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

A 77. With regard to Rs. 716 Crores claim against JAL by the Corporate Debtor, the IRP submits that after setting off the amount paid to JAL, the amount to be refunded by JAL is a sum of Rs. 594 Crores as on 31.12.2019. It is an admitted fact that mobilisation advance of Rs. 586 Crores is due and payable by JAL and JIL as on 31.12.2019, out of which JAL says, after setting off, the amount due and payable to JIL by JAL is only Rs. 274 Crores. However, JAL counsel has not placed material supporting the figures shown as set off, since JAL Counsel himself has stated that net receivable by JIL from JAL amounts to Rs. 274 crores, JAL shall forthwith pay Rs. 274 crores to JIL, as to remaining money as sought by the Resolution Applicant, JIL and JAL shall draft a reconciliation statement, accordingly payment has to be made to whomever any outstanding is payable.”

46Copy pinpoint46. Another major part of objections, in terms of magnitude and implication, came up from the dissenting financial creditor ICICI Bank. D It was submitted by this lender bank that being a dissenting financial creditor, it was entitled to receive payment as per the liquidation value in terms of Section 30(2)(b) of the Code read with Regulation 38(1)(b) of CIRP Regulations but in the resolution plan, it was sought to be provided only the land and equity in the SPVs proposed to be incorporated; and such a provision in the resolution plan was entirely impermissible. It was also submitted that while the assenting financial creditors were allowed to receive upfront payment of INR 300 crores on the basis of fresh debts raised by Expressway but the same benefit was not being extended to the dissenting financial creditors. The NCLT noted the star argument of the learned counsel for ICICI Bank that distribution of equity or the land parcels to the dissenting financial creditors does not satisfy the requirement of “payment” under Section 30(2) of the Code read with Regulation 38(1)(b) of the CIRP Regulations; and such payment has to be a liquidated sum, as stated under Section 53 of the Code. Per contra, it was contended on behalf of the resolution applicant and the IRP that it was nowhere envisaged in Section 30(2) of the Code that payment of liquidation value to dissenting financial creditors has to be in cash; that even Regulation 38(1)(b) of the CIRP Regulations only provided for the priority of payment to the dissenting financial creditors before the assenting financial creditors and the mode of payment to be in cash was not mentioned; that when the assenting financial creditors were not being paid in cash and had accepted equity and land parcels, payment to the

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 693 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

dissenting financial creditors in cash would cause prejudice to the rights of the assenting financial creditors. Meaning of the word “payment” in Black’s Law Dictionary was also cited and it was argued that the money or other valuable thing delivered to discharge the obligation is to be construed as payment under Section 30(2) of the Code. 46.1. While dealing with the rival submissions in relation to this claim of the dissenting financial creditor, the NCLT referred to the binding nature of agreement between JIL and the said creditor as also the rights of a dissenting financial creditor in terms of Sections 30(2) and 53 of the Code and concluded that the only recourse available was payment in cash to such dissenting financial creditor a sum equivalent to the liquidated sum he would be entitled to receive under Section 53 of the Code. The C NCLT said,- “91. If you come to the resolution under IBC, there are two outcomes in it. One is some creditors agreeing for a resolution to the existing situation. Another is, some creditors may not agree for the resolution. The persons agree for the resolution, they are no doubt bound by the arrangement they agreed upon. But as to the dissenting creditors, who have not agreed for the resolution, they are governed by sections 30(2) & 53 of the Code. In the case of dissenting creditor, the Corporate Debtor or the Resolution Applicant stepping into the shoes of the Corporate Debtor is bound by the earlier contract entered between the Corporate Debtor and the dissenting financial creditor and then by the pro rata distribution entitled u/s 53 of the Code. The only recourse available is, the dissenting creditor shall be paid in cash equivalent to the liquidated sum he is entitled to receive u/s 53 of the Code. It is a deeming fiction to calculate the liquidated sum payable to the dissenting financial creditor and pay the same to the dissenting creditor as if the company is liquidated. To make such payment, the company need not be factually liquidated.” 46.2. The word “payment”, as defined in Black’s Law Dictionary was also analysed by NCLT and it was stated that the obligation has to be seen and in the instant case, the obligation was repayment of money lent along with interest. It was observed, that the dissenting financial creditors were to be paid in cash not just by virtue of Section 53 of the Code but also by virtue of the terms and conditions of the agreement between JIL and the dissenting financial creditor, in the following words:- H

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A “92….Therefore this argument will not be ticking to say that payment in kind to the promise is discharge of obligation. If the promisee has agreed to give up the payment obligation, he is free to do so. In this case, for the dissenting financial creditor has not agreed to the approval of the resolution plan, they shall be paid in cash, not only by virtue of the mandate under Section 53 of the B Code but also by virtue of terms and conditions of the agreement between the Corporate Debtor and the dissenting financial creditor.” 46.3. The NCLT further observed that upon approval of the plan by the CoC, it was not open to the parties to say that, since the assenting creditors were not getting better treatment than the dissenting creditor, the dissenting creditor shall remain bound to the plan; and when a particular issue was governed by law, something not present in the law could not be thrust upon any party under the cover of equity. The NCLT, thereafter, proceeded to analyse the requirements of Section 30(2) of the Code with Section 53 and Regulation 38 of the CIRP Regulations; and also examined its powers to deal with those aspects of the resolution plan which were not compliant with Section 30(2) of the Code. Having examined and analysed thus, the NCLT held that when the resolution plan is found non-compliant with Section 30(2), the IRP or the resolution applicant cannot say that the approval being within the ambit of commercial wisdom of CoC, all what was decided by CoC was binding on the dissenting financial creditor; and it was within its (NCLT’s) jurisdiction to modify the plan so as to make it compliant with the requirements of law without altering its basic structure. The NCLT observed and held as under: - F “98. If section 30(2) (b) (ii) is carefully examined, and read in the context of the said clause, it is clear that payment will be the amount to be paid to the financial creditors under Section 53 of the code, because it is for payment of the debts of the financial creditors, thereafter it has been further stated it shall be not less than the amount to be paid to them in accordance with Section 53 G of the code.

99. When all these provisions and IBBI specifications made clear payment to the dissenting financial creditors means payment of amount, the resolution professional or the resolution applicant cannot argue that the payment can, not only be in cash but also in kind.

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 695 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

100. The persons agreeing for something, they may agree for anything, it does not mean that the persons disagreeing shall also be treated as the assenting financial creditors are treated. When any financial creditor disagreed for a resolution, he knows that he has to be compromised with the situation befall upon him under Section 53 of the code. It does not matter as to whether his entitlement under Section 53 is more or less than the treatment assenting financial creditors getting. Their rights are already compromised under section 53 slating them to their entitlement on pro rata basis. They cannot be put to further sufferance at the wish of the Resolution Applicant or the CoC. As Section 30 (2) has referred to section 53 entitlement, and this Bench being made custodian to verify as to whether section 30(2) compliance has been accomplished or not, the RP or the resolution plan applicant cannot say that plan approval is within the ambit of commercial wisdom of the CoC therefore what all that is decided by the CoC is binding upon the dissenting financial creditors. Whenever such compliance is not present in the plan, this Bench is authorised to examine the same and interfere with the plan despite the plan has been approved as contemplated under Section 30(4) of the code.

101. Looking at the resolution plan treatment to the dissenting financial creditor in the light of the aforesaid legal proposition, since it has not been said in the Code that plan should be approved as submitted by the resolution professional under Section 30(6) of the code, we are of the view that this Bench has jurisdiction to approve the plan by modifying the plan to the extent that does not alter the basic structure of the plan.” (underlining is in original) F

46.4. Having thus held on the requirements of modification of the plan in relation to the treatment of the dissenting financial creditor while retaining its basic structure, the NCLT observed that the two aspects which were made the basic conditions by the resolution applicant namely, getting the said sum of INR 750 crores and extinguishing of PMLA G proceedings were duly taken care of, respectively by the decision in relation to the said corpus of INR 750 crores and by the amendment of law. The NCLT further observed that for the sake of viability and feasibility, the plan could be modified to make it compliant with Section 30(2) of the Code. Having said so, NCLT proceeded to modify the terms of resolution H

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A plan in the manner that the resolution applicant shall pay to the dissenting financial creditor the amount receivable in terms of Section 53 of the Code in twelve monthly instalments along with interest starting from six months from the date of order with default conditions of interest. The NCLT ordered as under: - B “103. In view of the same, for the sake of viability and feasibility of the plan, we hereby modify this plan to make it in compliance with the section 30(2) (b) (ii) of the code by holding that the Resolution Applicant shall pay to ICICI an amount that it is entitled to receive u/s 53 of the code within 18 months from the date of approval of this plan, that is in 12 equal monthly instalments along C with interest over the admitted claim starting from six months hereof. In the event, the Resolution Applicant has failed to repay as stated above, ICICI is entitled to claim commercial interest over the admitted claim from the date of default, that is from the first month of 12 monthly instalments.”

