The National Company Law Appellate Tribunal (NCLAT) on Thursday admitted an appeal moved by ICICI Bank Ltd and other lenders challenging an order passed by National Company Law Tribunal’s (NCLT) Allahabad bench directing Jaiprakash Associates Ltd (JAL) to return 759 acres of land to its unit Jaypee Infratech Ltd (JIL).
The land, which belongs to JIL, was mortgaged to a consortium of banks led by ICICI Bank by JAL for a loan.
The other banks in the consortium include State Bank of India, Axis Bank and Standard Chartered.
A two-judge NCLAT bench headed by Justice S.J. Mukhopadhyay issued a notice to the resolution professional for JIL, which is currently undergoing corporate insolvency resolution process, asking it to file a reply along with any evidence to show that the mortgage to the banks was done “fraudulently”.
The registrar of companies was also directed not to alter the record of charges created by a company pursuant to the order of NCLT.
During the pendency of the appeal, the corporate insolvency resolution process for JIL would continue and the resolution professional would inform the resolution applications about the pendency of the appeal with respect to its mortgaged property, which is an asset of the corporate debtor, the appellate tribunal directed.
NCLAT, without passing a formal order to the effect, observed that prima facie NCLT had exceeded its jurisdiction by adjudicating upon the legality of a legal instrument.
“NCLT is not a civil court…. It has no right to declare an instrument illegal,” Justice Mukhopadhyay said.
Earlier this month, the Allahabad bench of NCLT had declared the transfer of ownership of 858 acres of JIL’s land by JAL to its own lenders, in the form of collateral for loans, as “fraudulent, preferential and undervalued” and asked JAL to return 759 acres of it.
The NCLT order was passed on a plea referred by the resolution professional for JIL, Anuj Jain, which alleged that JIL did not receive any consideration from JAL for these transactions.
Jaypee Infratech is among the 12 companies against whom the Reserve Bank of India, through its 13 June directive, asked banks to file insolvency petitions. NCLT’s Allahabad bench admitted a plea moved by IDBI Bank seeking the initiation of a corporate insolvency resolution process against the real estate firm in August 2017.
On 16 May, the apex court directed JAL to deposit Rs1,000 crore with its registry by 15 June to avert the liquidation of its subsidiary JIL.
The matter would be next heard on 13 July.
Source: Livemint, May 25, 2018