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

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A resolution plan then puts the same or another management in the saddle, subject to the provisions of the Code, so that the corporate debtor may be pulled out of the woods and may continue as a going concern, thus benefitting all stakeholders involved. It is only as a last resort that winding up of the corporate debtor is resorted to, so that its assets may be liquidated and paid out in the manner provided by Section 53 of the Code. On the other hand, RERA protects the interests of the individual investor in real estate projects by requiring the promoter to strictly adhere to its provisions. The object of RERA is to see that real estate projects come to fruition within the stated period and to see that allottees of such projects are not left in the lurch and are finally able to realise their dream of a home, or be paid compensation if such dream is shattered, or at least get back monies that they had advanced towards the project with interest. At the same time, recalcitrant allottees are not to be tolerated, as they must also perform their part of the bargain, namely, to pay instalments as and when they become due and payable. Given the different spheres within which these two enactments operate, different parallel remedies are given to allottees under RERA to see that their flat/apartment is constructed and delivered to them in time, barring which compensation for the same and/or refund of amounts paid together with interest at the very least comes their way. If, however, the allottee wants that the corporate debtor’s management itself be removed and replaced, so that the corporate debtor can be rehabilitated, he may prefer a Section 7 application under the Code. That another parallel remedy is available is recognised by RERA itself in the proviso to Section 71(1), by which an allottee may continue with an application already filed before the Consumer Protection Fora, he being given the choice to withdraw such complaint and file an application before the adjudicating officer under RERA read with Section 88. In similar circumstances, this Court in Swaraj Infrastructure (P) Ltd. v. Kotak Mahindra G Bank Ltd. has held that the Debts Recovery Tribunal proceedings under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 and winding-up proceedings under the Companies Act, 1956 can carry on in parallel streams (see paras 21 and 22 therein).” H (emphasis in bold supplied)

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 857 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

171.1.1. In view of the above, all the contentions regarding operation of RERA and claim thereunder or any other claim for compensation or interest, when not standing in conformity with the approved resolution plan, deserve to be rejected. In fact, the question as to what kind of agreement should be entered into with financial creditors like homebuyers is essentially a matter falling within the arena of commercial decision; and needless to repeat that in the process of approval of a resolution plan, the factors related with commerce are left to the wisdom of the Committee of Creditors. When the Committee of Creditors has approved the proposals of NBCC in the resolution plan, the same cannot be tinkered with reference to the grievance of some of the homebuyers about deprivation of adequate interest or compensation. In this view of the matter, the decision of this Court in the case of Wg Cdr. Arifur Rahman Khan (supra) needs no discussion because that would not apply to the issues presently under consideration.

172Copy pinpoint172. Yet another objection as regards liquidation costs has rightly been clarified by the IRP and NBCC that under Regulation 39B of the D CIRP Regulations, the CoC has been given a discretion to ascertain liquidation costs at the time of approval of the resolution plan or deciding to liquidate the company. This aspect, essentially lying within the arena of commerce, is also required to be left to the commercial wisdom of the Committee of Creditors. In any case, this aspect cannot be said to have a bearing on the decision as regards feasibility and viability of the resolution plan of NBCC and is required to be rejected. Similarly, the objections with reference to Regulation 36A(7) are also required to be rejected because there had not been any condition imposed by NBCC in expression of interest. As regards the conditions in the resolution plan, particularly Clauses 1 and 2 of Schedule 3 thereof, as already indicated, the matter relating to the said amount of INR 750 crores deposited by JAL pursuant to the directions of this Court in Chitra Sharma (supra) is being considered separately; and the stipulation in Clause 2 of Schedule 3 is even otherwise redundant in view of insertion of Section 32A to the Code, as discussed by the Adjudicating Authority, which need not be repeated. Suffice it to observe for the present purpose that the process of approval of the resolution plan is not vitiated because of such stipulations. Needless to say that these observations are not to be construed as our approval of Clause 1 of Schedule 3 of the resolution plan, because its legality and validity is being examined separately in Point J infra. H

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173Copy pinpoint173. We have summarised the major aspects of multifarious submissions, objections and suggestions projected before us but find that the attempt to raise such objections is itself baseless for being not in conformity with the provisions of the Code read with the law declared by this Court in Pioneer Urban (supra). The objections and submissions do not carry any merits either. In this view of the matter, we are not entering into the other submissions made by NBCC as regards the number of members of one of the appellant-association because nothing turns upon that.

174Copy pinpoint174. Before concluding on this segment of discussion, we are impelled to indicate that the objections and suggestions by dissatisfied homebuyers have gone to the extent of suggesting that IRP should be directed to release funds for raising construction; the Noida Authority be directed to issue the necessary Occupancy Certificate; and NBCC be directed to complete the entire project within 3 years and be prohibited from charging the homebuyers with any extra amount towards arbitrary increase in the name of ‘Super Built-Up Area’. An objection is stated that there had been diversion of the money deposited by homebuyers to YEIDA; and the suggestion has gone to the extent that the project may be taken over by the Government of Uttar Pradesh. These and other similar nature submissions, which do not relate to the real questions in controversy, neither carry any meaning nor any substance; they have only been noted to be rejected.

175Copy pinpoint175. For what has been discussed above, we hold that the homebuyers as a class having assented to the resolution plan of NBCC, any individual homebuyer or any association of homebuyers cannot maintain a challenge to the resolution plan and cannot be treated as a F dissenting financial creditor or an aggrieved person; the question of violation of the provisions of the Real Estate (Regulation and Development) Act, 2016 does not arise; the resolution plan in question is not violative of the mandatory requirements of the CIRP Regulations; and when the resolution plan comprehensively deals with all the assets G and liabilities of the corporate debtor, no housing project could be segregated merely for the reason that the same has been completed or is nearing completion. Point J INR 750 crores and accounting between JAL and JIL H

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 859 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

176Copy pinpoint176. We now need to enter into another area of serious dispute in these matters, which relates to the claim over the amount of INR 750 crores (which was deposited by JAL pursuant to the directions of this Court in the case of Chitra Sharma) and the interest accrued thereupon. On one hand, JAL and the persons/entities related with it, including its homebuyers and institutional financial creditor, assert that this money is the property of JAL and ought to come back to JAL but, on the other hand, the resolution applicant NBCC as also the persons/entities related with the corporate debtor JIL, including its homebuyers and the institutional financial creditor, assert that this money is a part of the assets of JIL and the Adjudicating Authority has rightly held so. In a third angle, an association of homebuyers of JAL submits that a part of this amount be designated to complete the construction work in relation to their project. Yet another angle is projected by some of the dissatisfied homebuyers of JIL, who suggest that NBCC is simply aiming at profiteering by getting hold of this money but without making any corresponding provision in the resolution plan for its appropriate use for the benefit of homebuyers. D Added to these rival claims are the other disputes of accounting, in relation to the advance made by JIL and its homebuyers to JAL towards special advance and Interest Free Maintenance Deposit etc. In fact, it has been the submission on behalf of JAL that either the entire amount of INR 750 crores with accrued interest be returned to it or in the alternative, after reconciliation of accounts, its liability towards JIL be adjusted from E this corpus and balance be refunded to it. In this scenario, we have formulated separate questions regarding the treatment of this amount of INR 750 crores and accrued interest and regarding reconciliation of accounts between JAL and JIL but, for being interlaced, these questions are taken up for determination together. F

177Copy pinpoint177. Indisputably, this sum of INR 750 crores was deposited by JAL pursuant to the orders passed by this Court in the case of Chitra Sharma (supra). While finally deciding the case of Chitra Sharma by the judgment dated 09.08.2018, this Court took note of myriad features of the case and also took note of the claim of some of the homebuyers to allow this money to be utilised for making refunds but declined such a G prayer and transferred this money to the NCLT. 177.1. In the process taken up thereafter, the relevant facts concerning this amount were spelt out by IRP in the information memorandum. Thereafter, in the resolution plan, NBCC rather made H

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A the availability of this corpus a condition precedent for implementation of the plan in the very first clause of its ‘reliefs and concessions’ in the following terms: - “INR 750 Cr was deposited by JAL with the Hon’ble Supreme Court and which amount (with the interest accrued thereon) was transferred to the Adjudicating Authority as per directions of the Hon’ble Supreme Court, with a direction that such monies shall continue to remain invested and parties shall bide by such directions as may be issued by the Adjudicating Authority. This amount of INR 750 Cr along with the interest accrued thereon will be made available to the Corporate Debtor/Resolution Applicant. Post receipt by the Corporate Debtor, this amount of INR 750 Cr will be treated in the books of accounts of the Corporate Debtor as equity infusion by the Existing Promoters and the corresponding equity of the Existing Promoters shall subsequently be extinguished in a manner similar to that adopted for extinguishment of other equity holding of the Existing Promoters under this Resolution Plan including by way of Capital Reduction or selective Capital Reduction. In the event, the said amount of INR 750 Cr along with the interest accrued is not made available to the Resolution Applicant/Corporate Debtor then the Resolution E Applicant has the right to withdraw from this process without any liability of any nature on the Resolution Applicant.” 177.2. The resolution plan was approved by the Committee of Creditors; meaning thereby that the aforesaid clause was accepted by the Committee of Creditors. However, the claim towards this amount of F INR 750 crores with accrued interest became a bone of contention when the Adjudicating Authority (NCLT) took up the process of approval of the resolution plan, particularly for JAL staking its claim over this amount as being the rightful owner thereof. In this regard, the Adjudicating Authority, after taking note of the orders passed by this Court in the case of Chitra Sharma (supra), concluded that the deposit made by G JAL was always meant for the benefit of the homebuyers of JIL and became an asset of the corporate debtor JIL; and the said amount was to be utilised towards securing the interests of homebuyers and fulfilling the obligations made to them, i.e., offering possession of the residential units after completing necessary construction or making refunds, as the case may be.

