voting share of the financial creditors in favour. On the other hand, the plan submitted by Suraksha Realty could muster only a vote of 2.12% of voting share of the financial creditors. The voting results were circulated by the IRP to the members of CoC on 17.12.2019; and, on the instructions of CoC, the IRP issued the Letter of Intent on 17.12.2019, which was duly accepted by NBCC. E 38.3. In compliance of the order dated 06.11.2019 passed by this Court, the IRP filed the application bearing C.A. No. 5 of 2020 in C.P. (IB) No. 77/ALD/2017 seeking approval of the resolution plan of NBCC under Section 30(6) read with Section 31 of the Code before the Allahabad Bench of NCLT on 20.12.2019. Later on, the Principal Bench of NCLT at New Delhi transferred the proceeding to itself and that is how the impugned order dated 03.03.2020 came to be passed by the Adjudicating Authority (NCLT, New Delhi) within the time allowed by this Court.

39Copy pinpoint39. For its very nature and for various requirements of the provisions contained in the Code as also in the CIRP Regulations, the resolution plan in question is a vast document carrying business plans, financial proposals including that of treatment of creditors, equity commitment, projected steps and expected reliefs and concessions. We shall refer to the particular stipulation/s in this plan at the relevant stage while dealing with the specific issue related therewith. However, an overview of the resolution plan shall be apposite to take note of its concept H

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A and salient features. In this regard, we may usefully reproduce the summary of resolution plan placed before us by the IRP. This summary is subdivided into different parts namely, (1) claims and their treatment; (2) implementation of the plan; (3) key reliefs sought for by NBCC; (4) status of project; and (5) annexure 1, being a part of the implementation process. B 39.1. The summary of claims and their treatment under the resolution plan is as under: -

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A 39.2. In the summary of the implementation process, by way of a flow chart, various steps have been indicated which include formation of different SPVs; raising of fresh debts of about INR 2,000 crores by securitisation of Yamuna Expressway; transfer of rights of Yamuna Expressway against equity shares and debt disbursement; transfer of 1,526 acres of land worth INR 5,001 crores, bank loan of INR 5,000 B crores and issuance of equity of INR 1 crore; diversification of JHL; infusion of INR 120 crores equity etc. etc. 39.2.1. The IRP has, in this summary, also indicated other key implementation provisions, most of which are the matters of contention in this litigation. That summary reads as under: - C “Other key implementation provisions - Deemed approval of YEIDA for transfer of Land and Toll road to designated SPV’s without incurring any cost such as stamp duty, transfer charges, Etc. D - Liability for additional farmer compensation (presently sub-judice) not payable by JIL. Alternatively, if found payable, YEIDA to collect is directly from end user. - Transfer of INR 750 crores (plus interest) deposited by JAL, pursuant to the order of the Hon’ble Supreme Court to be transferred to JIL and to be used exclusively for construction of houses. - JAL to pay amount due to JIL (approx. INR 500) (INR 716 Crores on insolvency commencement date) to JIL.” 39.3. The key reliefs sought for by NBCC in the resolution plan are summarised as under: -

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39.4. The timelines and methods for implementation have been E indicated in the annexure to this summary which reads as under: -

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JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 681 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

40Copy pinpoint40. As noticed, on this resolution plan being presented for approval before the Adjudicating Authority, various objections were raised by various stakeholders. All such objections and the prayer for approval of the resolution plan were considered analogously; and the Adjudicating Authority has, by its order dated 03.03.2020, proceeded to approve the plan with a few modifications and with certain directions. This order dated 03.03.2020 is the matter of challenge for one reason or another by the parties before us. For their relevance, it would be appropriate to take note of the salient features of this order in necessary details. Order dated 03.03.2020 by the Adjudicating Authority in approval of the resolution plan with modifications C

