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

JAYPEE KENSINGTON BOULEVARD APARTMENTSWELFARE ASSOCIATION & ORS.

NBCC (INDIA) LTD. & ORS.

(Civil Appeal No. 3395 of 2020)

MARCH 24, 2021

[A. M. KHANWILKAR, DINESH MAHESHWARI ANDSANJIV KHANNA, JJ.]

Insolvency and Bankruptcy Code, 2016 – ss. 30(2) and 31 –Contours of the jurisdiction of Adjudicating Authority in dealingwith resolution plan – Held: The Adjudicating Authority has limitedjurisdiction in the matter of approval of resolution plan, which iswell-defined and circumscribed by ss.30(2) and 31 of the Code – Inthe adjudicatory process concerning resolution plan under IBC,there is no scope for interference with the commercial aspects ofthe decision of the Committee of Creditors (CoC); and there is noscope for substituting any commercial term of the resolution planapproved by Committee of Creditors – If, within its limitedjurisdiction, the Adjudicating Authority finds any shortcoming inthe resolution plan vis-à-vis the specified parameters, it would onlysend the resolution plan back to the Committee of Creditors, for re-submission after satisfying the parameters delineated by the Codeand exposited by the Supreme Court.

Insolvency and Bankruptcy Code, 2016 – Resolution plan –Activities of the corporate debtor had impact on large number ofpersons/ entities, including buyers of flats/apartments in its realestate development projects – Whether approval of the resolutionplan of NBCC was vitiated because of simultaneous voting overtwo resolution plans in the Committee of Creditors – Held: Theprocess of simultaneous voting over two plans for electing one ofthem could not be faulted in the present case; and approval of theresolution plan of NBCC was not vitiated because of simultaneousconsideration and voting over two resolution plans by the Committeeof Creditors.

Insolvency and Bankruptcy Code, 2016 – Resolution plan –Activities of the corporate debtor had impact on large number of

CDE

Apersons/ entities, including buyers of flats/apartments in its realestate development projects – Whether, after approval of theresolution plan of NBCC by the Committee of Creditors, wherehomebuyers as class assented to the plan, any individualhomebuyer or any association of homebuyers could maintain achallenge to the resolution plan and could be treated as dissentingBfinancial creditor or an aggrieved person – Whether any housingproject which was completed or nearing completion ought to bekept out of the purview of the resolution plan – Held: On facts, thehomebuyers as class having assented to the resolution plan ofNBCC, any individual homebuyer or any association of homebuyersCcannot maintain challenge to the resolution plan and cannot betreated as dissenting financial creditor or an aggrieved person;and when the resolution plan comprehensively deals with all theassets and liabilities of the corporate debtor, no housing project ofthe corporate debtor could be segregated merely for the reason

that same was completed or nearing completion.D

The instant matters essentially related to resolution planin the corporate insolvency resolution process (CIRP) under theInsolvency and Bankruptcy Code, 2016 concerning the corporatedebtor, Jaypee Infratech Limited (JIL), whose activities hadimpact on large number of persons/ entities, including buyersEof flats/apartments in its real estate development projects. CIRPin relation to the corporate debtor JIL had been entangled invarious disputes in the past and even when the resolution plansubmitted by the resolution applicant, NBCC (India) Limited wasapproved by the Committee of Creditors by substantial majorityof 97.36% of voting share of the financial creditors, severalFdisputes/objections came up from various stakeholders and roleplayers, voicing the concerns of their own, like dissenting financialcreditors, dissatisfied homebuyers, displeased land providingagency, disillusioned creditor of wholly-owned subsidiary of thecorporate debtor and disappointed minority shareholders. ApartGfrom all these, the holding company of the corporate debtor,namely, Jaiprakash Associates Limited (JAL) and itsstakeholders had several questions over the resolution processin question and were particularly concerned with the sum of INR750 crores, which was deposited by JAL pursuant to the orderspassed by this Court in the first round of litigation. The principalHpoints calling for determination were:

A. What is the extent of, and limitations over, the powersand jurisdiction of the Adjudicating Authority while dealing withthe resolution plan approved by the Committee of Creditors?

B. As to whether approval of the resolution plan of NBCCis vitiated because of simultaneous voting over two resolutionplans in the Committee of Creditors?

C.(i) As to whether the Adjudicating Authority erred in notapproving the stipulations in the resolution plan for meeting withthe contingent liability of additional amount of land acquisitioncompensation; and has also erred in modifying these stipulations?(ii) As to whether the Adjudicating Authority erred in notapproving the mechanism provided in the resolution plan fortransfer, of the concessionaire’s rights and obligations under theConcession Agreement with Yamuna Expressway IndustrialDevelopment Authority (YEIDA), to the SPVs proposed to beincorporated; and has also erred in modifying the relevantstipulations? (iii) As to whether the Adjudicating Authority erredin not approving the reliefs and concessions sought for in theresolution plan in relation to YEIDA?

D. As to whether the Adjudicating Authority erred in notapproving the treatment of dissenting financial creditor like ICICIBank Limited in the resolution plan, as being not in accord withSection 30(2)(b) of the Code read with Regulation 38(1)(b) of theCIRP Regulations; and erred in modifying the terms of resolutionplan and in directing payment to the dissenting financial creditorin monetary terms?

E. As to whether the Adjudicating Authority erred inmodifying the step provided in the resolution plan in regard tothe fixed deposit holders and in directing the resolution applicantto make provision towards the dues of unclaimed fixed depositholders also?

F. (i) As to whether the resolution plan unauthorisedlypurports to deal with the assets of Jaypee Healthcare Limited(JHL)? (ii) As to whether the Adjudicating Authority erred inassuming that YES Bank Limited had agreed for constitution of acommittee to take forward the disinvestment process of JaypeeHealthcare Limited?

AG. As to whether the stipulation in the resolution plan forcancellation of certain agreements/sub-leases is unfair and theAdjudicating Authority erred in not modifying the same?

H. As to whether the minority shareholders are entitled tostate their claims/objections despite having not approached theBAdjudicating Authority; and as to whether the resolution plandoes not provide fair treatment to the minority shareholders?

I. (i) As to whether, after approval of the resolution plan ofNBCC by the Committee of Creditors, where homebuyers as aclass assented to the plan, any individual homebuyer or anyCassociation of homebuyers could maintain challenge to theresolution plan and could be treated as dissenting financialcreditor or an aggrieved person? (ii) As to whether the stipulationsin the resolution plan stand in violation of the provisions of theReal Estate (Regulation and Development) Act, 2016? (iii) As toDwhether the resolution plan is violative of the requirements ofCIRP Regulations? (iv) As to whether any housing project whichhas been completed or is nearing completion ought to be keptout of the purview of the resolution plan?

J. (i) As to whether the amount of INR 750 crores, whichEwas deposited by JAL pursuant to the orders passed by this Courtin the case of Chitra Sharma, and accrued interest thereupon, isthe property of JAL and stipulation in the resolution planconcerning its usage by JIL or NBCC is impermissible? (ii) Asto whether any amount is receivable by JIL and/or its homebuyersfrom JAL; and the accounts between JAL and JIL needFreconciliation?

K. (i) As to whether Clause 23 of Schedule 3 of theresolution plan providing for extinguishment of security interestof lenders of JAL could not have been approved by theAdjudicating Authority? (ii) As to whether adequate provision isGrequired to be made in the resolution plan as regards utilisationof the land bank of 758 acres, that has become available to JIL interms of the judgment dated 26.02.2020 by this Court?

L. What should be the appropriate orders on the otherissues raised by the resolution applicant seeking clarification/Hdirections?

M. As to whether the Appellate Authority was justified inproviding for an Interim Monitoring Committee forimplementation of the resolution plan in question during thependency of appeals?

Disposing of the matters, the Court

HELD:

A. The Adjudicating Authority has limited jurisdiction inthe matter of approval of resolution plan, which is well-definedand circumscribed by Sections 30(2) and 31 of the Code. In theadjudicatory process concerning resolution plan under IBC,there is no scope for interference with the commercial aspects ofthe decision of the CoC; and there is no scope for substitutingany commercial term of the resolution plan approved byCommittee of Creditors. If, within its limited jurisdiction, theAdjudicating Authority finds any shortcoming in the resolutionplan vis-à-vis the specified parameters, it would only send theresolution plan back to the Committee of Creditors, for re-submission after satisfying the parameters delineated by the Codeand exposited by this Court.

B. The process of simultaneous voting over two plans forelecting one of them cannot be faulted in the present case; andapproval of the resolution plan of NBCC is not vitiated becauseof simultaneous consideration and voting over two resolutionplans by the Committee of Creditors.

C. The stipulations in the resolution plan, as regardsdealings with YEIDA and with the terms of Concession Agreement,have rightly not been approved by the Adjudicating Authoritybut, for the stipulations which have not been approved, the onlycorrect course for the Adjudicating Authority was to send theplan back to the Committee of Creditors for reconsideration.

D. The Adjudicating Authority had not erred in disapprovingthe proposed treatment of dissenting financial creditor like ICICIBank Limited in the resolution plan; but erred in modifying therelated terms of the resolution plan and in not sending the matterback to the Committee of Creditors for reconsideration.

E. The Adjudicating Authority erred in issuing directionsto the resolution applicant to make provision to clear the dues of

Aunclaimed fixed deposit holders. Paragraph 125 of the impugnedorder dated 03.03.2020 of the Adjudicating Authority (NCLT) isset aside.

F. The issues related with the objections of YES BankLimited and pertaining to JHL, the subsidiary of the corporateBdebtor JIL, are left for resolution by the parties concerned, whowill work out viable solution in terms of paragraphs 141 and142 of this judgment.

G. In the overall scheme of the resolution plan, thestipulation in Clause 21 of Schedule 3 thereof cannot be said toCbe unfair; and the observations in paragraphs 132 and 133 of theorder dated 03.03.2020 justly take care of the right of anyaggrieved party (agreement holder) to seek remedy inaccordance with law and ensures viability of the resolution plan.

H. It cannot be said that the resolution plan does notDadequately deal with the interests of minority shareholders. Thegrievances as suggested by the minority shareholders cannot berecognised as legal grievances. Their objections stand rejected.

I. The homebuyers as class having assented to theresolution plan of NBCC, any individual homebuyer or anyEassociation of homebuyers cannot maintain challenge to theresolution plan and cannot be treated as dissenting financialcreditor or an aggrieved person; the question of violation of theprovisions of the RERA does not arise; the resolution plan inquestion is not violative of the mandatory requirements of theCIRP Regulations; and when the resolution plan comprehensivelyFdeals with all the assets and liabilities of the corporate debtor, nohousing project of the corporate debtor could be segregatedmerely for the reason that same has been completed or is nearingcompletion.

J. (i) The amount of INR 750 crores (which was depositedGby JAL pursuant to the orders passed by this Court in the case ofChitra Sharma) and accrued interest thereupon, is the propertyof JAL and stipulation in the resolution plan concerning its usageby JIL or the resolution applicant cannot be approved. The partof the order of NCLT placing this amount in the asset pool of JILis set aside. (ii) The question as to whether any amount isH

receivable by JIL and/or its homebuyers from JAL, againstadvance towards construction and with reference to the admittedliability to the tune of INR 195 crores as on 31.03.2020, shall bedetermined by NCLT after reconciliation of accounts in terms ofthe directions contained in paragraphs 189 to 191.1 of thisjudgment. The amount, if found receivable by JIL, be made overto JIL and the remaining amount together with accrued interestbe refunded to JAL in an appropriate account. The present matterbeing related to CIRP of JIL, no other orders are passed inrelation to the amount that would be refunded to JAL becausetreatment of the said amount in the asset pool of JAL shall remainsubject to such orders as may be passed by the competentauthority 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 lendersof JAL could not have been approved by the AdjudicatingAuthority, particularly in relation to the security interest thathas not been discharged. This part of the order dated 03.03.2020is set aside. (ii) Adequate provision is required to be made in theresolution plan as regards utilisation of the land bank of 758 acres,that has become available to JIL free from encumbrance, in termsof the judgment dated 26.02.2020 of this Court in the case ofAnuj Jain.

L. (i) The impugned order dated 03.03.2020 of theAdjudicating Authority (NCLT) shall be read as modified inrelation to Clause 7 of Schedule 3 of the resolution plan; and thesaid clause shall stand approved. (ii) As regards possession/controlover the project sites/lands of JIL, it is left open for the resolutionapplicant to take recourse to the appropriate proceedings inaccordance with law, whenever occasion so arise.

M. The Appellate Authority was not justified in providingfor an Interim Monitoring Committee for implementation of theresolution plan in question during the pendency of appeals. Theimpugned order dated 22.04.2020 passed by NCLAT is set aside.[Para 216][893-F-H; 894-A-H; 895-A-H; 896-A-D]

2. Some of the terms and stipulations of the resolution planof NBCC, which was voted for approval by 97.36% of the voting

Ashare of the Committee of Creditors, do not meet with approval.Although, barring such terms and stipulations, all other termsand propositions of the resolution plan stand approved. To bespecific, the terms and stipulations in the resolution plan whichdo not meet with approval are those concerning: (a) the landproviding agency [as held in Point C]; (b) the dissenting financialBcreditor [as held in Point D]; (c) the undischarged security interestof the lender of JAL [as held in Point K (i)]. [Para 217][896-D-F]

3. The decision of the Adjudicating Authority in relation tothe said amount of INR 750 crores with accrued interest has beendisapproved. This amount is the property of JAL and theCstipulations in the resolution plan concerning its usage by JIL orthe resolution applicant cannot be approved [as held in Point J(i) (supra)]. However, the final treatment of the said amount ofINR 750 crores with accrued interest shall be determined byNCLT after the reconciliation of accounts between JAL and JILDand in terms of the directions contained in this judgment. [Para217.1][896-F-G]

4. Adequate provision is required to be made by theresolution applicant for utilisation of the land bank of 758 acreson which, security interest of the lenders of JAL standsEdischarged in terms of the judgment of this Court in Anuj Jain.[Para 217.2][896-H; 897-A]

5. The matters aforesaid, one way or the other, relate tothe commercial terms of the resolution plan and carry their ownfinancial implications. [Para 217.3][897-A-B]F

6. When several shortcomings are found in the resolutionplan approved by the Committee of Creditors vis-à-vis thespecified parameters, the plan cannot be approved and the matteris required to be sent back to the Committee of Creditors. Butthe course to be adopted in the present matter carries its ownGshare of complications. [Para 218][897-B-C]

7. In this matter twice over in the past, this Court had toinvoke its plenary powers under Article 142 of the Constitutionof India, so that the insolvency resolution process concerningJIL could be taken to its logical fruition but within the discipline

of IBC. Having regard to the circumstances, this Court hadprovided windows for completion of CIRP while essentiallydiscounting on the time spent in the course of litigations. [Para219][897-D]

8. In the judgment dated 09.08.2018 in Chitra Sharma, thisCourt revived the CIRP after taking note of the peculiarities ofthe case and later amendment to IBC whereby, the doubts aboutthe status of homebuyers were removed and they were dulyaccorded the recognition as financial creditors. Then, in thejudgment dated 06.11.2019 in Jaiprakash Associates Ltd., thisCourt provided another period of 90 days for completion of theCIRP from the date of judgment, after observing that delay incompletion of CIRP was attributable to the process of law andneither the homebuyers nor any other financial creditor was tobe blamed for pendency of the proceedings. This Court alsoobserved that extraordinary situation had arisen because ofconstant experimentation at different levels due to lack of clarityon the matters crucial to the decision making process of CoCand besides, there had been further legislative changes whereby,the scope of resolution plan was expanded. This Court also tooknote of the fact that there was unanimity amongst all the partiesappearing before the Court that liquidation of JIL must beeschewed and an attempt be made to salvage the situation byfinding out some viable arrangement which could subserve theinterests of all concerned. The Court further took into accountthe third proviso to Section 12(3) of the Code whereby, anotherperiod of 90 days was provided in relation to the pendinginsolvency resolution process. All these factors led this Court toissue directions under Article 142 of the Constitution of India forthe second time in this matter, to do substantial and completejustice to the parties and in the interest of all the stakeholders.[Para 220][897-E-H; 898-A-B]

9. It appears that the resolution applicant, as also largenumber of homebuyers of JIL having substantial voting share inCoC, carried misplaced notion that the said amount of INR 750crores and accrued interest has become an asset of JIL. At thesame time, it appears that there had been lack of clarity as regardsthe treatment of contingent liability of the additional amount of

Acompensation. The lack of clarity percolated in the decision ofthe Adjudicating Authority too, where it was assumed by theAdjudicating Authority that some of the questionable terms/stipulations of the resolution plan could be modified/ modulatedby it. [Para 221][898-C-D]

B10. The consequence and impact of the judgment of thisCourt in Anuj Jain dated 26.02.2020 was also not properly takenin comprehension by the Adjudicating Authority and, it wasassumed by the Adjudicating Authority in its order dated03.03.2020 that the entire ‘858’ acres of land stood dischargedfrom the burden of security. Although the so-called correction ofCerrors was carried out by the Adjudicating Authority on17.03.2020 and the figure was corrected to ‘758’ acres but theconsequences of such material correction were not examined.[Para 221.1][898-E]

11. Nevertheless, encumbrance over 758 acres of landD(which is said to be carrying valuation of over INR 5000 crores)is removed; and availability of the said land parcel has substantialimpact on the position of assets and liquidity of the corporatedebtor JIL. [Para 221.1][898-F]

12. The entire substratum of the corporate insolvencyEresolution concerning JIL has undergone sea of change. Theadded features in the continuing processes had been that JALasserts to have carried out several works to reduce its liabilitytowards JIL and on the other hand, IRP has asserted to havecarried out further construction works and having made Offers

Fof Possession to several homebuyers. [Para 222][898-G-H]

13. Taking all the facts and circumstances into account andin keeping with the spirit and purport of the orders passed in thepast, this Court is inclined to again exercise the powers underArticle 142 of the Constitution of India and to enlarge the timeGfor completion of CIRP concerning JIL while extendingopportunity to the said resolution applicants Suraksha Realty andNBCC to submit modified/fresh resolution plans, which arecompliant with the requirements of the Code and the CIRPRegulations and are in accord with the observations and findingsin this judgment. [Para 223][899-A-B]H

14.1. Accordingly, while once again exercising powers underArticle 142 of the Constitution to do substantial and completejustice to the parties and in the interest of all the stakeholders ofJIL, the matter regarding approval of the resolution plan standsremitted to the Committee of Creditors of JIL and the time forcompletion of the process relating to CIRP of JIL is extended byanother period of 45 days from the date of this judgment. [Para225.1][900-B]

14.2. The IRP is directed to complete the CIRP within theextended time of 45 days. For this purpose, it will be open to theIRP to invite modified/fresh resolution plans only from SurakshaRealty and NBCC respectively, giving them time to submit thesame within 2 weeks from the date of this judgment. [Para225.2][900-C]

14.3. The IRP shall not entertain any expression of interestby any other person nor shall be required to issue any newinformation memorandum. The said resolution applicants shallbe expected to proceed on the basis of the informationmemorandum already issued by IRP and shall also take intoaccount the facts noticed and findings recorded in this judgment.[Para 225.3][900-D]

14.4. After receiving the resolution plans asaforementioned, the IRP shall take all further steps in the mannerthat the processes of voting by the Committee of Creditors andhis submission of report to the Adjudicating Authority (NCLT)are accomplished in all respects within the extended period of45 days from the date of this judgment. The Adjudicating Authorityshall take final decision in terms of Section 31 of the Codeexpeditiously upon submission of report by the IRP. [Para225.4][900-E-F]

14.5. These directions, particularly for enlargement of timeto complete the process of CIRP, are being issued in exceptionalcircumstances of the present case and shall not be treated as aprecedent. [Para 225.5][901-A]

K. Sashidhar v. Indian Overseas Bank and Ors. (2019)12 SCC 150: [2019] 3 SCR 845; Committee ofCreditors of Essar Steel India Limited v. Satish Kumar

Gupta and Ors.: (2020) 8 SCC 531: [2019]16 SCR 275;Maharashtra Seamless Limited v. PadmanabhanVenkatesh and Ors. (2020) 11 SCC 467 and IndiaThermal Power Ltd. v. State of M.P. and Ors. (2000) 3SCC 379 : [2000] 1 SCR 925 – relied on.

Chitra Sharma and Ors. v. Union of India and Ors.(2018) 18 SCC 575 : [2018] 12 SCR 1044; JaiprakashAssociates Limited and Anr. v. IDBI Bank Ltd. and Anr.(2020) 3 SCC 328; Anuj Jain, Interim ResolutionProfessional for Jaypee Infratech Limited v. Axis BankLimited Etc. Etc., (2020) 8 SCC 401; Pioneer UrbanLand and Infrastructure Ltd. & Anr. v. Union of India& Ors. (2019) 8 SCC 416 : [2019] 10 SCR 381;Embassy Property Development Pvt. Ltd. v. State ofKarnataka and Ors. (2019) SCC OnLine SC 1542;Swiss Ribbons Private Limited and Anr. v. Union of Indiaand Ors. (2019) 4 SCC 17 : [2019] 3 SCR 535; SavitriDevi v. State of U.P. & Ors. (2015) 7 SCC 21 : [2015] 7 SCR 512; Kerala State Electricity Board and Anr. v.Kurien E. Kalathil and Ors. (2000) 6 SCC 293 : [2000]1 Suppl. SCR 581; Municipal Corporation of GreaterMumbai (MCGM) v. Abhilash Lal and Ors. (2019) SCCOnLine SC 1479; Nand Kishore Gupta & Ors. v. Stateof U.P. & Ors. (2010) 10 SCC 282 : [2010] 11 SCR 356; Himachal Pradesh Housing and UrbanDevelopment Authority and Anr. v. Ranjit Singh Rana(2012) 4 SCC 505 : [2012] 2 SCR 427; Commissionerof Income Tax, Madhya Pradesh & Bhopal v. ShrimatiSodra Devi AIR 1957 SC 832 : [1958] SCR 1; KolkataMetropolitan Development Authority v. GobindaChandra Makal and Anr. (2011) 9 SCC 207 : [2011]14 SCR 373; Indian Handicrafts Emporium and Ors.v. Union of India and Ors. (2003) 7 SCC 589 : [2003]3 Suppl. SCR 43; CIT, Bangalore v. VenkateswaraHatcheries (P) Ltd. (1999) 3 SCC 632 : [1999] 2 SCR 177 and Union of India v. Sankalchand Himatlal Shethand Anr. (1977) 4 SCC 193 : [1978] 1 SCR 423; Statethrough Central Bureau of Investigation v.Parmeshwaran Subramani and Anr. (2009) 9 SCC 729

JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFAREASSOCIATION v. NBCC (INDIA) LTD.

: [2009] 14 SCR 385; Rathi Khandsari Udyog and Ors.v. State of Uttar Pradesh and Ors. (1985) 2 SCC 485: [1985] 2 SCR 966; Dadi Jagannadham v. JammuluRamulu and Ors. (2001) 7 SCC 71 : [2001] 2 Suppl.SCR 60; Vodafone International Holdings BV v. Unionof India and Anr. (2012) 6 SCC 613 : [2012] 1 SCR 573; Wg. Cdr. Arifur Rahman Khan & Ors. v. DLFSouthern Homes Pvt. Ltd. & Ors. (2020) SCC OnLineSC 667; ONGC and Anr. v. Association of Natural GasConsuming Industries and Ors. (2001) 6 SCC 627 :[2001] 1 Suppl. SCR 50 and South Eastern CoalfieldsLtd. v. State of M.P. & Ors. (2003) 8 SCC 648 : [2003]4 Suppl. SCR 651 – referred to.

Pradumna Kumar Jain v. U.P. Secondary EducationService Commission, Allahabad and Ors. (1997) 30ALR 339; Gajraj and Ors. v. State of U.P. and Ors.(2011) SCC OnLine All 1711 – referred to.

Samuel Katkin and Doris Katkin v. Commissioner ofInternal Revenue 570 F.2d 139 [Decision of the Courtof Appeal for the 6th Circuit, USA]; White v. ElmdeneEstates Ltd. 1959 ALL ER 605 – referred to.

From the Judgment and Order dated 22.04.2020 of the NationalECompany Law Appellate Tribunal, New Delhi in Company Appeal(AT)(Insolvency) No. 475 of 2020.

With

Civil Appeal No. 3396 of 2020, T.C (C) Nos. 234, 235, 236, 237,238, 239, 240, 241, 242, 243 Of 2020, Civil Appeal No. 1056 of 2021,FCivil Appeal No. 1057 of 2021 and Diary No. 20274 of 2020.

Tushar Mehta, SG., Dhruv Mehta, Gopal Sankarnarayanan, JaideepGupta, Huzefa Ahmadi, Arvind P. Datar, Anupam Lal Das, KrishnanVenugopal, Shyam Divan, Neeraj Kishan Kaul, Ravindra Shrivastava,Abhishek Manu Singhvi, Ritin Rai, Sidharth Luthra, R. Balasubramanian,GSr. Advs., Prateek Kumar, Siddharth Srivastava, Mohit Kishore,Ms. Raveena Rai, Anubhav Ray, Snehal Kakrania, Sahil Narang,Bishwajit Dubey, Uday Khare, Shatrajit Banerji, Sumit Attri, M/S. CyrilAmarchand Mangaldas, Kunal Chatterji, Ms. Maitrayee Banerjee, PravarVeer Mishra, Amit Kumar Mishra, Shashank Manish, Ms. ManasiHChatpalliwar, Ms. Smriti Shah, Ms. Twinkle Kataria, Ms. Nidhi Sahay,

Shivam Pandey, Buddy A. Ranganadhan, Raunak Jain, Hasan Murtaza,Vishal Gupta, Sumeet Sharma, Divyanshu Gupta, Zinnea Mehta, ParasChoudhary, Ms. Misha, Nikhil Mathur, Ms. Shreya Prakash, S.S. Shroff,P. Nagesh, Ms. Soumya Dutta, Anshuman Shrivastava, AbhijeetShrivastava, Ms. Garima Tiwari, Ms. Harneet Khanuja, Arpit Jain,B. Ramana Murthy, Anush Raajan, Ms. Ashima Chauhan, Ms. MansiGupta, Punit Dutt Tyagi, Raghavendra M. Bajaj, Ms. Garima Bajaj, Joel,Amit Dwivedi, Saifi Sham, Amar Gupta, Divyam Agarwal, Ashish Joshi,Ms. Pallavi Kumar, Sumant Batra, Sanjay Bhatt, Rabin Majumder,Ms. Niharika Sharma, Ms. Akansha Srivastava, Sachin Sharma, RohanJaitely, Tanvir Nayar, Akshay Sharma, Ram Lal Roy, Himanshu Shekhar,Jamnesh Kumar, L.K. Bhushan, Mohit Sharma, M/S. Dua Associates,Ms. Revaty Raghvan, Shariq Ahmed, Tariq Ahmed, Ms. Prashi Tyagi,Sunil Kumar Verma, Amit Pawan, Advocates for the appearing Parties.

The Judgment of the Court was delivered by

DINESH MAHESHWARI, J.

Introductory

1. Permission to file special leave petition(s) and leave granted inrespective Petition(s) for Special Leave to Appeal.

2. This batch of civil appeals, special appeals and transfer casesessentially relate to the resolution plan[1] in the corporate insolvencyresolution process[2] under the Insolvency and Bankruptcy Code, 2016[3]concerning the corporate debtor, Jaypee Infratech Limited[4], whoseactivities do impact large number of persons/entities, including the buyersof flats/apartments[5] in its real estate development projects.

2.1. As shall be noticed hereafter, CIRP in relation to the corporatedebtor JIL has been entangled in various disputes in the past and evenwhen the resolution plan submitted by the resolution applicant, NBCC(India) Limited[6] has been approved by the Committee of Creditors[7] by asubstantial majority of 97.36% of voting share of the financial creditors,

1 Hereinafter, at some places, it has also been referred to as ‘the plan’.

2 ‘CIRP’ for short.

3 Hereinafter also referred to as ‘the Code’ or ‘IBC’.

4 Hereinafter also referred to as ‘JIL’.

5 Hereinafter generally referred to as ‘the homebuyers’.

6 Hereinafter also referred to as ‘NBCC’.

7 ‘CoC’ for short.

Aseveral disputes/objections have come up from various stakeholders androle players, voicing the concerns of their own, like dissenting financialcreditors, dissatisfied homebuyers, displeased land providing agency,disillusioned creditor of wholly-owned subsidiary of the corporate debtorand disappointed minority shareholders. Apart from all these, the holdingcompany of the corporate debtor, namely, Jaiprakash Associates Limited[8]Band its stakeholders have several questions over the resolution processin question and are particularly concerned with the sum of INR 750crores, which was deposited by JAL pursuant to the orders passed bythis Court in the first round of litigation.3. Looking to multiload of issues arising from variegatedCpropositions/objections put forward by different parties, it appearsappropriate to draw brief outline and sketch of the matter at the outset.

Brief outline and sketch

4. The cases involved in this batch have got assimilated in thisDCourt in the following circumstances:

4.1. The corporate insolvency resolution process in relation to thecorporate debtor JIL got initiated on 09.08.2017 when the NationalCompany Law Tribunal[9], Allahabad Bench admitted the petition filed byone of the financial creditors, IDBI Bank Limited, under Section 7 of theECode. However, when the Interim Resolution Professional[10] invited claimsin this CIRP, the treatment of homebuyers became an issue contentious,because they were treated only as ‘other creditors’, not at par withfinancial and operational creditors.

4.2. The aforesaid position led to the proceedings in this Court,Fwhich were dealt with in batch of petitions led by Writ Petition (Civil)No. 744 of 2017: Chitra Sharma and Ors. v. Union of India andOrs.[11] wherein, several orders were passed by this Court from time totime, inter alia, with directions to JAL, the holding company of JIL, formaking deposits in the Court, particularly looking to the claim of refundbeing made by some of the homebuyers. While finally disposing of theG8 Hereinafter also referred to as ‘JAL’.

9 Hereinafter also referred to as ‘the Adjudicating Authority’ or ‘NCLT’. As shall benoticed, the matter before the Allahabad Bench was later on transferred to the NewDelhi Bench of the Tribunal. These expressions ‘the Tribunal’ or ‘NCLT’ or ‘theAdjudicating Authority’ refer to the said transferee Bench too, as per the given context.

10 ‘IRP’ for short.H11 Final judgment therein has since been reported as (2018) 18 SCC 575.

matters on 09.08.2018, this Court took note of several factors, includingthe nature of projects, interests of large number of homebuyers andunanimity amongst all the concerned that liquidation of the corporatedebtor shall not be in the interest of any stakeholder. This Court alsotook note of the fact that even the statutorily extended period forconcluding the CIRP was over but, there had been relevant superveningevent where, by way of an Amendment Ordinance that came into forceon 06.06.2018, the doubts about the status of homebuyers were removedand they were expressly recognised as financial creditors. Having regardto the facts and circumstances, this Court issued slew of directions forensuring complete justice in the cause, while exercising its powers underArticle 142 of the Constitution of India, by providing for further extendedperiod for conclusion of CIRP; for constitution of CoC afresh; andpermitting the IRP to invite fresh expressions of interest for the submissionof resolution plans. This Court also provided that the amount of INR 750crores, ‘which has been deposited in this Court by JAL/JIL shalltogether with the interest accrued thereon’ be transferred to NCLT,which would abide by the directions as may be issued by NCLT.4.3. While the proceedings thus restored by this Court werepending, further question cropped up as to the manner of reckoning thevoting percentage of homebuyers in CoC. Two members of NCLTdiffered in their opinion and the matter was referred to the third member.In the meantime, IDBI Bank sought exclusion, of the period of pendencyof the application for such clarification as to the voting percentage, fromthe period of 270 days for completion of CIRP. While this applicationwas pending, NCLT called upon the concerned parties to file reply onthe necessity to proceed further with the CIRP, for considering theresolution plan received from the bidder, subject to the outcome of thepending application. The orders passed by NCLT in relation to theseaspects were challenged before the National Company Law AppellateTribunal, New Delhi[12]. The Appellate Authority, by its judgment dated30.07.2019, provided for exclusion of 90 days for the purpose of countingthe total period of 270 days and disposed of the appeals with some moreobservations. This gave rise to further appeals in this Court, led by CivilAppeal No. 8437 of 2019 [@ No. 27229 of 2019]: JaiprakashAssociates Limited and Anr. v. IDBI Bank Ltd. and Anr.[13], which

12 Hereinafter also referred to as ‘the Appellate Authority’ or ‘NCLAT’.

13 Final judgment therein has since been reported as (2020) 3 SCC 328.

Awere decided on 06.11.2019. Therein, this Court found that delay incompletion of CIRP was attributable to the process of law and neitherthe homebuyers nor any other financial creditor was to be blamed forpendency of the proceedings; and under the plenary powers, this Courtpassed yet further orders so as to ensure that an attempt was made forrevival of the corporate debtor by submission of revised resolution plans.B

4.4. Running parallel to the proceedings noticed hereinabove, therehad been another set of proceedings involving two issues: one, relatingto an application filed by IRP before the Adjudicating Authority seekingorders for avoidance of the certain transactions, whereby several parcelsof land were put under mortgage with the lenders of JAL, the holdingCcompany of JIL; and second, involving the claim of two of the lenderbanks of JAL to be included in the category of financial creditors of JIL.These two aspects eventually came up for adjudication of this Court inanother batch of appeals led by Civil Appeal Nos. 8512-8527 of 2019:Anuj Jain, Interim Resolution Professional for Jaypee InfratechDLimited v. Axis Bank Limited etc. etc., which were decided on26.02.2020[14]. This Court held that six out of seven transactions in questionwere preferential within the meaning of Section 43 of the Code and thedirections by NCLT for avoidance of such transactions were upheld.On the second issue, this Court held that the applicant banks were notthe financial creditors of the corporate debtor JIL and the respectiveEorders passed in that regard by NCLT were restored.

4.5. We shall be dilating on the relevant attributes of the aforesaidprevious rounds of litigation at the appropriate stage and juncture hereafter.Suffice it to notice for the purpose of brief outline that the resolutionplans submitted by two applicants were put to vote of the Committee ofFCreditors and finally, the resolution plan submitted by NBCC (India)Limited was approved by the CoC on 17.12.2019, by vast majority ofover 97% of voting share of the financial creditors. Thereafter, on19.12.2019, the Interim Resolution Professional moved an applicationbefore the National Company Law Tribunal, Allahabad Bench, beingGC.A. No. 5 of 2020 in CP (IB) No. 77/ALD/2017, for submission andapproval of the resolution plan in terms of Section 30(6) read with Sections31 and 60(5) of the Code and Regulation 39(4) of the Insolvency andBankruptcy Board of India (Insolvency Resolution Process for Corporate

14 Final judgment therein has since been reported as Jaypee Infratech Ltd. InterimHResolution Professional v. Axis Bank Ltd. and Ors.: (2020) 8 SCC 401.

Persons) Regulations, 2016[15]. Later on, the proceedings pending beforethe Allahabad Bench of the National Company Law Tribunal weretransferred to its Principal Bench at New Delhi wherein, severalobjections/suggestions/propositions were submitted by differentstakeholders, going for or against the resolution plan or even off on atangent.

4.6. By its order dated 03.03.2020, the Adjudicating Authority(NCLT), proceeded to approve the resolution plan with some modificationsand certain directions while accepting some of the objections like thoseof the dissenting financial creditor bank and the land providing agencybut while rejecting some other, including those of the holding companyof JIL and while leaving few propositions open for adjudication in theappropriate forum[16].

4.7. The resolution applicant NBCC preferred an appeal againstthe aforesaid order dated 03.03.2020 before the National Company LawAppellate Tribunal, New Delhi, being Company Appeal (AT) (Insolvency)No. 465 of 2020 wherein the Appellate Authority, while issuing notice tothe unrepresented parties, made an interim order dated 22.04.2020 thatthe approved resolution plan may be implemented subject to the outcomeof appeal but at the same time, also provided that IRP may constitute an‘Interim Monitoring Committee’ comprising of the successful resolutionapplicant (NBCC) and three major institutional financial creditors, whowere the members of CoC.

4.8. As against the aforesaid order dated 22.04.2020, sixassociations of homebuyers in the real estate development projects ofthe corporate debtor and few individual homebuyers approached thisCourt seeking permission to maintain their appeals under Section 62 ofthe Code. Notices were issued on the prayers so made, returnable on06.08.2020.

4.9. On 06.08.2020, it was urged before us that several appealsagainst the said order dated 03.03.2020 were pending before NCLAT;and the parties agreed that those appeals may be withdrawn to thisCourt and be heard alongwith the aforesaid appeals of the associationsand homebuyers to avoid the likelihood of further delay in the matter.

15 Hereinafter also referred to as ‘the CIRP Regulations’.

16 few typographical errors in this order dated 03.03.2020 were corrected by NCLTby its order dated 17.03.2020.

DEF

AAcceding to the request, we had withdrawn the mentioned appeals foranalogous hearing with the matters pending before us. By way of interim,while staying the operation of the impugned order dated 22.04.2020, wehad provided that the IRP shall continue to manage the affairs of thesubject company i.e., JIL. Accordingly, the appeals pending before theNCLAT, being Company Appeal (AT) (Insolvency) Nos. 486, 488, 475,B478, 480, 489, 506, 547, 544 and 630 of 2020 have been transferred tothis Court and are registered as transferred cases. Further to this, threemore matters have been filed directly in this Court, with the respectivepetitioners/appellants having different sets of grievances against theNCLT’s order dated 03.03.2020. few impleadment/interventionCapplications have also been filed in these matters with the applicantsseeking to project their own propositions/viewpoints and/or objections inrelation to the resolution plan in question.

5. It is, therefore, apparent that the resolution plan, as approvedby the CoC on 17.12.2019 and the order dated 03.03.2020, as passed byDthe Adjudicating Authority (NCLT) in approval of the resolution planwith certain directions and modifications, are the pivots of the presentlitigation and subsidiary of these pivots is the interim order dated22.04.2020, as passed by NCLAT in the appeal filed by the resolutionapplicant NBCC, providing for composition of an ‘Interim MonitoringCommittee’ while implementing the resolution plan.EThe parties and their respective roles and interests in thematter6. For what has been noticed in the outline, and in view of theadjudication required of various issues raised and different reliefs claimedFin these matters, with several parties carrying different roles and status,worthwhile it would be to narrate, in brief, the relevant particulars of thekey parties involved, with their feasible classification in terms of theirrespective interests.[17]

6.1. The main parties before us in this batch, in terms of theirGrespective stands, contentions and viewpoints vis-à-vis the aforementionedpivots could be broadly divided in two categories. One category is of theparties who stand for the resolution plan, as approved by the CoC but

17 This introduction of persons/entities is to broadly co-relate the parties with thepoints to be taken up for determination; and is not intended to be an exhaustive list ofHthe parties involved.

who state grievance against few parts of the aforesaid orders dated03.03.2020 and 22.04.2020, insofar as providing for modification of theresolution plan and modified mechanism for its implementation. The othercategory is of the parties who carry grievances against the resolutionplan for one or more of its prescriptions or omissions; and/or who aredissatisfied with the order dated 03.03.2020 insofar as their objectionshave either been rejected or not taken into account; and/or who aredissatisfied with the order dated 22.04.2020 for the reasons differentthan those of the parties of first part.

The parties standing for the resolution plan

7. The two entities who need not, as such, be aligned with any ofthe other contesting parties but for practical purposes, stand for theresolution plan as approved by CoC are: (i) the corporate debtor companyin whose relation the resolution plan has been adopted and approved;and (ii) the Interim Resolution Professional. They may be introduced asunder:

7.1. Jaypee Infratech Limited (JIL):

It is the corporate debtor company in whose relation CIRP hasbeen taken up and the resolution plan has been made and approved.This company was essentially set up as special purpose vehicle[18] afterits holding company Jaiprakash Associates Limited (JAL) was awardedthe rights for construction of an Expressway from Noida to Agra; and aConcession Agreement[19] was entered into with the Yamuna ExpresswayIndustrial Development Authority[20]. With setting up of this company JIL,apart from other projects, housing plans were envisaged for constructionof real estate projects in two locations of the land acquired, one in WishTown, Noida and another in Mirzapur. substantial mass of disputes inthe present matters has its roots in the dealings of this company JIL withthe real estate development projects as also in its dealings with thehomebuyers and the lending institutions.

7.2. The Interim Resolution Professional Anuj Jain (IRP):

He is the Interim Resolution Professional in CIRP concerningJIL. He has taken steps and proceedings from time to time as envisagedby the Code, including dealing with the claims of variety of creditors;

18 ‘SPV’ for short.

19 ‘CA’ for short.

20 ‘YEIDA’ for short.

Amaking an application for avoidance of certain transactions as beingpreferential, which was finally dealt with and accepted by this Court inthe aforementioned judgment dated 26.02.2020; presenting the resolutionplans for voting by CoC; and submitting the approved resolution plan tothe Adjudicating Authority. In relation to the order dated 03.03.2020 aspassed by NCLT, the appeal filed by him before NCLAT, essentiallyBquestioning the jurisdiction of NCLT to modify the resolution plan and tochange the mode of payment to the dissenting financial creditors, beingCompany Appeal (AT) (Insolvency) No. 486 of 2020, stands transferredto this Court and is registered as T.C. (C) No. 234 of 2020. He isrespondent in almost all other cases.C8. The major set of parties who stand for the approved resolutionplan and seek its implementation while stating objections/grievancesagainst the modification parts of the order dated 22.04.2020 as passedby NCLAT and the order dated 03.03.2020 as passed by NCLT are thefollowing:D8.1. NBCC (India) Limited (NBCC):

NBCC (India) Limited is the resolution applicant and had preparedthe resolution plan for JIL, which was approved by majority of 97.36%of the voting share of the CoC. NBCC seeks setting aside of those partsof the order dated 03.03.2020 where the NCLT has modified some ofEthe terms of resolution plan and/or has issued certain directions. Theappeal filed by this company, being Company Appeal (AT) (Insolvency)No. 475 of 2020, stands transferred to this Court and is registered asT.C. (C) No. 236 of 2020. This company is also the respondent in variousother appeals/petitions and has comprehensively opposed the objectionsFraised against the resolution plan.[21]

8.2. IDBI Bank Limited:

This bank is standing in the capacity of an institutional financialcreditor of the corporate debtor JIL. The corporate insolvency resolutionprocess in relation to the corporate debtor JIL, which has culminated inGthe approval of the resolution plan submitted by NBCC, got initiatedpursuant to an application moved by this bank under Section 7 of the

21 This company has introduced itself in its resolution plan as “Navratna” status CentralPublic Sector Enterprise, under the aegis of Ministry of Housing and Urban Affairs,Government of India, having diversified its areas of operation in various segmentsHincluding real estate.

Code before the NCLT. This bank leads set of nine institutional financialcreditors including itself, who have voted in favour of the resolution planin question; and stands in support of the resolution plan while opposingthe contentions urged on behalf of the parties on the other side.

8.3. Jaypee Kensington Boulevard Apartments WelfareAssociation and 5 others:

They are the associations of homebuyers who have invested inthe housing projects floated by JIL. They are appellants in Civil AppealNo. 3395 of 2020[22], questioning the order dated 22.04.2020 as passedby NCLAT and essentially submit that the resolution plan as approvedby NCLT deserves to be implemented.

8.4. Ishwar Jha and 6 others:

They are individual homebuyers of the flats in the developmentprojects initiated by JIL. They are appellants in Civil Appeal No. 3396 of2020[23], questioning the order dated 22.04.2020 as passed by NCLATand they also essentially submit that the resolution plan as approved byNCLT deserves to be implemented without further delay.

8.5. Krishna Dev Mishra and 2 others:

They are also individual homebuyers of the flats in the developmentprojects initiated by JIL. They are applicants of I.A. No. 87967 of 2020in Civil Appeal No. 3395 of 2020 and similarly submit that the resolutionplan as approved by NCLT deserves to be implemented without furtherdelay.

8.6. Major General Praveen Kumar and Colonel V.S. Gaur:

They are the homebuyers who have moved applications forimpleadment/intervention in Civil Appeal No. 3395 of 2020, being I.A.Nos. 73323 of 2020 and 73330 of 2020 respectively, essentially seekingdirections to NBCC to complete the remaining works on priority basis inTower Nos. 5 to 12 and 14 to 16 in Kensington Park – 1, Jaypee Greens,Noida so that the possession of flats could be handed over to the buyers.

The objectors

9. The persons/entities who carry grievance/s against the resolutionplan for one reason or the other; and/or who are dissatisfied with the

22 @ Civil Appeal Diary No. 14741 of 2020.

23 @ Civil Appeal Diary No. 15061 of 2020.

Aorder passed by the NCLT and/or by the NCLAT, may be grouped withreference to the objections/propositions they stand for.

10. The first set of objectors consists of such persons/entitieswho otherwise belong to the class of ‘homebuyers’ but have their owngrievances in relation to the resolution plan and the subsequent orders.BThis set of parties could be introduced as follows:

10.1. Wish Town Home Buyers Welfare Society:

This is society of homebuyers in the projects of JIL who seeksimplementation of the projects but carries reservations on some of theterms of the resolution plan, where the requisite compensation in relationCto the delayed implementation of the projects by JIL has not beenprovided, particularly in terms of Section 18 of the Real Estate (Regulationand Development) Act, 2016[24]. It has also been suggested that the planof another resolution applicant Suraksha Realty was far better than thatof NBCC. This society also has the grievance that NBCC has failed toDspecify in the resolution plan the treatment and utilisation of the sum ofINR 750 crores received from JAL as also 758 acres of land that hadcome to JIL after the judgment of this Court dated 26.02.2020. Thissociety had filed Company Appeal (AT) (Insolvency) No. 506 of 2020before NCLAT against the said order dated 03.03.2020 that standstransferred to this Court and is registered as T.C. (C) No. 243 of 2020.EThis society has also moved an application, I.A. No. 72707 of 2020 inCivil Appeal No. 3395 of 2020 with the submissions against continuationof NBCC in the proposed ‘Interim Monitoring Committee’.

10.2. Jaypee Aman Owners Welfare Association:

FThis is an association of homebuyers in one of the projects of JILnamely, Jaypee Greens Aman in Sector 151 Noida. This associationmaintains that in substance, ‘Project Aman’ stands completed; that Offerof Possession[25] has already been issued to the allottees of 22 Towers;that delayed penalty ought to be allowed in relation to Tower Nos. 23and 24 for which, OOP has been issued by IRP; and that IRP ought toGtake steps for OOP for flats in Tower Nos. 25 and 27 for which, theapplication for Occupancy Certificate[26] has already been moved. Thisassociation is aggrieved of the projected date/s of completion and

24 Hereinafter also referred to as ‘RERA’.

25 ‘OOP’ for short.

26 ‘OC’ for short.H

proportional increase in delay, as provided in the resolution plan. As againstthe said order dated 03.03.2020, this association had filed CompanyAppeal (AT) (Insolvency) No. 480 of 2020 before NCLAT that standstransferred to this Court and is registered as T.C. (C) No. 240 of 2020.

10.3. Ashish Mohan Gupta & Anr.:

These are the homebuyers who seek to oppose the resolutionplan while raising questions over the proceedings of the Committee ofCreditors as also on various other grounds, which may be running commonto the grounds urged by the homebuyers/associations who are objectingto the plan and its approval. They had filed Company Appeal (AT)(Insolvency) No. 489 of 2020 before NCLAT that stands transferred tothis Court and is registered as T.C. (C) No. 242 of 2020.

10.4. Jaypee Orchard Resident Welfare Society:

This is another society of homebuyers in the projects of JIL whoseeks implementation of the projects of JIL but has its own reservationson the terms of the resolution plan where the requisite compensation inrelation to the delayed implementation of the projects by JIL has notbeen provided in terms of RERA. This society has not filed the appealbefore NCLAT but in view of other appeals having been withdrawn tothis Court, has preferred the petition for special leave to appeal, beingSLP Diary No. 18129 of 2020 in this Court, seeking to challenge the saidorder dated 03.03.2020.10.5. Ishwar Kewalramani and 76 Others:

These are the applicants of another impleadment application beingI.A. No. 88795 of 2020 in Civil Appeal No. 3395 of 2020; they arehomebuyers of the projects undertaken by JIL and are aggrieved by theorder dated 03.03.2020 insofar as NCLT has failed to specify the use of758 acres of unencumbered land now available with JIL; and anothergrievance is that NBCC has violated the statutory provisions by notproviding compensation to the homebuyers due to delayed possession.

10.6. Ashok Chandra:

He is another homebuyer who has moved I.A. No. 84309 of 2020in Civil Appeal No. 3395 of 2020 and seeks direction to determineadequate and fair amount of compensation to be paid to the homebuyersdue to the unreasonable delay in completion. He has also suggested that

Adifferent mechanism is required to be provided for dealing with the CIRPin question, in displacement of the resolution plan of NBCC.

11. Other objectors to the resolution plan and the order of NCLTdated 03.03.2020 could be broadly sub-divided into three: one being theholding company of the corporate debtor JIL and the persons/entitiesBrelated with these companies; second being the dissenting institutionalfinancial creditor of the corporate debtor JIL; and third being the otherstakeholders.

12. In the first sub-sect of objectors, the main parties before usare as follows:C12.1. Jaiprakash Associates Limited (JAL):

It is the holding company of the corporate debtor JIL; it hadapproximately 71.64% equity shareholding in JIL as on 31.03.2017. Thiscompany had deposited the sum of INR 750 crores as per the orderspassed by this Court in the case of Chitra Sharma (supra). Apart fromDa few other objections, this company JAL is seeking refund of INR 750crores with accrued interest; and it is contended that the said amount isnot the property of the corporate debtor JIL and it cannot be utilised forthe CIRP of JIL. This holding company had filed Company Appeal (AT)(Insolvency) No. 478 of 2020 before NCLAT against the said orderEdated 03.03.2020 that stands transferred to this Court and is registeredas T.C. (C) No. 238 of 2020.

12.2. Pankaj Sharma and 3 others:

They are homebuyers of the projects being developed by JALand are similarly contending that the said sum of INR 750 crores withFaccrued interest cannot be utilised for the CIRP of the corporate debtorJIL. They too had filed an appeal before NCLAT against the said orderdated 03.03.2020, being Company Appeal (AT) (Insolvency) No. 544 of2020 that stands transferred to this Court and is registered as T.C. (C)No. 237 of 2020.G12.3. Knights Court Social Welfare Association:

This is an association representing the homebuyers in the ‘KnightsCourt’ project of JAL who are aggrieved by the fact that the project hasbeen left incomplete by JAL and who are equally aggrieved by theprovision made in the resolution plan of JIL for utilisation of the said

amount of INR 750 crores. This association has directly challenged thesaid order of NCLT dated 03.03.2020 in this Court by way of SpecialLeave Petition (Civil) No. 10543 of 2020.

12.4. Manoj Gaur, suspended MD of corporate debtor JIL:

He is the suspended Managing Director of the corporate debtorJIL and has also stated himself to be the Executive Chairman of JAL.He has been arrayed as third respondent in the appeal filed by IRP. It isalso noticed that he, along with the holding company JAL, filed animpleadment application (I.A. No. 1508 of 2020) in the appeal filed byNBCC that was allowed by NCLAT on 15.07.2020 and that is how hebecame the seventh respondent in the appeal of NBCC. According tohis submissions, the IRP failed to ensure that the resolution plan did notcontravene the law for the time being in force; and that approval byCoC leaves much to be desired. Several of the stipulations andprescriptions in the resolution plan of NBCC are put to question by him.13. The second sub-sect of objectors to the resolution plan consistsof the institutional financial creditor of the corporate debtor JIL, beingICICI Bank Limited.

13.1. The directions issued by NCLT in modification of theresolution plan in regard to the claim of this bank for payment, in itscapacity as the dissenting financial creditor of JIL, is one of the majorgrounds of challenge by the persons/entities standing in favour of theresolution plan in question. This bank has also objected to the clauses inthe resolution plan in regard to the treatment of the said sum of INR 750crores. In its another capacity as the lender of JAL and having mortgageover the land of JIL in security of such lending to JAL, this bank haslevied another challenge to the resolution plan in regard to the release ofits security interest. This bank had challenged the said order dated03.03.2020 before NCLAT in Company Appeal (AT) (Insolvency) DiaryNo. 21936 of 2020 and has moved Transfer Petition (C) Diary No. 20274of 2020 in this Court, seeking transfer of its appeal before NCLAT foranalogous hearing with the present batch of matters.

14. The third sub-sect of the objectors to the resolution plancomprises of different entities/persons, mostly carrying their own claims/grievances. They are as follows:

14.1. Yamuna Expressway Industrial Development Authority:

AThis Authority, constituted under Section 3 of the Uttar PradeshIndustrial Area Development Act, 1976[27] was initially called TajExpressway Industrial Development Authority[28]; subsequently it wasrenamed as Yamuna Expressway Industrial Development Authority[29]by notification dated 11.07.2018. It had been the land provider forexecution of various projects by JAL/JIL under the ConcessionBAgreement. The provisions in the resolution plan for dealing with theavailable parcels of land and for meeting with the contingent liability (asregards payment of additional compensation towards acquisition of land)are the main areas of concern of this Authority, who had filed itsobjections to the resolution plan. The directions issued in modification ofCthe resolution plan in regard to YEIDA is also one of the major groundsof challenge by the persons/entities standing in favour of the resolutionplan.

14.2. YES Bank Limited:

This bank is the financial creditor of wholly-owned subsidiaryDof JIL, being Jaypee Healthcare Limited[30]. This bank asserts that theassets of JHL, said to be mortgaged with it, are not within the purviewof CIRP of JIL to be disposed by NBCC; and it seeks modifications inthe resolution plan accordingly. This bank filed an appeal before NCLATagainst the said order dated 03.03.2020, being Company Appeal (AT)E(Insolvency) No. 488 of 2020 that stands transferred to this Court and isregistered as T.C. (C) No. 235 of 2020.

14.3. Rajesh Gupta and 2 others:

These three persons, said to have entered into respectiveagreements with the corporate debtor, carry their own grievance againstFthe prescription in the resolution plan where the resolution applicant hasreserved its right to cancel such agreements/sub-lease deeds. They seekdirection for entering into sale deed/s of plot/s in Jaypee Greens WishTown or for refund. They had also filed an appeal before NCLAT againstthe said order dated 03.03.2020, being Company Appeal (AT) (Insolvency)GNo. 547 of 2020 that stands transferred to this Court and is registered asT.C. (C) No. 241 of 2020.

27 Hereinafter also referred to as the ‘U.P. Act of 1976’.

28 ‘TEA’ for short.

29 ‘YEIDA’ for short.

H30 ‘JHL’ for short.

14.4. Raman Prakash Mangala and 29 others:

They are minority shareholders of JIL and their assertion is thatthe resolution plan approved by CoC ought to consider the interests ofminority shareholders by giving fair market value of the equity sharesheld by them. Their appeal against the order dated 03.03.2020 beforeNCLAT, being Company Appeal (AT) (Insolvency) No. 630 of 2020,also stands transferred to this Court and is registered as T.C. (C) No.239 of 2020.

14.5. Gyanendra Kumar Raveendra:

He is also minority shareholder of JIL and has moved anapplication for impleadment in Civil Appeal No. 3395 of 2020, being I.A.No. 89429 of 2020. He is similarly aggrieved by the action of NBCC toextinguish the right of the minority shareholders without giving them a‘fair value’ of their shares.

Points for determination

15. Having drawn brief sketch and outline of the matter andhaving introduced the principal parties to this litigation with their respectiveinterests, we may now indicate the major points, which arise fordetermination in view of diverse propositions advanced before us, coupledwith the stipulations in the resolution plan in question and the modificationsordered by NCLT and NCLAT by way of the orders impugned. Theprincipal points calling for determination in this batch are:

A. What is the extent of, and limitations over, the powers andjurisdiction of the Adjudicating Authority while dealing with theresolution plan approved by the Committee of Creditors?

B. As to whether approval of the resolution plan of NBCC isvitiated because of simultaneous voting over two resolution plansin the Committee of Creditors?

C. (i) As to whether the Adjudicating Authority has erred in notapproving the stipulations in the resolution plan for meeting withthe contingent liability of additional amount of land acquisitioncompensation; and has also erred in modifying these stipulations?

(ii) As to whether the Adjudicating Authority has erred in notapproving the mechanism provided in the resolution plan fortransfer, of the concessionaire’s rights and obligations under the

Concession Agreement with YEIDA, to the SPVs proposed to beincorporated; and has also erred in modifying the relevantstipulations?

(iii) As to whether the Adjudicating Authority has erred in notapproving the reliefs and concessions sought for in the resolutionplan in relation to YEIDA?

D. As to whether the Adjudicating Authority has erred in notapproving the treatment of dissenting financial creditor like ICICIBank Limited in the resolution plan, as being not in accord withSection 30(2)(b) of the Code read with Regulation 38(1)(b) of theCIRP Regulations; and has erred in modifying the terms ofresolution plan and in directing payment to the dissenting financialcreditor in monetary terms?

E. As to whether the Adjudicating Authority has erred in modifyingthe step provided in the resolution plan in regard to the fixed depositDholders and in directing the resolution applicant to make provisiontowards the dues of unclaimed fixed deposit holders also?

F. (i) As to whether the resolution plan unauthorisedly purports todeal with the assets of Jaypee Healthcare Limited?

(ii) As to whether the Adjudicating Authority has erred inassuming that YES Bank Limited had agreed for constitution of acommittee to take forward the disinvestment process of JaypeeHealthcare Limited?

G. As to whether the stipulation in the resolution plan forcancellation of certain agreements/sub-leases is unfair and theFAdjudicating Authority has erred in not modifying the same?

H. As to whether the minority shareholders are entitled to statetheir claims/objections despite having not approached theAdjudicating Authority; and as to whether the resolution plan doesnot provide fair treatment to the minority shareholders?

I. (i) As to whether, after approval of the resolution plan of NBCCby the Committee of Creditors, where homebuyers as classassented to the plan, any individual homebuyer or any associationof homebuyers could maintain challenge to the resolution planand could be treated as dissenting financial creditor or anaggrieved person?

(ii) As to whether the stipulations in the resolution plan stand inviolation of the provisions of the Real Estate (Regulation andDevelopment) Act, 2016?

(iii) As to whether the resolution plan is violative of therequirements of CIRP Regulations?

(iv) As to whether any housing project which has beencompleted or is nearing completion ought to be kept out of thepurview of the resolution plan?

J. (i) As to whether the amount of INR 750 crores, which wasdeposited by JAL pursuant to the orders passed by this Court inthe case of Chitra Sharma, and accrued interest thereupon, isthe property of JAL and stipulation in the resolution plan concerningits usage by JIL or NBCC is impermissible?

(ii) As to whether any amount is receivable by JIL and/or itshomebuyers from JAL; and the accounts between JAL and JILneed reconciliation?

K. (i) As to whether Clause 23 of Schedule 3 of the resolutionplan providing for extinguishment of security interest of lendersof JAL could not have been approved by the AdjudicatingAuthority?

(ii) As to whether adequate provision is required to be made inthe resolution plan as regards utilisation of the land bank of 758acres, that has become available to JIL in terms of the judgmentdated 26.02.2020 by this Court?

L. What should be the appropriate orders on the other issuesraised by the resolution applicant seeking clarification/directions?

M. As to whether the Appellate Authority was justified in providingfor an Interim Monitoring Committee for implementation of theresolution plan in question during the pendency of appeals?

N. What should be the final order and relief?

Relevant factual and background aspects

16. For determination of the points so arising, we need to examinethe relevant provisions contained in IBC and CIRP Regulations and applythe same to the process related with consideration and approval of the

Aresolution plan in question; and to the terms, prescriptions and stipulationsof the impugned resolution plan as also to the modifications, as ordered(or as declined) by the Adjudicating Authority (NCLT) in the impugnedorder dated 03.03.2020. However, in the given set of facts andcircumstances, before examining the relevant provisions and beforedilating on the relevant features of the resolution plan and the orderBimpugned, it is expedient to take note of the crucial background aspectsrelating to the present CIRP and key attributes of the orders passed bythis Court in previous rounds of litigation concerning this very CIRP.

17. For clearer picture of the subject matter of this litigation, afew glimpses of the relevant history shall be apposite.C

17.1. By way of notification dated 24.04.2001, the Governmentof Uttar Pradesh, in exercise of its powers under Section 3 of the U.P.Act of 1976, proceeded to set up Taj Expressway Industrial DevelopmentAuthority (‘TEA’) for anchoring development of Taj Expressway Project,being that of six-lane 160 km long Super Expressway with serviceDroads and associated facilities connecting Noida and Agra, passing througha so-called virgin area along the river Yamuna.

17.2. At the initial stages, the said Taj Expressway IndustrialDevelopment Authority invited bids for selecting the entity for executionof the project. In this process, ultimately, the company known asEJaiprakash Industries Limited came out as the successful bidder. Thiscompany, Jaiprakash Industries Limited, is now named as JaiprakashAssociates Limited (‘JAL’).17.3. After the said bidding process, Concession Agreementdated 07.02.2003 was executed between the principal TEA and theFsuccessful bidder Jaiprakash Industries Limited, who came to be referredto as the “concessionaire”. Various terms and stipulations of thisConcession Agreement form the subject matter of one segment of disputein the present litigation, as discussed at the relevant stages hereafter. Atthe present stage, worthwhile it is to notice that under this CA, theGconcessionaire was to be provided land for constructing Expresswayand its allied facilities; and was also to be provided other land fordevelopment. In this regard, the concessionaire was given lease ofExpressway land with right to collect toll from the users of the road for36 years; and the land adjacent to the road was provided to theconcessionaire for commercial exploitation on lease for 90 years. AsHregards premium for the land being so transferred, the stipulations in the

CA had been to the effect that such premium shall be equivalent toacquisition cost plus lease rent of INR 100 per hectare per year. InClause 18.1 of CA, it was also agreed to between the parties that incase the concessionaire and TEA would consider it necessary to transferthe rights and obligations of concessionaire to special purpose vehicle(‘SPV’), the concessionaire would do so in reasonable time for which,documents as may be required shall be executed amongst theconcessionaire, the TEA and the SPV. For accomplishment of the project,the Government of Uttar Pradesh proceeded to acquire land for layingof the Expressway; and also proceeded to acquire additional land alongthe road for development of the same for commercial, amusement,industrial, institutional and residential purposes.

17.4. Coming on the heels of this project and in terms of the saidClause 18.1 of CA, the corporate debtor Jaypee Infratech Limited (‘JIL’)was set up as special purpose vehicle by the concessionaire andthereafter, the rights and obligations under CA were transferred to JILby way of an assignment agreement dated 19.10.2007 and deed ofagreement dated 27.11.2007. In this manner, the corporate debtor JILcame to be accepted as the concessionaire. Later on, by way of anotification dated 11.07.2008, Taj Expressway Industrial DevelopmentAuthority was renamed as Yamuna Expressway Industrial DevelopmentAuthority (‘YEIDA’). The net result of the dealings aforesaid has beenthat the rights and obligations under the said Concession Agreementdated 07.02.2003 now relate to the corporate debtor JIL as theconcessionaire and YEIDA as the land providing agency.17.5. As noticed, the corporate debtor JIL was set up as the SPVby the original concessionaire JAL; and JAL had approximately 71.64%equity shareholding in JIL as on 31.03.2017. Admittedly, JAL had beenthe holding company of JIL. When JIL was set up as an SPV for thepurpose of execution of the project/s under the said CA, finances wereobtained from consortium of banks against the partial mortgage ofland acquired and pledge of 51% of the shareholding held by JAL.Accordingly, JIL took up those two projects; the Expressway was laidand JIL also started developing real estate projects in two locations ofthe land acquired, one in Wish Town, Noida and another in Mirzapur.