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 861 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

178Copy pinpoint178. While questioning the aforesaid stipulation in the resolution plan and this part of the order impugned, vast variety of submissions have been made on behalf of JAL, its institutional financial creditor and its homebuyers. 178.1. It has been contended on behalf of JAL that the said sum of INR 750 crores undisputedly belongs to JAL, as the same was deposited by it on the directions of this Court in the order dated 11.09.2017 in Chitra Sharma (supra). It is submitted that this Court ordered the deposit to be made by JAL so as to provide an interim workable arrangement and relief to the homebuyers, who were, at the relevant time, not recognised as financial creditors of the corporate debtor and had no say in the resolution process of a company in which, they had made deposits for their future homes. However, it is submitted, the purpose of this deposit was not aimed at resolving the insolvency of JIL so as to make it an asset of JIL; and it was clearly mentioned in the information memorandum that the sum of INR 750 crores was deposited by JAL and was not an asset of JIL. Moreover, the interest payable would also accrue to JAL and would be an asset of JAL. 178.1.1. It has been forcefully contended that the assets belonging to a third party cannot be utilised towards the resolution of insolvency of a corporate debtor, as held by this Court in the case of Embassy Property (supra). The decision in Anuj Jain (supra) has also been referred to submit that therein too, this Court disallowed JIL’s assets from being utilised for securing the dues owed by JAL. 178.1.2. With reference to the proceedings in the case of Chitra Sharma, it is submitted that the purpose for which this deposit was ordered has been achieved due to the amendment of IBC and there is no reason for allowing this amount to be treated as an asset of JIL. It is also submitted that in Chitra Sharma, this Court directed opening of the web-portals for the homebuyers of both JIL and JAL; and this makes the position clear that the said amount was meant for the homebuyers of JAL too. Hence, the Adjudicating Authority (NCLT) proceeded on an erroneous premise that the amount was only for the refund of JIL’s G homebuyers, thereby seriously prejudicing the homebuyers of JAL. 178.1.3. It is submitted that JAL is committed to make the pending homes for its own homebuyers for which it requires funds; and utilisation of the deposit made by JAL towards the insolvency resolution of JIL H

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A would result in a ‘Domino Effect’ and would expose JAL to the risk of insolvency and, on the other hand, would result in unjust enrichment of the resolution applicant (NBCC). 178.1.4. In another limb of arguments, it is submitted that JAL is conscious of its liability towards JIL, which was INR 195 crores as on B 31.03.2020; and since JAL is not in a position to make this payment unless the amount of INR 750 crores is refunded to it, in all fairness, JAL offers that this admitted liability towards JIL could be discharged by appropriating from the said amount of INR 750 crores and the balance be refunded to JAL. It is submitted that the said payable amount may be verified by IRP or by a chartered accountant appointed by him. In this regard, while referring to the background facts relating to the construction contracts given to JAL and advance payment on that account made by JIL, the term in the resolution plan providing for termination of construction contracts has also been referred and it has been prayed that the balance due from JAL could be adjusted from the said amount of INR 750 crores, if NBCC makes a formal submission to the effect that it would be terminating the construction agreements. The written submissions on behalf of JAL in this regard could be reproduced as under: - “G. AMOUNTS DUE FROM JAL TO JIL

26. JIL has entered into various agreement(s)/ work contract(s) E for development of Yamuna Expressway and development/ maintenance of other land parcels located at Noida, Jaganpur, Mirzapur, Tappal & Agra. Pursuant thereto, at the request of JAL, JIL has advanced to JAL a sum aggregating to Rs. 716 Crores (as on 31.03.2018) which was recoverable from JAL’s RA Bill as F also when construction work was carried out.

27. The said sum was accordingly been recovered from JAL’s RA Bill since August 2017 leaving an outstanding of Rs.274 Crores as on 31.12.2019. This has further reduced to a sum aggregate of Rs.195 Crores as on 31.03.2020 (as per the audited accounts), G and is likely to be reduced by approx. Rs.165 Crores within a period of 12 months as per the work plan drawn by the RBSA (Advisors to the CIRP) [@Pg.143 of JAL’s Additional Affidavit].

28. Therefore, JAL is conscious of the fact that liability towards JIL now stands to Rs.195 Crores (as on 31.03.2020 and is reducing per the construction work). Since JAL is not in a position to make H

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 863 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

this payment independently unless the Rs.750 Crores is refunded back to it, hence, in all fairness and bonafide, JAL offers that this admitted and undisputed liability towards JIL can be discharged by appropriating the said liability from the Rs.750 Crores and the balance may be directed to be refunded. This amount may be verified by the RP or by a chartered accountant appointed by him.

29. However, it is pertinent to mention herein that NBCC’s Resolution Plan treats the contracts for construction (between JIL and JAL) in the following manner [@Pg.47of JAL’s Additional Affidavit dated 12.05.2020]: C “(vi) Resolution Applicant shall have a right to terminate the current construction contracts with Jaiprakash Associates Limited, (“JAL”), which are on cost plus basis and enter into fresh construction contracts with the vendors as may be selected by the Resolution Applicant in accordance with its business policies and such contracts D shall be entered into on arms’ length basis as per the market standard. Provided that JAL shall not be entitled to terminate such construction contracts for a period of 12 months from the Approval Date.” (Emphasis Supplied)

30. The above clearly shows that JAL is at the mercy of NBCC E wherein NBCC is free to terminate the contracts for construction unilaterally, whereas JAL cannot. Therefore, it is submitted that the aforementioned balance of Rs.195 Crores (which was to be appropriated towards the construction of JIL’s Projects) can only be adjusted/ set off from the sum of Rs.750 Crores if NBCC F makes a formal submission to the effect that it would be terminating the construction agreements.” (emphasis is in original) 178.1.5. It has, therefore, been prayed that the said sum of INR 750 crores along with accrued interest be ordered to be refunded to JAL G or in the alternative, the refund may be ordered after appropriating the amount of liability of JAL towards JIL, in terms of above-quoted paragraph 30 of the written submissions. 178.2.While supporting the submissions for return of INR 750 crores, the homebuyers of JAL have contended that the said deposit H

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A was not meant to finance construction, or to grant equity, or loan, or for any charitable purpose; that the Supreme Court ordered the deposit to be made by JAL only to provide an interim workable arrangement and for relief to the homebuyers, as they were not having the status of a financial creditor under the Code; that the purpose of the deposit was not for resolving the insolvency of JIL; and that the information B memorandum did not show this sum of INR 750 crores as an asset of the corporate debtor JIL. With reference to the condition precedent mentioned in the resolution plan involving the transfer of INR 750 crores in favour of NBCC, it is submitted that the question requiring consideration is as to whether NBCC could have laid a claim over the said sum of C INR 750 crores as a condition of its bid? Further, an unjustified deprivation of the rightful amount to JAL and deprivation of the right of utilisation of the amount by the developer acts as a serious prejudice and detriment to the legal rights and interests of the homebuyers of JAL. It is submitted that the reasoning and findings of NCLT in the order dated 03.03.2020 are flawed and without any basis. The amount deposited has not been shown in the books of accounts of JIL as its asset and the NCLT had no authority to allow the same to be claimed by NBCC under a conditional resolution plan. It is further submitted that the order of the NCLT puts the homebuyers of JIL at an advantageous position at the cost of the interests of the homebuyers of JAL, which is contrary to the provisions and spirit of the CIRP Regulations and the Code as a whole. The homebuyers of JAL have prayed that this amount of INR 750 crores with accrued interest be released to JAL so as to secure the interests of its homebuyers. 178.3. An association of homebuyers of JAL has also challenged the said order of NCLT dated 03.03.2020 directly in this Court and has submitted that “Knights Court Project” was supposed to be completed by 2015 and the homebuyers have already paid 95% of the sale consideration to JAL. It is submitted that the sum of INR 750 crores was deposited by JAL for the benefit of homebuyers of JAL and JIL and it was stated that 92% of the homebuyers wanted to obtain possession of the flat, which is possible only after necessary construction takes place. It is further submitted that the money of the contributors of JAL ought to be first utilised for the construction of the flats of “Knights Court Project” and not towards the resolution plan of JIL or for returning to JAL. This association has stated its own grievance that in the simultaneously held proceedings under RERA, JAL has demanded from

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 865 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