41Copy pinpoint41. The order dated 03.03.2020, as passed by NCLT in exercise of its jurisdiction under Section 31 of the Code, could be reasonably divided in five segments. In the first place, the NCLT recounted the relevant background aspects leading to the CIRP in question and the orders passed by this Court in the aforementioned three rounds of litigation in the cases of Chitra Sharma, Jaiprakash Associates Ltd. and Anuj D Jain (supra). Secondly, the NCLT dealt with the issue relating to the said INR 750 crores deposited by JAL in terms of the interim orders passed by this Court in the case of Chitra Sharma and which was to abide by the directions of NCLT in terms of the final judgement in Chitra Sharma. Thirdly, the NCLT examined the resolution plan and summarised its propositions, projections and stipulations. Thereafter, in the fourth segment, the NCLT dealt with the objections against the resolution plan by several persons/entities, including JAL and its stakeholders, ICICI Bank, YEIDA, some of the aggrieved homebuyers, YES Bank and the agreement holders. In the fifth segment, the NCLT generally dealt with the clauses relating to the reliefs and concessions in the resolution plan as also various other applications filed by different stakeholders. For their relevance, the material observations and findings of the Adjudicating Authority (NCLT) in its order dated 03.03.2020 could be relayed sequentially.

42Copy pinpoint42. In the first part of the order dated 03.03.2020, the NCLT G referred to the very same background aspects which we have already recited hereinbefore, namely, the award of contract for construction of Expressway to JAL, incorporation of JIL as special purpose vehicle, the Concession Agreement extended by YEIDA, taking up of the projects by JIL for laying of Expressway and developing residential flats, JIL H

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A having collected money from homebuyers but having failed to deliver flats to them and having also defaulted in payment of loan instalments, initiation of CIRP and litigation in this Court in the case of Chitra Sharma (supra). The NCLT traversed through all the aforementioned relevant interim orders and final judgment in Chitra Sharma. The NCLT also took note of the directions of this Court in the judgment dated 06.11.2019 B in the case of Jaiprakash Associates Ltd. and in the judgment dated 26.02.2020 in the case of Anuj Jain.

43Copy pinpoint43. In the second part, in relation to the said amount of INR 750 crores and accrued interest thereupon, the NCLT took note of a vast variety of submissions made by different claimants, which may also be C usefully recounted as follows. 43.1. It was submitted on behalf of JAL, who moved an application seeking return of the said sum of INR 750 crores, that when the Supreme Court had declined the request of homebuyers for pro rata distribution of the said amount and had transferred the same to D NCLT, the amount could not be appropriated for any purpose other than refunding it to JAL. It was submitted that the said deposit of INR 750 crores had acquired the character of constructive trust and this amount was required to be refunded to JAL on the principles enshrined in Sections 77 and 83 of the Indian Trusts Act. It was further submitted that since the Supreme Court had nowhere directed either to pay the remaining balance or to utilise this money towards refund of homebuyers’ money, it had to be treated as the money of JAL and returned accordingly. It was also submitted that as per CIRP Regulations 36 and 37, only the properties of the corporate debtor were subject to the resolution process and the amount deposited by JAL, being not the asset of the corporate debtor, was required to be returned. Such submissions of JAL were duly supported by ICICI Bank, the leader of the consortium of banks, who had lent money to JAL and it was further submitted that in the case of Chitra Sharma (supra), the Supreme Court directed the promoters of JAL to deposit INR 2,000 crores in order to ensure that the homebuyers were not left remediless and their money could be refunded but after amendment to IBC, the Supreme Court neither ordered such refund nor insisted upon the promoters of JAL to deposit the remaining balance of INR 1,250 crores, but simply delegated this work to the NCLT to proceed with CIRP and to approve the resolution plan in accordance with IBC. It was submitted on behalf of ICICI Bank that there being no specific H

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 683 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