47Copy pinpoint47. Another major contentious issue before the Adjudicating Authority related to the objections of YEIDA. As noticed, YEIDA had been the land providing agency and had entered into Concession Agreement for leasing the land for construction of Expressway and also for the purpose of development of the surrounding parcels of land. E 47.1. The NCLT noticed that as per the said CA, the concessionaire (JIL) was to bear the acquisition cost for the project land given to it and in consideration, the concessionaire would obtain the right to develop land for commercial exploitation and the right to operate the Expressway and collect toll for a period of 36 years; and after the expiry F of 36 years from the grant of concession, the Expressway shall revert to YEIDA. As to the land for development, it was given on lease for 90 years. It was essentially submitted on behalf of YEIDA that the question, of additional compensation of the land acquired, cropped up with the directions of the Allahabad High Court; and that the liability in regard to the additional compensation in relation to the land acquired and leased to G JIL was that of the corporate debtor JIL. It was also pointed out that the question of such additional compensation by JIL was subjected to arbitration proceedings where an award was made to the effect that the corporate debtor need not pay this amount of additional compensation but the award has been questioned by YEIDA in the proceedings under H

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 697 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

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A provided necessary changes were made in it ‘by removing the fall outs from the concession agreement’. 47.2. In regard to this issue relating to the objections and submissions on behalf of YEIDA, the NCLT was of the view that CoC should not have approved the resolution plan stating that the additional compensation would be collected from the end-users; and proceeded to modulate the terms of the resolution plan to read that YEIDA shall have the right to collect the acquisition cost through the SPVs concerned. As regards the issue as to whether additional compensation need not be paid with regard to the Expressway for the same would revert to YEIDA after 36 years, the NCLT found it appropriate to read down the resolution plan as leaving it open to the parties to have proper recourse over this issue in the competent forum when occasion so arise. The NCLT also observed that the Concession Agreement was based on the statute created by the State Government and, therefore, any violation of terms and conditions of the same would be the violation of law in force. The NCLT, however, again recorded the submissions on behalf of YEIDA that their endeavour was only for compliance of the terms and conditions of CA in order to ensure proper monitoring on realisation of dues and supervision over the work of corporate debtors or SPVs but not for rejection of the resolution plan. The relevant observations, findings and directions of YEIDA in regard to this issue read as under: - E “118. On hearing the submissions of either side, with regard to payment of additional compensation, in the event any direction has been given in the arbitration proceedings to the Corporate Debtor to pay additional compensation, as per concession agreement, additional cost shall be paid by the concessionaire. F We don’t go into the point as to whether additional compensation is part of the acquisition cost because i.e. a point already Adjudicated by the Arbitral Authority and the issue is pending before the Hon’ble High Court of Delhi, now the limited point to be dealt with is, as to whether such compensation, if directed to be paid, is to be paid by the concessionaire or by the end users.

119. As said above, there are two payment components come from the concessionaire one is acquisition cost, two is the lease rentals. In the concession agreement, it is obvious that acquisition cost (actual cost) shall be paid by the concessionaire, as to lease rentals are concerned, it has been dealt with in detail that lease

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 699 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

rentals could be collected either from sub-lessee or from the end users, wherever the interest is transferred either to the sub-lessee or the end users. Therefore, CoC should not have approved the resolution plan stating that the compensation, if awarded, shall be collected from the end users.

120. To iron out all these creases and to make this resolution plan viable, we hereby direct that the resolution plan shall be read as YEIDA has right to collect acquisition cost through the SPVs concerned.

121. With regard to other objections that additional compensation need not be paid with regard to Expressway land on the premise that since Expressway will revert to YEIDA after 36 years, YEIDA counsel submits that this land has been given on consideration of collection of toll for about 36 years.

122. In the backdrop of this factual scenario, we are of view that both are governed by concession agreement, therefore the D Resolution Plan is to be read that it is left open to both the parties to have proper recourse over this issue before Competent Forum of law when time comes for payment of additional compensation.

123. On transfer of concessionaire’s rights and obligations to SPVs, as per the concession agreement, it is clear that this Corporate Debtor is a concessionaire, for the first time concessionaire having proposed to transfer its rights and obligations to the aforesaid two SPVs, we are of the view that documents shall be executed between the concessionaire, YEIDA and each of the SPVs. At last we must say that the concession Agreement is based on the statute created by the State Government, therefore any violation of the terms and conditions of the concession agreement is violation of the law in force as contemplated under section 30(2) of the Code, it has been decided as above.

124. Despite YEIDA counsel representing the State Government Authorities with regard to its rights, the counsel has categorically mentioned that YEIDA’s endeavour is only for compliance of the terms and conditions of concession agreement so that the State Agencies will have proper monitoring on realization of its dues and will have proper supervision over the works of the Corporate Debtor or its SPVs, but not to ensure that this resolution plan is rejected by this Bench on the grounds aforementioned.” H

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48Copy pinpoint48. After having dealt with the aforesaid major issues relating to INR 750 crores, objections of JAL and its stakeholders, ICICI Bank and YEIDA, the NCLT proceeded to deal with the other issues relating to the fixed deposit holders, some of the aggrieved homebuyers, YES Bank and the agreement holders. B 48.1. As regards fixed deposit holders, the NCLT provided that the resolution applicant shall make a provision to clear their dues as and when the unclaimed fixed deposit holder claims it, and this right will remain in force as long as they were entitled to claim under the Companies Act, 2013. These directions of NCLT in the impugned order read as under: - C “125. Regarding FD holders payments who have not made claims which have been reflected in the records of the Corporate Debtor, the Plan Applicant shall make a provision to clear their dues as and when the unclaimed FD holder claims it, and this right will remain in force as long as they are entitled to claim under D Companies Act 2013.” 48.2. The NCLT also took note of the submissions of some of the homebuyers who were not agreeing with the resolution plan in question. Those dissatisfied homebuyers submitted that the timelines given in the resolution plan for completion of flats were not workable; there was no clause for refund of money in the event flats not being completed within the timelines envisaged, except to the extent of nominal interest; and that the voting share of homebuyers being only 57.66%, it cannot be said that cent percent consent had been given for approval of the resolution plan by CoC. The NCLT declined to recognise such objectors as dissenting financial creditors because authorised representative of this class of creditors had voted in favour of the resolution plan. The NCLT observed and held as under: - “126. One Rashmi Singhal and another applicant calling themselves as dissenting home-buyers, filed IA 871/2020, stating that the time lines given in the Resolution Plan for completion of flats are not workable and for there being no clause for refund of money in the event flats are not completed within the time lines envisaged, except to the extent of nominal interest mentioned in the plan, these two submit that they have dissented for the approval of the Resolution Plan. They have further relied upon voting share saying homebuyers voting share is only 57.66% therefore, it cannot be

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 701 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

called that cent percent consent has been given for approval of the Resolution Plan by CoC. For there being a rule under IBC, whenever more than 50% voting has come from a class of creditors represented by an authorized representative, the approval given to the authorized representative for more than 50% will become 100% approval, therefore it cannot be said that dissenting homebuyers before authorised representative to be considered as dissenting financial creditors against the total voting of CoC. If the authorized representative dissented in the CoC, then the respective class of creditors would be considered as dissenting financial creditors. Moreover, if at all any dissenting financial creditor is there, his only look out is as to whether he has been paid as per Section 30(2) of the Code or not but not to see whether the Resolution Plan is workable or not.” 48.3. As regards the objections raised by YES Bank, which had given loan to Jaiprakash Healthcare Ltd., a wholly-owned subsidiary of JIL, against dealing with the shares of its borrower (JHL) in the resolution plan, the NCLT observed that the resolution applicant and the said Bank having agreed for constitution of a Committee to deal with the shares and assets of JHL, that issue was not required to be discussed. The NCLT said, - “127. YES Bank, which has given loan to Jaiprakash Health Care E subsidiary of JIL, has also raised an objection against dealing with the shares of the Health Care belonging to the Corporate Debtor. However, since the Resolution Applicant and YES Bank having agreed for constitution of a Committee to deal with the shares and assets of the subsidiary company, we are under no obligation to discuss this issue any further.” F

48.4. As regards the right reserved by the resolution applicant to cancel the transactions where certain parcels of land were transferred by the corporate debtor without proper agreement/sub-lease deed, NCLT noticed the submission made by such agreement holders that the agreements were executed by the corporate debtor in the normal course G of its business prior to the commencement of CIRP and monies were also advanced; and therefore, such agreements could not be terminated unilaterally. The NCLT also noticed the counter submissions by IRP and NBCC that the agreements allegedly executed between the corporate debtor and the agreement holders had not been determined, but the H

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A resolution applicant has reserved its right to cancel such instruments wherever the corporate debtor had entered into deals without proper agreements and without support of consideration. In this regard, the NCLT observed that if an agreement was not valid in law and suffered from want of consideration, it was not even required to be said that such agreement could be cancelled by the party concerned. However, the B NCLT further observed that even when such a clause had been mentioned, the agreement holders had not lost their right to seek remedy in the competent forum; and determined this part of the matter in the following words: - “132. It is a trite law when an agreement is not valid in the eyes of law and consideration has not been paid, then it need not be separately said that such agreement could be cancelled by the effected party.