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179Copy pinpoint179. The submissions aforesaid, for refund of INR 750 crores with accrued interest to JAL, have been duly countered by the persons/ entities standing for the resolution plan, while supporting the order passed by the Adjudicating Authority. We may take note of the leading submissions in this regard. B 179.1. It has been contended on behalf of the resolution applicant NBCC that the resolution plan introduced by it, which got approved by the CoC and by the Adjudicating Authority, included this deposit of INR 750 crores by JAL to be treated in the CIRP of JIL and utilisation of this amount has been a condition precedent to the implementation of the resolution plan. C 179.1.1. NBCC has elaborated on the submissions that the stipulation in its resolution plan as regards this sum of INR 750 crores was essentially based on the orders of this Court in the case of Chitra Sharma; and on the fact that JAL was directed to deposit this money in the proceedings which were filed in relation to CIRP of JIL. It is submitted with reference to various orders passed in the case of Chitra Sharma that this money was clearly meant for the benefit of homebuyers and though this Court initially discussed the proposition of pro rata disbursement among the refund seekers but no such disbursement was ordered after the Court noticed that an overwhelming majority of homebuyers was desirous of seeking possession of flats and disbursement to refund seekers was going to cause prejudice to others. It is submitted that intention of the Court, that the aforesaid amount shall inure to the benefit of homebuyers, is also apparent from the fact that even after amendment of the Code with effect from 06.06.2018, whereby the homebuyers were included as financial creditors, this Court deemed it appropriate to retain the deposit for the benefit of JIL homebuyers and did not pass any modification order in respect thereof or any order for release of said amount to JAL. 179.1.2. With reference to the contents of the information memorandum under sub-heading ‘Unique Investment/financing opportunity for the Resolution Applicant with adequate value to be unlocked’ in the ‘Investment Highlights’, NBCC would submit that the financial model of the resolution plan is based on the availability of this sum of INR 750 crores, and if the same is not made available, it would be handicapped in completing the flats of the homebuyers. NBCC has reiterated that availability of this amount being a condition precedent, it

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 867 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

would have a right to withdraw from the resolution plan in the event this amount is not made available to it. 179.1.3. It has also been submitted that the deposit made by JAL pursuant to the orders of this Court in Chitra Sharma was to secure and protect the interests of homebuyers of JIL and in order to act on the lines of the order of this Court, the deposit ought to be permitted to be used to achieve the purpose namely, the construction of dwelling units. NBCC submits that the said sum of INR 750 crores did not remain an asset of JAL after the same was deposited in this Court. 179.1.4. Apart from the aforesaid submissions and without prejudice, NBCC has also stated, with reference to the observations made by this Court during the course of hearing, that if any reconciliation of accounts has to be carried out before approval of the plan by this Court, NBCC ought to be involved in such an exercise, for being the successful resolution applicant and a part of the erstwhile Interim Monitoring Committee. D 179.1.5. NBCC has also referred to paragraph 77 of the impugned order dated 03.03.2020, wherein the NCLT has recorded an admission on behalf of JAL about its liability towards JIL to the tune of INR 274 crores and ordered that JAL shall make this payment to JIL; and regarding the remaining amount, JAL and JIL shall draft a reconciliation statement and proceed according to the outcome of such reconciliation. E

179.1.6. Long drawn submissions have been made on behalf of NBCC in regard to the alleged liabilities of JAL towards JIL on various scores. These aspects of accounting would not, as such, require adjudication herein but have some bearing on the issues raised before us and hence, a part of the written submissions on behalf of NBCC in this regard are reproduced as follows: - “2. JAL has claimed by way of an additional affidavit filed in the JAL Appeal claimed that as on 31 March 2020, the amount owed by JAL to JIL has reduced to INR 218 Crores. It needs to be highlighted that under the Resolution Plan, NBCC has reserved its right to terminate all existing contractual arrangements with JAL.

3. It is submitted that as per the records of JIL provided by the IRP and seen by NBCC during its presence in the IMC, it has been observed that: H

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A The Home Buyer of JIL are required to pay amounts in the nature of Interest Free Maintenance Deposit (“IFMD”) towards the flat units purchased by them, and after the formation of recognized Residents Welfare Associations (RWAs) this IFMD is required to be transferred to RWA as per provisions of the UP Apartments Act. B Since JAL is the designated maintenance agency for such flat units as per the existing contractual arrangement between JIL, JAL and the Home Buyers, this payment of IFMD was to be paid by Home buyers to JAL and thereafter the transfer of IFMD was to be made by JAL to the RWAs. C In the year 2016, on the request of JAL, JIL has paid to JAL an advance amounting to INR 381 crore towards Interest Free Maintenance Deposit (IFMD, with the understanding that these amounts would be later on recovered by JIL form the Home Buyers at the time of taking over of possession of their flat units by the Home Buyers and the advance paid will get adjusted. However, JAL will transfer the IFMD to the RWAs. i. Accordingly, during course of handing over of the flats, an amount of approximately INR 115 Crores has been collected from Home Buyers by JIL and same stands adjusted from the advance amount of INR 381 Crores but is now payable/transferable to the RWAs of the Home Buyers by JAL. ii.Therefore, an amount of INR 266 Crore (INR 381-INR 115 Cr) is still recoverable by JIL from JAL as per audited accounts of JIL as on 31 March 2020. Overall, the Amount of Rs 115 Crore F (ultimately to be transferred to RWA) along with 266 crores (pertaining to JIL) i.e. 381 crores is recoverable from JAL towards Interest Free Maintenance Deposit (IFMD) of Home Buyers. This needs to be seen in the context that NBCC may terminate all existing contractual arrangements with JAL and thus INR 115 G Crores which is money belonging to Home Buyers ought to be paid by JAL to JIL for further transfer to the Home Buyers. iii. Further, JIL has paid to JAL an advance amounting to INR 450 crore towards special advance in the year 2016, which was being recovered on pro-rata basis from the JAL running bills. Till 31 Mar 2020, an amount approx. of INR 146 Crores is adjusted from H

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 869 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

running bills of JAL and an amount of INR 304 Crore is still A recoverable from JAL as on 31 March 2020 as per audited accounts of JIL as on 31 March 2020. iv. Apart from the above, an amount of INR 71 Crore is also recoverable from JAL in respect of Land Swap Deal with JAL lenders. B v. From above details, it is apparent that a cash amount of INR 756 Cr (381 + 304 + 71 Cr) is payable by JAL to JIL as on 31.3.2020. vi. It is pertinent to mention that the Hon’ble Court by judgment dated 26.02.2020 in Civil Appeal No. 8512-8527 of 2019 Anuj C Jain vs. Axis Bank Limited etc. etc. (2020 SCC Online SC 237) (“758 Acres Judgment”) has set aside mortgage created on 758 acres of land belonging to JIL to secure the debts of JAL on the ground that the same were preferential transactions. However, apart from the said 758 acres of land, mortgage of 100 acres of land of JIL to secure JAL’s debts could not be set aside as the same was beyond the look back period. Thus, at present a mortgage of 100 acres of land of JIL still exists to secure the debts of JAL. Hence, an amount equivalent to the market value of the 100 acre mortgaged land (mortgaged against 1500 crore loan) could be payable by JAL to JIL, subject to JIL exercising the remedies available to it under the law in this regard. The equivalent value of the said land as per the valuation taken for the purpose of the Resolution Plan (land proposed to be transferred through land SPV) is INR 328 crores. vii. Hence it is submitted that for effective implementation of the F Resolution Plan and to ensure that the strict timelines prescribed therein are met, JAL shall pay to JIL immediately upon the disposal of these appeals and under the aegis of this Hon’ble Court a total Amount of Rs 1084 Crores (756 crores + 328 Cr). viii. The same shall be utilised for the construction in terms of the G NBCC Resolution Plan.” 179.1.7. Apart from the above, the resolution applicant NBCC has also indicated various other aspects of accounting in regard to the defect liability of JAL as the master developer; and charging of excess profit by JAL. However, it is also submitted that the suggested amounts H

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A are subject to final reconciliation and verification. With these submissions, the prayer on behalf of NBCC is stated in the following terms: - “9. Needless to state that the above amounts are subject to final reconciliation and verification of accounts. In this regard it is requested that such reconciliation should be carried out by an independent third party to be nominated by the Hon’ble Court which would ensure that the rightful entitlement of JIL is provided to it and the Resolution Plan is successfully and effectively implemented.” 179.2. The associations of homebuyers of JIL, while supporting the submissions of the resolution applicant, have contended that returning the said sum of INR 750 crores deposited by JAL would be contrary to the orders of this Court, as the intention of the Court in Chitra Sharma was to safeguard the interests of homebuyers and rehabilitation of JIL. Moreover, direction by the Court to JAL for making such deposit, even when it was aware that JAL was not a party to the CIRP of JIL, shows that the refund shall not be made to JAL. It is submitted that any such refund may cause reduction of readily available funds to start the construction of unfinished projects. 179.2.1. It has been prayed that the Court may confirm that the said sum of INR 750 crores is to protect the interests of the homebuyers and forms a part of the assets of JIL. Alternatively, it has also been prayed that reconciliation of accounts between JAL and JIL be done in a time bound manner; and the refund of leftover funds be not permitted until NBCC completes the construction of apartments and the homebuyers get the possession of the flats. The homebuyers have also prayed for an injunction against NBCC, barring it from withdrawing and for direction to NBCC to expedite the process of implementation. Yet further prayers have been made to direct an audit of the quality of construction by NBCC to make sure that it conforms to the quality agreed upon by the homebuyers at the time of booking the apartments.

G 179.3. The other homebuyers of JIL, while supporting the submissions aforesaid, have reiterated that the directions of this Court in Chitra Sharma to JAL for making the said deposit was primarily to safeguard the interests of the homebuyers and rehabilitation/restitution of JIL; that it was a conscious decision of this Court keeping the interests of the homebuyers in mind; that if the intention of this Court was to revert this deposit to JAL, an express direction would have been made

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 871 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

in that behalf but, despite multiple pleas of JAL, this Court did not do so; that the application of JAL seeking recall of the directions for depositing INR 2,000 crores was dismissed by the order dated 25.10.2017 and it is against the principles of res judicata for JAL to seek the same relief in the present proceedings; that the IRP was conscious of the intention of this Court regarding the fate of the deposit made by JAL and that is why included this amount in the information memorandum with a caveat that it is subject to the order of the NCLT. It is further submitted that any direction for refund of this money to JAL would cause shortage of readily available funds to start the construction, which may jeopardise the fate of the entire project. 179.4. Even those associations of homebuyers of JIL, who have attempted to project themselves as ‘dissenting’ homebuyers, are ad idem on this issue that the said sum of INR 750 crores is the property of JIL and ought not be refunded to JAL. However, it is submitted by them that NBCC is aiming at profiteering by getting hold of this money without corresponding provision in the resolution plan for its use for the benefit of homebuyers. 179.5. The other persons/entities standing with JIL have also opposed the submissions made on behalf of JAL for return of this sum of INR 750 crores. It is submitted that even while permitting RBI to allow the banks to initiate CIRP against JAL, this Court did not issue any direction for refund of the deposit made by JAL and rather allowed this amount to be utilised for the CIRP of the corporate debtor JIL. Therefore, this amount has rightly been taken in the resolution plan for being utilised for the purposes of JIL.