direction by the Supreme Court to utilise this money for the financial creditors of JIL, the same was required to be returned to JAL. The promoter-directors of the corporate debtor also filed an affidavit stating that no part of this money was deposited by JIL and the same was not handed over to JIL for any purpose whatsoever; and that the Supreme Court had never held that JAL was legally bound to contribute funds required for completing the projects of JIL. On similar lines, the appellant Pankaj Sharma and other homebuyers of JAL also prayed for release of the said amount to JAL so that it could be utilised for the homebuyers of JAL. It was submitted that JAL itself was in financial distress and if such a huge amount belonging to it was given to another company, the interests of the stakeholders of JAL would be jeopardised. It also submitted that the purpose for which the deposit was made had not been fulfilled and it was not meant for construction of the flats of JIL and this money, being not an asset of JIL, should be returned to JAL. 43.2. In opposition, it was submitted by the lenders of JIL, led by IDBI Bank that in the judgement dated 09.08.2018, the Supreme Court D was conscious of the fact that this amount could not be disbursed only to one class of creditors and hence, it was not allowed to be used for the purpose of the refund seekers. It was further submitted that the corporate debtor was generating revenue through collection from Yamuna Expressway but this money, rather than being utilised for servicing the loans provided by the institutional lenders, was being utilised towards construction work and for running the corporate debtor as a going concern; and in this scenario, the said amount of INR 750 crores with interest should be distributed on pro rata basis to the lenders of JIL in accordance with the voting share in the CoC. Along with others, IRP also made submissions that there were 32,754 allottees to whom flats were sold as per the records of JIL and as on 05.10.2018, 24,296 of them were waiting for possession of their flats; and if the money was ordered to be released for construction and development of the projects of the corporate debtor, it would provide a boost to the construction activity and serve the larger purpose. It was submitted by IRP that as per the orders passed by this Court in Chitra Sharma (supra), this money was intended to protect the interests of homebuyers only. It was also pointed out that as per the tripartite agreement involving JAL, JIL and homebuyers, JAL was the developer of the project and was responsible for delivering possession of flats to the homebuyers. The IRP also referred to various orders passed by this Court in the course of H

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A proceedings in the case of Chitra Sharma as also a settlement proposal given by JAL on 15.02.2019, stating that the said sum of INR 750 crores was to be utilised towards revival of the business of JIL irrespective of the outcome of legal proceedings. In the backdrop of these facts and circumstances, it was submitted that the said amount being for the cause of homebuyers, it was not open to JAL or its lenders or promoters or homebuyers to seek reopening of the issue concluded by the decision of this Court. 43.3. Having noticed the length and breadth of the arguments on the two sides, where one was supporting for utilisation of the said amount of INR 750 crores and accrued interest for the benefit of the homebuyers of JIL and where other side was arguing for return of the money to JAL, the NCLT proceeded to consider as to how this money was to be dealt with. 43.4. The NCLT referred to the background in which this Court had passed the order for deposit of the said amount where promoter– D directors of JAL and JIL were one and the same; and JIL/JAL had failed to deliver flats to the homebuyers of JIL within the timelines given by them. The NCLT observed that in the orders of this Court, JIL/JAL were directed to deposit a sum of INR 2,000 crores towards refund of the money of homebuyers; the Court had never treated that money as the property of JAL; and the only reason for this Court not distributing the deposited amount to the homebuyers was that only 8% of them were seeking refund whereas 92% had asked for possession of the flats and, in order to avoid preferential treatment, this issue was relegated to the NCLT. The NCLT further observed that though JAL was per se not a debtor to the homebuyers but, when the money had come on behalf of the debtor in relation to a debt obligation or for discharge of an obligation, neither the person depositing it could subsequently say that he was the owner of the money nor the money could be construed as a trust money. The NCLT held that this money had to be utilised to the obligation owed to the creditors of the corporate debtor and any decision for refund of money to JAL would be overreaching the wisdom of the Supreme Court. The NCLT, accordingly, disposed of all the applications with respect to the issue of INR 750 crores and held that this money is to be treated as the asset of the corporate debtor. The relevant passages of the observations and findings of NCLT in regard to this issue could be extracted as under: - H

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 685 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

“51. On reading the judgments and orders of Hon’ble Supreme A Court, it is evident that the Hon’ble Supreme Court is aware of the fact that JAL has deposited the money. It is aware of the fact that JIL money has gone to JAL for construction of the towers to the homebuyers of JIL, it is a fact that promoter-directors of JIL and JAL are one and the same. It is a fact that JIL/JAL failed to B deliver flats to the homebuyers of JIL within the timelines given by them. In all the orders of the Hon’ble Supreme Court, it has only been said that JIL/JAL shall deposit Rs. 2000 crore towards the refund of homebuyers money. It has not been treated that money as the money of JAL. On reading all the orders of the Hon’ble Supreme Court, all that could be ascertained is the C Hon’ble Supreme Court endeavoured to claw back the homebuyers’ money from JIL and JAL. In that pursuance, JAL deposited Rs. 750 crore. The only criteria for not distributing this Rs. 750 crore to the homebuyers is that only 8% of the homebuyers sought for refund of the money whereas 92% homebuyers have asked for flats, therefore to avoid preferential treatment, this issue has been relegated to the NCLT to deal with in accordance with IBC. One more fact is, though Hon’ble Supreme Court initially stayed the proceedings of CIRP, subsequently vacated the stay and allowed the IRP to proceed with CIRP.