133. Though such clause has been mentioned, it does not mean that the agreement holders have lost their rights to seek remedy for its grievances before Competent Forum, in view thereof, this clause need not be considered as clause effecting the rights of the alleged agreement holders.” 48.5. The NCLT also made observations as regards the objections raised by JAL and other objectors against inclusion of 858 acres 40 as part of the resolution plan and pointed out that such an objection lost its relevance after the decision of this Court dated 26.02.2020 in the case of Anuj Jain (supra).

49Copy pinpoint49. Having thus dealt with the relevant objections, the NCLT entered into the fifth segment of its order and generally dealt with the provisions relating to the reliefs and concessions with the observations/ directions as under: - “134. The clauses already covered in the aforesaid discussion will not be discussed again, but as to the clauses not covered above are hereby dealt with as follow: - G Clauses 1 to 5 have already been covered in the above discussion. Clause No. 6:- With regard to the past liabilities of income tax authority, they shall stand extinguished. 40 This figure was corrected on 17.03.2020 by NCLT as ‘758 acres’ in terms of the order of this Court dated 26.02.2020.

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 703 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

Clause No. 7:- Since reduction of the share capital of the corporate debtor is not part of this resolution, this Adjudicating Authority cannot waive the procedure for reduction of share capital in relation to the companies not yet incorporated. Clause No. 8 & 10:- Payment of stamp duty mentioned in clause 8 is waived to the extent permissible under law. B Clause No. 9:- Any non-compliance arising out of past claims prior to CIRP initiation shall not have any bearing on this corporate debtor from hereof. Clause No. 11:- The lenders to the corporate debtor shall regularise all the accounts and ensure that such classification of the loan C account is standard in their books with effect from the transfer dates. Clause No. 12:- All claims which have been placed before the RP and any criminal proceedings appurtenant to those claims are hereby extinguished. D Clause No. 13:- As to the contracts relating to the development of land by JAL, the Resolution applicant can reserve its right to terminate the same, as to the claims, if any, the resolution applicant has right to take appropriate action against JAL. E Clause No. 14:- With regard to liability arising out of concession agreement in relation to YEIDA, since those issues are governed by concession agreement, this Bench cannot nullify the rights of YEIDA against the corporate debtor emanating from the concession agreement. F Clause No. 15:- The agreements for subleases executed between the corporate debtor and the third parties, which are not in accordance with law and not supported by material proof, the Resolution applicant will have a right to terminate in accordance with law. Clause No. 16 to 18:- The resolution applicant is granted 12 months’ G time from the approval date to ensure compliances in relation to the non-compliance of applicable laws by the corporate debtor or of its subsidiary pertaining to any period up to the approval date and licenses if any, to be obtained. H

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A Clause No. 19:- In respect to the lands shown as transferred to JAL for real estate development, where the title and ownership is still lying with the corporate debtor, the resolution applicant is at liberty to proceed in accordance with law. Clause No. 20:- It goes without saying that the IRP will not be held responsible with regard to discharge of his duties during CIR Process. The IRP and the Resolution Applicant will not be liable for any transactions carried out by the ex-management of the corporate debtor. Clause No. 21:- This point has already been dealt with in the above discussion. Clause No. 22:- For the purpose of consolidation of the books of the CD with the resolution applicant, the effective date shall be treated as the first day of the quarter immediately succeeding quarter in which the resolution applicant completes the takeover of the CD. Clause No. 23:- This point is not clear as to whether it is referring to the land of the Corporate Debtor mortgaged to the lenders of JAL, if that is so, since it has been decided by the Honourable Supreme Court, it need not be reiterated. E Clause No. 24:- This generalization of cancellation of all agreements cannot be granted unless each transaction is specifically dealt with. Clause No. 25:- The resolution applicant cannot modify the resolution plan once it is approved by the CoC. F Clause No. 26:- As to the claims placed before the IRP and other liabilities of the CD which are shown in the records of the company and where notice has been given to such creditors, they can be construed as withdrawn after the approval date. Clause No. 27:- With regard to extension of concession period by G YEIDA, it is YEIDA to decide as to whether such extension should be given or not. Clause No. 28:- This Adjudicating Authority can only direct the Central Government and Reserve Bank of India to accord permissions to the extent permissible under law.” H

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 705 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

50Copy pinpoint50. As regards other applications/objections, the NCLT disposed them of with comments wherever required. We need not elaborate on all such observations but could usefully point out the rejection of two such applications. 50.1. One such application was filed by a financer of one of the homebuyers seeking its induction in the CoC. This application was dismissed as misconceived in the following words: - “CA-74/2019 filed by PNB Housing Finance Ltd. for directions to the IRP to induct this applicant in the CoC and if any amount is refunded to the home-buyers, the amount due to the applicant ought to be paid to this applicant because it is the lender to the home-buyers. This application is dismissed as misconceived, as the lender to the home-buyers will not have any right to be financial creditors of the CD.” 50.2. Another application was filed by three homebuyers seeking the relief of quashing the minutes of CoC dated 01.03.2019; for direction to conduct a forensic land audit of the corporate debtor; and for various directions to IRP, like those for taking legal opinion on Concession Agreement, analysis of Expressway cost escalation, providing information and answers to the queries of homebuyers etc. etc. The NCLT noted the propositions of these applicants and dismissed the application with the observations that they were three persons out of thousands of homebuyers and if such issues were to be examined and decided, the resolution process could never be completed; and at the stage of approval of the resolution plan, if objections of this kind were allowed, there would be no end to it. The NCLT said, - “It is an application filed by Mr. Hemant Kumar & two others, who do not have direct voting in the CoC, because there are thousands of home-buyers, out of them these three are minuscule in number, if at all these issues are to be examined and decided, and remain waiting for the remedies, this resolution process will not complete even after two years from hereof. Moreover, at the time of approval of this resolution plan, if objections of this kind are allowed there cannot be any end to it, therefore, this application is hereby dismissed.”

51Copy pinpoint51. With the aforesaid, the Adjudicating Authority (NCLT) concluded on the matter while disposing of all the applications and while H

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A holding that all the stakeholders shall remain bound by the order so passed. However, various stakeholders have various submissions to make and various objections to take against the order so passed by the Adjudicating Authority.

52Copy pinpoint52. Having taken note of the relevant contents of the order dated B 03.03.2020, as passed by the Adjudicating Authority (NCLT) in exercise of its jurisdiction under Section 31 of the Code, it would be worthwhile to summarise the significant attributes of, and takeaways from, this order because a substantial part of the forthcoming discussion shall be revolving around the findings recorded and directions given therein. The relevant aspects could be summarised as follows: C (a) As regards the said sum of INR 750 crores, the Adjudicating Authority, with reference to the orders passed by this Court in the case of Chitra Sharma (supra), held that the deposit made by JAL became an asset of the corporate debtor JIL; and the said money was to be utilised towards securing the interests of homebuyers. As regards the D question of the amount payable by JAL to JIL, it was directed that JAL shall make payment of the admitted amount of INR 274 crores; and after reconciliation of accounts, further payment shall be made to whomsoever outstanding was found payable. (b) As regards the objections by the dissenting financial creditor E ICICI Bank, the Adjudicating Authority held that payment to such dissenting financial creditor shall be made in cash, as per the amount it would be entitled to under Section 53 of the Code, in the form of twelve monthly instalments with interest to be accrued six months post the order. It was also observed by the Adjudicating Authority that it had the necessary jurisdiction to modify the resolution plan to make sure it complied with Section 30(2) of the Code, so long as its basic structure was not altered. (c) As regards the objections by YEIDA, the Adjudicating Authority held that YEIDA shall have the right to collect the acquisition cost through the SPVs proposed to be incorporated so as to make the resolution plan compliant with the terms of the Concession Agreement; however, the Adjudicating Authority refrained from adjudicating on the issue of additional compensation in relation to the land under Expressway and left it for the parties to take appropriate action at the appropriate stage. The Adjudicating Authority also held that for transfer of rights and H