180Copy pinpoint180. From the long range of submissions aforesaid, two aspects emerge for determination: one, as regards the treatment of the said amount of INR 750 crores and accrued interest; and second, as regards the amount receivable by JIL from JAL and reconciliation of accounts between these two companies. For dealing with extensive submissions concerning the said amount of INR 750 crores and accrued interest, worthwhile it would be to recapitulate the basic facts related with this deposit.

181Copy pinpoint181. A comprehensive look at what had transpired during the course of consideration of the matter involved in Chitra Sharma and what had culminated in the final judgment dated 09.08.2018, a few pertinent features come to the fore, which essentially relate to the concern of this Court H

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A towards homebuyers of JAL and JIL taken as a whole. As noticed, when the proceedings were taken up by this Court in Chitra Sharma in the month of September, 2017, the homebuyers were facing critical predicaments inasmuch as, at that point of time, they were not recognised as financial creditors of the corporate debtor. The matter, of course, arose from the insolvency proceedings relating to JIL but the submissions before the Court did not remain limited to the homebuyers of JIL alone; rather the predicaments were placed before the Court on behalf of the homebuyers of JAL and JIL as a whole lot and it was submitted that the interests of the ‘flat purchasers’, who had invested with JAL and JIL, need to be protected. On 11.09.2017, after noticing several facets of the matters, including the fact that JAL, the holding company, was not a party to the insolvency proceedings concerning JIL, this Court issued a slew of directions, including that for deposit of INR 2,000 crores by JAL. 181.1. JAL made an avid effort to wriggle out of the rigour of the direction for deposit of INR 2,000 crores while seeking recall of the order passed by this Court or for a modification that would enable it to transfer the rights under the Concession Agreement in respect of the Yamuna Expressway. This attempt on the part of JAL failed after this Court noticed the submissions in opposition that the rights under the Concession Agreement belonged to JIL. The directions of this Court, E for deposit as made from time to time in the course of proceedings in Chitra Sharma, resulted in JAL depositing INR 750 crores in instalments. 181.2. The fact of the matter remains, and unfolds from various interim orders passed in the case of Chitra Sharma, that basic concern of the Court was regarding the claim of the homebuyers of JAL and JIL F taken as a whole; and it was not stated at any stage by this Court that JAL was to part with this money exclusively for the purposes of JIL and, for that matter, for the purposes of the homebuyers of JIL alone. As noticed, during the course of proceedings, this Court appointed amicus curiae, who was directed to open web-portal for the homebuyers of JIL G and an independent web-portal for the homebuyers of JAL. As per the order dated 22.11.2017, the learned counsel appearing for JAL was to provide the requisite details to the amicus as also the amount for creation of the portal and for carrying on the consequential activities. 181.3. On 21.03.2018, it was stated on behalf of JAL that an amount of INR 550 crores had already been deposited and that only

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 873 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

about 8% of the homebuyers were interested in seeking refund while others were desirous of seeking possession of their flats. This Court indicated that at the given stage, only the matter in relation to the homebuyers seeking refund was being examined and other grievances would be examined in the next phase of proceedings. Since the order for deposit of INR 2,000 crores had not been fully complied with, the Court B issued directions for further deposit of INR 200 crores in instalments. At that stage, the Court was informed by the amicus curiae that as per his portal and as per the record of JAL, an amount of INR 1,300 crores was required to be refunded by way of principal alone to the homebuyers who were seeking refunds. 181.4. Thereafter, on 16.05.2018, 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’. On that date, it was also 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 15.06.2018’. 181.5. Lastly, on 13.07.2018, this Court, while expressing disinclination to entertain the proposals advanced on behalf of JAL, 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 E and JIL to construct the projects’. Thereafter, the matters were finally heard and decided by way of the judgment dated 09.08.2018. 181.6. Even at the final consideration of the matter, further proposals were mooted on behalf of JAL but were rejected by this Court while explaining that accepting any such proposal on behalf of JAL would cause serious prejudice to the discipline of IBC; and this Court particularly observed that clauses (c) and (g) of Section 29A operated as a bar to the promoters of JAL/JIL participating in the resolution process. This apart, after taking note of various grounds urged on behalf of the homebuyers in opposition to the proposal, this Court was convinced that JAL/JIL were lacking in financial capacity and resources to complete the unfinished projects. The reasons that were stated on behalf of the homebuyers in opposition to the proposal of JAL were aplenty where it was, inter alia, alleged that there had been questionable transactions involving mortgage of around 758 acres of JIL’s land worth INR 5,000 crores in favour of the lenders of JAL without any consideration and the H

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A same were set aside by NCLT87; that the claim by JAL of delivering the flats was also a fractured one because the flats were delivered incomplete and OOP was being made without OC; that about 22,000 homebuyers were suffering due to delays of more than four years in completion of various projects of JAL and JIL; that under the contracts, JAL and JIL were jointly and severally liable to deliver the flats; that there were serious B doubts about the credentials of JAL, who had diverted huge funds from JIL towards its other businesses; JAL had been unable to honour the order of this Court for depositing INR 2,000 crores, where only INR 750 crores were deposited after about 10 months from the initial order dated 11.09.2017 and where the instalment of INR 1,000 crores, as ordered on C 16.05.2018, was not forthcoming. The aforesaid and all other facts and factors indeed formed the basis of the conclusion by this Court that JAL/JIL were lacking in financial capacity and resources to complete the unfinished projects. There was, of course, a common refrain that liquidation of the corporate debtor JIL would not be in the interest of homebuyers. D 181.7. In Chitra Sharma (supra), having pondered over 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 considered it just and proper to revive the CIRP of JIL and to reconstitute the CoC as per the amended provisions of IBC with recourse to the powers under Article 142 of the Constitution of India. 181.8. However, before concluding on the matter, 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 the amount 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 required to be considered with empathy, such a request could not be acceded to; and specified four major reasons for declining this prayer, which included the reason that there were other creditors too and if the amount was utilised only for refund seekers, the homebuyers who were seeking their flats would have a legitimate grievance. Another reason was that the insolvency resolution process qua JAL was also being permitted. This was coupled with the position that this Court was reviving the CIRP in relation to JIL.

87 The said order of NCLT was ultimately approved by this Court in the judgment dated 26.02.2020 in the case of Anuj Jain.

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 875 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

181.9. It is also noteworthy that though the homebuyers were earlier not recognised as financial creditors, the doubts about their status as financial creditors were removed with amendment of the statute (IBC) with effect from 06.06.2018 and that was a major reason that this Court considered it appropriate, while deciding Chitra Sharma on 09.08.2018, to revive the resolution process but while making it clear that it would follow the discipline of IBC. However, this Court did not order that the said sum of INR 750 crores shall stand forfeited to JIL but only transferred the same together with accrued interest to NCLT, so as to abide by the directions of NCLT.

182Copy pinpoint182. Taking all the factors and the orders of this Court into account cumulatively, it is difficult to find if the sum in question was ever ordered by this Court to be deposited by JAL in discharge of its obligations towards JIL or towards homebuyers of JIL alone; and equally difficult it is to accept the submissions made by the resolution applicant and other persons standing with JIL that this corpus of INR 750 crores together with accrued interest has become an asset of JIL. D

183Copy pinpoint183. In an overall analysis, it appears that at the relevant time of consideration of the matter in Chitra Sharma, the grievances that were projected before this Court were not confined to the homebuyers of JIL alone but they related to the homebuyers of JAL as well; and the agreements with the homebuyers were also of a composite nature, with both JAL and JIL being the parties thereto. It had been in that hodgepodge of the interwoven transactions that the homebuyers of JAL and JIL projected their grievances as a whole lot before the Court in Chitra Sharma. As noticed, at the initial stages, pro rata disbursement to the refund seekers was under contemplation of the Court (as twice over stated in the interim orders) but even those refund seekers were not the homebuyers of JIL alone. The figure of INR 1,300 crores, as being the amount required for refund, was stated by the amicus curiae as per his portal and ‘as per the record of JAL’. 183.1. Therefore, it is apparent that at the given stage, the said deposit was taken for the purpose of the refund seeking homebuyers of G JAL and JIL both; and at the final stage, when this Court found that the interests of various other stakeholders were to be taken into account, the money was transferred to NCLT. It is difficult to deduce from the said proceedings and from the final order of this Court in Chitra Sharma that the corpus comprising of INR 750 crores with accrued interest is to be treated as the property of JIL. H

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A 183.2. The NCLT essentially proceeded on the considerations that JAL had indeed received money from the homebuyers of JIL; that JAL was asked by the Court to deposit the amount towards refund of JIL homebuyers; and that there was no direction from the Court to return this money to JAL. It appears that all the relevant facts and background aspects concerning this deposit did not surface before NCLT, which led B it to draw an inference not standing in conformity with the meaning and purport of the directions of this Court in the case of Chitra Sharma (supra). 183.3. While deducing that the money in question became the property of JIL in view of the directions for deposit to JAL by this Court, C the NCLT omitted to consider that the directions to JAL by this Court were not backed by any finding that in law JAL was liable to make good the said some of money for the purpose of refund seeker homebuyers of JIL alone. The directions and observations of this Court in the case of Chitra Sharma when read ad seriatim with their context, it is clear that such directions for deposit to JAL were that of an attempt by this Court to deal with the demands of refund seeking homebuyers of JAL and JIL. Even such a tentative proposition did not reach its finality in Chitra Sharma; and after taking note of the other factors and interests of various other stakeholders, the money was transferred to NCLT. In a comprehensive view of the matter, the inference drawn by NCLT in its impugned order dated 03.03.2020, that this money is an asset of the corporate debtor JIL remains unsustainable.