17.6. However, JIL defaulted in several of its obligations, includingthose in completion of the real estate projects as proposed and in paymentof dues of the lender financial institutions.

A18. The default on the part of JIL in payment of its dues led thelender bank, IDBI Bank Limited, instituting petition under Section 7 ofthe Code before the NCLT, for initiation of the corporate insolvencyresolution process against JIL. The applicant bank alleged that JIL hadcommitted default in repayment of its dues to the tune of INR 526.11crores. JIL filed its objections to the petition but later on, withdrew theBobjections and furnished its consent for resolution plan under the provisionsof the Code.

18.1. In view of the above, on 09.08.2017, NCLT initiated the CIRPin respect of JIL. An order of moratorium was issued under Section 14of the Code by which, the institution of suits and continuation of pendingCproceedings, including execution proceedings, were prohibited and anInterim Resolution Professional was appointed. On 14.08.2017, IRP, inpursuance of the order of NCLT, called for submissions of claims byfinancial creditors in Form-C, by operational creditors in Form-B, by theworkmen and employees in Form-E and by other creditors in Form-F.DOn 16.08.2017, the Insolvency and Bankruptcy Board of India[31] madean amendment to its Regulations whereby, Regulation 9(a) was insertedto include the claims by other creditors; and then, on 18.08.2017, theBoard released press note that the homebuyers could fill in Form-F, asthey could not be treated at par with financial and operational creditors.

E19. The aforesaid position led to several petitions in this Court,particularly by the aggrieved homebuyers. As noticed, those petitionswere dealt with by this Court as batch, led by the case of ChitraSharma (supra). Several orders were passed by this Court in the saidbatch of petitions from time to time, inter alia, to the effect that IRPwas permitted to take over the management of JIL and was directed toFensure that necessary provisions were made to protect the interests ofhomebuyers. Various orders were also made with directions to JAL, asholding company of JIL, for making deposits in the Court, particularlylooking to the claim of refund being made by some of the homebuyers.While finally disposing of the matters, this Court took note of the interestsGof homebuyers as also the creditors of JAL and JIL; and also took noteof the status of proceedings and the statutory provisions as then obtaining,including the fact that the statutory period of 180 days, and even theextended period of 90 days, for concluding the CIRP had come to anend but then, by way of the Insolvency and Bankruptcy (Amendment)

H31 Hereinafter also referred to as ‘the Board’.

Ordinance, 2018, which came into force on 06.06.2018, the doubts aboutthe status of homebuyers were removed and they were expresslyrecognised as financial creditors of the corporate debtor. In the givenset of facts and circumstances, this Court provided reprieve to theCIRP in question while making further orders in the interests ofhomebuyers and other creditors.

19.1. The proceedings and the orders passed by this Court in thesaid case of Chitra Sharma are of material bearing in the present caseand, therefore, may be usefully recounted in necessary details.

Orders and directions in the case of Chitra Sharma

20. As noticed, this Court was moved in the case of Chitra Sharma(supra) essentially for the reason that large number of homebuyers,who had invested in the real estate projects proposed by JAL and JIL,were feeling distressed in the wake of the proposed CIRP concerningJIL and who were likely to be left in the lurch because, at the givenstage, while IBC recognised three categories of stakeholders namely, (i)corporate debtors; (ii) financial creditors; and (iii) operational creditorsbut, the homebuyers, otherwise having direct and substantial interestin CIRP with investment of lifetime, were being treated only as ‘othercreditors’. In the given scenario, on being moved, this Court issued noticeon 04.09.2017 in the said batch of petitions; the proceedings before theNCLT at Allahabad were stayed until further orders; copy of theproceedings was ordered to be served on the office of the learned AttorneyGeneral for India; and the applications for impleadment and interventionwere allowed.

20.1. Thereafter, on 11.09.2017, while dealing with an applicationmoved by IDBI Bank Limited for vacation of the ad-interim order dated04.09.2017, several facets of the matter and ramifications of the stayorder passed by this Court were projected with reference to the schemeof the provisions contained in the Code. On the other hand, it was arguedon behalf of the homebuyers that they were of lower and middle incomegroups, who had invested their life savings with JIL and JAL and theirinterests were required to be protected. It was argued that if CIRP wasrestored, there should be representative from the homebuyers or theCourt may appoint someone on CoC to espouse the interests of thehomebuyers.

A20.1.1. Taking note of the submissions so made and in order tosafeguard the interests of stakeholders, this Court modified the earlierorder dated 04.09.2017 and issued material directions, inter alia, to theeffect that: (i) IRP shall take over the management of JIL and formulateinterim resolution plan with necessary provision to protect the interestsof homebuyers; (ii) Mr. Shekhar Naphade, learned senior counsel alongBwith Ms. Shubhangi Tuli, AOR shall participate in the meetings of CoCto espouse the cause of the homebuyers and to protect their interests;the Director or Managing Director of JIL or JAL on the date of institutionof insolvency proceedings as also on the date of order, except the nomineeDirectors of lending institutions, shall not leave the country without priorCpermission of the Court; and all the suits and proceedings against JILshall remain stayed in terms of Section 14(1)(a) of the Code. In addition,this Court also directed JAL to deposit sum of INR 2,000 crores andprovided that if any assets or property of JAL had to be sold for thepurpose, that should be done after obtaining prior approval of this Court.For its relevance, the aforesaid order dated 11.09.2017, carryingDsignificant observations and material directions of this Court, which areof bearing on substantial part of the present litigation, could be extracted,in extenso, as under: -

“All the applications for intervention/impleadment areallowed.EIA No. 87575 of 2017 in SLPs (C) Nos. 24001- 24002 of2017 (D. Nos. 27277, 27579 and 27624 of 2017)

The present interlocutory application has been filed by theIDBI Bank Ltd. in the special leave petitions which have beenFregistered as SLPs (C) Nos. 24001 and 24002 of 2017.This is an application for vacating/modification of the order dated4-9-2017. On that day, this Court while issuing notice, had passedthe following order:

“2. …..In the meantime the impugned order(s) passed by theGNational Company Law Tribunal, Allahabad shall remain stayeduntil further orders. copy of the special leave petition beserved on the office of learned Attorney General for India. Allapplications for impleadment/intervention stand allowed.”

Mr K.K. Venugopal, learned Attorney General for IndiaHappearing for Respondents 1 and 2 submitted that the order passed

by this Court on 4-9-2017 needs to be vacated or modified becausethe consequence of the stay would be that the Management ofRespondent 3, Jaypee Infratech Ltd. would stand restored. Thiswas not consequence intended by this Court. It is urged by himthat if the erstwhile Management of the said company continues,it will affect the rights of the creditors and the consumers as well.

In the course of the hearing, we have been informed thatafter the order of stay was passed by this Court, the InterimResolution Professional (IRP) has handed over records toRespondent 3, Jaypee Infratech Ltd. (“JIL”). It is submitted byMr K.K. Venugopal, learned Attorney General that some timeshould be granted to the IRP to formulate at least preliminaryscheme so that the interest of all stakeholders is protected. Hehas also shown his concern for the interest of the homebuyers.

Dr Abhishek Manu Singhvi, learned Senior Counselappearing for IDBI Bank Ltd., (Respondent 6 in the writ petition)submits that under the statutory scheme, the IRP has to take overotherwise the letter and spirit of the Act is likely to be affected.

The learned counsel appearing for the homebuyers, incontra, submits that they belong to the lower and middle incomegroup and have invested life savings with JIL and with its holdingcompany, Jai Prakash Associates Ltd. (“JAL”). It has beenassiduously urged that the investments of flat purchasers are withJIL and JAL and, therefore, the interest of the purchasers may beprotected. It is also argued that if the IRP is restored, there shouldbe representative from the homebuyers or this Court may appointsomeone on this Committee of Creditors and espouse the interestsof the homebuyers.

Having heard the learned counsel for the parties at length,in modification of the order dated 4-9-2017, we issue the followingdirections:

a) The IRP shall forthwith take over the Management of JIL.The IRP shall formulate and submit an interim resolution planwithin 45 days before this Court. The interim resolution plan shallmake all necessary provisions to protect the interests of thehomebuyers;

b) Mr Shekhar Naphade, learned Senior Counsel along withMs Shubhangi Tuli, Advocate-on-Record, shall participate in themeetings of the Committee of Creditors under Section 21 of theInsolvency and Bankruptcy Code, 2016 to espouse the cause ofthe homebuyers and protect their interests;

c) The Managing Director and the Directors of JIL and JAL shallnot leave India without the prior permission of this Court;

d) JAL which is not party to the insolvency proceedings,shall deposit sum of Rs 2000 crores (Rupees two thousandcrores) before this Court on or before 27-10-2017. For theCsaid purpose, if any assets or property of JAL have to besold, that should be done after obtaining prior approval ofthis Court. Any person who was Director or ManagingDirector of JIL or JAL on the date of the institution of theinsolvency proceedings against JIL as well as the presentDirectors/Managing Director shall also not leave theDcountry without prior permission of this Court. The foregoingrestraint shall not apply to nominee Directors of lending institutions(IDBI/ICICI/SBI);

e) All suits and proceeding instituted against JIL shall in terms ofSection 14(1)(a) remain stayed as we have directed the IRP toEremain in Management.

Be it clarified that we have passed this order keeping inview the provisions of the Act and also the interest of thehomebuyers.

FIA stands disposed of accordingly.

The matter be listed at 2.00 p.m. on 13-11-2017.

The prior date given by this Court i.e. 10-10-2017 standscancelled.”

(emphasis in bold supplied)

20.1.2. It could be readily noticed that in formulating the directionsaforesaid, this Court initiated steps to protect the interests of homebuyersessentially for the reason that, at the given stage, homebuyers were notregarded as financial creditors and they were not represented in theCoC. Significantly, while evolving workable and protective mechanism,

this Court also took note of the crucial background aspects and the factthat JIL was essentially an alter ego of JAL; and thus, even whileconsciously noting that JAL was not party to the insolvency proceedings,directed that JAL shall deposit sum of INR 2,000 crores and restraintswere also put over disposal of assets or property of JAL and over themovement of the Directors/Managing Directors of JIL or JAL awayfrom the country.

20.2. JAL moved an application (I.A. No. 102471 of 2017) formodification/recall of the aforesaid direction for deposit of INR 2,000crores or for modification that would enable it to transfer the rightsunder the Concession Agreement in respect of the Yamuna Expressway.This application was considered and rejected by the Court on 25.10.2017after noticing the submissions in opposition by the learned AttorneyGeneral as also by the learned counsel appearing on behalf of IDBIBank and YEIDA. It was also submitted by the counsel for IRP that therights under the Concession Agreement belonged to JIL, which wassubject to proceedings under the IBC and therefore, such requestcould not be granted. However, the time for depositing INR 2,000 croreswas extended until 05.11.2017. The relevant part of order dated 25.10.2017reads as under: -

“It is submitted by Mr Kapil Sibal and Mr Mukul Rohatgi,learned Senior Counsel appearing for the applicant that JAL maybe permitted to transfer its rights under the concession agreementin respect of Yamuna Expressway. The same is seriously opposedby Mr K.K. Venugopal, learned Attorney General for India,Dr Abhishek Manu Singhvi, learned Senior Counsel appearing forthe IDBI Ltd. and Mr Ravindra Kumar, learned counsel appearingfor the Yamuna Expressway Industrial Development Authority.

It is also submitted by Mr Parag P. Tripathi, learned SeniorCounsel representing the Interim Resolution Professional (IRP)that the rights under the concession agreement in respect ofYamuna Expressway are of Jaypee Infratech Ltd. (JIL), which issubject to proceeding under the Insolvency and Bankruptcy Codeand, therefore, it cannot be transferred. Mr Ravinder Kumar,learned counsel appearing for the Authority has submitted thatthe rights under the concession agreement, are non-transferable.

We have also heard Mr Ajit Kumar Sinha, learned SeniorCounsel appearing for some of the homebuyers. There are other

Acounsel who are representing the homebuyers who are interestedin having their flats. We do not want to address the said aspecttoday.

We are not inclined to entertain the application formodification of the order dated 11-9-2017. However, we extendBthe time to deposit the sum of Rs 2000 crores (Rupees two thousandcrores) till 5-11-2017.”

20.3. Then, on 13.11.2017, this Court appointed learned counselMr. Pawanshree Agarwal as the amicus curiae, who was to open aweb portal on which details of homebuyers could be uploaded. All theCDirectors of JAL, except institutional Directors were ordered to remainpresent before the Court on the next date with the affidavits disclosingtheir personal assets. This order dated 13.11.2017 reads as under: -

“All the applications for impleadment/intervention standallowed. The homebuyers are directed to approachDMr Pawanshree Agarwal, learned counsel, who is appointed asthe Amicus Curiae in the matter to assist the Court and he shallopen web portal so that the homebuyers can give their details toMr Pawanshree Agarwal. Let the matter be listed on 22-11-2017.On that day, all the Directors except institutional Directors ofJaiprakash Associates Ltd. (JAL) shall remain personally presentEin the Court with the affidavits disclosing their personal assets.”

20.4. On the next date, 22.11.2017, eight independent Directorsand five promoter Directors were present before the Court. On astatement made on behalf of JAL, this Court permitted JAL to depositINR 275 crores during the course of the day and directed further deposit,Fof INR 150 crores by 13.12.2017 and INR 125 crores by 31.12.2017. Arestraint was imposed on the alienation of properties and assets of theDirectors and their families while maintaining the earlier direction forthe deposit of INR 2,000 crores; and the Directors concerned weredirected to remain present on the next date. The amicus curiae wasGasked to create web portal within week; and for that matter, learnedcounsel appearing for JAL was to provide all the details as required bythe amicus and also to provide him sum of INR 5 lakhs. The relevantpart of order dated 22.11.2017 reads as under: -

“It is submitted by learned Senior Counsel appearing forJaiprakash Associates Ltd. (JAL) that the company is ready withH

Rs 275 crores. The homebuyers raised their concern about therealisation of the amount. This Court appreciates the grievanceand the concern of the homebuyers.

We think it would be appropriate to direct as follows:

(a) demand draft of Rs 275 crores be deposited byMr Anupam Lal Das, learned counsel appearing for the company,before the Registry of this Court, today.

(b) sum of Rs 150 crores be deposited by 13-12-2017.

(c) further sum of Rs 125 crores be deposited by 31-12-2017.

(d) Neither the independent Directors nor the promoterDirectors shall alienate their personal properties or assets in anymanner, and if they do so, they will not only be liable for criminalprosecution but contempt of the court.

(e) That apart, we also direct that the properties and assets oftheir immediate and dependent family members should also notbe transferred in any manner, whatsoever.

Needless to say that direction for deposit of Rs 2000 croresshall remain as it is. The only indulgence is to pay the same ininstalments.

Mr Pawanshree Agrawal, who had been appointed as AmicusCuriae on an earlier date, shall create portal within week anddo the needful as he has done in similar matters. Mr Anupam LalDas, learned counsel shall provide all the details as required byMr Pawanshree Agrawal. Mr Anupam Lal Das shall provide asum of Rs 5 lakhs to Mr Pawanshree Agrawal for creation of theportal and to carry on the consequential activities. Matters belisted on 10-1-2018. On that day, all the independent Directorsand promoter Directors of Jaiprakash Associates Limited, shallremain present. Copies of the affidavits deposed by all the fivepromoter Directors, shall be served on the Central Agency, sothat the learned Attorney General can be made aware of that.Call on the date fixed.”

20.5. Next to the above, the matter was considered on 15.12.2017,when the deposited INR 150 crores were ordered to be kept in short-

Aterm deposit and the time (for further payment) was extended until25.01.2018. Further to that, on 10.01.2018, this Court took note of thesubmissions made on behalf of the homebuyers of JAL as also anapplication made by Reserve Bank of India[32] seeking leave to move theNCLT against JAL and issued the directions, inter alia, to the effectthat JAL shall file an affidavit disclosing its housing projects throughoutBthe country and the stage of their construction; the amicus shall open anindependent web portal for the homebuyers of JAL; the application ofRBI shall be considered at later stage; and the Directors concernedneed not remain personally present before the Court unless so directedbut shall not leave the country. The relevant part of this order datedC10.01.2018 reads as under: -“Having heard the learned counsel for the parties, we areinclined to pass the following directions:

(i) Jaiprakash Associates Ltd. (JAL) shall file an affidavit statingtherein as to how many housing projects it has throughout theDcountry and the stage of their construction. The said affidavitshall be filed within week hence.

(ii) Mr Pawanshree Agarwal, learned Amicus Curiae shall createan independent web portal in respect of the homebuyers of JAL,which shall reflect the details of the homebuyers.E(iii) The web portal created by Mr Pawanshree Agarwal quaJaypee Infratech Ltd. (JIL) shall be kept alive.

(iv) The application filed by Reserve Bank of India seekingpermission to move NCLT shall be considered at later stage.

F(v) The independent Directors of JAL need not remain personallypresent on every date of hearing unless so directed by this Court.The independent Directors shall not leave the country withoutleave of this Court.

(vi) The earlier order of injuncting JAL to create any kind ofGthird-party interest in the assets is reiterated.(vii) The applications for impleadment/intervention and directionsfiled before this Court shall be served on Mr PawanshreeAgarwal.”

32 ‘RBI’ for short.H

20.6. Further effective proceedings took place on 21.03.2018when it was stated on behalf of JAL that INR 550 crores had alreadybeen deposited and that only about 8% of homebuyers were interestedin seeking refund while others were desirous of seeking possession oftheir flats. This Court indicated that at the given stage, only the matter inrelation to the homebuyers seeking refund was being examined and othergrievances shall be examined in the next phase of proceedings. Sincethe order for deposit of INR 2,000 crores had not been complied withdespite the end of deadline, the Court issued directions for further depositof INR 200 crores, as agreed to by the Managing Director of JAL presentin the Court, where the first instalment of INR 100 crores was to bedeposited by 15.04.2018 and the second instalment in the like amountwas to be deposited by 10.05.2018. The amicus curiae informed theCourt, with reference to his portal and the record of JAL, that sum ofINR 1,300 crores was required to be refunded by way of principal aloneto the homebuyers who were seeking refunds, whereupon the amicuswas requested to submit project-wise chart, indicating the number ofpersons and the stage of completion. Taking note of the grievances ofthe homebuyers that the developer was demanding monthly instalmentsdespite being unable to complete construction, the developer wasrestrained from raising demands towards outstanding or future instalmentsin respect of those buyers who had expressed desire to obtain refunds.Further to that, the IRP was permitted to finalise the resolution plan, tobe implemented only with the leave of the Court. This Court also tooknote of the inability expressed by the learned senior counsel, who wasearlier requested to espouse the cause of homebuyers in CoC and, in hisplace, Mr. Gaurav Agarwal Advocate was appointed for the purpose.This order dated 21.03.2018 reads as under: -

“Heard Mr Anupam Lal Das, learned counsel appearingfor Respondent 4 Jaiprakash Associates Ltd. (JAL). Though manya contention has been raised by Mr Das, yet, we are not inclinedto entertain the same keeping in view our orders dated 11-9-2017and 25-10-2017. We have been told by Mr Das that JAL hasdeposited sum of Rs 550 crores before the Registry of thisCourt. It is submitted by Mr Das that only 8% of the homebuyers/allottees are inclined to take refund whereas others haveexpressed their inclination to have the flats.

DEF

We would intend to make it absolutely clear that, forthe present, we are only concerned with those homebuyerswho intend to have refund. In the next phase, we mayconsider the grievances, if any, of the homebuyers whointend to have the flats. In that regard, we think it appropriateto hear Mr Parag P. Tripathi, learned Senior Counsel appearingfor Interim Resolution Professional (IRP) and Mr Jayant Bhushanand Mr Sanjay Hegde and others, learned Senior Counsel appearingfor some Associations of homebuyers who intend to have theirflats.

As our order for deposit of Rs 2000 crores has not beencomplied with, we intend to pass the following directions:

(a) JAL shall deposit further sum of Rs 200 croresin two instalments, as agreed by the Managing Directorwho is present in Court today. The first instalment of Rs100 crores shall be deposited by 15-4-2018 and the secondDinstalment of Rs 100 crores shall be deposited by 10-5-2018;

(b) It is submitted by Mr Pawanshree Agrawal, learnedAmicus Curiae that as per his portal an amount of Rs 1300crores, at present, is required to be refunded towards theEprincipal sum for those homebuyers who, as of today, seekrefund. The figure of Rs 1300 crores is as per the record ofJAL.

In view of the aforesaid, we would require Mr Agrawalto prepare projectwise chart indicating the number ofpersons in respect of that project and the stage ofcompletion of the respective projects so that appropriateorder can be passed for disbursement of the amount onpro rata basis to the homebuyers;

(c) Mr Agrawal, learned Amicus Curiae shall keep the portaloperational. However, the requests of only those persons onthe portal who have sought refund, as of today will beconsidered at this stage;

(d) The submission of the homebuyers who are seekingrefund is that the developer is making demands towards monthlyinstalments. We direct that no demand towards outstanding or

future instalments shall be raised by the developer to the flat buyerswho have, as of today, expressed the option to obtain refund. Thedemands raised by the developer in respect of the homebuyerswho have already opted for refund till today, shall remain stayed;

(e) The IRP may proceed to finalise the resolution plan butthe same shall be implemented after taking leave of this Court.

(f) The National Company Law Tribunal (NCLT) shalldecide subject to the directions which we have given hereinabove.

Before we fix the next date, we must note that we have beenapprised that Mr Shekhar Naphade, learned Senior Counsel whowas appointed to espouse the cause of the homebuyers beforethe Committee of Creditors has expressed his inability to continueas such.

In view of the aforesaid, need has arisen to appointsomeone else in place of Mr Shekhar Naphade and accordinglywe appoint Mr Gaurav Agrawal, Advocate. It is further clarifiedthat Mr Gaurav Agrawal shall be guided by our previous orders.

Let the matter be listed on 16-4-2018 so that this Court cantake note of whether the developer has complied with the directionof depositing the first instalment and to pass directions with regardto disbursement of the amount deposited on pro rata basis on thebasis of the report submitted by Mr Pawanshree Agrawal.”

(emphasis in bold supplied)

20.7. On 16.04.2018, apart from dealing with two applicationsfiled by the Managing Director and the Joint Managing Director of JALseeking permission to travel abroad, this Court took note of the depositof INR 100 crores by JAL and directed that the second instalment ofINR 100 crores be deposited by 10.05.2018. While reiterating liberty toIRP to finalise the resolution plan in terms of the earlier order, this Courtalso extended liberty to JAL to submit representation to the competentauthority without expressing any opinion on that count and leaving therepresentation to be considered in accordance with law.[33]

33 As discussed little later, it has appeared in the final judgment passed in the case ofChitra Sharma that the referred representation had been in relation to the prayer ofJAL to participate as one of the intending bidders in the resolution plan which wasbeing formulated by the IRP; and such participation by JAL was impermissible inview of Section 29A introduced to the Code.

A20.8. Thereafter, on 16.05.2018, apart from dealing with anotherapplication filed by an independent Director of JAL seeking permissionto travel abroad, this Court took note of the fact that sum of INR 750crores was lying in deposit and it was observed that the same ‘has to bedisbursed on pro rata basis amongst the homebuyers’. It was alsodirected that JAL, the holding company of JIL, shall deposit furtherBsum of INR 1,000 crores ‘jointly and severally’ by 15.06.2018 subjectto which, stay was granted over further proceedings, only insofar asconcerning the liquidation. The relevant part of this order dated 16.05.2018reads as under: -

“Having heard the learned counsel for the parties at length, itCis directed that Jaiprakash Associates Ltd. (JAL), theholding company of Jaypee Infratech Ltd. (JIL) shall deposita further sum of Rs 1000 crores jointly and severally by 15-6-2018. Subject to the said deposit, there shall be stay of furtherproceedings only insofar as the liquidation is concerned. In theDmeantime, Interim Resolution Professional (IRP) shall remain inmanagement. If the amount is not deposited by 15-6-2018, thestatutory proceedings shall continue. As far as Rs 750 crores,which is lying in deposit is concerned, it has to be disbursedon pro rata basis amongst the homebuyers.”

(emphasis in bold supplied)

20.9. Thereafter, on 13.07.2018, this Court took note of certainproposals made by JAL, which were opposed by the petitioners. Whileobserving disinclination to entertain such proposals, this Court postedthe matters on 16.07.2018 ‘exclusively for the purpose of consideringFthe issue of the rights of the homebuyers and the capability of JALand JIL to construct the projects’.

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

strength of the mortgage created by the corporate debtor JIL as collateralsecurity of the debts of its holding company JAL. Thereafter, on16.05.2018, NCLT accepted an application, that was moved by IRP on06.02.2018, for avoidance of certain transactions whereby the corporatedebtor JIL had mortgaged its properties as collateral securities for theloans and advances made by the lender banks and financial institutionsto JAL, as being preferential, undervalued and fraudulent. These aspectswere finally dealt with by this Court in the judgement dated 26.02.2020,as shall be noticed later.

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

22.1. In final judgement dated 09.08.2018 in the case of ChitraSharma (supra), this Court took note of the past proceedings and alsothe fact that when resolution plans were considered and examined bythe CoC, JAL too submitted its proposals which were rejected in viewof the bar contained in Section 29A IBC as also for the reason that JALfailed to convince the CoC of its ability to tie up the funds for construction.However, even the other plans could not muster the support of the requisitemajority in CoC. Accordingly, IRP informed NCLT that no resolutionplan was approved by the CoC even within the extended period forcompleting the CIRP, which came to an end on 12.05.2018. This Courttook note of the mandate of Section 33 IBC whereby liquidation followsupon rejection of resolution plan but then, noticed unanimity of theparties during the course of hearing that the liquidation of JIL was notgoing to subserve the interests of the homebuyers who had made valuableinvestments by contributing their hard-earned money in the hope ofobtaining roof over their heads. This Court also observed that homefor the family was considered to be part of the right to life and tooknote of the appeal made by the homebuyers to ensure complete justicerather than leaving them at the mercy of the liquidation process. Whileappreciating the substance of that plea, this Court nevertheless indicatedthe need to abide by the discipline of law and thereafter, proceeded totake comprehensive view of the scheme of IBC; and also underscoredthe fact that though IBC, as originally enacted, did not contain expressprovisions in relation to the interests of homebuyers but, their concernswere sought to be assuaged in the amendment brought about by theInsolvency and Bankruptcy (Amendment) Ordinance, 2018, which came

Ainto force on 06.06.2018 and whereby, the homebuyers were expresslybrought within the purview of financial creditors under the IBC. ThisCourt pointed out that now being duly recognised as financial creditors,the homebuyers were necessarily part of the CoC, constituted in termsof Section 21 IBC. This Court also took note of the relevant provisionsin the Regulations relating to the voting share of the respective financialBcreditors in CoC and selection of an authorised representative[34] torepresent financial creditors in particular class.

22.2. Proceeding further, this Court extensively referred to avariety of submissions made on behalf of JAL, seeking to explain theperspective of the developers with reference to the projects alreadyCaccomplished by them and the projects being under execution; and theirproposal to deposit post-dated cheques to the tune of INR 600 croreswith the registry of this Court, if they were allowed to dispose of someof the assets. The Court also took note of the fact that JAL had soughtdirections to NCLT to decide an application for sanctioning the schemeDof arrangement, propounded pursuant to restructuring agreementaccepted by 32 creditors. The request of JAL was to continue with thestay of liquidation proceedings against its deposit of post-dated chequesof INR 600 crores and also to stay the directions of this Court wherebyIRP was allowed to remain in management of the corporate debtor. TheCourt recorded the propositions of JAL as follows: -E“36. …..JAL has sought to assure that it would double the strengthof existing workers for the construction of its projects. JAL hasalso stated that it would deposit postdated cheques of Rs 600crores with the Registry of this Court. However, this is subject tothe condition that the Court should allow it to dispose of “identifiedFcement assets” including its cement plan (sic) at Rewa in MadhyaPradesh. In order to enable it to do so, JAL has sought directionto the NCLT at Allahabad to decide the application filed before itfor sanctioning scheme of arrangement, propounded pursuantto master restructuring agreement signed and accepted by theG32 creditors. JAL seeks to continue the stay of liquidationproceedings against its deposit of postdated cheques of Rs 600crores. JAL also seeks stay on the direction of this Court allowingthe IRP to remain in management.”

22.2.1. After careful consideration, this Court rejected the proposalsubmitted on behalf of JAL while explaining that accepting any suchproposal on behalf of JAL would cause serious prejudice to the disciplineof IBC. In that regard, this Court referred to the provisions contained inSection 29A of the Code and the background in which certain specifiedpersons were made ineligible to be the resolution applicants.[35] This Court,inter alia, observed and explained as under: -

“39. Clauses (c) and (g) of Section 29-A would operate as barto the promoters of JAL/JIL participating in the resolution process.Under clause (c), person who at the time of the submission ofthe resolution plan has an account which has been classified anon-performing asset under the guidelines of RBI or of financialregulator is subject to bar on participation for stipulated period.Under clause (g), person who has been promoter or in themanagement or control of corporate debtor in which preferentialtransaction, undervalued transaction, extortionate credittransaction or fraudulent transaction has taken place and in respectof which an order has been made by the adjudicating authorityunder the IBC is prohibited from participating. The Court mustbear in mind that Section 29-A has been enacted in the largerpublic interest and to facilitate effective corporate governance.Parliament rectified loophole in the Act which allowed backdoorentry to erstwhile managements in the CIRP. Section 30 IBC, asamended, also clarifies that resolution plan of person who isineligible under Section 29-A will not be considered by the CoC:”

22.3. Apart from the above, this Court also took note of variousgrounds urged on behalf of the homebuyers in opposition to the proposalso submitted and, after examining the matter in its entirety, this Courtwas convinced that JAL/JIL were lacking in financial capacity andresources to complete the unfinished projects; and allowing them to

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

Aparticipate in the process of resolution would render the statutoryprovisions nugatory.

22.3.1. Having regard to the issues involved herein, we are impelledto take note of the grounds so urged on behalf of the homebuyers andtheir due acceptance by this Court as follows: -

“40. Mr Anand Grover appearing on behalf of the homebuyershas opposed the proposal submitted by JAL/JIL on the followinggrounds:

40.1. Loans given to JAL have been classified as non-performingassets which renders JAL ineligible as resolution applicant/newCpromoter under Section 29-A(b) IBC;

40.2. In addition to Section 29-A(b), JAL is also disqualified underSection 29-A(g) IBC. Section 29-A(g) provides that personwho is engaged in fraudulent transaction should not be allowedto bid for another company as such person may again engage inDfraudulent transactions. In May 2018, the NCLT, Allahabad setaside fraudulent transaction involving mortgage of around 750acres of JIL’s land in favour of the lenders of JAL. This mortgagewas without any consideration and the land of 750 acres may beworth INR 5000 crores. The matter is now before the NCLAT,which has specifically framed an issue in this regard;

40.3. RBI is already before this Court seeking initiation ofinsolvency proceedings against JAL. JAL’s proposal, althoughpresented under the garb of protecting the interest of homebuyers,is aimed at the twin benefits of avoiding insolvency of JAL andFregaining control of JIL, thereby defeating RBI’s application forinsolvency proceedings of JAL as well as Section 29-A IBC;

40.4. The reasons pleaded by JAL/JIL to excuse their failure tocomplete the housing projects such as the stay order granted bythe National Green Tribunal have been rejected by the orders ofthe National Consumer Disputes Redressal Commission as thereGwas no stay. One such order was passed by NCDRC on 2-5-2016, in Developers Township Property Owners Welfare Societyv. Jaiprakash Associates Ltd.;

40.5. The contention of JAL that they faced impediments onaccount of the purported stay imposed by NGT is patently

incorrect as the stay by NGT was only on handing over possessionwithout an occupation certificate, which had no bearing on theconstruction. Moreover, JAL carried out construction during thatperiod as is evidenced inter alia by the fact that they raised demandsfor construction linked payments during this period;

40.6. During the pendency of the CIRP from 9-8-2017,construction work was done under the aegis of the IRP underwhom JAL was mere contractor;

40.7. The claim by JAL that flats have been delivered is afractured claim as flats have been delivered in incomplete stagesand are not in accordance with the allotment letters. The flooringis not complete, doors and windows are missing, no-objectioncertificates have not been obtained from the Fire Departmentand the offer of possession is being made without the occupationcertificate;

40.8. JAL does not have the capacity to deliver the flats and 22,000homebuyers are suffering due to delays of more than four yearsin completion of various projects of JAL and JIL;

40.9. Under the contracts, JAL and JIL are jointly andseverally liable to deliver the flats. If JAL was serious aboutdelivering the flats, the present situation would not havearisen. Further, JAL would have avoided the insolvencyprocess of JIL and would not have cast the homebuyers tothe uncertainties of insolvency;

40.10. There are serious doubts about the credentials ofJAL which has diverted funds from JIL towards its otherbusinesses. The applicant associations had appointed ASAFinancial Services to conduct an audit of JIL’s financials and theaudit report demonstrates that JAL may have diverted more thanINR 10,000 crores from JIL;

40.11.JAL is undergoing serious financial crisis. This is clearfrom the following facts:

40.11.1. JAL has not yet honoured the order of this Courtasking it to deposit Rs 2000 crores for protection of theinterest of the homebuyers. JAL has paid only Rs 750 croresout of Rs 2000 crores, after the expiry of almost 10 months

Afrom 11-9-2017 which was the date of the initial order ofthis Court;

40.11.2. JAL has failed to pay even the latest instalment ofRs 1000 crores by 15-6-2018 in accordance with the orderof this Court dated 16-5-2018;

B40.11.3. JAL is defaulter of more than 30 banks to the extent ofaround Rs 30,000 crores. JAL has also defaulted on fixed deposits,foreign currency convertible bonds and payments to NoidaAuthority;

40.11.4. Even in the latest proposal, the proposal to depositCRs 600 crores is spread over time indicating that JAL has noresources; and

40.11.5. The proposal of doubling the strength of workers from4000 to 8000 would only mean doubling the strength from 17workers per tower to 35 workers per tower (228 towers to beDbuilt by 8000 workers). This would amount to 2 workers in eachfloor of 4 flats (21,532 flats in 228 towers by 8000 workers). Atthis rate, completion of flats may take several years.

41. Similar submissions have been urged on behalf of thehomebuyers by other learned counsel.

42. The bar under Section 29-A would preclude JAL/JILfrom being allowed to participate in the resolution process.Moreover, the facts which have been drawn to the attentionof the Court leave no manner of doubt that JAL/JIL lackthe financial capacity and resources to complete theFunfinished projects. To allow them to participate in theprocess of resolution will render the provisions of the Actnugatory. This cannot be permitted by the Court.”

(emphasis in bold supplied)

22.4. It was, however, submitted on behalf of JAL/JIL that withGexpiry of timelines for CIRP, the only option would be to liquidate thecorporate debtor which may not be in the interest of homebuyers and inthat situation, the only way out would be to provide for an arrangementoutside the provisions of IBC. It was also submitted that unless groupof independent professionals came to conclusion that it was notHfinancially viable for JAL/JIL to complete the remaining work in time-

bound manner, their role as developers should not be discounted. Hence,it was submitted that an independent committee of experts be constitutedby the Court to evaluate the financial capability of JAL/JIL to continueexecuting the ongoing projects. It was also submitted that only 8% ofthe homebuyers had opted for refunds while 92% had chosen not toclaim refunds, thereby implying confidence in the ability of JIL/JAL tocomplete the project. However, on the other hand, the homebuyersuniformly opposed the submissions so made and it was urged before theCourt that they had no confidence in the ability of either JIL or JAL tocomplete the outstanding projects. In the third dimension, it was submittedon behalf of the IRP that Court may revive the CIRP by extending thetime specified in IBC in order to enable fresh consideration to be madeof the prospect for resolution which would take into account the interestsof homebuyers under the amended IBC; and the second option wouldbe to appoint committee under the supervision of the Court to explorethe possibility of resolution which would obviate the need for liquidation.Having pondered over the diverse propositions, the requirement ofbalancing the discipline of the Code, to do complete justice and to securethe interests of all the concerned, this Court found it just and proper toaccept the suggestion that CIRP be revived and CoC be reconstitutedas per the amended provisions of IBC with recourse to the powers underArticle 142 of the Constitution of India. This Court observed and held asunder: -

“47. In considering the rival submissions, several important facetsof the case need to be underscored.

47.1. First and foremost, the CIRP was initiated on 9-8-2017,following the order of NCLT admitting the proceedings. The periodof 180 days for concluding the CIRP came to an end on 6-2-2018and the extended period ended on 12-5-2018. When the CIRPwas initiated and until the period of 270 days concluded, thehomebuyers did not have the status of financial creditors underthe provisions of IBC. They had no statutory voting rights in theCoC. Under the interim directions of this Court, workablearrangement was sought to be put into place by appointing arepresentative of the homebuyers on the CoC to facilitate theirinterests being duly borne in mind. But the point to be noted is thatin the absence of statutory recognition of the position of thehomebuyers as financial creditors, the law did not allow for real

ABC

and substantive entitlements to them in the CoC. These statutoryentitlements have been brought in by the Ordinance in order torecognise the vital interests of the homebuyers in real estateproject and to allow them statutory status in the insolvencyresolution process. Unfortunately by the time that the Ordinancecame into being on 6-6-2018, the period of 270 days had expired;the resolution plan of Lakshdeep was rejected and the IRPinformed NCLT that no resolution plan had been approved withinthe extended period of 270 days on 12-5-2018.

47.2. Having regard to the material change which has beenbrought about by the amendment of the IBC by theOrdinance and the fact that this Court has been in seisin ofthe proceedings to ensure that the homebuyers areprotected, we are of the view that it is but appropriate andto do complete justice to secure the interests of allconcerned that the CIRP should be revived and CoCreconstituted as per the amended provisions to include the

homebuyers. In the facts of the present case, recourse to thepower under Article 142 would be warranted to render completejustice. Parliament has undoubtedly provided period of 180 daysand an extended period of 90 days to complete the process. Butin the present case peculiar situation has arisen as result ofwhich the status of the homebuyers which had not been recognisedprior to 6-6-2018 has now been expressly recognised as resultof the amending Ordinance.

47.3. The learned counsel for the IRP submitted that in the CoCwhich will be reconstituted under the amended IBC, thehomebuyers would have substantial voting power so as to beable to effectively protect their interests. Moreover, this Courtshould follow the discipline of IBC which has been enacted byParliament specifically to streamline the resolution of corporateinsolvencies. Matters involving corporate insolvencies requireexpert determination. The legislature has made specific provisionswhich are conceived in public interest and to facilitate goodcorporate governance. The Court should not take upon itself theburden of supervising the intricacies of the resolution process.Accepting the suggestion of Mr Nariman (and one of the twooptions proposed by Mr Tripathi) of the Court appointing

committee to supervise the resolution process outside IBC willinvolve the Court in an insuperable burden of evaluating intricatematters of financial expertise on which Parliament has legislatedto create specific mechanisms.

47.4. We are emphatically of the view that it would not beappropriate for the Court to appoint committee to oversee theCIRP and assume the task of supervising the work of theCommittee. We must particularly be careful not to supplantthe mechanisms which have been laid down in the IBC bysubstituting them with mechanism under judicialdirections. Such course of action would in our view not beconsistent with the need to ensure complete justice under Article142, under the regime of law. Hence, the power under Article 142should be utilised at the present stage for the limited purpose ofrecommencing the resolution process afresh from the stage ofappointment of IRP by the order dated 9-8-2017 and resultantlyrenew the period which has been prescribed for the completionof the resolution process. We have furnished above, the reasonsfor doing so. Chief amongst them is the fact that in the presentcase the period of 270 days expired before the Ordinanceconferring statutory status on homebuyers as financial creditorscame into existence. In the circumstances, it would benecessary to revive the period prescribed by the statuteby another 180 days commencing from the date of thisorder. During this period, the IRP shall follow the provisionsof the IBC afresh in all respects. new CoC should beconstituted in accordance with the amended provisions IBCto enforce the statutory status of the allottees as financialcreditors. We also clarify that apart from the three bidders whosebids were found to be eligible by the IRP, it would be open to theIRP to invite fresh bids to facilitate wider field of choice beforethe CoC. In that process, the offers made by the intervenors inthese proceedings can also be considered by CoC anew. We arenot inclined to evaluate the merits of the bids submitted by thebidders who were left in the fray, two of whom have intervened.All bids must follow the discipline IBC. We have, however,not accepted the submission to allow JIL or JAL and theerstwhile promoters to participate in the process. Theirparticipation is expressly prohibited by Section 29-A and

[2021] 12 S.C.R.

we decline to make any exception which would breach salutaryand express provision made in the IBC.”

(emphasis in bold supplied)

22.5. Thereafter, this Court also took into consideration thesubmissions made on behalf of some of the homebuyers for issuance ofBdirections to facilitate pro rata disbursement of INR 750 crores lying indeposit pursuant to the interim directions. This Court observed that evenwhen the claim of the refund seekers was to be considered with empathy,such request could not be acceded to and specified four major reasonsfor declining this prayer. The consideration of this Court in relation to theCsaid sum of INR 750 crores, being also directly relevant for the presentpurpose, could be usefully extracted as under: -

“48. As we have stated earlier, an amount of Rs 750 crores islying in deposit before this Court pursuant to the interim directions,on which interest has accrued. The homebuyers have earnestlyDsought the issuance of interim directions to facilitate pro ratadisbursement of this amount to those of the homebuyers who seeka refund. We are keenly conscious of the fact that the claim ofthe homebuyers who seek refund of monies deserves to beconsidered with empathy. Yet, having given our anxiousconsideration to the plea and on the balance, we are not inclinedEto accede to it for more than one reason.

48.1. Firstly, during the pendency of the CIRP, it would as matterof law, be impermissible for the Court to direct preferentialpayment being made to particular class of financial creditors,whether secured or unsecured. For the present, we leave openFthe question as to whether the homebuyers are unsecured creditors(as was urged by Mr Tripathi) or secured creditors (as was urgedby counsel appearing for them). Directing disbursement of theamount of Rs 750 crores to the homebuyers who seekrefund would be manifestly improper and cause injustice toGthe secured creditors since it would amount to preferentialdisbursement to class of creditors. Once we have takenrecourse to the discipline IBC, it is necessary that itsstatutory provisions be followed to facilitate the conclusionof the resolution process.

48.2. Secondly, the figures which have been made availablepresently, following the opening of the web portal by the AmicusCuriae, indicate that 8% of the homebuyers have sought refundof their monies while 92% would evidently prefer possession ofthe homes which they have purchased. We cannot be unmindfulof the interests of 92% of the homebuyers many of whomwould also have obtained loans to secure home. Theywould have legitimate grievance if the corpus of Rs 750crores (together with accrued interest) is distributed to thehomebuyers who seek refund. The purpose of the processenvisaged by IBC for the evaluation and approval of resolutionplan is to form composite approach to deal with the financialsituation of the corporate debtor. Allowing refund to one classof financial creditors will not be in the overall interest of acomposite plan being formulated under the provisions ofthe IBC.

48.3. Thirdly during the course of the hearing, the Court has beenapprised of the concerns of the secured creditors, chief amongthem being IDBI Bank Ltd. In its submissions before this Court,IDBI Bank has emphasised that one of the major reasons for theenactment of IBC was to protect the interest of lenders. The debtowing to the banks and financial institutions has been secured bythe assets of JIL, to protect their interests. This debt originates inthe public deposits of the banks and financial institutions, who areanswerable to their stakeholders.48.4. Fourthly, RBI has moved this Court for permission to initiatean insolvency resolution process. Parliament enacted the BankingRegulation (Amendment) Act 2017 by introducing Section35-AA and Section 35-AB into the Banking Regulation Act 1949.The amendment empowers the Central Government to authoriseRBI to issue directions to any banking company to initiate aninsolvency resolution process in respect of default as understoodunder the IBC. Such an order was issued by the CentralGovernment on 5-5-2017. The RBI constituted an Internal AdvisoryCommittee (IAC) consisting primarily of its independent Directors.The IAC took up for consideration accounts which were classifiedeither partly or wholly non-performing from amongst the top 500exposures in the banking system as on 31-3-2017. As first step,

Athe IAC recommended all such non-performing asset accountswith fund and non-fund based outstandings exceeding Rs 5000crores. The IAC has initially taken up twelve accounts involvingtotal exposure of Rs 1,79,769 crores. JIL was one of the twelveaccounts in respect of which directions have been issued to banksfor initiating insolvency resolution. Subsequently, the IACBrecommended that in respect of those accounts where 60% ormore had been classified as NPAs as on 30-6-2017, banks maybe directed to implement viable resolution plan within six monthsfailing which the accounts may be directed for reference underthe IBC by 31-12-2017. JAL was one such entity. No viableCresolution plan could be found as result of which it is also requiredto be referred for CIRP. RBI has carried out this exercise as amatter of economic policy in its capacity as the prime bankinginstitution in the country, entrusted with supervisory role, andthe power to issue binding directions……..”

(emphasis in bold supplied)

22.6. Having said so, this Court acceded to the request made onbehalf of the RBI to initiate CIRP against JAL under IBC and thereafterproceeded to conclude on the matter with the following directions: -

“50. We, accordingly, issue the following directions:

50.1. In exercise of the power vested in this Court under Article142 of the Constitution, we direct that the initial period of 180days for the conclusion of the CIRP in respect of JIL shallcommence from the date of this order. If it becomesnecessary to apply for further extension of 90 days, weFpermit the NCLT to pass appropriate orders in accordancewith the provisions of the IBC;

50.2. We direct that CoC shall be constituted afresh inaccordance with the provisions of the Insolvency andBankruptcy (Amendment) Ordinance, 2018, moreGparticularly the amended definition of the expression“financial creditors”;

50.3. We permit the IRP to invite fresh expressions ofinterest for the submission of resolution plans by applicants,in addition to the three shortlisted bidders whose bids or, asHthe case may be, revised bids may also be considered;

50.4. JIL/JAL and their promoters shall be ineligible to participatein the CIRP by virtue of the provisions of Section 29-A;

50.5. RBI is allowed, in terms of its application to this Court todirect the banks to initiate corporate insolvency resolutionproceedings against JAL under the IBC;

50.6. The amount of Rs 750 crores which has been depositedin this Court by JAL/JIL shall together with the interestaccrued thereon be transferred to NCLT and continue toremain invested and shall abide by such directions as maybe issued by NCLT.”

(emphasis in bold supplied)

23. Thus, the ternary, of anxiety on the part of stakeholders toavoid liquidation of the corporate debtor JIL; of due recognition by thelegislature of the homebuyers as financial creditors; and concern of thisCourt to do complete justice in the cause while maintaining the disciplineof law, led to the improvisation in Chitra Sharma, as noticeable in thepreceding paragraphs, with revival of CIRP in relation to the corporatedebtor JIL and re-constitution of CoC with the basic aim to ensure theresolution of insolvency of the corporate debtor JIL by way of the methodsenvisaged by, and permissible under, the Code.

Another round in this Court and further enlargement oftime for CIRP in question.

24. However, this resolution process concerning the corporatedebtor JIL again landed in rough weather, now due to passage of time atdifferent stages while dealing with another grey area i.e., method ofcounting of votes in the Committee of Creditors, which led to anotherround of litigation; and this Court had to again invoke its plenary powersto salvage the situation in the judgment dated 06.11.2019 in the case ofJaiprakash Associates Ltd. (supra). For their relevance, theobservations made and directions issued in that case may also berecapitulated.

25. The second round of litigation concerning this CIRP came upto this Court in the following circumstances:

25.1. Consequent to the aforesaid directions in the case of ChitraSharma, the matter proceeded before the NCLT being the AdjudicatingAuthority. The IRP issued public notice inviting claims from all the

Astakeholders of JIL, including the homebuyers and submitted his reporton formation of the Committee of Creditors before the AdjudicatingAuthority on the following basis:

37.3% in case of financial institutions,

62.3% homebuyers, andB

0.4% fixed deposit holders.

25.2. However, on 17.09.2018, an application came to be madebefore the Adjudicating Authority by one of the associations of homebuyersseeking clarification as to the manner in which the voting percentage ofCthe homebuyers would be reckoned. The two members of NCLTexpressed difference of opinion on the issue as result of which, referencewas made to the President of NCLT to place the matter before the thirdmember. Eventually, an order was passed by the third member on24.05.2019. This order was challenged by one of the associations ofhomebuyers before NCLAT. In the meantime, IDBI Bank filed anDapplication before NCLT for excluding the period of pendency of thesaid application for clarification regarding the manner of counting thevotes of the concerned financial creditors, from the period of 270 daysfor completion of CIRP. However, during the pendency of such anapplication, the NCLT, by its order dated 06.05.2019, called upon theEauthorities, the representatives of allottees and others to file reply on thenecessity to proceed further with CIRP for considering the resolutionplan received from the concerned bidder. The IDBI Bank assailed thisorder of NCLT by way of another appeal before the NCLAT.25.3. The aforesaid two appeals were decided together byFNCLAT by way of its judgment dated 30.07.2019. The NCLAT tooknote of the fact that no regulation had been framed under the Code as tohow the voting share of thousands of allottees (homebuyers) would becounted when all of them fell within the meaning of ‘financial creditors’and hence, were the members of CoC. The NCLAT observed that thishad been an extraordinary situation where the law was silent and thereGwas no guideline which led to difference of opinion between the twomembers and the matter was finally decided by the third member. TheNCLAT opined that in the given situation, certain period could be excludedwhile counting the total period of 270 days. In this judgement dated30.07.2019, NCLAT provided for exclusion of 90 days for the purposeof counting 270 days of CIRP from the date of receipt of the copy of itsH

judgement. The NCLAT also commented that the aforesaid exclusionwas being provided to enable calling of fresh resolution plans but reiteratedthat no liberty was available to JAL in view of the observations anddecision of this Court in Chitra Sharma (supra).

25.3.1. Those observations and directions of NCLAT in itsjudgment dated 30.07.2019, as reproduced in the judgement of this Courtdated 06.11.2019, could be usefully recounted as follows: -

“22. In view of the aforesaid extraordinary situation, we are ofthe view that the period from 17-9-2018 i.e. the date of applicationfiled by the association of the allottees for clarification for theorder and till the final decision i.e. 4-6-2019 i.e. the date the matterwas finally decided by the Third Hon’ble Member (total 260 days),can be excluded for the purpose of counting the 270 days.However, as the matter is pending since long, we are not inclinedto exclude the total period of 260 days and instead in the interestof the allottees, we exclude 90 days for the purpose of countingthe period of 270 days of “corporate insolvency resolution process”,which should be counted from the date of receipt of the copy ofthis order.

23. The aforesaid period is excluded to enable the “resolutionprofessional”/”committee of creditors” to call for fresh “resolutionplans” and to consider them, if so required after negotiations passappropriate order under sub-section (5) of Section 30 of the I&BCode preferably within period of 45 days. Rest of the period of45 days margin is given to remove any difficulty and appropriateorder as may be passed by the adjudicating authority.

The voting share of the allottees should be counted in terms of“I&B Code” as existing on the date of voting/”Regulation” and/or in accordance with majority decision of the adjudicatingauthority.

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

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

26. The aforesaid judgement of NCLAT was assailed in this Courtby JAL and by the Wish Town Homebuyers’ Welfare Society. Theseappeals raised essentially two issues before this Court: one, as to whetherNCLT or NCLAT had the power to exclude any period from the statutoryperiod in exercise of inherent powers sans any express provision in theCCode in that regard; and second, whether it was open to allow the bidderwhose resolution plan had already been rejected by CoC, to submit revisedplan or to invite fresh resolution plans to be considered by CoC after thestatutory period specified for submission of such plans?

27. After cogitating over the submissions made in support of theDappeals, it was clear that the inevitable fallout of accepting the standtaken by the appellants would be to set aside the impugned judgmentand relegate the parties to situation where the only option would be toproceed with the liquidation process concerning JIL on the premise thatno resolution plan was received before the expiry of the period of CIRPEor being case of rejection of the resolution plan under Section 31 of theCode. However, during the arguments, there was complete unanimity(again) between all the stakeholders, including the appellants before thisCourt, that the liquidation of JIL must be eschewed as it would do moreharm to the interests of the stakeholders, in particular the large numberof homebuyers.F

28. In the given set of circumstances and considering the positiontaken by the stakeholders, this Court found it neither necessary norappropriate to dilate on the issues as urged and instead, proceeded toagain exercise the plenary powers under Article 142 of the Constitutionof India in order to ensure substantial justice in the cause. In the process,Gthis Court, of course, rejected the suggestions given by section ofhomebuyers to keep the entire process outside the dispensation underthe Code with reference to the observations already made in the case ofChitra Sharma (supra), but found it justified to modulate part of suchdirections, to the extent such modulation would not stand in conflict withHthe legislative intent and subserve the cause of justice, by providing

window to find out viable solution. This Court also took note of variousamendments brought about to the Code and the CIRP Regulations; andthe overall circumstances of the case, where delay in completion ofCIRP relating to JIL was attributable to law’s delay and neitherhomebuyers nor other financial creditors were to be blamed for pendencyof proceedings before NCLT and before NCLAT. In the peculiar, ratherextraordinary, situation obtaining in the matter, this Court considered itappropriate to ensure that an attempt was made for revival of thecorporate debtor JIL, lest it was exposed to liquidation process and forthat matter, to permit IRP to reissue the request for resolution plan to thetwo bidders who had earlier submitted the plans and to call upon them tosubmit revised resolution plans, which could be placed before CoC. Inthe process, this Court also took note of the time limit for completion ofinsolvency resolution process as per third proviso to Section 12(3) of theCode, which came into effect from 16.08.2019. The relevant observationsof this Court could be usefully reproduced as under: -“16. Suffice it to note that an extraordinary situation had arisenbecause of the constant experimentation which went about atdifferent level due to lack of clarity on matters crucial to thedecision-making process of CoC. Besides that, in view of therecent legislative changes, the scope of resolution plan standsexpanded which may now include provision for restructuring thecorporate debtor including by way of merger, amalgamation anddemerger and more so the power bestowed on CoC to considernot only the feasibility and viability of the resolution plan but alsothe manner of distribution proposed, which may take into accountthe order of priority amongst the creditors. Additionally, the recentlyinserted Section 12-A enables the adjudicating authority to allowthe withdrawal of an application filed under Section 7 or Section 9or Section 10, on an application made by the applicant with theapproval of 90% voting share of the CoC. Similarly, sub-clause(7) of Regulation 36-B inserted with effect from 4-7-2018, dealingwith the request for resolution plans unambiguously postulatesthat the resolution professional may, with the approval of theCommittee, reissue request for resolution plans, if the resolutionplans received in response to earlier request are not satisfactory,subject to the condition that the request is made to all prospectiveresolution applicants in the final list. In the present case, finallyonly two bidders had participated and submitted their resolution

plan which was placed before CoC and stated to have beenrejected. However, applying the principle underlying Regulation36-B(7), we deem it appropriate to permit IRP to reissue requestfor resolution plans to the two bidders (Suraksha Realty andNBCC) and/or to call upon them to submit revised resolutionplan(s), which can be then placed before CoC for its dueconsideration.

17. In the present case, as aforementioned, there is unanimityamongst all the parties appearing before this Court including theresolution applicant that liquidation of JIL must be eschewed andinstead an attempt be made to salvage the situation by finding outsome viable arrangement which would subserve the interests ofall concerned.

18. In view of the legislative changes referred to above, we areof the considered opinion that we need to and must exercise ourplenary powers to make an attempt to revive the corporate debtor(AIL), lest it is exposed to liquidation process under Chapter IIIof Part II of the I & Code. We are inclined to do so because theproject has been implemented in part and out of over 20,000homebuyers, substantial number of them have been put inpossession and the remaining work is in progress and in somecases at an advanced stage of completion. In this backdrop, itwould be in the interest of all concerned to accept viable planreflecting the recent legislative changes.

19. Indeed, the third proviso to Section 12(3) predicates time-limitfor completion of insolvency resolution process, which has comeinto effect from 16-8-2019. The same reads thus:

“Provided also that where the insolvency resolution process ofa corporate debtor is pending and has not been completed withinthe period referred to in the second proviso, such resolutionprocess shall be completed within period of ninety days fromthe date of commencement of the Insolvency and BankruptcyCode (Amendment) Act, 2019.”

Taking an overall view of the matter, we deem it just, proper andexpedient to issue directions under Article 142 of the Constitutionof India to all concerned to reckon 90 days’ extended period fromthe date of this order instead of the date of commencement of the

Insolvency and Bankruptcy Code (Amendment) Act, 2019. Thatmeans, in terms of this order, the CIRP concerning JIL shall becompleted within period of 90 days from today.

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

29. In the given circumstances, this Court passed the followingorder for the purpose of substantial and complete justice and in the interestof all the stakeholders: -

“21. Accordingly, we pass the following orders to do substantialand complete justice to the parties and in the interest of all thestakeholders of JIL:

21.1. We direct the IRP to complete the CIRP within 90 daysfrom today. In the first 45 days, it will be open to the IRP to inviterevised resolution plan only from Suraksha Realty and NBCCrespectively, who were the final bidders and had submittedresolution plan on the earlier occasion and place the revised plan(s)before CoC, if so required, after negotiations and submit report tothe adjudicating authority NCLT within such time. In the secondphase of 45 days commencing from 21-12-2019, margin is providedfor removing any difficulty and to pass appropriate orders thereonby the adjudicating authority.

21.2. The pendency of any other application before the NCLT orNCLAT, as the case may be, including any interim direction giventherein shall be no impediment for the IRP to receive and processthe revised resolution plan from the above named two biddersand take it to its logical end as per the provisions of the I & BCode within the extended timeline prescribed in terms of this order.

21.3. We direct that the IRP shall not entertain any expression ofinterest (improved) resolution plan individually or jointly or in concertwith any other person, much less ineligible in terms of Section 29-A of the I & Code.

21.4. These directions are issued in exceptional situation in thefacts of the present case and shall not be treated as precedent.

A21.5. This order may not be construed as having answered thequestions of law raised in both the appeals, including as recognitionof the power of NCLT/NCLAT to issue direction or order notconsistent with the statutory timelines and stipulations specifiedin the I & Code and the Regulations framed thereunder.”

B30. The passages above-quoted give insight as to what had beenthe concern of all and what had been the intent of the orders passed bythis Court in its plenary powers. It is not far to seek that even whereCIRP in relation to JIL had been facing one hurdle after another, theprincipal part of delay was not attributable to any of the stakeholders;and then, all through, there had been unanimity that liquidation of JILCwas to be avoided and viable solution ought to be searched. Theaforesaid directions in the judgement dated 06.11.2019 ultimately led therevised resolution plans by the two applicants being placed before CoCand voting of CoC in favour of the resolution plan proposed by NBCCwhich is the bone of contention in this batch of matters.

31. For completion of the narrative in regard to the second roundof litigation, we may also point out that after the judgment dated06.11.2019, even though the process relating to the submission of revisedplans and consideration by CoC took place, but culmination of the proposalin approval of the resolution plan got delayed. Hence, IRP filed oneEmiscellaneous application in this Court (M.A. No. 540 of 2020), pointingout various difficulties and unavoidable circumstances which had causedthe delay though the proposal was submitted within the time frameprescribed. While accepting the reasons stated in the application so filedby the IRP, this Court, by another order dated 03.02.2020, extended thetime by four weeks for approval of the resolution plan. This is how theFprocess of approval of resolution plan culminated in the impugned orderdated 03.03.2020 by the Principal Bench of NCLT at New Delhi.[36]

32. Before dilating on the resolution plan in question, it appearsjust and proper to narrate the features relating to yet another litigationdirectly impacting the CIRP concerning the corporate debtor JIL. AsGindicated, that litigation had been in relation to the application made by

36 It may be indicated in the passing that later on, few miscellaneous applications asalso interlocutory applications were filed in relation to the case of Chitra Sharma(supra), most of which were disposed of by this Court on 18.12.2019, in view of theaforesaid order dated 06.11.2019. Having regard to the points requiring determinationHherein, it is not necessary to dilate on those applications.

IRP for avoidance of certain transactions as preferential; and in relationto the claim of some of the lender institutions of JAL to be recognised asfinancial creditors of JIL on the strength of the mortgage transactionswhereby the property of JIL was mortgaged to secure the debts of JAL.

Yet another litigation in this Court relating to preferentialtransactions and lenders of JAL

33. The other litigation concerning this CIRP, leading to thejudgment dated 26.02.2020 in the case of Anuj Jain (supra), came up inthe following circumstances:

33.1. As already noticed, even during the pendency of proceedingsin this Court in the case of Chitra Sharma (supra), the IRP had filed anapplication on 06.02.2018 seeking avoidance of certain transactions,whereby the corporate debtor had mortgaged several parcels of its landas collateral security for the loans and advances made by the lenderbanks and financial institutions to the holding company JAL. The IRPalleged that the transactions in question were preferential, undervaluedand fraudulent, in terms of Sections 43, 45 and 66 of the Code. By itsorder dated 16.05.2018, the NCLT accepted the application so made byIRP in relation to six out of seven transactions that were put in questionand held that those transactions were to be avoided as being fraudulent,preferential and undervalued. In other words, in relation to such sixtransactions, the security interest was ordered to be discharged and theproperties involved therein were vested in the corporate debtor, withrelease of encumbrances. In appeal, the NCLAT, however, took anentirely opposite view of the matter and by its judgement dated01.08.2019, upturned the order so passed by NCLT, while holding thatthe transactions in question do not fall within the mischief of beingpreferential or undervalued or fraudulent; and that the lenders in question(the lenders of JAL) were entitled to exercise their rights under theCode. Aggrieved, the IRP as also one of the creditors of the corporatedebtor JIL and the associations of homebuyers preferred appeals in thisCourt.

33.2. Apart from the above, during the course of CIRP, two ofthe lender banks of JAL sought inclusion in the category of financialcreditors of JIL but IRP did not agree and declined to recognise them assuch. Being aggrieved, the said banks preferred separate applicationsunder Section 60(5) of the Code before NCLT while asserting their

Aclaim to be recognised as financial creditors of the corporate debtor JIL,on account of the securities provided by JIL for the facilities granted toJAL. The NCLT rejected the applications so filed by the said banks, byway of its orders dated 09.05.2018 and 15.05.2018, while concludingthat on the strength of the mortgage created by the corporate debtorJIL, as collateral security of the debt of its holding company JAL, theBlenders of JAL could not be categorised as financial creditors of JIL.The appeals filed by the aggrieved lenders of JAL against the said ordersdated 09.05.2018 and 15.05.2018 were purportedly allowed as per theresult recorded in the impugned order dated 01.08.2019. Aggrieved, oneof the lenders of the corporate debtor JIL preferred an appeal in thisCCourt, while asserting that such mortgagees could not be taken asfinancial creditors of the corporate debtor JIL.

34. The aforesaid two appeals, relating to avoidance of preferentialtransactions and the claim of lender banks of JAL to be recognised asfinancial creditors of JIL, were considered together and allowed by thisDCourt by way of the common judgement dated 26.02.2020 in the case of

Anuj Jain (supra).