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 707 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

obligations to the two SPVs, necessary documents shall be executed A involving the concessionaire (JIL), YEIDA and the SPV concerned. These alterations were ordered by the Adjudicating Authority ‘to iron out all these creases and to make this resolution plan viable’. (d) As regards the issue relating to the fixed deposit holders, the Adjudicating Authority provided that the resolution applicant shall make B a provision to clear the dues even of those fixed deposit holders who had not made the claims. In other words, the Adjudicating Authority directed for another modification of the resolution plan, for satisfying the dues of unclaimed fixed deposit holders. (e) The Adjudicating Authority brushed aside the objections sought C to be taken by some of the aggrieved homebuyers, while holding that they could not be categorised or treated as dissenting financial creditors. (f) As regards the objections by YES Bank, the Adjudicating Authority pointed out that no intervention was required since YES Bank agreed to settle its objections with NBCC by forming a Committee. D (g) As regards the agreement holders, the Adjudicating Authority observed that if an agreement was not valid in law and suffered from want of consideration, it was not even required to be said that such agreement could be cancelled by the party concerned. However, the Adjudicating Authority also observed that even when such a clause had E been mentioned in the resolution plan, the agreement holders had not lost their right to seek remedy in the competent forum. (h) The Adjudicating Authority generally dealt with the clauses relating to the ‘reliefs and concessions’ in Schedule 3 of the resolution plan as also various other applications filed by different stakeholders. F Some of the reliefs and concessions sought for by the resolution applicant were not granted or were declined, for the reasons specified against the relevant clauses. The other applications/objections were disposed of with a few comments. Order dated 22.04.2020 by NCLAT making interim G arrangement

53Copy pinpoint53. As noticed at the outset, the aforesaid order dated 03.03.2020 was challenged in various appeals before the Appellate Authority (NCLAT), which have since been withdrawn to this Court after we took note of all the factors concerning this litigation and accepted the requests H

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A made by the parties concerned. Such requests were made when the matters first appeared before us in challenge to an interim order dated 22.04.2020 passed by NCLAT, whereby the NCLAT made an interim arrangement of constitution of an Interim Monitoring Committee for implementation of the plan in question. The said order dated 22.04.2020, being also a subject of challenge in this batch, could be usefully noticed to complete the narrative.

54Copy pinpoint54. The resolution applicant NBCC preferred an appeal against the aforesaid order dated 03.03.2020 insofar as it felt aggrieved of the modifications in the resolution plan. In that appeal, the NCLAT, while issuing notice to the unrepresented parties, directed that the approved resolution plan may be implemented subject to the outcome of appeal but at the same time, it was also provided that IRP may constitute an Interim Monitoring Committee comprising of the successful resolution applicant (NBCC) and three major institutional financial creditors, who were the members of CoC. This impugned interim order dated 22.04.2020 D reads as under: - “22.04.2020 The Appellant – NBCC (India) Ltd., which has emerged as the Successful Resolution Applicant in ‘Corporate Insolvency Resolution Process’ initiated against Jaypee Infratech Ltd. (JIL) is aggrieved of modifications made by the learned E Adjudicating Authority in the ‘Resolution Plan’ submitted by it and as approved by the ‘Committee of Creditors’ to the extent it allows objections of ICICI Bank Ltd. and Yamuna Expressway Industrial Development Authority and directs payment to unclaimed Fixed Deposit Holders. It is submitted that the learned Adjudicating Authority could not intercede the business decision F of the ‘Committee of Creditors’ taken by the prescribed voting shares and the learned Adjudicating Authority exceeded its jurisdiction in making such modifications. Issue notice to the Respondents through Speed Post in the main appeal as well as in the Interim Application. G On behalf of ICICI Bank Ltd., Ms. Misha, learned Counsel accepts notice. On behalf of Respondent No.4 – Interim Resolution Professional, Mr. Sumant Batra, learned Counsel accepts notice. On behalf of Respondent No.5 – IDBI Bank, Mr. Bidhwajit Dubey, learned Counsel accepts Notice. No further notice be served upon these Respondents. The above Respondents may file their reply

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 709 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

affidavits within two weeks. Rejoinders, if any be filed within one week thereof. Let notice be served upon Respondent Nos.2 and 3. Requisites along with process fee be filed within three days. If the Appellant provides email addresses of the Respondents, let service be effected through email also. B Mr. Sumant Batra, learned Counsel representing the ‘Resolution Professional’ intends to file an Appeal in regard to some observations made in paragraph 103 of the impugned order. We are told that the implementation of the ‘Successful Resolution Plan’ would involve participation of the ‘Successful Resolution C Applicant’, i.e. NBCC (India) Ltd. as also the three major Institutional Financial Creditors, who are Members of the ‘Committee of Creditors’ i.e., IDBI Bank Ltd., IIFCL and LIC. Meanwhile, till further orders, the approved ‘Resolution Plan’ may be implemented subject to outcome of this Appeal. The Interim D Resolution Professional may constitute ‘Interim Monitoring Committee’ comprising of the ‘Successful Resolution Applicant’, i.e., the Appellant and the three major Institutional Financial Creditors, who were Members of the ‘Committee of Creditors’ as named above. E Mr. Sumant Batra, learned Counsel submits that as of now he is continuing and managing the affairs of the ‘Corporate Debtor’. The Resolution Professional, who would be constituent of the ‘Interim Monitoring Committee’ shall continue to be paid as may be deemed reasonable by the ‘Interim Monitoring Committee’ F from the date of this order. If any fee is outstanding for the past services rendered by the Resolution Professional during the ‘Corporate Insolvency Resolution Process’, the same shall be paid as per the decision of the ‘Committee of Creditors’. These directions will last till the disposal of this Appeal. G List the matter for ‘admission after notice’ on 15th May, 2020.” The relevant statutory provisions

55Copy pinpoint55. Having taken note of the parties and their respective interests; the principal points for determination; the relevant factual and background aspects, particularly with reference to the three decisions of this Court H

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A dated 09.08.2018, 06.11.2019 and 26.02.2020; the salient features of the resolution plan; and key aspect of the orders impugned, we may now go through the provisions that would be relevant for determination of the points arising in this batch of matters.

56Copy pinpoint56. While the expressions generally used in the Code are defined B in Section 3 but then, the expressions employed for the purpose of Part II of the Code, dealing with insolvency resolution and liquidation of corporate persons, are defined in Section 5 thereof. 56.1. The relevant definitions as occurring in Section 3 are as under: - C “Section 3(8): “corporate debtor” means a corporate person who owes a debt to any person; Section 3(10): “creditor” means any person to whom a debt is owed and includes a financial creditor, an operational creditor, a secured creditor, an unsecured creditor and a decree-holder; D Section 3(11): “debt” means a liability or obligation in respect of a claim which is due from any person and includes a financial debt and operational debt; Section 3(12): “default” means non-payment of debt when whole or any part or instalment of the amount of debt has become due E and payable and is not paid by the debtor or the corporate debtor, as the case may be; Section 3(30): “secured creditor” means a creditor in favour of whom security interest is created; F Section 3(31): “security interest” means right, title or interest or a claim to property, created in favour of, or provided for a secured creditor by a transaction which secures payment or performance of an obligation and includes mortgage, charge, hypothecation, assignment and encumbrance or any other agreement or arrangement securing payment or performance of any obligation of any person: Provided that security interest shall not include a performance guarantee;” 56.2. The relevant definitions occurring in Section 5 for the purpose of Part II of the Code are as under: -

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 711 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

“Section 5(1): “Adjudicating Authority”, for the purposes of this A Part, means National Company Law Tribunal constituted under section 408 of the Companies Act, 2013 (18 of 2013); Section 5(7): “financial creditor” means any person to whom a financial debt is owed and includes a person to whom such debt has been legally assigned or transferred to; B Section 5(8): “financial debt” means a debt alongwith interest, if any, which is disbursed against the consideration for the time value of money and includes- (a) money borrowed against the payment of interest; C (b) any amount raised by acceptance under any acceptance credit facility or its de-materialised equivalent; (c) any amount raised pursuant to any note purchase facility or the issue of bonds, notes, debentures, loan stock or any similar instrument; D (d) the amount of any liability in respect of any lease or hire purchase contract which is deemed as a finance or capital lease under the Indian Accounting Standards or such other accounting standards as may be prescribed; (e) receivables sold or discounted other than any receivables sold E on non-recourse basis; (f) any amount raised under any other transaction, including any forward sale or purchase agreement, having the commercial effect of a borrowing; 41 [Explanation.- For the purposes of this sub-clause,- F