184Copy pinpoint184. Before switching over to the other leg of discussion in regard to this sum of INR 750 crores, it may also be observed that the contentions urged on behalf of the homebuyers of JIL, that this Court having rejected the application of JAL for recalling the directions for depositing the amount of INR 2,000 crores, the claim for refund of deposited amount by JAL is against the principles of res judicata, is also baseless. As noticed, during the course of consideration of the matter in Chitra Sharma (supra), this Court not only declined the prayer for recall of the directions for deposit but, even reiterated such directions on more than one occasion. However, all such orders and directions were interim in nature and from none of those interim orders or from the final judgment in Chitra Sharma, it could be deduced that the issue concerning entitlement to the deposited amount was finally decided by this Court against the depositor JAL.

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 877 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

185Copy pinpoint185. Coming to the resolution plan, in our view, NBCC could not A have prepared the same by assuming that this amount was the property of JIL when it was neither stated so in the orders passed by this Court nor by IRP in the information memorandum. The overt reliance by NBCC on the contents of the information memorandum is also misplaced because IRP never stated in the information memorandum that this amount of B INR 750 crores was a part of the assets of JIL. In the relevant heading of ‘Investment/Financing Opportunity’, the IRP stated thus: - “Unique investment/financing opportunity for the Resolution Applicant with adequate value to be unlocked • Unutilized land parcels (mortgaged and unencumbered land) C of 3502 Acres • 4,602 units (6.39 Mn sqft) of unsold inventory in LFD 1 (Noida), LFD 3 (Mirzapur), LFD 5 (Agra). • More than INR 3,758 cr receivable (including amount not due) as at Sep 30, 2018, against sold inventory, further approximately D INR 184.45 cr is due against bulk sale of land • Rights over the toll fee (along with revenue from road side facilities and advertisement) to be collected on Yamuna Expressway over the balance concession period of 30 years as at date E • 25% CAGR in toll revenue up to H1FY19 • Opportunity to exploit 3.4 mn sqft of road side facility area across express way • 100% equity shareholding in Jaypee Healthcare Limited, F having two fully operational hospitals in Noida & Chitta and one semi operational hospitals in Anoopshahr, UP • Jaypee Hospital, Noida with 525 beds (338 operational beds) is expandable to 1200 beds • 750 Crores deposited by JAL lying with Hon’ble NCLT, G utilization/ end use of same pending directions and decisions of Hon’ble NCLT.” (underlining supplied for emphasis)

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A 185.1.Therefore, even though various aspects relating to other assets and their potential utilisation were indicated in the information memorandum but, as regards this sum of INR 750 crores, the information memorandum made it absolutely clear that the same was deposited by JAL and was lying with NCLT; and that its end use was pending decision of NCLT. In the face of such unequivocal expressions, it cannot be accepted that in the information memorandum, any declaration was made that this sum of INR 750 crores was readily available to the resolution applicant. The submissions in this regard as made on behalf of NBCC are required to be rejected.

186Copy pinpoint186. We may observe that the decisions cited by the parties do not require much discussion. The principles in the cited decisions including those in the case of Embassy Property (supra) that the assets belonging to a third party cannot be utilised towards resolution of a corporate debtor remain fundamental and beyond cavil. Equally, the reference to the maxim actus curiae neminem gravabit, and to the decision in ONGC (supra) D has been rather unnecessary because the said principle is essentially employed for the purpose of restitution and putting a party in the position where he would have been but for intervention or lapse of the Court. 88 The principle underlying this maxim is also fundamental to all the rules of administration of justice and hence, an unintended result of any act or omission on the part of the Court, which occurs for whatever reason, is E not allowed to operate to the prejudice of any person. However, this principle would not apply to the present case for the reasons that this Court consciously directed the holding company JAL to make a deposit but, added to that were the other conscious decisions where this amount was not ordered to be forfeited to JIL nor there was any decree that this F 88 This principle has been succinctly explained by this Court in the case of South Eastern Coalfields Ltd. v. State of M.P. & Ors.: (2003) 8 SCC 648 in the following words: - “28. That no one shall suffer by an act of the court is not a rule confined to an erroneous act of the court; the “act of the court” embraces within its sweep all such acts as to which the court may form an opinion in any legal proceedings that the court would not have so acted had it been correctly apprised of the facts and the law. The factor attracting applicability of restitution is not the act of the court being wrongful or a mistake or error committed by the court; the test is whether on account of an act of the party persuading the court to pass an order held at the end as not sustainable, has resulted in one party gaining an advantage which it would not have otherwise earned, or the other party has suffered an impoverishment which it would not have suffered but for the order of the court and the act of such party…….”

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 879 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

amount had become property of JIL or the homebuyers of JIL. For what has been found and held hereinabove, we do not consider it necessary to dilate further on these principles.

187Copy pinpoint187. The upshot is that the said amount of INR 750 crores and accrued interest thereupon, is not the property of JIL. In regard to this amount, neither the stipulation in the resolution plan could be countenanced nor the order of NCLT could be approved.

188Copy pinpoint188. Accordingly, we hold that the amount of INR 750 crores, which was deposited by JAL pursuant to the orders passed by this Court in the case of Chitra Sharma, and accrued interest thereupon, is the property of JAL; and stipulation in the resolution plan concerning its usage by the resolution applicant of JIL cannot be approved. The part of the impugned order dated 03.03.2020 placing this amount in the asset pool of JIL is set aside.

189Copy pinpoint189. After we have found that the impugned order dated 03.03.2020 placing the said amount of INR 750 crores and accrued interest in the asset pool of JIL is unsustainable, the question is as to what orders in sequel be made regarding this money? In ordinary circumstances, the consequence of the findings in the preceding paragraphs would have been of direct refund of this money to JAL but the present matter carries with it several entangled features relating to the amount otherwise payable by JAL to JIL; and these features cannot be ignored altogether. E

189.1. As noticed, even when JAL and JIL are two separate corporate entities, JIL is an alter ego of JAL, for having been set up as an SPV and having been substituted as concessionaire in the Concession Agreement aforesaid. The agreements with homebuyers had also been of such a nature where JAL and JIL both were signatories thereto. F Additionally, JAL had been extended construction contracts by JIL and, as per the submissions made before us [vide paragraph 178.1.4 (supra)], JAL had been carrying out the construction work and taking steps to reduce the liability towards JIL that stood at a sum of INR 716 crores as on 31.03.2018 and was purportedly reduced to INR 195 crores as on G 31.03.2020. Various homebuyers have allegedly made payments towards IFMD to JAL. Moreover, JAL has submitted that balance of INR 195 crores, which was to be appropriated towards the construction of JIL’s project, could be adjusted from the said sum of INR 750 crores, if the resolution applicant makes a formal submission of terminating the H

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A construction agreement. NBCC, on the other hand, has suggested several other amounts to be recoverable from JAL. 189.2. Having comprehensively taken note of the complex and interwoven features, even while we are not inclined to countenance the other claims against JAL in these proceedings89, so far as the admitted amount towards construction advance is concerned, in our view, the process had been a continuing one and admittedly an amount of INR 195 crores was due to JIL as on 31.03.2020. In the given circumstances, it would serve the interests of all stakeholders, if the proposition for reconciliation of accounts, as stated in the alternative submissions by JAL as also by the resolution applicant, be partly accepted and after reconciliation, the payable amount be made over to JIL before refunding the remainder to JAL. 189.3. On behalf of JAL, it is submitted that verification/ reconciliation could be carried out by IRP or by a chartered accountant appointed by him, whereas NBCC would submit that such reconciliation should be carried out by an independent third party to be nominated by this Court. However, as noticed, the said sum of INR 750 crores stood transferred to NCLT in terms of the final directions in the case of Chitra Sharma (supra). Having regard to all the relevant features of this case, it appears appropriate that the process of reconciliation of accounts between JAL and JIL be taken up under the supervision of NCLT.

190Copy pinpoint190. For the aforesaid purpose of reconciliation of accounts between JAL and JIL, the NCLT shall, within 7 days of receipt of copy of this judgment, nominate an independent accounting expert; and the accounting expert so nominated by NCLT shall carry out the process of reconciliation while involving IRP of JIL and one representative of JAL. Looking to the underlying urgency, the accounting expert shall complete the entire process of reconciliation of accounts and submission of his report to NCLT within 10 days of his nomination. The professional charges and expenses for the task assigned to the accounting expert shall be determined by NCLT and shall be borne equally by JAL and G JIL. 190.1. After receiving the report from the accounting expert, the NCLT shall pass appropriate orders in the manner that, if any amount is 89 This is because insolvency resolution of JAL itself is looming large and in case of insolvency resolution or liquidation of JAL, such claims against JAL shall have to stand in the queue as per the discipline of IBC.