34.1. As regards the transactions in question, this Court held thatthey had been of deemed preference to related party by the corporatedebtor JIL during the look-back period of two years and were coveredEwithin the period envisaged by Section 43(4) of the Code. This Courtalso held that clause (a) of sub-section (3) of Section 43 of the Codecalled for purposive interpretation so as to ensure that the provisionoperates in sync with the intention of legislature; and therefore, theexpression “or”, appearing as disjunctive between the expressions“corporate debtor” and “transferee”, ought to be read as “and”; so as toFbe conjunctive of the two expressions i.e., “corporate debtor” and“transferee”. Having interpreted the provision so, this Court held thatthe impugned transactions did not fall within the ordinary course of businessof the corporate debtor JIL and hence, were not of excepted transfers interms of Section 43(3) of the Code. Accordingly, this Court held as under:-G“Summation: The transactions in question are hit by Section43 IBC

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

had been justified in issuing necessary directions in terms of Section44 of the Code in relation to the transactions concerning PropertiesNos. 1 to 6. NCLAT, in our view, had not been right in interferingwith the well-considered and justified order passed by NCLT inthis regard.”

34.2. As regards the second question concerning the status ofthe lenders of JAL, this Court observed that when the transactions inquestion were found preferential and hit by Section 43 of the Code, theywere denuded of their value and worth; and the security interest createdby the corporate debtor JIL over the property involved in thosetransactions stood discharged in whole; and, therefore, such lenders ofJAL cannot claim any status as creditors of the corporate debtor JILmuch less as financial creditors. However, the question as regards thestatus of such lenders of JAL qua the corporate debtor JIL was examinedindependent of the findings that the transactions in question were hit bySection 43 of the Code, with the following observations: -“34.4. We may, of course, reiterate that in view of the conclusionthat we have reached in relation to the principal issue, thetransactions in question are denuded of their value and worth, perthe force of the order by NCLT under Section 44 of the Code,which has been approved by us. To be most specific, the securityinterests created by the corporate debtor JIL over the propertiesin question stand discharged in whole. Therefore, the respondentlenders cannot claim any status as creditors of the corporate debtorJIL and there could arise no question of their making any claim tobe treated as financial creditors as such. However, for its relevance,we deem it appropriate to determine the issue as to whether thelenders of JAL, because of creation of the mortgages in question,could be treated as financial creditors of JIL, independent of thefinding that the transactions in question are hit by Section 43 ofthe Code.”

34.3. Thereafter, this Court dealt with the rival submissions relatingto the status of such lenders of JAL and held that they, on the strength ofthe mortgages in question, might fall in the category of secured creditorsbut, for the reason that the corporate debtor did not owe them any financialdebt, such lenders of JAL were not falling in the category of financialcreditors of the corporate debtor JIL. This Court summed up theconclusion on this issue in the following terms: -

A“Summation on second issue

57. For what has been discussed hereinabove, on the issue as towhether lenders of JAL could be treated as financial creditors,we hold that such lenders of JAL, on the strength of the mortgagesin question, may fall in the category of secured creditors, but suchBmortgages being neither towards any loan, facility or advance tothe corporate debtor nor towards protecting any facility or securityof the corporate debtor, it cannot be said that the corporate debtorowes them any “financial debt” within the meaning of Section5(8) of the Code; and hence, such lenders of JAL do not fall in thecategory of the “financial creditors” of the corporate debtor JIL.”

35. It would be relevant to notice that the parcels of land formingthe subject of seven questioned transactions were admeasuring about858 acres; and while leaving 100 acres of land forming the subject ofseventh transaction, which was not declared as preferential, chunk of758 acres of land, which earlier carried encumbrances because of theDmortgages in favour of the lenders of JAL, got released with thejudgement delivered by this Court and stood vested in JIL free fromencumbrances. The judgement was delivered by this Court on 26.02.2020,after voting by CoC on the resolution plan in question but before theimpugned order of NCLT dated 03.03.2020.E36. The foregoing narrative in relation to the past litigations hasessentially been to flag and accentuate those attributes of the decisionsof this Court which carry their own relevance, bearing and implicationson the issues involved in the present batch of matters.

37. Continuing with the narrative, we may now take up theFimpugned resolution plan, propounded by the resolution applicant NBCCand voted in favour by CoC with an overwhelming majority of 97.36%.

The Resolution Plan

38. As noticed, by the order dated 06.11.2019, this Court directedIRP to complete the CIRP within 90 days from the date of the order;Gand for that matter, it was provided that in the first 45 days, it would beopen to the IRP to invite revised resolution plans only from the twoapplicants namely Suraksha Realty and NBCC, who were the finalbidders and had submitted resolution plans on the earlier occasion, andto place the revised plan(s) before the CoC.H

38.1. From the facts stated before us, it is borne out that therevised resolution plans were called from the said applicants and wereplaced for consideration in the 16[th] Meeting of CoC held on 07.12.2019.Having considered the resolution plans, the members of CoC requestedthe resolution applicants to improve their offers and thereupon, both theresolution applicants agreed to submit addendums to their revisedresolution plans. Accordingly, Suraksha Realty submitted an addendumto the resolution plan on 07.12.2019 and NBCC submitted its addendumto the resolution plan on 08.12.2019. Then, with the certificate dated08.12.2019 from IRP that the resolution plans submitted by SurakshaRealty and NBCC were fully compliant under Section 30(3) of the Coderead with Regulation 39(2) of the CIRP Regulations, the plans alongwith the respective addendums were put to e-voting from 9 a.m. of10.12.2019, until 11.59 p.m. of 16.12.2019.

38.2. In the voting by CoC, the resolution plan submitted by NBCCalong with addendum was approved by vote of 97.36% of voting shareof the financial creditors in favour. On the other hand, the plan submittedby Suraksha Realty could muster only vote of 2.12% of voting shareof the financial creditors. The voting results were circulated by the IRPto the members of CoC on 17.12.2019; and, on the instructions of CoC,the IRP issued the Letter of Intent on 17.12.2019, which was duly acceptedby NBCC.

38.3. In compliance of the order dated 06.11.2019 passed by thisCourt, the IRP filed the application bearing C.A. No. 5 of 2020 in C.P.(IB) No. 77/ALD/2017 seeking approval of the resolution plan of NBCCunder Section 30(6) read with Section 31 of the Code before the AllahabadBench of NCLT on 20.12.2019. Later on, the Principal Bench of NCLTat New Delhi transferred the proceeding to itself and that is how theimpugned order dated 03.03.2020 came to be passed by the AdjudicatingAuthority (NCLT, New Delhi) within the time allowed by this Court.

39. For its very nature and for various requirements of theprovisions contained in the Code as also in the CIRP Regulations, theresolution plan in question is vast document carrying business plans,financial proposals including that of treatment of creditors, equitycommitment, projected steps and expected reliefs and concessions. Weshall refer to the particular stipulation/s in this plan at the relevant stagewhile dealing with the specific issue related therewith. However, anoverview of the resolution plan shall be apposite to take note of its concept

674SUPREME COURT REPORTS

Aand salient features. In this regard, we may usefully reproduce thesummary of resolution plan placed before us by the IRP. This summaryis subdivided into different parts namely, (1) claims and their treatment;(2) implementation of the plan; (3) key reliefs sought for by NBCC; (4)status of project; and (5) annexure 1, being part of the implementationprocess.B

39.1. The summary of claims and their treatment under theresolution plan is as under: -

CDEFG

675ABCDEFGH

A39.2. In the summary of the implementation process, by way of aflow chart, various steps have been indicated which include formationof different SPVs; raising of fresh debts of about INR 2,000 crores bysecuritisation of Yamuna Expressway; transfer of rights of YamunaExpressway against equity shares and debt disbursement; transfer of1,526 acres of land worth INR 5,001 crores, bank loan of INR 5,000Bcrores and issuance of equity of INR 1 crore; diversification of JHL;infusion of INR 120 crores equity etc. etc.

39.2.1. The IRP has, in this summary, also indicated other keyimplementation provisions, most of which are the matters of contentionin this litigation. That summary reads as under: -C

“Other key implementation provisions

- Deemed approval of YEIDA for transfer of Land and Toll roadto designated SPV’s without incurring any cost such as stampduty, transfer charges, Etc.

- Liability for additional farmer compensation (presently sub-judice)not payable by JIL. Alternatively, if found payable, YEIDA tocollect is directly from end user.

- Transfer of INR 750 crores (plus interest) deposited by JAL,pursuant to the order of the Hon’ble Supreme Court to beEtransferred to JIL and to be used exclusively for construction ofhouses.

- JAL to pay amount due to JIL (approx. INR 500) (INR 716Crores on insolvency commencement date) to JIL.”

39.3. The key reliefs sought for by NBCC in the resolution planFare summarised as under: -

ABC

DEFGH

ABCD

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

679ABCDEFGH

ABCDEFG

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

Order dated 03.03.2020 by the Adjudicating Authority inapproval of the resolution plan with modifications

41. The order dated 03.03.2020, as passed by NCLT in exerciseof its jurisdiction under Section 31 of the Code, could be reasonablydivided in five segments. In the first place, the NCLT recounted therelevant background aspects leading to the CIRP in question and theorders passed by this Court in the aforementioned three rounds of litigationin the cases of Chitra Sharma, Jaiprakash Associates Ltd. and AnujJain (supra). Secondly, the NCLT dealt with the issue relating to thesaid INR 750 crores deposited by JAL in terms of the interim orderspassed by this Court in the case of Chitra Sharma and which was toabide by the directions of NCLT in terms of the final judgement in ChitraSharma. Thirdly, the NCLT examined the resolution plan andsummarised its propositions, projections and stipulations. Thereafter, inthe fourth segment, the NCLT dealt with the objections against theresolution plan by several persons/entities, including JAL and itsstakeholders, ICICI Bank, YEIDA, some of the aggrieved homebuyers,YES Bank and the agreement holders. In the fifth segment, the NCLTgenerally dealt with the clauses relating to the reliefs and concessions inthe resolution plan as also various other applications filed by differentstakeholders. For their relevance, the material observations and findingsof the Adjudicating Authority (NCLT) in its order dated 03.03.2020 couldbe relayed sequentially.

42. In the first part of the order dated 03.03.2020, the NCLTreferred to the very same background aspects which we have alreadyrecited hereinbefore, namely, the award of contract for construction ofExpressway to JAL, incorporation of JIL as special purpose vehicle, theConcession Agreement extended by YEIDA, taking up of the projectsby JIL for laying of Expressway and developing residential flats, JIL

Ahaving collected money from homebuyers but having failed to deliverflats to them and having also defaulted in payment of loan instalments,initiation of CIRP and litigation in this Court in the case of Chitra Sharma(supra). The NCLT traversed through all the aforementioned relevantinterim orders and final judgment in Chitra Sharma. The NCLT alsotook note of the directions of this Court in the judgment dated 06.11.2019Bin the case of Jaiprakash Associates Ltd. and in the judgment dated26.02.2020 in the case of Anuj Jain.

43. In the second part, in relation to the said amount of INR 750crores and accrued interest thereupon, the NCLT took note of vastvariety of submissions made by different claimants, which may also beCusefully recounted as follows.

43.1. It was submitted on behalf of JAL, who moved anapplication seeking return of the said sum of INR 750 crores, that whenthe Supreme Court had declined the request of homebuyers for prorata distribution of the said amount and had transferred the same toDNCLT, the amount could not be appropriated for any purpose other thanrefunding it to JAL. It was submitted that the said deposit of INR 750crores had acquired the character of constructive trust and this amountwas required to be refunded to JAL on the principles enshrined in Sections77 and 83 of the Indian Trusts Act. It was further submitted that sinceEthe Supreme Court had nowhere directed either to pay the remainingbalance or to utilise this money towards refund of homebuyers’ money,it had to be treated as the money of JAL and returned accordingly. Itwas also submitted that as per CIRP Regulations 36 and 37, only theproperties of the corporate debtor were subject to the resolution processand the amount deposited by JAL, being not the asset of the corporateFdebtor, was required to be returned. Such submissions of JAL were dulysupported by ICICI Bank, the leader of the consortium of banks, whohad lent money to JAL and it was further submitted that in the case ofChitra Sharma (supra), the Supreme Court directed the promoters ofJAL to deposit INR 2,000 crores in order to ensure that the homebuyersGwere not left remediless and their money could be refunded but afteramendment to IBC, the Supreme Court neither ordered such refund norinsisted upon the promoters of JAL to deposit the remaining balance ofINR 1,250 crores, but simply delegated this work to the NCLT to proceedwith CIRP and to approve the resolution plan in accordance with IBC. Itwas submitted on behalf of ICICI Bank that there being no specificH

direction by the Supreme Court to utilise this money for the financialcreditors of JIL, the same was required to be returned to JAL. Thepromoter-directors of the corporate debtor also filed an affidavit statingthat no part of this money was deposited by JIL and the same was nothanded over to JIL for any purpose whatsoever; and that the SupremeCourt had never held that JAL was legally bound to contribute fundsrequired for completing the projects of JIL. On similar lines, the appellantPankaj Sharma and other homebuyers of JAL also prayed for release ofthe said amount to JAL so that it could be utilised for the homebuyers ofJAL. It was submitted that JAL itself was in financial distress and ifsuch huge amount belonging to it was given to another company, theinterests of the stakeholders of JAL would be jeopardised. It alsosubmitted that the purpose for which the deposit was made had not beenfulfilled and it was not meant for construction of the flats of JIL and thismoney, being not an asset of JIL, should be returned to JAL.43.2. In opposition, it was submitted by the lenders of JIL, led byIDBI Bank that in the judgement dated 09.08.2018, the Supreme Courtwas conscious of the fact that this amount could not be disbursed only toone class of creditors and hence, it was not allowed to be used for thepurpose of the refund seekers. It was further submitted that the corporatedebtor was generating revenue through collection from YamunaExpressway but this money, rather than being utilised for servicing theloans provided by the institutional lenders, was being utilised towardsconstruction work and for running the corporate debtor as goingconcern; and in this scenario, the said amount of INR 750 crores withinterest should be distributed on pro rata basis to the lenders of JIL inaccordance with the voting share in the CoC. Along with others, IRPalso made submissions that there were 32,754 allottees to whom flatswere sold as per the records of JIL and as on 05.10.2018, 24,296 ofthem were waiting for possession of their flats; and if the money wasordered to be released for construction and development of the projectsof the corporate debtor, it would provide boost to the constructionactivity and serve the larger purpose. It was submitted by IRP that asper the orders passed by this Court in Chitra Sharma (supra), thismoney was intended to protect the interests of homebuyers only. It wasalso pointed out that as per the tripartite agreement involving JAL, JILand homebuyers, JAL was the developer of the project and wasresponsible for delivering possession of flats to the homebuyers. TheIRP also referred to various orders passed by this Court in the course of

Aproceedings in the case of Chitra Sharma as also settlement proposalgiven by JAL on 15.02.2019, stating that the said sum of INR 750 croreswas to be utilised towards revival of the business of JIL irrespective ofthe outcome of legal proceedings. In the backdrop of these facts andcircumstances, it was submitted that the said amount being for the causeof homebuyers, it was not open to JAL or its lenders or promoters orBhomebuyers to seek reopening of the issue concluded by the decision ofthis Court.

43.3. Having noticed the length and breadth of the arguments onthe two sides, where one was supporting for utilisation of the said amountof INR 750 crores and accrued interest for the benefit of the homebuyersCof JIL and where other side was arguing for return of the money to JAL,the NCLT proceeded to consider as to how this money was to be dealtwith.

43.4. The NCLT referred to the background in which this Courthad passed the order for deposit of the said amount where promoter–Ddirectors of JAL and JIL were one and the same; and JIL/JAL hadfailed to deliver flats to the homebuyers of JIL within the timelines givenby them. The NCLT observed that in the orders of this Court, JIL/JALwere directed to deposit sum of INR 2,000 crores towards refund ofthe money of homebuyers; the Court had never treated that money asEthe property of JAL; and the only reason for this Court not distributingthe deposited amount to the homebuyers was that only 8% of themwere seeking refund whereas 92% had asked for possession of the flatsand, in order to avoid preferential treatment, this issue was relegated tothe NCLT. The NCLT further observed that though JAL was per se nota debtor to the homebuyers but, when the money had come on behalf ofFthe debtor in relation to debt obligation or for discharge of an obligation,neither the person depositing it could subsequently say that he was theowner of the money nor the money could be construed as trust money.The NCLT held that this money had to be utilised to the obligation owedto the creditors of the corporate debtor and any decision for refund ofGmoney to JAL would be overreaching the wisdom of the Supreme Court.The NCLT, accordingly, disposed of all the applications with respect tothe issue of INR 750 crores and held that this money is to be treated asthe asset of the corporate debtor. The relevant passages of theobservations and findings of NCLT in regard to this issue could beextracted as under: -H

“51. On reading the judgments and orders of Hon’ble SupremeCourt, it is evident that the Hon’ble Supreme Court is aware ofthe fact that JAL has deposited the money. It is aware of the factthat JIL money has gone to JAL for construction of the towers tothe homebuyers of JIL, it is fact that promoter-directors of JILand JAL are one and the same. It is fact that JIL/JAL failed todeliver flats to the homebuyers of JIL within the timelines givenby them. In all the orders of the Hon’ble Supreme Court, it hasonly been said that JIL/JAL shall deposit Rs. 2000 crore towardsthe refund of homebuyers money. It has not been treated thatmoney as the money of JAL. On reading all the orders of theHon’ble Supreme Court, all that could be ascertained is theHon’ble Supreme Court endeavoured to claw back thehomebuyers’ money from JIL and JAL. In that pursuance, JALdeposited Rs. 750 crore. The only criteria for not distributing thisRs. 750 crore to the homebuyers is that only 8% of the homebuyerssought for refund of the money whereas 92% homebuyers haveasked for flats, therefore to avoid preferential treatment, this issuehas been relegated to the NCLT to deal with in accordance withIBC. One more fact is, though Hon’ble Supreme Court initiallystayed the proceedings of CIRP, subsequently vacated the stayand allowed the IRP to proceed with CIRP.52. In the backdrop of these facts and in the light of submissionsmade by either side, let us see what the Honourable SupremeCourt held in Chitra Sharma “Directing disbursement of theamount of Rs. 750 Crore to the Homebuyers who seek refundwould be manifestly improper and cause injustice to theSecured Creditors since it would amount to preferentialtreatment to class of creditors” (Para 48.1 of Chitra Sharmacase (2018) 18 SCC). This being the observation, now the pointbefore us is how to go about it. It has not been said anywhere inthe observation that this money should go back to JAL. Moreoverthe Hon’ble Supreme Court has not asked JAL/JIL to deposit themoney on the condition that it would be returned to JAL in theevent it has not been distributed to JIL homebuyers. It has notbeen said anywhere that it is the money of JAL.

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

ABC

money. Once contract is not performed as stated under anagreement entered between the parties, if the party advancedmoney is entitled for refund of the money, the jural relation inbetween the person given the money and the person taken themoney will become creditor and debtor relation. When suchmoney has come back from the debtor to the creditor or to aperson in between for the cause of the creditor, it can never becalled as the money of the debtor, it has to be treated as moneyreturned to the creditor.

54. In this case, JAL has admittedly failed to complete the projectsas stated by JIL and JAL. It is not the case that this money wasgiven for charitable purpose. It is not the case that this moneywas deposited with the Hon’ble Supreme Court on the conditionthat it would be returned to JAL in the event it has not beendistributed to the homebuyers. As long as debtor is liable to paymoney to the creditor, once it has been deposited towards thatpayment, it can’t be stated that money belongs to the debtor.

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

57. No doubt money is fungible, but obligation to repay is notfungible, therefore when money is deposited or clawed back torepay it to the creditor, the money being fungible and there beingan obligation for repayment, it can no more be considered as moneyowned by the debtor. Though JAL is per se not debtor to theHomebuyers, when money has come on behalf of the debtor inrelation to debt obligation or for discharge of an obligation, theperson deposited it towards that obligation cannot subsequentlysay that he is the owner of the money, therefore entitled for returnof it.

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

is reached to the persons to whom it is intended to. In the case oftrust, the owner is under no obligation to pass on the benefit to thebeneficiary, therefore, the owner/settler being the owner of theproperty, he is entitled to take it back in the event it is not utilizedfor the purpose the owner intended to. But that is not the casewhen money from the Debtor or on behalf of the Debtor hasgone out towards discharge of an obligation. In the case of trust,ownership of that property or money remains with the owner aslong as it is not utilized for the purpose intended to. That ownerhas no obligation to part with his property/money.59. In case of homebuyers’ issue, once homebuyers entered intoan agreement with developer and when their relations enteredinto turbulence and not in position to become normal, the relationin between them will become creditor and debtor and the personunder obligation shall refund the money of the homebuyers. In thegiven case, JAL deposited money on behalf of JIL for utilizationof the same to the homebuyers of the Corporate Debtor. Therefore,it is evident that this deposit is made towards an obligation. Whenany money is received towards an obligation, it can neither beconstrued as trust money nor construed as governed by constructivetrust, therefore we have not found any merit to say that this moneyis governed by trust concept.

60. In this case, the homebuyers’ money has been lying with theCorporate Debtor and JAL, it is an admitted fact that money comefrom the Homebuyers has gone to JAL in the name of construction.It is not the case of the JAL that JIL money has not come forconstruction. Moreover, JAL, by the time it has deposited, wasaware that it was depositing that money towards the obligationowned to JIL homebuyers.

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

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

Athe custody of it and thereafter transferred this money to NCLTwith direction that the parties shall abide by the directions ofNCLT. Had the Hon’ble Supreme Court has felt that it should goback to JAL, the Honourable Supreme Court would have returnedit to JAL, but it has not been done. Whenever any payment ismade towards any liability, it has to be treated as payment madeBtowards that liability. It does not matter who paid the money, itmatters as to whether it has been paid towards an obligation ornot. Since JAL has without any objection or condition paid to thehomebuyers of JIL on behalf of JIL, it has to be treated that thepayment is towards the obligation of JIL. Though it has not beenCexplicitly explained that JAL paid on behalf of JIL, the matterpending before the Hon’ble Supreme Court being with regard tohomebuyers of JIL, when money was asked to be depositedtowards refund of JIL homebuyers, and the same being paid byJAL, now it is not open to JAL to say that it is JAL’s money.

63. As to the argument saying that for Rs. 750 Crore has not goneinto the books of Corporate Debtor (JIL), therefore it cannot betreated as the asset of JIL, when money has been deposited onthe directions of Honourable Supreme Court and that has not beenreturned by Honourable Supreme Court, we are only limited tounderstand that the Honourable Supreme Court has not refunded

the money because refunding to few creditors in preference toother creditors would become preferential treatment, thereforesuch observation cannot be extrapolated to say that the Hon’bleSupreme Court has refused to refund the money on the assumptionthat this money has to go back to JAL.

64. If we see the situation in the perspective of the historicalfacts, it is evident that homebuyers paid money, JIL and JAL failedto deliver homes to the homebuyers, therefore the obligation liesupon JIL to satisfy that obligation either by refunding the moneyor by delivering homes to the homebuyers, for neither of the thingsGbeing done, the money having passed from JIL to JAL, and partof it having come back as per the orders of the Hon’ble SupremeCourt, now it is not open either to JAL or its creditors to canvassthat this money is belonging to JAL.

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

Debtor and in case this Bench for any reason passes any orderfor return of this money to JAL, it would be nothing butoverreaching the wisdom of the Hon’ble Supreme Court and itsdirections. When money has been paid by JAL towards anobligation as per directions of the Hon’ble Supreme Court, it canno more be considered as the assets of JAL. As to whether it hasbeen stated in the information memorandum that this Rs. 750 Croreis an asset of the Corporate Debtor or not, every case has to beseen in the context of its facts. If at all for any reason, this is notshown as the asset of the corporate Debtor in the informationmemorandum, can it be said that the Hon’ble Supreme Courttransferring the deposit to NCLT has no meaning? Any order thathas been passed by the Hon’ble Supreme Court, is binding on allCourts and Tribunals, for there being no direction to return thismoney to JAL or to determine as to whether it has to be paid toJAL or not, it is not open to this Bench to draw any inferenceother than an inference considering that this money is an asset ofthe Corporate Debtor. Since JAL is not under further obligation tocomplete construction of homes, there is no occasion to assumethat if this money go back to JAL, it would be utilized for thecause of the creditors of the Corporate Debtor, in view thereof,we hereby dispose of all CAs related to Rs. 750 Crore issue byholding that this money is to be treated as the asset of the CorporateDebtor.”

44. After having dealt with the issue of INR 750 crores, the NCLTtook up the issue with regard to the approval of the resolution plan andfor that matter, in the third segment of the impugned order, summarisedthe salient features of the resolution plan, which have already been noticedhereinbefore and need not be repeated. The objections dealt with by theNCLT in the fourth segment of its order dated 03.03.2020 could now benoticed with reference to the objector and the subject matter.

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

ABC

AJIL was not discharged of PMLA and other investigations; that theapproval was inconsistent with Section 11(4)(g) of RERA; thatsimultaneous voting on two resolution plans was not permissible in law;that the resolution applicant wrongly suggested that there was no haircutin the proposed settlement of dues of financial creditors because thehaircut was as far high as INR 6,101 crores which was 62.36% of theBdebt of INR 9,783 crores. These contentions were countered by IRPwith the submissions that the promoters of JAL and JIL had no locus toquestion the offer accepted by the CoC and as per the decision of thisCourt in the case of Maharashtra Seamless Limited v. PadmanabhanVenkatesh and Ors. (C.A. No. 4242 of 2019)[37], no provision in theCCode required the resolution applicant to match the liquidation value;that no provision in the Code prevented simultaneous voting over twoplans; and that as per the decision of this Court in the case of PioneerUrban Land and Infrastructure Ltd. & Anr. v. Union of India &Ors.: (2019) 8 SCC 416, RERA and IBC co-exist and have to beinterpreted harmoniously and in the event of clash, RERA must giveDway to IBC. It was also submitted that when the homebuyers who wereentitled to raise RERA objections had themselves voted in favour of theplan, the promoters/directors could not raise any grievance. There wasa question of claim of the corporate debtor against JAL, being the amountgiven as mobilisation advance on which, there was discrepancy in theEaccounting, but it was admitted on behalf of JAL that an amount of INR274 crores was net receivable by JIL from JAL. To this, the NCLTdirected payment of the said amount to JIL and for reconciliation of theaccount as regards the remaining dues. The NCLT had also brushedaside the submissions regarding the contingent nature of the plan withreference to its finding on the issue related to the said deposited sum ofFINR 750 crores and Section 32A inserted to the Code by way ofamendment with effect from 28.12.2019. The relevant observations ofNCLT read as under: -

“69. With regard to these two issues, this Bench has alreadydecided that Rs. 750 Crore lying with NCLT shall be utilized forGthe cause of the creditors of the Corporate Debtor and with regardto PMLA proceedings, for Section 32A being brought intoexistence by way of Amendment to the Code 28.12.2019, nowthere need not be any separate protection from the PMLA

proceedings over the assets of the Corporate Debtor, thereforewe have not dealt with this issue, therefore the argument sayingthat plan is conditional has no merit.

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

73. Apart from this, it is not the case of promoter/directors thatcompany has positive net worth entitling the promoters of thecompany to receive the residual proceeds in the event companyis liquidated. As long as liabilities are more than the assets of thecompany, the promoters/directors’ arguments cannot be seen asa point having bearing on the resolution plan approved by the CoC.

74……….This objection over simultaneous voting per se doesnot look as an act in violation of the Code or Regulations thereto.No provision has envisaged that two plans should not be put tovoting. Moreover there is no mandate that if two plans are put tovoting, the plan voted in favour to be declared non est in law.Doctrine of severance could be applied by validating the actiondoable under the law as valid. If any excess has happened, suchexcess can be taken out. Besides this, both the plans are notapproved. In addition to it, unsuccessful Resolution Applicant hasno grievance to the plan present before us.

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

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

A77. With regard to Rs. 716 Crores claim against JAL by theCorporate Debtor, the IRP submits that after setting off the amountpaid to JAL, the amount to be refunded by JAL is sum ofRs. 594 Crores as on 31.12.2019. It is an admitted fact thatmobilisation advance of Rs. 586 Crores is due and payable byJAL and JIL as on 31.12.2019, out of which JAL says, after settingBoff, the amount due and payable to JIL by JAL is only Rs. 274Crores. However, JAL counsel has not placed material supportingthe figures shown as set off, since JAL Counsel himself has statedthat net receivable by JIL from JAL amounts to Rs. 274 crores,JAL shall forthwith pay Rs. 274 crores to JIL, as to remainingCmoney as sought by the Resolution Applicant, JIL and JAL shalldraft reconciliation statement, accordingly payment has to bemade to whomever any outstanding is payable.”

46. Another major part of objections, in terms of magnitude andimplication, came up from the dissenting financial creditor ICICI Bank.DIt was submitted by this lender bank that being dissenting financialcreditor, it was entitled to receive payment as per the liquidation value interms of Section 30(2)(b) of the Code read with Regulation 38(1)(b) ofCIRP Regulations but in the resolution plan, it was sought to be providedonly the land and equity in the SPVs proposed to be incorporated; andsuch provision in the resolution plan was entirely impermissible. It wasEalso submitted that while the assenting financial creditors were allowedto receive upfront payment of INR 300 crores on the basis of freshdebts raised by Expressway but the same benefit was not being extendedto the dissenting financial creditors. The NCLT noted the star argumentof the learned counsel for ICICI Bank that distribution of equity or theFland parcels to the dissenting financial creditors does not satisfy therequirement of “payment” under Section 30(2) of the Code read withRegulation 38(1)(b) of the CIRP Regulations; and such payment has tobe liquidated sum, as stated under Section 53 of the Code. Per contra,it was contended on behalf of the resolution applicant and the IRP that itwas nowhere envisaged in Section 30(2) of the Code that payment ofGliquidation value to dissenting financial creditors has to be in cash; thateven Regulation 38(1)(b) of the CIRP Regulations only provided for thepriority of payment to the dissenting financial creditors before theassenting financial creditors and the mode of payment to be in cash wasnot mentioned; that when the assenting financial creditors were not beingHpaid in cash and had accepted equity and land parcels, payment to the

dissenting financial creditors in cash would cause prejudice to the rightsof the assenting financial creditors. Meaning of the word “payment” inBlack’s Law Dictionary was also cited and it was argued that the moneyor other valuable thing delivered to discharge the obligation is to beconstrued as payment under Section 30(2) of the Code.

46.1. While dealing with the rival submissions in relation to thisclaim of the dissenting financial creditor, the NCLT referred to the bindingnature of agreement between JIL and the said creditor as also the rightsof dissenting financial creditor in terms of Sections 30(2) and 53 of theCode and concluded that the only recourse available was payment incash to such dissenting financial creditor sum equivalent to the liquidatedsum he would be entitled to receive under Section 53 of the Code. TheNCLT said,-

“91. If you come to the resolution under IBC, there are twooutcomes in it. One is some creditors agreeing for resolution tothe existing situation. Another is, some creditors may not agreefor the resolution. The persons agree for the resolution, they areno doubt bound by the arrangement they agreed upon. But as tothe dissenting creditors, who have not agreed for the resolution,they are governed by sections 30(2) & 53 of the Code. In thecase of dissenting creditor, the Corporate Debtor or the ResolutionApplicant stepping into the shoes of the Corporate Debtor is boundby the earlier contract entered between the Corporate Debtorand the dissenting financial creditor and then by the pro ratadistribution entitled u/s 53 of the Code. The only recourse availableis, the dissenting creditor shall be paid in cash equivalent to theliquidated sum he is entitled to receive u/s 53 of the Code. It is adeeming fiction to calculate the liquidated sum payable to thedissenting financial creditor and pay the same to the dissentingcreditor as if the company is liquidated. To make such payment,the company need not be factually liquidated.”

46.2. The word “payment”, as defined in Black’s Law Dictionarywas also analysed by NCLT and it was stated that the obligation has tobe seen and in the instant case, the obligation was repayment of moneylent along with interest. It was observed, that the dissenting financialcreditors were to be paid in cash not just by virtue of Section 53 of theCode but also by virtue of the terms and conditions of the agreementbetween JIL and the dissenting financial creditor, in the following words:-

A“92….Therefore this argument will not be ticking to say thatpayment in kind to the promise is discharge of obligation. If thepromisee has agreed to give up the payment obligation, he is freeto do so. In this case, for the dissenting financial creditor has notagreed to the approval of the resolution plan, they shall be paid incash, not only by virtue of the mandate under Section 53 of theBCode but also by virtue of terms and conditions of the agreementbetween the Corporate Debtor and the dissenting financialcreditor.”46.3. The NCLT further observed that upon approval of the planby the CoC, it was not open to the parties to say that, since the assentingCcreditors were not getting better treatment than the dissenting creditor,the dissenting creditor shall remain bound to the plan; and when aparticular issue was governed by law, something not present in the lawcould not be thrust upon any party under the cover of equity. The NCLT,thereafter, proceeded to analyse the requirements of Section 30(2) ofDthe Code with Section 53 and Regulation 38 of the CIRP Regulations;and also examined its powers to deal with those aspects of the resolutionplan which were not compliant with Section 30(2) of the Code. Havingexamined and analysed thus, the NCLT held that when the resolutionplan is found non-compliant with Section 30(2), the IRP or the resolutionapplicant cannot say that the approval being within the ambit ofEcommercial wisdom of CoC, all what was decided by CoC was bindingon the dissenting financial creditor; and it was within its (NCLT’s)jurisdiction to modify the plan so as to make it compliant with therequirements of law without altering its basic structure. The NCLTobserved and held as under: -F“98. If section 30(2) (b) (ii) is carefully examined, and read in thecontext of the said clause, it is clear that payment will be theamount to be paid to the financial creditors under Section 53 ofthe code, because it is for payment of the debts of the financialcreditors, thereafter it has been further stated it shall be not lessthan the amount to be paidto them in accordance with Section 53Gof the code.

99. When all these provisions and IBBI specifications made clearpayment to the dissenting financial creditors means payment ofamount, the resolution professional or the resolution applicantcannot argue that the payment can, not only be in cash but also inHkind.

100. The persons agreeing for something, they may agree foranything, it does not mean that the persons disagreeing shall alsobe treated as the assenting financial creditors are treated. Whenany financial creditor disagreed for resolution, he knows that hehas to be compromised with the situation befall upon him underSection 53 of the code. It does not matter as to whether hisentitlement under Section 53 is more or less than the treatmentassenting financial creditors getting. Their rights are alreadycompromised under section 53 slating them to their entitlement onpro rata basis. They cannot be put to further sufferance at thewish of the Resolution Applicant or the CoC. As Section 30 (2)has referred to section 53 entitlement, and this Bench being madecustodian to verify as to whether section 30(2) compliance hasbeen accomplished or not, the RP or the resolution plan applicantcannot say that plan approval is within the ambit of commercialwisdom of the CoC therefore what all that is decided by the CoCis binding upon the dissenting financial creditors. Whenever suchcompliance is not present in the plan, this Bench is authorised toexamine the same and interfere with the plan despite the plan hasbeen approved as contemplated under Section 30(4) of the code.

101. Looking at the resolution plan treatment to the dissentingfinancial creditor in the light of the aforesaid legal proposition,since it has not been said in the Code that plan should be approvedas submitted by the resolution professional under Section 30(6) ofthe code, we are of the view that this Bench has jurisdiction toapprove the plan by modifying the plan to the extent that does notalter the basic structure of the plan.”

(underlining is in original)

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

Aplan in the manner that the resolution applicant shall pay to the dissentingfinancial creditor the amount receivable in terms of Section 53 of theCode in twelve monthly instalments along with interest starting from sixmonths from the date of order with default conditions of interest. TheNCLT ordered as under: -

B“103. In view of the same, for the sake of viability and feasibilityof the plan, we hereby modify this plan to make it in compliancewith the section 30(2) (b) (ii) of the code by holding that theResolution Applicant shall pay to ICICI an amount that it is entitledto receive u/s 53 of the code within 18 months from the date ofapproval of this plan, that is in 12 equal monthly instalments alongCwith interest over the admitted claim starting from six monthshereof. In the event, the Resolution Applicant has failed to repayas stated above, ICICI is entitled to claim commercial interestover the admitted claim from the date of default, that is from thefirst month of 12 monthly instalments.”D

47. Another major contentious issue before the AdjudicatingAuthority related to the objections of YEIDA. As noticed, YEIDA hadbeen the land providing agency and had entered into ConcessionAgreement for leasing the land for construction of Expressway and alsofor the purpose of development of the surrounding parcels of land.

47.1. The NCLT noticed that as per the said CA, theconcessionaire (JIL) was to bear the acquisition cost for the project landgiven to it and in consideration, the concessionaire would obtain the rightto develop land for commercial exploitation and the right to operate theExpressway and collect toll for period of 36 years; and after the expiryFof 36 years from the grant of concession, the Expressway shall revert toYEIDA. As to the land for development, it was given on lease for 90years. It was essentially submitted on behalf of YEIDA that the question,of additional compensation of the land acquired, cropped up with thedirections of the Allahabad High Court; and that the liability in regard tothe additional compensation in relation to the land acquired and leased toGJIL was that of the corporate debtor JIL. It was also pointed out that thequestion of such additional compensation by JIL was subjected toarbitration proceedings where an award was made to the effect that thecorporate debtor need not pay this amount of additional compensationbut the award has been questioned by YEIDA in the proceedings under

Section 34 of the Arbitration and Conciliation Act, 1996[38]-[39]. YEIDAstated its objection to the stipulation in the resolution plan that in case ofthe award being overruled, YEIDA would collect the amount of additionalcompensation from the end-users of the project land. It was submittedin this regard that in the CA, two payment components were present -one being of acquisition cost payable by the concessionaire and anotherbeing of lease rent, which could be paid by the sub-lessee/end-user asthe case may be. It was submitted that given such components, the IRPor the resolution applicant could not insist that YEIDA has to collect theacquisition cost directly from the end-users. It was also submitted thateven if the land utilised for Expressway was to revert to YEIDA after36 years, the CA nevertheless provided as key components that theconcessionaire would collect toll for this period and has to bear all thecost including the cost of acquisition; and there was no exemption asregards the land of Expressway. It was also submitted that the resolutionapplicant cannot split the transferred land into two and say that thepayment of additional compensation would be applicable to the land usedfor development alone. It was further submitted that in view of Clause18.1 of CA, in case of the necessity to transfer the concessionaire’srights and obligations to an SPV, there has to be necessary documentationinvolving YEIDA, the concessionaire and the SPV incorporated, so thatYEIDA could keep exercising its rights over the SPV concerned; andthe resolution applicant or CoC could not have unilaterally transferredthe rights and obligations of the corporate debtor to an SPV without theconsent of YEIDA. decision of this Court in the case of EmbassyProperty Development Pvt. Ltd. v. State of Karnataka and Ors.:2019 SCC OnLine SC 1542 was also referred to submit that IBC willnot have overriding effect on every enactment which is applicable to thetransactions related to the corporate debtor. It was further submittedthat the requirement of withdrawal of arbitration case could not be thrustupon YEIDA under the cover of the plan; and for the resolution planhaving set out so many provisions curtailing the rights held by YEIDA,the same was required to be rejected. However, the AdjudicatingAuthority also noticed that despite such objections, the counsel appearingon behalf of YEIDA submitted that since the project was for publiccause, it would have no objection for approval of the resolution plan

38 Hereinafter also referred as to ‘the Arbitration Act’.

39 It appears from the corrigendum dated 17.03.2020 and the submissions of the partiesthat the issue is pending before the Court of District Judge, Gautam Budh Nagar.

Aprovided necessary changes were made in it ‘by removing the fall outsfrom the concession agreement’.

47.2. In regard to this issue relating to the objections and submissionson behalf of YEIDA, the NCLT was of the view that CoC should nothave approved the resolution plan stating that the additional compensationBwould be collected from the end-users; and proceeded to modulate theterms of the resolution plan to read that YEIDA shall have the right tocollect the acquisition cost through the SPVs concerned. As regards theissue as to whether additional compensation need not be paid with regardto the Expressway for the same would revert to YEIDA after 36 years,the NCLT found it appropriate to read down the resolution plan as leavingCit open to the parties to have proper recourse over this issue in thecompetent forum when occasion so arise. The NCLT also observedthat the Concession Agreement was based on the statute created by theState Government and, therefore, any violation of terms and conditionsof the same would be the violation of law in force. The NCLT, however,Dagain recorded the submissions on behalf of YEIDA that their endeavourwas only for compliance of the terms and conditions of CA in order toensure proper monitoring on realisation of dues and supervision over thework of corporate debtors or SPVs but not for rejection of the resolutionplan. The relevant observations, findings and directions of YEIDA inregard to this issue read as under: -E

“118. On hearing the submissions of either side, with regard topayment of additional compensation, in the event any directionhas been given in the arbitration proceedings to the CorporateDebtor to pay additional compensation, as per concessionagreement, additional cost shall be paid by the concessionaire.FWe don’t go into the point as to whether additional compensationis part of the acquisition cost because i.e. point alreadyAdjudicated by the Arbitral Authority and the issue is pendingbefore the Hon’ble High Court of Delhi, now the limited point tobe dealt with is, as to whether such compensation, if directed toGbe paid, is to be paid by the concessionaire or by the end users.

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

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

120. To iron out all these creases and to make this resolution planviable, we hereby direct that the resolution plan shall be read asYEIDA has right to collect acquisition cost through the SPVsconcerned.

121. With regard to other objections that additional compensationneed not be paid with regard to Expressway land on the premisethat since Expressway will revert to YEIDA after 36 years, YEIDAcounsel submits that this land has been given on consideration ofcollection of toll for about 36 years.

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

123. On transfer of concessionaire’s rights and obligations to SPVs,as per the concession agreement, it is clear that this CorporateDebtor is concessionaire, for the first time concessionaire havingproposed to transfer its rights and obligations to the aforesaid twoSPVs, we are of the view that documents shall be executedbetween the concessionaire, YEIDA and each of the SPVs. Atlast we must say that the concession Agreement is based on thestatute created by the State Government, therefore any violationof the terms and conditions of the concession agreement is violationof the law in force as contemplated under section 30(2) of theCode, it has been decided as above.

124. Despite YEIDA counsel representing the State GovernmentAuthorities with regard to its rights, the counsel has categoricallymentioned that YEIDA’s endeavour is only for compliance of theterms and conditions of concession agreement so that the StateAgencies will have proper monitoring on realization of its duesand will have proper supervision over the works of the CorporateDebtor or its SPVs, but not to ensure that this resolution plan isrejected by this Bench on the grounds aforementioned.”

48. After having dealt with the aforesaid major issues relating toINR 750 crores, objections of JAL and its stakeholders, ICICI Bank andYEIDA, the NCLT proceeded to deal with the other issues relating tothe fixed deposit holders, some of the aggrieved homebuyers, YES Bankand the agreement holders.

B48.1. As regards fixed deposit holders, the NCLT provided thatthe resolution applicant shall make provision to clear their dues as andwhen the unclaimed fixed deposit holder claims it, and this right willremain in force as long as they were entitled to claim under the CompaniesAct, 2013. These directions of NCLT in the impugned order read asunder: -C

“125. Regarding FD holders payments who have not made claimswhich have been reflected in the records of the Corporate Debtor,the Plan Applicant shall make provision to clear their dues asand when the unclaimed FD holder claims it, and this right willremain in force as long as they are entitled to claim underDCompanies Act 2013.”

48.2. The NCLT also took note of the submissions of some ofthe homebuyers who were not agreeing with the resolution plan inquestion. Those dissatisfied homebuyers submitted that the timelines givenin the resolution plan for completion of flats were not workable; thereEwas no clause for refund of money in the event flats not being completedwithin the timelines envisaged, except to the extent of nominal interest;and that the voting share of homebuyers being only 57.66%, it cannot besaid that cent percent consent had been given for approval of theresolution plan by CoC. The NCLT declined to recognise such objectorsFas dissenting financial creditors because authorised representative ofthis class of creditors had voted in favour of the resolution plan. TheNCLT observed and held as under: -

“126. One Rashmi Singhal and another applicant calling themselvesas dissenting home-buyers, filed IA 871/2020, stating that the timeGlines given in the Resolution Plan for completion of flats are notworkable and for there being no clause for refund of money in theevent flats are not completed within the time lines envisaged,except to the extent of nominal interest mentioned in the plan,these two submit that they have dissented for the approval of theResolution Plan. They have further relied upon voting share sayingHhomebuyers voting share is only 57.66% therefore, it cannot becalled that cent percent consent has been given for approval ofthe Resolution Plan by CoC. For there being rule under IBC,whenever more than 50% voting has come from class of creditorsrepresented by an authorized representative, the approval givento the authorized representative for more than 50% will become100% approval, therefore it cannot be said that dissentinghomebuyers before authorised representative to be considered asdissenting financial creditors against the total voting of CoC. Ifthe authorized representative dissented in the CoC, then therespective class of creditors would be considered as dissentingfinancial creditors. Moreover, if at all any dissenting financialcreditor is there, his only look out is as to whether he has beenpaid as per Section 30(2) of the Code or not but not to see whetherthe Resolution Plan is workable or not.”

48.3. As regards the objections raised by YES Bank, which hadgiven loan to Jaiprakash Healthcare Ltd., wholly-owned subsidiary ofJIL, against dealing with the shares of its borrower (JHL) in the resolutionplan, the NCLT observed that the resolution applicant and the said Bankhaving agreed for constitution of Committee to deal with the sharesand assets of JHL, that issue was not required to be discussed. TheNCLT said, -

“127. YES Bank, which has given loan to Jaiprakash Health Caresubsidiary of JIL, has also raised an objection against dealing withthe shares of the Health Care belonging to the Corporate Debtor.However, since the Resolution Applicant and YES Bank havingagreed for constitution of Committee to deal with the sharesand assets of the subsidiary company, we are under no obligationto discuss this issue any further.”

48.4. As regards the right reserved by the resolution applicant tocancel the transactions where certain parcels of land were transferredby the corporate debtor without proper agreement/sub-lease deed, NCLTnoticed the submission made by such agreement holders that theagreements were executed by the corporate debtor in the normal courseof its business prior to the commencement of CIRP and monies werealso advanced; and therefore, such agreements could not be terminatedunilaterally. The NCLT also noticed the counter submissions by IRP andNBCC that the agreements allegedly executed between the corporatedebtor and the agreement holders had not been determined, but the

Aresolution applicant has reserved its right to cancel such instrumentswherever the corporate debtor had entered into deals without properagreements and without support of consideration. In this regard, theNCLT observed that if an agreement was not valid in law and sufferedfrom want of consideration, it was not even required to be said that suchagreement could be cancelled by the party concerned. However, theBNCLT further observed that even when such clause had beenmentioned, the agreement holders had not lost their right to seek remedyin the competent forum; and determined this part of the matter in thefollowing words: -

“132. It is trite law when an agreement is not valid in the eyesCof law and consideration has not been paid, then it need not beseparately said that such agreement could be cancelled by theeffected party.

133. Though such clause has been mentioned, it does not meanthat the agreement holders have lost their rights to seek remedyDfor its grievances before Competent Forum, in view thereof, thisclause need not be considered as clause effecting the rights ofthe alleged agreement holders.”

48.5. The NCLT also made observations as regards the objectionsraised by JAL and other objectors against inclusion of 858 acres[40] asEpart of the resolution plan and pointed out that such an objection lost itsrelevance after the decision of this Court dated 26.02.2020 in the caseof Anuj Jain (supra).

49. Having thus dealt with the relevant objections, the NCLTentered into the fifth segment of its order and generally dealt with theFprovisions relating to the reliefs and concessions with the observations/directions as under: -

“134. The clauses already covered in the aforesaid discussion willnot be discussed again, but as to the clauses not covered aboveare hereby dealt with as follow: -GClauses 1 to 5 have already been covered in the above discussion.

Clause No. 6:- With regard to the past liabilities of income taxauthority, they shall stand extinguished.

40 This figure was corrected on 17.03.2020 by NCLT as ‘758 acres’ in terms of the orderHof this Court dated 26.02.2020.

Clause No. 7:- Since reduction of the share capital of the corporatedebtor is not part of this resolution, this Adjudicating Authoritycannot waive the procedure for reduction of share capital in relationto the companies not yet incorporated.

Clause No. 8 & 10:- Payment of stamp duty mentioned in clause8 is waived to the extent permissible under law.

Clause No. 9:- Any non-compliance arising out of past claimsprior to CIRP initiation shall not have any bearing on this corporatedebtor from hereof.

Clause No. 11:- The lenders to the corporate debtor shall regulariseall the accounts and ensure that such classification of the loanaccount is standard in their books with effect from the transferdates.

Clause No. 12:- All claims which have been placed before the RPand any criminal proceedings appurtenant to those claims arehereby extinguished.

Clause No. 13:- As to the contracts relating to the development ofland by JAL, the Resolution applicant can reserve its right toterminate the same, as to the claims, if any, the resolution applicanthas right to take appropriate action against JAL.

Clause No. 14:- With regard to liability arising out of concessionagreement in relation to YEIDA, since those issues are governedby concession agreement, this Bench cannot nullify the rights ofYEIDA against the corporate debtor emanating from theconcession agreement.

Clause No. 15:- The agreements for subleases executed betweenthe corporate debtor and the third parties, which are not inaccordance with law and not supported by material proof, theResolution applicant will have right to terminate in accordancewith law.

Clause No. 16 to 18:- The resolution applicant is granted 12 months’time from the approval date to ensure compliances in relation tothe non-compliance of applicable laws by the corporate debtor orof its subsidiary pertaining to any period up to the approval dateand licenses if any, to be obtained.

AClause No. 19:- In respect to the lands shown as transferred toJAL for real estate development, where the title and ownership isstill lying with the corporate debtor, the resolution applicant is atliberty to proceed in accordance with law.

Clause No. 20:- It goes without saying that the IRP will not beBheld responsible with regard to discharge of his duties during CIRProcess. The IRP and the Resolution Applicant will not be liablefor any transactions carried out by the ex-management of thecorporate debtor.

Clause No. 21:- This point has already been dealt with in theCabove discussion.

Clause No. 22:- For the purpose of consolidation of the books ofthe CD with the resolution applicant, the effective date shall betreated as the first day of the quarter immediately succeedingquarter in which the resolution applicant completes the takeoverof the CD.D

Clause No. 23:- This point is not clear as to whether it is referringto the land of the Corporate Debtor mortgaged to the lenders ofJAL, if that is so, since it has been decided by the HonourableSupreme Court, it need not be reiterated.

EClause No. 24:- This generalization of cancellation of all agreementscannot be granted unless each transaction is specifically dealtwith.

Clause No. 25:- The resolution applicant cannot modify theresolution plan once it is approved by the CoC.

Clause No. 26:- As to the claims placed before the IRP and otherliabilities of the CD which are shown in the records of the companyand where notice has been given to such creditors, they can beconstrued as withdrawn after the approval date.

Clause No. 27:- With regard to extension of concession period byGYEIDA, it is YEIDA to decide as to whether such extension shouldbe given or not.

Clause No. 28:- This Adjudicating Authority can only direct theCentral Government and Reserve Bank of India to accordpermissions to the extent permissible under law.”

50. As regards other applications/objections, the NCLT disposedthem of with comments wherever required. We need not elaborate onall such observations but could usefully point out the rejection of twosuch applications.

50.1. One such application was filed by financer of one of thehomebuyers seeking its induction in the CoC. This application wasdismissed as misconceived in the following words: -

“CA-74/2019 filed by PNB Housing Finance Ltd. for directionsto the IRP to induct this applicant in the CoC and if any amount isrefunded to the home-buyers, the amount due to the applicantought to be paid to this applicant because it is the lender to thehome-buyers. This application is dismissed as misconceived, asthe lender to the home-buyers will not have any right to be financialcreditors of the CD.”

50.2. Another application was filed by three homebuyers seekingthe relief of quashing the minutes of CoC dated 01.03.2019; for directionto conduct forensic land audit of the corporate debtor; and for variousdirections to IRP, like those for taking legal opinion on ConcessionAgreement, analysis of Expressway cost escalation, providing informationand answers to the queries of homebuyers etc. etc. The NCLT notedthe propositions of these applicants and dismissed the application withthe observations that they were three persons out of thousands ofhomebuyers and if such issues were to be examined and decided, theresolution process could never be completed; and at the stage of approvalof the resolution plan, if objections of this kind were allowed, there wouldbe no end to it. The NCLT said, -

“It is an application filed by Mr. Hemant Kumar & two others,who do not have direct voting in the CoC, because there arethousands of home-buyers, out of them these three are minusculein number, if at all these issues are to be examined and decided,and remain waiting for the remedies, this resolution process willnot complete even after two years from hereof. Moreover, at thetime of approval of this resolution plan, if objections of this kindare allowed there cannot be any end to it, therefore, this applicationis hereby dismissed.”

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

Aholding that all the stakeholders shall remain bound by the order so passed.However, various stakeholders have various submissions to make andvarious objections to take against the order so passed by the AdjudicatingAuthority.

52. Having taken note of the relevant contents of the order datedB03.03.2020, as passed by the Adjudicating Authority (NCLT) in exerciseof its jurisdiction under Section 31 of the Code, it would be worthwhile tosummarise the significant attributes of, and takeaways from, this orderbecause substantial part of the forthcoming discussion shall be revolvingaround the findings recorded and directions given therein. The relevantaspects could be summarised as follows:C

(a) As regards the said sum of INR 750 crores, the AdjudicatingAuthority, with reference to the orders passed by this Court in the caseof Chitra Sharma (supra), held that the deposit made by JAL becamean asset of the corporate debtor JIL; and the said money was to beutilised towards securing the interests of homebuyers. As regards theDquestion of the amount payable by JAL to JIL, it was directed that JALshall make payment of the admitted amount of INR 274 crores; andafter reconciliation of accounts, further payment shall be made towhomsoever outstanding was found payable.

(b) As regards the objections by the dissenting financial creditorEICICI Bank, the Adjudicating Authority held that payment to suchdissenting financial creditor shall be made in cash, as per the amount itwould be entitled to under Section 53 of the Code, in the form of twelvemonthly instalments with interest to be accrued six months post the order.It was also observed by the Adjudicating Authority that it had theFnecessary jurisdiction to modify the resolution plan to make sure itcomplied with Section 30(2) of the Code, so long as its basic structurewas not altered.

(c) As regards the objections by YEIDA, the Adjudicating Authorityheld that YEIDA shall have the right to collect the acquisition cost throughGthe SPVs proposed to be incorporated so as to make the resolution plancompliant with the terms of the Concession Agreement; however, theAdjudicating Authority refrained from adjudicating on the issue ofadditional compensation in relation to the land under Expressway andleft it for the parties to take appropriate action at the appropriate stage.The Adjudicating Authority also held that for transfer of rights andH

obligations to the two SPVs, necessary documents shall be executedinvolving the concessionaire (JIL), YEIDA and the SPV concerned.These alterations were ordered by the Adjudicating Authority ‘to ironout all these creases and to make this resolution plan viable’.

(d) As regards the issue relating to the fixed deposit holders, theAdjudicating Authority provided that the resolution applicant shall makea provision to clear the dues even of those fixed deposit holders who hadnot made the claims. In other words, the Adjudicating Authority directedfor another modification of the resolution plan, for satisfying the dues ofunclaimed fixed deposit holders.

(e) The Adjudicating Authority brushed aside the objections soughtto be taken by some of the aggrieved homebuyers, while holding thatthey could not be categorised or treated as dissenting financial creditors.

(f) As regards the objections by YES Bank, the AdjudicatingAuthority pointed out that no intervention was required since YES Bankagreed to settle its objections with NBCC by forming Committee.

(g) As regards the agreement holders, the Adjudicating Authorityobserved that if an agreement was not valid in law and suffered fromwant of consideration, it was not even required to be said that suchagreement could be cancelled by the party concerned. However, theAdjudicating Authority also observed that even when such clause hadbeen mentioned in the resolution plan, the agreement holders had notlost their right to seek remedy in the competent forum.

(h) The Adjudicating Authority generally dealt with the clausesrelating to the ‘reliefs and concessions’ in Schedule 3 of the resolutionplan as also various other applications filed by different stakeholders.Some of the reliefs and concessions sought for by the resolution applicantwere not granted or were declined, for the reasons specified against therelevant clauses. The other applications/objections were disposed of witha few comments.

Order dated 22.04.2020 by NCLAT making interimarrangement

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

Amade by the parties concerned. Such requests were made when thematters first appeared before us in challenge to an interim order dated22.04.2020 passed by NCLAT, whereby the NCLAT made an interimarrangement of constitution of an Interim Monitoring Committee forimplementation of the plan in question. The said order dated 22.04.2020,being also subject of challenge in this batch, could be usefully noticedBto complete the narrative.

54. The resolution applicant NBCC preferred an appeal againstthe aforesaid order dated 03.03.2020 insofar as it felt aggrieved of themodifications in the resolution plan. In that appeal, the NCLAT, whileissuing notice to the unrepresented parties, directed that the approvedCresolution plan may be implemented subject to the outcome of appealbut at the same time, it was also provided that IRP may constitute anInterim Monitoring Committee comprising of the successful resolutionapplicant (NBCC) and three major institutional financial creditors, whowere the members of CoC. This impugned interim order dated 22.04.2020Dreads as under: -

“22.04.2020 The Appellant – NBCC (India) Ltd., which hasemerged as the Successful Resolution Applicant in ‘CorporateInsolvency Resolution Process’ initiated against Jaypee InfratechLtd. (JIL) is aggrieved of modifications made by the learnedEAdjudicating Authority in the ‘Resolution Plan’ submitted by itand as approved by the ‘Committee of Creditors’ to the extent itallows objections of ICICI Bank Ltd. and Yamuna ExpresswayIndustrial Development Authority and directs payment tounclaimed Fixed Deposit Holders. It is submitted that the learnedAdjudicating Authority could not intercede the business decisionFof the ‘Committee of Creditors’ taken by the prescribed votingshares and the learned Adjudicating Authority exceeded itsjurisdiction in making such modifications.

Issue notice to the Respondents through Speed Post in the mainappeal as well as in the Interim Application.

On behalf of ICICI Bank Ltd., Ms. Misha, learned Counsel acceptsnotice. On behalf of Respondent No.4 – Interim ResolutionProfessional, Mr. Sumant Batra, learned Counsel accepts notice.On behalf of Respondent No.5 – IDBI Bank, Mr. Bidhwajit Dubey,learned Counsel accepts Notice. No further notice be served uponHthese Respondents. The above Respondents may file their reply

affidavits within two weeks. Rejoinders, if any be filed within oneweek thereof.

Let notice be served upon Respondent Nos.2 and 3. Requisitesalong with process fee be filed within three days. If the Appellantprovides email addresses of the Respondents, let service beeffected through email also.

Mr. Sumant Batra, learned Counsel representing the ‘ResolutionProfessional’ intends to file an Appeal in regard to someobservations made in paragraph 103 of the impugned order.

We are told that the implementation of the ‘Successful ResolutionPlan’ would involve participation of the ‘Successful ResolutionApplicant’, i.e. NBCC (India) Ltd. as also the three majorInstitutional Financial Creditors, who are Members of the‘Committee of Creditors’ i.e., IDBI Bank Ltd., IIFCL and LIC.

Meanwhile, till further orders, the approved ‘Resolution Plan’ maybe implemented subject to outcome of this Appeal. The InterimResolution Professional may constitute ‘Interim MonitoringCommittee’ comprising of the ‘Successful Resolution Applicant’,i.e., the Appellant and the three major Institutional FinancialCreditors, who were Members of the ‘Committee of Creditors’as named above.

Mr. Sumant Batra, learned Counsel submits that as of now he iscontinuing and managing the affairs of the ‘Corporate Debtor’.The Resolution Professional, who would be constituent of the‘Interim Monitoring Committee’ shall continue to be paid as maybe deemed reasonable by the ‘Interim Monitoring Committee’from the date of this order. If any fee is outstanding for the pastservices rendered by the Resolution Professional during the‘Corporate Insolvency Resolution Process’, the same shall be paidas per the decision of the ‘Committee of Creditors’. Thesedirections will last till the disposal of this Appeal.

List the matter for ‘admission after notice’ on 15th May, 2020.”

The relevant statutory provisions

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

Adated 09.08.2018, 06.11.2019 and 26.02.2020; the salient features of theresolution plan; and key aspect of the orders impugned, we may now gothrough the provisions that would be relevant for determination of thepoints arising in this batch of matters.

56. While the expressions generally used in the Code are definedBin Section 3 but then, the expressions employed for the purpose of PartII of the Code, dealing with insolvency resolution and liquidation ofcorporate persons, are defined in Section 5 thereof.

56.1. The relevant definitions as occurring in Section 3 are asunder: -C“Section 3(8): “corporate debtor” means corporate person whoowes debt to any person;

Section 3(10): “creditor” means any person to whom debt isowed and includes financial creditor, an operational creditor, asecured creditor, an unsecured creditor and decree-holder;DSection 3(11): “debt” means liability or obligation in respect ofa claim which is due from any person and includes financialdebt and operational debt;

Section 3(12): “default” means non-payment of debt when wholeor any part or instalment of the amount of debt has become dueEand payable and is not paid by the debtor or the corporate debtor,as the case may be;

Section 3(30): “secured creditor” means creditor in favour ofwhom security interest is created;

FSection 3(31): “security interest” means right, title or interest ora claim to property, created in favour of, or provided for securedcreditor by transaction which secures payment or performanceof an obligation and includes mortgage, charge, hypothecation,assignment and encumbrance or any other agreement orarrangement securing payment or performance of any obligationGof any person:

Provided that security interest shall not include performanceguarantee;”

56.2. The relevant definitions occurring in Section 5 for the purposeof Part II of the Code are as under: -H

“Section 5(1): “Adjudicating Authority”, for the purposes of thisPart, means National Company Law Tribunal constituted undersection 408 of the Companies Act, 2013 (18 of 2013);

Section 5(7): “financial creditor” means any person to whom afinancial debt is owed and includes person to whom such debthas been legally assigned or transferred to;

Section 5(8): “financial debt” means debt alongwith interest, ifany, which is disbursed against the consideration for the time valueof money and includes-

(a) money borrowed against the payment of interest;

(b) any amount raised by acceptance under any acceptance creditfacility or its de-materialised equivalent;

(c) any amount raised pursuant to any note purchase facility orthe issue of bonds, notes, debentures, loan stock or any similarinstrument;

(d) the amount of any liability in respect of any lease or hirepurchase contract which is deemed as finance or capital leaseunder the Indian Accounting Standards or such other accountingstandards as may be prescribed;

(e) receivables sold or discounted other than any receivables soldon non-recourse basis;

(f) any amount raised under any other transaction, including anyforward sale or purchase agreement, having the commercial effectof borrowing;

41[Explanation.- For the purposes of this sub-clause,-

(i) any amount raised from an allottee under real estate projectshall be deemed to be an amount having the commercial effect ofa borrowing; and

(ii) the expressions, “allottee” and “real estate project” shall havethe meanings respectively assigned to them in clauses (d) and(zn) of section 2 of the Real Estate (Regulation and Development)Act, 2016 (16 of 2016);]

A(g) any derivative transaction entered into in connection withprotection against or benefit from fluctuation in any rate or priceand for calculating the value of any derivative transaction, onlythe market value of such transaction shall be taken into account;

(h) any counter-indemnity obligation in respect of guarantee,Bindemnity, bond, documentary letter of credit or any other instrumentissued by bank or financial institution;

(i) the amount of any liability in respect of any of the guarantee orindemnity for any of the items referred to in sub-clauses (a) to (h)of this clause;

CSection 5(20): “operational creditor” means person to whoman operational debt is owed and includes any person to whomsuch debt has been legally assigned or transferred;

Section 5(21): “operational debt” means claim in respect ofthe provision of goods or services including employment or debtDin respect of the payment of dues arising under any law for thetime being in force and payable to the Central Government, anyState Government or any local authority;

Section 5(25): “resolution applicant” means person, whoindividually or jointly with any other person, submits resolutionEplan to the resolution professional pursuant to the invitation madeunder clause (h) of sub-section (2) of section 25;

Section 5(26): “resolution plan” means plan proposed byresolution applicant for insolvency resolution of the corporate debtoras going concern in accordance with Part II

F42[Explanation.- For removal of doubts, it is hereby clarified thata resolution plan may include provisions for the restructuring ofthe corporate debtor, including by way of merger, amalgamationand demerger;]

Section 5(27): “resolution professional”, for the purposes of thisGPart, means an insolvency professional appointed to conduct thecorporate insolvency resolution process and includes an interimresolution professional; and

Section 5(28): “voting share” means the share of the voting rightsof single financial creditor in the committee of creditors whichis based on the proportion of the financial debt owed to suchfinancial creditor in relation to the financial debt owed by thecorporate debtor.”