52. In the backdrop of these facts and in the light of submissions made by either side, let us see what the Honourable Supreme Court held in Chitra Sharma “Directing disbursement of the amount of Rs. 750 Crore to the Homebuyers who seek refund would be manifestly improper and cause injustice to the Secured Creditors since it would amount to preferential treatment to a class of creditors” (Para 48.1 of Chitra Sharma case (2018) 18 SCC). This being the observation, now the point before us is how to go about it. It has not been said anywhere in the observation that this money should go back to JAL. Moreover the Hon’ble Supreme Court has not asked JAL/JIL to deposit the money on the condition that it would be returned to JAL in the event it has not been distributed to JIL homebuyers. It has not been said anywhere that it is the money of JAL.

53. It is a fact that if homes are not delivered within the time, the only recourse is either to complete the homes or to refund the H

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A money. Once a contract is not performed as stated under an agreement entered between the parties, if the party advanced money is entitled for refund of the money, the jural relation in between the person given the money and the person taken the money will become creditor and debtor relation. When such money has come back from the debtor to the creditor or to a B person in between for the cause of the creditor, it can never be called as the money of the debtor, it has to be treated as money returned to the creditor.

54. In this case, JAL has admittedly failed to complete the projects as stated by JIL and JAL. It is not the case that this money was given for charitable purpose. It is not the case that this money was deposited with the Hon’ble Supreme Court on the condition that it would be returned to JAL in the event it has not been distributed to the homebuyers. As long as debtor is liable to pay money to the creditor, once it has been deposited towards that payment, it can’t be stated that money belongs to the debtor. *** *** ***

56. ICICI Bank Counsel has argued that money is fungible, therefore unless money has gone out from JAL for repayment, it can’t be said as money deposited by JIL is the money payable to E JIL homebuyers.

57. No doubt money is fungible, but obligation to repay is not fungible, therefore when money is deposited or clawed back to repay it to the creditor, the money being fungible and there being an obligation for repayment, it can no more be considered as money owned by the debtor. Though JAL is per se not a debtor to the Homebuyers, when money has come on behalf of the debtor in relation to a debt obligation or for discharge of an obligation, the person deposited it towards that obligation cannot subsequently say that he is the owner of the money, therefore entitled for return of it.

58. If trust concept is examined, we will know that trust is a relationship where property/money held by one party for the benefit of another party. Trustee holds the property/money for the benefit of the trust beneficiaries. Trustee is under fiduciary duty to ensure that the property of the owner is maintained and the benefit thereof H

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 687 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

is reached to the persons to whom it is intended to. In the case of trust, the owner is under no obligation to pass on the benefit to the beneficiary, therefore, the owner/settler being the owner of the property, he is entitled to take it back in the event it is not utilized for the purpose the owner intended to. But that is not the case when money from the Debtor or on behalf of the Debtor has gone out towards discharge of an obligation. In the case of trust, ownership of that property or money remains with the owner as long as it is not utilized for the purpose intended to. That owner has no obligation to part with his property/money.

59. In case of homebuyers’ issue, once homebuyers entered into an agreement with a developer and when their relations entered into turbulence and not in a position to become normal, the relation in between them will become creditor and debtor and the person under obligation shall refund the money of the homebuyers. In the given case, JAL deposited money on behalf of JIL for utilization of the same to the homebuyers of the Corporate Debtor. Therefore, D it is evident that this deposit is made towards an obligation. When any money is received towards an obligation, it can neither be construed as trust money nor construed as governed by constructive trust, therefore we have not found any merit to say that this money is governed by trust concept. E

60. In this case, the homebuyers’ money has been lying with the Corporate Debtor and JAL, it is an admitted fact that money come from the Homebuyers has gone to JAL in the name of construction. It is not the case of the JAL that JIL money has not come for construction. Moreover, JAL, by the time it has deposited, was aware that it was depositing that money towards the obligation owned to JIL homebuyers.