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 881 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

found receivable by JIL/homebuyers of JIL, the same shall be made over to JIL from out of the said amount of INR 750 crores and accrued interest; and remainder thereof shall be returned to JAL in an appropriate account and that shall abide by the directions of the competent authority dealing with the proceedings concerning JAL. The NCLT would be expected to pass appropriate orders within 2 weeks of submission of report by the accounting expert. 190.2. However, we need to make it clear that this process of reconciliation is not meant for determination of any claim otherwise sought to be levied against JAL by IRP or homebuyers of JIL or by the resolution applicant; and only the accounts concerning the amount/s advanced to JAL by JIL towards construction contracts (vide paragraph 178.1.4.) C are to be examined and reconciled with reference to the extent of liabilities discharged by JAL and then to find the extent of excessive amount, if any, available with JAL which is receivable by JIL/homebuyers of JIL.

191Copy pinpoint191. In regard to the aforesaid directions concerning reconciliation of accounts and disposal of the said amount of INR 750 crores and accrued interest, a few more comments and observations appear necessary. We have taken note of the submissions made on behalf of NBCC as also on behalf of various homebuyers of JIL that this money is required for construction of houses and if it goes to JAL, there would be acute shortage of funds for construction. We are also aware of the facts that have come on record that JAL is itself in distress and CIRP in its relation is looming large. We have further taken note of the submissions made by the financial creditor of JAL to place this sum of money within their control in an escrow account. However, we have not accepted any of these submissions in entirety. F 191.1. As observed hereinabove, after having found that the said money is the property of JAL, ordinarily, the consequence would have been of directing its refund to JAL but the other entangled features of the case relating to the amount otherwise payable by JAL to JIL cannot be ignored altogether, particularly when it was an admitted position on behalf of JAL before NCLT that an amount of INR 274 crores was G payable by it to JIL and even before this Court, this obligation to pay has been admitted on behalf of JAL, albeit to the tune of INR 195 crores as on 31.03.2020; and it appears that JAL has been taking steps (maybe crippled steps) to carry out construction and to reduce its liability. We are not determining the extent of amount payable by JAL to JIL because H

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A that would be a matter of reconciliation of accounts but, having regard to the background in which, and the purpose for which, JAL made the said deposit pursuant to the orders of this Court and also having regard to the present position of these two companies, adopting this course appears to be in the balance of the legal rights of the respective stakeholders as also in the balance of equities. We would hasten to B observe that ordinarily, the equitable considerations do not directly come into play in corporate insolvency resolution process but the matter concerning this amount of INR 750 crores and accrued interest thereupon is a convoluted and stand-alone issue, having the peculiarities of its own and hence, we have adopted the course as contemplated above. This C process is otherwise not of determination of the claims of individual stakeholders, be it operational creditors or financial creditors. In the interest of justice, it is also made clear that disposal of the said sum of INR 750 crores shall otherwise not be treated as determinative of the rights and obligations of any stakeholder in any of these two companies, JAL and JIL. D

192Copy pinpoint192. Before closing on this point for determination, we may indicate that a few of the arguments on this point have gone off on a tangent, as could be noticed from the submissions made by an association of homebuyers of JAL, who has directly approached this Court against the order of NCLT, that INR 160 crores be designated out of the said amount of INR 750 crores for completing the houses of the members of that association; and that in RERA proceedings, JAL was demanding money from its members, though, there was unexplained delay of 5 to 7 years in completion of project by JAL. We are unable to find any logic in the submission of this nature against JAL by its homebuyers having been made in these proceedings. It goes without saying that the dealing between JAL and its homebuyers is not the subject matter of the present proceedings. Similarly, the submission by some of the dissatisfied homebuyers of JIL, that NBCC is aiming at profiteering by getting hold of this money but without making corresponding provision in the resolution plan for the appropriate use of this money for the benefit of homebuyers, also remains baseless and redundant in view of what has already been discussed hereinbefore. Another block of submissions on behalf of some of the homebuyers of JIL, like seeking directions against NBCC that it shall not withdraw and should expedite construction as also seeking audit over the quality of construction, have gone far too beyond the real issues requiring determination in the present litigation. In regard to these and

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 883 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

other submissions of similar nature, we would only leave the parties to take recourse to appropriate remedies in accordance with law, in case of any legal grievance existing or arising in future. Point K Security interest of the lenders of JAL and effect of judgment dated 26.02.2020 B

193Copy pinpoint193. Two separate questions formulated in this point for determination carry their intrinsic correlation and hence are taken up for determination together. 193.1. The genesis of these questions lies in seven such transactions whereby, the financial facilities obtained by JAL were secured by way of mortgages created over various parcels of JIL’s land, aggregating to 858 acres. During the present CIRP proceedings, the IRP questioned these transactions as being preferential, undervalued and fraudulent within the meaning of Sections 43, 45 and 66 of the Code. An application moved by IRP for avoidance of these transactions was accepted in part by the Adjudicating Authority in its order dated 16.05.2018 and directions were issued for avoidance of six of these transactions. However, one such transaction was found by the Adjudicating Authority to be not falling within relevant time, as provided in Section 43 of the Code and hence, the same was not avoided. The order so passed by the E Adjudicating Authority (NCLT) was, however, reversed by the Appellate Authority (NCLAT). Hence, the matter came in appeal before this Court and was dealt with in the case of Anuj Jain (supra), decided on 26.02.2020.

194Copy pinpoint194. In the judgment dated 26.02.2020 in Anuj Jain (supra), this F Court took note of all the relevant particulars of the said seven transactions and the one, which was not found falling within relevant time, was noticed by this Court as follows: - “7.5. Yet another transaction was questioned by IRP as being avoidable but the adjudicating authority held the same to be not G falling within the relevant time as provided under Section 43 of the Code. The particulars of this transaction are as follows: Mortgage deed dated 12-5-2014 for 100 acres of land situated at Village Tappal, Tehsil Khair, District Aligarh, Uttar Pradesh executed by JIL in favour of ICICI Bank Ltd. against H

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A the facility agreement dated 12-12-2013 granting term loan of Rs 1500 crores and overdraft amount of Rs 175 crores to JAL (hereinafter also referred to as “Property No. 7”) (As regards this description, it is pointed out on behalf of the respondent ICICI Bank that it had been of “term loan of Rs 1500 crores under the corporate rupee loan facility agreement and general conditions B dated 12-12-2013 and mortgage deed was dated 10-3-2014”).” 194.1. As noticed, in final determination of the relevant issues, this Court disapproved the order of NCLAT; and the order of NCLT was upheld in relation to six of these transactions with the finding that the transactions in question were hit by Section 43 of the Code and the C Adjudicating Authority (NCLT) was justified in issuing necessary directions in terms of Section 44 of the Code. However, as noticed, the above-noted seventh transaction pertaining to the mortgage dated 12.05.2014 and relating to 100 acres of land, remained intact. The property involved in the said transaction, which was not covered under avoidance D provisions is referred to as ‘Tappal Property 1’, for being situated at village Tappal for which, the mortgage was created on 12.05.2014. 194.2. We have also noticed hereinbefore that in the case of Anuj Jain (supra), this Court had examined another issue, that is, as to whether the lenders of JAL could be categorised as financial creditors of JIL. In E this regard, this Court though observed that when the transactions in question were hit by Section 43 of the Code, they were denuded of their value and worth and the security interest created over the property of JIL involved in those transactions stood discharged in whole; and, therefore, such lenders of JAL were not entitled to claim any status as creditors of the corporate debtor JIL much less as financial creditors but then, this Court examined the question as regards the status of such lenders of JAL qua the corporate debtor JIL independent of the findings that the transactions in question were hit by Section 43 of the Code. Ultimately, on this issue relating to the status of such lenders of JAL, this Court 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 would not fall in the category of financial creditors of the corporate debtor JIL.90 90 The relevant conclusions in the case of Anuj Jain have been reproduced in paragraphs H 34.1 to 34.3, hereinbefore.

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 885 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

194.3. The judgment dated 26.02.2020 in the case of Anuj Jain A (supra) was delivered by this Court after the voting by CoC on the resolution plan in question but before passing of the impugned order dated 03.03.2020 by the Adjudicating Authority.