(i) any amount raised from an allottee under a real estate project shall be deemed to be an amount having the commercial effect of a borrowing; and (ii) the expressions, “allottee” and “real estate project” shall have G the meanings respectively assigned to them in clauses (d) and (zn) of section 2 of the Real Estate (Regulation and Development) Act, 2016 (16 of 2016);]

41 This Explanation was inserted by Act 26 of 2018 w.r.e.f. 06.06.2018. H

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A (g) any derivative transaction entered into in connection with protection against or benefit from fluctuation in any rate or price and for calculating the value of any derivative transaction, only the market value of such transaction shall be taken into account; (h) any counter-indemnity obligation in respect of a guarantee, B indemnity, bond, documentary letter of credit or any other instrument issued by a bank or financial institution; (i) the amount of any liability in respect of any of the guarantee or indemnity for any of the items referred to in sub-clauses (a) to (h) of this clause; C Section 5(20): “operational creditor” means a person to whom an operational debt is owed and includes any person to whom such debt has been legally assigned or transferred; Section 5(21): “operational debt” means a claim in respect of the provision of goods or services including employment or a debt in respect of the payment of dues arising under any law for the time being in force and payable to the Central Government, any State Government or any local authority; Section 5(25): “resolution applicant” means a person, who individually or jointly with any other person, submits a resolution plan to the resolution professional pursuant to the invitation made under clause (h) of sub-section (2) of section 25; Section 5(26): “resolution plan” means a plan proposed by resolution applicant for insolvency resolution of the corporate debtor as a going concern in accordance with Part II F 42 [Explanation.- For removal of doubts, it is hereby clarified that a resolution plan may include provisions for the restructuring of the corporate debtor, including by way of merger, amalgamation and demerger;] Section 5(27): “resolution professional”, for the purposes of this G Part, means an insolvency professional appointed to conduct the corporate insolvency resolution process and includes an interim resolution professional; and

42 H Inserted by Act 26 of 2019, sec. 2 (w.e.f. 16.08.2019).

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 713 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

Section 5(28): “voting share” means the share of the voting rights A of a single financial creditor in the committee of creditors which is based on the proportion of the financial debt owed to such financial creditor in relation to the financial debt owed by the corporate debtor.”

57Copy pinpoint57. As already indicated, and which is not far to seek, the B Explanation inserted to sub-clause (f) of clause (8) of Section 5 with effect from 06.06.2018 made it clear that any amount raised from an allottee under a real estate project is deemed to be having the commercial effect of a borrowing and thereby, it answers to the description of a “financial debt”. The pertinent consequence of this clarificatory amendment is that such an allottee under a real estate project stands in C the capacity of a financial creditor of the corporate debtor. Prior to this amendment, such an allottee was sought to be regarded only as an ‘other creditor’ and that had been the principal cause behind the litigation in this Court in Chitra Sharma (supra). For a complete and meaningful understanding of this Explanation inserted to Section 5(8)(f) of the Code, D it would be in concordance to take note of the meanings assigned to the expressions “allottee” and “real estate project” in RERA. The referred clauses (d) and (zn) of Section 2 of RERA read as under: - “Section 2(d): “allottee” in relation to a real estate project, means the person to whom a plot, apartment or building, as the case may E be, has been allotted, sold (whether as freehold or leasehold) or otherwise transferred by the promoter, and includes the person who subsequently acquires the said allotment through sale, transfer or otherwise but does not include a person to whom such plot, apartment or building, as the case may be, is given on rent; F Section 2(zn): “real estate project” means the development of a building or a building consisting or apartments, or converting an existing building or a part thereof into apartments, or the development of land into plots or apartments, as the case may be, for the purpose of selling all or some of the said apartments or plots or building, as the case may be, and includes the common G areas, the development works, all improvements and structures thereon, and all easement, rights and appurtenances belonging thereto;”

58Copy pinpoint58. We may now take note of the relevant provisions contained in the Code, as amended from time to time and as applicable to the case at H

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A hand, particularly Section 18 relating to the duties of interim resolution professional; Section 21 specifying the composition of the Committee of Creditors and matters related with it; Section 24 laying down the norms for meeting of the Committee of Creditors; Section 25 relating to the duties of the resolution professional; Section 25A, as inserted with effect from 06.06.2018 and as amended with effect from 16.08.2019, in regard to the rights and duties of the authorised representative of the financial creditors; Section 30 on the essentials of a resolution plan and its submission to the Committee of Creditors by the resolution professional; Section 31 relating to the approval of resolution plan by the Adjudicating Authority; Sections 32 and 61 relating to the appeal against an order approving the resolution plan and grounds for such an appeal; Section 53 relating to distribution of assets in case of liquidation; and Section 238 on the overriding effect of the Code. These provisions read as under: - “Section 18. Duties of interim resolution professional.- The interim resolution professional shall perform the following duties, namely:- (a) collect all information relating to the assets, finances and operations of the corporate debtor for determining the financial position of the corporate debtor, including information relating to- (i) business operations for the previous two years; E (ii) financial and operational payments for the previous two years; (iii) list of assets and liabilities as on the initiation date; and (iv) such other matters as may be specified; F (b) receive and collate all the claims submitted by creditors to him, pursuant to the public announcement made under sections 13 and 15; (c) constitute a committee of creditors; (d) monitor the assets of the corporate debtor and manage its operations until a resolution professional is appointed by the committee of creditors; (e) file information collected with the information utility, if necessary; and (f) take control and custody of any asset over which the corporate debtor has ownership rights as recorded in the balance sheet of

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 715 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

the corporate debtor, or with information utility or the depository of securities or any other registry that records the ownership of assets including- (i) assets over which the corporate debtor has ownership rights which may be located in a foreign country; (ii) assets that may or may not be in possession of the corporate debtor; (iii) tangible assets, whether movable or immovable; (iv) intangible assets including intellectual property; (v) securities including shares held in any subsidiary of the corporate debtor, financial instruments, insurance policies; (vi) assets subject to the determination of ownership by a court or authority: (g) to perform such other duties as may be specified by the Board. D Explanation.–For the purposes of this [section] 43, the term “assets” shall not include the following, namely:- (a) assets owned by a third party in possession of the corporate debtor held under trust or under contractual arrangements including bailment; E (b) assets of any Indian or foreign subsidiary of the corporate debtor; and (c) such other assets as may be notified by the Central Government in consultation with any financial sector regulator. 44 Section 21. Committee of creditors.-(1) The interim F resolution professional shall after collation of all claims received against the corporate debtor and determination of the financial position of the corporate debtor, constitute a committee of creditors. 43 Substituted by Act 26 of 2018, sec. 14, for “sub-section” (w.r.e.f. 06.06.2018). 44 This Section 21 has undergone various changes in its amendment by Act 26 of 2018 G w.r.e.f. 06.06.2018 which include substitution/omission of certain expressions as also insertion of certain provisions. While leaving aside all the minute details, we may, of course, indicate that by this very amendment, sub-sections (6A) and (6B) were also inserted and sub-sections (7) and (8) were substituted. Before their substitution, sub- sections (7) and (8) stood as under: “(7) The Board may specify the manner of determining the voting share in respect of financial debts issued as securities under sub-section (6). H

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A (2) The committee of creditors shall comprise all financial creditors of the corporate debtor: Provided that a financial creditor or the authorised representative of the financial creditor referred to in sub-section (6) or sub-section (6A) or sub-section (5) of section 24, if it is a B related party of the corporate debtor, shall not have any right of representation, participation or voting in a meeting of the committee of creditors. Provided further that the first proviso shall not apply to a financial creditor, regulated by a financial sector regulator, if it is a C related party of the corporate debtor solely on account of conversion or substitution of debt into equity shares or instruments convertible into equity shares, prior to the insolvency commencement date. (3) Subject to sub-sections (6) and (6A), where the corporate D debtor owes financial debts to two or more financial creditors as part of a consortium or agreement, each such financial creditor shall be part of the committee of creditors and their voting share shall be determined on the basis of the financial debts owed to them.

