New Delhi, February 26: The Supreme Court Wednesday restored the National Company Law Tribunal (NCLT) order directing Jaiprakash Associates Ltd (JAL) to return 758 acres of land, which was pledged with several banks, to its debt-laden subsidiary firm Jaypee Infratech Ltd (JIL). The NCLAT had allowed the pleas of all banks as well as JAL and held that the transactions were genuine and the allegation of undervaluation was not justified.
The top court, while deciding a batch of appeals filed by Interim Resolution Professional of JIL and others, set aside the decision of the National Company Law Appellate Tribunal (NCLAT) passed on August 1, last year.
The NCLAT had quashed the verdict of NCLT, Allahabad, which on May 16, 2018 had held that the mortgage of properties of JIL, which was facing insolvency proceedings under the Insolvency and Bankruptcy Code (IBC), in favour of the lending financial institutions of holding firm JAL cannot be countenanced.
The NCLT had also held that the lenders of JAL do not fall in the category of the “financial creditors” of corporate debtor JIL just because of the mortgage of JIL’s properties in favour of JAL.
The Allahabad bench of the NCLT had asked the holding firm JAL to return 758 acres of land to its subsidiary JIL, declaring the transfer of the land as “fraudulent” and “undervalued”.
It had also directed JAL to release and discharge interest created over the patch of land to lenders.
A bench comprising Justices A M Khanwilkar and Dinesh Maheshwari, in its 174 judgement, considered various provisions of the IBC and reversed the verdict of the NCLAT.
“The impugned order dated August 1, 2019 as passed by NCLAT in the batch of appeals is reversed and is set aside… consequently, the order dated May 16, 2018 so passed by NCLT is upheld in regard to the findings that the transactions in question are preferential within the meaning of Section 43 of the Code,” Justice Maheshwari, who wrote the judgement, said.