57. As already indicated, and which is not far to seek, theExplanation inserted to sub-clause (f) of clause (8) of Section 5 witheffect from 06.06.2018 made it clear that any amount raised from anallottee under real estate project is deemed to be having the commercialeffect of borrowing and thereby, it answers to the description of a“financial debt”. The pertinent consequence of this clarificatoryamendment is that such an allottee under real estate project stands inthe capacity of financial creditor of the corporate debtor. Prior to thisamendment, such an allottee was sought to be regarded only as an ‘othercreditor’ and that had been the principal cause behind the litigation inthis Court in Chitra Sharma (supra). For complete and meaningfulunderstanding of this Explanation inserted to Section 5(8)(f) of the Code,it would be in concordance to take note of the meanings assigned to theexpressions “allottee” and “real estate project” in RERA. The referredclauses (d) and (zn) of Section 2 of RERA read as under: -

“Section 2(d): “allottee” in relation to real estate project, meansthe person to whom plot, apartment or building, as the case maybe, has been allotted, sold (whether as freehold or leasehold) orotherwise transferred by the promoter, and includes the personwho subsequently acquires the said allotment through sale, transferor otherwise but does not include person to whom such plot,apartment or building, as the case may be, is given on rent;

Section 2(zn): “real estate project” means the development of abuilding or building consisting or apartments, or converting anexisting building or part thereof into apartments, or thedevelopment of land into plots or apartments, as the case may be,for the purpose of selling all or some of the said apartments orplots or building, as the case may be, and includes the commonareas, the development works, all improvements and structuresthereon, and all easement, rights and appurtenances belongingthereto;”

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

Ahand, particularly Section 18 relating to the duties of interim resolutionprofessional; Section 21 specifying the composition of the Committee ofCreditors and matters related with it; Section 24 laying down the normsfor meeting of the Committee of Creditors; Section 25 relating to theduties of the resolution professional; Section 25A, as inserted with effectfrom 06.06.2018 and as amended with effect from 16.08.2019, in regardBto the rights and duties of the authorised representative of the financialcreditors; Section 30 on the essentials of resolution plan and itssubmission to the Committee of Creditors by the resolution professional;Section 31 relating to the approval of resolution plan by the AdjudicatingAuthority; Sections 32 and 61 relating to the appeal against an orderCapproving the resolution plan and grounds for such an appeal; Section 53relating to distribution of assets in case of liquidation; and Section 238 onthe overriding effect of the Code. These provisions read as under: -

“Section 18. Duties of interim resolution professional.- Theinterim resolution professional shall perform the following duties,Dnamely:-(a) collect all information relating to the assets, finances andoperations of the corporate debtor for determining the financialposition of the corporate debtor, including information relating to-

(i) business operations for the previous two years;E(ii) financial and operational payments for the previous twoyears;

(iii) list of assets and liabilities as on the initiation date; and

(iv) such other matters as may be specified;

F(b) receive and collate all the claims submitted by creditors tohim, pursuant to the public announcement made under sections13 and 15;

(c) constitute committee of creditors;

(d) monitor the assets of the corporate debtor and manage itsGoperations until resolution professional is appointed by thecommittee of creditors;

(e) file information collected with the information utility, ifnecessary; and

(f) take control and custody of any asset over which the corporateHdebtor has ownership rights as recorded in the balance sheet of

the corporate debtor, or with information utility or the depositoryof securities or any other registry that records the ownership ofassets including-

(i) assets over which the corporate debtor has ownership rightswhich may be located in foreign country;

(ii) assets that may or may not be in possession of the corporatedebtor;

(iii) tangible assets, whether movable or immovable;

(iv) intangible assets including intellectual property;

(v) securities including shares held in any subsidiary of thecorporate debtor, financial instruments, insurance policies;

(vi) assets subject to the determination of ownership by courtor authority:

(g) to perform such other duties as may be specified by the Board.Explanation.–For the purposes of this [section][43], the term“assets” shall not include the following, namely:-

(a) assets owned by third party in possession of the corporatedebtor held under trust or under contractual arrangements includingbailment;

(b) assets of any Indian or foreign subsidiary of the corporatedebtor; and

(c) such other assets as may be notified by the Central Governmentin consultation with any financial sector regulator.

44Section 21. Committee of creditors.-(1) The interimresolution professional shall after collation of all claims receivedagainst the corporate debtor and determination of the financial

position of the corporate debtor, constitute committee of creditors.

43 Substituted by Act 26 of 2018, sec. 14, for “sub-section” (w.r.e.f. 06.06.2018).

44 This Section 21 has undergone various changes in its amendment by Act 26 of 2018w.r.e.f. 06.06.2018 which include substitution/omission of certain expressions as alsoinsertion of certain provisions. While leaving aside all the minute details, we may, ofcourse, indicate that by this very amendment, sub-sections (6A) and (6B) were alsoinserted and sub-sections (7) and (8) were substituted. Before their substitution, sub-sections (7) and (8) stood as under:

“(7) The Board may specify the manner of determining the voting share inrespect of financial debts issued as securities under sub-section (6).

(2) The committee of creditors shall comprise all financialcreditors of the corporate debtor:

Provided that financial creditor or the authorisedrepresentative of the financial creditor referred to in sub-section(6) or sub-section (6A) or sub-section (5) of section 24, if it is aBrelated party of the corporate debtor, shall not have any right ofrepresentation, participation or voting in meeting of the committeeof creditors.

Provided further that the first proviso shall not apply to afinancial creditor, regulated by financial sector regulator, if it is arelated party of the corporate debtor solely on account ofconversion or substitution of debt into equity shares or instrumentsconvertible into equity shares, prior to the insolvencycommencement date.

(3) Subject to sub-sections (6) and (6A), where the corporatedebtor owes financial debts to two or more financial creditors aspart of consortium or agreement, each such financial creditorshall be part of the committee of creditors and their voting shareshall be determined on the basis of the financial debts owed tothem.

E(4) Where any person is financial creditor as well as anoperational creditor,-

(a) such person shall be financial creditor to the extent ofthe financial debt owed by the corporate debtor, and shall be includedin the committee of creditors, with voting share proportionate tothe extent of financial debts owed to such creditor;F

(b) such person shall be considered to be an operationalcreditor to the extent of the operational debt owed by the corporatedebtor to such creditor.

(5) Where an operational creditor has assigned or legallyGtransferred any operational debt to financial creditor, the

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

assignee or transferee shall be considered as an operational creditorto the extent of such assignment or legal transfer.

(6) Where the terms of the financial debt extended as partof consortium arrangement or syndicated facility provide for asingle trustee or agent to act for all financial creditors, each financialcreditor may-

(a) authorise the trustee or agent to act on his behalf in thecommittee of creditors to the extent of his voting share;

(b) represent himself in the committee of creditors to theextent of his voting share;

(c) appoint an insolvency professional (other than theresolution professional) at his own cost to represent himself in thecommittee of creditors to the extent of his voting share; or

(d) exercise his right to vote to the extent of his votingshare with one or more financial creditors jointly or severally.

(6A) Where financial debt—

(a) is in the form of securities or deposits and the terms ofthe financial debt provide for appointment of trustee or agent toact as authorised representative for all the financial creditors, suchtrustee or agent shall act on behalf of such financial creditors;

(b) is owed to class of creditors exceeding the number asmay be specified, other than the creditors covered under clause(a) or sub-section (6), the interim resolution professional shall makean application to the Adjudicating Authority along with the list ofall financial creditors, containing the name of an insolvencyprofessional, other than the interim resolution professional, to actas their authorised representative who shall be appointed by theAdjudicating Authority prior to the first meeting of the committeeof creditors;

(c) is represented by guardian, executor or administrator,such person shall act as authorised representative on behalf ofsuch financial creditors,

and such authorised representative under clause (a) or clause (b)or clause (c) shall attend the meetings of the committee of

Acreditors, and vote on behalf of each financial creditor to the extentof his voting share.

(6B) The remuneration payable to the authorisedrepresentative-

(i) under clauses (a) and (c) of sub-section (6A), if any, shallbe as per the terms of the financial debt or the relevantdocumentation; and

(ii) under clause (b) of sub-section (6A) shall be as specifiedwhich shall form part of the insolvency resolution process costs.

(7) The Board may specify the manner of voting and thedetermining of the voting share in respect of financial debts coveredunder sub-sections (6) and (6A).

(8) Save as otherwise provided in this Code, all decisionsof the committee of creditors shall be taken by vote of not lessthan fifty-one per cent. of voting share of the financial creditors:

Provided that where corporate debtor does not have anyfinancial creditors, the committee of creditors shall be constitutedand shall comprise of such persons to exercise such functions insuch manner as may be specified.

(9) The committee of creditors shall have the right to requirethe resolution professional to furnish any financial information inrelation to the corporate debtor at any time during the corporateinsolvency resolution process.

(10) The resolution professional shall make available anyFfinancial information so required by the committee of creditorsunder sub-section (9) within period of seven days of suchrequisition.

45Section 24. Meeting of committee of creditors.-(1) Themembers of the committee of creditors may meet in person or bysuch electronic means as may be specified.

(2) All meetings of the committee of creditors shall beconducted by the resolution professional.

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

(3) The resolution professional shall give notice of eachmeeting of the committee of creditors to-

(a) members of committee of creditors, including theauthorised representatives referred to in sub-sections (6) and (6A)of section 21 and sub-section (5);

(b) members of the suspended Board of Directors or thepartners of the corporate persons, as the case may be;

(c) operational creditors or their representatives if the amountof their aggregate dues is not less than ten per cent of the debt.

(4) The directors, partners and one representative ofoperational creditors, as referred to in sub-section (3), may attendthe meetings of committee of creditors, but shall not have anyright to vote in such meetings:

Provided that the absence of any such director, partner orrepresentative of operational creditors, as the case may be, shallnot invalidate proceedings of such meeting.

(5) Subject to sub-sections (6), (6A) and (6B) of section21, any creditor who is member of the committee of creditorsmay appoint an insolvency professional other than the resolutionprofessional to represent such creditor in meeting of thecommittee of creditors:

Provided that the fees payable to such insolvencyprofessional representing any individual creditor will be borne bysuch creditor.

(6) Each creditor shall vote in accordance with the votingshare assigned to him based on the financial debts owed to suchcreditor.

(7) The resolution professional shall determine the votingshare to be assigned to each creditor in the manner specified bythe Board.

(8) The meetings of the committee of creditors shall beconducted in such manner as may be specified.

Section 25. Duties of resolution professional.-(1) It shall bethe duty of the resolution professional to preserve and protect the

assets of the corporate debtor, including the continued businessoperations of the corporate debtor.

(2) For the purposes of sub-section (1), the resolutionprofessional shall undertake the following actions, namely:-

(a) take immediate custody and control of all the assets ofthe corporate debtor, including the business records of the corporatedebtor;

(b) represent and act on behalf of the corporate debtor withthird parties, exercise rights for the benefit of the corporate debtorin judicial, quasi-judicial or arbitration proceedings;

(c) raise interim finances subject to the approval of thecommittee of creditors under section 28;

(d) appoint accountants, legal or other professionals in themanner as specified by Board;

(e) maintain an updated list of claims;

(f) convene and attend all meetings of the committee ofcreditors;

(g) prepare the information memorandum in accordanceEwith section 29;

46[(h) invite prospective resolution applicants, who fulfil suchcriteria as may be laid down by him with the approval of committeeof creditors, having regard to the complexity and scale of operationsof the business of the corporate debtor and such other conditionsFas may be specified by the Board, to submit resolution plan orplans.]

(i) present all resolution plans at the meetings of thecommittee of creditors;

(j) file application for avoidance of transactions inaccordance with Chapter III, if any; and

46 This clause (h) was substituted by Act 8 of 2018, sec. 4, w.r.e.f. 23.11.2017. Clause(h), before substitution, stood as under:

“(h) invite prospective lenders, investors, and any other persons to putHforward resolution plans;”.

(k) such other actions as may be specified by the Board.47Section 25A. Rights and duties of authorisedrepresentative of financial creditors.-(1) The authorisedrepresentative under sub-section (6) or sub-section (6A) of section21 or sub-section (5) of section 24 shall have the right to participateand vote in meetings of the committee of creditors on behalf ofthe financial creditor he represents in accordance with the priorvoting instructions of such creditors obtained through physical orelectronic means.

(2) It shall be the duty of the authorised representative tocirculate the agenda and minutes of the meeting of the committeeof creditors to the financial creditor he represents.

(3) The authorised representative shall not act against theinterest of the financial creditor he represents and shall alwaysact in accordance with their prior instructions:

Provided that if the authorised representative representsseveral financial creditors, then he shall cast his vote in respect ofeach financial creditor in accordance with instructions receivedfrom each financial creditor, to the extent of his voting share:

Provided further that if any financial creditor does not giveprior instructions through physical or electronic means, theauthorised representative shall abstain from voting on behalf ofsuch creditor.

(3A) Notwithstanding anything to the contrary contained insub-section (3), the authorised representative under sub-section(6A) of section 21 shall cast his vote on behalf of all the financialcreditors he represents in accordance with the decision taken bya vote of more than fifty per cent. of the voting share of thefinancial creditors he represents, who have cast their vote:

Provided that for vote to be cast in respect of an applicationunder section 12A, the authorised representative shall cast hisvote in accordance with the provisions of sub-section (3).

(4) The authorised representative shall file with thecommittee of creditors any instructions received by way of physical

47 This Section 25A was inserted by Act 26 of 2018 (w.r.e.f. 06.06.2018). Herein, sub-section (3A) was inserted by Act No. 26 of 2019 (w.e.f. 16.08.2019).

or electronic means, from the financial creditor he represents, forvoting in accordance therewith, to ensure that the appropriatevoting instructions of the financial creditor he represents iscorrectly recorded by the interim resolution professional orresolution professional, as the case may be.

BExplanation.-For the purposes of this section, the“electronic means” shall be such as may be specified.

48Section 30. Submission of resolution plan.-(1) resolutionapplicant may submit resolution plan [49][along with an affidavitstating that he is eligible under section 29 A] to the resolutionCprofessional prepared on the basis of the information memorandum.

(2) The resolution professional shall examine each resolutionplan received by him to confirm that each resolution plan-

(a) provides for the payment of insolvency resolution processcosts in manner specified by the Board in priority to theD50[payment] of other debts of the corporate debtor;

51[(b) provides for the payment of debts of operationalcreditors in such manner as may be specified by the Board whichshall not be less than-

(i) the amount to be paid to such creditors in the event of aEliquidation of the corporate debtor under section 53; or

(ii) the amount that would have been paid to such creditors, ifthe amount to be distributed under the resolution plan had beendistributed in accordance with the order of priority in sub-section(1) of section 53,F

48 This Section 30 has undergone various changes in its amendments by Acts 8 of 2018,26 of 2018 and 26 of 2019. Several aspects relating to the requirements of Section 30have formed the matters of contention herein. For their relevance, all the concernedamendments are being indicated.

49 Inserted by Act 26 of 2018, sec. 23(i) (w.r.e.f. 06.06.2018).

G50 Substituted by Act 26 of 2018, sec. 23 (ii)(A), for “repayment” (w.r.e.f. 06.06.2018).51 Substituted by Act 26 of 2019, sec. 6(a), for clause (b) (w.e.f. 16.08.2019). Earlierclause (b) was amended by Act 26 of 2018, sec. 23(ii)(A) (w.r.e.f. 06.06.2018). Clause(b), before substitution, stood as under:

“(b) provides for the payment of the debts of operational creditors in suchmanner as may be specified by the Board which shall not be less than theamount to be paid to the operational creditors in the event of liquidation ofHthe corporate debtor under section 53;”

whichever is higher, and provides for the payment of debts offinancial creditors, who do not vote in favour of the resolutionplan, in such manner as may be specified by the Board, whichshall not be less than the amount to be paid to such creditors inaccordance with sub-section (1) of section 53 in the event of aliquidation of the corporate debtor.

Explanation 1.—For the removal of doubts, it is herebyclarified that distribution in accordance with the provisions ofthis clause shall be fair and equitable to such creditors.

Explanation 2.—For the purposes of this clause, it is herebydeclared that on and from the date of commencement of theInsolvency and Bankruptcy Code (Amendment) Act, 2019, theprovisions of this clause shall also apply to the corporate insolvencyresolution process of corporate debtor-

(i) where resolution plan has not been approved or rejectedby the Adjudicating Authority;

(ii) where an appeal has been preferred under section 61 orsection 62 or such an appeal is not time barred under anyprovision of law for the time being in force; or

(iii) where legal proceeding has been initiated in any courtagainst the decision of the Adjudicating Authority in respect ofa resolution plan;]

(c) provides for the management of the affairs of theCorporate debtor after approval of the resolution plan;

(d) the implementation and supervision of the resolution plan;

(e) does not contravene any of the provisions of the law forthe time being in force;

(f) conforms to such other requirements as may be specifiedby the Board.

52[Explanation.—For the purposes of clause (e), if anyapproval of shareholders is required under the Companies Act,2013 (18 of 2013) or any other law for the time being in force forthe implementation of actions under the resolution plan, such

approval shall be deemed to have been given and it shall not be acontravention of that Act or law.]

(3) The resolution professional shall present to the committeeof creditors for its approval such resolution plans which confirmthe conditions referred to in sub-section (2).

53[(4) The committee of creditors may approve resolutionplan by vote of not less than [54][sixty-six] per cent. of votingshare of the financial creditors, after considering its feasibilityand viability, [55][the manner of distribution proposed, which maytake into account the order of priority amongst creditors as laiddown in sub-section (1) of section 53, including the priority andvalue of the security interest of secured creditor] and such otherrequirements as may be specified by the Board:

Provided that the committee of creditors shall not approvea resolution plan, submitted before the commencement of theInsolvency and Bankruptcy Code (Amendment) Ordinance, 2017(Ord. 7 of 2017), where the resolution applicant is ineligible undersection 29A and may require the resolution professional to invitea fresh resolution plan where no other resolution plan is availablewith it:

Provided further that where the resolution applicant referredto in the first proviso is ineligible under clause (c) of section 29A,the resolution applicant shall be allowed by the committee ofcreditors such period, not exceeding thirty days, to make paymentof overdue amounts in accordance with the proviso to clause (c)of section 29A:

Provided also that nothing in the second proviso shall beconstrued as extension of period for the purposes of the provisoto sub-section (3) of section 12, and the corporate insolvencyresolution process shall be completed within the period specifiedin that sub-section.]

53 Substituted by Act 8 of 2018, sec. 6, for sub-section (4) (w.r.e.f. 23.11.2017). Sub-section (4), before substitution, stood as under:

“(4) The committee of creditors may approve resolution plan by vote of notless than seventy five per cent of voting share of the financial creditors.”.

54 Substituted by Act 26 of 2018, sec. 23(iii)(a) for “seventy-five” (w.r.e.f. 06.06.2018).H55 Inserted by Act 26 of 2019, sec. 6(b) (w.e.f. 16.08.2019).

56[Provided also that the eligibility criteria in section 29A asamended by the Insolvency and Bankruptcy Code (Amendment)Ordinance, 2018 (Ord. 6 of 2018) shall apply to the resolutionapplicant who has not submitted resolution plan as on the date ofcommencement of the Insolvency and Bankruptcy Code(Amendment) Ordinance, 2018 (Ord. 6 of 2018).]

(5) The resolution applicant may attend the meeting of thecommittee of creditors in which the resolution plan of the applicantis considered:

Provided that the resolution applicant shall not have rightto vote at the meeting of the committee of creditors unless suchresolution applicant is also financial creditor.

(6) The resolution professional shall submit the resolutionplan as approved by the committee of creditors to the AdjudicatingAuthority.

57Section 31. Approval of resolution plan.-(1) If theAdjudicating Authority is satisfied that the resolution plan asapproved by the committee of creditors under sub-section (4) ofsection 30 meets the requirements as referred to in sub-section(2) of section 30, it shall by order approve the resolution planwhich shall be binding on the corporate debtor and its employees,members, creditors, [58][including the Central Government, any StateGovernment or any local authority to whom debt in respect ofthe payment of dues arising under any law for the time being inforce, such as authorities to whom statutory dues are owed,]guarantors and other stakeholders involved in the resolution plan:

59[Provided that the Adjudicating Authority shall, beforepassing an order for approval of resolution plan under this sub-section, satisfy that the resolution plan has provisions for itseffective implementation.]

56 Inserted by Act 26 of 2018, sec. 23(iii)(b) (w.r.e.f. 06.06.2018).

57 This Section 31 has also undergone various changes in its amendments by Act 26 of2018 and 26 of 2019. For their relevance, all the concerned amendments of this Section

31 are also indicated.

58 Inserted by Act 26 of 2019, sec. 7 (w.e.f. 16.08.2019).

59 Inserted by Act 26 of 2018, sec. 24(a) (w.r.e.f. 06.06.2018).

(2) Where the Adjudicating Authority is satisfied that theresolution plan does not confirm to the requirements referred to insub-section (1), it may, by an order, reject the resolution plan.

(3) After the order of approval under sub-section (1),-

(a) the moratorium order passed by the AdjudicatingAuthority under section 14 shall cease to have effect; and

(b) the resolution professional shall forward all recordsrelating to the conduct of the corporate insolvency resolutionprocess and the resolution plan to the Board to be recorded on itsdatabase.

60[(4) The resolution applicant shall, pursuant to the resolutionplan approved under sub-section (1), obtain the necessary approvalrequired under any law for the time being in force within periodof one year from the date of approval of the resolution plan by theAdjudicating Authority under sub-section (1) or within such periodDas provided for in such law, whichever is later:

Provided that where the resolution plan contains provisionfor combination as referred to in section 5 of the Competition Act,2002 (12 of 2003), the resolution applicant shall obtain the approvalof the Competition Commission of India under that Act prior toEthe approval of such resolution plan by the committee of creditors.]

Section 32. Appeal.-Any appeal from an order approving theresolution plan shall be in the manner and on the grounds laiddown in sub-section (3) of section 61.

Section 61. Appeals and Appellate Authority.-(1)Notwithstanding anything to the contrary contained under theCompanies Act, 2013 (18 of 2013), any person aggrieved by theorder of the Adjudicating Authority under this part may prefer anappeal to the National Company Law Appellate Tribunal.

(2) Every appeal under sub-section (1) shall be filed withinthirty days before the National Company Law Appellate Tribunal:

Provided that the National Company Law Appellate Tribunalmay allow an appeal to be filed after the expiry of the said period

of thirty days if it is satisfied that there was sufficient cause fornot filing the appeal but such period shall not exceed fifteen days.

(3) An appeal against an order approving resolution planunder section 31 may be filed on the following grounds, namely:–

(i) the approved resolution plan is in contravention of theprovisions of any law for the time being in force;

(ii) there has been material irregularity in exercise of the powersby the resolution professional during the corporate insolvencyresolution period;

(iii) the debts owed to operational creditors of the corporatedebtor have not been provided for in the resolution plan in themanner specified by the Board;

(iv) the insolvency resolution process costs have not beenprovided for repayment in priority to all other debts; or

(v) the resolution plan does not comply with any other criteriaspecified by the Board.

(4) An appeal against liquidation order passed under section33 may be filed on grounds of material irregularity or fraudcommitted in relation to such liquidation order.

Section 53. Distribution of assets.–(1) Notwithstandinganything to the contrary contained in any law enacted by theParliament or any State Legislature for the time being in force,the proceeds from the sale of the liquidation assets shall bedistributed in the following order of priority and within such periodand in such manner as may be specified, namely:-

(a) the insolvency resolution process costs and the liquidationcosts paid in full;

(b) the following debts which shall rank equally betweenand among the following:-

(i) workmen’s dues for the period of twenty-four monthspreceding the liquidation commencement date; and

(ii) debts owed to secured creditor in the event suchsecured creditor has relinquished security in the mannerset out in section 52;

(c) wages and any unpaid dues owed to employees otherthan workmen for the period of twelve months preceding theliquidation commencement date;

(d) financial debts owed to unsecured creditors;

(e) the following dues shall rank equally between and amongthe following:-

(i) any amount due to the Central Government and the StateGovernment including the amount to be received on accountof the Consolidated Fund of India and the Consolidated Fundof State, if any, in respect of the whole or any part of theperiod of two years preceding the liquidation commencementdate;

(ii) debts owed to secured creditor for any amount unpaidfollowing the enforcement of security interest;

(f) any remaining debts and dues;

(g) preference shareholders, if any; and

(h) equity shareholders or partners, as the case may be.

(2) Any contractual arrangements between recipients undersub-section (1) with equal ranking, if disrupting the order of priorityunder that sub-section shall be disregarded by the liquidator.

(3) The fees payable to the liquidator shall be deductedproportionately from the proceeds payable to each class ofrecipients under sub-section (1), and the proceeds to the relevantrecipient shall be distributed after such deduction.

Explanation.–For the purpose of this section-

(i) it is hereby clarified that at each stage of thedistribution of proceeds in respect of class of recipientsthat rank equally, each of the debts will either be paid infull, or will be paid in equal proportion within the sameclass of recipients, if the proceeds are insufficient tomeet the debts in full; and

(ii) the term “workmen’s dues” shall have the samemeaning as assigned to it in section 326 of the CompaniesAct, 2013 (18 of 2013).

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

59. We may also take note of Regulations 16A, 37, 38, 39 and39B in CIRP Regulations, as applicable at the relevant time as follows: -

“[61]16A. Authorised representative.-(1) The interim resolutionprofessional shall select the insolvency professional, who is thechoice of the highest number of financial creditors in the class inForm CA received under sub-regulation (1) of regulation 12, toact as the authorised representative of the creditors of therespective class:

Provided that the choice for an insolvency professional toact as authorised representative in Form CA received under sub-regulation (2) of regulation 12 shall not be considered.

(2) The interim resolution professional shall apply to theAdjudicating Authority for appointment of the authorisedrepresentatives selected under sub-regulation (1) within two daysof the verification of claims received under sub-regulation (1) ofregulation 12.

(3) Any delay in appointment of the authorised representativefor any class of creditors shall not affect the validity of any decisiontaken by the committee.

(4) The interim resolution professional shall provide the listof creditors in each class to the respective authorisedrepresentative appointed by the Adjudicating Authority.

(5) The interim resolution professional or the resolutionprofessional, as the case may be, shall provide an updated list ofcreditors in each class to the respective authorised representativeas and when the list is updated.

Clarification: The authorised representative shall have norole in receipt or verification of claims of creditors of the class herepresents.

61 This Regulation 16A was inserted w.e.f. 04.07.2018.

(6) The interim resolution professional or the resolutionprofessional, as the case may be, shall provide electronic meansof communication between the authorised representative and thecreditors in the class.

(7) The voting share of creditor in class shall be inBproportion to the financial debt which includes an interest at therate of eight per cent per annum unless different rate has beenagreed to between the parties.

(8) The authorised representative of creditors in classshall be entitled to receive fee for every meeting of the committeeCattended by him in the following manner, namely:-

(9) The authorised representative shall circulate the agendato creditors in class and announce the voting window at leasttwenty-four hours before the window opens for voting instructionsand keep the voting window open for at least twelve hours.

E6237. Resolution Plan.-A resolution plan shall provide for themeasures, as may be necessary, for insolvency resolution of thecorporate debtor for maximization of value of its assets, includingbut not limited to the following:-

(a) transfer of all or part of the assets of the corporate debtorFto one or more persons;

(b) sale of all or part of the assets whether subject to anysecurity interest or not;

(ba) restructuring of the corporate debtor, by way of merger,amalgamation and demerger;

(c) the substantial acquisition of shares of the corporate debtor,or the merger or consolidation of the corporate debtor with one or

more persons;

62 This Regulation 37 was substituted for the earlier one w.e.f. 06.02.2018. Clause (ba)was inserted to this Regulation w.e.f. 28.11.2019; and clause (ca) was inserted w.e.f.H04.07.2018.

(ca) cancellation or delisting of any shares of the corporatedebtor if applicable:

(d) satisfaction or modification of any security interest;

(e) curing or waiving of any breach of the terms of any debtdue from the corporate debtor;

(f) reduction in the amount payable to the creditors;

(g) extension of maturity date or change in interest rate orother terms of debt due from the corporate debtor;

(h) amendment of the constitutional documents of the corporatedebtor;

(i) issuance of securities of the corporate debtor, for cash,property, securities, or in exchange for claims or interests, or otherappropriate purpose;

(j) change in portfolio of goods or services produced or renderedby the corporate debtor;

(k) change in technology used by the corporate debtor; and

(l) obtaining necessary approvals from the Central and StateGovernments and other authorities.

6338. Mandatory contents of the resolution plan.-64[(1) Theamount payable under resolution plan-

(a) to the operational creditors shall be paid in priority overfinancial creditors; and

63 This Regulation 38 has also undergone several changes. The relevant amendments tosub-regulation (1) and (3) are separately indicated hereinbelow. That apart, sub-regulation(1A) was inserted w.e.f. 05.10.2017 and sub-regulation (1B) was inserted w.e.f.24.01.2019

64 Sub-regulation (1) was amended w.e.f. 04.07.2018; then was substituted w.e.f.05.10.2018; and then was again substituted w.e.f. 28.11.2019. Before the last substitution,this sub-regulation (1), stood as under:-

“(1) The amount due to the operational creditors under resolution planshall be given priority in payment over financial creditors.”

A(b) to the financial creditors, who have right to vote undersub-section (2) of Section 21 and did not vote in favour of theresolution plan, shall be paid in priority over financial creditorswho voted in favour of the plan.]

(1A) resolution plan shall include statement as to how itBhas dealt with the interests of all stakeholders, including financialcreditors and operational creditors, of the corporate debtor.

(1B) resolution plan shall include statement giving details ifthe resolution applicant or any of its related parties has failed toimplement or contributed to the failure of implementation of anyCother resolution plan approved by the Adjudicating Authority atany time in the past.

(2) resolution plan shall provide:

(a) the term of the plan and its implementation schedule;

D(b) the management and control of the business of the corporatedebtor during its term; and

(c) adequate means for supervising its implementation.

65[(3) resolution plan shall demonstrate that-E(a) it addresses the cause of default;

(b) it is feasible and viable;

(c) it has provisions for its effective implementation;

F(d) it has provisions for approvals required and the timeline forthe same; and

(e) the resolution applicant has the capability to implement theresolution plan.]

65 Sub-regulation (3) was inserted w.e.f. 07.11.2017 and then was substituted w.e.f.04.07.2018. Before substitution, this sub-regulation (3), stood as under:-

“(3) resolution plan shall contain details of the resolution applicant andother connected persons to enable the committee to assess the credibility ofsuch applicant and other connected persons to take prudent decision whileHconsidering the resolution plan for its approval.”.

6639. Approval of resolution plan.-67[(1) prospectiveresolution applicant in the final list may submit resolution planor plans prepared in accordance with the Code and theseregulations to the resolution professional electronically withinthe time given in the request for resolution plans under regulation36B along with-

(a) an affidavit stating that it is eligible under section29A to submit resolution plans;

68[***]

(c) an undertaking by the prospective resolution applicantthat every information and records provided in connection withor in the resolution plan is true and correct and discovery offalse information and record at any time will render the applicantineligible to continue in the corporate insolvency resolutionprocess, forfeit any refundable deposit, and attract penal actionunder the Code.

(1A) resolution plan which does not comply with theprovisions of sub-regulation (1) shall be rejected.]

69[(2) The resolution professional shall submit to thecommittee all resolution plans which comply with therequirements of the Code and regulations made thereunderalong with the details of following transactions, if any, observed,found or determined by him-

66 This Regulation 39 has also undergone wide ranging amendments, the relevant ofwhich are indicated hereinbelow.

67 Sub-regulation (1) was substituted w.e.f. 01.01.2018 and that was replaced by sub-regulation (1) and (1A) w.e.f. 04.07.2018. Before 04.07.2018, sub-regulation (1) stoodas under: –

“(1) resolution applicant shall submit resolution plan(s) prepared inaccordance with the Code and these regulations to the resolution professional withinthe time given in the invitation made under clause (h) of sub-section (2) of section 25.”68 Clause (b) was omitted w.e.f. 05.10.2018. Before omission, it stood as under:

“(b) an undertaking that it will provide for additional funds to the extent

required for the purposes under sub-regulation (1) of regulation 38; and”.69 Sub-regulation (2) was substituted w.e.f. 07.11.2017. Prior to this substitution, thissub-regulation (2) stood as under:

“(2) The resolution professional shall present all resolution plans that meetthe requirements of the Code and these Regulations to the committee for itsconsideration.”

A(a) preferential transactions under section 43;

(b) undervalued transactions under section 45;

(c) extortionate credit transactions under section 50; and

(d) fraudulent transactions under section 66,

Band the orders, if any, of the adjudicating authority in respect ofsuch transactions.]

70-71[(3) The committee shall evaluate the resolution plans receivedunder sub-regulation (1) strictly as per the evaluation matrix toidentify the best resolution plan and may approve it with suchCmodifications as it deems fit:

Provided that the committee shall record its deliberationson the feasibility and viability of the resolution plans.]

D70 This sub-regulation (3) was substituted w.e.f. 04.07.2018; before its substitution itstood as under:

“(3) The committee may approve any resolution plan with such modificationsas it deems fit”

Its proviso was substituted w.e.f. 25.07.2019; before its substitution itstood as under:

E“Provided that the committee shall record the reasons for approving orrejecting resolution plan.”

There had also been an insertion of sub-regulation (3A) w.e.f. 06.02.2018

but the same was omitted w.e.f. 05.10.2018.

71 We may further indicate that w.e.f. 07.08.2020, entire of this sub-regulation (3) hasbeen substituted and sub-regulations (3A) and (3B) have been inserted, essentiallydealing with the eventuality of consideration of more than one resolution plans by theFCoC.

Though the amendment w.e.f. 07.08.2020, would not directly apply tothe present case but, for reference, we may reproduce the newly substitutedsub-regulation (3),(3A) and (3B) as under:

“(3) The committee shall-

(a) evaluate the resolution plans received under sub-regulation (2) asper evaluation matrix;

(b) record its deliberations on the feasibility and viability of eachresolution plan; and

(c) vote on all such resolution plans simultaneously.

(3A) Where only one resolution plan is put to vote, it shall be consideredapproved if it receives requisite votes.

(3B) Where two or more resolution plans are put to vote simultaneously,the resolution plan, which receives the highest votes, but not less than requisiteH

72[(4) The resolution professional shall endeavour to submitthe resolution plan approved by the committee to the AdjudicatingAuthority at least fifteen days before the maximum period forcompletion of corporate insolvency resolution process under section12, along with compliance certificate in Form of the Scheduleand the evidence of receipt of performance security required undersub-regulation (4A) of regulation 36B.]

(5) The resolution professional shall forthwith send copyof the order of the Adjudicating Authority approving or rejecting aresolution plan to the participants and the resolution applicant.

(6) provision in resolution plan which would otherwiserequire the consent of the members or partners of the corporatedebtor, as the case may be, under the terms of the constitutionaldocuments of the corporate debtor, shareholders’ agreement, jointventure agreement or other document of similar nature, shalltake effect notwithstanding that such consent has not beenobtained.

(7) No proceedings shall be initiated against the interimresolution professional or the resolution professional, as the casemay be, for any actions of the corporate debtor, prior to theinsolvency commencement date.

(8) person in charge of the management or control of thebusiness and operations of the corporate debtor after resolutionplan is approved by the Adjudicating Authority, may make anapplication to the Adjudicating Authority for an order seeking theassistance of the local district administration in implementing theterms of resolution plan.

73[(9) creditor, who is aggrieved by non-implementationof resolution plan approved under sub-section (1) of section 31,may apply to the Adjudicating Authority for directions.]”

votes, shall be considered as approved:

Provided that where two or more resolution plans receive equal votes,but not less than requisite votes, the committee shall approve any one of them,as per the tie-breaker formula announced before voting:

Provided further that where none of the resolution plans receivesrequisite votes, the committee shall again vote on the resolution plan thatreceived the highest votes, subject to the timelines under the Code.”

72 This sub-regulation was substituted for the earlier one w.e.f. 04.07.2018 and was alsoamended w.e.f. 24.01.2019.

73 This sub-regulation was inserted w.e.f. 24.01.2019.

A7439B. Meeting liquidation cost.-(1) While approving aresolution plan under sub-section (4) of section 30 or deciding toliquidate the corporate debtor under sub-section (2) of section 33,the committee may make best estimate of the amount requiredto meet liquidation costs, in consultation with the resolutionprofessional, in the event an order for liquidation is passed underBsection 33.

(2) The committee shall make best estimate of the value of theliquid assets available to meet the liquidation costs, as estimated insub-regulation (1).

C(3) Where the estimated value of the liquid assets under sub-regulation (2) is less than the estimated liquidation costs undersub-regulation (1), the committee shall approve plan providingfor contribution for meeting the difference between the two.

(4) The resolution professional shall submit the plan approved underDsub-regulation (3) to the Adjudicating Authority while filing theapproval or decision of the committee under section 30 or 33, asthe case may be.

Explanation.-

For the purposes of this regulation, ‘liquidation costs’ shall haveEthe same meaning as assigned to it in clause (ea) of sub-regulation(1) of regulation (2) of the Insolvency and Bankruptcy Board ofIndia (Liquidation Process) Regulations, 2016.

60.We would hasten to reiterate that in the foregoing extractionsof the provisions, we have indicated the amendments/substitutions/Finsertions in the related footnotes to the extent relevant for the presentpurpose; and not necessarily all the changes as brought about from timeto time.

JIL’s CIRP: Chronicle of complications

G61. The factual and background aspects relating to this batch ofmatters make it evident that the insolvency resolution of the corporatedebtor JIL carries with it vexed and strikingly intricate issues wheretwice over this Court had exercised its plenary powers under Article142 of the Constitution of India to ensure complete justice in the cause

H74 This sub-regulation was inserted w.e.f. 25.07.2018.

and yet, for variety of reasons, the insolvency resolution is eluding thecorporate debtor JIL; and even when the resolution plan is said to havebeen approved by vast majority of 97.36% of the voting share ofCommittee of Creditors, several issues are still hovering over with anassortment of grievances of different stakeholders and role players. Eventhe very process taken up by the Committee of Creditors has beenquestioned apart from several questions over one or the other stipulationin the resolution plan. Further, several questions have spurt up on theorder passed by the Adjudicating Authority, wherein some of the objectionshave been accepted and the plan has been modified while few otherobjections have been rejected. Modification of the resolution plan by theAdjudicating Authority has given the resolution applicant and even IRPseveral causes to be discontented with and at the same time, rejection ofsome of the objections has also been challenged by the objectors. Thisapart, some of the stakeholders, who did not raise objections before theAdjudicating Authority, have also raised their grievances against the plan.Put in nutshell, this process of resolution is yet to pass through mazeof hurdles.

61.1. Having regard to the peculiar circumstances of this case,we had withdrawn all the appeals pending before NCLAT to this Courtand have heard the entire matter at sufficient length, while extendingopportunity of making oral and written submissions to practically all theparties who wished to put their say on record.

61.2. We have examined the submissions so made as also thematerial placed on record with reference to the law applicable and havegiven anxious consideration to the relevant submissions, which arereflected in the points for determination formulated hereinbefore.

62. Before proceeding further, we may also recapitulate that whileentertaining these matters and transferring the cases pending beforeNCLAT to this Court by order dated 06.08.2020, we had directed thatthe IRP shall continue to manage the affairs of the subject company i.e.,JIL. We may point out that the IRP has filed an affidavit dated 05.09.2020,stating the status of the corporate debtor and the major part of activitiesrelating to construction of flats and issuing Offers of Possession which,according to the IRP, has resulted in reduction of liability to the realestate allottees. The relevant paragraphs of this affidavit read as under:-

“I state that as part of management of the affairs of theCorporate Debtor, the Deponent inter alia is continuing the

construction of residential and commercial dwelling units formingpart of the real estate projects of the Corporate Debtor. I furtherstate during the corporate insolvency resolution process(hereinafter, “CIR Process”), the IRP continued construction ofresidential and commercial dwelling units and has issued Offer ofPossessions (OOPs) for 7996 units based on occupancycertificates received from the NOIDA Authority, from time totime. That out of these OOPs issued, sub-lease registration of6,429 has been completed. The process of issuance of OOPs asstarted by the Deponent after the receipt of such occupancycertificates continues.

I further state that for approximately 2,688 allottees to whomOOPs providing for delay rebate was issued prior to 17.12.2019,either the Sub-Lease Deed is still to be executed or the Sub-Lease Deed is pending for registration before the Registrar ofAssurances of Noida.

I state that the delivery of units and their transfer by wayof sub-lease registration has resulted in reduction of FinancialCreditors’ (Real-Estate Allottees) liability by more than Rs. 2,250Crores since commencement of the CIR Process in the CorporateDebtor.”

The objectives and scheme of IBC

63. For dealing with the questions involved, worthwhile it wouldbe to begin the discussion broadly on the scheme of the Code andassignments of some of the relevant role players in the corporateinsolvency resolution process.

63.1. As noticed from the Preamble, the Code came to be enactedto consolidate and amend the laws relating to reorganisation andinsolvency resolution of corporate persons, partnership firms andindividuals in time bound manner; the objectives, inter alia, being formaximisation of the value of assets of such persons and balance ofGinterests of all the stakeholders. The Preamble reads as under: -

“An Act to consolidate and amend the laws relating toreorganisation and insolvency resolution of corporate persons,partnership firms and individuals in time bound mannerfor maximisation of value of assets of such persons, to promoteentrepreneurship, availability of credit and balance the

interests of all the stakeholders including alteration in theorder of priority of payment of Government dues and toestablish an Insolvency and Bankruptcy Board of India, andfor matters connected therewith or incidental thereto.”

63.2. In the judgment delivered on 25.01.2019 in the case of SwissRibbons Private Limited and Anr. v. Union of India and Ors.: (2019)4 SCC 17[75], this Court traversed through the historical background andscheme of the Code in the wake of challenge to the constitutional validityof various provisions therein. One part of such challenge had beenfounded on the ground that the classification between ‘financial creditor’and ‘operational creditor’ was discriminatory and violative of Article 14of the Constitution of India. This ground as also several other groundspertaining to various provisions of the Code were rejected by this Courtafter elaborate dilation on the vast variety of rival contentions. In thecourse, this Court took note, inter alia, of the pre-existing state of lawas also the objects and reasons for enactment of the Code. Whileobserving that focus of the Code was to ensure revival and continuationof the corporate debtor, where liquidation would be the last resort, thisCourt pointed out that on its scheme and framework, the Code was abeneficial legislation to put the corporate debtor on its feet, and not amere recovery legislation for the creditors. This Court said, -

“27. As is discernible, the Preamble gives an insight into what issought to be achieved by the Code. The Code is first and foremost,a Code for reorganisation and insolvency resolution of corporatedebtors. Unless such reorganisation is effected in time-boundmanner, the value of the assets of such persons will deplete.Therefore, maximisation of value of the assets of such persons sothat they are efficiently run as going concerns is another veryimportant objective of the Code. This, in turn, will promoteentrepreneurship as the persons in management of the corporatedebtor are removed and replaced by entrepreneurs. When,therefore, resolution plan takes off and the corporatedebtor is brought back into the economic mainstream, it isable to repay its debts, which, in turn, enhances the viabilityof credit in the hands of banks and financial institutions.Above all, ultimately, the interests of all stakeholders arelooked after as the corporate debtor itself becomes

75 Hereinafter also referred to as the case of ‘Swiss Ribbons’.

Abeneficiary of the resolution scheme—workers are paid,the creditors in the long run will be repaid in full, andshareholders/investors are able to maximise theirinvestment. Timely resolution of corporate debtor who is inthe red, by an effective legal framework, would go long way tosupport the development of credit markets. Since more investmentBcan be made with funds that have come back into the economy,business then eases up, which leads, overall, to higher economicgrowth and development of the Indian economy. What is interestingto note is that the Preamble does not, in any manner, refer toliquidation, which is only availed of as last resort if there isCeither no resolution plan or the resolution plans submitted are notup to the mark. Even in liquidation, the liquidator can sell thebusiness of the corporate debtor as going concern. (SeeArcelorMittal[76] at para 83, fn 3)

28. It can thus be seen that the primary focus of theDlegislation is to ensure revival and continuation of thecorporate debtor by protecting the corporate debtor fromits own management and from corporate death byliquidation. The Code is thus beneficial legislation whichputs the corporate debtor back on its feet, not being mererecovery legislation for creditors. The interests of the corporateEdebtor have, therefore, been bifurcated and separated from thatof its promoters/those who are in management. Thus, the resolutionprocess is not adversarial to the corporate debtor but, in fact,protective of its interests…..”(emphasis in bold supplied)

64. Keeping in view the objectives of the Code and observationsof this Court, we may now take an overview of the scheme and structureof the relevant parts of the Code. Part I thereof contains the provisionsregarding title, extent, commencement and application of the Code asalso the definition and meaning of various expressions used in the Code.GDifferent provisions have come into force on different dates, aspermissible under proviso to sub-section (3) of Section 1. Part II of theCode deals with insolvency resolution and liquidation for corporatepersons. Chapter I of Part II makes provision for its applicability andalso defines various expressions used in this Part (Sections 4 and 5).H76 ArcelorMittal (India) (P) Ltd. v. Satish Kumar Gupta & Ors: (2019) 2 SCC 1.

Chapter II of Part II contains the provisions for corporate insolvencyresolution process in Sections 6 to 32 whereas Chapter III of this Part IIcontains the provisions for liquidation process in Sections 33 to 54[77].

64.1. glance at Chapter II of Part II would inform that it containsthe blueprint for the process of insolvency resolution in relation to thecorporate debtors to whom this Part applies, while specifying the personswho could initiate the process; the manner and impact of such initiation;the roles and rights as also duties of key persons and entities to be involvedin the resolution process like the resolution professional, the Committeeof Creditors, the authorised representative of financial creditors and theresolution applicant; the matters essential for preparation of the resolutionplan; the submission and approval of the resolution plan; and the appealagainst approval of the resolution plan.

Approval of resolution plan: Crucial steps and role players

65. As noticed, as per the requirements of the Code read with theorders passed by this Court in the cases of Chitra Sharma andJaiprakash Associates Ltd. (supra), the insolvency resolution processin relation to the corporate debtor JIL has already passed through thestages of initiation, appointment of interim resolution professional,constitution and reconstitution of the Committee of Creditors, submissionand resubmission of resolution plans, approval of the resolution plan ofNBCC by the Committee of Creditors, submission of the said resolutionplan to the Adjudicating Authority, and its approval by the AdjudicatingAuthority, albeit with some modifications.

65.1. The issues now raised before us basically relate to thecontents of the resolution plan in question; its approval by the Committeeof Creditors; and the order passed by the Adjudicating Authority in itsapproval with modifications. Thus, on the issues raised and points arisingfor determination, the focus in the present case is on the dispensationgoverning the process of approval of the resolution plan by CoC who,under Section 30(4) of the Code, considers and votes at the resolutionplan after it has been verified by the resolution professional as beingcompliant with the statutory requirements specified in Section 30(2) ofthe Code; and on the approval of resolution plan by the AdjudicatingAuthority in terms of Section 31 of the Code. Having regard to the

77 Sections 4 to 32 came into force on 01.12.2016 whereas Section 33 to 54 came intoforce on 15.12.2016.

ABC

Aissues involved, we may usefully take note of the relevant principlesenunciated by this Court in relation to these crucial steps of CIRP.

66. The relevant aspects relating to the steps in CIRP for approvalof the resolution plan have come up for interpretation before this Courtin at least three major decisions, in the cases of K. Sashidhar v. IndianBOverseas Bank and Ors.: (2019) 12 SCC 150 (decided on 05.02.2019),Committee of Creditors of Essar Steel India Limited v. Satish KumarGupta and Ors.: (2020) 8 SCC 531 (decided on 15.11.2019), andMaharashtra Seamless Limited v. Padmanabhan Venkatesh andOrs.: (2020) 11 SCC 467 (decided on 22.01.2020). The contestingparties have also relied upon these decisions in support of their respectiveCcontentions. We shall be referring to these cases in little detail in thelater part of this judgment while determining Point concerning thescope of the jurisdiction of the Adjudicating Authority in dealing with theresolution plan approved by the Committee of Creditors. At this juncture,we may only indicate the importance of few essential role players inDthe process, as discernible from the relevant provisions of the Code andas exposited by this Court.

66.1. In the scheme of IBC, the script of corporate insolvencyresolution process, to large extent, revolves around the resolutionprofessional. When CIRP gets initiated with admission of the applicationEby the Adjudicating Authority as per Sections 7, 9 or 10, as the case maybe, an interim resolution professional is appointed by the AdjudicatingAuthority in terms of Section 13(1)(c) and in the manner laid down inSection 16. Collating and admitting the claims of all creditors; appointingand convening the meetings of the Committee of Creditors; and runningthe business of the corporate debtor as going concern during theFintermediate period are the key tasks assigned to the interim resolutionprofessional, as distinctly appears from Sections 15, 17, 18 and 20 of theCode. Further, in the scheme of IBC, the Committee of Creditors, in itsfirst meeting to be held within seven days of its constitution, has to resolveto appoint the interim resolution professional as resolution professionalGor to replace him by another resolution professional (vide Section 22IBC). In terms of Section 23, the resolution professional is to conductthe entire CIRP and manage the operations of the corporate debtor duringthe period of CIRP. His duties and responsibilities extend to the conductof all the meetings of the Committee of Creditors, giving notice of suchmeetings to the members of CoC, to the members of the suspendedH

Board of Directors and to the operational creditors, if amount of theiraggregate dues is not less than 10% of the debt. Akin to the duties of theinterim resolution professional under Section 18 of the Code, the resolutionprofessional is also required to preserve and protect the assets of thecorporate debtor while continuing with the business operations and whileundertaking the actions contemplated by Section 25(2) of the Code.Significantly, the resolution professional is also required to prepare theinformation memorandum in terms of Section 29 of the Code; inviteprospective resolution applicants; and present the resolution plans at themeeting of the Committee of Creditors, while duly examining them asrequired by Section 30 of the Code. These compliances are duly regulatedby Regulations 35, 36, 36A and 36B of the CIRP Regulations.

66.1.1. Taking note of the relevant provisions, this Court in thecase of Essar Steel (supra) summed up the key role of the resolutionprofessional in the following terms: -

“48. The detailed provisions that have been stated hereinabovemake it clear that the resolution professional is person who isnot only to manage the affairs of the corporate debtor as goingconcern from the stage of admission of an application underSections 7, 9 or 10 of the Code till resolution plan is approved bythe Adjudicating Authority, but is also key person who is to appointand convene meetings of the Committee of Creditors, so that theymay decide upon resolution plans that are submitted in accordancewith the detailed information given to resolution applicants by theresolution professional. Another very important function of theresolution professional is to collect, collate and finally admit claimsof all creditors, which must then be examined for payment, in fullor in part or not at all, by the resolution applicant and be finallynegotiated and decided by the Committee of Creditors.”

66.2. Further, the role of prospective resolution applicant has alsobeen explained in Essar Steel with reference, inter alia, to UNCITRALLegislative Guide as also Regulations 37 and 38 of the CIRP Regulationson the contents of resolution plan, while pointing out the rights of aprospective resolution applicant to receive necessary information as alsoits duty to prepare the resolution plan providing for necessary measuresfor insolvency resolution of the corporate debtor with maximisation ofthe value of its assets.

744SUPREME COURT REPORTS

[2021] 12 S.C.R.

ACommittee of Creditors: the protagonist of CIRP

67. While in their representative roles, the resolution professionaland the resolution applicant are duty bound to ensure that the resolutionplan is prepared in conformity with the requirements of the Code andthe CIRP Regulations and is properly presented for consideration, theBcentral role in taking the decision as to whether resolution plan beadopted or not, in the same form as presented to it or in modified form;and as to whether the attempt for revival of corporate debtor be madeor not, ultimately rests with the pivotal body, comprising of the financialcreditors of the corporate debtor and termed as “Committee of Creditors”.As noticed from the provisions above-quoted, the final decision on aCresolution plan is taken by the Committee of Creditors; and, for approval,a resolution plan is required to be voted in favour by not less than 66% ofthe voting share of the financial creditors, as per Section 30(4) of theCode. It is also relevant to point out that though the resolution professionalis to run the business of the corporate debtor as going concern duringDthe corporate insolvency resolution process but, as per Section 28(3) ofthe Code, he cannot take certain decisions relating to the managementof the corporate debtor without prior approval of the Committee ofCreditors by vote of at least 66% of the voting shares[78].67.1. It is, therefore, evident that corporate insolvency resolution,Ewith approval of the plan of resolution, is ultimately in the exclusivedomain of the Committee of Creditors. Even during the resolution process,major decisions as regards management and finances of the corporatedebtor are in the control of the Committee of Creditors. As per thecomposition delineated in Section 21 of the Code, the Committee ofCreditors is comprised of all financial creditors of the corporate debtor;Fand the frame of Section 21 puts it beyond doubt that the voting share ofeach financial creditor is determined on the basis of financial debt owedto it. It is also clear from Section 30(4) as also Section 28(3) that themajor decisions of approval are to be taken by the Committee of Creditorsby vote of at least 66% of the voting share of the financial creditorsGand not by simple majority. The reasons and purpose for assigningsuch unique and decisive role in corporate insolvency resolution to theCommittee of Creditors and for that matter, to substantial block of not

78 This percentage of minimum votes of CoC, for approval of resolution plan as also forprior approval of certain actions, was ‘seventy-five’ in the Code as originally enactedHand was altered to ‘sixty-six’ by way of an amendment with effect from 06.06.2018.

less than 2/3[rd] of voting share of the financial creditors, were extensivelydelineated in the report of the Bankruptcy Law Reforms Committee ofNovember, 2015 while remarking on the essential theme that the‘appropriate disposition of defaulting firm is business decision,and only the creditors should make it’.

67.2. In the case of K. Sashidhar (supra), while setting out therelevant extracts from the said Report, this Court exposited on the primacyof the commercial wisdom of the Committee of Creditors in the corporateinsolvency resolution process in the following terms: -

“52. As aforesaid, upon receipt of “rejected” resolution plan theadjudicating authority (NCLT) is not expected to do anything more;but is obligated to initiate liquidation process under Section 33(1)of the I&B Code. The legislature has not endowed the adjudicatingauthority (NCLT) with the jurisdiction or authority to analyse orevaluate the commercial decision of CoC much less to enquireinto the justness of the rejection of the resolution plan by thedissenting financial creditors. From the legislative history and thebackground in which the I&B Code has been enacted, it is noticedthat completely new approach has been adopted for speedingup the recovery of the debt due from the defaulting companies. Inthe new approach, there is calm period followed by swiftresolution process to be completed within 270 days (outer limit)failing which, initiation of liquidation process has been madeinevitable and mandatory. In the earlier regime, the corporatedebtor could indefinitely continue to enjoy the protection givenunder Section 22 of the Sick Industrial Companies Act, 1985 orunder other such enactments which has now been forsaken.Besides, the commercial wisdom of CoC has been givenparamount status without any judicial intervention, for ensuringcompletion of the stated processes within the timelines prescribedby the I&B Code. There is an intrinsic assumption thatfinancial creditors are fully informed about the viability ofthe corporate debtor and feasibility of the proposedresolution plan. They act on the basis of thoroughexamination of the proposed resolution plan and assessmentmade by their team of experts. The opinion on the subject-matter expressed by them after due deliberations in CoCmeetings through voting, as per voting shares, is

collective business decision. The legislature, consciously,has not provided any ground to challenge the “commercialwisdom” of the individual financial creditors or theircollective decision before the adjudicating authority. Thatis made non-justiciable.

53. In the report of the Bankruptcy Law Reforms Committee ofNovember 2015, primacy has been given to CoC to evaluate thevarious possibilities and make decision. It has been observedthus:

“The key economic question in the bankruptcy process

When firm (referred to as the corporate debtor in the draftlaw) defaults, the question arises about what is to be done.Many possibilities can be envisioned. One possibility is totake the firm into liquidation. Another possibility is tonegotiate debt restructuring, where the creditors acceptDa reduction of debt on an NPV basis, and hope that thenegotiated value exceeds the liquidation value. Anotherpossibility is to sell the firm as going concern and usethe proceeds to pay creditors. Many hybrid structures ofthese broad categories can be envisioned.

EThe Committee believes that there is only one correct forumfor evaluating such possibilities, and making decision:a creditors committee, where all financial creditors havevotes in proportion to the magnitude of debt that they hold.In the past, laws in India have brought arms of theGovernment (legislature, executive or judiciary) into thisFquestion. This has been strictly avoided by the Committee.The appropriate disposition of defaulting firm is abusiness decision, and only the creditors should make it.”

(emphasis in bold supplied; emphasis in italics is in original)

67.3. In Essar Steel (supra), 3-Judge Bench of this CourtGsurveyed almost all the relevant provisions concerning corporateinsolvency resolution process; and, as noticed above, explained theassignments of different role players in this process. In that context, thisCourt again explained the primacy endowed on the commercial wisdomof the Committee of Creditors and reasons therefor, with further detailedHreference to the aforesaid report of the Bankruptcy Law Reforms

Committee of November, 2015. Apart from the passage from the saidreport that was noticed in K. Sashidhar (reproduced hereinabove), theCourt noticed various other passages from this report in Essar Steel;and one part thereof, which further underscores the rationale for onlyfinancial creditors handling the process of resolution, could be usefullyreproduced as under (part of paragraph 56 at p. 578 of SCC): -

“5.3.1. Steps at the start of the IRP

4. Creation of the creditors committee

The creditors committee will have the power to decide thefinal solution by majority vote in the negotiations. The majorityvote requires more than or equal to 75 per cent of the creditorscommittee by weight of the total financial liabilities. The majorityvote will also involve cram down option on any dissentingcreditors once the majority vote is obtained. …

The Committee deliberated on who should be on thecreditors committee, given the power of the creditors committeeto ultimately keep the entity as going concern or liquidate it. TheCommittee reasoned that members of the creditors committeehave to be creditors both with the capability to assess viability,as well as to be willing to modify terms of existing liabilitiesin negotiations. Typically, operational creditors are neitherable to decide on matters regarding the insolvency of theentity, nor willing to take the risk of postponing payments forbetter future prospects for the entity. The Committee concludedthat, for the process to be rapid and efficient, the Code willprovide that the creditors committee should be restricted toonly the financial creditors.”

(emphasis in italics is in original)

67.4. In Essar Steel, the Court referred to the above-quoted andother passages from the judgement in K. Sashidhar (supra) andexplained the decisive role of the commercial wisdom of the Committeeof Creditors, inter alia, in the following passages: -

“54. Since it is the commercial wisdom of the Committee ofCreditors that is to decide on whether or not to rehabilitatethe corporate debtor by means of acceptance of particular

resolution plan, the provisions of the Code and theRegulations outline in detail the importance of setting upof such Committee, and leaving decisions to be made by therequisite majority of the members of the aforesaid Committee inits discretion.……

59. Even though it is the resolution professional who is to run thebusiness of the corporate debtor as going concern during theintermediate period, yet, such resolution professional cannot takecertain decisions relating to management of the corporate debtorwithout the prior approval of at least 66% of the votes of theCommittee of Creditors…….

60. Thus, it is clear that since corporate resolution isultimately in the hands of the majority vote of the Committeeof Creditors, nothing can be done qua the management ofthe corporate debtor by the resolution professional whichimpacts major decisions to be made in the interregnumbetween the taking over of management of the corporatedebtor and corporate resolution by the acceptance of aresolution plan by the requisite majority of the Committeeof Creditors. Most importantly, under Section 30(4), theCommittee of Creditors may approve resolution plan bya vote of not less than 66% of the voting share of thefinancial creditors, after considering its feasibility andviability, and various other requirements as may beprescribed by the Regulations.

64. Thus, what is left to the majority decision of the Committee ofCreditors is the “feasibility and viability” of resolution plan, whichobviously takes into account all aspects of the plan, including themanner of distribution of funds among the various classes ofcreditors. As an example, take the case of resolution plan whichdoes not provide for payment of electricity dues. It is certainlyopen to the Committee of Creditors to suggest modification tothe prospective resolution applicant to the effect that such duesought to be paid in full, so that the carrying on of the business ofthe corporate debtor does not become impossible for want of

most basic and essential element for the carrying on of suchbusiness, namely, electricity. This may, in turn, be accepted by theresolution applicant with consequent modification as todistribution of funds, payment being provided to certain type ofoperational creditor, namely, the electricity distribution company,out of upfront payment offered by the proposed resolution applicantwhich may also result in consequent reduction of amountspayable to other financial and operational creditors. What isimportant is that it is the commercial wisdom of this majorityof creditors which is to determine, through negotiation withthe prospective resolution applicant, as to how and in whatmanner the corporate resolution process is to take place.”

(emphasis in bold supplied)

67.5. In the case of Maharashtra Seamless Ltd. (supra), again,a 3-Judge Bench of this Court referred extensively to the enunciationsin Essar Steel (supra) and reiterated the primacy assigned to thecommercial wisdom of the Committee of Creditors in the matter ofcorporate insolvency resolution.

68. For what has been noticed hereinabove, it would not be anexaggeration in terms that, in corporate insolvency resolution process,the role of Committee of Creditors is akin to that of protagonist, givingfinality to the process (subject, of course, to approval by the AdjudicatingAuthority), who takes the key decisions in its commercial wisdom andalso takes the consequences thereof. As noticed, the process is aimed atbringing the corporate debtor back on its feet and it is acknowledgedthat appropriate disposition of defaulting corporate debtor and the choiceof solution, to keep the corporate debtor as going concern or to liquidateit, is to be made by the financial creditors, who could assess the viabilityand may take decisions in modification of the terms of the existingliabilities. In other words, the decision as to whether the corporate debtorbe resurrected or not, by acceptance of particular resolution plan, isessentially business decision and hence, is left to the committeeconsisting of the financial creditors, that is, the Committee of Creditorsbut, with the requirement that the resolution plan, for its approval, oughtto muster not less than 66% votes of the voting share of the financialcreditors.