195Copy pinpoint195. In the resolution plan, apart from various stipulations in regard to the land of JIL and creation of two SPVs with transfer of certain B parcels of land, the resolution applicant stated in Clause 23 of Schedule 3 relating to ‘reliefs and concessions’ as under: - “23. The JAL Lenders Mortgaged Land shall continue to be vested in the Corporate Debtor free of any mortgage, charge and encumbrance.” C

196Copy pinpoint196. The Adjudicating Authority, in its impugned order dated 03.03.2020, while noticing the terms of the resolution plan and key reliefs, summarised the matter relating to the land mortgaged with JAL lenders in the following part of tabulation: -

(bold is in original) H

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A 196.1.As regards the land under mortgage, the Adjudicating Authority stated its consideration in paragraph 128 of the order impugned in the following terms: - “128. With regard to the objections raised by JAL and other objectors for inclusion of 858 acres as part of the resolution B plan, for the Hon’ble Supreme Court on 26.02.2020 held that mortgaged of 858 acres of JIL land to the lenders of JAL is an avoidance transaction, it can no more be an objection from JAL or from consortium of ICICI Bank to say that land cannot be part of the resolution plan for it has been mortgaged to the financial creditors of JAL.” C However, while concluding on Clause 23 of Schedule 3 of the resolution plan, the Adjudicating Authority observed (in paragraph 134) thus: - “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.”91 196.2. Noteworthy it is that ‘cross-reference’ in the table above- quoted, to ‘Clause 1 of Schedule 3 of the resolution plan’ as also the figure of extent of land pertaining to avoidance transactions at ‘858 acres’ in paragraph 128 of the impugned order were incorrect and the Adjudicating Authority corrected these errors in the corrigendum dated 17.03.2020 in the manner that the cross-reference is to ‘Clause 23 of Schedule 3 of the resolution plan’ and the extent of land held by this Court to be of avoidance transactions is ‘758 acres’. F

197Copy pinpoint197. To put it in clear terms, the net outcome of the propositions, proceedings and findings noticed in the preceding paragraphs is as follows: 858 acres of JIL’s land was mortgaged with the lenders of JAL; in the resolution plan, NBCC sought the relief that such land shall continue to remain vested in the corporate debtor JIL free from any mortgage, charge and encumbrance; 758 acres, out of this 858 acres, of land got released from mortgage in terms of the judgment in Anuj Jain (supra); 100 acres of land, being ‘Tappal Property 1’, however, continued to remain under 91 The aforesaid observations, as occurring in paragraphs 128 and 134 of the impugned order dated 03.03.2020, have been extracted hereinbefore in the narratives but we have re-extracted them for continuity of the present discussion.

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 887 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

mortgage with ICICI Bank; and, as regards this mortgage, ICICI Bank A was not recognised as a financial creditor of JIL even if falling in the category of secured creditors; the Adjudicating Authority has not rendered any specific decision as regards such mortgaged land and as regards the relief claimed by the resolution applicant while assuming that the entire matter stands concluded with the judgment of this Court dated 26.02.2020 B in Anuj Jain (supra).

198Copy pinpoint198. Now, the aforesaid terms of the resolution plan and the order of the Adjudicating Authority have given rise to two major issues. The first one is the grievance of ICICI Bank, who is the mortgagee in the said mortgage transaction relating to ‘Tappal Property 1’, that was not hit by Section 43 of the Code for having been entered into beyond the look-back period.

199Copy pinpoint199. The mortgagee bank would submit that in terms of the judgment of this Court in Anuj Jain, the said mortgage in relation to ‘Tappal Property 1’ continues to remain in force and thereby, the bank is a secured creditor of the corporate debtor JIL; and this mortgage cannot be taken away through a resolution plan without assigning any value. It is submitted that the stipulations in the resolution plan in regard to this mortgage remain invalid where the resolution applicant has erroneously assumed that the effect of implementation of the plan would be that all encumbrances and charges on the property of the corporate debtor for the loans given to third party shall stand extinguished. It is contended that a legal right in the property cannot be taken away except by due process of law; that the process under the Code provides for reckoning and accounting of claims against the corporate debtor; and that only those claims which are accounted for and dealt with as a part of this process could possibly be dealt with in a resolution plan but, the claims which have not been accounted for and reckoned in this process cannot stand extinguished. It is submitted that this bank, in its capacity as mortgagee of the said ‘Tappal Property 1’, is left to suffer from double whammy where its claim under the mortgage has not been reckoned in the CIRP and then, the approved resolution plan proceeds to go ahead and extinguish the mortgage itself. It is argued that all these aspects have not been examined by the Adjudicating Authority and hence, its order, in regard to this issue, cannot be approved. This bank had filed a belated appeal before NCLAT, being D. No. 21936 of 2020 and has sought transfer of the same in this Court by way of Transfer Petition - D. No. 20274 of 2020. H

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200Copy pinpoint200. In response to the aforesaid submissions of ICICI Bank, the resolution applicant has contended, with reference to the findings and conclusion of this Court in the case of Anuj Jain (supra), that the said bank is not a financial creditor of JIL and hence, has no locus in the matter and cannot claim payment of liquidation value of the debt owed by JAL. Without prejudice, it is also submitted that the resolution plan B adequately deals with the treatment of the terms of securities, guarantees, indemnities, pledge, charge or encumbrances of any kind in relation to any debt and in this regard, the prescription in the resolution plan at page 362 of the appeal filed by NBCC has been referred. That part of the resolution plan pertains to the terms/stipulations under the sub-heading, C ‘Effects of Settlement of Admitted Financial debt due to Financial Creditors’ which in turn, occurs under the heading ‘1.2. Proposal for Financial Creditors’. The referred term provides for release and discharge of all liabilities under such securities etc., other than continuation of guarantee benefits with the institutional financial creditors as laid down in the resolution plan. D

201Copy pinpoint201. Apart from the issue raised by ICICI Bank in relation to the said mortgaged land of 100 acres, another issue raised by some of the homebuyers is that adequate provisions have not been made in the resolution plan in relation to 758 acres of land, that was earlier covered by the other six mortgage transactions but now stands released from E encumbrance.

202Copy pinpoint202. Having examined the matter in its totality, we find force in the submissions so made by the mortgagee bank as also by the homebuyers.

203Copy pinpoint203. The resolution applicant has overtly relied upon the fact that the objector bank was not accepted as a financial creditor of JIL by this Court in Anuj Jain (supra) and has contended on this basis that the objections so raised by this bank are required to be rejected. These submissions of the resolution applicant NBCC suffer from several shortcomings. Even when the said bank has not been recognised as a G financial creditor because the mortgage in question was not relating to any financial debt of the corporate debtor JIL, its capacity as a secured creditor, for being the holder of security in the form of mortgage which has not been avoided and which remains existing, cannot be denied; and has not been denied by this Court in Anuj Jain (supra). H

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 889 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

203.1. This bank appears right in its contention that when the A security in question was not even taken up as a part of the resolution process, it could not have been extinguished on the ipse dixit of the resolution applicant. Unfortunately, Adjudicating Authority totally missed out the real issue before it in regard to this mortgage transaction because, in the order as originally passed on 03.03.2020, the Adjudicating Authority B assumed that all the mortgages in favour of the lenders of JAL (covering the entire 858 acres of JIL land) were annulled by this Court in Anuj Jain (supra) as avoidance transactions. Of course, in the corrigendum dated 17.03.2020, the Adjudicating Authority rectified the error of the figure ‘858’, as occurring in paragraph 128 of the original order dated 03.03.2020, and corrected it to ‘758’ but, did not examine the C consequences thereof. In other words, while making the correction on 17.03.2020, the Adjudicating Authority failed to advert to the relevant question as to what would be the proper order as regards the remaining 100 acres of land, if only 758 acres was released in terms of the judgment in Anuj Jain (supra). D 203.2. The fact that the Adjudicating Authority dealt with this segment rather cursorily is yet further seen from the part of the table reproduced hereinabove where, while making reference to the mortgages in favour of the lenders of JAL, an incorrect cross-reference was made to Clause 1 of Schedule 3 of the resolution plan. This error was also corrected in the order dated 17.03.2020 and correct reference was made to Clause 23 of Schedule 3 but, again, the implication of this correction totally escaped the attention of the Adjudicating Authority. 203.3. As noticed, in the said Clause 23, a fleeting suggestion on the part of the resolution applicant had been that ‘JAL lenders mortgaged land shall continue to be vested in the corporate debtor free from any mortgage, charge and encumbrance’. The Adjudicating Authority dealt with the said clause of the resolution plan in an equally cursory manner by observing that the point was not clear but, if it was referring to the land mortgaged with the lenders of JAL, the issue had already been decided by the Supreme Court and need not be reiterated. In this entire process of mistakes/errors (might be accidental) and corrections as also cursory observations, the Adjudicating Authority totally missed out that one transaction relating to 100 acres of land, being ‘Tappal Property 1’, remained unaffected by the judgment in Anuj Jain (supra); and that the security creating over this land could not have been annulled in the manner suggested in the plan. H

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204Copy pinpoint204. It cannot be denied that the claim of ICICI Bank pertaining to the said mortgage over 100 acres of land was not reckoned in the CIRP of JIL and without any specific provision in that regard, the resolution applicant merely suggested by way of the Clause 23 of Schedule 3 as if such mortgage shall stand annulled and the land shall vest in the corporate debtor free from any encumbrances. To say the B least, the said Clause 23 does not appear to be standing in conformity with any principal of law for discharge of a security interest, particularly of a third party who is not included in the insolvency resolution process of a corporate debtor. We would hasten to make it clear that the capacity of ICICI Bank in relation to the said mortgage of 100 acres of land of C ‘Tappal Property 1’ is entirely different than its status as the dissenting financial creditor of JIL, to the extent JIL directly owed a financial debt to it. Those aspects pertaining to its capacity as dissenting financial creditor, to the extent of its share of financial debt, have already been discussed in Point D hereinbefore.

205Copy pinpoint205. For what has been discussed above, neither the said Clause 23 of Schedule 3 of the resolution plan relating to ‘reliefs and concessions’ could be approved nor the order of the Adjudicating Authority in this regard.