E (4) Where any person is a financial creditor as well as an operational creditor,- (a) such person shall be a financial creditor to the extent of the financial debt owed by the corporate debtor, and shall be included in the committee of creditors, with voting share proportionate to the extent of financial debts owed to such creditor; (b) such person shall be considered to be an operational creditor to the extent of the operational debt owed by the corporate debtor to such creditor. (5) Where an operational creditor has assigned or legally transferred any operational debt to a financial creditor, the

(8) All decisions of the committee of creditors shall be taken by a vote of not less than seventy-five per cent of voting share of the financial creditors: Provided that where a corporate debtor does not have any financial creditors, the committee of creditors shall be constituted and comprise of such persons to exercise such functions in such manner as may be specified by the Board.”

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 717 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

assignee or transferee shall be considered as an operational creditor to the extent of such assignment or legal transfer. (6) Where the terms of the financial debt extended as part of a consortium arrangement or syndicated facility provide for a single trustee or agent to act for all financial creditors, each financial creditor may- B (a) authorise the trustee or agent to act on his behalf in the committee of creditors to the extent of his voting share; (b) represent himself in the committee of creditors to the extent of his voting share; C (c) appoint an insolvency professional (other than the resolution professional) at his own cost to represent himself in the committee of creditors to the extent of his voting share; or (d) exercise his right to vote to the extent of his voting share with one or more financial creditors jointly or severally. D (6A) Where a financial debt— (a) is in the form of securities or deposits and the terms of the financial debt provide for appointment of a trustee or agent to act as authorised representative for all the financial creditors, such trustee or agent shall act on behalf of such financial creditors; E (b) is owed to a class of creditors exceeding the number as may be specified, other than the creditors covered under clause (a) or sub-section (6), the interim resolution professional shall make an application to the Adjudicating Authority along with the list of all financial creditors, containing the name of an insolvency professional, other than the interim resolution professional, to act as their authorised representative who shall be appointed by the Adjudicating Authority prior to the first meeting of the committee of creditors; (c) is represented by a guardian, executor or administrator, such person shall act as authorised representative on behalf of such financial creditors, and such authorised representative under clause (a) or clause (b) or clause (c) shall attend the meetings of the committee of H

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A creditors, and vote on behalf of each financial creditor to the extent of his voting share. (6B) The remuneration payable to the authorised representative- (i) under clauses (a) and (c) of sub-section (6A), if any, shall B be as per the terms of the financial debt or the relevant documentation; and (ii) under clause (b) of sub-section (6A) shall be as specified which shall form part of the insolvency resolution process costs.

C (7) The Board may specify the manner of voting and the determining of the voting share in respect of financial debts covered under sub-sections (6) and (6A). (8) Save as otherwise provided in this Code, all decisions of the committee of creditors shall be taken by a vote of not less D than fifty-one per cent. of voting share of the financial creditors: Provided that where a corporate debtor does not have any financial creditors, the committee of creditors shall be constituted and shall comprise of such persons to exercise such functions in such manner as may be specified. E (9) The committee of creditors shall have the right to require the resolution professional to furnish any financial information in relation to the corporate debtor at any time during the corporate insolvency resolution process. (10) The resolution professional shall make available any financial information so required by the committee of creditors under sub-section (9) within a period of seven days of such requisition. 45 Section 24. Meeting of committee of creditors.-(1) The members of the committee of creditors may meet in person or by such electronic means as may be specified. (2) All meetings of the committee of creditors shall be conducted by the resolution professional.

45 This Section 24 has also undergone a few changes in its amendment by Act 26 of 2018 H w.r.e.f. 06.06.2018 which are essentially of sequel to the amendment of Section 21.

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 719 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

(3) The resolution professional shall give notice of each meeting of the committee of creditors to- (a) members of committee of creditors, including the authorised representatives referred to in sub-sections (6) and (6A) of section 21 and sub-section (5); (b) members of the suspended Board of Directors or the partners of the corporate persons, as the case may be; (c) operational creditors or their representatives if the amount of their aggregate dues is not less than ten per cent of the debt. (4) The directors, partners and one representative of operational creditors, as referred to in sub-section (3), may attend the meetings of committee of creditors, but shall not have any right to vote in such meetings: Provided that the absence of any such director, partner or representative of operational creditors, as the case may be, shall not invalidate proceedings of such meeting. (5) Subject to sub-sections (6), (6A) and (6B) of section 21, any creditor who is a member of the committee of creditors may appoint an insolvency professional other than the resolution professional to represent such creditor in a meeting of the committee of creditors: Provided that the fees payable to such insolvency professional representing any individual creditor will be borne by such creditor. (6) Each creditor shall vote in accordance with the voting share assigned to him based on the financial debts owed to such creditor. (7) The resolution professional shall determine the voting share to be assigned to each creditor in the manner specified by the Board. G (8) The meetings of the committee of creditors shall be conducted in such manner as may be specified. Section 25. Duties of resolution professional.-(1) It shall be the duty of the resolution professional to preserve and protect the H

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A assets of the corporate debtor, including the continued business operations of the corporate debtor. (2) For the purposes of sub-section (1), the resolution professional shall undertake the following actions, namely:- (a) take immediate custody and control of all the assets of B the corporate debtor, including the business records of the corporate debtor; (b) represent and act on behalf of the corporate debtor with third parties, exercise rights for the benefit of the corporate debtor in judicial, quasi-judicial or arbitration proceedings; C (c) raise interim finances subject to the approval of the committee of creditors under section 28; (d) appoint accountants, legal or other professionals in the manner as specified by Board; D (e) maintain an updated list of claims; (f) convene and attend all meetings of the committee of creditors; (g) prepare the information memorandum in accordance with section 29; 46 [(h) invite prospective resolution applicants, who fulfil such criteria as may be laid down by him with the approval of committee of creditors, having regard to the complexity and scale of operations of the business of the corporate debtor and such other conditions as may be specified by the Board, to submit a resolution plan or plans.] (i) present all resolution plans at the meetings of the committee of creditors; (j) file application for avoidance of transactions in accordance with Chapter III, if any; and

46 This clause (h) was substituted by Act 8 of 2018, sec. 4, w.r.e.f. 23.11.2017. Clause (h), before substitution, stood as under: “(h) invite prospective lenders, investors, and any other persons to put forward resolution plans;”.

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 721 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

(k) such other actions as may be specified by the Board. A 47 Section 25A. Rights and duties of authorised representative of financial creditors.-(1) The authorised representative under sub-section (6) or sub-section (6A) of section 21 or sub-section (5) of section 24 shall have the right to participate and vote in meetings of the committee of creditors on behalf of the financial creditor he represents in accordance with the prior voting instructions of such creditors obtained through physical or electronic means. (2) It shall be the duty of the authorised representative to circulate the agenda and minutes of the meeting of the committee of creditors to the financial creditor he represents. (3) The authorised representative shall not act against the interest of the financial creditor he represents and shall always act in accordance with their prior instructions: Provided that if the authorised representative represents several financial creditors, then he shall cast his vote in respect of each financial creditor in accordance with instructions received from each financial creditor, to the extent of his voting share: Provided further that if any financial creditor does not give prior instructions through physical or electronic means, the authorised representative shall abstain from voting on behalf of such creditor. (3A) Notwithstanding anything to the contrary contained in sub-section (3), the authorised representative under sub-section (6A) of section 21 shall cast his vote on behalf of all the financial creditors he represents in accordance with the decision taken by a vote of more than fifty per cent. of the voting share of the financial creditors he represents, who have cast their vote: Provided that for a vote to be cast in respect of an application under section 12A, the authorised representative shall cast his vote in accordance with the provisions of sub-section (3). (4) The authorised representative shall file with the committee of creditors any instructions received by way of physical 47 This Section 25A was inserted by Act 26 of 2018 (w.r.e.f. 06.06.2018). Herein, sub- section (3A) was inserted by Act No. 26 of 2019 (w.e.f. 16.08.2019). H