69. The significance of primacy of the Committee of Creditors inthe process of corporate insolvency resolution unfolds itself when we

Aexamine the contours of the jurisdiction of Adjudicating Authority dealingwith resolution plan after the same has been voted at by the Committeeof Creditors. We have formulated the questions relating to such contoursas the first point for determination in view of the fact that most of theother questions involved in this batch of matters revolve around the orderdated 03.03.2020 as passed by the Adjudicating Authority in approval ofBthe resolution plan of NBCC with certain modifications. The decision onlegality and validity of the order passed by the Adjudicating Authority onany particular objection or issue would largely depend on the question asto whether the Adjudicating Authority has acted within its jurisdiction orhas overstepped its jurisdiction or has acted illegally or with materialCirregularity in exercise of its jurisdiction. In fact, contours of the jurisdictionof the Adjudicating Authority are also delineated by this Court in theaforesaid decisions, as shall be noticed infra.

70. With the foregoing observations and while keeping theaforementioned enunciations in view, we may now take up the pointsDarising for determination in this case.

Point

Contours of the jurisdiction of Adjudicating Authority in dealingwith resolution plan

E71. As noticed, the resolution plan in relation to the corporatedebtor JIL, as propounded by NBCC, has been approved by theCommittee of Creditors with the votes of 97.36% of the voting share offinancial creditors. However, the Adjudicating Authority (NCLT), whilepassing the impugned order dated 03.03.2020, has modified some of theterms of the resolution plan while also declining modification in relationFto some other terms of the resolution plan. In relation to either of theevents, whether of modifying the terms of the plan or declining the prayerfor modification, invariably the question pertaining to the jurisdiction ofthe Adjudicating Authority would arise for consideration.72. The contours of the powers and jurisdiction of AdjudicatingGAuthority dealing with resolution plan approved by the Committee ofCreditors have been clearly defined, delineated and described by thisCourt in the aforesaid decisions in K. Sashidhar, Essar Steel andMaharashtra Seamless Ltd. Appropriate it would be to take note ofthe principles emanating from these decisions with brief reference tothe relevant factual aspects of each of these cases.H

73. The first in this series of judgments relating to the process ofapproval of resolution plan in CIRP proceedings had been the case ofK. Sashidhar (supra) where the matters in issue related to two differentcorporate debtors, Kamineni Steel & Power (India) (P) Ltd. (‘KSPIPL’)and Innovative Industries Ltd. (‘IIL’).

73.1. Shorn of unnecessary details, the relevant factual aspectsof the case of KSPIPL had been that the said company had filed apetition under Section 10 of the Code seeking initiation of CIRP that wasadmitted on 10.02.2017 by NCLT, Hyderabad and IRP was appointedwith directions to constitute CoC. Accordingly, CoC was constitutedand there had been few rounds of consideration of the matter by CoC,where different propositions were mooted for insolvency resolution.Ultimately, on 30.10.2017, the voting share of consenting banks expresslyapproving the proposed resolution plan was 66.67% and the voting shareof dissenting lender banks was 26.97%. Bank of Maharashtra, having6.36% voting share, neither approved nor rejected the plan nor abstainedfrom voting but conveyed that they remained ‘open to consider theresolution plan’. Be it noted that at the relevant time, the requirement forapproval of the resolution plan, as per Section 30(4) of the Code, wasthat it ought to be approved by vote of not less than 75% of votingshare of the financial creditors.

73.1.1. The position as obtainable after the aforesaid voting wasthat the resolution plan fell short of receiving minimum 75% votes of thevoting share of the financial creditors. IRP filed an affidavit of the outcomebefore the Adjudicating Authority (NCLT, Hyderabad) on 03.11.2017.However, the Managing Director of the corporate debtor submittedbefore the Adjudicating Authority that the majority ought to be countedwithout taking into account the voting share of the financial creditor whochose not to participate in the voting. It was the submission that withsuch exclusion, the percentage of voting share in approval of the planwould be 78.63% and, therefore, the plan could be taken as approved bythe CoC. The NCLT, by its order dated 20.11.2017, allowed the petitionso filed and approved the resolution plan with certain directions. Thethree dissenting financial creditors, including the said Bank ofMaharashtra, filed an appeal before NCLAT against the order of NCLTin approving the resolution plan despite the same having not received theapproval of minimum 75% votes of the voting share of financial creditors.The Managing Director of the corporate debtor also filed an appeal

Achallenging the observation made by NCLT regarding the corporateguarantee to be proceeded with.

73.2. The factual aspects relating to the other corporate debtorIIL had been that its lender bank filed insolvency application that wasadmitted by NCLT, Mumbai on 17.01.2017. In the CoC meeting relatingBto this corporate debtor, the financial creditors holding 66.57% votingshare voted in favour of approving the proposed resolution plan, whereasdissenting financial creditors, having 33.43% voting share, voted against.Resultantly, the proposed plan was not approved for want of support ofthe requisite percentage of voting share. The resolution applicant filedan application seeking permission to submit revised resolution plan andCto invite fresh votes. The impending liquidation proceedings were objectedto by the workers’ union too. The NCLT, however, rejected theapplications and directed initiation of liquidation proceedings by its orderdated 23.11.2017. An appeal was filed challenging the order so passedby the NCLT.D73.3. The Appellate Authority (NCLAT) took up both the appealsrelating to KSPIPL and IIL together and the same were disposed of bya common judgment dated 06.09.2018, wherein it was held that thestatutory requirement of approval of resolution plan by vote of not lessthan 75% of the voting share of financial creditors, as laid down underESection 30(4) of the Code, was mandatory and the plans in questionwere not approved by the requisite majority. Therefore, the appeals weredismissed.

73.4. The common judgment so passed by NCLAT was inchallenge before this Court. During the pendency of appeals in this Court,Fthe aforesaid amendment to Section 30(4) was made and the requisitevoting share for approval of resolution plan was reduced to 66% witheffect from 06.06.2018.

73.5. After examining the long length of rival submissions, thisCourt proceeded to determine the questions as to whether the percentageGof voting share of the financial creditors specified in Section 30(4) ofIBC was mandatory; as to whether the votes of the financial creditorswho had abstained from voting were required to be ignored for thepurpose of computing the required percentage of voting share; as towhether the amendments brought into force during the pendency ofappeals were applicable to those cases; and as to whether it was openH

to the Adjudicating Authority/Appellate Authority to reckon any factorother than those specified in Sections 30(2) or 61(3) of IBC, as the casemay be, for rejection of the resolution plan?

73.6. This Court analysed the entire scheme of the Code,particularly concerning the resolution plan and its approval by theCommittee of Creditors and then by the Adjudicating Authority; andheld that the percentage of voting share was not directory and in thelight of the provisions contained in the Code and the CIRP Regulations,the approving votes must fulfil the requisite percentage of voting share.The Court also held that the amendment to Section 30(4), prescribingnew qualifying standard for approval of resolution plan was neitherretrospective in operation nor was having retroactive effect. The Courtalso rejected the suggestion for different percentage of voting share inthe case of KSPIPL. These aspects are not much relevant for the presentpurpose. The aspects relevant are the enunciations in relation to therespective roles of the Committee of Creditors and the AdjudicatingAuthority. As already noticed, this Court explained in detail the primacygiven to the commercial wisdom of the Committee of Creditors andsuch commercial wisdom being made non-justiciable. Having said so,this Court also proceeded to define the strict limits of the jurisdiction ofNCLT/NCLAT while dealing with the matter relating to approval ofresolution plan in the following passages: -

“55. Whereas, the discretion of the adjudicating authority (NCLT)is circumscribed by Section 31 limited to scrutiny of the resolutionplan “as approved” by the requisite per cent of voting share offinancial creditors. Even in that enquiry, the grounds on whichthe adjudicating authority can reject the resolution plan isin reference to matters specified in Section 30(2), whenthe resolution plan does not conform to the statedrequirements. Reverting to Section 30(2), the enquiry tobe done is in respect of whether the resolution planprovides: (i) the payment of insolvency resolution processcosts in specified manner in priority to the repayment ofother debts of the corporate debtor, (ii) the repayment ofthe debts of operational creditors in prescribed manner,(iii) the management of the affairs of the corporate debtor,(iv) the implementation and supervision of the resolutionplan, (v) does not contravene any of the provisions of the

Alaw for the time being in force, (vi) conforms to such otherrequirements as may be specified by the Board. The Boardreferred to is established under Section 188 of the I&BCode. The powers and functions of the Board have beendelineated in Section 196 of the I&B Code. None of thespecified functions of the Board, directly or indirectly,Bpertain to regulating the manner in which the financialcreditors ought to or ought not to exercise their commercialwisdom during the voting on the resolution plan underSection 30(4) of the I&B Code. The subjective satisfaction ofthe financial creditors at the time of voting is bound to be mixedCbaggage of variety of factors. To wit, the feasibility and viabilityof the proposed resolution plan and including their perceptionsabout the general capability of the resolution applicant to translatethe projected plan into reality. The resolution applicant may havegiven projections backed by normative data but still in the opinionof the dissenting financial creditors, it would not be free fromDbeing speculative. These aspects are completely within the domainof the financial creditors who are called upon to vote on theresolution plan under Section 30(4) of the I&B Code.

56. For the same reason, even the jurisdiction of NCLAT beingin continuation of the proceedings would be circumscribedin that regard and more particularly on account of Section 32 ofthe I&B Code, which envisages that any appeal from an orderapproving the resolution plan shall be in the manner and on thegrounds specified in Section 61(3) of the I&B Code…….

57. On bare reading of the provisions of the I&B Code, it wouldappear that the remedy of appeal under Section 61(1) is againstan “order passed by the adjudicating authority (NCLT)”, whichwe will assume may also pertain to recording of the fact that theproposed resolution plan has been rejected or not approved by avote of not less than 75% of voting share of the financial creditors.Indubitably, the remedy of appeal including the width of jurisdictionof the appellate authority and the grounds of appeal, is creatureof statute. The provisions investing jurisdiction and authorityin NCLT or NCLAT as noticed earlier, have not made thecommercial decision exercised by CoC of not approvingthe resolution plan or rejecting the same, justiciable. This

position is reinforced from the limited grounds specifiedfor instituting an appeal that too against an order “approvinga resolution plan” under Section 31. First, that the approvedresolution plan is in contravention of the provisions of anylaw for the time being in force. Second, there has beenmaterial irregularity in exercise of powers “by the resolutionprofessional” during the corporate insolvency resolutionperiod. Third, the debts owed to operational creditors havenot been provided for in the resolution plan in theprescribed manner. Fourth, the insolvency resolution plancosts have not been provided for repayment in priority toall other debts. Fifth, the resolution plan does not complywith any other criteria specified by the Board. Significantly,the matters or grounds—be it under Section 30(2) or under Section61(3) of the I&B Code—are regarding testing the validity of the“approved” resolution plan by CoC; and not for approving theresolution plan which has been disapproved or deemed to havebeen rejected by CoC in exercise of its business decision.58. Indubitably, the inquiry in such an appeal would be limited tothe power exercisable by the resolution professional under Section30(2) of the I&B Code or, at best, by the adjudicating authority(NCLT) under Section 31(2) read with Section 31(1) of the I&BCode. No other inquiry would be permissible. Further, thejurisdiction bestowed upon the appellate authority (NCLAT) is alsoexpressly circumscribed. It can examine the challenge only inrelation to the grounds specified in Section 61(3) of the I&B Code,which is limited to matters “other than” enquiry into the autonomyor commercial wisdom of the dissenting financial creditors. Thus,the prescribed authorities (NCLT/NCLAT) have beenendowed with limited jurisdiction as specified in the I&BCode and not to act as court of equity or exercise plenarypowers.”

(emphasis in bold supplied)

74. few months after the decision in the case of K. Sashidhar,the aforesaid provisions relating to the approval of resolution plan cameup for further exposition before 3-Judge Bench of this Court in thecase of Essar Steel (supra).

ABC

A74.1. On the background aspects, while omitting details, sufficeit to notice for the present purpose that in the case of Essar Steel, theNCLT, Ahmedabad admitted the petition filed by lender bank and aftera few rounds of proceedings, the negotiated resolution plan of ArcelorMittal (India) (P) Ltd. was approved by CoC by majority of 92.24%.After several further proceedings, the Adjudicating Authority, by its orderBdated 08.03.2019, disposed of the application to approve the resolutionplan. However, in the appeal, the NCLAT modified the terms of theresolution plan and proceeded to redistribute the proceeds while, interalia, holding that financial creditors and operational creditors deserveequal treatment under resolution plan and while further holding thatCCoC was not empowered to decide the manner in which distributionwas to be made between one or other creditors, as there would be aconflict of interest between financial and operational creditors. The orderso passed by the NCLAT was in challenge before this Court.

74.2. In the given backdrop, the roles of resolution professional,Dresolution applicant and Committee of Creditors as also the jurisdictionof Adjudicating Authority and Appellate Authority came up for furtherand fuller exposition by this Court in Essar Steel (supra). We have alreadynoticed the passages from this decision in regard to the scheme of IBCand the pivotal role of Committee of Creditors in the process of insolvencyresolution of corporate debtor. As regards the jurisdiction of AdjudicatingEAuthority and Appellate Authority in this process of insolvency resolution,in Essar Steel, this Court extensively referred to the principles laid downand explained in K. Sashidhar and thereafter held as under: -

“Thus, it is clear that the limited judicial review available,which can in no circumstance trespass upon businessFdecision of the majority of the Committee of Creditors, hasto be within the four corners of Section 30(2) of the Code,insofar as the Adjudicating Authority is concerned, and Section32 read with Section 61(3) of the Code, insofar as the AppellateTribunal is concerned, the parameters of such review having beenGclearly laid down in K. Sashidhar.”

(emphasis in bold supplied)

74.3. In Essar Steel, it was however argued that sub-section (5)of Section 60 was not considered in K. Sashidhar and in that context,this Court examined the rights of operational creditors and the reasonsHset forth in the Insolvency Committee Report, 2018 and then, reiterated

the primacy of Committee of Creditors while declaring the law in nouncertain terms that the Adjudicating Authority cannot interfere on meritswith the commercial decision taken by the Committee of Creditors; thelimited judicial review available to it was to see that the Committee ofCreditors had taken into account the requirement of keeping the corporatedebtor as going concern with maximisation of the value of assets andthe interests of all stakeholders including operational creditors were takencare of. Significantly, in Essar Steel, this Court laid down that if theAdjudicating Authority would find that the requisite parameters had notbeen kept in view, it may send the resolution plan back to the Committeeof Creditors to resubmit the same after satisfying the parameters. ThisCourt laid down as under: -

“73. There is no doubt whatsoever that the ultimatediscretion of what to pay and how much to pay each class orsub-class of creditors is with the Committee of Creditors,but, the decision of such Committee must reflect the factthat it has taken into account maximising the value of theassets of the corporate debtor and the fact that it hasadequately balanced the interests of all stakeholdersincluding operational creditors. This being the case, judicialreview of the Adjudicating Authority that the resolution plan asapproved by the Committee of Creditors has met the requirementsreferred to in Section 30(2) would include judicial review that ismentioned in Section 30(2)(e), as the provisions of the Code arealso provisions of law for the time being in force. Thus, whilethe Adjudicating Authority cannot interfere on merits withthe commercial decision taken by the Committee ofCreditors, the limited judicial review available is to seethat the Committee of Creditors has taken into accountthe fact that the corporate debtor needs to keep going as agoing concern during the insolvency resolution process;that it needs to maximise the value of its assets; and thatthe interests of all stakeholders including operationalcreditors has been taken care of. If the AdjudicatingAuthority finds, on given set of facts, that the aforesaidparameters have not been kept in view, it may send aresolution plan back to the Committee of Creditors to re-submit such plan after satisfying the aforesaid parameters.The reasons given by the Committee of Creditors while approving

resolution plan may thus be looked at by the AdjudicatingAuthority only from this point of view, and once it is satisfied thatthe Committee of Creditors has paid attention to these key features,it must then pass the resolution plan, other things being equal.”

(emphasis in bold supplied)

74.4. Thereafter, this Court dealt with the matter on merits inrelation to certain claims and objections which need not be elaborated;suffice it would be to notice that this Court did not approve the impugnedorder of NCLAT and directed that CIRP of the corporate debtor shalltake place in accordance with the amended resolution plan, as acceptedCby the Committee of Creditors.

75. Maharashtra Seamless Ltd. (supra) has been yet anotherdecision in which interference with the decision of Committee of Creditorsby NCLAT met with total disapproval of this Court.

75.1. In Maharashtra Seamless Ltd., the matter related to CIRPDconcerning the corporate debtor United Seamless Tubular Private Ltd.where resolution plans of four different applicants were considered andCoC approved the resolution plan filed by the appellant MaharashtraSeamless Ltd. by majority of 87.10% of the voting share of financialcreditors. Certain differences arose with respect to the liquidation valueEof the assets of corporate debtor and the CoC took an average of theclosest estimate. However, NCLAT ordered re-determination ofliquidation value and accordingly, the revised value was arrived at.Thereafter, the CoC again approved the resolution plan of the appellantconsidering the revised liquidation value. Then, NCLT approved theresolution plan submitted by the appellant which included an upfrontFpayment of INR 477 crores for infusion in the capital of the corporatedebtor. promoter of the corporate debtor and financial creditor filedappeals before NCLAT contending that the resolution plan gave unfairadvantage to the resolution applicant whereupon, the Appellate Authorityproceeded to give direction to the resolution applicant to enhance itsGfund inflow upfront.

75.2. In the aforesaid backdrop, the matter was considered inappeal filed by the resolution applicant. After having examined therelevant provisions of the Code and the CIRP Regulations as also theenunciations in Essar Steel (supra), this Court observed that there wasno provision in the Code or Regulations under which the bid of anyH

resolution applicant has to match the liquidation value; that the objectbehind such valuation process was to assist the CoC to take properdecision on the resolution plan; and once the plan was approved by CoC,the Adjudicating Authority was only to ascertain if the resolution planwas meeting the requirements of sub-sections (2) and (4) of Section 30.The Court observed that in the given case, the Appellate Authority hadproceeded on equitable perceptions rather than commercial wisdom.Even while observing that release of assets at the value 20% below theliquidation value arrived by valuers appeared inequitable, this Courtobserved that the adjudicatory process ought to cede ground to thecommercial wisdom of the creditors rather than assess the resolutionplan on the basis of quantitative analysis. While disapproving interferenceby the Appellate Authority, this Court observed and held as under: -

“27. Now the question arises as to whether, while approving aresolution plan, the adjudicating authority could reassess resolutionplan approved by the Committee of Creditors, even if the sameotherwise complies with the requirement of Section 31 of the Code.The learned counsel appearing for Indian Bank and the saiderstwhile promoter of the corporate debtor have emphasised thatthere could be no reason to release property valued at Rs 597.54crores to MSL for Rs 477 crores. The learned counsel appearingfor these two respondents have sought to strengthen theirsubmission on this point referring to the other resolution applicantwhose bid was for Rs 490 crores which is more than that of theappellant MSL.

28. No provision in the Code or Regulations has been brought toour notice under which the bid of any resolution applicant has tomatch liquidation value arrived at in the manner provided inRegulation 35 of the Insolvency and Bankruptcy Board of India(Insolvency Resolution Process for Corporate Persons)Regulations, 2016. This point has been dealt with in Essar Steel.We have quoted above the relevant passages from this judgment.

29. It appears to us that the object behind prescribing such valuationprocess is to assist the CoC to take decision on resolution planproperly. Once, resolution plan is approved by the CoC, thestatutory mandate on the adjudicating authority under Section 31(1)of the Code is to ascertain that resolution plan meets therequirement of sub-sections (2) and (4) of Section 30 thereof.

AWe, per se, do not find any breach of the said provisions in theorder of the adjudicating authority in approving the resolution plan.30. The appellate authority has, in our opinion, proceededon equitable perception rather than commercial wisdom.On the face of it, release of assets at value 20% below itsBliquidation value arrived at by the valuers seemsinequitable. Here, we feel the Court ought to cede groundto the commercial wisdom of the creditors rather thanassess the resolution plan on the basis of quantitativeanalysis. Such is the scheme of the Code. Section 31(1) ofthe Code lays down in clear terms that for final approval of aCresolution plan, the adjudicating authority has to be satisfied thatthe requirement of sub-section (2) of Section 30 of the Code hasbeen complied with. The proviso to Section 31(1) of the Codestipulates the other point on which an adjudicating authority has tobe satisfied. That factor is that the resolution plan has provisionsDfor its implementation. The scope of interference by theadjudicating authority in limited judicial review has been laid downin Essar Steel, the relevant passage (para 54) of which we havereproduced in earlier part of this judgment. The case of MSL intheir appeal is that they want to run the company and infuse morefunds. In such circumstances, we do not think the appellateEauthority ought to have interfered with the order of the adjudicatingauthority in directing the successful resolution applicant to enhancetheir fund inflow upfront.”

(emphasis in bold supplied)

76. The expositions aforesaid make it clear that the decision as toFwhether corporate debtor should continue as going concern or shouldbe liquidated is essentially business decision; and in the scheme ofIBC, this decision has been left to the Committee of Creditors, comprisingof the financial creditors. Differently put, in regard to the insolvencyresolution, the decision as to whether particular resolution plan is to beGaccepted or not is ultimately in the hands of the Committee of Creditors;and even in such decision making process, resolution plan cannot betaken as approved if the same is not approved by votes of at least 66%of the voting share of financial creditors. Thus, broadly put, resolutionplan is approved only when the collective commercial wisdom of thefinancial creditors, having at least 2/3[rd] majority of voting share in theHCommittee of Creditors, stands in its favour.

77. In the scheme of IBC, where approval of resolution plan isexclusively in the domain of the commercial wisdom of CoC, the scopeof judicial review is correspondingly circumscribed by the provisionscontained in Section 31 as regards approval of the Adjudicating Authorityand in Section 32 read with Section 61 as regards the scope of appealagainst the order of approval.

77.1. Such limitations on judicial review have been dulyunderscored by this Court in the decisions above-referred, where it hasbeen laid down in explicit terms that the powers of the AdjudicatingAuthority dealing with the resolution plan do not extend to examine thecorrectness or otherwise of the commercial wisdom exercised by theCoC. The limited judicial review available to Adjudicating Authority lieswithin the four corners of Section 30(2) of the Code, which wouldessentially be to examine that the resolution plan does not contraveneany of the provisions of law for the time being in force, it conforms tosuch other requirements as may be specified by the Board, and it providesfor: (a) payment of insolvency resolution process costs in priority; (b)payment of debts of operational creditors; (c) payment of debts ofdissenting financial creditors; (d) for management of affairs of corporatedebtor after approval of the resolution plan; and (e) implementation andsupervision of the resolution plan.

77.2. The limitations on the scope of judicial review are reinforcedby the limited ground provided for an appeal against an order approvinga resolution plan, namely, if the plan is in contravention of the provisionsof any law for the time being in force; or there has been materialirregularity in exercise of the powers by the resolution professional duringthe corporate insolvency resolution period; or the debts owed to theoperational creditors have not been provided for; or the insolvencyresolution process costs have not been provided for repayment in priority;or the resolution plan does not comply with any other criteria specifiedby the Board.

77.3. The material propositions laid down in Essar Steel (supra)on the extent of judicial review are that the Adjudicating Authority wouldsee if CoC has taken into account the fact that the corporate debtorneeds to keep going as going concern during the insolvency resolutionprocess; that it needs to maximise the value of its assets; and that theinterests of all stakeholders including operational creditors have beentaken care of. And, if the Adjudicating Authority would find on given

Aset of facts that the requisite parameters have not been kept in view, itmay send the resolution plan back to the Committee of Creditors for re-submission after satisfying the parameters. Then, as observed inMaharashtra Seamless Ltd. (supra), there is no scope for theAdjudicating Authority or the Appellate Authority to proceed on anyequitable perception or to assess the resolution plan on the basis ofBquantitative analysis. Thus, the treatment of any debt or asset is essentiallyrequired to be left to the collective commercial wisdom of the financialcreditors.77.4. During the course of submissions, one of the parties(YEIDA), seeking to support modification of the resolution planCconcerning some of the terms and stipulations, has referred to decisionby learned Single Judge of the Allahabad High Court in the case ofPradumna Kumar Jain v. U.P. Secondary Education ServiceCommission, Allahabad and Ors.: (1997) 30 ALR 339 to submitthat the power to approve or disapprove includes the power to modify;Dand it has been strongly argued that the power to modify is inherent inthe power of approval in terms of Section 31 of the Code. It is noticedthat the questions involved in the cited decision related to the powersunder Regulation 8 of the U.P. Secondary Education Services Commission(Procedure for Approval of Punishment) Regulations, 1985, whichprovided that ‘the Commission shall after due consideration approveEor disapprove the punishment proposed or may issue any otherdirections deemed fit in the case’. While interpreting the said provision,where the Commission was to act as superior authority and the provisionitself postulated that the said authority could ‘issue any other directionsdeemed fit’, the Court held that the expressions indicated the existenceFof the power to modify. We are afraid, the principles stated in the saiddecision or in other decisions of like nature cannot be imported to readthe power to modify the resolution plan into Section 31 of the Code.

77.5. In fact, the power of approval conferred on the AdjudicatingAuthority in Section 31 of the Code is required to be visualised withGreference to the overall scheme of the Code and the purposes for whichsuch powers have been conferred. The power of judicial review inSection 31 is not akin to the power of superior authority to deal withthe merits of the decision of any inferior or subordinate authority. Assuccinctly stated in Essar Steel (supra), the limited judicial reviewavailable is to see that the Committee of Creditors has adhered to theHspecified parameters, of keeping the corporate debtor going as going

concern during the resolution process; maximisation of the value of itsassets; and taking care of the interests of all stakeholders. This Courthas, in no uncertain terms, held that if the specified parameters have notbeen kept in view, the Adjudicating Authority may send resolution planback to the Committee of Creditors to re-submit such plan after satisfyingthe parameters. The reasons given by the Committee of Creditors are,thus, looked at by the Adjudicating Authority only from this point of view.It is not jurisdiction to decide as to what ought to be the terms of theresolution plan. That jurisdiction, in the scheme of IBC, is conferred onthe Committee of Creditors alone, who has to take such decision in itscommercial wisdom, while keeping in view the applicable provisions andthe specified parameters; of course, its decision of approval has to be bythe requisite majority of minimum 66% of the voting share.

77.6. In yet another set of submissions, on behalf of the erstwhiledirector of JIL and JAL, it has been repeatedly asserted that theCommittee of Creditors had failed in its statutory duty to ensuremaximisation of JIL’s assets and protecting the interests of allstakeholders; and it is submitted that the Committee of Creditors failedto visualise that there was no justification for NBCC seeking to acquireJIL on meagre amount of INR 120 crores despite the net worth of JILbeing much higher.

77.6.1. The assessment about maximisation of the value of assets,in the scheme of the Code, would always be subjective in nature and thequestion, as to whether particular resolution plan and its propositionsare leading to maximisation of value of assets or not, would be the matterof enquiry and assessment of the Committee of Creditors alone. Whenthe Committee of Creditors takes the decision in its commercial wisdomand by the requisite majority; and there is no valid reason in law toquestion the decision so taken by the Committee of Creditors, theadjudicatory process, whether by the Adjudicating Authority or theAppellate Authority, cannot enter into any quantitative analysis to adjudgeas to whether the prescription of the resolution plan results in maximisationof the value of assets or not. The generalised submissions and objectionsmade in relation to this aspect of value maximisation do not, by themselves,make out case of interference in the decision taken by the Committeeof Creditors in its commercial wisdom.

78. To put in nutshell, the Adjudicating Authority has limitedjurisdiction in the matter of approval of resolution plan, which is well-

Adefined and circumscribed by Sections 30(2) and 31 of the Code readwith the parameters delineated by this Court in the decisions above-referred. The jurisdiction of the Appellate Authority is also circumscribedby the limited grounds of appeal provided in Section 61 of the Code. Inthe adjudicatory process concerning resolution plan under IBC, thereis no scope for interference with the commercial aspects of the decisionBof the CoC; and there is no scope for substituting any commercial termof the resolution plan approved by the CoC. Within its limited jurisdiction,if the Adjudicating Authority or the Appellate Authority, as the case maybe, would find any shortcoming in the resolution plan vis-à-vis the specifiedparameters, it would only send the resolution plan back to the CommitteeCof Creditors, for re-submission after satisfying the parameters delineatedby Code and exposited by this Court.

79. The other points arising in this batch of matters, particularlywith reference to the findings and directions by the Adjudicating Authorityin the impugned order dated 03.03.2020 and with reference to the otherDrelated aspects, may now be examined within the framework of theparameters aforesaid and the principles laid down by this Court.

Point

Simultaneous voting over two resolution plans by CoC

E80. While dealing with plethora of disputes and objectionsconcerning the resolution plan of NBCC and the process of its approval,we deem it appropriate to deal, first of all, with part of objections thatapproval of the resolution plan of NBCC by CoC is vitiated because ofthe fact that two resolution plans, of Suraksha Realty and NBCC, wereput to simultaneous voting whereas such simultaneous voting on theFresolution plans was not permissible. If this part of objections is accepted,perhaps, nothing more would require consideration.81. It has been argued on behalf of the objectors that at the timeof voting by CoC in the present matter, there was no provision in theCode permitting the voting by CoC at more than one resolution plan at aGtime and in the very scheme of the Code and the requirements of dueconsideration, it was necessary that one plan was considered at onepoint of time. The process of simultaneous voting in the present casehas vitiated the decision of CoC. It has also been argued that Regulation39(3B), permitting the CoC to put more than one resolution plan to vote,was inserted to CIRP Regulations only with effect from 07.08.2020 andH

being prospective in operation, would not apply to the present process.Per contra, it is contended by the parties standing with the approval ofthe plan in question that there had not been any prohibition or restrictionin the Code for putting more than one resolution plan to vote at the sametime. On behalf of IRP, it has also been contended that in terms of sub-section (3) of Section 30, he was required to present the CoC suchresolution plans, which were conforming to the conditions referred insub-section (2); and as per sub-section (4) of Section 30, the CoC ‘mayapprove resolution plan’. It is, therefore, submitted that in the presentprocess, both the plans were rightly placed before the CoC; and theCoC rightly voted on such plans and approved one of them. It is submittedthat the amendment brought about with effect from 07.08.2020 isclarificatory in nature and only gives out the methodology for puttingmore than one resolution plan to vote.

82. Having examined the objection against simultaneous votingwith reference to the material on record and the law applicable, we areunable to find any substance whatsoever in this objection.

83. It is noteworthy that there has not been any prohibition in thescheme of IBC and CIRP Regulations that CoC could not simultaneouslyconsider and vote upon more than one resolution plan at the same timefor electing one of the available options. It has rightly been contended onbehalf of IRP that in terms of sub-section (3) of Section 30 of the Code,he was obliged to place both the plans before CoC when they werefound conforming to the conditions referred to in sub-section (2) of Section30; and thereafter, it was for the CoC to consider the plans and to voteupon the same. Of course, the CoC could have approved only oneresolution plan; and that has precisely been done in the present case.There does not appear any flaw or fault in the process adopted in thepresent case as regards voting over the resolution plans by the CoC.

83.1. Moreover, as noticed, the legislature itself has made theposition clear by way of later amendment with effect from 07.08.2020,by specifically making stipulations for simultaneous voting over morethan one resolution plan by the CoC, particularly with amendment ofsub-regulation (3) of Regulation 39 of CIRP Regulations and insertion ofsub-regulations (3A) and (3B) thereto.[79] Such an amendment could onlybe visualised as clarificatory in nature; and, in any case, even before

79 vide second footnote to sub-regulation (3) of Regulation 39 of CIRP Regulations,ibid.

Aamendment, there had not been any prohibition in putting two or moreconforming resolution plans to vote simultaneously.

84. It is also noticeable that when the matter was considered inthe second round of litigation and this Court issued various necessarydirections in the order dated 06.11.2019 in exercise of its plenary powersBunder Article 142 of the Constitution of India, it was specifically providedthat the two applicants viz., Suraksha Realty and NBCC would be invitedto submit revised plans for consideration. The minutes of CoC meetinghave also been placed before us by IRP and it appears that this veryaspect was duly deliberated in the meeting where IDBI Bank proposedfor simultaneous voting over the two plans and this suggestion wasCaccepted by almost all CoC members except ICICI Bank Ltd. and AxisBank Ltd., who were having together the voting share of only about2.3%. Due deliberations in this regard, in the meeting of Committee ofCreditors dated 07.12.2019, read as under: -

“The IRP enquired from CoC about the Resolution Plan that needDto be put for voting by CoC. IDBI Bank on behalf of lendersproposed that given the unique nature of this case both plans shouldbe put to vote as this will provide equal opportunity for individualmembers of COC to select their preferred Resolution Plan. Themain reason for proposing joint vote on both plans was -

-Specific directions of Hon’ble Supreme Court under itsspecial powers (Article 142) where COC/IRP was required toconsider Resolution Plans from only NBCC and Suraksha inaccordance with law and regulation.

-Ideally it would like to propose the H1 Resolution Plan toFvote, but since the total overall evaluation scores were very closeand there is no consensus amongst members of COC on theevaluation methodology used.

-Giving equal opportunity to all members of COC (includingHome buyers and FD holders) to approve the plan most preferredGby them.

-Given the unique and complex nature of this Resolutionprocess.

All CoC members except ICICI Bank Limited, Axis BankLimited (together having vote share of approx. 2.3%) agreed with

the suggestion made by IDBI Bank and decided to put both theResolution Plans simultaneously to vote. Accordingly, it wasdecided that both the Resolution Plans will be put to votesimultaneously and in the event both secure the minimum thresholdof 66% votes, the plan securing overall higher vote will beconsidered as the preferred resolution plan. The IRP agreed tofollow the COC’s instructions and organise the voting.

It was pointed out by CAM in the CoC meeting that sinceboth the Resolution Plans are being put to vote, we might end upin situation where both the Resolution Plans will receive morethan 66% votes, thus creating doubts as to whether both resolutionapplicants are equally entitled to have their plans submitted to theadjudicating authority for approval. Therefore, to avoid such asituation, the CoC members should be allowed to vote on either ofthe two Resolution Plans only. The Authorised Representative ofthe Home Buyers informed that almost all home buyer does notwant liquidation of the corporate debtor. In case there is spilt ofvote between Home Buyers and other members of COC, thereare more chances of no resolution plan getting approved andsituation of liquidation may arise. Majority of home buyers whohave written to AR of Home Buyers have indicated NBCC as itspreferred choice. Home Buyers are also fully aware that withoutsupport of other members of COC, none of the resolution planwill get approved by COC. Para 21(i) of Hon’ble Supreme Courtjudgment dated 06.11.2019 also directed to “place the revisedplan(s) before the CoC, if so required, after negotiations andsubmit report to the adjudicating authority NCLT within suchtime.”To avoid scenario of liquidation or non-compliance ofHon’ble Supreme Court direction, AR of Home Buyers insistedthat both the Resolution Plans should be put to vote and the CoCmembers should be allowed to vote on both the Resolution Plansand in the event that both the Resolution Plans receive more than66% votes, then the successful Resolution Applicant will be decidedbasis (sic) the Resolution Plan that has received higher number ofvotes.”

85. In view of the above, we are unable to find any fault insimultaneous consideration and voting over two resolution plans by CoC

Afor electing one of them; and we would have no hesitation in giving ourimprimatur to such process. The baseless objection in this regard hasrightly been rejected by the Adjudicating Authority.

Point

Matters related with the land providing agency YEIDA

86. We may now enter into the first major point for determinationin this batch of matters; and that relates to the stipulations in the resolutionplan concerning the land providing agency YEIDA. The frontal aspectof this issue is about the provision made in the resolution plan for meetingwith the contingent liability of additional compensation for land acquisition.CThe other aspect pertains to the directions by the Adjudicating Authorityfor execution of tripartite agreement amongst YEIDA, the corporatedebtor JIL and the SPVs proposed to be set up in terms of the resolutionplan. An ancillary aspect relates to certain reliefs and concessions soughtfor by the resolution applicant.

87. As noticed, the rights under the land in question were providedto the original concessionaire under the Concession Agreement dated07.02.2003 and later on, JIL was recognised as the concessionaire. Inthe broad framework, one chunk of land was provided to theconcessionaire for constructing the Expressway and its allied facilities,Efor which the CA provided, inter alia, as under: -

“4.1 Land for construction of Expressway shall be provided byTEA to the Concessionaire, generally in width of 100 metersalong the alignment of the Expressway with additional land width,where required, for developing other facilities like Toll Plazas etc.,on following terms & conditions.

*********

b. The land shall be leased for period starting from the date oftransfer till the end of the Concession Period through such leasedeed as may be mutually agreed between the Parties.

d. The sole premium of the transferred land shall be equivalent tothe acquisition cost plus lease rent of Rs. 100.00 (Rupees onehundred) only per hectare per year. The acquisition cost shall bethe actual compensation paid to the land owners without any

additional charge and shall be payable by the Concessionaire asper applicable rules. The lease rent shall be payable annually.”

Another chunk of land was provided to the concessionaire forcommercial exploitation, for which the CA provided, inter alia, as under:-

“4.3 Land for development shall be transferred by TEA to theConcessionaire free from all Encumbrances on following terms& conditions:

a. It shall be on lease for period of 90 (ninety) years from thedate of transfer through such lease deeds as may be mutuallyagreed between the Parties.

c. The sole premium of the transferred land shall be equivalent tothe acquisition cost plus lease rent of Rs. 100.00 (Rupees onehundred) only per hectare per year. The acquisition cost shall bethe actual compensation paid to the land owners without anyadditional charge and shall be payable by the Concessionaire asper applicable rules. The rent shall be payable annually for 90(Ninety) years from the date of transfer of land.

d. The Concessionaire shall be entitled to further sub-leasedeveloped / undeveloped land to sub-lessees / end-users in itssole discretion without any further consent or approval or paymentof any charges / fee etc. to TEA or any other relevant authority.

e. After sub-lease of part of the land by the Concessionaire, thesame can be transferred / assigned without requiring any consentor approval of or payment of any additional charges, transfer fee,premiums etc. to TEA or to any other relevant authority and/orthere can be subsequent multiple sub-leases of the land in smallerparts. The lease rent of the respective sub-leased portion of landshall be paid by the sub-lessees / transferees to TEA directly onpro-rata basis @ Rs. 100.00 (Rupees one hundred) per hectareper year. The Concessionaire shall be required to pay lease rentto TEA for the portion of land remaining in its possession aftersub-lease, on pro-rata basis at the aforesaid prescribed rate. Totallease rent paid by the Concessionaire and various sub-lessees /transferees shall be Rs. 100.00 (Rupees one hundred) per hectareper year.*********

Ag. The Concessionaire may make request to TEA to executethe lease deed directly in favour of Concessionaire’s subsidiaries,assigns, transferees etc. in respect of any portion of the land onthe same terms and conditions as mentioned above, and on receiptof such request TEA shall execute the lease deed in respect ofsuch portion of land directly in favour of such subsidiaries, assignsBand transferees.

h. In case TEA and the Concessionaire consider it appropriate,tripartite agreement for sub-lease deed may be executed betweenthe TEA, Concessionaire and the Sub-Lessee.

C4.4 The Concessionaire shall be free to decide the purpose forwhich transferred land will be used i.e. for commercial,amusement, industrial, institutional, residential etc. and also forthe area of land to be allocated for different uses. TheConcessionaire shall also be free to decide whether the sub-leasedland shall be in the form of plots or constructed properties. NoDpermission of TEA shall be required either for the land use or fortransfer of leasehold / sub-leasing / multiple sub-leasing of land.The land use shall however be as per applicable Master Plan andother regulations.”

Another stipulation, in Clause 18.1 of the CA, which has its ownErelevance to the present case, may also be taken note of as under:-

“TRANSFER OF CONCESSIONAIRE’S RIGHTS ANDOBLIGATIONS TO SPV

18.1 In case the Concessionaire and the TEA consider it necessaryFto transfer Concessionaire’s rights and obligations under thisAgreement to SPV, the Concessionaire shall, in reasonabletime, transfer all its rights and obligations under this Agreement toa SPV for which documents as may be required shall be executedbetween the Concessionaire, the TEA and the SPV withoutadditional cost to the Concessionaire or the SPV.”G

87.1. It is not in dispute that under the said Concession Agreement,JIL got the rights: (a) to construct and operate the Expressway andcollect toll for period of 36 years; and (b) to use the land along theExpressway for commercial exploitation for period of 90 years.

88. The issue pertaining to additional amount of land acquisitioncompensation cropped up in the wake of decision of the Full Bench ofAllahabad High Court dated 21.10.2011 in the case of Gajraj and Ors.v. State of U.P. and Ors.: 2011 SCC OnLine All 1711, wherein theHigh Court ruled in favour of payment of additional compensation to theland owners involved therein. The said decision in Gajraj was upheld bythis Court in the case of Savitri Devi v. State of U.P. & Ors.: (2015) 7SCC 21. In sequel, spate of litigation in Allahabad High Courtconcerning other parcels of land came up and several other land owners,including whose land stood acquired for the project in question, demandedadditional compensation. It is stated by YEIDA that looking to suchlitigations and agitations, the Government of U.P. proceeded to set up acommittee called the ‘Chaudhary Committee’; and the said committeerecommended for grant of additional compensation (to the extent of64.7%) to the land owners whose land had been acquired. While acceptingthese recommendations, the Government of U.P. proceeded to issueG.O. dated 29.08.2014, directing YEIDA to ensure payment of additionalcompensation to all the land owners. In this turn of events, YEIDAdemanded the amount of additional compensation from JIL to the tuneof INR 2591.78 crores by its communication dated 20.01.2015 and yetanother amount of approximately INR 247 crores by its communicationdated 31.05.2017.

88.1. The aforesaid communications of YEIDA and the said G.O.dated 29.08.2014 were challenged by JIL by way of writ petition beforethe High Court of Allahabad but, later on, JIL sought permission towithdraw with view to seek recourse to the alternative remedy ofarbitration, as provided in the CA. The High Court of Allahabad, by itsorder dated 03.11.2016, permitted JIL to withdraw and to pursue thealternative remedy of arbitration[80]. Thereafter, the concessionaire JILtook up the matter in arbitration which led to the arbitral award dated02.11.2019 in its favour, holding that the demand made by YEIDA wasnot sustainable. This award has been challenged by YEIDA under Section34 of the Arbitration and Conciliation Act, 1996 and those proceedings,being Arbitration Case No. 3 of 2020, are pending in the Court of DistrictJudge, Gautam Budh Nagar. It has also been pointed out that the saidG.O. was struck down by the Allahabad High Court in other petitions;

80 As per the facts stated, the said order of High Court was challenged by YEIDA in thisCourt in D. No. 15058 of 2017, which was dismissed on 01.09.2017.

Aand the order so passed by the High Court has been challenged in SLP(Civil) No. 10015-10034 of 2020, pending in this Court.

89. At the stage of drawing up the resolution plan in question, thesaid arbitral award had been made with the result that the liability towardsthe amount of additional compensation was not standing against JIL.BHowever, for the reason that the matter was sub judice, the resolutionapplicant considered it appropriate to make provision for meeting withthe contingency, in case this liability would ultimately get fastened onJIL; and proposed in the resolution plan as under: -

“1.2 Treatment of creditors

As part of the Resolution Plan, it is proposed that:

(i) As mentioned in this Plan, this Resolution Plan assumes that noamount is payable by the Corporate Debtor in relation to theLandowner Compensation Debt in view of the Award. However,if the said position changes on account of the Award beingoverruled then in relation to the Landowner Compensation Debt,the amounts payable to the landowners shall be collected directlyby YEIDA in the following manner for the following parcels oflands (in relation to which such debt accrues), from the ultimateend-users:

(i) Land under development (real estate projects) – thecompensation in this regard shall be collected by YEIDA fromthe Home Buyers;

(ii) Land already subleased to other entities by the CorporateDebtor – the compensation shall be collected from therespective sub-lessees to whom the lands have been subleasedby the Corporate Debtor either directly or indirectly;

(iii) Unutilized land parcels – the compensation shall be collectedfrom the end users in whose favour such land shall betransferred/subleased by the Corporate Debtor; and

(iv) Yamuna Expressway – Yamuna Expressway is projectof public utility and the ultimate owner of the project land isYEIDA, who will get the ultimate ownership of the YamunaExpressway after the expiry of the concession period underthe Concession Agreement and accordingly the compensationin this regard shall be payable by YEIDA.”

90. Apart from the above, the resolution applicant also proposedto set up two separate SPVs, one being Expressway SPV and anotherbeing Land Bank SPV. It was proposed that the assets and liabilitiespertaining to Expressway shall be transferred to the Expressway SPVby way of transfer of 100% shareholding and the concession rights underthe CA; and that out of the unutilised parcels of land available with thecorporate debtor, 1,526 acres shall be transferred to Land Bank SPV;and that Land Bank SPV will also take over the admitted financial debtto the tune of INR 5,100 crores. In the resolution plan, the applicant alsostated about the approvals required and its assumptions in that regard inthe following terms: -

“BUSINESS PLAN / FINANCIAL PROJECTIONS

(d) Provisions for the Approvals required and the timeline for

the same

(ii) The Resolution Applicant is of the view that the approval ofthis Resolution Plan by the Adjudicating Authority shall be deemedto have waived all the requirements in relation to transfer ofYamuna Expressway and land bank asset by way of businesstransfer and no approval/consent shall be necessary from anyother person (including Yamuna Expressway IndustrialDevelopment Authority (“YEIDA”) or any other GovernmentalAuthority), in this regard.”

91. Moreover, in Clauses 4, 14 and 27 of Schedule 3 of theresolution plan, while seeking ‘reliefs and concessions’, the resolutionapplicant mooted few more propositions concerning YEIDA and theConcession Agreement, which have also contributed to the intricaciesof the matter.

91.1. In Clause 4 of Schedule 3 of the resolution plan, NBCCexpected that YEIDA shall withdraw its challenge to another awarddated 23.01.2017, pertaining to the issue of additional FAR, in the followingterms: -

“4. YEIDA to withdraw the appeal filed in the District Court,Gautam Budh Nagar being Arbitration Case No. 69 of 2017challenging the award dated January 23, 2017 passed by arbitral

Atribunal pertaining to additional FAR and the Corporate Debtor toget the right to use additional FAR as per details contained inAnnexure-P at all five land parcels immediately (on withdrawalof such appeal) without any additional payment for the same.However, the Resolution Applicant shall make payment of INR1 Cr in consideration of full and final settlement of YEIDA’s claimBif any arising out of such appeal, considering YEIDA’s claim asOperational Debt in terms of IBC and to ensure equitable treatmentto all the Operational Creditors.”91.2. Further, in Clause 14 of Schedule 3 of the plan, the resolutionapplicant sought extinguishment of liability towards capital cost pertainingCto Noida-Greater Noida Expressway in the following terms: -

“14. The liability arising out of the Concession Agreement, to repaythe capital cost pertaining to Noida-Greater Noida Expressway(treated as interest free loan from YEIDA to the Corporate Debtor)shall stand extinguished, on account of failure of YEIDA to allowDthe Corporate Debtor to collect and retain toll/fee from the usersof the Noida-Greater Noida Expressway during the term of theConcession Agreement, as agreed under Clause 3.7 of theConcession Agreement.”

91.3. Yet further, in Clause 27 of Schedule 3, the resolutionEapplicant expected an extension of the period under the CA by 10 years.This Clause reads as under: -

“27. To ensure feasibility and viability of this Resolution Plan,YEIDA and other concerned authorities shall extend theconcession period (currently 36 years) under the ConcessionFAgreement for an additional period of ten years.”

92. YEIDA took exception to several parts of the stipulationsaforesaid before the Adjudicating Authority and essentially submittedthat the liability towards the amount of additional compensation, in relationto the land acquired and leased to JIL, was that of JIL, although such aGquestion was sub judice in challenge to the arbitral award under Section34 of the Arbitration Act. It was submitted on behalf of YEIDA that incase the liability is ultimately mulcted on JIL, YEIDA cannot be drivento collect the amount of additional compensation from the end-users asproposed in the plan. It was asserted that the terms of CA provided fortwo payment components: one being of acquisition cost payable by theH

concessionaire and other being of leased rent to be paid by the sub-lessee/end-user; and given such components, it could not have beenprovided that YEIDA would collect the acquisition cost directly from theend-users.

92.1. It was also submitted that the resolution applicant was notentitled to split the transferred land into two, and to say that the paymentof additional compensation would be applicable only towards the landused for development and not for the land used for Expressway.

92.2. As regards the expected exemption to pay the acquisitioncost pertaining to the land utilised for Expressway, it was submitted thateven if Expressway was to revert to YEIDA after 36 years, JIL wasallowed to collect toll for this period and there could be no exemption asregards cost of acquisition for the land of Expressway.

93. Another part of objection was that if the concessionaire’s rightsand obligations were proposed to be transferred to SPVs, properdocumentation was required, so that YEIDA could exercise its rightsover the SPVs concerned. It was yet further submitted that withdrawalof the arbitration case could not be thrust upon YEIDA.

94. As noticed, the Adjudicating Authority observed in regard tothese issues concerning YEIDA that looking to the terms of CA, theCommittee of Creditors should not have approved the resolution planstating that the compensation, if awarded, shall be collected from theend-users. However, the Adjudicating Authority proceeded to modulatesuch terms ‘to make the plan viable’ and provided that the resolutionplan be read to mean that YEIDA shall have right to collect acquisitioncost through the SPVs concerned. With regard to the issue of additionalcompensation concerning the land of Expressway, the AdjudicatingAuthority considered it appropriate to read the resolution plan in the waythat it is left open to both the parties to have proper recourse over thisissue before competent forum when the time would come for paymentof additional compensation. As regards transfer of concessionaire’s rightsand obligations to SPVs, the Adjudicating Authority was of the viewthat, when JIL as concessionaire was, for the first time, proposing totransfer its rights and obligations to SPVs, the documents involving theconcessionaire JIL, YEIDA and the SPV concerned were required tobe executed. The NCLT also observed that the CA was based on thestatute created by the State Government and, therefore, violation of its

Aterms and conditions would be violation of the law in force and wouldnot be permissible in terms of Section 30(2) of the Code.

94.1. Interestingly, the other reliefs and concessions in regard toYEIDA, as sought for in the aforementioned Clauses 14 and 27, werespecifically declined by the Adjudicating Authority (vide the commentsBon these clauses in paragraph 134 of the order dated 03.03.2020).However, as regards Clause 4 of the ‘reliefs and concessions’ that YEIDAshall withdraw the arbitration case filed under Section 34 of the ArbitrationAct, though the Adjudicating Authority noticed this aspect in the argumentsof the parties but, did not make any specific order in that regard and inparagraph 134 of the impugned order dated 03.03.2020, merely observedCthat Clauses 1 to 5 were covered by the previous discussion.

95. On behalf of the resolution applicant (NBCC), while questioningthe directions and observations of the Adjudicating Authority in relationto the dealings with YEIDA and particularly in relation to the contingentliability of additional compensation, detailed reference has been madeDto all the background aspects and extensive arguments have been madein support of the stipulations in the resolution plan.

95.1. It is submitted on behalf of the resolution applicant that ason date, there is no claim of YEIDA against JIL in relation to the additionalamount of compensation but, keeping the larger interests in view, theEresolution plan has provided for this eventuality in the manner that YEIDAwould be able to collect the amounts from the end-users. While takingexception to the observations in the order impugned, it is submitted thatthe Adjudicating Authority has seriously erred in seeking to construe theCA because that was an issue pending in the arbitration case. It is furtherFsubmitted that in terms of Regulation 37 of CIRP Regulations, theresolution plan can propose modifications/alterations of contracts of thecorporate debtors and in fact, all the contracts are being modified underthe plan, of course, subject to the approval by the CoC with requisitemajority. As regards legal status of the Concession Agreement, it issubmitted that the Adjudicating Authority has erred in assuming as if itGwere statutory contract. In this regard, with reference to Section 6-Aof the U.P. Act of 1976[81], it is contended that YEIDA may by an

81 Section 6-A of U.P. Act of 1976 reads as under: -

“6-A Notwithstanding anything to the contrary contained in any otherprovisions of this Act and subject to such terms and conditions as may beHspecified in the regulations, the Authority may, by Agreement, authorize any

agreement authorise any person to provide or maintain, or continue toprovide or maintain, any infrastructure or amenities and therefore, oncean agreement was reached between JIL and YEIDA, their relationshipwould be governed by that contract (Concession Agreement). It issubmitted that while enacting Section 6-A of the U.P. Act of 1976, theintent of the legislature has been to carve out contractual relationshipdistinct from the statute and this goes against the whole construct of‘statutory contract’ which YEIDA is trying to project. The decisions ofthis Court in the cases of India Thermal Power Ltd. v. State of M.P.and Ors.: (2000) 3 SCC 379 and Kerala State Electricity Boardand Anr. v. Kurien E. Kalathil and Ors.: (2000) 6 SCC 293 havebeen referred to submit that merely for YEIDA being statutory body,the contract in question does not partake the character of statutorycontract. This issue relating to contingent liability of additionalcompensation, according to NBCC, is required to be settled for properimplementation of the resolution plan or else, it may lead to seriousimpediment in future.

95.2. As regards those observations of the Adjudicating Authoritywhere the issue of additional compensation qua the Expressway landhas been left open for decision in the competent forum, it is submittedthat the observations are not in accord with the decision in Essar Steel(supra), that there ought to be finality of claims against the corporatedebtor. According to YEIDA, if this issue is left to be decided in anyother proceedings, the same would lead to ‘hydra head’ popping up inthe future.

95.3. It is further submitted that Expressway land would admittedlyrevert to YEIDA after the end of concession period and, therefore,YEIDA is the end-user of the Expressway. It is submitted that since theplan proposed the payment by end-users and this principle was approvedby CoC, YEIDA has to be the entity liable towards additionalcompensation in relation to the land of Expressway, for it being the end-user with the land reverting to it. It has also been submitted that YEIDAhas otherwise stated no objection to the pass-through proposition as regardsliability towards additional compensation to the end-users and hence, itsobjection towards this liability qua Expressway land remains unjustified.

person to provide or maintain or continue to provide or maintain anyinfrastructure or amenities under this Act and to collect taxes or fees, as the casemay be, levied therefore.”

AIt is also submitted that in the resolution plan, debt of INR 2,000 croresis proposed to be raised on the Expressway for the purpose ofconstruction of flats; and in the event this liability of additionalcompensation on the Expressway land is not passed on to the end-user,raising of the loan may become difficult.

B95.4. NBCC has further stated its objection to the proposedtripartite agreement with reference to Clauses 4.3(d), 4.3(e) and 4.4 ofCA and it is submitted that the right of transfer being available to theconcessionaire, foisting of tripartite agreement with YEIDA is not justified.It is submitted that so far as the execution of tripartite agreement inrelation to the Expressway SPV is concerned, this part of the order isCnot being challenged but as regards Land Bank SPV, there is norequirement of entering into tripartite agreement because JIL hasunfettered rights under CA to transfer the land to any person.95.5. As regards decision of this Court in the case of MunicipalCorporation of Greater Mumbai (MCGM) v. Abhilash Lal and Ors.:D(2019) SCC OnLine SC 1479, which is relied upon by YEIDA, it issubmitted that the said decision is not applicable to the facts of the presentcase because therein, MCGM had not entered into binding leaseagreement containing the terms similar to the CA applicable to the partiesherein. Moreover, in the said decision, the statute, i.e., MunicipalECorporation of Greater Mumbai Act, 1888, itself provided that the onlyway MCGM’s properties could be dealt with was through lease or byway of creation of any other interest with the prior permission of MCGM,but there is no similar provision in the U.P. Act of 1976.

96. On behalf of the IRP, it has been submitted that granting orFrefusing the reliefs sought for under Schedule 3 of the resolution plan isa matter within the discretion of the Adjudicating Authority and even ifthe same have not been granted, they do not form part of the commercialterms of the plan; and the referred clauses of ‘reliefs and concessions’are not hit by Section 30(2)(e) of the Code.

G97. The associations of homebuyers as also the individualhomebuyers standing in support of the plan have contended that thealleged terms of the Concession Agreement and any alleged breachthereof does not amount to breach under Section 30(2)(e) of the Codeand therefore, the Adjudicating Authority has acted wholly withoutjurisdiction in dealing with such terms because they do not come withinHthe scope of Section 31 of the Code.

97.1. However, one of the homebuyers, who has moved anapplication for intervention, I.A. No. 84309 of 2020, has made severalsubmissions questioning the dealings of JIL and YEIDA and has submittedthat the Concession Agreement having not been provided to thehomebuyers, the CIRP proceedings are rendered void.

98. In response to the aforesaid submissions in favour of theresolution plan, several counter arguments have been made by differentparties. To avoid prolixity and repetition, we take into account thesubmissions of the parties directly related with these issues namely,YEIDA. Added to that, we may also refer to the submissions made onbehalf of the erstwhile director of the corporate debtor JIL as also itsholding company JAL.

99. It has been stated and reiterated, as had been the submissionsbefore the NCLT, that YEIDA does not stand to oppose the resolutionplan only for the sake of opposition; rather it would like the plan to succeedbut, it has public duty to ensure that the framework under CA ispreserved; and the issues being raised by it are solely intended to preservethe CA and to enforce the terms therein. Again, detailed reference hasbeen made to the background aspects concerning the land in questionand the Concession Agreement as also to the findings of NCLT andthereafter, the contentions urged on behalf of the resolution applicanthave been refuted.

99.1. In the first place, YEIDA has submitted that the resolutionapplicant is not correct in suggesting that the Adjudicating Authority hasdealt with the interpretation of CA to hold that compensation was to bepaid by the concessionaire and by the proposed SPVs. Paragraph 118 ofthe impugned order dated 03.03.2020 has been referred wherein, theAdjudicating Authority stated that the question, as to whether additionalcompensation was part of the acquisition cost, was not being examinedbecause it had already been adjudicated in arbitration and is pending inthe Court.

99.2. While supporting the other part of impugned order dated03.03.2020, it is submitted that there being no privity of contract betweenYEIDA and the end-users, the amount towards additional compensationcould only be collected from the SPVs and not directly from the end-users. According to YEIDA, the Adjudicating Authority has rightlymodified the mechanism in the resolution plan for collection of additionalcompensation in the manner that instead of collecting the amount directly

Afrom the end-users, YEIDA would now be collecting it through the SPVsconcerned. This has, according to YEIDA, no impact on the commercialaspects of the resolution plan.

99.3. It is also submitted that the contract in question, that is, theConcession Agreement, is statutory contract entered into by YEIDABfor public purpose and it cannot be altered or modified through resolutionplan as an ordinary commercial contract. It is submitted that the CAgrants and governs the rights of corporate debtor JIL over the land ofYEIDA; that such rights are limited and distinct from ownership rights;and that the resolution applicant cannot unilaterally alter the CA andimprove upon the rights granted thereunder to enhance the assets of theCcorporate debtor.

99.4. As regards the land falling under Expressway, YEIDA hasquestioned the contentions urged on behalf of NBCC and it is submittedthat such ground was not taken in the appeal filed against the impugnedorder and was raised for the first time in written submissions.DNevertheless, according to YEIDA, the argument is patently incorrect,for it ignores the fact that the corporate debtor JIL and its successorSPVs would derive the benefits of both, the toll collected from Expresswayfor 36 years as also from the other land for development. It has alsobeen submitted that the additional compensation for Expressway, whenEto be passed on to the end-users, could only be passed on to thecommuters in the form of appropriate adjustment in the toll, but nototherwise.

99.5. Moving on to the questions related with creation of SPVs,transfer of land to them and the aforesaid stipulations in the resolutionFplan, it is submitted that the project in question is an integrated andindivisible one, as held by this Court in the case of Nand Kishore Gupta& Ors. v. State of U.P. & Ors.: (2010) 10 SCC 282 and hence, itsbifurcation is impermissible.

99.6. It is also submitted that the assumption in the resolutionGplan, that the approval of NCLT would waive the requirement of YEIDA’sapproval, is misconceived. Regulation 37 of CIRP Regulations has beenreferred to submit that the plan has to provide for necessary measuresfor insolvency resolution including approvals from the Central and StateGovernments and other authorities. Therefore, according to YEIDA,such pre-emptory waiver as envisaged in the plan is contrary to theHCIRP Regulations. further reference has been made to Clause 18.1 of

the CA and it is contended that in terms thereof, in case any SPV is tobe set up, necessary documents involving the concessionaire JIL, YEIDAand SPV have to be executed. It is reiterated that despite such objections,YEIDA is taking practical view of the matter so as to ensure thesuccess of the resolution plan and, therefore, the Adjudicating Authority(NCLT) has also rightly provided for such documentation withoutdisturbing the commercial effect of the plan while ensuring that all thefuture dealings shall be in terms of the CA and thereby, fulfilling therequirements of Section 30(2) of the Code.99.7. As regards the contentions on the part of the resolutionapplicant that Land Bank SPV is not governed by the CA or that there isno restriction on the corporate debtor’s ability to sub-lease, it is submittedthat the rights for development of the land along the proposed Expresswaywere to be provided at five or more locations with one location in Noidaor Greater Noida in terms of Clause 3.3 of the CA. Therefore, thesuggestion that this land may not be governed by CA is not correct. Asregards the right to sub-lease, it is submitted on behalf of YEIDA that asper the terms of plan, it is not mere sub-lease in favour of Land BankSPV but the chunk of land for development is sought to be transferredto the Land Bank SPV by way of business transfer; and in any case, interms of the referred clauses of CA, execution of tripartite agreement isa condition indispensable.

99.8. It has also been submitted that YEIDA has consistently takenthe stand that it would be ready to do everything within its power toensure that the plan is success but even after long length of time, theresolution applicant has not even approached YEIDA for execution ofnecessary documents. While relying on the aforesaid decision in MCGM,it has been argued that the provisions of the Code cannot override apublic body’s right and duty to control and regulate as to how its propertiesare to be dealt with.

99.9. As regards the powers of the Adjudicating Authority tomodify the plan, reliance is placed on the decision in ArcelorMittal (supra),where this Court has held that the Adjudicating Authority is to applyjudicial mind to resolution plan to satisfy itself that the plan meets therequirements under Section 30 of the Code. It is further submitted thateven in Essar Steel (supra), this Court has recognised the AdjudicatingAuthority’s power of judicial review. Further, with reference to thedecision of Allahabad High Court in the case of Pradumna Kumar

AJain (supra), it is submitted that the power to approve or reject planmust necessarily include the power to modify plan. According toYEIDA, such power of the Adjudicating Authority is implicit in Section31; and if the Adjudicating Authority finds that resolution plan does notconform to the Code but would do so by modifications, such modificationsdeserve to be upheld, lest the corporate debtor is pushed to liquidation. ItBis re-emphasised that the modifications provided in the impugned orderdated 03.03.2020 have no commercial implications and they relate onlyto the mechanism prescribed by the resolution plan, which are requiredto be modified to uphold the CA, statutory contract.