61. Here there could not be any assumption or presumption to say that JAL deposited this money before the Honourable Supreme Court with an assumption that it would come back to it in the event this money has not been utilized for the distribution of it to the homebuyers of JIL.

62. As long as the Hon’ble Supreme Court has not stated that this money has to be returned to JAL, it has to be construed that the Hon’ble Supreme Court has consciously retained the money within H

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A the custody of it and thereafter transferred this money to NCLT with a direction that the parties shall abide by the directions of NCLT. Had the Hon’ble Supreme Court has felt that it should go back to JAL, the Honourable Supreme Court would have returned it to JAL, but it has not been done. Whenever any payment is made towards any liability, it has to be treated as a payment made towards that liability. It does not matter who paid the money, it matters as to whether it has been paid towards an obligation or not. Since JAL has without any objection or condition paid to the homebuyers of JIL on behalf of JIL, it has to be treated that the payment is towards the obligation of JIL. Though it has not been explicitly explained that JAL paid on behalf of JIL, the matter pending before the Hon’ble Supreme Court being with regard to homebuyers of JIL, when money was asked to be deposited towards refund of JIL homebuyers, and the same being paid by JAL, now it is not open to JAL to say that it is JAL’s money.

D 63. As to the argument saying that for Rs. 750 Crore has not gone into the books of Corporate Debtor (JIL), therefore it cannot be treated as the asset of JIL, when money has been deposited on the directions of Honourable Supreme Court and that has not been returned by Honourable Supreme Court, we are only limited to understand that the Honourable Supreme Court has not refunded E the money because refunding to a few creditors in preference to other creditors would become a preferential treatment, therefore such observation cannot be extrapolated to say that the Hon’ble Supreme Court has refused to refund the money on the assumption that this money has to go back to JAL.

F 64. If we see the situation in the perspective of the historical facts, it is evident that homebuyers paid money, JIL and JAL failed to deliver homes to the homebuyers, therefore the obligation lies upon JIL to satisfy that obligation either by refunding the money or by delivering homes to the homebuyers, for neither of the things being done, the money having passed from JIL to JAL, and part of it having come back as per the orders of the Hon’ble Supreme Court, now it is not open either to JAL or its creditors to canvass that this money is belonging to JAL.

65. In view thereof, we hereby consider that this money has to be utilized to the obligation owed to the creditors of the Corporate

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 689 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

Debtor and in case this Bench for any reason passes any order for return of this money to JAL, it would be nothing but overreaching the wisdom of the Hon’ble Supreme Court and its directions. When money has been paid by JAL towards an obligation as per directions of the Hon’ble Supreme Court, it can no more be considered as the assets of JAL. As to whether it has been stated in the information memorandum that this Rs. 750 Crore is an asset of the Corporate Debtor or not, every case has to be seen in the context of its facts. If at all for any reason, this is not shown as the asset of the corporate Debtor in the information memorandum, can it be said that the Hon’ble Supreme Court transferring the deposit to NCLT has no meaning? Any order that has been passed by the Hon’ble Supreme Court, is binding on all Courts and Tribunals, for there being no direction to return this money to JAL or to determine as to whether it has to be paid to JAL or not, it is not open to this Bench to draw any inference other than an inference considering that this money is an asset of the Corporate Debtor. Since JAL is not under further obligation to complete construction of homes, there is no occasion to assume that if this money go back to JAL, it would be utilized for the cause of the creditors of the Corporate Debtor, in view thereof, we hereby dispose of all CAs related to Rs. 750 Crore issue by holding that this money is to be treated as the asset of the Corporate E Debtor.”

44Copy pinpoint44. After having dealt with the issue of INR 750 crores, the NCLT took up the issue with regard to the approval of the resolution plan and for that matter, in the third segment of the impugned order, summarised the salient features of the resolution plan, which have already been noticed hereinbefore and need not be repeated. The objections dealt with by the NCLT in the fourth segment of its order dated 03.03.2020 could now be noticed with reference to the objector and the subject matter.