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A or electronic means, from the financial creditor he represents, for voting in accordance therewith, to ensure that the appropriate voting instructions of the financial creditor he represents is correctly recorded by the interim resolution professional or resolution professional, as the case may be. B Explanation.-For the purposes of this section, the “electronic means” shall be such as may be specified. 48 Section 30. Submission of resolution plan.-(1) A resolution applicant may submit a resolution plan 49[along with an affidavit stating that he is eligible under section 29 A] to the resolution C professional prepared on the basis of the information memorandum. (2) The resolution professional shall examine each resolution plan received by him to confirm that each resolution plan- (a) provides for the payment of insolvency resolution process costs in a manner specified by the Board in priority to the D 50 [payment] of other debts of the corporate debtor; 51 [(b) provides for the payment of debts of operational creditors in such manner as may be specified by the Board which shall not be less than- (i) the amount to be paid to such creditors in the event of a E liquidation of the corporate debtor under section 53; or (ii) the amount that would have been paid to such creditors, if the amount to be distributed under the resolution plan had been distributed in accordance with the order of priority in sub-section (1) of section 53, F 48 This Section 30 has undergone various changes in its amendments by Acts 8 of 2018, 26 of 2018 and 26 of 2019. Several aspects relating to the requirements of Section 30 have formed the matters of contention herein. For their relevance, all the concerned amendments are being indicated. 49 Inserted by Act 26 of 2018, sec. 23(i) (w.r.e.f. 06.06.2018). 50 G Substituted by Act 26 of 2018, sec. 23 (ii)(A), for “repayment” (w.r.e.f. 06.06.2018). 51 Substituted by Act 26 of 2019, sec. 6(a), for clause (b) (w.e.f. 16.08.2019). Earlier clause (b) was amended by Act 26 of 2018, sec. 23(ii)(A) (w.r.e.f. 06.06.2018). Clause (b), before substitution, stood as under: “(b) provides for the payment of the debts of operational creditors in such manner as may be specified by the Board which shall not be less than the amount to be paid to the operational creditors in the event of a liquidation of the corporate debtor under section 53;”

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 723 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

whichever is higher, and provides for the payment of debts of financial creditors, who do not vote in favour of the resolution plan, in such manner as may be specified by the Board, which shall not be less than the amount to be paid to such creditors in accordance with sub-section (1) of section 53 in the event of a liquidation of the corporate debtor. B Explanation 1.—For the removal of doubts, it is hereby clarified that a distribution in accordance with the provisions of this clause shall be fair and equitable to such creditors. Explanation 2.—For the purposes of this clause, it is hereby declared that on and from the date of commencement of the C Insolvency and Bankruptcy Code (Amendment) Act, 2019, the provisions of this clause shall also apply to the corporate insolvency resolution process of a corporate debtor- (i) where a resolution plan has not been approved or rejected by the Adjudicating Authority; D (ii) where an appeal has been preferred under section 61 or section 62 or such an appeal is not time barred under any provision of law for the time being in force; or (iii) where a legal proceeding has been initiated in any court against the decision of the Adjudicating Authority in respect of E a resolution plan;] (c) provides for the management of the affairs of the Corporate debtor after approval of the resolution plan; (d) the implementation and supervision of the resolution plan; F (e) does not contravene any of the provisions of the law for the time being in force; (f) conforms to such other requirements as may be specified by the Board. 52 [Explanation.—For the purposes of clause (e), if any G approval of shareholders is required under the Companies Act, 2013 (18 of 2013) or any other law for the time being in force for the implementation of actions under the resolution plan, such

52 Inserted by Act 26 of 2018, sec. 23(ii)(B) (w.r.e.f. 06.06.2018). H

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A approval shall be deemed to have been given and it shall not be a contravention of that Act or law.] (3) The resolution professional shall present to the committee of creditors for its approval such resolution plans which confirm the conditions referred to in sub-section (2). B 53 [(4) The committee of creditors may approve a resolution plan by a vote of not less than 54[sixty-six] per cent. of voting share of the financial creditors, after considering its feasibility and viability, 55[the manner of distribution proposed, which may take into account the order of priority amongst creditors as laid C down in sub-section (1) of section 53, including the priority and value of the security interest of a secured creditor] and such other requirements as may be specified by the Board: Provided that the committee of creditors shall not approve a resolution plan, submitted before the commencement of the D Insolvency and Bankruptcy Code (Amendment) Ordinance, 2017 (Ord. 7 of 2017), where the resolution applicant is ineligible under section 29A and may require the resolution professional to invite a fresh resolution plan where no other resolution plan is available with it:

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 725 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

G 56 Inserted by Act 26 of 2018, sec. 23(iii)(b) (w.r.e.f. 06.06.2018). 57 This Section 31 has also undergone various changes in its amendments by Act 26 of 2018 and 26 of 2019. For their relevance, all the concerned amendments of this Section 31 are also indicated. 58 Inserted by Act 26 of 2019, sec. 7 (w.e.f. 16.08.2019). 59 Inserted by Act 26 of 2018, sec. 24(a) (w.r.e.f. 06.06.2018). H

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A (2) Where the Adjudicating Authority is satisfied that the resolution plan does not confirm to the requirements referred to in sub-section (1), it may, by an order, reject the resolution plan. (3) After the order of approval under sub-section (1),- (a) the moratorium order passed by the Adjudicating B Authority under section 14 shall cease to have effect; and (b) the resolution professional shall forward all records relating to the conduct of the corporate insolvency resolution process and the resolution plan to the Board to be recorded on its database. C 60 [(4) The resolution applicant shall, pursuant to the resolution plan approved under sub-section (1), obtain the necessary approval required under any law for the time being in force within a period of one year from the date of approval of the resolution plan by the Adjudicating Authority under sub-section (1) or within such period as provided for in such law, whichever is later: Provided that where the resolution plan contains a provision for combination as referred to in section 5 of the Competition Act, 2002 (12 of 2003), the resolution applicant shall obtain the approval of the Competition Commission of India under that Act prior to the approval of such resolution plan by the committee of creditors.] Section 32. Appeal.-Any appeal from an order approving the resolution plan shall be in the manner and on the grounds laid down in sub-section (3) of section 61. Section 61. Appeals and Appellate Authority.-(1) F Notwithstanding anything to the contrary contained under the Companies Act, 2013 (18 of 2013), any person aggrieved by the order of the Adjudicating Authority under this part may prefer an appeal to the National Company Law Appellate Tribunal. (2) Every appeal under sub-section (1) shall be filed within G thirty days before the National Company Law Appellate Tribunal: Provided that the National Company Law Appellate Tribunal may allow an appeal to be filed after the expiry of the said period

60 H Inserted by Act 26 of 2018, sec. 24(b) (w.r.e.f. 06.06.2018).

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of thirty days if it is satisfied that there was sufficient cause for A not filing the appeal but such period shall not exceed fifteen days. (3) An appeal against an order approving a resolution plan under section 31 may be filed on the following grounds, namely:– (i) the approved resolution plan is in contravention of the provisions of any law for the time being in force; B

(ii) there has been material irregularity in exercise of the powers by the resolution professional during the corporate insolvency resolution period; (iii) the debts owed to operational creditors of the corporate debtor have not been provided for in the resolution plan in the manner specified by the Board; (iv) the insolvency resolution process costs have not been provided for repayment in priority to all other debts; or (v) the resolution plan does not comply with any other criteria specified by the Board. (4) An appeal against a liquidation order passed under section 33 may be filed on grounds of material irregularity or fraud committed in relation to such a liquidation order. Section 53. Distribution of assets.–(1) Notwithstanding E anything to the contrary contained in any law enacted by the Parliament or any State Legislature for the time being in force, the proceeds from the sale of the liquidation assets shall be distributed in the following order of priority and within such period and in such manner as may be specified, namely:- F (a) the insolvency resolution process costs and the liquidation costs paid in full; (b) the following debts which shall rank equally between and among the following:- G (i) workmen’s dues for the period of twenty-four months preceding the liquidation commencement date; and (ii) debts owed to a secured creditor in the event such secured creditor has relinquished security in the manner set out in section 52; H

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A (c) wages and any unpaid dues owed to employees other than workmen for the period of twelve months preceding the liquidation commencement date; (d) financial debts owed to unsecured creditors; (e) the following dues shall rank equally between and among the following:- (i) any amount due to the Central Government and the State Government including the amount to be received on account of the Consolidated Fund of India and the Consolidated Fund of a State, if any, in respect of the whole or any part of the period of two years preceding the liquidation commencement date; (ii) debts owed to a secured creditor for any amount unpaid following the enforcement of security interest;

D (f) any remaining debts and dues; (g) preference shareholders, if any; and (h) equity shareholders or partners, as the case may be. (2) Any contractual arrangements between recipients under sub-section (1) with equal ranking, if disrupting the order of priority E under that sub-section shall be disregarded by the liquidator. (3) The fees payable to the liquidator shall be deducted proportionately from the proceeds payable to each class of recipients under sub-section (1), and the proceeds to the relevant recipient shall be distributed after such deduction. F Explanation.–For the purpose of this section- (i) it is hereby clarified that at each stage of the distribution of proceeds in respect of a class of recipients that rank equally, each of the debts will either be paid in G full, or will be paid in equal proportion within the same class of recipients, if the proceeds are insufficient to meet the debts in full; and (ii) the term “workmen’s dues” shall have the same meaning as assigned to it in section 326 of the Companies Act, 2013 (18 of 2013). H

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Section 238. Provisions of this Code to override other laws.- A The provisions of this Code shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law.