99.10. Apart from the above, it has also been submitted on behalfCof YEIDA, that the resolution plan carries such other terms andstipulations which cannot be approved; and objections of YEIDA to suchterms were upheld but, NBCC has not appealed against that part of theorder of the Adjudicating Authority. Therefore, those stipulations deservenot to be approved. In this regard, it has been pointed out that YEIDADhas taken objection to Clause 4 of Schedule 3 requiring it to give up thelitigation under the Arbitration Act; and this objection was noted by theAdjudicating Authority and NBCC has not challenged those observations.Such relief, according to YEIDA, cannot be claimed in resolutionplan and ought to be declined. It has further been pointed out that thestipulations in the said Clauses 14 and 27 of Schedule 3 of the resolutionEplan, respectively for extinguishment of the liability arising under the CAand for extension of term of CA, have not been granted by theAdjudicating Authority; and these aspects having not been appealedagainst, the clauses in question deserve to be deleted from the resolutionplan.F100. The submissions so made on behalf of YEIDA have beensupported by the erstwhile director of JIL with reference to the decisionin Embassy Property (supra) and with the submissions that YEIDAbeing statutory body created under the U.P. Act of 1976, the agreemententered into between YEIDA and the corporate debtor is statutory inGnature and this relationship is not just contractual but is statutorilygoverned. The requirement that YEIDA must collect compensation fromthe homebuyers or end-users in case it succeeds in the arbitration case,according to the erstwhile director, is in contravention of the law for thetime being in force, for it violates the U.P. Act of 1976. It is furthersubmitted that the Adjudicating Authority has rightly ordered executionH

of tripartite agreement involving the proposed SPVs. In essence, thesubmission has been that the treatment of YEIDA in the resolution planis not in conformity with the law and the order passed by the AdjudicatingAuthority calls for no interference.

101. While dealing with the rival submissions, we may indicate atthe outset that some of the objections like questioning the dealings of JILand YEIDA and want of availability of CA with the homebuyers haveunnecessarily been raised and carry no meaning to the real questions incontroversy. They require no discussion and are left at that.

102. Coming to the real questions in controversy, in the first place,we deem it appropriate to observe that the suggestion on behalf of YEIDAand erstwhile director of the corporate debtor, that the ConcessionAgreement in question is statutory contract, is not correct and cannotbe accepted. It has rightly been pointed out on behalf of the resolutionapplicant NBCC that the said CA is not statutory contract; it has onlybeen executed by YEIDA in exercise of its enabling powers conferredby the statute, that is, U.P. Act of 1976 but the same is neither anagreement provided by the statute nor executed under statute. ThisCourt has clarified the law in this respect in the case of India ThermalPower Ltd. (supra) in the following terms: -

“11. It was contended by Mr Cooper, learned Senior Counselappearing for appellant GBL and also by some counsel appearingfor other appellants that the appellant/IPPs had entered into PPAsunder Sections 43 and 43-A of the Electricity Supply Act and assuch they are statutory contracts and, therefore, MPEB had nopower or authority to alter their terms and conditions. Thiscontention has been upheld by the High Court. In our opinion thesaid contention is not correct and the High Court was wrong inaccepting the same. Section 43 empowers the Electricity Boardto enter into an arrangement for purchase of electricity on suchterms as may be agreed. Section 43-A(1) provides that generatingcompany may enter into contract for the sale of electricitygenerated by it with the Electricity Board. As regards thedetermination of tariff for the sale of electricity by generatingcompany to the Board, Section 43(1)(2) provides that the tariffshall be determined in accordance with the norms regardingoperation and plant-load factor as may be laid down by the authorityand in accordance with the rates of depreciation and reasonable

Areturn and such other factors as may be determined from time totime by the Central Government by notification in the OfficialGazette. These provisions clearly indicate that the agreement canbe on such terms as may be agreed by the parties except that thetariff is to be determined in accordance with the provision containedin Section 43-A(2) and notifications issued thereunder. MerelyBbecause contract is entered into in exercise of an enablingpower conferred by statute that by itself cannot renderthe contract statutory contract. If entering into contractcontaining the prescribed terms and conditions is mustunder the statute then that contract becomes statutoryCcontract. If contract incorporates certain terms andconditions in it which are statutory then the said contractto that extent is statutory. contract may contain certainother terms and conditions which may not be of statutorycharacter and which have been incorporated therein as aresult of mutual agreement between the parties. Therefore,Dthe PPAs can be regarded as statutory only to the extent thatthey contain provisions regarding determination of tariff and otherstatutory requirements of Section 43-A(2). Opening andmaintaining of an escrow account or an escrow agreement arenot the statutory requirements and, therefore, merely becauseEPPAs contemplate maintaining escrow accounts that obligationcannot be regarded as statutory.”

(emphasis in bold supplied)

102.1.Applying the principles aforesaid to the facts of the presentcase, we are clearly of the view that the agreement in question does notFacquire the status of statutory contract merely for having been executedin terms of the powers with YEIDA under Section 6-A of the U.P. Actof 1976.

102.2.Apart from above, another part of the submissions on behalfof YEIDA with reference to the case of Nand Kishore Gupta (supra)Gagainst incorporation of two SPVs cannot be accepted. The observationsof this Court in the case of Nand Kishore Gupta (supra) came in thewake of challenge to the very acquisition process concerning the landparcels for the project in question, that is Yamuna Expressway Project.One of the arguments therein was that about 25 million square kilometresHof land was being acquired for 5 parcels of land to be given for

commercial exploitation. This Court found the High Court right incommenting that such creation of 5 zones for industry, residence,amusement etc. was going to be complementary to the creation ofhighway. However, the observations in Nand Kishore Gupta (supra),holding all the parcels of land to be part of integrated and indivisibleproject, cannot be read to mean that creation of two SPVs by theconcessionaire, one for the Expressway and another for the remainingland for commercial development, can never be provided.

102.3.However, even if the submissions of YEIDA are not correctin regard to the aforesaid two aspects, all other submissions made on itsbehalf cannot be discarded and rather, on substance, they deserveacceptance to large extent.

103. The contract in question, the CA, even though not statutoryone, is nevertheless contract entered into between the concessionaireand statutory authority, that is, YEIDA. It is needless to observe thateven if in the scheme of IBC, resolution plan could modify the terms ofa contract, any tinkering with the contract in question, that is, theConcession Agreement, could not have been carried out without theapproval and consent of the authority concerned, that is, YEIDA. Anydoubt in that regard stands quelled with reference to Regulation 37 ofCIRP Regulations that requires resolution plan to provide for variousmeasures including ‘necessary approvals from the Central and StateGovernments and other authorities’. The authority concerned in thepresent case, YEIDA, is the one established by the State Governmentunder the U.P. Act of 1976 and its approval remains sine qua non forvalidity of the resolution plan in question, particularly qua the terms relatedwith YEIDA. The stipulations/assumptions in the resolution plan, thatapproval by the Adjudicating Authority shall dispense with all therequirements of seeking consent from YEIDA for any business transferare too far beyond the entitlement of the resolution applicant. Neitherany so-called deemed approval could be foisted upon the governmentalauthority like YEIDA nor such an assumption stands in conformity withRegulation 37 of the CIRP Regulations.

104. Furthermore, the suggestion that Clause 18.1 of the CA hadbeen one-time measure and that stands exhausted with creation of JILas SPV and transfer of original concessionaire’s rights to JIL, has itsown shortcomings. The concept and purport of Clause 18.1, of course,at the relevant time had been of the obligation on the original

Aconcessionaire to execute the documents for creation of SPV and thisclause came in operation when JIL was created as an SPV. However, itwould be wholly unrealistic to say that once JIL was created as an SPV,the said Clause 18.1 stood exhausted and there remained no obligationon the part of JIL (as the substituted concessionaire) to execute thenecessary documents if it would propose to transfer its rights andBobligations under the CA to another SPV; and it could do so without theconsent of YEIDA. This suggestion carries an inherent fallacy becauseif Clause 18.1 is removed from the CA, serious question would ariseas to how the rights and obligations of the substituted concessionaire JILcould at all be transferred to another SPV? Looking to the pith andCsubstance of the CA, the said Clause 18.1 has to be applied for creationof any SPV by or on behalf of JIL.

104.1.The other clauses in CA permitting creation of sub-leasecould hardly be applied for en bloc transfer of land to the SPVs, asproposed in the resolution plan. The referred Clauses 4.3(d) and 4.3(e)Dwere essentially meant for creation of sub-leases when the land given tothe concessionaire for development, or part thereof, was to be sub-leasedto the end-user/s. Even in that regard, the provisions were made for theconcessionaire to make request to the land providing agency to executethe lease-deed directly in favour of its subsidiaries, assigns or transferees;and in case the agency and the concessionaire would consider itEappropriate, tripartite agreement for sub-lease may be executed. Takingall the relevant clauses together with the substance and purport of CA,it is difficult to countenance that the proposed transfer to SPVs could betreated as an ordinary sub-lease for which, no documentation involvingYEIDA would be required.F104.2.Although, as urged, the proposal to create two separateSPVs may not be impermissible looking to the framework of the CA,where different stipulations were made in relation to the land forconstructing Expressway with its allied facilities and the land forcommercial exploitation, respectively in Clauses 4.1 and 4.3 of the CA,Gbut the question is as to the method of transfer of concessionaire’s rightsand obligations to such SPVs. That could only be in accordance with theapproval of YEIDA and with the execution of necessary tripartitedocuments as envisaged by CA.

104.3. As observed hereinbefore, looking to the terms and purportHof the CA, creation of two SPVs, one for Expressway and another for

the remaining land for commercial development, is not altogether prohibitedbut then, it cannot be suggested by NBCC that such creation of SPVscould be even without necessary documentation involving YEIDA. Inthis regard, YEIDA seems to be right in its contentions that suchdocumentation is even otherwise required for avoiding any ambiguityabout the rights and obligations and also for itself (YEIDA) to properlymonitor the functioning of SPVs, each of which would stand in thecapacity of concessionaire and would be carrying the rights and obligationsunder the CA.

104.4. For what has been discussed above, we need not delveinto the decision of this Court in MCGM (supra), where the statutoryprovision itself required prior approval of the local body before dealingwith its properties through lease or by creation of any other interest.Though in the present case, there is no such statutory embargo but forthat matter, all the terms of the Concession Agreement cannot beforsaken. Any alteration in the essentials of the Concession Agreementwould require the consent of YEIDA.

104.5. The Adjudicating Authority (NCLT), while disapproving thestipulations in the resolution plan whereby documentation for such transferwas sought to be avoided, proceeded to order execution of suchdocuments. According to YEIDA, this modification has no commercialeffect and therefore, has rightly been ordered by NCLT. Although thismodification, prima facie, does not appear to be having any commercialeffect, for it being only matter of proper documentation but, interlacedwith this process of documentation are the other stipulations, which doimpact the commercial terms of the resolution plan, particularly thoserelating to the amount of additional compensation, if payable.

105. With the observations foregoing, we may now take up anotherimportant aspect of the objections, which relates to the provisions in theresolution plan towards the amount of additional compensation, if payable.

105.1. Concisely put, as per the resolution plan, the contingentliability concerning additional amount of land acquisition compensation isproposed to be dealt with in the manner that in the event any such amountof additional compensation is to be paid, YEIDA would collect the samefrom the end-users; and as regards the land of Expressway, such additionalcompensation shall be payable by YEIDA because YEIDA will be theend-user on getting ownership of the land of Expressway after expiry ofthe concession period. NBCC has justified these propositions on various

Agrounds as noticed hereinabove. YEIDA takes serious exception to themand particularly to the stipulation that additional compensation in regardto the land of Yamuna Expressway would be payable by it. TheAdjudicating Authority has made two-fold modifications in this regard.In paragraph 120 of the impugned order dated 03.03.2020, theAdjudicating Authority has said that to iron out creases and to make theBresolution plan viable, it would direct that the plan shall be read to meanthat YEIDA has right to collect acquisition cost through the SPVsconcerned. On the other hand, concerning the Expressway land, theAdjudicating Authority has provided in paragraph 122 of the impugnedorder that the resolution plan would be read to mean that it is left open toCboth the parties to have proper recourse before competent forum whenthe time comes for payment of additional compensation. In the submissionsof YEIDA, such modifications were necessary to make the plan compliantwith the rights and obligations under the CA.

105.2. We find the prescriptions in the resolution plan in regard toDthe contingent liability of additional compensation to be questionable onmore than one count.

106. The question is yet to be finally determined as to whethersuch liability towards additional amount of compensation rests with thecorporate debtor JIL or with YEIDA, because the arbitral award madeEin favour of JIL is the subject matter of challenge in the Court. However,the contingency was required to be provided in the plan in case liabilitywould be ultimately fastened on the corporate debtor JIL. It has notbeen suggested that any such bifurcation of liability, qua the land underExpressway on one hand and other parcels on the other, is subjectmatter of the arbitration proceedings. However, going by the terms ofFthe CA, prima facie, we are unable to find any indication therein that theliability for compensation with reference to the land under Expresswayis not of the concessionaire. In any case, while making provision formeeting with this contingent liability of additional amount of compensation,the resolution applicant could not have decided of its own that there willGnot be any liability of the concessionaire or its assigns towards the landunder Expressway.

106.1. It appears that while proposing to create two different SPVs,the resolution applicant stumbled on an idea that the liability for additionalcompensation as regards Expressway land could be simply deflected toHYEIDA with reference to the fact that YEIDA will get this land back

after 36 years; and reflected this idea by way of the questioned propositionin the resolution plan. The Adjudicating Authority has chosen to leavethis issue open, for being litigated at the appropriate time and before thecompetent forum. In our view, such prescription as regards Expresswayland amounts to alterations of the material terms of CA and cannot bemade without the consent of YEIDA. This aspect could have only beendisapproved.

106.2. Similarly, the resolution applicant, of its own, could not havedecided that end-user would mean sub-lessee and thereby deflect evencollection of the amount towards this liability on YEIDA and that toowhen YEIDA was not going to be party in creation of any sub-lease.The structuring of these propositions regarding contingent liability turnsout to be wholly illogical, apart from being at loggerheads with the termsof the Concession Agreement.

106.3. It needs no great deal of discussion to find that the saidaspect concerning the provision for additional compensation, if notapproved on material terms, is of significant commercial impact. Eventhe other modification by the Adjudicating Authority, that YEIDA shallhave right to collect acquisition cost through SPVs concerned, carrytheir own commercial implications. These are not the terms which couldbe taken up for modification without disturbing the financial proposal ofthe resolution plan. While these prescriptions could not have beenapproved, in our view, the Adjudicating Authority could not have enteredinto any process of modification. The only course open for theAdjudicating Authority (NCLT) was to send the plan back to theCommittee of Creditors for reconsideration.

107. Apart from the aforesaid, the reliefs and concessions as soughtfor by the resolution applicant in relation to YEIDA in Clauses 4, 14 and27 of Schedule 3 are also required to be disapproved. We are unable tocountenance the proposition that by way of resolution plan, it could beenjoined upon an agency of the government like YEIDA to give up orwithdraw from pending litigation. Similarly, extinguishment of existingliability qua YEIDA is not relief that could be given to the resolutionapplicant for askance. For the same reason, the resolution applicant cannotseek extension of time period of the Concession Agreement by way of aclause of ‘relief’ in the resolution plan without the consent of agovernmental body like YEIDA.

A108. Before concluding on this point for determination where wehave accepted the major parts of the objections of YEIDA, we may, infairness to all the parties concerned, reiterate that despite stating itsobjections, YEIDA has consistently maintained before the NCLT as alsobefore this Court[82] that it does not stand to oppose the resolution planonly for the sake of opposition; rather it would like the plan to succeedBbut, it has public duty to ensure that the framework under CA ispreserved and else, it would be ready to do everything within its powerto ensure that the plan is success. Thus, it would not be out of place toadd sanguine hope that being the owner of the land in question andpublic authority, YEIDA, who had envisaged and promoted the entireCproject, would, in future dealing with the matter, act with caution andcircumspection, while earnestly reflecting upon the practical impact ofits propositions/decisions on various stakeholders, including thehomebuyers.

109. For what has been discussed hereinabove, we are constrainedDto hold that the stipulations in the resolution plan, as regards dealingswith YEIDA and with the terms of Concession Agreement, have rightlynot been approved and the stipulations in question, when not beingconsented to by YEIDA, are required to be disapproved. Further, in thecumulative effect of the stipulations which have not been approved, theonly correct course for the Adjudicating Authority was to send the planEback to the Committee of Creditors for reconsideration.

Point

Treatment of the debt of dissenting financial creditor ICICI BankLimitedF110. Now, we need to enter into another area of major dispute,which relates to the objections of dissenting financial creditor, ICICIBank Limited.

111. For dealing with the issue concerning dissenting financialcreditor, we need to look closely at the relevant prescriptions in theGresolution plan of NBCC. As noticed, in Schedule 2 of the resolutionplan, detailed steps are mentioned for acquisition of control of the corporatedebtor and implementation of the resolution plan. Steps 6A and 6B relateto the institutional financial creditors. The preceding steps, in theirchronology, are (1) incorporation of NBCC SPV and acquisition of theH82 vide paragraphs 47.2, 99 and 99.8 (supra)

corporate debtor by the resolution applicant through that SPV; (2)incorporation of Expressway SPV by the corporate debtor and transferof Yamuna Expressway to that SPV and securitisation of toll cash flow;(3) payment of unpaid CIRP costs; (4) payment of total operational debt;and (5) incorporation of Land Bank SPV. The sixth step is divided in twoparts, being Step 6A concerning upfront payment to the institutionalfinancial creditors and 6B concerning treatment of institutional financialcreditors for the remaining amount. In the second part of Step 6B, specificstipulations are contained as regards the dissenting financial creditors.For comprehension of the gamut of such prescriptions, we may reproduceSteps 6A and 6B in the resolution plan as under: -

“STEP 6A: UPFRONT PAYMENT TO THE INSTITUTIONAL FINANCIALCREDITOR

1. Part of the Admitted Financial Debts of the Institutional FinancialCreditors shall be settled to an extent of INR [Fresh Debt- 2,000]Cr by making upfront Payment of ~ INR [Fresh Debt - (less)2,000] Cr by the Expressway SPV, to be incorporated by theCorporate Debtor under Step 2 above. No prepayment penaltyshall be payable to the Institutional Financial Creditors, in the eventof any upfront payment of debt of as provided above.

2. In this regard, it is clarified that upon payment of upfront amountaggregating to INR [Fresh Debt - (less) 2,000] Cr to theInstitutional Financial Creditors, their charge over the YamunaExpressway and toll cash flow shall be automatically released,without any further deed or act by the parties.

“STEP 6B: TREATMENT OF INSTITUTIONAL FINANCIAL CREDITORSFOR THE REMAINING AMOUNT

After upfront payment is made to the Institutional FinancialCreditors as contemplated under Step-6A above, the remainingAdmitted Financial Debt due to the Institutional Financial Creditorsshall be settled in its entirety in the following manner.

Conversion of part of Admitted Financial Debt (due toInstitutional Financial Creditors) into equity shares of theCorporate Debtor and subsequent reduction of share capitalto extinguish the shareholding of Institutional Financial Creditorsin the Corporate Debtor in entirety;

Transfer of 100% shareholding of Land Bank SPV from theCorporate Debtor to the Institutional Financial Creditors;

Transfer of 100% shareholding of Expressway SPV from theCorporate Debtor to the Institutional Financial Creditors for aconsideration equal to their then outstanding debt to be paid byway of settlement of the outstanding debt to the same extent;and

It is also proposed that the Resolution Applicant shall enter into:

(i) management agreement with the Land Bank SPV (to beowned by the Institutional Financial Creditors) for the purposeCof monetizing the land held by the Land Bank SPV for aninitial tenure of 5 years subject to fixed/success-based feeto be mutually agreed between the Institutional FinancialCreditors and the Resolution Applicant. Detailed terms andconditions of such management agreement, including anyDescrow mechanism may be mutually agreed between theInstitutional Financial Creditors and the Resolution Applicant.Additionally, the Resolution Applicant reserves its first right tobuy back the land held by the Land Bank SPV, at the thenprevailing market rate.

E(ii) an operations & maintenance agreement with the ExpresswaySPV (to be owned by the Institutional Financial Creditors) tooperate and maintain the Expressway for tenure of 5 yearssubject to fee to be mutually agreed between the InstitutionalFinancial Creditors and the Resolution Applicant. Detailed termsand conditions of such O&M agreement, including any escrowFmechanism may be mutually agreed between the InstitutionalFinancial Creditors and the Resolution Applicant.

We have structured the transaction in tax efficient manner tothe best of our knowledge. However, in the event any income taxliability or goods and services tax (GST) liability, arises in futureon account of transfer of land parcels, same shall be borne by theInstitutional Financial Creditors in pro rata manner without anyrecourse, express or implied, to the Resolution Applicant.

As per IBC, Dissenting Financial Creditors are required to bepaid minimum of amounts in the nature of liquidation value dueto them in terms of Sections 30(2) and 53 of the IBC. However,

as per the amendment to the CIRP Regulations on 31 December2017, the requirement for disclosing the Liquidation Value of acorporate debtor undergoing resolution to the resolution applicantshas been dispensed with and accordingly, the Liquidation Valuefor the Corporate Debtor is currently not available with us.However, as per our estimate, the liquidation value owed to theDissenting Financial Creditors, in terms of Sections 30 and 53 ofthe IBC read with Regulation 38 of the CIRP Regulations isexpected to be nil.;

However, in the event the Dissenting Financial Creditors areentitled to some amount in the nature of liquidation value in termsof Sections 30 and Section 53 of the IBC read with Regulation 38of the CIRP Regulations, then the Dissenting Financial Creditorswould be provided the liquidation value owed to them in terms ofSection 30(2) and Section 53 of the IBC read with Regulation 38of the CIRP Regulations in the form of proportionate share in theequity of the Expressway SPV and transfer of certain land parcelsbelonging to the Corporate Debtor. For avoidance of doubt it isclarified that on account of the transfer of equity and transfer ofland parcels in favour of Dissenting Financial Creditors asstipulated above there will be corresponding decrease in theequity and area of land parcels being transferred to the InstitutionalFinancial Creditors (through the Land SPV) who vote in favourof the Plan. Further the Resolution Applicant shall have the solediscretion to determine the location of the land parcels to betransferred to the Dissenting Financial Creditors and the value ofsuch land parcels being transferred shall be same as that proposedunder this Resolution Plan for the Institutional Financial Creditorswho vote in favour of the Plan.Provided further that the Dissenting Financial Creditors shall bearthe stamp duty, registration costs, and other applicable taxesincluding goods and services tax (GST) involved in the transfer ofland parcels in their favour as stipulated hereinabove.

Notwithstanding anything contained in this Resolution Plan, theDissenting Financial Creditors shall neither be entitled to nor shallthey receive any other amounts other than the amounts due tothem in the nature of liquidation value as stipulated hereinabove.”

ABC

A111.1. Thus, the proposal in the resolution plan is to the effect that,if the dissenting financial creditors would be entitled to some amount inthe nature of liquidation value in terms of Sections 30 and Section 53 ofthe IBC read with Regulation 38 of the CIRP Regulations, they wouldbe provided such liquidation value ‘in the form of proportionate sharein the equity of the Expressway SPV and transfer of certain landBparcels belonging to the Corporate Debtor’.

112. The dissenting financial creditor of JIL, namely, ICICI BankLimited, took exception to the stipulations aforesaid and submitted beforethe Adjudicating Authority that being dissenting financial creditor, itwas entitled to receive cash payment as per the liquidation value in termsCof Section 30(2)(b) of the Code read with Regulation 38(1)(b) of theCIRP Regulations; and providing for land and equity in the proposedSPVs in lieu of the requisite payment was entirely impermissible. Theseobjections were countered by IRP and NBCC with the submissions thatit was nowhere provided in the scheme of the Code and CIRP RegulationsDthat payment of liquidation value to the dissenting financial creditor hasto be in cash. It was also submitted that when mode of discharge ofobligation towards dissenting financial creditor was not envisaged onlyby way of cash payment, money or other valuable thing delivered todischarge the obligation would be construed as “payment”, fulfilling therequirement of Section 30(2) of the Code. It was also submitted thatEwhen the assenting financial creditors were not being paid in cash, anysuch payment to the dissenting financial creditors would cause prejudiceto the rights of the assenting financial creditors. As noticed, theAdjudicating Authority rejected the stand so taken by IRP and NBCCand observed that all the provisions and specifications of the Board madeFit clear that payment to dissenting financial creditors means payment ofthe amount; and it cannot be argued that the payment could also be in amanner other than cash. The Adjudicating Authority also rejected thecontention made with reference to the treatment assigned to the assentingfinancial creditors while observing that person agreeing might agreefor anything but the same may not be acceptable to the person disagreeing.GAccordingly, the Adjudicating Authority (NCLT) did not approve theproposal in the resolution plan as regards treatment of the dissentingfinancial creditors.

112.1.However, after disapproving, the Adjudicating Authorityproceeded on the lines that this objectionable part of the resolution planH

could be modified without altering the basic structure of the plan. Havingsaid so, the Adjudicating Authority proceeded to modify the resolutionplan in the manner that the resolution applicant shall pay to the dissentingfinancial creditors the amount, that was receivable in terms of Section53 of the Code, in twelve monthly instalments together with interest withother stipulations, as contained in paragraph 103 of its order, which wehave reproduced in paragraph 46.4 hereinbefore. This part of the orderof the Adjudicating Authority has been challenged by NBCC as also byIRP in their respective appeals. The assenting financial creditors, includingIDBI Bank and the assenting homebuyers have also supported thischallenge. Their submissions have been countered by the dissentingfinancial creditor ICICI Bank as also by the erstwhile director of thecorporate debtor.113. We may now summarise the essential contents of extensivesubmissions made by the parties in challenge to this part of the order ofthe Adjudicating Authority, while avoiding repetition of the same contentionby different parties.

113.1.It has been strenuously contended on behalf of the IRP thatthe Adjudicating Authority has acted wholly without jurisdiction inmodifying the terms of the resolution plan that was approved by 97.36%of the voting share of the Committee of Creditors. It is submitted thatthe resolution plan in question is duly compliant with the requirements ofSection 30 of the Code and if the Adjudicating Authority was at all of theview that the plan did not meet with any particular requirement, it couldhave only sent it back to CoC to consider the proposed modifications, soas to afford an opportunity to the resolution applicant to modify the planand to the CoC to reconsider and vote upon the same. It is submittedthat the Adjudicating Authority, by itself, could not have made anymodification in the resolution plan, particularly on any commercial aspectof the plan which remains exclusively within the domain of the CoC.

113.1.1. It has also been submitted on behalf of IRP that in themeeting of CoC dated 28.11.2019, ICICI Bank did not raise any objectionto the mode of payment and only objected to the amount provided by theresolution applicant and that being the position, it could not have raisedany objection at later stage.

113.1.2. It is further submitted that the requirements in Section30(2)(b) of the Code stress upon the ‘value’ dissenting financial creditor

Ais entitled to receive but, it has nowhere been provided that the mannerof payment has to be in cash; rather the manner of payment has beenleft to be specified by the Board and the Board has also not specifiedthat such payment has to be in cash only.

113.1.3. Further, according to IRP, if the word “payment” is givenBa prescriptive meaning, it would result in clause (b) of sub-section (2) ofSection 30 prescribing the manner of distribution and that would amountto amending the word “creditor” in sub-section (4) of Section 30. It issubmitted that in the scheme of the Code, dissenting financial creditorsare bound to accept the manner of distribution in the resolution plan asapproved by the majority of 66% or more of the voting share in the CoCCand if they are not held so bound, the provisions permitting the CoC totake decisions with requisite majority would be rendered nugatory.

113.2.The resolution applicant NBCC has also made long rangingsubmissions in challenge to the directions in paragraph 103 of the orderof the Adjudicating Authority while defending the terms and stipulationsDin the resolution plan. It is submitted that Step 6B in the resolution planhas been formulated in due compliance of the requirements of Section30(2) of the Code and Regulation 38(1) of the CIRP Regulations. It isstated in its written submissions that the requirements of law are dulysatisfied as follows:E“3. Thus, the requirements of law have been met in the followingmanner:

a. Payment of liquidation value in terms of payment ofproportionate share in the Land Bank SPV and Expressway SPV;andF

b. the payment to the Dissenting Financial Creditors shall bemade in terms of Regulation 38 of the CIRP Regulations andfurther states that on account of the payments to the DissentingFinancial Creditors in the form of proportionate equity in theExpressway SPV and transfer of certain land parcels, there wouldGbe corresponding decrease in the equity and land parcels beingtransferred to the lenders who vote in favour of the plan.”

113.2.1. As regards the expression “payment” for the purpose ofSection 30(2) of the Code, the meaning of this term stated in Black’sLaw Dictionary (9[th] Edition) has been referred. Further, reliance isHplaced on the decisions of this Court in the case of Pioneer Urban

(supra), Himachal Pradesh Housing and Urban DevelopmentAuthority and Anr. v. Ranjit Singh Rana: (2012) 4 SCC 505; and onthe decision of the Court of Appeal for the 6[th] Circuit, USA in the caseof Samuel Katkin and Doris Katkin v. Commissioner of InternalRevenue: 570 F.2d 139 as also on decision of the High Court ofCalcutta wherein, decision of the Court of Appeal of England in Whitev. Elmdene Estates Ltd.: 1959 ALL ER 605 has been relied upon.With reference to the Dictionary meaning and the cited decisions, thecontention has been that “payment” means the discharge of an obligationby delivery of money or its equivalent; and the expression “payment” isnot restricted to delivery of money or legal tender only.

113.2.2. It is argued that Section 8 of the Code, as relied upon byICICI Bank, uses the term “payment” to denote the payment of amountsthat are “operational debts” before commencement of the insolvencyresolution process, whereas the same term is used under Section 30(2)to denote the payment under resolution plan. The language employedunder Section 8(2)(b) of the Code includes payment by way of electronictransfer or by cheque. On the other hand, Section 30(2) of the Code is inrelation to payment under resolution plan, and does not in any mannerstipulate the mode of payment.

113.2.3. It is also contended that the word ‘payment’ is requiredto be interpreted with reference to its context and placement; and tosupport the submissions on contextual interpretation, reliance is placedon the decisions in Commissioner of Income Tax, Madhya Pradesh& Bhopal v. Shrimati Sodra Devi: AIR 1957 SC 832; KolkataMetropolitan Development Authority v. Gobinda Chandra Makaland Anr.: (2011) 9 SCC 207; Indian Handicrafts Emporium andOrs. v. Union of India and Ors.: 2003 (7) SCC 589; CIT, Bangalorev. Venkateswara Hatcheries (P) Ltd.: (1999) 3 SCC 632; and Unionof India v. Sankalchand Himatlal Sheth and Anr.: (1977) 4 SCC193.

113.2.4. It has also been submitted that the context in relation tothe word “payment” needs to be examined in terms of the object andpurpose of resolution of insolvency and not in terms of recovery of debt;and in the light of the fact that for the purpose of insolvency resolution,a resolution plan may provide for various ways of settlement of claims.On the scheme of the Code and object and purpose of resolution, thedecisions in ArcelorMittal and Swiss Ribbons (supra) have been referred.

ARegulation 37(1) of the CIRP Regulations has also been referred whereinit is provided that resolution plan may provide for securities in exchangeof claims. It is also submitted that limiting the word “payment” only tomean cash would defeat the purpose of resolution and would ratherincentivise dissent. It is submitted that such mode of payment by cashshould not be read in the statute, when not provided therein. The decisionBof this Court in the case of State through Central Bureau ofInvestigation v. Parmeshwaran Subramani and Anr.: (2009) 9 SCC729 has been referred.113.2.5. It has also been submitted that the “value” under Section53 is only guiding factor for the CoC to exercise its commercial wisdomCand the reference to “value” in Section 53 does not mean that thedissenting financial creditor has to be paid such value only in cash. It isalso submitted that the liquidation value is not known to the resolutionapplicant and there is no requirement of mentioning the liquidation valuein the resolution plan. It is pointed out that earlier, sub-clauses (j) andD(k) of Regulation 36(2) provided for inclusion of liquidation value of thecorporate debtor and liquidation value due to the operational creditors aspart of information memorandum, but these clauses were deleted w.e.f.31.12.2017 and the resolution applicant is not given access to theliquidation value of the corporate debtor. It is also submitted that as perthe decision in Maharashtra Seamless Ltd. (supra), there is noErequirement for resolution applicant to match the liquidation value of acorporate debtor. It has been vehemently contended that all the amountsbeing raised or made available to NBCC are going to be utilised forconstruction of homes and any requirement of payment in cash wouldbe detrimental to the object of completing the construction on time, which

Fwould cause prejudice to the homebuyers. It is also submitted that‘payment in kind’ is accepted under banking norms and in this regard, itis also indicated that on an earlier occasion, the objector ICICI Bankitself had accepted land-debt swap as method of payment for dischargeof the debt of JIL.G113.2.6. Apart from above, NBCC has also referred to its affidavitfiled during the course of hearing while submitting that the admitted debtof ICICI Bank is INR 304.1 crores which is 1.31% of total financialdebt and as per the final statement available, the proportionate liquidationvalue payable to this bank would be about INR 238.84 crores. Thereafter,particulars of the parcels of land proposed to be offered to ICICI BankH

and their estimated value as also the estimated value of equity inExpressway have been stated to suggest that adequate provision is beingmade for payment of debt of this bank while indicating that the bankwould also be entitled to its proportionate share under Step 6A of theresolution plan.

113.3.The assenting financial creditor, IDBI Bank, has alsosupported the submissions aforesaid. The additional parts of itssubmissions are that ICICI Bank is using its dissent to obtain an advantageover the assenting financial creditors, by seeking to be paid in cash purelyby virtue of dissent. It is also submitted that resolution plan was approvedby 97.36% of the voting share of the creditors in CoC in its commercialwisdom after assessing the viability and feasibility of the resolution plan;and if the other institutional financial creditors also wanted to receivetheir money, they would have simply voted for liquidation which wouldhave deprived thousands of homebuyers of any chance of getting theirhomes. It is also submitted that if cash payment is considered to be theonly mode of payment available to the dissenting financial creditors, itwould incentivise the financial creditors to go for dissent, leading to moreliquidations and fewer resolutions and thereby defeating the theme andspirit of the Code. It has also been submitted in the alternative that if atall, this Court upholds the related part of the order of NCLT and permitscash payment, the interests of the assessing financial creditors need tobe safeguarded and such payment should not result in any dilution orreduction in the amount payable to the assenting financial creditors.114. While opposing the submissions so made and supporting themodification of the resolution plan by NCLT, it has been emphaticallyargued on behalf of the dissenting financial creditor, ICICI Bank, thatthe resolution plan in question had been non-compliant with therequirements of law and had it not been amended to provide for paymentof the amounts admittedly owed to it by the corporate debtor, the onlycourse would have been of rejection of the plan; and that would havejeopardised the entire resolution process carried out for more than twoyears under exceptional circumstances and would have pushed thecorporate debtor to liquidation, much to the disappointment ofhomebuyers.

114.1.With reference to Section 30(2)(b) of the Code andRegulation 38(1)(b) of the CIRP Regulations, it is submitted that as perthe statutory mandate, resolution applicant is required to pay minimum

Aof liquidation value [in terms of Section 53(1) of the Code] to the dissentingfinancial creditors in priority over the assenting financial creditors; and ifa resolution plan does not provide for this mandatory payment in priority,the same cannot be approved.

114.2.It is submitted that, admittedly, the corporate debtor owedBan amount of INR 304.1 crores to ICICI Bank as on the insolvencycommencement date; and this bank, holding 1.3% voting share in theCoC, voted against the resolution plan proposed by NBCC and therefore,came to be categorised as dissenting financial creditor. Consequently,this bank has the right and entitlement to be paid, and in priority over theassenting financial creditors, the amount against its dues, which shall beCnot less than the amount payable in accordance with Section 53(1) ofthe Code, that is, the liquidation value; and this payment could only bemade in terms of cash and not by any other mode or method.

114.3.It is contended that Section 53 contemplates the proceedsfrom the sale of the liquidation assets to be utilised to pay the dissentingDfinancial creditors and there is no such conceivable possibility that theassets of corporate debtor would be liquidated in any other consideration,apart from cash. The payment, for the purpose of Section 30(2)(b) ofthe Code, would only be in terms of money or legal tender; and it isentirely impermissible for resolution applicant to pay such liquidationEvalue to the dissenting financial creditor in kind, unless the latter acceptssuch form of payment. Various decisions on the process of interpretationhave been referred on behalf of the objector bank including those inSankalchand Himatlal Sheth (supra) and Rathi Khandsari Udyogand Ors. v. State of Uttar Pradesh and Ors.: (1985) 2 SCC 485.

F114.4.It is further submitted that in the resolution plan, the treatmentof the dissenting financial creditors is inferior to the assenting financialcreditors inasmuch as the latter is being provided an upfront payment ofINR 300 crores, whereas the former is not provided with any cash at all.Such treatment defeats the purpose of Section 30(2)(b) of the Code,which has been amended to protect the interests of the dissenting financialGcreditors.

114.5.Yet further, it is submitted that the presumption of NBCCthat the liquidation value towards the dissenting financial creditors shallbe nil is baseless; and the treatment of dissenting financial creditors inthe resolution plan is vague and incapable of precise valuation as it isHbased on speculation rather than current market figures.

114.6.While questioning the valuation suggested in the resolutionplan, it is submitted that valuation of the land proposed to be transferredto the Land Bank SPV is INR 5001 crores which is based on futurepotential. On the other hand, the valuations conducted by the IRP comesat INR 2509 crores and by the others equals to INR 3643 crores whichis significantly less than the value arrived at by NBCC. The treatmentunder the plan also mentions that the land so transferred shall carry withit the liabilities attached and the dissenting financial creditor shall bearsuch uncertain and unquantified liabilities. This, it is submitted, raises adoubt as to whether this provision even satisfies the liquidation valuepayable to the dissenting financial creditors.

114.7.It is further submitted that the contention of NBCC, thatthe intent of the legislature while using the word “amount” cannot berestricted to only payment in cash, does not have any basis in law. ICICIBank submits that even look at the language of Section 8 of the Codemakes it clear that when it comes to the requirement of payment inrelation to corporate insolvency resolution, the same has to be in monetaryterms. It is submitted that once the language of statute is clear, themeaning of the provisions cannot be altered by judicial interpretation.

114.8.It is further submitted that the purpose of guaranteeingliquidation value to the dissenting financial creditors is to protect theirinterests so as to make sure that they are not in worse position thanthey would have been in the event of liquidation but, the treatment providedin the resolution plan for dissenting financial creditors is done in waythat they get punished for their dissent.

114.9.It is further submitted that once the resolution plan is putforth before the Adjudicating Authority for its approval, judicial mind isapplied to see as to whether such plan fulfils the mandatory requirementsunder the Code, which involves firstly, compliance with Section 30(2) ofthe Code; secondly, whether the plan is fair and equitable and balancesthe interests of all the stakeholders; and thirdly, whether the plan maximisesthe value of assets. Such approval of NCLT is never formality, but anecessity. According to the objector bank, the Adjudicating Authority,while modifying the resolution plan, has made sure that the modificationsdo not alter the basic structure of the plan and hence, has not violatedthe principle of judicial review. Therefore, the contention that NCLT hasacted beyond its jurisdiction and has overridden the commercial wisdomof CoC is incorrect.

114.10. It is also submitted that just because ICICI Bank hasvoted against the approval of both the resolution plans, it does not meanthat the intention of the Bank would be the liquidation of the corporatedebtor. Such contention of NBCC furthers its mala fide intentions andis placed only to undermine the dissentient bank.

B115. The submissions so made on behalf of the dissenting financialcreditor bank have also been supported by the erstwhile director of thecorporate debtor JIL and JAL. It is submitted that the proposition in theresolution plan to satisfy the claim of the dissenting financial creditors inthe form of share and equity or transfer of land parcels is not in conformitywith the requirements of Section 30(2)(b) of the Code. It is also submittedCthat proposing to satisfy the claim of the dissenting financial creditors bya mode other than monetary payment is tantamount to reading the word‘equivalent’ in the relevant provision, which is entirely impermissible inlaw. The decision of this Court in the case of Dadi Jagannadham v.Jammulu Ramulu and Ors.: (2001) 7 SCC 71, has been referred. ItDis also submitted that reliance of NBCC on Regulation 37 of the CIRPRegulations, to justify the manner in which dissenting financial creditorsare to be paid, is misplaced because instead of Regulation 37, the relevantprovision which needs consideration is Regulation 38(1)(b), as it is directlyrelated to Section 30(2)(b)(ii) of the Code. It is, therefore, maintainedthat the resolution plan, as regards prescription for the dissenting financialEcreditors, being violative of the requirements of law, could not have beenapproved.

116. Having examined the rival submissions with reference to thelaw applicable in relation to the treatment of the debt of dissenting financialcreditor in CIRP under the Code, we find the objections taken by theFdissenting financial creditor in the present case fully justified; and theinterpretation suggested by the IRP, the resolution applicant and theassenting financial creditor cannot be accepted.

117. An overview of the Insolvency and Bankruptcy Code, 2016gives the basic idea that even while the avowed objects of the Code areGtowards insolvency resolution in time bound manner for maximisationof value of assets of the corporate debtors and balance of interests of allthe stakeholders, the core provisions of the Code, comparatively newlegislation, have already undergone several amendments from time totime. In fact, in Pioneer Urban (supra), this Court has recognised the

legislature’s right to experiment when coming to the economic legislationlike the Code, while observing as under: -

“The Legislature’s right to experiment in matters economic

15. In Swiss Ribbons, this Court was at pains to point out,referring, inter alia, to various American decisions in paras 17 to24, that the legislature must be given free play in the joints whenit comes to economic legislation. Apart from the presumption ofconstitutionality which arises in such cases, the legislativejudgement in economic choices must be given certain degree ofdeference by the courts. In para 120 of the said judgment, thisCourt held: (SCC p. 112)

“120. The Insolvency Code is legislation which dealswith economic matters and, in the larger sense, deals with theeconomy of the country as whole. Earlier experiments, aswe have seen, in terms of legislations having failed, “trial” havingled to repeated “errors”, ultimately led to the enactment of theCode. The experiment contained in the Code, judged by thegenerality of its provisions and not by so-called crudities andinequities that have been pointed out by the petitioners, passesconstitutional muster. To stay experimentation in thingseconomic is grave responsibility, and denial of the right toexperiment is fraught with serious consequences to the nation.We have also seen that the working of the Code is beingmonitored by the Central Government by Expert Committeesthat have been set up in this behalf. Amendments have beenmade in the short period in which the Code has operated, boththe code itself as well as to subordinate legislation made underit. This process is an ongoing process which involves allstakeholders, including the petitioners.”

It is in this background that the constitutional challenge tothe Amendment Act will have to be decided.”

118. few aspects of the vast variety of amendments to IBChave been noticed hereinbefore and are being dealt with in this judgment,to the extent relevant for the issues involved. One part of suchamendments relates to Section 30, with which we are concerned in thispoint for determination. As noticed, the earlier clause (b) of sub-section(2) of Section 30 of the Code required that the resolution plan should

Aprovide for payment of debts of operational creditors, which should notbe less than the amount to be paid to the operational creditors in theevent of liquidation. The treatment of various classes of creditors in thescheme then existing had been matter of debate at various levels andin several decisions. It acquired attention of the legislature that balancewas required to be brought about in treatment of different creditors andB‘critical gaps’ were noticed in the corporate insolvency framework,including those in the treatment of dissenting financial creditors. This ledto the introduction of Bill No. XXVI of 2019, being the Insolvency andBankruptcy Code (Amendment) Bill, 2019, in the Rajya Sabha in July2019. The Statement of Objects and Reasons for this Bill, giving aCreasonable insight as to what was sought to be achieved, reads as under:-

“STATEMENT OF OBJECTS AND REASONS

The Insolvency and Bankruptcy Code, 2016 (the Code) wasenacted with view to consolidate and amend the laws relating toreorganization and insolvency resolution of corporate persons,Dpartnership firms and individuals in time-bound manner formaximization of value of assets of such persons, to promoteentrepreneurship, availability of credit and balance of interests ofall the stakeholders including alteration in the order or priority ofpayment of Government dues and to establish an Insolvency andEBankruptcy Board of India.2. The Preamble to the Code lays down the objects of theCode to include “the insolvency resolution” in time bound mannerfor maximization of value of assets in order to balance the interestsof all the stakeholders. Concerns have been raised that in somecases extensive litigation is causing undue delays, which mayhamper the value maximization. There is need to ensure thatall creditors are treated fairly, without unduly burdeningthe Adjudicating Authority whose role is to ensure that theresolution plan complies with the provisions of the Code.Various stakeholders have suggested that if the creditors weretreated on an equal footing, when they have different pre-insolvencyentitlements, it would adversely impact the cost and availability ofcredit. Further, views have also been obtained so as to bring clarityon the voting pattern of financial creditors represented by theauthorized representative.

3. In view of the aforesaid difficulties and in order to fillthe critical gaps in the corporate insolvency framework, ithas become necessary to amend certain provisions of theInsolvency and Bankruptcy Code. The Insolvency and BankruptcyCode (Amendment) Bill, 2019, inter alia, provides for thefollowing, namely:-

(a) to amend clause (26) of section 5 of the Code so as toinsert an Explanation in the definition of “resolution plan” to clarifythat resolution plan proposing the insolvency resolution ofcorporate debtor as going concern may include the provisionsfor corporate restructuring, including by way of merger,amalgamation and demerger to enable the market to come upwith dynamic resolution plans in the interest of value maximization;

(b) to amend sub-section (4) of section 7 of the Code toprovide that if an application has not been admitted or rejectedwithin fourteen days by the Adjudicating Authority, it shall providethe reasons in writing for the same;

(c) to amend sub-section (3) of section 12 of the Code tomandate that the insolvency resolution process of corporatedebtor shall not extend beyond three hundred and thirty days fromthe insolvency commencement date, which will include the timetaken in legal proceedings, in order to prevent undue delays in thecompletion of the Corporate Insolvency Resolution Process.However, if the process, including time take in legal proceedings,is not completed within the said period of three hundred and thirtydays, an order requiring the corporate debtor to be liquidated underclause (a) of sub-section (1) of section 33 shall be passed. It isclarified that the time taken for the completion of the corporateinsolvency resolution process shall include the time taken in legalproceedings;

(d) to insert sub-section (3A) in section 25A of the Code toprovide that an authorized representative under sub-section (6A)of section 21 will cast the vote for all financial creditors herepresents in accordance with the decision taken by vote ofmore than fifty per cent. of the voting share of the financialcreditors he represents, who have cast their vote, in order tofacilitate decision making in the committee of creditors, especiallywhen financial creditors are large and heterogeneous group;

(e) to amend sub-section (2) of section 30 of the Codeto provide that –

(i) the operational creditors shall receive an amountthat is not less than the liquidation value of their debt orthe amount that would have been received if the amount toBbe distributed under the resolution plan had beendistributed in accordance with the order of priorities insection 53 of the Code, whichever is higher;

(ii) the financial creditors who do not vote in favour ofthe resolution plan shall receive an amount that is not lessCthan the liquidation value of their debt;

(iii) the provisions shall apply to the corporate insolvencyresolution process of corporate debtor-

(A) where resolution plan has not been approved or rejected bythe Adjudicating Authority; or

(B) an appeal is preferred under section 61 or 62 or such appeal isnot time barred under any provision of law for the time being inforce; or

(C) where legal proceeding has been initiated in any court againstthe decisions of the Adjudicating Authority in respect of resolutionEplan;

(f) to amend sub-section (1) of section 31 of the Code to clarifythat the resolution plan approved by the Adjudicating Authorityshall also be binding on the Central Government, any StateGovernment or any local authority to whom debt in respect ofFpayment of dues arising under any law for the time being in force,such as authorities to whom statutory dues are owed, includingtax authorities;

(g) to amend sub-section (2) of section 33 of the Code to clarifythat the committee of creditors may take the decision to liquidateGthe corporate debtor, in accordance with the requirements providedin sub-section (2) of section 33, any time after the constitution ofthe committee of creditors under sub-section (1) of section 21until the confirmation of the resolution plan, including at any timebefore the preparation of the information memorandum.

4. The Bill seeks to achieve the above objectives.”

(emphasis in bold supplied)

118.1.The aforesaid Bill ultimately took the shape of the Insolvencyand Bankruptcy Code (Amendment) Act, 2019, being Act 26 of 2019.This Amendment Act of 2019 not only provided that operational creditorswould receive an amount that is not less than liquidation value of theirdebts or the amount that would have been received if the amount to bedistributed under the resolution plan had been distributed in accordancewith the order of priorities in Section 53 but, in addition to that, thisamendment ensured that the dissenting financial creditors would also bepaid certain minimum amount, which would not be less than the amountto be paid in the event of liquidation; and the Explanation clarified thatthe distribution in accordance with clause (b) would be fair and equitableto all the creditors. The purport and connotation of this amendment cameto be tersely explained by this Court in the case of Essar Steel as under:-

“128. When it comes to the validity of the substitution of Section30(2)(b) by Section 6 of the Amending Act of 2019, it is clear thatthe substituted Section 30(2)(b) gives operational creditorssomething more than was given earlier as it is the higher of thefigures mentioned in sub-clauses (i) and (ii) of sub-clause (b)that is now to be paid as minimum amount to operationalcreditors. The same goes for the latter part of sub-clause (b)which refers to dissentient financial creditors. Ms Madhavi Divanis correct in her argument that Section 30(2)(b) is in fact abeneficial provision in favour of operational creditors anddissentient financial creditors as they are now to be paid acertain minimum amount, the minimum in the case of operationalcreditors being the higher of the two figures calculated under sub-clauses (i) and (ii) of clause (b), and the minimum in the case ofdissentient financial creditor being minimum amount that wasnot earlier payable. As matter of fact, pre-amendment, securedfinancial creditors may cramdown unsecured financial creditorswho are dissentient, the majority vote of 66% voting to give themnothing or next to nothing for their dues. In the earlier regime itmay have been possible to have done this but after theamendment such financial creditors are now to be paid theminimum amount mentioned in sub-section (2). Ms MadhaviDivan is also correct in stating that the order of priority of payment

Aof creditors mentioned in Section 53 is not engrafted in sub-section(2)(b) as amended. Section 53 is only referred to in orderthat certain minimum figure be paid to different classesof operational and financial creditors. It is only for thispurpose that Section 53(1) is to be looked at as it is clearthat it is the commercial wisdom of the Committee ofBCreditors that is free to determine what amounts be paidto different classes and sub-classes of creditors in accordancewith the provisions of the Code and the Regulations madethereunder.

129. As has been held in this judgment, it is clear thatCExplanation 1 has only been inserted in order that theAdjudicating Authority and the Appellate Tribunal cannotenter into the merits of business decision of the requisitemajority of the Committee of Creditors. As has also beenheld in this judgment, there is no residual equity jurisdiction in theDAdjudicating Authority or the Appellate Tribunal to interfere inthe merits of business decision taken by the requisite majority ofthe Committee of Creditors, provided that it is otherwise inconformity with the provisions of the Code and the Regulations,as has been laid down by this judgment.”

(emphasis in bold supplied)

118.2.As noticed, the decision of this Court in Essar Steel wasdelivered on 15.11.2019. few days after this decision, i.e., on 28.11.2019,amendment was carried out in clause (1) of Regulation 38 of the CIRPRegulations, which has direct co-relation with the aforesaid amendedFclause (b) of Section 30(2) of the Code. By way of this amendment ofRegulation 38(1), the priority for the amount payable came to be specified,not only to the operational creditors but also to the dissenting financialcreditors over their assenting counterparts. The aforesaid amendmentsand the expositions of this Court in Essar Steel make it clear that theinterests of dissenting financial creditors are duly taken care of, whileGproviding for the minimum amount they are entitled to and, for that matter,in priority over the assenting financial creditors.

118.3.Even when the legislature has filled in the gaps in IBC,particularly qua the dissenting financial creditors; and their interests aresought to be taken care of by making it mandatory to provide for theHpayment of their dues in terms of liquidation value, another grey area

has surfaced in the present case. It is concerning the mode of translatingsuch assured returns to reality. Putting it differently, there is no doubtthat now the dissenting financial creditors shall get payment and thattoo, in priority over the assenting financial creditors but, the questionremains about the mode of fulfilling such obligations towards dissentientfinancial creditors.

119. In the present case, the resolution plan has, in the first place,stated that according to the estimate of the resolution applicant, theliquidation value to be received by the dissenting financial creditors waslikely to be nil but then, has provided for discharge of any likely obligationtowards them in the manner that they shall be provided proportionateshare in the equity of Expressway SPV and land parcels but not anypayment in terms of money. The dissenting financial creditor, ICICI Bank,is thoroughly dissatisfied with such prescription whereby its dues shallbe satisfied by mode other than direct payment in cash. On the otherhand, the IRP, the resolution applicant and even the assenting financialcreditor would assert that such prescription satisfies all the essentialrequirements of Section 30(2)(b) and Regulation 38(1)(b). Both theseprovisions essentially use the expressions “payment”; “the amount to bepaid”; “the amount payable”; and “shall be paid”. ICICI Bank assertsthat these expressions refer only to the payment in monetary terms,whereas the submissions are countered with the assertions that the term“payment” is with reference to discharge of obligation and that could bebrought about by any of the methods permissible in law and not necessarilyby way of payment in terms of money alone. This takes us to the principlesof interpretation and assigning appropriate meaning to the expressionsused.

119.1.The principles in the decisions cited by the learned counselfor the contesting parties are not of much debate and hence, we neednot elaborate on every cited decision. The contextual interpretation remainsone of the fundamental guiding principles; and the relevant observationsin paragraph 54 of the decision in Sankalchand Himatlal Sheth (supra),which have been referred to by the contesting parties, would suffice forthe purpose, which read as under: -

“54. Now, it is undoubtedly true that where the language of anenactment is plain and clear upon its face and by itself susceptibleto only one meaning, then ordinarily that meaning would have tobe given by the Court. In such case the task of interpretation

Acan hardly be said to arise. But language at best is an imperfectmedium of expression and variety of significations may often liein word or expression. It has, therefore, been said that the wordsof statute must be understood in the sense which the legislaturehas in view and their meaning must be found not so much in astrictly grammatical or etymological propriety of language, nor inBits popular use, as in the subject or the occasion on which they areused and the object to be attained. It was said by Mr. JusticeHolmes in felicitous language in Town v. Eisner that “a word isnot crystal, transparent and unchanged; it is the skin of livingthought and may vary greatly in colour and content according toCthe circumstances and the time in which it is used”. The wordsused in statute cannot be read in isolation: their colourand content are derived from their context and, therefore,every word in statute must be examined in its context.And when I use the word ‘context’, I mean it in its widest sense“as including not only other enacting provisions of the same statuteDbut its preamble, the existing state of the law, other statutes inpari materia and the mischief which – the statute was intendedto remedy”. The context is of the greatest importance inthe interpretation of the words used in statute. “It is quitetrue”, pointed out Judge Learned Hand in Helvering v. GregoryE“that as the articulation of statute increases, the room forinterpretation must contract; but the meaning of sentence maybe more than that of the separate words, as melody is morethan the notes, and no degree of particularity can every obviaterecourse to the setting in which all appear, and which all collectivelycreate”. Again, it must be remembered that though the wordsFused are the primary, and ordinarily the most reliable, source ofinterpreting the meaning of any writing, be it statute, or contract,or anything else, it is one of the surest indexes of mature anddeveloped jurisprudence not to make fortress out of the dictionary,but to remember that statute always has some purpose or objectGto accomplish, whose sympathetic and imaginative discovery, isthe surest guide to its meaning. The literal construction should notobsess the Court, because it has only prima facie preference, thereal object of interpretation being to find out the true intentof the law maker and that can be done only by reading thestatute as an organic whole, with each part throwing light

on the other and bearing in mind the rule in Heydon’s casewhich requires four things to be “discerned andconsidered” in arriving at the real meaning : (1) what wasthe law before the Act was passed; (2) what was the mischiefor defect for which the law had not provided; (3) whatremedy Parliament has appointed; and (4) the reason ofthe remedy. There is also another rule of interpretation which isequally well settled and which seems to follow as necessarycorollary, namely, where the words, according to their literalmeaning “produce an inconsistency, or an absurdity orinconvenience so great as to convince the Court that the intentioncould not have been to use them in their ordinary signification”,the Court would be justified in “putting on them some othersignification, which, though less proper, is one which the Courtthinks the words will bear”. Vide River Wear Commissioners v.Admson. It is in the light of these principles of interpretation thatI must proceed to consider what is the true meaning and effect ofclause (1) of Article 222: whether it permits transfer of Judgefrom one High Court to another, irrespective of his consent.”

(emphasis in bold supplied)

119.2.There is no doubt on the principles that, depending uponcontext, the same word may be used in different parts of the statutewith different meanings, as observed in Kolkata MetropolitanDevelopment Authority (supra); and the same word in the context ofone provision of the enactment may convey one meaning and anothermeaning in different context, as pointed out in Venkateswara Hatcheries(supra). However, it is also fundamental that construction of statuteleading to absurdity is required to be rejected and if more than one meaningor interpretation is possible, the one which favours the objects of thestatute ought to be adopted. When it comes to the world of business andcommerce, the observations of the majority in Rathi Khandsari Udyog(supra) are pertinent where, in paragraph 34 of the decision, this Courtobserved that in the legislations pertaining to the world of business andcommerce, the dictionary to be referred to is the dictionary of theinhabitants of that world. It is also settled principle of statutoryinterpretation that the statute is required to be read as whole; and forthat matter, it would be rather pre-elementary to say that for understandingthe meaning and connotation of particular expression in particular

ABC

Astatutory provision, the provision itself is required to be read as whole.When we look at the ‘context’ for the purpose of particular expression,which has otherwise not been defined in the statute elsewhere, acomprehension of the sentence or phrase in which the expression occurscoupled with the frame of the provision taken as whole and, on thebroad sphere, the entire statute with its objects and intents would lead toBthe true construction of the expression under reference; of course, whilealso keeping in view the other relevant principles, including the basicsthat natural and ordinary meaning of word or expression is not ignored,unless there be any reason therefor.

120. Keeping the principles aforesaid in view, we may embarkCupon the interpretation required in this case, of the expressions used inthe relevant provisions of Section 30(2)(b) of the Code and Regulation38(1)(b) of the CIRP Regulations.

120.1.The expression “payment” occurs in Section 30(2) of theCode, which lays down certain basics which the resolution professionalDhas to find in the resolution plan before he presents the same to theCommittee of Creditors. As per clauses (a) and (b) of sub-section (2) ofSection 30, the resolution plan ought to provide for: (a) payment ofinsolvency resolution process costs; and (b) payment of debts ofoperational creditors as also dissenting financial creditors. Such paymentEhas to be in the manner specified by the Board and the resolution processcosts rank top in priority. This provision, read with Regulation 38(1),makes it clear that the next priority is of operational creditors who arefollowed by the dissenting financial creditors. The question is as to whatis intended by these provisions and as to how the action of “payment” isto be performed?F120.2.The referred observations in the case of Pioneer Urbanthat the expression “payment” is elastic enough to include “recompense”and “repayment” had been with reference to following passages in thecase of Ranjit Singh Rana (supra): -

G“13. Webster Comprehensive Dictionary (International Edn.) Vol.2 defines “payment”:

“Payment.- (1) the act of paying.

(2) Pay; requital; recompense.”

14. The Law Lexicon by P. Ramanatha Aiyar, 2nd Edn. Reprint,inter alia, states:

“payment is defined to be the act of paying, or that which ispaid; discharge of debt, obligation or duty; satisfaction of claim;recompense; the fulfilment of promise or the performance of anagreement; the discharge in money of sum due”.

15. The word “payment” may have different meaning in differentcontext but in the context of Section 37(1)(b); it meansextinguishment of the liability arising under the award. It signifiessatisfaction of the award. The deposit of the award amount intothe court is nothing but payment to the credit of the decree-holder. In this view, once the award amount was deposited by theappellants before the High Court on 24-5-2001, the liability ofpost-award interest from 24-5-2001 ceased. The High Court, thus,was not right in directing the appellants to pay the interest @ 18%p.a. beyond 24-5-2001.”

120.3.We need not enter into the other observations regarding thewords “pay” and “payment”, made in the context of different statutesand different provisions but, we may profitably look at the meaningassigned to these expressions in the relevant dictionaries and lexicons.In Black’s Law Dictionary (Tenth Edition, page 1309), the verb “pay”,which leads to the derivative “paid” is defined as follows: -

“Pay, vb. (13c) 1. To give money for good or service that onebuys; to make satisfaction <pay by credit card>. 2. To transfermoney that one owes to person, company, etc. <pay the utilitybill>. 3. To give (someone) money for the job that he or she does;to compensate person for his or her occupation; COMPENSATE(1) <she gets paid twice month>. 4. To give (money) to someonebecause one has been ordered by court to do so <pay thedamages>. 5. To be profitable; to bring in return <the venturepaid 9%>.”

On the same page in Black’s Law Dictionary (Tenth Edition, page1309), the expression “payment” is defined in the following terms: -

“Payment. (14c) 1. Performance of an obligation by the deliveryof money or some other valuable thing accepted in partial or fulldischarge of the obligation. 2. The money or other valuable thingso delivered in satisfaction of an obligation.”

A120.4.In the Law Lexicon by P. Ramanatha Aiyar (Fifth Edition,Volume 3 at page 3796), several connotations of the expression “payment”have been mentioned. We may reproduce the relevant part thereof asunder: -

“Payment is defined to be the act of paying, or that which is paid;Bdischarge of debt, obligation, or duty; satisfaction of claim;recompense; the fulfilment of promise or the performance of anagreement; the discharge in money of sum due.

In legal contemplation, payment is the discharge of an obligationby the delivery of money or its equivalent, and is generally madeCwith the assent of both parties to the contract.”

120.5.Significantly, the “payment”, as envisaged by clause (b) ofSection 30(2) as also Regulation 38(1), is of the “amount”. The word“amount” in its noun form is defined in Webster’s Third New InternationalDictionary (at page 72) in the parlance of accounting as under: -D“3 accounting: principal sum and the interest on it”

121. Taking up the provisions under debate, it is but clear that asper sub-section (2) of Section 30, the resolution plan ought to provide forcertain payments; and first of that is the insolvency resolution processcosts. An action of “payment” being that of discharge of an obligationEby delivery of money or other valuable thing accepted in discharge ofobligation, one could at once notice that proposing to pay the insolvencyresolution process costs in any form other than money would be anexercise in absurdity. Such payment has to be in terms of money alone.Then comes clause (b) whereby and whereunder, the resolution plan isFto provide for payment of debts of operational creditors and the minimumquantum is specified in terms of ‘amount to be paid’ or ‘amount thatwould have been paid’ with reference to the event of liquidation and/ordistribution in terms of Section 53 of the Code. Here again, if anyproposition is suggested for payment of debts of operational creditors byway of something other than money, and that too in the form of equitiesGin the other corporate entities to be carved out of the corporate debtor,that would not be shunning off the debts of operational creditors butwould only be keeping them glued to the corporate debtor or its successorentities. Such method of payment could least be step towardsinsolvency resolution. The same features, with necessary variations,would apply to the second part of clause (b) of sub-section (2) of SectionH

30 in regard to the dissenting financial creditors. The operational creditorsas also the dissenting financial creditors are to be paid in terms of theamount to be determined with reference to Section 53 of the Code andare to be paid in priority, as described in Regulation 38(1) of the CIRPRegulations.