206Copy pinpoint206. Similarly, the grievance voiced by some of the homebuyers is also justified that adequate provisions are required for dealing with the other chunk of 758 acres of land (that now stands released from mortgage in consequence of the judgment of this Court in Anuj Jain). This is another aspect which is required to be examined by the Committee of Creditors for ensuring viability of the plan and maximisation of the value of the assets of the corporate debtor JIL. We need not make much comment in this regard but it cannot be gainsaid that availability of this chunk of land free from encumbrances has its own bearing on the entire gamut of insolvency resolution of JIL. The other aspects arising from the availability of this chunk of land shall be dealt with, when examining the question of final orders to be passed in these matters in Point N G infra. Point L Other issues requiring clarification/directions

207Copy pinpoint207. In its detailed submissions, NBCC has also raised an issue that in Clause 7 Schedule 3 of the resolution plan, reduction of share H

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 891 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

capital is being sought for the corporate debtor and ‘not for the A companies yet incorporated’ but the Adjudicating Authority has erroneously made the observations in its order that such reduction was not a part of this resolution. The resolution applicant NBCC has sought clarification in this regard. The relevant clause in the resolution plan reads as under: - B “7. The approval of this Plan by the Adjudicating Authority shall be deemed to have waived all the procedural requirements in terms of Section 66, Section 42, Section 62(1), Section 71 of the CA, 2013 and relevant rules made thereunder, in relation to reduction of share capital of the Corporate Debtor, issuance of shares by Expressway SPV, Land Bank SPV, conversion of Admitted C Financial Debt due to the Institutional Financial Creditors to equity, subscription of debentures by the Corporate Debtor or transfer of shares of the Land Bank SPV from the Corporate Debtor to Institutional Financial Creditors.”

208Copy pinpoint208. The observations by the Adjudicating Authority as regards this clause are that since reduction of the share capital of corporate debtor is not a part of the resolution plan, the Adjudicating Authority ‘cannot waive the procedure for reduction of share capital in relation to the companies not yet incorporated’.

209Copy pinpoint209. When the resolution plan with all its reliefs and concessions was approved by CoC and the plan was otherwise being approved by the Adjudicating Authority (albeit with modifications), the aforesaid observations in regard to Clause 7 of ‘reliefs and concessions’ cannot be said to be of apt dealing with the relief sought. Be that as it may, having regard to the purport and purpose of the said Clause 7 and its approval by CoC, we find no reason as to why the same may not be approved. Hence, the impugned order of the Adjudicating Authority dated 03.03.2020 shall be read as modified and in approval of the said Clause 7 of ‘reliefs and concessions’.

210Copy pinpoint210. In the last, NBCC has also prayed for directions to JAL and its sub-contractors or any other person having control over the project sites/lands of JIL to immediately hand over possession/control thereof to JIL and has also prayed for directions to the local administration for necessary support in that regard. We do not find any reason to make any such generalised observations or directions but would leave it open H

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A for the resolution applicant to take recourse to the appropriate proceedings in accordance with law, whenever occasion so arise. Point M Modified mechanism for implementation by the Appellate Authority

211Copy pinpoint211. We have formulated this point for determination only in view of the fact that the interim order dated 22.04.2020, as passed by NCLAT while dealing with the appeal filed by NBCC against the said order dated 03.03.2020, has been challenged by the associations and individual homebuyers before this Court. Although in view of what has been discussed and held hereinbefore, all the issues related with the resolution C plan and the impugned order of NCLT dated 03.03.2020 stand determined comprehensively and the related appeals before NCLAT, already withdrawn to this Court, shall also come to an end. Therefore, not much of discussion is required on this point but, a few comments in regard to the proposition adopted by the Appellate Authority appear necessary.

212Copy pinpoint212. It appears that the proposition, of providing for Interim Monitoring Committee comprising of the representatives of three institutional financial creditors and the resolution applicant as also the resolution professional, was picked up by the Appellate Authority with reference to the stipulation in Point No. 2(a) of Part A of the resolution E plan, where it was provided under the heading ‘Management Team’ and sub-heading ‘Appointment of Monitoring Agency’ that on and from the approval date and until the transfer date, the corporate debtor will be managed by a monitoring agency or any other person appointed by the resolution applicant in consultation with a Steering Committee comprising of three major institutional financial creditors. F 212.1. In our view, even if the resolution plan carried such a management framework, the Appellate Authority, while dealing with the appeal against approval of the resolution plan, could not have provided for such a mechanism which is not envisaged by the Code.

213Copy pinpoint213. The Code lays down detailed procedure for corporate G insolvency resolution process and such a proposition, for constitution of any Interim Monitoring Committee during the pendency of appeal before the Appellate Authority (NCLAT) is neither envisaged by law nor appears justified. It is apparent on a bare perusal of sub-section (3) of Section 61 of the Code that any challenge to the order approving a resolution plan H

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under Section 31 could be maintained only on the grounds specified therein. Obviously, while dealing with such appeals, the Appellate Authority is required to remain within the confines of the boundaries delineated by the Code rather than seeking to provide for a mechanism, for implementation of the plan.

214Copy pinpoint214. Moreover, looking to the peculiar features of this resolution process, which has its own complications, constitution of such a Committee, consisting only of the resolution professional, the resolution applicant and the institutional financial creditors while leaving aside the biggest chunk of stakeholders i.e., the homebuyers (having more than 57% of the voting share in the CoC), would have caused more difficulties in implementation of the resolution plan rather than serving any purpose. C

215Copy pinpoint215. While entertaining the captioned appeals and directing transfer of the related cases pending before NCLAT to this Court by our order dated 06.08.2020, we had stayed the operation of the impugned order dated 22.04.2020 while allowing the IRP to continue with the management of the affairs of the corporate debtor. While concluding on these matters, D it appears appropriate and necessary that the said order dated 22.04.2020 by NCLAT be disapproved and set aside. Point N Summation of findings; final order and conclusion E

216Copy pinpoint216. For what has been discussed and held on the relevant points for determination, our findings and conclusions are as follows: A. The Adjudicating Authority has limited jurisdiction in the matter of approval of a resolution plan, which is well-defined and circumscribed by Sections 30(2) and 31 of the Code. In the F adjudicatory process concerning a resolution plan under IBC, there is no scope for interference with the commercial aspects of the decision of the CoC; and there is no scope for substituting any commercial term of the resolution plan approved by Committee of Creditors. If, within its limited jurisdiction, the Adjudicating G Authority finds any shortcoming in the resolution plan vis-à-vis the specified parameters, it would only send the resolution plan back to the Committee of Creditors, for re-submission after satisfying the parameters delineated by the Code and exposited by this Court. H

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A B. The process of simultaneous voting over two plans for electing one of them cannot be faulted in the present case; and approval of the resolution plan of NBCC is not vitiated because of simultaneous consideration and voting over two resolution plans by the Committee of Creditors. B C. The stipulations in the resolution plan, as regards dealings with YEIDA and with the terms of Concession Agreement, have rightly not been approved by the Adjudicating Authority but, for the stipulations which have not been approved, the only correct course for the Adjudicating Authority was to send the plan back to the Committee of Creditors for reconsideration. C D. The Adjudicating Authority has not erred in disapproving the proposed treatment of dissenting financial creditor like ICICI Bank Limited in the resolution plan; but has erred in modifying the related terms of the resolution plan and in not sending the matter back to the Committee of Creditors for reconsideration. D E. The Adjudicating Authority has erred in issuing directions to the resolution applicant to make provision to clear the dues of unclaimed fixed deposit holders. Paragraph 125 of the impugned order dated 03.03.2020 is set aside.

E F. The issues related with the objections of YES Bank Limited and pertaining to JHL, the subsidiary of the corporate debtor JIL, are left for resolution by the parties concerned, who will work out a viable solution in terms of paragraphs 141 and 142 of this judgment.

F G. In the overall scheme of the resolution plan, the stipulation in Clause 21 of Schedule 3 thereof cannot be said to be unfair; and the observations in paragraphs 132 and 133 of the order dated 03.03.2020 justly take care of the right of any aggrieved party (agreement holder) to seek remedy in accordance with law and ensures viability of the resolution plan. G H. It cannot be said that the resolution plan does not adequately deal with the interests of minority shareholders. The grievances as suggested by the minority shareholders cannot be recognised as legal grievances. Their objections stand rejected.

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 895 ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

I. The homebuyers as a class having assented to the resolution plan of NBCC, any individual homebuyer or any association of homebuyers cannot maintain a challenge to the resolution plan and cannot be treated as a dissenting financial creditor or an aggrieved person; the question of violation of the provisions of the RERA does not arise; the resolution plan in question is not violative of the mandatory requirements of the CIRP Regulations; and when the resolution plan comprehensively deals with all the assets and liabilities of the corporate debtor, no housing project of the corporate debtor could be segregated merely for the reason that same has been completed or is nearing completion. J. (i) The amount of INR 750 crores (which was deposited by C JAL pursuant to the orders passed by this Court in the case of Chitra Sharma) and accrued interest thereupon, is the property of JAL and stipulation in the resolution plan concerning its usage by JIL or the resolution applicant cannot be approved. The part of the order of NCLT placing this amount in the asset pool of JIL is D set aside. (ii) The question as to whether any amount is receivable by JIL and/or its homebuyers from JAL, against advance towards construction and with reference to the admitted liability to the tune of INR 195 crores as on 31.03.2020, shall be determined by E NCLT after reconciliation of accounts in terms of the directions contained in paragraphs 189 to 191.1 of this judgment. The amount, if found receivable by JIL, be made over to JIL and the remaining amount together with accrued interest be refunded to JAL in an appropriate account. It is made clear that the present matter being related to CIRP of JIL, no other orders are passed in relation to the amount that would be refunded to JAL because treatment of the said amount in the asset pool of JAL shall remain subject to such orders as may be passed by the competent authority dealing with the affairs of JAL. K. (i) Clause 23 of Schedule 3 of the resolution plan, providing for extinguishment of security interest of the lenders of JAL could not have been approved by the Adjudicating Authority, particularly in relation to the security interest that has not been discharged. This part of the order dated 03.03.2020 is set aside. H

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