45Copy pinpoint45. It was submitted on behalf of JAL that the resolution plan could not be approved for the reasons that it was being used as a device for enrichment of NBCC at the cost of the corporate debtor where NBCC was attempting to acquire JIL having worth of about INR 8,257 crores for a petty sum of INR 120 crores; that the resolution plan was a contingent one where NBCC reserved its right to withdraw if the said sum of INR 750 crores was not treated as part of the resolution plan and H

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A JIL was not discharged of PMLA and other investigations; that the approval was inconsistent with Section 11(4)(g) of RERA; that simultaneous voting on two resolution plans was not permissible in law; that the resolution applicant wrongly suggested that there was no haircut in the proposed settlement of dues of financial creditors because the haircut was as far high as INR 6,101 crores which was 62.36% of the B debt of INR 9,783 crores. These contentions were countered by IRP with the submissions that the promoters of JAL and JIL had no locus to question the offer accepted by the CoC and as per the decision of this Court in the case of Maharashtra Seamless Limited v. Padmanabhan Venkatesh and Ors. (C.A. No. 4242 of 2019)37, no provision in the C Code required the resolution applicant to match the liquidation value; that no provision in the Code prevented simultaneous voting over two plans; and that as per the decision of this Court in the case of Pioneer Urban Land and Infrastructure Ltd. & Anr. v. Union of India & Ors.: (2019) 8 SCC 416, RERA and IBC co-exist and have to be interpreted harmoniously and in the event of a clash, RERA must give way to IBC. It was also submitted that when the homebuyers who were entitled to raise RERA objections had themselves voted in favour of the plan, the promoters/directors could not raise any grievance. There was a question of claim of the corporate debtor against JAL, being the amount given as mobilisation advance on which, there was a discrepancy in the accounting, but it was admitted on behalf of JAL that an amount of INR 274 crores was net receivable by JIL from JAL. To this, the NCLT directed payment of the said amount to JIL and for reconciliation of the account as regards the remaining dues. The NCLT had also brushed aside the submissions regarding the contingent nature of the plan with reference to its finding on the issue related to the said deposited sum of F INR 750 crores and Section 32A inserted to the Code by way of amendment with effect from 28.12.2019. The relevant observations of NCLT read as under: - “69. With regard to these two issues, this Bench has already decided that Rs. 750 Crore lying with NCLT shall be utilized for G the cause of the creditors of the Corporate Debtor and with regard to PMLA proceedings, for Section 32A being brought into existence by way of Amendment to the Code 28.12.2019, now there need not be any separate protection from the PMLA

37 H Since reported as (2020) 11 SCC 467.

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 691 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

proceedings over the assets of the Corporate Debtor, therefore we have not dealt with this issue, therefore the argument saying that plan is conditional has no merit. *** *** ***

72. Moreover, the calculation of figures given by JAL to say that figures placed by the Resolution Plan are not supported by material, in any event, this being an issue to be taken up by the CoC, this Bench cannot decide the fate of the resolution plan on the figures shown by the promoters of JIL and JAL, unless such plan is vitiated by fraud.

73. Apart from this, it is not the case of promoter/directors that company has positive net worth entitling the promoters of the company to receive the residual proceeds in the event company is liquidated. As long as liabilities are more than the assets of the company, the promoters/directors’ arguments cannot be seen as a point having bearing on the resolution plan approved by the CoC. D 74……….This objection over simultaneous voting per se does not look as an act in violation of the Code or Regulations thereto. No provision has envisaged that two plans should not be put to voting. Moreover there is no mandate that if two plans are put to voting, the plan voted in favour to be declared non est in law. E Doctrine of severance could be applied by validating the action doable under the law as valid. If any excess has happened, such excess can be taken out. Besides this, both the plans are not approved. In addition to it, unsuccessful Resolution Applicant has no grievance to the plan present before us. F

75. With regard to RERA issue, the IRP submits that the Hon’ble Supreme court in para 28 of Pioneer Urban Land & Infrastructure Limited & anr. Vs. Union of India & Ors. (WP (c) no. 43 of 2019) held that RERA and IBC must be held to co- exist and be interpreted harmoniously and in the event of clash, RERA must give way to IBC. G

76. When the home-buyers, who are entitled to raise RERA objection themselves have voted in favour of the plan, RERA violation if any, it cannot be the grievance of the promoters/ directors. H

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