121.1.Therefore, when, for the purpose of discharge of obligationmentioned in the second part of clause (b) of Section 30(2) of the Code,the dissenting financial creditors are to be “paid” an “amount” quantifiedin terms of the “proceeds” of assets receivable under Section 53 of theCode; and the “amount payable” is to be “paid” in priority over theirassenting counterparts, the statute is referring only to the sum of moneyand not anything else. In the frame and purport of the provision and alsothe scheme of the Code, the expression “payment” is clearly descriptiveof the action of discharge of obligation and at the same time, is alsoprescriptive of the mode of undertaking such an action. And, that actioncould only be of handing over the quantum of money, or allowing therecovery of such money by enforcement of security interest, as per theentitlement of the dissenting financial creditor.

121.2.We would hasten to observe that in case dissentingfinancial creditor is secured creditor and valid security interest iscreated in his favour and is existing, the entitlement of such dissentingfinancial creditor to receive the “amount payable” could also be satisfiedby allowing him to enforce the security interest, to the extent of thevalue receivable by him and in the order of priority available to him.Obviously, by enforcing such security interest, dissenting financialcreditor would receive “payment” to the extent of his entitlement andthat would satisfy the requirement of Section 30(2)(b) of the Code[83]. Inany case, that is, whether by direct payment in cash or by allowingrecovery of amount via the mode of enforcement of security interest,the dissenting financial creditor is entitled to receive the “amount payable”in monetary terms and not in any other term.122. The indications as emerging from the text of other provisionsas also from the scheme of the Code, are to the effect that the resolutionapplicant, with approval of resolution plan, is to proceed on clean slate

83 Though it is obvious, but is clarified to avoid any ambiguity, that the “securityinterest” referred herein for the purpose of money recovery by dissenting financialcreditor would only be such security interest which is relatable to the “financial debt”and not to any other debt or claim.

BCD

Arather than carrying the cargo of such debts which need to be satisfied(to the extent required) and then jettisoned. The expressions “payment”and “amount to be paid”, when read in the context and on the canvass ofthe objects and purposes of the Code, in our view, these expressionsonly convey their ordinary meaning, as understood in ordinary businessparlance, that is, delivery of money alone; and there is no reason toBconstrue these expressions to be conveying the meaning of ‘delivery ofmoney or its equivalent’.

123. good length of arguments on behalf of IRP are devoted tothe stand that, what CoC considers in sub-section (4) of Section 30 isthe manner of distribution proposed; and such manner of distributionCought to be fair and equitable, as explained in Explanation 1 to clause(b) of Section 30(2). It is contended that if legislature intended the word“payment” to have prescriptive meaning, that is, payment by way ofpayment of money only, there would have been no need to addExplanation 1 to clause (b) which provides that distribution under clauseD(b) to operational and dissenting financial creditors shall be fair andequitable because in such case, the distribution would only mean acrystallised sum of money with no room to test if distribution was fairand equitable. The argument is, again, of stretching the plain words beyondtheir real intent and meaning. The said Explanation is for removal ofdoubts and for clarification that distribution in terms of clause (b) shallEbe fair and equitable to the creditors covered thereunder that is,operational and dissenting financial creditors. This Explanation appearsto have been necessitated for the reason that quantification of theminimum amount payable under clause (b) of Section 30(2) is in therealm of certain guesswork or estimate with reference to the distributionFenvisaged by Section 53 of the Code. This Explanation cannot anddoes not provide meaning to the expressions “payment” and “amount tobe paid”. These and other arguments of similar nature, could only berejected.

123.1. submission made on behalf of IRP suggesting estoppelGagainst the dissenting financial creditor for having not raised the issue inthe meeting of the Committee of Creditors also remains baseless. Thisis for the simple reason that no estoppel could operate against thestatutory right of the dissenting financial creditor to receive payment interms of Section 30(2)(b) of the Code.

123.2. The submission that commercial banks are permitted bythe Banking Regulations Act, 1949 to swap the debt for land and equityhas its own shortcomings, rather shortfalls. The expressions “payment”and “amount to be paid” and “amount payable” as occurring in Section30(2) and Regulation 38(1) cannot be interpreted only for the purpose ofbanks as financial creditors; the provisions refer to “financial creditors”as such and it would be too far stretched to say that these expressionsmay have different meanings for different financial creditors in the mannerthat financial creditor who could accept payment by any mode otherthan money could be “paid” by that mode and the other financial creditorswho cannot accept anything except money shall be receiving paymentin cash. This kind of interpretation would not only be reading words buteven phrases and provisos in the statutory provisions, which is entirelyimpermissible.123.3. Similarly, the suggestion that the Government and theGovernmental bodies, which are not permitted by law to swap debt withequity or land will have to be paid by way of money and to that extent,the meaning of “payment” in the first part of clause (b) of Section 30(2)will have contextually different meaning, is, again, seeking to providemultiple sub-sects of the mode of payment, whereas no such differentiationor classification is indicated in the provisions under reference or in anyother provision contained in the Code.

123.4.The suggestion about prejudice being caused to the assentingfinancial creditors by making payment to the dissenting one has severalshortcomings. As noticeable, in the scheme of IBC, resolution plan istaken as approved, only when voted in favour by majority of not lessthan 66% of the voting share of CoC. Obviously, the dissenting sectstands at 34% or less of the voting share of CoC. Even when the financialcreditors having say of not less than 2/3[rd] in the Committee of Creditorschoose to sail with the resolution plan, the law provides right to theremainder (who would be having not more than 34% of voting share)not to take this voyage but to disembark, while seeking payment of theiroutstanding dues. Even this disembarkment does not guarantee themthe time value for money of the entire investment in the corporate debtor;what they get is only the liquidation value in terms of Section 53 of theCode. Of course, in the scheme of CIRP under the Code, the dissentingfinancial creditors get, whatever is available to them, in priority overtheir assenting counterparts. In the given scheme of the statutory

Aprovisions, there is no scope for comparing the treatment to be assignedto these two divergent sects of financial creditors. The submissions madeon behalf of assenting financial creditors cannot be accepted.

123.5.The other submissions and counters with reference to thephraseology of Section 8 of the Code do not require much dilation because,Bthe said provision essentially relates to the dues of an operational debtorand the steps envisaged before commencement of insolvency resolutionprocess. Nevertheless, “payment” for the purpose of the said provisionis also of money transfer; and not by any other mode.

124. To sum up, in our view, for proper and meaningfulCimplementation of the approved resolution plan, the payment as envisagedby the second part of clause (b) of sub-section (2) of Section 30 couldonly be payment in terms of money and the financial creditor who choosesto quit the corporate debtor by not putting his voting share in favour ofthe approval of the proposed plan of resolution (i.e., by dissenting), cannotbe forced to yet remain attached to the corporate debtor by way ofDprovisions in the nature of equities or securities. In the true operation ofthe provision contained in the second part of sub-clause (ii) of clause (b)of sub-section (2) of Section 30 (read with Section 53), in our view, theexpression “payment” only refers to the payment of money and notanything of its equivalent in the nature of barter; and provision in thatEregard is required to be made in the resolution plan whether in terms ofdirect money or in terms of money recovery with enforcement of securityinterest, of course, in accordance with the other provisions concerningthe order of priority as also fair and equitable distribution. We are notcommenting on the scenario if the dissenting financial creditor himselfchooses to accept any other method of discharge of its paymentFobligation but as per the requirements of law, the resolution plan ought tocarry the provision as aforesaid.

125. For what has been observed and held hereinabove, we haveno hesitation in rejecting the contentions urged in challenge to that partof the decision of NCLT where the proposition in the resolution plan,Gconcerning the method of meeting with the liability towards dissentingfinancial creditors, has been disapproved. That part of the decision ofNCLT is unexceptionable and is approved.

126. However, as noticed, after disapproving the terms of theresolution plan concerning dissenting financial creditors, the AdjudicatingHAuthority proceeded on the assumption that the offending terms could

be modified without changing the basic structure of the plan; and thenproceeded to make such modifications by providing that payment shallbe made to the dissenting financial creditor bank in instalments. Thequestion is as to whether the Adjudicating Authority could have doneso? The answer is simply in the negative.

127. As noticed and held in Point (supra), the AdjudicatingAuthority has no jurisdiction to enter into the commercial aspects of theresolution plan and to interfere with the wisdom of the Committee ofCreditors. The terms as provided in the resolution plan for dischargingthe obligations towards the dissenting financial creditors were clearlyand directly pertaining to the financial model proposed by the resolutionapplicant and accepted by the requisite majority of the Committee ofCreditors. The submissions made on behalf of the IRP in this regard arecorrect that if the Adjudicating Authority was of the view that the plandid not meet with any particular requirement, it could have only sent itback to the CoC to consider the proposed modifications, so as to affordan opportunity to the resolution applicant to modify the plan and to theCoC to reconsider and vote upon the same.

128. In other words, the Adjudicating Authority, of its own, couldnot have made any modification in the resolution plan, particularly onany commercial aspect thereof. The suggestions that in carrying out therequisite modifications by the Adjudicating Authority, the basic structureof the resolution plan is not altered do not merit acceptance, particularlybecause the terms taken up for modification by the Adjudicating Authoritybelong to the thick of commercial aspects of the resolution plan; and anyalteration thereof goes to the very root of the financial model propoundedby the plan.

129. The upshot of the discussion foregoing is that though theAdjudicating Authority has not erred in disapproving the treatment ofdissenting financial creditor like ICICI Bank in the resolution plan but,has erred in modifying the terms of the resolution plan and in not sendingthe matter back to the Committee of Creditors for reconsideration whileextending an opportunity to the resolution applicant to make the necessarymodifications.

130. For what has been discussed and held hereinabove, we seeno reason to enter into the other area of suggestions and disputesconcerning the particular parcels of land being offered by the resolutionapplicant to the objector bank. These aspects are rendered redundant

BCD

Aonce we have held that the payment envisaged by Section 30(2)(b) readwith Section 53 of the Code has to be in monetary terms and not in anyother mode.

Point

Matters related with fixed deposit holdersB

131. As regards payment to the fixed deposit holders, it is noticedthat the resolution plan has provided for 100% upfront payment to thefixed deposit holders whose claims were forming part of the admittedfinancial debt in the following terms (Schedule 2 to the plan relating tothe steps for implementation): -C

“VIII. STEP 7: PAYMENT TO FD HOLDERS

Following the Approval Date, the Admitted Financial Debt of theFD Holders shall be settled by making 100% upfront payment oftheir principal dues within 90 days from the Approval Date butDafter payment of the CIRP Cost and the Admitted OperationalDebt.

It is clarified that other than the Claims of FD Holders formingpart of the Admitted Financial Debt, no other payment shall bemade to any other FD Holder.”

E132. It is also noticed from the minutes of CoC meeting dated07.12.2019 that the authorised representative of the fixed deposit holdersmade the submissions for honouring the claims received until the date ofapproval of the resolution plan, which was recorded as under: -

“Payment to FD Holders: Authorised Representative (“AR”)Fof Fixed Deposit (“FD”) holders submitted to CoC that FD claimshave increased to INR 29 Crores as per the latest CoCreconstitution dated 30.11.2019 and both the Resolution Applicantshave fixed the amount to FD holders at INR 28 Crores whichshall be paid on pro rata basis, therefore the principal amount toFD holders shall be reduced proportionately. AR of FD holdersGrequested CoC that all the claims received from FD holders tillthe Resolution Plan approval date should be honored by theResolution Applicants to avoid any sort of litigation by FD holders.”

133. However, the NCLT, in paragraph 125 of its order hasproceeded to modify the said term of the resolution plan as approved byH

CoC and has provided that the resolution applicant shall make provisionto clear even the dues of unclaimed fixed deposit holders when theywould make claim and such right will remain in force as long as theywere entitled to make claim under the Companies Act, 2013.

134. The aforesaid modification of the terms of resolution planhas been challenged by NBCC with the submissions that such directionsof the Adjudicating Authority are wholly unjustified and are beyond themandate of this Court in Essar Steel (supra). In our view, the submissionsof NBCC deserve to be accepted.

135. In the scheme of the process for corporate insolvencyresolution, it is preliminarily provided in Section 13 of the Code that,after admission of an application for corporate insolvency resolutionprocess, the Adjudicating Authority, apart from declaring moratoriumand appointing an interim resolution professional, is also required to causea public announcement of the initiation of CIRP and ‘call for submissionof claims under Section 15’. As per Section 15, the material informationin the public announcement is to contain, inter alia, ‘the last date forsubmission of claims, as may be specified’. The IRP is enjoined withseveral duties under Section 18 and as per clause (b) thereof, he is to‘receive and collate all the claims submitted by the creditors to him,pursuant to the public announcement made under sections 13 and15’. CIRP Regulations make the position clearer still, where, by virtueof Regulation 12, creditor is required to submit his claim with proof ‘onor before the last date mentioned in the public announcement’; anda creditor who fails to submit the claim within the stipulated time, mayyet submit the claim with proof ‘on or before the ninetieth day of theinsolvency commencement date’. As per Regulation 13, the resolutionprofessional concerned is to verify the claims within seven days of thelast date of receipt of claims.

135.1.Due adherence to the timelines provided in the Code andthe related Regulations and punctual compliance of the requirements isfundamental to the entire process of resolution; and if claim is notmade within the stipulated time, the same cannot become part of theInformation Memorandum to be prepared by IRP and obviously, it wouldnot enter into consideration of the resolution applicant as also of theCommittee of Creditors. In the very scheme of the corporate insolvencyresolution process, resolution applicant cannot be expected to make aprovision in relation to any creditor or depositor who has failed to make

Aa claim within the time stipulated and the extended time as permitted byRegulation 12. In Essar Steel (supra), while dealing with the topic‘Extinguishment of Personal Guarantees and Undecided Claims’,this Court disapproved that part of the NCLT judgment which held thatother claims, that might exist apart from those decided on merits by theresolution professional and by the Adjudicating Authority/AppellateBTribunal, could be decided in an appropriate forum in terms of Section60(6) of the Code. This Court specifically held that resolution applicantcannot be made to suddenly encounter undecided claims after resolutionplan submitted by him has been accepted; and in the scheme of theCode, all claims must be submitted to, and decided by, the resolutionCprofessional so that the resolution applicant could proceed on freshplate. This Court, inter alia, held as under: -

“107. For the same reason, the impugned NCLAT judgment in holdingthat claims that may exist apart from those decided on merits bythe resolution professional and by the Adjudicating Authority/DAppellate Tribunal can now be decided by an appropriate forumin terms of Section 60(6) of the Code, also militates against therationale of Section 31 of the Code. successful resolutionapplicant cannot suddenly be faced with “undecided” claims afterthe resolution plan submitted by him has been accepted as thiswould amount to hydra head popping up which would throw intoEuncertainty amounts payable by prospective resolution applicantwho would successfully take over the business of the corporatedebtor. All claims must be submitted to and decided by the resolutionprofessional so that prospective resolution applicant knowsexactly what has to be paid in order that it may then take over andFrun the business of the corporate debtor. This the successfulresolution applicant does on fresh slate, as has been pointed outby us hereinabove. For these reasons, NCLAT judgment must alsobe set aside on this count.”

135.2.It has not been the case of anyone that in the process inGquestion, any of the requirements of Sections 13, 15 and 18 had not beencomplied with. It has also not been anybody’s case that any claim madeby any fixed deposit holder within the stipulated time was not taken intoaccount by IRP.

136. In the given fact situation and in view of the law declared byHthis Court, we find no justification for the directions contained in paragraph

125 of the order passed by NCLT. Those directions are required to beannulled.

Point

Objections of the financial creditor of subsidiary of the corporate

debtor

137. Indisputably, the corporate debtor JIL owns 100% equityshareholding in JHL which is having three operational hospitals in theState of Uttar Pradesh. Substantial part of the shareholding of JHL ispledged with its lenders. In the resolution plan, NBCC has proposed inregard to JHL as follows: -

“Since, majority of shareholding of Jaypee HealthcareLimited is already pledged to the lenders to the hospitals to securethe indebtedness of Jaypee Healthcare Limited, it is proposed todivest the entire shareholding of Jaypee Healthcare Limited byinviting bids for the same and utilize the divestment funds forsettlement of outstanding debt obligations of Jaypee HealthcareLimited, without any additional payment by the Corporate Debtor.In this regard, the pledge over shareholding of JIL (shares ofJaypee Healthcare Limited held by JIL) created in favour of thelenders of Jaypee Healthcare Limited shall stand released in termsof this Resolution Plan immediately upon the approval of thisResolution Plan by the Adjudicating Authority. Such release wouldinter alia be in consideration of the proposed repayment of theoutstanding debt of the lenders of Jaypee Healthcare Limited.Such repayment would not include levy of any penalties or chargesincluding prepayment penalty, penal charges, etc. In furtheranceof the aforesaid objective the lenders of Jaypee Healthcare Limitedshall not be entitled to deal with the assets of Jaypee HealthcareLimited or adversely interfere with the continued businessoperations of Jaypee Healthcare Limited in any mannerwhatsoever including enforcement of any security created in theirfavour by the Corporate Debtor or by Jaypee Healthcare Limited(pledge, mortgage, etc.), entering into operation and maintenanceagreements or any other agreements with any person which hasan effect of selling, leasing or otherwise disposing off the wholeor substantially the whole of the undertaking of Jaypee HealthcareLimited, take any action which would otherwise require the consentof the shareholders of Jaypee Healthcare Limited or take any

CDEF

Aother steps which may be contrary to the treatment proposed forJaypee Healthcare Limited under this Resolution Plan.

Further, the Resolution Applicant also reserves its right to causethe Corporate Debtor to transfer its entire shareholding in JaypeeHealthcare Limited into trust. Such trust would be settled by theBCorporate Debtor, the beneficiary of the trust would be theResolution Applicant and the trustee would be professional entity(to be appointed by the Resolution Applicant). The trust propertywould comprise inter alia of the entire shareholding of theCorporate Debtor in Jaypee Healthcare Limited.”

C138. The objector YES Bank Limited, as being the financial creditorof JHL, had raised objections as regards such stipulations and proposalswhile asserting that the assets of its debtor JHL could not have beendealt with in this resolution plan. The Adjudicating Authority, though tookup such objections for consideration but observed that the resolutionapplicant NBCC and YES Bank having agreed for constitution of aDcommittee to deal with the shares and assets of the subsidiary company,this issue was not required to be discussed.139. The objector YES Bank has taken exception to the aforesaidpart of the order impugned with the submissions that no such settlementwas drawn out with NBCC and the Adjudicating Authority has failed toEconsider the objections on rather incorrect assumptions. It is submittedthat the resolution plan interferes with the statutorily protected rights ofthe lenders of JHL, who are effectively the third parties and not themembers of CoC of JIL. It is also submitted that the transfer of theentire undertaking and business of JHL, wholly-owned subsidiary ofFJIL, under the garb of sale of equity is not permissible as per the Section18(f) read with its Explanation (b) and Regulation 37(a) of the CIRPRegulations whereby, the resolution plan is only limited to the assets ofthe corporate debtor. With reference to various decisions, including thatin the case of Vodafone International Holdings BV v. Union of Indiaand Anr.: (2012) 6 SCC 613, it is submitted that holding companyGdoes not own the undertaking or business of subsidiary company even ifit holds all the shares therein. It is also contended that the CIRP of JHLmust be independently conducted as the sale of business or undertakingin the manner suggested by NBCC severely prejudices the rights of thecreditors of JHL to recover their legitimate dues. It is yet further submittedHthat the shares of JIL, the corporate debtor, are subject to the pledge

created by them to secure the debts of JHL and the resolution plancannot unilaterally extinguish the security interest provided to the lendersof JHL, who are not the creditors of JIL and therefore, not the part ofthe CoC of JIL. This objector bank submits that the resolution plan doesnot account for the total debts incurred by JHL and the securities orencumbrances, to the extent of 63.65% of the shares, as created byJHL over its assets. It has, therefore, been prayed that this objectorbank be allowed to continue with its appeal before the Allahabad Benchof NCLT against JHL and the portion of resolution plan dealing withJHL and its assets be deleted.

139.1.It is noticed that without prejudice to the aforesaid and othersubmissions, the objector YES Bank has given out its proposition forevolving workable mechanism with certain stipulations in sub-paragraphs“ff” and “gg” of paragraph 7 of the memo of appeal, which read asunder: -

“ff. Without prejudice to any of the above and the following legalgrounds raised in the present proceedings, the Appellant in thebest interest of all the interested parties including the interests ofthe Resolution Applicant and in spirit of reconciliatory approach isstill willing to work with the Resolution Applicant in finding aworking solution so that JHL assets can be monetized in timelymanner. Provided, the Respondent No. 2 / Resolution Applicantis willing to accept the proposals and the safeguards as requestedby the Appellant. For brevity’s sake, the Appellant’s proposal fora workable mechanism is set out in the Written Submissions filedbefore the Ld. Adjudicating Authority, which is reiterated below:

(i) The lenders of JHL led by YBL will take all necessarypreparatory measures required for finding viable buyer to takeover the JHL units in completely transparent manner.

(ii) To the above cause, JHL lenders shall be permitted toprepare an information memorandum, seek bids from prospectivebuyers, appoint independent, impartial and reputed investmentbankers to run the process of JHL monetisation.

(iii) This is proposed to be done through fullest co-operationfrom RP of JIL as well as Board and Management of JHL asinformation and engagement will be critical to run an efficient andeffective sale process.

A(iv) JHL lenders shall liaise with the IRP, Mr. Jain and sharethe status of the steps periodically with IRP and NBCC.

(v) Sale Committee to bet set up with participation oflenders of JHL and NBCC, for sale of JHL;

(vi) The decision to accept the bid of particular buyershall be taken by unanimous vote of NBCC and YBL (on behalfof the lenders of JHL);

(vii) The sale process shall be finalised within period on 3months from the date of approval of the resolution plan by Hon’bleNCLT and latest by June 30, 2020 and until such time rights ofClenders of JHL vis-à-vis assets of JHL as well as pledge of JHLShares (held by JIL as investment) in favour of JHL lenders shallbe kept intact;

(viii) In the event of successful disinvestment of JHL, thedisinvestment funds shall be utilized for settlement of debt of JHLDlenders in priority, in accordance with existing Resolution Plan;

(xi) During the period above, until June 30, 2020, there shallbe moratorium on the rights of the JHL lenders to enforce itssecurities held in JHL including the share pledge by JIL;

(x) Should the sale still not be finalised before June 30,2020,Efor any reason whatsoever (including any delay due to legalproceedings), then the moratorium over enforcement of pledgedshares as well as other assets of JHL, shall stand lifted; and

(xi) Thereafter, JHL lenders will have all rights to enforceits securities against JHL to recover its outstanding dues includingFbut not limited to enforcement of pledge, and, or continuation ofCIRP against JHL.

gg. If the Respondent No. 2 is agreeable to accept the abovemechanism then the Appellant shall not press its remedies forchallenging the Resolution Plan. Failing which the entire ResolutionGPlan insofar as it relates to JHL Assets is required to be severedand set aside.”

140. In response, it is submitted that as resolution applicant,NBCC is entitled to get the management of the corporate debtor on aclean slate (as observed by this Court in the case of Essar Steel); andH

when NBCC under its plan is extinguishing all the contingent liabilities,disinvestment of JHL shares cannot be taken exception of. It has alsobeen submitted that in the resolution plan, it was made clear that NBCCdoes not possess the expertise to run the operation of healthcarebusiness and, therefore, seeks to divest the entire shareholding of JHLto third party and/or trust who would have the requisite expertise todeal with the requirements of healthcare business. It is also submitted,with reference to Section 18(f)(v) of the Code, that the assets of thecorporate debtor include securities and shares held in any subsidiary;and shares of subsidiary company are held as the assets of the parentcompany in its books, as held by this Court in the case of Vodafone(supra).

140.1.Apart from the above, NBCC has referred to theproceedings before the Adjudicating Authority before passing of the orderdated 03.03.2020 and it is pointed out that the Adjudicating Authority, inits order dated 04.02.2020 observed that settlement may be reachedbetween NBCC and YES Bank and pursuant thereto, YES Bank andNBCC held meeting on 06.02.2020 to discuss the mechanism for saleof shares of JHL and thereafter, on 07.02.2020, proposal for sale ofshares of JHL was given by YES Bank to which NBCC, in its emaildated 14.02.2020 stated that “NBCC is agreeable for constitution ofa committee which will take forward the disinvestment process ofJHL after approval of the resolution plan as submitted by NBCC.”Thus, according to NBCC, there has been an agreement between theparties on the manner of sale to be carried out of JHL shares. Thisapart, NBCC has also referred to the aforesaid proposal stated in thememo of appeal and while reproducing the first part of the above-quotedparagraph “gg”, has stated its acceptance of the proposal so made byYES Bank subject to the approval of resolution plan.141. We have carefully examined the submissions made by theparties. In the totality of circumstances of the case and the stance ofrespective parties, when it is noticed that the aforesaid proposal of YESBank, as stated in sub-paragraphs “ff” and “gg” of paragraph 7 of thememo of appeal, is acceptable to NBCC, subject to approval of theresolution plan, we do not find any reason to say anything further on thisscore and would leave the parties to work out viable solution in thebest interest of all the stakeholders; and for that purpose, the partiesconcerned, if necessary, may seek appropriate orders from NCLT, asregards mode and modalities of the process to be carried out.

A142. In view of the above, we do not consider it necessary torender any other finding in this point for determination except theobservation that the resolution plan essentially deals with the assets ofthe corporate debtor JIL and not that of its subsidiary JHL. Differentlyput, what the resolution plan deals with are the shares in JHL, which areregarded as assets of the corporate debtor JIL. As observed, no furtherBcomments are required and we leave this aspect of the matter at thatonly.

Point

Grievance of agreement holdersC

143. As regards certain transfers without proper agreement/sub-lease deed and without consideration, the resolution applicant hadreserved right in itself to cancel such instruments or term sheets withoutany corresponding obligation to the counter party in the following terms(Clause 21 Schedule 3 of the resolution plan): -D“21. With respect to any alleged transfer of land parcels by theCorporate Debtor to third parties without any proper agreement/sub-lease deeds and where the consideration amount has not beenpaid to the Corporate Debtor inter alia including the land parcelslisted in Annexure G, the Resolution Applicant reserve right toEcancel such instruments/agreements/term sheets and uponcancellation the title in such land parcels will continue to be legallyvested in the Corporate Debtor without any liability/obligation tothe counter-party.”

144. The NCLT has observed that when an agreement is invalidFand consideration has not been paid, no separate stipulation is requiredto be made that such agreement could be cancelled. However, at thesame time, NCLT has also observed that even though such clause hasbeen mentioned in the resolution plan, that did not mean that the agreementholders have lost their right to seek remedy before the competent forum.

145. The agreement holders, while questioning this part of theGresolution plan in their appeal, have given the details of five term sheets/agreements with the corporate debtor between 01.05.2017 to 08.08.2017i.e., before the date of initiation of CIRP (09.08.2017). It is submittedthat those term sheets were rectified by CoC in its meetings dated10.11.2017 and 28.11.2017 and upon assurances of IRP for externalHdevelopment and providing of other services, the appellants had made

further part payment, in addition to the amounts already paid. It is furthersubmitted that the resolution plan is contrary to Section 30(2)(e) of IBCas the term sheets/agreements were found valid during the CIRP by theCoC and they cannot become improper agreements overnight on themere saying of the resolution applicant. The grievance of the appellantsis that even after holding that the appellants have not lost their right toseek remedy before competent forum, the questioned Clause 21 (in‘reliefs and concessions’) of the resolution plan was not modified byNCLT. According to the appellants, the approved resolution plan carryingsuch clause purports to take away their rights without due process oflaw in contravention of Article 300-A of the Constitution of India andhence, is violative of Section 30(2)(e) of IBC. The appellants also submitthat the Development Plan of the concerned area has not yet beenrenewed by the Noida Authority and the status of the development isalso uncertain.145.1.With these submissions, the appellants have stated theirprayer in the manner that they are willing to pay the balance amountwithin 1 year in respect of the property at C-1/E, Sector 133 Noida,which is in their possession and to cancel the other 4 term sheets/agreements relating to the land at Sector 151 Noida with adjustment ofthe payments made therein towards the property at Sector 133 Noida;and to execute the sale deed and get the master plan sanctions for thenext 5 years. Alternatively, the appellants pray for the refund of theamount deposited by them, to the tune of INR 24.03 crores approximately,with appropriate interest.

146. Per contra, NBCC maintains that the resolution plan asapproved by CoC and the Adjudicating Authority is binding on all thestakeholders including the appellants and in any case, the relief in question,as provided in the resolution plan, is limited to such instances where noproper agreements/sub-lease deeds have been executed by the corporatedebtor with counter parties and therefore, Article 300-A of theConstitution is not violated and the relief provided in the resolution planis not arbitrary or unfair. It is also submitted by NBCC that while dealingwith the segment of ‘reliefs and concessions’, the Adjudicating Authorityhas not passed any favourable order in regard to the said relief; andeven while granting the right to NBCC to cancel the agreement, haskept intact the right of an affected party to seek remedy in competentforum.

A147. In our view, looking to the nature of dealings and thepropositions advanced by agreement holders, the observations made bythe Adjudicating Authority, in addendum to Clause 21 of ‘reliefs andconcessions’ in the resolution plan but, without encroaching upon thecommercial wisdom of CoC, only work towards viability of the planwhile extending fair treatment to the agreement holders, by keepingBtheir right to seek remedy in competent forum intact. The resolutionapplicant, NBCC, also does not appear to be having any qualms about it.

148. Thus, in the overall scheme of the resolution plan, thestipulation in question cannot be said to be unfair; and the observationsof the Adjudicating Authority in paragraphs 132 and 133 of the impugnedCorder dated 03.03.2020 remain just and proper. No further orders arerequired in this regard. This point stands determined accordingly.

Point

Grievance of minority shareholdersD

D149. The other set of objectors is of the non-promoter shareholdersof the corporate debtor, who are also referred to as the minorityshareholders. Their grievance is that the resolution plan does not dealwith their interests and they have not been provided with fair exitoption. It is submitted that such non-promoter shareholders have investedtheir hard-earned money in the equity of the corporate debtor muchEbefore initiation of CIRP; that they had made the investment on thebasis of the financial statements filed by the corporate debtor, suggestingthe valuation of various assets including the Expressway and other landparcels; and the corporate debtor has adequate and appreciating assetsto take care of all the liabilities and interests of the stakeholders.F150. These shareholders have referred to valuation report, saidto have been prepared by India Infrastructure Finance Co. Ltd., on31.03.2017 suggesting that even after accounting for liabilities, net worthof the corporate debtor was about INR 7,377 crores. It is submitted thatthe IRP itself had valued the corporate debtor at INR 8,257 crores butGNBCC is attempting to acquire the company for meagre sum of INR120 crores and extinguishing the entire public shareholding of thecorporate debtor by paying sum of INR 1 crore in total, as against thefair value per share at INR 56.68; and the offer of NBCC isunconscionable, is against the principles of proportionality, results inmisappropriation of funds of these shareholders, and is being used as aHdevice to enrich the resolution applicant at the cost of stakeholders.

150.1. It is also submitted that the plan is in contravention ofSection 230 of the Companies Act, 2013, which provides for the powerto compromise or make arrangements with any creditor or member of acompany; that the minority shareholders, even if not part of the CoC,have right to know and participate in any compromise or arrangementwhich affects their rights; that they have right to dissent with anyterms of the compromise or arrangement which affects their rights andfor that matter, they would be deemed to be dissenting shareholders,who need to be provided reasonable exit option or opportunity. It isfurther submitted, while referring to the decision in Essar Steel (supra),that the ultimate decision of what amount to pay may rest with the CoC,but the decision should be made by taking into account the maximumvalue of the assets of the corporate debtor and after adequately balancingthe interests of all stakeholders including operational creditors.

150.2. These minority shareholders further contend that whenthe intent of the IBC is to keep the corporate debtor as going concern,the action of delisting the public shareholding of the corporate debtortotally defeats the objective. It is also submitted that the resolution planhas not been formulated in accordance with the procedure envisaged bythe Securities and Exchange Board of India (Delisting of Equity Shares)Regulations, 2009[84] which require that an exit opportunity ought to beprovided for de-listing of shares from the stock exchange.

150.3. It is submitted that though the said shareholders were notpart of CoC and did not get the opportunity to attend the meetings ofCoC, they made all efforts to voice their concerns and even got issuedthe notice dated 19.02.2020 to IRP and the resolution applicant but thenotice failed to evoke any response. According to these objectors, theresolution plan, as approved by the NCLT, is not in accord with Regulation38(1A) of the CIRP Regulations and is contrary to the intent of IBCinasmuch as it has failed to maximise the value of assets of corporatedebtor and to protect the interests of all the stakeholders. It is alsocontended that the interests of all the stakeholders ought to have beenprotected but the Adjudicating Authority has not even considered thematter relating to the interests of the minority shareholders.

150.4. With the aforesaid submissions, it has been prayed thatappropriate orders are required to safeguard the interests of minority

84 Hereinafter also referred to as ‘Delisting Regulations’.

Ashareholders and the respondents deserve to be directed to device areasonable exit scheme for them whereby, they are given price atleast as per the book value of shares at the time of initiation of CIRP oran order be issued to swap the shares of existing minority shareholderswith the shares of NBCC.

B151. The contentions so urged are opposed by NBCC with thesubmission that these shareholders have, for the first time, approachedin appeal though they were aware of the proceeding before theAdjudicating Authority, as is evidenced by the letter sent by their advocateon 19.02.2020; and the issue has been raised at this stage only to createunnecessary hindrances and to cause prejudice to the entire process.C

151.1. As regards fairness of the treatment given to the minorityshareholders, it is submitted that the resolution plan provides an exitoption to the existing public shareholders at price which is higher thanthe liquidation value; and they are being paid an exit price of INR 1crore, which is in contrast to the treatment being accorded to promoterDshareholders, whose shareholding is being extinguished and cancelled inits entirety without any consideration.

151.2. It is submitted that the liquidation value as determined bythe valuers appointed by the IRP under the Code is approximately INR17,876 crores (as per RBSA) and INR 17,658 crores (as per GAA),Ewhereas the total debt owed to financial creditors is approximately INR23,247 crores. In the aforesaid scenario, according to NBCC, where theminority shareholders are not entitled to any value, the resolution plan,with offer of exit at price of INR 1 crore, is neither unfair nor arbitrary.

151.3. It has further been submitted that in the scheme of IBC,Fspecific and novel method of insolvency resolution is provided wherein,by way of amendment brought about by Act 26 of 2018 w.e.f. 06.06.2018,the Explanation to Section 30(2)(e) has been inserted, providing fordeemed approval of shareholders and, therefore, the submissions on behalfof the minority shareholders do not deserve consideration.G152. Having given anxious consideration to the rival submissions,we are clearly of the view that objections sought to be taken by theminority shareholders must fail.

153. It is noticed from the resolution plan that the DelistingRegulations, as amended on 31.05.2018, have been duly taken note of;H

and the step for delisting and extinguishment of existing shareholding isprovided in Schedule 2 thereof, in the following terms: -

“IX. STEP 8: DELISTING AND EXTINGUISHMENT OF EXISTINGSHAREHOLDING

1. As an integral part of the Resolution Plan, post implementationof Step 1, the shares of the Corporate Debtor shall be de-listed, interms of SEBI (Delisting of Equity Shares) Regulations, 2009.

(“Delisting Regulations”), as amended by Amendment toDelisting Regulations dated May 31, 2018, which prescribes thatthe procedure under the Delisting Regulations are not applicablefor any delisting pursuant to an approved resolution plan underthe Code, if:

(a) the resolution plan sets out specific delisting procedure; or

(b) the resolution plan provides an exit option to existing publicshareholders at price which is higher of the liquidation value (asapplied in the order of priority of claims prescribed under Section53 of IBC) and the exit price being paid to the promoters.

In this regard, the Non-Promoter Shareholders (i.e. the publicshareholders) shall be paid an exit price aggregating to INR 1 Crand pursuant to the same, their shareholding shall be extinguished.

2. In terms of the definition of Public Shareholders under theDelisting Regulations, Existing Promoters are specifically carvedout. Accordingly, simultaneous to the de-listing, the issued equityshare capital of the Corporate Debtor as held by the ExistingPromoters i.e. 84.70 Cr equity shares of face value of INR 10(Rupees Ten each) shall be extinguished and cancelled in its entiretywithout any consideration.

3. Extinguishment of shares of Corporate Debtor may be donethrough Capital Reduction or selective Capital Reduction.

4. Extinguishment of shares of Corporate Debtor may be donethrough credit to Capital Reserve Account.

The equity shareholding of the Corporate Debtor post De-listingand Capital Reduction shall be as follows:

It cannot be said that the resolution plan is not compliant with theCrequirements of Regulation 38(1A) of the CIRP Regulations.

153.1. As noticed, by way of Explanation to Section 30(2)(e) ofthe Code, it has been made clear by the legislature that if any approvalof shareholders is required under the Companies Act, 2013 or any otherlaw for the time being in force for implementation of actions under theDresolution plan, such approval shall be deemed to have been given and itshall not be contravention of that Act or law. The attempt on the partof minority shareholders to raise objection against the resolution plansimply flies in the face of this Explanation to Section 30(2)(e) of theCode.

153.2. Needless to reiterate that in the scheme of IBC, only theCoC is entrusted with the task of dealing with and approving the plan ofinsolvency resolution; and the shareholders of corporate debtor, who isalready reeling under debts, have not been provided any participation inthe insolvency resolution process. It goes without saying that in the caseFof corporate debtor like JIL, if the process of liquidation is resorted tounder Chapter III of the Code, there is very little likelihood of theshareholders getting even dewdrops out of the waterfall of distributionof assets, as delineated in Section 53 of the Code, where the preferenceshareholders and equity shareholders stand last in the order of priority.In the totality of circumstances, when the promoters’ shareholding isGextinguished and cancelled in toto without any consideration, even nominalexit price of INR 1 crore for minority shareholders cannot be termed asunfair or inequitable. In any case, decision in regard to the aforesaidstep in the resolution plan had been that of the commercial wisdom ofthe Committee of Creditors and is not amenable to judicial review.

153.3. Reference to Section 230 of the Companies Act, 2013,which deals with power to compromise or make arrangements withcreditors and members is entirely inapt in the context of the presentcase because no such proceedings for compromise or arrangements arein contemplation. On the contrary, in the present case, the proceedingsof CIRP under the Code have reached an advanced stage with approvalof resolution plan by the CoC and the Adjudicating Authority.

153.4. Apart from the above, NBCC also appears right incontending that once the resolution plan stands approved by theAdjudicating Authority, the objecting shareholders, who did not even raiseany grievance before the Adjudicating Authority, cannot now, for thefirst time, object to the arrangement arrived under the resolution plan, inview of Section 31 read with Section 238 of the Code which provide thatthe approved resolution plan shall be binding on all stakeholders and thatthe provisions of IBC shall prevail not only over the laws but also theinstruments having effect by virtue of any such law.154. Viewed from any angle, in our view, it cannot be said that theresolution plan does not adequately deal with the interests of minorityshareholders. The grievances as suggested by these shareholders cannotbe recognised as legal grievances; and do not provide them any cause ofaction to maintain their objections. The objections by the minorityshareholders stand rejected.

Point I

Matters related with dissatisfied homebuyers of JIL

155. We may now take up the issues raised by section ofhomebuyers of JIL against the resolution plan of NBCC. For dealingwith this segment of disputes, bit of prelude concerning the status andposition of homebuyers in CIRP shall be apposite.

156. Not much of discussion is required to notice that the largestblock of stakeholders, who are likely to bear the brunt in the event ofliquidation of JIL and conversely, who are likely to find succor in case ofresolution of insolvency of JIL, is that of the homebuyers, who haveinvested their hard-earned money in the projects of JIL. In the first tworounds of litigation, they had been the focal point of consideration wherethis Court invoked its powers under Article 142 of the Constitution ofIndia to ensure that the insolvency resolution process of JIL is takenahead within the discipline of IBC while obviating the likelihood of

Aliquidation. As narrated in sufficient detail hereinbefore, during thependency of the case of Chitra Sharma, by the amendment of IBCwith insertion of Explanation to Section 5(8)(f), the doubts about thestatus of homebuyers got clarified and, for being duly recognised asfinancial creditors of the corporate debtor, the homebuyers got their sayin the Committee of Creditors. In fact, such an amendment and inclusionBof homebuyers in the Committee of Creditors had far-reaching andground-breaking effects in the present case for the reason that thehomebuyers, as class, acquired dominant status in the Committee ofCreditors, with more than half of the voting share with them. Obviously,no effective decision of the Committee of Creditors could have beenCtaken without the involvement and assent of the homebuyers. As noticed,the resolution plan in question had been approved by CoC of JIL withmore than 97% of the voting share in its favour. In this voting, thehomebuyers had the voting share of more than 57%. It goes withoutsaying that if the homebuyers were not to vote for this plan, the samewould have not seen its approval with minimum 66% of the voting shareDof financial creditors, as required by the Code. The other plan of SurakshaRealty got less than 3% votes. If both the plans were unable to musterthe requisite (not less than 66%) voting share, the only consequencewould have been liquidation of JIL, which every stakeholder wanted toavoid.E157. In the process envisaged by the Code, where the CoC mayapprove resolution plan by vote of not less than 66% of voting share,there remains an obvious possibility of some of the financial creditorsnot voting for approval of the plan but by the very nature of process,they would be having the voting share of not more than 34% and couldFbe conveniently described as ‘dissenting financial creditors’. Theresolution plan is required to carry specific provision for payment ofdebts of such dissenting financial creditors, more particularly in view ofthe requirements of the second part of Section 30(2)(b) of the Code. Allthe features related with such provisions and their operation have beenexamined in Point (supra) concerning the dissenting financial creditor,Gwho has indeed not voted in favour of the plan in question.

158. The relevant aspect for the present point for determination isthat apart from such dissenting financial creditors, few of theassociations of homebuyers and some of the individual homebuyers carrytheir own grievances against the resolution plan and seek to submit thatH

their interests have not been safeguarded and they are being denied oftheir legal rights. These dissatisfied associations and individualhomebuyers seek to contend that the resolution plan is lacking in variousrequisite arrangements; is violative of the CIRP Regulations; and is alsoviolative of the provisions of RERA and therefore, it could not havebeen approved. One block of such objectors is rather differentlydissatisfied for the reason that according to them, the housing projectswhich have been completed or are nearing completion ought to be keptout of the purview of this plan of resolution. In counter, it is contendedon behalf of the resolution applicant that these dissatisfied homebuyersor associations have no right to maintain any objection as if being thedissenting financial creditors because the homebuyers have voted as aclass in favour of the resolution plan and are bound as class with ‘dragalong’ provisions in the Code. The objections have been refuted on meritstoo. These rival submissions have led to the formulation of four differentquestions in this point for determination.

159. The associations and the individual homebuyers who aredissatisfied with the resolution plan and the process of its approval havemade various overlapping and repeat submissions; we may summarisethe substance thereof, while avoiding prolixity, as far as possible.

159.1. It is contended on behalf of the association of homebuyers,who has filed the appeal (in T.C. No. 243 of 2020) and has also filed anintervention application in the appeal filed by other associations, that thehomebuyers have the locus standi to file an appeal even though theybelong to class of creditors represented through an authorisedrepresentative, who voted in favour of the resolution plan of NBCC.This association of dissatisfied homebuyers submits that sub-section (3A)of Section 25A of the Code is only intended to iron out the logisticalissues and technical difficulties which arise due to the large number ofcreditors; and the mere fact that more than 51% of the homebuyersvoted in favour of the resolution plan cannot take away the statutoryright of appeal.

159.1.1. As regards the major part of grievances, it is contendedon behalf of this association that the resolution plan in question is patentlyillegal and is in contravention of the provisions of RERA and its rules.With reference to Section 30(2)(e) of the Code, it has been argued thatthe resolution plan must be in conformity with other laws in force andmerely because IBC has non-obstante provision over other laws would

Abe no ground to hold that resolution plan framed under the schememust also be elevated to such status; that RERA is one such legislationwhich expressly deals with the rights of the homebuyers and if there isany inconsistency between IBC and RERA, the former would prevailbut, the same cannot be said about resolution plan under IBC. It issubmitted that Sections 13(2), 18 and 19(4) of RERA as also U.P. RERAB(Agreement for Sale/Lease) Rules, 2018 are in violation as the resolutionplan does not provide an option to the homebuyers to seek refund incase the flat is not delivered within the time period prescribed in therevised schedule; and does not provide interest as well as compensationon the amounts already paid by homebuyers, in case they seek refund.CTherefore, according to this association, if the resolution plan as existingis approved, it would take away all the rights bestowed upon thehomebuyers under RERA and homebuyers will be at the mercy of ‘onesided agreements’ made by NBCC with no future remedies available tothem. It is also submitted that the resolution plan actually recognises theinterest amount to be paid to the homebuyers as part of the ‘AdmittedDAmount’ but does not pass on this amount to the homebuyers.

159.1.2. In another line of submissions, it has been contended that758 acres of land is returned to JIL as per the judgment of this Courtdated 26.02.2020 in the case of Anuj Jain (supra) but NBCC has failedto specify anything in the resolution plan regarding the treatment andEutilisation of this big parcel of land though the same ought to be put touse for the purpose of providing delay penalty/interest to the homebuyers.It is submitted that NBCC cannot be allowed to unjustly enrich itself atthe cost of the corporate debtor’s unencumbered assets and ought touse this land bank to make its resolution plan compliant with the provisionsFof RERA.

159.1.3. In yet another line of submissions, it has been contendedthat the IRP, while filing Form-H along with the approval application,has not placed on record the liquidation costs; and this cost is requiredfor assessing the feasibility and viability of the resolution plan. Therefore,Gthere had been complete violation of Regulation 39B of the CIRPRegulations. It is also submitted that the resolution plan in question, beinga conditional one in terms of Clauses 1 and 2 of Schedule 3 thereof,could not have been taken as resolution plan standing in conformitywith the requirements of Regulation 36A(7) of the CIRP Regulations.

159.1.4. Of course, as regards the said amount of INR 750 croresdeposited by JAL, this association maintains that the same was to protectthe interests of homebuyers of JIL and forms the part of corpus of JILbut, it is also submitted that if there be any ambiguity with respect to thehomebuyers of JAL and they are also to be covered under the deposit somade by JAL, then the amount may be used by the corporate debtor andJAL on pro rata basis so as to secure the interests of the homebuyersof both these companies. It has also been prayed that NBCC be directedto start the construction within 30 days and to complete the entire projectwithin 3 years; that NBCC be barred from withdrawing; and that NBCCbe prohibited from charging the homebuyers with any extra amounttowards arbitrary increase in the name of ‘Super Built-Up Area’, whichwould be illegal without corresponding increase in the carpet area.

159.2. Another society of homebuyers of the projects undertakenby JIL has directly approached this Court against the order dated03.03.2020 passed by NCLT, and is essentially aggrieved that theresolution plan does not provide for the interest to be accrued to thehomebuyers or compensation for delay period on their deposits.

159.2.1. On behalf of this society also, the aforesaid submissionsrelating to 758 acres of land, violation of the provisions of RERA andproposed changes in ‘Super Built-Up Area’ are re-emphasised. Thisapart, it is submitted that the resolution plan provides for unfair treatmentto the homebuyers of JIL inasmuch as they are liable to pay interest at18% p.a. in the event of default to pay the remaining instalments but, onthe other hand, meagre delay compensation, amounting to INR 5/- persquare feet per month, is offered to them in case of delay in constructionand the same is stated to be due only after the expiry of one year fromthe date of delivery of possession. It is submitted that the “financialdebt” in terms of Section 5(8) of IBC is that of “disbursal against theconsideration for the time value of money”, which means compensationfor the length of time for which the money has been disbursed. Thus, theprovisions for the homebuyers in the resolution plan ought to mandatorilyinclude just and fair interest to account for the period of delay.

159.3. As noticed, in paragraph 126 of the order dated 03.03.2020,the Adjudicating Authority rejected the submissions sought to be madeby few other homebuyers, who asserted themselves to be the“dissenting” homebuyers, because the authorised representative onbehalf of the homebuyers had assented to the resolution plan while

ABCD

Aobserving that ‘it cannot be said that dissenting homebuyers beforeauthorised representative to be considered as dissenting financialcreditors against the total voting of CoC’. These homebuyers havefiled separate appeal (in T.C. No. 242 of 2020) with many submissionsrunning common to those of the contesting associations. While avoidingrepetition, we may take note of the other material submissions on behalfBof these appellants-homebuyers.

159.3.1. It is contended on behalf of these homebuyers that theyand several other homebuyers have consistently dissented from theresolution plan as the proposed timelines for completion are not workableand there is no clause for refund of money in situation that theCconstruction is not completed within time; and cent percent approval hasnot been given for effectuating the resolution plan. The grievance is thattheir application was rejected by NCLT on the ground that AR on behalfof the homebuyers had assented to the resolution plan but without dealingwith the specific objection raised by the appellants with regard to theDproceedings before the CoC and the procedure adopted by it; and theywere not even allowed to make all their submissions before NCLT.According to these appellants, NCLT has applied two standards whiledealing with objections of two dissenting financial creditors i.e., ICICIBank on one hand and the appellants on the other, which amounts tounfair discrimination amongst the same class of creditors; and the findingsEin paragraph 126 of the impugned order are in the teeth of NCLT’sfindings in paragraphs 100 and 101 of the same order.

159.3.2. It is submitted that in the 16[th] meeting of CoC, there wasno consensus with regard to the resolution plan to be adopted; and onevaluation of the resolution plans, it was found that the plan of SurakshaFRealty was better than that of NBCC considering the scores given bythe experts. The appellants have submitted that in the resolution plan bySuraksha Realty, provision was made for delay penalty pertaining toprevious period in the form of fixed compensation by way of transfer ofland worth INR 250 crores at Mirzapur and for this purpose, creation ofGa Trust was proposed; and it was also proposed that the said resolutionapplicant shall endeavour to monetise the land for 4 years and the saleproceeds would be distributed amongst the eligible homebuyers.According to the appellants, the plans were put to vote contrary to theprovisions of IBC and yet, IRP moved an application for approval of theplan submitted by NBCC, which was objected by them and various otherH

parties with the submissions that the resolution plan of NBCC was unfairlyadopted through illegal voting; and that the plan of NBCC was incontravention of RERA.

159.3.3. It is submitted that in the resolution plan in question,Schedule 2 Step 9 provides for treatment of homebuyers and refundseekers in the manner that the claim of homebuyers shall be satisfied byensuring delivery of flats in accordance with the schedule at AnnexureA, whereby project completion period is provided as 42 months withmoratorium period of one year and therefore, for 54 months, the appellantsand other homebuyers would not get any compensation and thereafteronly delay penalty of INR 5/- per square feet per month is provided,which is also subject to non-occurrence of any force majeure event.

159.3.4. While questioning the process of voting and the propositionthat homebuyers have as class assented to the plan of NBCC, theseappellants have submitted that the voting percentage in respect ofNBCC’s plan was distributed in the following manner:

Therefore, according to the appellants, the claim that 97.02%homebuyers have voted for NBCC’s plan is misleading; and as per thevoting percentage, rough ratio is that for every 3 homebuyers who votedfor NBCC, 2 have dissented/abstained. The appellants have furthercontended that the authorised representative of homebuyers made twowrong statements before the Committee of Creditors: one, that both theresolution plans of Suraksha Realty and NBCC would be put to vote andsecond, that the majority of homebuyers had written to him indicatingNBCC as the preferred choice. It is submitted that both these statementson behalf of the homebuyers were grossly incorrect and contrary torecord and as such, the entire voting process of the CoC, as contemplatedunder Section 21(8) of the Code, is vitiated. There had been no suchwritten instruction to the authorised representative of the homebuyersand he could not have determined what was the majority mark ofhomebuyers. It is further submitted that even if the said authorisedrepresentative could have consented to put both the resolution plans to

Avote contrary to the mandate of Regulation 39(3), CoC could not haveacted contrary to the provisions of IBC as there could be no waiver ofthe statute. It is submitted that these objections could have been, andhad rightly been, raised before the Adjudicating Authority because thereis no other forum to raise these concerns; but the Adjudicating Authorityhas not addressed them at all.B

159.3.5. The issue relating to the said land parcel of 758 acreshas also been raised by these appellants with the submissions that afterthe judgment of this Court dated 26.02.2020, the said land ought to havebeen included in the resolution plan and used in the interest of homebuyersbut the Adjudicating Authority has not examined this aspect of the matterCeither.

159.4. The submissions on behalf of yet another association ofhomebuyers (appellant in T.C. No. 240 of 2020) are considerably different,where it is prayed that the project related with its members beingsubstantially complete, deserves to be separated from the resolution plan.D

159.4.1. It is submitted on behalf of this association that theconstruction of all 4228 flats in 26 towers of the project “Jaypee GreensAman” is complete and only the finishing works for Tower Nos. 23, 24,25 & 27 are pending due to delay in execution of the agreements. It isalso submitted that out of 18153 homebuyers of the corporate debtorEforming part of the financial creditors, only 459 homebuyers in ProjectAman (which amount to 2.53 %) were part of the creditors at the timeof voting for the resolution plan. According to this association, “JaypeeGreens Aman” is an inhabited project where more than 1500 familieshave already started living and it is situated over 10 kms away from theFlocation of “Wish Town” and hence, should be considered as anindependent housing colony and ought to be separated from the resolutionplan; and any order on the resolution plan should not have an adverseimpact on this project. It is submitted that in relation to the project inquestion, the resolution applicant is only to complete the finishing workwhich could be carried out by the IRP himself to avoid further delayGwhereas, if the resolution plan is followed, these homebuyers shall haveto wait for another 18 months to receive possession of the completedflats which would add to their mental agony.

159.4.2. It has also been submitted that the members of thisassociation had deposited an Interest Free Maintenance DepositH(‘IFMD’) and Maintenance Advance and also executed Maintenance

Agreements with JAL; and even though this refundable security depositwas not part of the information memorandum, the resolution plan inquestion stakes claim over this amount while ignoring the basic rules ofbusiness and to siphon off the hard-earned/borrowed money of theallottees. According to the association, this amount ought to be refundedto the allottees concerned.

159.4.3. It is also submitted that the approved resolution plan onlytalks about the date of completion of the construction of flats but doesnot indicate the completion date of the entire project of “Jaypee GreensAman”; and as construction of flats of this project is carried out, specificdirections need to be issued for completion of the project with all amenitiesand finishing works.

159.4.4. This association has also relied upon decision of this Courtin the case of Wg. Cdr. Arifur Rahman Khan & Ors. v. DLF SouthernHomes Pvt. Ltd. & Ors.: (2020) SCC OnLine SC 667 and has prayedfor relief of 6% p.a. simple interest which shall be attached to theallottees of the project “Jaypee Greens Aman” on the total amount paidtowards the purchase of the flats in addition to the delay period penalty.It is also submitted that the allottees of Tower Nos. 23, 24, 25 & 27should not be discriminated and must be treated at par with other allottees,who have already received the penalty for delayed period.

159.4.5. This association has also prayed for directions to IRP torelease the payments in time bound manner to keep the project and itsactivities as going concern as the work at the project “Jaypee GreensAman” has come to standstill for want of requisite payment of bills ofcontractors. This association has made yet another prayer for directionsto the Noida Authority to issue the necessary Occupancy Certificate.

159.5. Apart from the above-mentioned appellants, few morehomebuyers have filed intervention applications in the leading appealwhile essentially reiterating the same contentions that the resolution planof NBCC is not compliant with the requirements of RERA and that thehomebuyers would be put to prejudice in relation to their rights underRERA. The issue relating to the said 758 acres of land has also beenraised.

159.6. For completing the panorama of diverse submissions, wemay take note of the fact that the applicant of I.A. No. 84309 of 2020has filed separate written submissions and has contended that there had

Abeen diversion of the money deposited by homebuyers to YEIDA andthe same was accepted by JIL and the lenders constituting the CoCwithout considering that it was wrongful and fraudulent diversionagainst accepted norms; that JIL and YEIDA have remained silent onthe issue and allowed homebuyers’ money to be used in YamunaExpressway, which acted as an interest free loan to JIL for almost 10Byears and therefore, the homebuyers ended up funding 25% of the projectof Expressway and the said investment ought to be returned to thehomebuyers; that the provisions of the Concession Agreement regardingcuring the defaults were never addressed before NCLT and before thisCourt; that when JIL caused delay in delivering possession of the flatsCto the homebuyers, the material adverse effect clause should have beeninvoked, rather than initiation of the CIRP; that the homebuyers weremade aware of liquidation of JIL as the only possibility; that thehomebuyers were not provided with the Concession Agreement andeven when it was demanded from the IRP, it was not furnished.Therefore, not sharing CA and not providing any such legal advice onDCA has put the CIRP proceedings under the scanner and the same beheld null and void. It has further been contended that the resolution planof NBCC ought to have been rejected as it contravenes several of theprovisions of law including that of RERA. It is also contended that thehomebuyers to whom flats were delivered could not have been takenEout of CoC once it had been constituted; and such taking out has impacteda few thousand homebuyers and thereby, the voting weightage by about10%. The applicant has further submitted that the present one is anexceptional case requiring innovative approach and has even suggestedthe alternative that Government of Uttar Pradesh takes over the fullproject as it is, provided it meets all rights of the homebuyers! It isFsubmitted that this could be possibility under Article 142 of theConstitution of India.

160. The submissions so made have been duly opposed by thepersons/entities standing in favour of the resolution plan as approved bythe Adjudicating Authority. For avoiding unnecessary expansion, we deemGit appropriate to take note of the submissions made on behalf of IRP andNBCC as also the financial creditor of JIL in this regard.

160.1. It is submitted on behalf of IRP and NBCC that theseassociations and homebuyers have no locus standi to challenge theapproved resolution plan because, in terms of Section 25A(3A) readHwith Section 21(6A) of the Code, the homebuyers vote in the CoC as

class; even dissenting individual within the class is bound by the decisionof the majority of that class; and as such, this decision operates as astatutory estoppel against the members of the entire class. It is submittedthat the manner of voting by homebuyers has been extensively dealtwith by this Court in Pioneer Urban (supra) and the AdjudicatingAuthority has, in accordance with Section 25A(3A) and the law laiddown in Pioneer Urban, rightly dealt with the issue of ‘dissentinghomebuyers’ in paragraph 126 of the order impugned. It is furthersubmitted that the legislature has recognised the likelihood of conflictinginterests among the groups of homebuyers and accordingly, the IBCamendment dated 16.08.2019 has provided ‘drag along’ mechanismso far as voting by homebuyers in relation to the approval of resolutionplan is concerned, by way of insertion of sub-section (3A) to Section25A of the Code. It is, therefore, evident that the minority shall be draggedalong with the majority in voting on approval of resolution plan andhence, the appellants are bound by the decision taken by the collectivemajority of the homebuyers.160.2. It is also submitted that as per Section 61 of the Code, anappeal can be filed by person who is aggrieved by the approval of theresolution plan but, considering that homebuyers as class have assentedto the resolution plan of NBCC, individual homebuyers cannot be treatedas dissenting creditors or even aggrieved persons within the meaning ofSection 61 of the Code. It is, therefore, submitted that such appealsought to be dismissed for having been filed without any locus.

160.3. It is yet further submitted that the appellant Wish TownSociety attempted to submit an application and objections that wererejected by the Adjudicating Authority on 31.01.2020, essentially on thegrounds that the society had failed to implead itself as the party to theapplication; that only 448 homebuyers had voted against the resolutionplan but the society was claiming to represent 1500 homebuyers withoutmentioning as to who were the persons who authorised filing of theobjections; and that the society had no locus to raise objections. It issubmitted that now the society is seeking to place on record list ofalleged 1248 members but no such list was produced before theAdjudicating Authority and cannot be allowed to be introduced at theappellate stage.

160.4. As regards the questions related with RERA, it is submittedthat the alleged violation of RERA has been contended by these

Ahomebuyers without demonstrating the manner in which any provisionunder RERA is being violated; and that the resolution plan, at no instance,states that it would not comply with the applicable laws. However, it issubmitted that in the event there is any conflict between the approvedresolution plan and the provisions of RERA, the approved resolutionplan shall remain binding on all stakeholders under Section 31 of theBCode and would override the provisions of RERA in accordance withSection 238 of the Code.

160.5. It is also submitted that resolution plan can alter thecontracts with financial creditors and the Code gives wide powers to theresolution applicant to modify financial and operational contracts so asCto best serve the interests of all the stakeholders. It is submitted that, asper the proposal under the resolution plan, NBCC would construct anddeliver the flats to homebuyers but would not be paying outstandinginterests to any homebuyer, and such proposition is permissible underRegulation 37(f) of CIRP Regulations, that permits resolution plan toDreduce any debts due to any creditors; and such an amendment to thecontracts having been agreed to by the overwhelming majority of theCoC, remains binding on all the homebuyers.

160.6. As regards liquidation costs, it is submitted that underRegulation 39B of the CIRP Regulations, CoC has been given discretionEto ascertain the liquidation costs at the time of approval of resolutionplan or deciding to liquidate company; and, as per the Explanation toRegulation 39B, liquidation costs have the same meaning as given to itunder Regulation 2(1)(ea) of the Insolvency and Bankruptcy Board ofIndia (Liquidation Process) Regulations 2016, whereunder ‘liquidationcosts’ have been defined to mean, inter alia, the costs in the liquidationFprocess of company. It is submitted that non-submission of liquidationcosts under Form-H is not an irregularity that is fatal to the CIRP or theresolution plan; that the liquidation costs have no bearing on the feasibilityand viability of resolution plan; and liquidation costs are different fromliquidation value, which has been defined under Regulation 2(k) of theGCIRP Regulations to mean ‘the estimated realisable value of the assetsof the corporate debtor, if the corporate debtor were to be liquidatedon the insolvency commencement date’. The IRP under Form-H hasmentioned the fair value and liquidation value of the corporate debtor.

160.7. As regards the objections raised by Jaypee Aman OwnersHWelfare Association for exclusion from resolution plan, it is submitted

that the NBCC’s resolution plan is intended to cover all the homebuyersof JIL, where the creditor-debtor relationship continues to subsist i.e.,where the final settlement between the homebuyer and JIL, throughexecution of sub-lease deed, has not been achieved. With reference tothe provisions in the resolution plan, it is submitted that the plan specificallyprovides that “Aman Project” shall be completed within period of 15months from the date resolution applicant acquires the shareholding ofthe corporate debtor; and such an indicative period has been provided inrespect of all the pending projects of JIL, which are to be completed byNBCC in terms of the resolution plan. It is further submitted that thecontents of the plan including the indicative delivery schedules wereavailable to all homebuyers and they had, in full cognizance of the same,chosen to approve the plan in question which would remain binding onall the stakeholders of the corporate debtor in terms of Section 31 of theCode once it is approved; and therefore, the said association is estoppedfrom challenging, or seeking an exit from, the resolution plan as the planstands approved. In regard to the submission that the IRP may be directedto do certain things like apply for OCs in respect of certain towers orissue OOPs, it is submitted that the IRP has disclosed in an affidavitbefore the Court that during the CIRP process, he has been managingJIL as going concern and has continued construction of residential andcommercial dwelling units and has issued OOPs for 7996 units based onthe OCs received from the Noida Authority; and out of the OOPs issued,sub-lease registration of 6429 has been completed. It is submitted thatthe claims of homebuyer vis-à-vis JIL stand settled on execution of thesub-lease deed and, therefore, all those homebuyers whose sub-leasedeeds have not been executed shall be bound by the resolution planapproved by the CoC of JIL.