59Copy pinpoint59. We may also take note of Regulations 16A, 37, 38, 39 and B 39B in CIRP Regulations, as applicable at the relevant time as follows: - “6116A. Authorised representative.-(1) The interim resolution professional shall select the insolvency professional, who is the choice of the highest number of financial creditors in the class in Form CA received under sub-regulation (1) of regulation 12, to C act as the authorised representative of the creditors of the respective class: Provided that the choice for an insolvency professional to act as authorised representative in Form CA received under sub- regulation (2) of regulation 12 shall not be considered. D (2) The interim resolution professional shall apply to the Adjudicating Authority for appointment of the authorised representatives selected under sub-regulation (1) within two days of the verification of claims received under sub-regulation (1) of regulation 12. E (3) Any delay in appointment of the authorised representative for any class of creditors shall not affect the validity of any decision taken by the committee. (4) The interim resolution professional shall provide the list of creditors in each class to the respective authorised F representative appointed by the Adjudicating Authority. (5) The interim resolution professional or the resolution professional, as the case may be, shall provide an updated list of creditors in each class to the respective authorised representative as and when the list is updated. G Clarification: The authorised representative shall have no role in receipt or verification of claims of creditors of the class he represents. 61 This Regulation 16A was inserted w.e.f. 04.07.2018. H

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A (6) The interim resolution professional or the resolution professional, as the case may be, shall provide electronic means of communication between the authorised representative and the creditors in the class. (7) The voting share of a creditor in a class shall be in proportion to the financial debt which includes an interest at the rate of eight per cent per annum unless a different rate has been agreed to between the parties. (8) The authorised representative of creditors in a class shall be entitled to receive fee for every meeting of the committee attended by him in the following manner, namely:- Number of creditors in the class Fee per meeting of the committee (Rs.) 10-100 15,000 101-1000 20,000 More than 1000 25,000 D (9) The authorised representative shall circulate the agenda to creditors in a class and announce the voting window at least twenty-four hours before the window opens for voting instructions and keep the voting window open for at least twelve hours. 62

E 37. Resolution Plan.-A resolution plan shall provide for the measures, as may be necessary, for insolvency resolution of the corporate debtor for maximization of value of its assets, including but not limited to the following:- (a) transfer of all or part of the assets of the corporate debtor F to one or more persons; (b) sale of all or part of the assets whether subject to any security interest or not; (ba) restructuring of the corporate debtor, by way of merger, amalgamation and demerger; G (c) the substantial acquisition of shares of the corporate debtor, or the merger or consolidation of the corporate debtor with one or more persons; 62 This Regulation 37 was substituted for the earlier one w.e.f. 06.02.2018. Clause (ba) was inserted to this Regulation w.e.f. 28.11.2019; and clause (ca) was inserted w.e.f. H 04.07.2018.

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(ca) cancellation or delisting of any shares of the corporate A debtor if applicable: (d) satisfaction or modification of any security interest; (e) curing or waiving of any breach of the terms of any debt due from the corporate debtor; B (f) reduction in the amount payable to the creditors; (g) extension of a maturity date or a change in interest rate or other terms of a debt due from the corporate debtor; (h) amendment of the constitutional documents of the corporate debtor; (i) issuance of securities of the corporate debtor, for cash, property, securities, or in exchange for claims or interests, or other appropriate purpose; (j) change in portfolio of goods or services produced or rendered by the corporate debtor; (k) change in technology used by the corporate debtor; and (l) obtaining necessary approvals from the Central and State Governments and other authorities. E 63

38. Mandatory contents of the resolution plan.-64[(1) The amount payable under a resolution plan- (a) to the operational creditors shall be paid in priority over financial creditors; and F

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A (b) to the financial creditors, who have a right to vote under sub-section (2) of Section 21 and did not vote in favour of the resolution plan, shall be paid in priority over financial creditors who voted in favour of the plan.] (1A) A resolution plan shall include a statement as to how it has dealt with the interests of all stakeholders, including financial creditors and operational creditors, of the corporate debtor. (1B) A resolution plan shall include a statement giving details if the resolution applicant or any of its related parties has failed to implement or contributed to the failure of implementation of any other resolution plan approved by the Adjudicating Authority at any time in the past. (2) A resolution plan shall provide: (a) the term of the plan and its implementation schedule; D (b) the management and control of the business of the corporate debtor during its term; and (c) adequate means for supervising its implementation. 65 [(3) A resolution plan shall demonstrate that- E (a) it addresses the cause of default; (b) it is feasible and viable; (c) it has provisions for its effective implementation;

F (d) it has provisions for approvals required and the timeline for the same; and (e) the resolution applicant has the capability to implement the resolution plan.]

G 65 Sub-regulation (3) was inserted w.e.f. 07.11.2017 and then was substituted w.e.f. 04.07.2018. Before substitution, this sub-regulation (3), stood as under:- “(3) A resolution plan shall contain details of the resolution applicant and other connected persons to enable the committee to assess the credibility of such applicant and other connected persons to take a prudent decision while considering the resolution plan for its approval.”.

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39. Approval of resolution plan.-67[(1) A prospective resolution applicant in the final list may submit resolution plan or plans prepared in accordance with the Code and these regulations to the resolution professional electronically within the time given in the request for resolution plans under regulation 36B along with- B (a) an affidavit stating that it is eligible under section 29A to submit resolution plans; 68 [***] (c) an undertaking by the prospective resolution applicant that every information and records provided in connection with C or in the resolution plan is true and correct and discovery of false information and record at any time will render the applicant ineligible to continue in the corporate insolvency resolution process, forfeit any refundable deposit, and attract penal action under the Code. D (1A) A resolution plan which does not comply with the provisions of sub-regulation (1) shall be rejected.] 69 [(2) The resolution professional shall submit to the committee all resolution plans which comply with the requirements of the Code and regulations made thereunder E along with the details of following transactions, if any, observed, found or determined by him-

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A (a) preferential transactions under section 43; (b) undervalued transactions under section 45; (c) extortionate credit transactions under section 50; and (d) fraudulent transactions under section 66, B and the orders, if any, of the adjudicating authority in respect of such transactions.] 70 71 - [(3) The committee shall evaluate the resolution plans received under sub-regulation (1) strictly as per the evaluation matrix to identify the best resolution plan and may approve it with such C modifications as it deems fit: Provided that the committee shall record its deliberations on the feasibility and viability of the resolution plans.]

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72 [(4) The resolution professional shall endeavour to submit the resolution plan approved by the committee to the Adjudicating Authority at least fifteen days before the maximum period for completion of corporate insolvency resolution process under section 12, along with a compliance certificate in Form H of the Schedule and the evidence of receipt of performance security required under sub-regulation (4A) of regulation 36B.] (5) The resolution professional shall forthwith send a copy of the order of the Adjudicating Authority approving or rejecting a resolution plan to the participants and the resolution applicant. (6) A provision in a resolution plan which would otherwise require the consent of the members or partners of the corporate debtor, as the case may be, under the terms of the constitutional documents of the corporate debtor, shareholders’ agreement, joint venture agreement or other document of a similar nature, shall take effect notwithstanding that such consent has not been obtained. D (7) No proceedings shall be initiated against the interim resolution professional or the resolution professional, as the case may be, for any actions of the corporate debtor, prior to the insolvency commencement date. (8) A person in charge of the management or control of the E business and operations of the corporate debtor after a resolution plan is approved by the Adjudicating Authority, may make an application to the Adjudicating Authority for an order seeking the assistance of the local district administration in implementing the terms of a resolution plan. 73 F [(9) A creditor, who is aggrieved by non-implementation of a resolution plan approved under sub-section (1) of section 31, may apply to the Adjudicating Authority for directions.]” votes, shall be considered as approved: Provided that where two or more resolution plans receive equal votes, but not less than requisite votes, the committee shall approve any one of them, G as per the tie-breaker formula announced before voting: Provided further that where none of the resolution plans receives requisite votes, the committee shall again vote on the resolution plan that received the highest votes, subject to the timelines under the Code.” 72 This sub-regulation was substituted for the earlier one w.e.f. 04.07.2018 and was also amended w.e.f. 24.01.2019. 73 This sub-regulation was inserted w.e.f. 24.01.2019. H

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