160.8. Again, as regards IFMD, Step 9 in Schedule 2 has beenreferred and it is submitted that the above provision is only in relation tothe monies paid by the homebuyers to JAL (either directly or indirectly,including payment through JIL) as the resolution applicant does not andwill not have any control over JAL.

160.9. Apart from the above, it has also been submitted on behalfof IRP that Regulation 36A(7) applies only to expression of interestwhich cannot be conditional but that provision does not apply to theresolution plan and it is no one’s case that the expression of interestsubmitted by NBCC was conditional. The amendment to the Code with

Aeffect from 28.12.2019, that is, before passing of the order by NCLThas also been referred to submit that with Section 32A having beeninserted to the Code, NBCC would be entitled to claim the protectionthereunder and the question of withdrawing from the resolution plan forthe reason stated in Clause 2 of Schedule 3 does not arise.

B160.10. The financial creditor of JIL has also opposed thesubmissions made by these dissatisfied homebuyers and it is submittedthat they have erroneously identified ICICI Bank to be similarly situatedwith them. It is submitted that this bank is dissenting financial creditorin terms of the resolution plan unlike those dissatisfied homebuyers; andthis bank is entitled to different treatment in terms of Section 30(2)(b)Cof the Code.

161. We have given anxious consideration to the wide variety ofsubmissions made by dissatisfied homebuyers and the counters thereto.

162. Before proceeding further, it appears appropriate to pointDout that the contentions urged in regard to simultaneous voting over tworesolution plans have already been discussed and rejected in Point Bhereinbefore. These contentions, in our view, have unnecessarily beentaken by the persons who wish to remain on the dissenting side of thefence by carving out every possible objection, whether of substance ornot. The issue relating to 758 acres of land, that is now available to JILEafter the judgment of this Court in the case of Anuj Jain, is beingconsidered separately in Point K infra. Likewise, the issue relating tothe amount of INR 750 crores deposited by JAL pursuant to the directionsin the case of Chitra Sharma as also other areas of accounting betweenJAL and JIL including the issue relating to IFMD are being consideredFseparately in Point J infra. These issues, thus, would require no commentherein.

163. Taking up other aspects of the rival submissions and havingexamined the scheme of the Code in relation to plan of insolvencyresolution, we are clearly of the view that the propositions of some ofGthe associations and individual homebuyers to claim themselves as‘dissenting homebuyers’ and thereby, ‘dissenting financial creditors’ donot stand in conformity with the scheme of the Code and the manner ofvoting on plan of resolution by the Committee of Creditors.

164. As noticed, for the purpose of approval of resolution plan inCIRP, what is required is its approval by vote of not less than 66% ofH

the voting share of financial creditors; and what is counted for the requisitepercentage (66) is the voting share of the financial creditors and not theindividual votes of financial creditors. The expression ‘voting share’ hasbeen precisely defined in clause (28) of Section 5 to mean the votingrights of single financial creditor in the Committee of Creditors, whichis based on the proportion of the financial debt owed to such financialcreditor vis-à-vis the financial debt owed by the corporate debtor. In thescheme of the Code with Explanation to Section 5(8)(f), the debt owedby the corporate debtor towards allottees of the real estate project isconsidered to be financial debt but for that matter, every individualallottee does not become an independent financial creditor of the corporatedebtor, if the number of allottees are 10 or more, in terms of the meaningassigned to the expression “class of creditors” in CIRP Regulations[85].The allottees, like the homebuyers of JIL, falling within clause (f) ofsub-section (8) of Section 5, do carry the status of financial creditors butthey would be falling in class collectively; and the voting share of thatclass would be in terms of the financial debt owed to that class as awhole.

164.1. Specific provisions have been made for voting on behalf ofa class of creditors in terms of clause (b) of sub-section (6A) of Section21 by the authorised representative. The rights and duties of the authorisedrepresentative of financial creditors are also delineated in Section 25Aof the Code and any doubt, as to how he would vote and how his vote iscounted, is put to rest by insertion of sub-section (3A) to Section 25A,which provides that notwithstanding anything to the contrary containedin sub-section (3), the AR shall cast his vote on behalf of all the financialcreditors he represents ‘in accordance with the decision taken by avote of more than fifty per cent. of the voting share of the financialcreditors he represents, who have cast their vote’.

164.2. At this juncture, we may usefully take note of the enunciationof this Court in the case of Pioneer Urban (supra) that has direct bearingon the questions raised herein. The decision in Pioneer Urban wasrendered by this Court in the backdrop of challenge to the said amendmentmade to the Code whereby, the allottees of real estate projects were

85 The relevant definition clause in CIRP Regulations, inserted with effect from04.07.2018 reads as under: -

“(aa) “class of creditors” means class with at least ten financial creditorsunder clause (b) of sub-section (6A) of section 21 and the expression, “creditors in aclass” shall be construed accordingly;”

Aprovided the status of financial creditors by way of insertion ofExplanation to sub-clause (f) of clause (8) of Section 5 of the Codeand with corresponding insertion of Section 25A as also sub-section (6A)to Section 21. While dealing with such challenge, in Pioneer Urban(supra), this Court extensively referred to the objects and reasons forthese amendments as also their meaning, connotation and effect. TheBrelevant part of the matter, in regard to the issue at hand, is that alongwith the aforesaid amendment, this Court also examined the amendmentof Section 25A with insertion of sub-section (3A) by Act 26 of 2019.This Court explained the connotation of the said amendment and itslogic, while rejecting the challenge to Section 21(6A) and 25A of theCCode, in the following: -

“63. Given the fact that allottees may not be homogeneousgroup, yet there are only two ways in which they can voteon the Committee of Creditors—either to approve or todisapprove of proposed resolution plan. Sub-sectionD(3-A) goes long way to ironing out any creases that mayhave been felt in the working of Section 25A in that theauthorised representative now casts his vote on behalf ofall financial creditors that he represents. If decision takenby vote of more than 50% of the voting share of thefinancial creditors that he represents is that particularEplan be either accepted or rejected, it is clear that theminority of those who vote, and all others, will now be boundby this decision. As has been stated by us in Swiss Ribbons,the legislature must be given free play in the joints to experiment.Minor hiccups that may arise in implementation can always beFsorted out later. Thus, any challenge to the machinery provisionscontained in Sections 21(6-A) and 25A of the Code must berepelled.”

(emphasis in bold supplied)

164.3. In the face of clear language of sub-section (3A) of SectionG25A of the Code, read with the law declared by this Court in PioneerUrban (supra), the suggestion on behalf of the dissatisfied homebuyersthat the said provision was only intended to iron out the logistical issuesand technical difficulties is required to be rejected altogether. The saidprovision, as held by this Court, is to iron out the creases that might haveHbeen felt in the proper working of Section 25A; and it is made explicit

that the allottees, even if not homogeneous group, they could vote onlyeither to approve the resolution plan or to disapprove the same.Divergence of the views within their own class may exist but, whencoming to the vote in the Committee of Creditors, their vote would bethat of class.

164.4. Having regard to the scheme of IBC and the law declaredby this Court, it is more than clear that once decision is taken, either toreject or to approve particular plan, by vote of more than 50% of thevoting share of the financial creditors within class, the minority ofthose who vote, as also all others within that class, are bound by thatdecision. There is absolutely no scope for any particular person standingwithin that class to suggest any dissention as regards the vote over theresolution plan. It is obvious that if this finality and binding force is notprovided to the vote cast by the authorised representative over theresolution plan in accordance with the majority decision of the class heis authorised to represent, plan of resolution involving large number ofparties (like an excessively large number of homebuyers herein) maynever fructify and the only result would be liquidation, which is not theprime target of the Code. In the larger benefit and for common good, thedemocratic principles of the determinative role of the opinion of majorityhave been duly incorporated in the scheme of the Code, particularly inthe provisions relating to voting on the resolution plan and binding natureof the vote of authorised representative on the entire class of the financialcreditor/s he represents.

164.5. To put it in more clear terms qua the homebuyers, theoperation of sub-section (3A) of Section 25A of the Code is that theirauthorised representative is required to vote on the resolution plan inaccordance with the decision taken by vote of more than 50% of thevoting share of the homebuyers; and this 50% is counted with referenceto the voting share of such homebuyers who choose to cast their votefor arriving at the particular decision. Once this process is carried outand the authorised representative has been handed down particulardecision by the requisite majority of voting share, he shall vote accordinglyand his vote shall bind all the homebuyers, being of the single class herepresents.

165. In the present case, on one hand, it has consistently beensubmitted by the stakeholders, particularly the homebuyers, that liquidationof JIL should be eschewed, but on the other hand, some of the associations

Aand homebuyers have attempted to find faults with the resolution plan towhich their majority, who voted, took the decision for approval. There isno scope for any homebuyer suggesting himself to be dissenting financialcreditor merely because he was not with majority within the class. Hisdissatisfaction does not partake the legal character of dissentingfinancial creditor.B

165.1. rather overambitious attempt has been made by thehomebuyers who have filed separate appeal (T.C. No. 242 of 2020) torefer to the percentage of voting share of homebuyers and it has beensuggested that out of the total voting share of homebuyers i.e., 57.66%,the assenting voting share was only 34.10%, whereas 22.51% abstainedCand 1.05% dissented. It is submitted that roughly, for every 3 homebuyerswho voted for NBCC, 2 had dissented/abstained. Even assuming thepercentage as stated by these appellants to be correct, we are at lossto find any logic in the submissions so made. re-look at sub-section(3A) of Section 25A would make it clear that ‘50%’ for the purpose ofDthe said provision is of those homebuyers who cast their vote. On thepercentage figures as given before us, out of the total voting share ofhomebuyers at 57.66%, the persons carrying 22.51% voting share simplyabstained and of the persons casting their votes, ayes were having thevoting share of 34.10% whereas nays were having the voting share of1.05%. Obviously, 50% would be counted only of the persons who choseEto vote where, much higher than 50% of the homebuyers who cast theirvote, stood for approval of the resolution plan of NBCC[86]. Such votingcannot be set at naught for the purported dissatisfaction of minisculeminority, which was about 3.69% in terms of the number of personsvoting; and about 1.05% in terms of the voting share. They have to sailFalong with the overwhelming majority. That is the purport and effect of‘drag along’ or ‘sail along’ provisions in the scheme of the Code.

85 The IRP has given the details of voting by the allottees in the following terms (inparagraph 4 of its written submissions under the heading- ‘Issues raised byhomebuyers’):-“…. In the present case, out of 21781 allottees forming the class ofGallottees, 12147 cast their vote on the Resolution Plan. (It is pertinent tomention that through the resolution plan process of JIL, around 9000 allotteeshave always remained non-responsive and abstained from voting at any time.)Out of 12147 allottees who cast their vote (present and voting), 11699 allotteesvoted in favour of the Resolution Plan while 448 voted against the ResolutionPlan. Thus, the number of allottees who voted in favour of the Resolution Plan,this 11699, comprise 96.31% of the total number of allottees present andHvoting….”

166. For what has been discussed hereinabove, the suggestionsthat there was no cent percent approval of the resolution plan, or thatthere was no consensus amongst homebuyers, or that the plan ofSuraksha Realty was considered better, are required to be rejected. It isnot the case that the AR of homebuyers has not voted in accordancewith the decision taken by vote of more than 50% of the voting shareof homebuyers who did cast their vote. In the given set of facts, wehave no hesitation in thoroughly disapproving the unnecessary imputationsmade by one set of homebuyers against the AR that he made anyincorrect statement before the CoC. That being the position, and theauthorised representative having voted in accordance with the instructionsgiven to him from the class of financial creditors i.e., homebuyers, everyindividual falling in this class remains bound by his vote and any associationor homebuyer of JIL cannot be acceded the locus to stand differentlyand to project its/his own viewpoint or grievance by way of objections orby way of appeal. All such objections and appeals are required to berejected on this ground alone.167. The suggestion about the so-called statutory right of appealhas only been noted to be rejected. The homebuyers as class shall bedeemed to have voted in favour of approval of the resolution plan ofNBCC; and once having voted so, any particular constituent of thatclass cannot be heard in opposition to the plan by way of objection orappeal. The statute, that is IBC, has itself provided for estoppel againstany such attempted opposition to the plan by constituent of the classthat had voted in favour of approval.

168. The misplaced assumptions on the part of dissatisfiedhomebuyers have gone to the extent that they have attempted to putthemselves at par with the dissenting financial creditors like ICICI Bank,who carry an entirely different legal status in CIRP, for being not withinthe class of homebuyers and being of different class of financialcreditors. The said financial creditor has rightly opposed these submissionsand has rightly pointed out that its rights in terms of Section 30(2)(b) ofthe Code stand at an entirely different footing.

169. Another attempt has been made as regards calculation ofvoting weightage by suggesting that the homebuyers to whom flats havebeen delivered could not have been taken out of CoC. Even thissuggestion remains bereft of substance. When person does not standin the capacity of financial creditor i.e., to whom no financial debt is

Aowed by the corporate debtor, he could only be taken out of the block offinancial creditors. We are impelled to observe that consideration andvoting at the resolution plan is not process or event where any objectionor grievance could be raised even by person who does not stand in thecapacity of financial creditor. His remedies, in accordance with law,could be elsewhere but not in this process of approval of resolution planBunder the Code.

169.1. For the same reasons as above, the suggestion to keep anyhousing project which is already complete or nearing completion out ofthe purview of the resolution plan is required to be rejected. Whenapproval of the resolution plan is to be voted by CoC; and its compositionCis specified by the Code, there is no such concept of keeping anyparticular homebuyer out of CoC even if the relationship of creditor anddebtor subsists between him and the corporate debtor.

170. To sum up this part of discussion, in our view, after approvalof the resolution plan of NBCC by CoC, where homebuyers as classDassented to the plan, any individual homebuyer or association cannotmaintain any challenge to the resolution plan nor could be treated ascarrying any legal grievance.

171. Once we have held that these dissatisfied homebuyers andassociations are not entitled to put up any challenge to the resolutionEplan contrary to the decision of the requisite majority of their class, alltheir objections are required to be rejected outright. Yet, in the interest ofjustice, we have examined these objections to find if there be any aspectworth consideration within the periphery of Section 30(2) of the Code.We find none.F

171.1.The major part of the objections of these dissatisfiedhomebuyers relate to the purported rights under RERA. We are afraid,even such propositions do not stand in conformity with law. The interplayof RERA and IBC also came up for fuller exposition in the case ofPioneer Urban (supra) and this Court rejected the contentions urgedGon behalf of the petitioners that RERA being special enactment dealingwith real estate development projects must be given precedence overthe Code. In Pioneer Urban, this Court noticed Section 238 of the Codeand held as under: -

“25. It is significant to note that there is no provision similar to thatof Section 88 of RERA in the Code, which is meant to be aH

complete and exhaustive statement of the law insofar as its subject-matter is concerned. Also, the non obstante clause of RERA cameinto force on 1-5-2016, as opposed to the non obstante clause ofthe Code which came into force on 1-12-2016. Further, theamendment with which we are concerned has come into forceonly on 6-6-2018. Given these circumstances, it is little difficultto accede to arguments made on behalf of the learned SeniorCounsel for the petitioners, that RERA is special enactmentwhich deals with real estate development projects and must,therefore, be given precedence over the Code, which is only ageneral enactment dealing with insolvency generally. From theintroduction of the Explanation to Section 5(8)(f) of the Code, it isclear that Parliament was aware of RERA, and applied some ofits definition provisions so that they could apply when the Code isto be interpreted. The fact that RERA is in addition to and notin derogation of the provisions of any other law for the timebeing in force, also makes it clear that the remedies under RERAto allottees were intended to be additional and not exclusiveremedies. Also, it is important to remember that as the authoritiesunder RERA were to be set up within one year from 1-5-2016,remedies before those authorities would come into effect only onand from 1-5-2017 making it clear that the provisions of the Code,which came into force on 1-12-2016, would apply in addition toRERA.”

29. It is clear, therefore, that even by process of harmoniousconstruction, RERA and the Code must be held to co-exist, and,in the event of clash, RERA must give way to the Code.RERA, therefore, cannot be held to be special statutewhich, in the case of conflict, would override the generalstatute viz. the Code.

30. As matter of fact, the Code and RERA operate in completelydifferent spheres. The Code deals with proceeding in rem inwhich the focus is the rehabilitation of the corporate debtor. Thisis to take place by replacing the management of the corporatedebtor by means of resolution plan which must be accepted by66% of the Committee of Creditors, which is now put at the helmof affairs, in deciding the fate of the corporate debtor. Such

ABC

DEF

resolution plan then puts the same or another management in thesaddle, subject to the provisions of the Code, so that the corporatedebtor may be pulled out of the woods and may continue as agoing concern, thus benefitting all stakeholders involved. It is onlyas last resort that winding up of the corporate debtor is resortedto, so that its assets may be liquidated and paid out in the mannerprovided by Section 53 of the Code. On the other hand, RERAprotects the interests of the individual investor in real estateprojects by requiring the promoter to strictly adhere to its provisions.The object of RERA is to see that real estate projects come tofruition within the stated period and to see that allottees of suchprojects are not left in the lurch and are finally able to realise theirdream of home, or be paid compensation if such dream isshattered, or at least get back monies that they had advancedtowards the project with interest. At the same time, recalcitrantallottees are not to be tolerated, as they must also perform theirpart of the bargain, namely, to pay instalments as and when theybecome due and payable. Given the different spheres within whichthese two enactments operate, different parallel remedies are givento allottees under RERA to see that their flat/apartment isconstructed and delivered to them in time, barring whichcompensation for the same and/or refund of amounts paid togetherwith interest at the very least comes their way. If, however, theallottee wants that the corporate debtor’s management itself beremoved and replaced, so that the corporate debtor can berehabilitated, he may prefer Section 7 application under the Code.That another parallel remedy is available is recognised by RERAitself in the proviso to Section 71(1), by which an allottee maycontinue with an application already filed before the ConsumerProtection Fora, he being given the choice to withdraw suchcomplaint and file an application before the adjudicating officerunder RERA read with Section 88. In similar circumstances, thisCourt in Swaraj Infrastructure (P) Ltd. v. Kotak MahindraBank Ltd. has held that the Debts Recovery Tribunal proceedingsunder the Recovery of Debts Due to Banks and FinancialInstitutions Act, 1993 and winding-up proceedings under theCompanies Act, 1956 can carry on in parallel streams (see paras21 and 22 therein).”

(emphasis in bold supplied)

171.1.1. In view of the above, all the contentions regarding operationof RERA and claim thereunder or any other claim for compensation orinterest, when not standing in conformity with the approved resolutionplan, deserve to be rejected. In fact, the question as to what kind ofagreement should be entered into with financial creditors like homebuyersis essentially matter falling within the arena of commercial decision;and needless to repeat that in the process of approval of resolutionplan, the factors related with commerce are left to the wisdom of theCommittee of Creditors. When the Committee of Creditors has approvedthe proposals of NBCC in the resolution plan, the same cannot be tinkeredwith reference to the grievance of some of the homebuyers aboutdeprivation of adequate interest or compensation. In this view of thematter, the decision of this Court in the case of Wg Cdr. Arifur RahmanKhan (supra) needs no discussion because that would not apply to theissues presently under consideration.172. Yet another objection as regards liquidation costs has rightlybeen clarified by the IRP and NBCC that under Regulation 39B of theCIRP Regulations, the CoC has been given discretion to ascertainliquidation costs at the time of approval of the resolution plan or decidingto liquidate the company. This aspect, essentially lying within the arenaof commerce, is also required to be left to the commercial wisdom of theCommittee of Creditors. In any case, this aspect cannot be said to havea bearing on the decision as regards feasibility and viability of theresolution plan of NBCC and is required to be rejected. Similarly, theobjections with reference to Regulation 36A(7) are also required to berejected because there had not been any condition imposed by NBCC inexpression 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 byJAL pursuant to the directions of this Court in Chitra Sharma (supra) isbeing considered separately; and the stipulation in Clause 2 of Schedule3 is even otherwise redundant in view of insertion of Section 32A to theCode, as discussed by the Adjudicating Authority, which need not berepeated. Suffice it to observe for the present purpose that the processof approval of the resolution plan is not vitiated because of suchstipulations. Needless to say that these observations are not to beconstrued as our approval of Clause 1 of Schedule 3 of the resolutionplan, because its legality and validity is being examined separately inPoint J infra.

A173. We have summarised the major aspects of multifarioussubmissions, objections and suggestions projected before us but find thatthe attempt to raise such objections is itself baseless for being not inconformity with the provisions of the Code read with the law declaredby this Court in Pioneer Urban (supra). The objections and submissionsdo not carry any merits either. In this view of the matter, we are notBentering into the other submissions made by NBCC as regards the numberof members of one of the appellant-association because nothing turnsupon that.

174. Before concluding on this segment of discussion, we areimpelled to indicate that the objections and suggestions by dissatisfiedChomebuyers have gone to the extent of suggesting that IRP should bedirected to release funds for raising construction; the Noida Authoritybe directed to issue the necessary Occupancy Certificate; and NBCCbe directed to complete the entire project within 3 years and be prohibitedfrom charging the homebuyers with any extra amount towards arbitraryDincrease in the name of ‘Super Built-Up Area’. An objection is statedthat there had been diversion of the money deposited by homebuyers toYEIDA; and the suggestion has gone to the extent that the project maybe taken over by the Government of Uttar Pradesh. These and othersimilar nature submissions, which do not relate to the real questions incontroversy, neither carry any meaning nor any substance; they haveEonly been noted to be rejected.

175. For what has been discussed above, we hold that thehomebuyers as class having assented to the resolution plan of NBCC,any individual homebuyer or any association of homebuyers cannotmaintain challenge to the resolution plan and cannot be treated as aFdissenting financial creditor or an aggrieved person; the question ofviolation of the provisions of the Real Estate (Regulation andDevelopment) Act, 2016 does not arise; the resolution plan in question isnot violative of the mandatory requirements of the CIRP Regulations;and when the resolution plan comprehensively deals with all the assetsGand liabilities of the corporate debtor, no housing project could besegregated merely for the reason that the same has been completed oris nearing completion.

Point J

INR 750 crores and accounting between JAL and JIL

176. We now need to enter into another area of serious dispute inthese matters, which relates to the claim over the amount of INR 750crores (which was deposited by JAL pursuant to the directions of thisCourt in the case of Chitra Sharma) and the interest accrued thereupon.On one hand, JAL and the persons/entities related with it, including itshomebuyers and institutional financial creditor, assert that this money isthe property of JAL and ought to come back to JAL but, on the otherhand, the resolution applicant NBCC as also the persons/entities relatedwith the corporate debtor JIL, including its homebuyers and the institutionalfinancial creditor, assert that this money is part of the assets of JIL andthe Adjudicating Authority has rightly held so. In third angle, anassociation of homebuyers of JAL submits that part of this amount bedesignated to complete the construction work in relation to their project.Yet another angle is projected by some of the dissatisfied homebuyersof JIL, who suggest that NBCC is simply aiming at profiteering by gettinghold of this money but without making any corresponding provision inthe resolution plan for its appropriate use for the benefit of homebuyers.Added to these rival claims are the other disputes of accounting, in relationto the advance made by JIL and its homebuyers to JAL towards specialadvance and Interest Free Maintenance Deposit etc. In fact, it has beenthe submission on behalf of JAL that either the entire amount of INR750 crores with accrued interest be returned to it or in the alternative,after reconciliation of accounts, its liability towards JIL be adjusted fromthis corpus and balance be refunded to it. In this scenario, we haveformulated separate questions regarding the treatment of this amount ofINR 750 crores and accrued interest and regarding reconciliation ofaccounts between JAL and JIL but, for being interlaced, these questionsare taken up for determination together.

177. Indisputably, this sum of INR 750 crores was deposited byJAL pursuant to the orders passed by this Court in the case of ChitraSharma (supra). While finally deciding the case of Chitra Sharma bythe judgment dated 09.08.2018, this Court took note of myriad featuresof the case and also took note of the claim of some of the homebuyers toallow this money to be utilised for making refunds but declined such aprayer and transferred this money to the NCLT.

177.1. In the process taken up thereafter, the relevant factsconcerning this amount were spelt out by IRP in the informationmemorandum. Thereafter, in the resolution plan, NBCC rather made

Athe availability of this corpus condition precedent for implementationof the plan in the very first clause of its ‘reliefs and concessions’ in thefollowing terms: -

“INR 750 Cr was deposited by JAL with the Hon’ble SupremeCourt and which amount (with the interest accrued thereon) wasBtransferred to the Adjudicating Authority as per directions of theHon’ble Supreme Court, with direction that such monies shallcontinue to remain invested and parties shall bide by such directionsas may be issued by the Adjudicating Authority.

This amount of INR 750 Cr along with the interest accrued thereonCwill be made available to the Corporate Debtor/ResolutionApplicant. Post receipt by the Corporate Debtor, this amount ofINR 750 Cr will be treated in the books of accounts of theCorporate Debtor as equity infusion by the Existing Promotersand the corresponding equity of the Existing Promoters shallsubsequently be extinguished in manner similar to that adoptedDfor extinguishment of other equity holding of the Existing Promotersunder this Resolution Plan including by way of Capital Reductionor selective Capital Reduction. In the event, the said amount ofINR 750 Cr along with the interest accrued is not made availableto the Resolution Applicant/Corporate Debtor then the ResolutionEApplicant has the right to withdraw from this process without anyliability of any nature on the Resolution Applicant.”

177.2. The resolution plan was approved by the Committee ofCreditors; meaning thereby that the aforesaid clause was accepted bythe Committee of Creditors. However, the claim towards this amount ofINR 750 crores with accrued interest became bone of contention whenFthe Adjudicating Authority (NCLT) took up the process of approval ofthe resolution plan, particularly for JAL staking its claim over this amountas being the rightful owner thereof. In this regard, the AdjudicatingAuthority, after taking note of the orders passed by this Court in thecase of Chitra Sharma (supra), concluded that the deposit made byGJAL was always meant for the benefit of the homebuyers of JIL andbecame an asset of the corporate debtor JIL; and the said amount wasto be utilised towards securing the interests of homebuyers and fulfillingthe obligations made to them, i.e., offering possession of the residentialunits after completing necessary construction or making refunds, as theHcase may be.

178. While questioning the aforesaid stipulation in the resolutionplan and this part of the order impugned, vast variety of submissionshave been made on behalf of JAL, its institutional financial creditor andits homebuyers.

178.1. It has been contended on behalf of JAL that the said sumof INR 750 crores undisputedly belongs to JAL, as the same wasdeposited by it on the directions of this Court in the order dated 11.09.2017in Chitra Sharma (supra). It is submitted that this Court ordered thedeposit to be made by JAL so as to provide an interim workablearrangement and relief to the homebuyers, who were, at the relevanttime, not recognised as financial creditors of the corporate debtor andhad no say in the resolution process of company in which, they hadmade deposits for their future homes. However, it is submitted, thepurpose of this deposit was not aimed at resolving the insolvency of JILso as to make it an asset of JIL; and it was clearly mentioned in theinformation memorandum that the sum of INR 750 crores was depositedby JAL and was not an asset of JIL. Moreover, the interest payablewould also accrue to JAL and would be an asset of JAL.

178.1.1. It has been forcefully contended that the assets belongingto third party cannot be utilised towards the resolution of insolvency ofa corporate debtor, as held by this Court in the case of Embassy Property(supra). The decision in Anuj Jain (supra) has also been referred tosubmit that therein too, this Court disallowed JIL’s assets from beingutilised for securing the dues owed by JAL.

178.1.2. With reference to the proceedings in the case of ChitraSharma, it is submitted that the purpose for which this deposit wasordered has been achieved due to the amendment of IBC and there isno reason for allowing this amount to be treated as an asset of JIL. It isalso submitted that in Chitra Sharma, this Court directed opening ofthe web-portals for the homebuyers of both JIL and JAL; and this makesthe position clear that the said amount was meant for the homebuyers ofJAL too. Hence, the Adjudicating Authority (NCLT) proceeded on anerroneous premise that the amount was only for the refund of JIL’shomebuyers, thereby seriously prejudicing the homebuyers of JAL.

178.1.3. It is submitted that JAL is committed to make the pendinghomes for its own homebuyers for which it requires funds; and utilisationof the deposit made by JAL towards the insolvency resolution of JIL

Awould result in ‘Domino Effect’ and would expose JAL to the risk ofinsolvency and, on the other hand, would result in unjust enrichment ofthe resolution applicant (NBCC).

178.1.4. In another limb of arguments, it is submitted that JAL isconscious of its liability towards JIL, which was INR 195 crores as onB31.03.2020; and since JAL is not in position to make this paymentunless the amount of INR 750 crores is refunded to it, in all fairness,JAL offers that this admitted liability towards JIL could be dischargedby appropriating from the said amount of INR 750 crores and the balancebe refunded to JAL. It is submitted that the said payable amount may beverified by IRP or by chartered accountant appointed by him. In thisCregard, while referring to the background facts relating to the constructioncontracts given to JAL and advance payment on that account made byJIL, the term in the resolution plan providing for termination of constructioncontracts has also been referred and it has been prayed that the balancedue from JAL could be adjusted from the said amount of INR 750 crores,Dif NBCC makes formal submission to the effect that it would beterminating the construction agreements. The written submissions onbehalf 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)Efor 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 sum aggregating to Rs. 716 Crores(as on 31.03.2018) which was recoverable from JAL’s RA Bill asalso when construction work was carried out.F

27. The said sum was accordingly been recovered from JAL’sRA Bill since August 2017 leaving an outstanding of Rs.274 Croresas on 31.12.2019. This has further reduced to sum aggregate ofRs.195 Crores as on 31.03.2020 (as per the audited accounts),Gand is likely to be reduced by approx. Rs.165 Crores within aperiod 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 towardsJIL now stands to Rs.195 Crores (as on 31.03.2020 and is reducingper the construction work). Since JAL is not in position to make

this payment independently unless the Rs.750 Crores is refundedback to it, hence, in all fairness and bonafide, JAL offers that thisadmitted and undisputed liability towards JIL can be dischargedby appropriating the said liability from the Rs.750 Crores and thebalance may be directed to be refunded. This amount may beverified by the RP or by chartered accountant appointed byhim.

29. However, it is pertinent to mention herein that NBCC’sResolution Plan treats the contracts for construction (betweenJIL and JAL) in the following manner [@Pg.47of JAL’sAdditional Affidavit dated 12.05.2020]:

“(vi) Resolution Applicant shall have right to terminatethe current construction contracts with JaiprakashAssociates Limited, (“JAL”), which are on cost plus basisand enter into fresh construction contracts with the vendorsas may be selected by the Resolution Applicant inaccordance with its business policies and such contractsshall be entered into on arms’ length basis as per the marketstandard. Provided that JAL shall not be entitled toterminate such construction contracts for period of 12”months from the Approval Date.(Emphasis Supplied)

(Emphasis Supplied)

30. The above clearly shows that JAL is at the mercy of NBCCwherein NBCC is free to terminate the contracts for constructionunilaterally, whereas JAL cannot. Therefore, it is submitted thatthe aforementioned balance of Rs.195 Crores (which was to beappropriated towards the construction of JIL’s Projects) can onlybe adjusted/ set off from the sum of Rs.750 Crores if NBCCmakes formal submission to the effect that it would be terminatingthe construction agreements.”

(emphasis is in original)

178.1.5. It has, therefore, been prayed that the said sum of INR750 crores along with accrued interest be ordered to be refunded to JALor in the alternative, the refund may be ordered after appropriating theamount of liability of JAL towards JIL, in terms of above-quotedparagraph 30 of the written submissions.

178.2.While supporting the submissions for return of INR 750crores, the homebuyers of JAL have contended that the said deposit

Awas not meant to finance construction, or to grant equity, or loan, or forany charitable purpose; that the Supreme Court ordered the deposit tobe made by JAL only to provide an interim workable arrangement andfor relief to the homebuyers, as they were not having the status of afinancial creditor under the Code; that the purpose of the deposit wasnot for resolving the insolvency of JIL; and that the informationBmemorandum did not show this sum of INR 750 crores as an asset ofthe corporate debtor JIL. With reference to the condition precedentmentioned in the resolution plan involving the transfer of INR 750 croresin favour of NBCC, it is submitted that the question requiring consideration

is as to whether NBCC could have laid claim over the said sum ofCINR 750 crores as condition of its bid? Further, an unjustified deprivationof the rightful amount to JAL and deprivation of the right of utilisation ofthe amount by the developer acts as serious prejudice and detriment tothe legal rights and interests of the homebuyers of JAL. It is submittedthat the reasoning and findings of NCLT in the order dated 03.03.2020

are flawed and without any basis. The amount deposited has not beenDshown in the books of accounts of JIL as its asset and the NCLT had noauthority to allow the same to be claimed by NBCC under conditionalresolution plan. It is further submitted that the order of the NCLT putsthe homebuyers of JIL at an advantageous position at the cost of theinterests of the homebuyers of JAL, which is contrary to the provisionsEand spirit of the CIRP Regulations and the Code as whole. Thehomebuyers of JAL have prayed that this amount of INR 750 croreswith accrued interest be released to JAL so as to secure the interests ofits homebuyers.

178.3. An association of homebuyers of JAL has also challenged

Fthe said order of NCLT dated 03.03.2020 directly in this Court and hassubmitted that “Knights Court Project” was supposed to be completedby 2015 and the homebuyers have already paid 95% of the saleconsideration to JAL. It is submitted that the sum of INR 750 croreswas deposited by JAL for the benefit of homebuyers of JAL and JIL

and it was stated that 92% of the homebuyers wanted to obtain possessionGof the flat, which is possible only after necessary construction takesplace. It is further submitted that the money of the contributors of JALought to be first utilised for the construction of the flats of “KnightsCourt Project” and not towards the resolution plan of JIL or for returningto JAL. This association has stated its own grievance that in theHsimultaneously held proceedings under RERA, JAL has demanded from

its members another sum of INR 98 crores and it is submitted that theliability for completion and development of flats of the aforesaid projectwas of JAL but there was an unexplained delay of 5-7 years on the partof JAL; and therefore, it was onerous that JAL was demanding such anamount from its members.

178.3.1. It has been submitted on behalf of this association ofhomebuyers of JAL that only an amount of INR 160 crores is requiredto finish the aforesaid project and it has been prayed that the same bemade available from the said INR 750 crores deposited by JAL, forcompleting the houses of the members of this association.

178.4. The institutional financial creditor of JAL has contendedthat the deposit of INR 750 crores was made by JAL out of its ownmoney and has continued to be its asset; and that in the absence of anydirection by the Supreme Court or any legal transfer, the ownership ofthis deposit would not change, and this money is required to be returnedto JAL. It is submitted that this Court has consistently laid down that anact of the Court cannot prejudice any party before it and in case it happens,the Court is bound to revert the party to the position prior to such an actof the Court. The decision in the case of ONGC and Anr. v. Associationof Natural Gas Consuming Industries and Ors.: (2001) 6 SCC 627has been referred. It is submitted that JAL deposited the money on thedirections of this Court for securing the interests of homebuyers but,since the Court did not make any direction for the utilisation of this depositand simply transferred the fund to NCLT, JAL is entitled to be restoredto its original position with return of this amount. It is reiterated that theIRP cannot lay claim over the assets of third party, held in trust or inpossession of the corporate debtor. It is also re-emphasised that thedirections to JAL for making this deposit was to arrive at an interimworkable arrangement and to protect the interests of the homebuyers;but when the purpose became moot after the amendment of IBC, themoney is supposed to be returned to its owner, i.e., JAL. It is submittedthat JAL itself is in financial distress and is unable to meet with theobligations towards its stakeholders and an application under Section 7of the Code for the CIRP of JAL is pending. With these submissions, ithas been prayed that the deposited amount with accrued interest beordered to be returned to JAL and be further ordered to be kept in anescrow account under the control of the lenders of JAL, led by ICICIBank.

A179. The submissions aforesaid, for refund of INR 750 croreswith accrued interest to JAL, have been duly countered by the persons/entities standing for the resolution plan, while supporting the order passedby the Adjudicating Authority. We may take note of the leadingsubmissions in this regard.B179.1. It has been contended on behalf of the resolution applicantNBCC that the resolution plan introduced by it, which got approved bythe CoC and by the Adjudicating Authority, included this deposit of INR750 crores by JAL to be treated in the CIRP of JIL and utilisation of thisamount has been condition precedent to the implementation of theresolution plan.C

179.1.1. NBCC has elaborated on the submissions that thestipulation in its resolution plan as regards this sum of INR 750 croreswas essentially based on the orders of this Court in the case of ChitraSharma; and on the fact that JAL was directed to deposit this money inthe proceedings which were filed in relation to CIRP of JIL. It is submittedDwith reference to various orders passed in the case of Chitra Sharmathat this money was clearly meant for the benefit of homebuyers andthough this Court initially discussed the proposition of pro ratadisbursement among the refund seekers but no such disbursement wasordered after the Court noticed that an overwhelming majority ofEhomebuyers was desirous of seeking possession of flats and disbursementto refund seekers was going to cause prejudice to others. It is submittedthat intention of the Court, that the aforesaid amount shall inure to thebenefit of homebuyers, is also apparent from the fact that even afteramendment of the Code with effect from 06.06.2018, whereby thehomebuyers were included as financial creditors, this Court deemed itFappropriate to retain the deposit for the benefit of JIL homebuyers anddid not pass any modification order in respect thereof or any order forrelease of said amount to JAL.

179.1.2. With reference to the contents of the informationmemorandum under sub-heading ‘Unique Investment/financingGopportunity for the Resolution Applicant with adequate value to beunlocked’ in the ‘Investment Highlights’, NBCC would submit that thefinancial model of the resolution plan is based on the availability of thissum of INR 750 crores, and if the same is not made available, it wouldbe handicapped in completing the flats of the homebuyers. NBCC hasHreiterated that availability of this amount being condition precedent, it

would have right to withdraw from the resolution plan in the event thisamount is not made available to it.

179.1.3. It has also been submitted that the deposit made by JALpursuant to the orders of this Court in Chitra Sharma was to secureand protect the interests of homebuyers of JIL and in order to act on thelines of the order of this Court, the deposit ought to be permitted to beused to achieve the purpose namely, the construction of dwelling units.NBCC submits that the said sum of INR 750 crores did not remain anasset of JAL after the same was deposited in this Court.

179.1.4. Apart from the aforesaid submissions and withoutprejudice, NBCC has also stated, with reference to the observationsmade by this Court during the course of hearing, that if any reconciliationof accounts has to be carried out before approval of the plan by thisCourt, NBCC ought to be involved in such an exercise, for being thesuccessful resolution applicant and part of the erstwhile InterimMonitoring Committee.

179.1.5. NBCC has also referred to paragraph 77 of the impugnedorder dated 03.03.2020, wherein the NCLT has recorded an admissionon behalf of JAL about its liability towards JIL to the tune of INR 274crores and ordered that JAL shall make this payment to JIL; and regardingthe remaining amount, JAL and JIL shall draft reconciliation statementand proceed according to the outcome of such reconciliation.

179.1.6. Long drawn submissions have been made on behalf ofNBCC in regard to the alleged liabilities of JAL towards JIL on variousscores. These aspects of accounting would not, as such, requireadjudication herein but have some bearing on the issues raised before usand hence, part of the written submissions on behalf of NBCC in thisregard are reproduced as follows: -

“2. JAL has claimed by way of an additional affidavit filed in theJAL Appeal claimed that as on 31 March 2020, the amount owedby JAL to JIL has reduced to INR 218 Crores. It needs to behighlighted that under the Resolution Plan, NBCC has reservedits right to terminate all existing contractual arrangements withJAL.

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

The Home Buyer of JIL are required to pay amounts in thenature of Interest Free Maintenance Deposit (“IFMD”) towardsthe flat units purchased by them, and after the formation ofrecognized Residents Welfare Associations (RWAs) this IFMDis required to be transferred to RWA as per provisions of the UPApartments Act.

Since JAL is the designated maintenance agency for suchflat units as per the existing contractual arrangement betweenJIL, JAL and the Home Buyers, this payment of IFMD was to bepaid by Home buyers to JAL and thereafter the transfer of IFMDwas to be made by JAL to the RWAs.

In the year 2016, on the request of JAL, JIL has paid toJAL an advance amounting to INR 381 crore towards InterestFree Maintenance Deposit (IFMD, with the understanding thatthese amounts would be later on recovered by JIL form the HomeBuyers at the time of taking over of possession of their flat unitsby 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, anamount of approximately INR 115 Crores has been collected fromHome Buyers by JIL and same stands adjusted from the advanceamount of INR 381 Crores but is now payable/transferable to theRWAs of the Home Buyers by JAL.

ii.Therefore, an amount of INR 266 Crore (INR 381-INR 115Cr) is still recoverable by JIL from JAL as per audited accountsof JIL as on 31 March 2020. Overall, the Amount of Rs 115 Crore(ultimately to be transferred to RWA) along with 266 crores(pertaining to JIL) i.e. 381 crores is recoverable from JAL towardsInterest Free Maintenance Deposit (IFMD) of Home Buyers.This needs to be seen in the context that NBCC may terminate allexisting contractual arrangements with JAL and thus INR 115Crores which is money belonging to Home Buyers ought to bepaid by JAL to JIL for further transfer to the Home Buyers.

iii. Further, JIL has paid to JAL an advance amounting to INR 450crore towards special advance in the year 2016, which was beingrecovered on pro-rata basis from the JAL running bills. Till 31Mar 2020, an amount approx. of INR 146 Crores is adjusted from

running bills of JAL and an amount of INR 304 Crore is stillrecoverable from JAL as on 31 March 2020 as per auditedaccounts of JIL as on 31 March 2020.

iv. Apart from the above, an amount of INR 71 Crore is alsorecoverable from JAL in respect of Land Swap Deal with JALlenders.

v. From above details, it is apparent that cash amount of INR756 Cr (381 + 304 + 71 Cr) is payable by JAL to JIL as on31.3.2020.

vi. It is pertinent to mention that the Hon’ble Court by judgmentdated 26.02.2020 in Civil Appeal No. 8512-8527 of 2019 AnujJain vs. Axis Bank Limited etc. etc. (2020 SCC Online SC 237)(“758 Acres Judgment”) has set aside mortgage created on758 acres of land belonging to JIL to secure the debts of JAL onthe ground that the same were preferential transactions. However,apart from the said 758 acres of land, mortgage of 100 acres ofland of JIL to secure JAL’s debts could not be set aside as thesame was beyond the look back period. Thus, at present mortgageof 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 acremortgaged land (mortgaged against 1500 crore loan) could bepayable by JAL to JIL, subject to JIL exercising the remediesavailable to it under the law in this regard. The equivalent value ofthe said land as per the valuation taken for the purpose of theResolution Plan (land proposed to be transferred through landSPV) is INR 328 crores.

vii. Hence it is submitted that for effective implementation of theResolution Plan and to ensure that the strict timelines prescribedtherein are met, JAL shall pay to JIL immediately upon the disposalof these appeals and under the aegis of this Hon’ble Court totalAmount of Rs 1084 Crores (756 crores + 328 Cr).

viii. The same shall be utilised for the construction in terms of theNBCC Resolution Plan.”

179.1.7. Apart from the above, the resolution applicant NBCChas also indicated various other aspects of accounting in regard to thedefect liability of JAL as the master developer; and charging of excessprofit by JAL. However, it is also submitted that the suggested amounts

Aare 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 finalreconciliation and verification of accounts. In this regard it isrequested that such reconciliation should be carried out by anBindependent third party to be nominated by the Hon’ble Courtwhich would ensure that the rightful entitlement of JIL is providedto it and the Resolution Plan is successfully and effectivelyimplemented.”

179.2. The associations of homebuyers of JIL, while supportingCthe submissions of the resolution applicant, have contended that returningthe said sum of INR 750 crores deposited by JAL would be contrary tothe orders of this Court, as the intention of the Court in Chitra Sharmawas to safeguard the interests of homebuyers and rehabilitation of JIL.Moreover, direction by the Court to JAL for making such deposit, evenwhen it was aware that JAL was not party to the CIRP of JIL, showsDthat the refund shall not be made to JAL. It is submitted that any suchrefund may cause reduction of readily available funds to start theconstruction of unfinished projects.179.2.1. It has been prayed that the Court may confirm that thesaid sum of INR 750 crores is to protect the interests of the homebuyersEand forms part of the assets of JIL. Alternatively, it has also beenprayed that reconciliation of accounts between JAL and JIL be done ina time bound manner; and the refund of leftover funds be not permitteduntil NBCC completes the construction of apartments and thehomebuyers get the possession of the flats. The homebuyers have alsoFprayed for an injunction against NBCC, barring it from withdrawing andfor direction to NBCC to expedite the process of implementation. Yetfurther prayers have been made to direct an audit of the quality ofconstruction by NBCC to make sure that it conforms to the quality agreedupon by the homebuyers at the time of booking the apartments.

G179.3. The other homebuyers of JIL, while supporting thesubmissions aforesaid, have reiterated that the directions of this Court inChitra Sharma to JAL for making the said deposit was primarily tosafeguard the interests of the homebuyers and rehabilitation/restitutionof JIL; that it was conscious decision of this Court keeping the interestsof the homebuyers in mind; that if the intention of this Court was toHrevert this deposit to JAL, an express direction would have been made

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 depositingINR 2,000 crores was dismissed by the order dated 25.10.2017 and it isagainst the principles of res judicata for JAL to seek the same relief inthe present proceedings; that the IRP was conscious of the intention ofthis Court regarding the fate of the deposit made by JAL and that is whyincluded this amount in the information memorandum with caveat thatit is subject to the order of the NCLT. It is further submitted that anydirection for refund of this money to JAL would cause shortage of readilyavailable funds to start the construction, which may jeopardise the fateof the entire project.

179.4. Even those associations of homebuyers of JIL, who haveattempted to project themselves as ‘dissenting’ homebuyers, are ad idemon this issue that the said sum of INR 750 crores is the property of JILand ought not be refunded to JAL. However, it is submitted by them thatNBCC is aiming at profiteering by getting hold of this money withoutcorresponding provision in the resolution plan for its use for the benefitof homebuyers.

179.5. The other persons/entities standing with JIL have alsoopposed the submissions made on behalf of JAL for return of this sumof INR 750 crores. It is submitted that even while permitting RBI toallow the banks to initiate CIRP against JAL, this Court did not issue anydirection for refund of the deposit made by JAL and rather allowed thisamount to be utilised for the CIRP of the corporate debtor JIL. Therefore,this amount has rightly been taken in the resolution plan for being utilisedfor the purposes of JIL.

180. From the long range of submissions aforesaid, two aspectsemerge for determination: one, as regards the treatment of the said amountof INR 750 crores and accrued interest; and second, as regards theamount receivable by JIL from JAL and reconciliation of accountsbetween these two companies. For dealing with extensive submissionsconcerning the said amount of INR 750 crores and accrued interest,worthwhile it would be to recapitulate the basic facts related with thisdeposit.

181. comprehensive look at what had transpired during the courseof consideration of the matter involved in Chitra Sharma and what hadculminated in the final judgment dated 09.08.2018, few pertinent featurescome to the fore, which essentially relate to the concern of this Court

Atowards homebuyers of JAL and JIL taken as whole. As noticed,when the proceedings were taken up by this Court in Chitra Sharma inthe month of September, 2017, the homebuyers were facing criticalpredicaments inasmuch as, at that point of time, they were not recognisedas financial creditors of the corporate debtor. The matter, of course,arose from the insolvency proceedings relating to JIL but the submissionsBbefore the Court did not remain limited to the homebuyers of JIL alone;rather the predicaments were placed before the Court on behalf of thehomebuyers of JAL and JIL as whole lot and it was submitted that theinterests of the ‘flat purchasers’, who had invested with JAL and JIL,need to be protected. On 11.09.2017, after noticing several facets of theCmatters, including the fact that JAL, the holding company, was not aparty to the insolvency proceedings concerning JIL, this Court issued aslew of directions, including that for deposit of INR 2,000 crores byJAL.

181.1. JAL made an avid effort to wriggle out of the rigour of theDdirection for deposit of INR 2,000 crores while seeking recall of theorder passed by this Court or for modification that would enable it totransfer the rights under the Concession Agreement in respect of theYamuna Expressway. This attempt on the part of JAL failed after thisCourt noticed the submissions in opposition that the rights under theConcession Agreement belonged to JIL. The directions of this Court,Efor deposit as made from time to time in the course of proceedings inChitra Sharma, resulted in JAL depositing INR 750 crores in instalments.

181.2. The fact of the matter remains, and unfolds from variousinterim orders passed in the case of Chitra Sharma, that basic concernof the Court was regarding the claim of the homebuyers of JAL and JILFtaken as whole; and it was not stated at any stage by this Court thatJAL 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. Asnoticed, during the course of proceedings, this Court appointed amicuscuriae, who was directed to open web-portal for the homebuyers of JILGand an independent web-portal for the homebuyers of JAL. As per theorder dated 22.11.2017, the learned counsel appearing for JAL was toprovide the requisite details to the amicus as also the amount for creationof the portal and for carrying on the consequential activities.

181.3. On 21.03.2018, it was stated on behalf of JAL that anHamount of INR 550 crores had already been deposited and that only

about 8% of the homebuyers were interested in seeking refund whileothers were desirous of seeking possession of their flats. This Courtindicated that at the given stage, only the matter in relation to thehomebuyers seeking refund was being examined and other grievanceswould be examined in the next phase of proceedings. Since the order fordeposit of INR 2,000 crores had not been fully complied with, the Courtissued directions for further deposit of INR 200 crores in instalments. Atthat stage, the Court was informed by the amicus curiae that as per hisportal and as per the record of JAL, an amount of INR 1,300 croreswas required to be refunded by way of principal alone to the homebuyerswho were seeking refunds.

181.4. Thereafter, on 16.05.2018, this Court took note of the factthat sum of INR 750 crores was lying in deposit and it was observedthat the same ‘has to be disbursed on pro rata basis amongst thehomebuyers’. On that date, it was also directed that ‘JaiprakashAssociates Ltd. (JAL), the holding company of Jaypee InfratechLtd. (JIL), shall deposit further sum of Rs. 1000 crores jointly andseverally by 15.06.2018’.

181.5. Lastly, on 13.07.2018, this Court, while expressingdisinclination to entertain the proposals advanced on behalf of JAL, postedthe matters on 16.07.2018 ‘exclusively for the purpose of consideringthe issue of the rights of the homebuyers and the capability of JALand JIL to construct the projects’. Thereafter, the matters were finallyheard and decided by way of the judgment dated 09.08.2018.

181.6. Even at the final consideration of the matter, furtherproposals were mooted on behalf of JAL but were rejected by this Courtwhile explaining that accepting any such proposal on behalf of JAL wouldcause serious prejudice to the discipline of IBC; and this Court particularlyobserved that clauses (c) and (g) of Section 29A operated as bar tothe promoters of JAL/JIL participating in the resolution process. Thisapart, after taking note of various grounds urged on behalf of thehomebuyers in opposition to the proposal, this Court was convinced thatJAL/JIL were lacking in financial capacity and resources to completethe unfinished projects. The reasons that were stated on behalf of thehomebuyers in opposition to the proposal of JAL were aplenty where itwas, inter alia, alleged that there had been questionable transactionsinvolving mortgage of around 758 acres of JIL’s land worth INR 5,000crores in favour of the lenders of JAL without any consideration and the

Asame were set aside by NCLT[87]; that the claim by JAL of delivering theflats was also fractured one because the flats were delivered incompleteand OOP was being made without OC; that about 22,000 homebuyerswere suffering due to delays of more than four years in completion ofvarious projects of JAL and JIL; that under the contracts, JAL and JILwere jointly and severally liable to deliver the flats; that there were seriousBdoubts about the credentials of JAL, who had diverted huge funds fromJIL towards its other businesses; JAL had been unable to honour theorder of this Court for depositing INR 2,000 crores, where only INR 750crores were deposited after about 10 months from the initial order dated11.09.2017 and where the instalment of INR 1,000 crores, as ordered onC16.05.2018, was not forthcoming. The aforesaid and all other facts andfactors indeed formed the basis of the conclusion by this Court thatJAL/JIL were lacking in financial capacity and resources to completethe unfinished projects. There was, of course, common refrain thatliquidation of the corporate debtor JIL would not be in the interest ofhomebuyers.D

181.7. In Chitra Sharma (supra), having pondered over diversepropositions, the requirement of balancing the discipline of the Code, todo complete justice and to secure the interests of all the concerned, thisCourt considered it just and proper to revive the CIRP of JIL and toreconstitute the CoC as per the amended provisions of IBC with recourseEto the powers under Article 142 of the Constitution of India.

181.8. However, before concluding on the matter, this Court alsotook into consideration the submissions made on behalf of some of thehomebuyers for issuance of directions to facilitate pro rata disbursementof the amount of INR 750 crores lying in deposit pursuant to the interimFdirections. This Court observed that even when the claim of the refundseekers was required to be considered with empathy, such requestcould not be acceded to; and specified four major reasons for decliningthis prayer, which included the reason that there were other creditorstoo and if the amount was utilised only for refund seekers, the homebuyersGwho were seeking their flats would have legitimate grievance. Anotherreason was that the insolvency resolution process qua JAL was alsobeing permitted. This was coupled with the position that this Court wasreviving the CIRP in relation to JIL.

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

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

182. Taking all the factors and the orders of this Court into accountcumulatively, it is difficult to find if the sum in question was ever orderedby this Court to be deposited by JAL in discharge of its obligations towardsJIL or towards homebuyers of JIL alone; and equally difficult it is toaccept the submissions made by the resolution applicant and other personsstanding with JIL that this corpus of INR 750 crores together withaccrued interest has become an asset of JIL.

183. In an overall analysis, it appears that at the relevant time ofconsideration of the matter in Chitra Sharma, the grievances that wereprojected before this Court were not confined to the homebuyers of JILalone but they related to the homebuyers of JAL as well; and theagreements with the homebuyers were also of composite nature, withboth JAL and JIL being the parties thereto. It had been in that hodgepodgeof the interwoven transactions that the homebuyers of JAL and JILprojected their grievances as whole lot before the Court in ChitraSharma. As noticed, at the initial stages, pro rata disbursement to therefund seekers was under contemplation of the Court (as twice overstated in the interim orders) but even those refund seekers were not thehomebuyers of JIL alone. The figure of INR 1,300 crores, as being theamount required for refund, was stated by the amicus curiae as per hisportal and ‘as per the record of JAL’.

183.1. Therefore, it is apparent that at the given stage, the saiddeposit was taken for the purpose of the refund seeking homebuyers ofJAL and JIL both; and at the final stage, when this Court found that theinterests of various other stakeholders were to be taken into account,the money was transferred to NCLT. It is difficult to deduce from thesaid proceedings and from the final order of this Court in Chitra Sharmathat the corpus comprising of INR 750 crores with accrued interest is tobe treated as the property of JIL.

A183.2. The NCLT essentially proceeded on the considerationsthat JAL had indeed received money from the homebuyers of JIL; thatJAL was asked by the Court to deposit the amount towards refund ofJIL homebuyers; and that there was no direction from the Court to returnthis money to JAL. It appears that all the relevant facts and backgroundaspects concerning this deposit did not surface before NCLT, which ledBit to draw an inference not standing in conformity with the meaning andpurport of the directions of this Court in the case of Chitra Sharma(supra).

183.3. While deducing that the money in question became theproperty of JIL in view of the directions for deposit to JAL by this Court,Cthe NCLT omitted to consider that the directions to JAL by this Courtwere not backed by any finding that in law JAL was liable to make goodthe said some of money for the purpose of refund seeker homebuyers ofJIL alone. The directions and observations of this Court in the case ofChitra Sharma when read ad seriatim with their context, it is clearDthat such directions for deposit to JAL were that of an attempt by thisCourt to deal with the demands of refund seeking homebuyers of JALand JIL. Even such tentative proposition did not reach its finality inChitra Sharma; and after taking note of the other factors and interestsof various other stakeholders, the money was transferred to NCLT. In acomprehensive view of the matter, the inference drawn by NCLT in itsEimpugned order dated 03.03.2020, that this money is an asset of thecorporate debtor JIL remains unsustainable.

184. Before switching over to the other leg of discussion in regardto this sum of INR 750 crores, it may also be observed that the contentionsurged on behalf of the homebuyers of JIL, that this Court having rejectedFthe application of JAL for recalling the directions for depositing the amountof INR 2,000 crores, the claim for refund of deposited amount by JAL isagainst the principles of res judicata, is also baseless. As noticed, duringthe course of consideration of the matter in Chitra Sharma (supra),this Court not only declined the prayer for recall of the directions forGdeposit but, even reiterated such directions on more than one occasion.However, all such orders and directions were interim in nature and fromnone of those interim orders or from the final judgment in Chitra Sharma,it could be deduced that the issue concerning entitlement to the depositedamount was finally decided by this Court against the depositor JAL.

185. Coming to the resolution plan, in our view, NBCC could nothave prepared the same by assuming that this amount was the propertyof JIL when it was neither stated so in the orders passed by this Courtnor by IRP in the information memorandum. The overt reliance by NBCCon the contents of the information memorandum is also misplaced becauseIRP never stated in the information memorandum that this amount ofINR 750 crores was part of the assets of JIL. In the relevant headingof ‘Investment/Financing Opportunity’, the IRP stated thus: -

“Unique investment/financing opportunity for the ResolutionApplicant with adequate value to be unlocked

•Unutilized land parcels (mortgaged and unencumbered land)Cof 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 approximatelyDINR 184.45 cr is due against bulk sale of land

•Rights over the toll fee (along with revenue from road sidefacilities and advertisement) to be collected on YamunaExpressway over the balance concession period of 30 yearsas at dateE

•25% CAGR in toll revenue up to H1FY19

•Opportunity to exploit 3.4 mn sqft of road side facility areaacross express way

•100% equity shareholding in Jaypee Healthcare Limited,having two fully operational hospitals in Noida & Chitta andone 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,utilization/ end use of same pending directions and decisionsof Hon’ble NCLT.”

(underlining supplied for emphasis)

A185.1.Therefore, even though various aspects relating to otherassets and their potential utilisation were indicated in the informationmemorandum but, as regards this sum of INR 750 crores, the informationmemorandum made it absolutely clear that the same was deposited byJAL and was lying with NCLT; and that its end use was pending decisionof NCLT. In the face of such unequivocal expressions, it cannot beBaccepted that in the information memorandum, any declaration was madethat this sum of INR 750 crores was readily available to the resolutionapplicant. The submissions in this regard as made on behalf of NBCCare required to be rejected.

186. We may observe that the decisions cited by the parties doCnot require much discussion. The principles in the cited decisions includingthose in the case of Embassy Property (supra) that the assets belongingto third party cannot be utilised towards resolution of corporate debtorremain fundamental and beyond cavil. Equally, the reference to the maximactus curiae neminem gravabit, and to the decision in ONGC (supra)Dhas been rather unnecessary because the said principle is essentiallyemployed for the purpose of restitution and putting party in the positionwhere he would have been but for intervention or lapse of the Court.[88]The principle underlying this maxim is also fundamental to all the rulesof administration of justice and hence, an unintended result of any act oromission on the part of the Court, which occurs for whatever reason, isEnot allowed to operate to the prejudice of any person. However, thisprinciple would not apply to the present case for the reasons that thisCourt consciously directed the holding company JAL to make depositbut, added to that were the other conscious decisions where this amountwas not ordered to be forfeited to JIL nor there was any decree that thisF88 This principle has been succinctly explained by this Court in the case of SouthEastern Coalfields Ltd. v. State of M.P. & Ors.: (2003) 8 SCC 648 in the followingwords: -

“28. That no one shall suffer by an act of the court is not rule confinedto an erroneous act of the court; the “act of the court” embraces within itssweep all such acts as to which the court may form an opinion in any legalproceedings that the court would not have so acted had it been correctly apprisedGof the facts and the law. The factor attracting applicability of restitution is notthe act of the court being wrongful or mistake or error committed by the court;the test is whether on account of an act of the party persuading the court topass an order held at the end as not sustainable, has resulted in one partygaining an advantage which it would not have otherwise earned, or the otherparty has suffered an impoverishment which it would not have suffered but forHthe order of the court and the act of such party…….”

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

187. The upshot is that the said amount of INR 750 crores andaccrued interest thereupon, is not the property of JIL. In regard to thisamount, neither the stipulation in the resolution plan could be countenancednor the order of NCLT could be approved.

188. Accordingly, we hold that the amount of INR 750 crores,which was deposited by JAL pursuant to the orders passed by this Courtin the case of Chitra Sharma, and accrued interest thereupon, is theproperty of JAL; and stipulation in the resolution plan concerning itsusage by the resolution applicant of JIL cannot be approved. The part ofthe impugned order dated 03.03.2020 placing this amount in the assetpool of JIL is set aside.

189. After we have found that the impugned order dated 03.03.2020placing the said amount of INR 750 crores and accrued interest in theasset pool of JIL is unsustainable, the question is as to what orders insequel be made regarding this money? In ordinary circumstances, theconsequence of the findings in the preceding paragraphs would havebeen of direct refund of this money to JAL but the present matter carrieswith it several entangled features relating to the amount otherwise payableby JAL to JIL; and these features cannot be ignored altogether.

189.1. As noticed, even when JAL and JIL are two separatecorporate entities, JIL is an alter ego of JAL, for having been set up asan SPV and having been substituted as concessionaire in the ConcessionAgreement aforesaid. The agreements with homebuyers had also beenof such nature where JAL and JIL both were signatories thereto.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 toreduce the liability towards JIL that stood at sum of INR 716 crores ason 31.03.2018 and was purportedly reduced to INR 195 crores as on31.03.2020. Various homebuyers have allegedly made payments towardsIFMD to JAL. Moreover, JAL has submitted that balance of INR 195crores, which was to be appropriated towards the construction of JIL’sproject, could be adjusted from the said sum of INR 750 crores, if theresolution applicant makes formal submission of terminating the

Aconstruction agreement. NBCC, on the other hand, has suggested severalother amounts to be recoverable from JAL.

189.2. Having comprehensively taken note of the complex andinterwoven features, even while we are not inclined to countenance theother claims against JAL in these proceedings[89], so far as the admittedBamount towards construction advance is concerned, in our view, theprocess had been continuing one and admittedly an amount of INR195 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 forreconciliation of accounts, as stated in the alternative submissions byJAL as also by the resolution applicant, be partly accepted and afterCreconciliation, the payable amount be made over to JIL before refundingthe remainder to JAL.

189.3. On behalf of JAL, it is submitted that verification/reconciliation could be carried out by IRP or by chartered accountantappointed by him, whereas NBCC would submit that such reconciliationDshould be carried out by an independent third party to be nominated bythis Court. However, as noticed, the said sum of INR 750 crores stoodtransferred to NCLT in terms of the final directions in the case of ChitraSharma (supra). Having regard to all the relevant features of this case,it appears appropriate that the process of reconciliation of accountsEbetween JAL and JIL be taken up under the supervision of NCLT.190. For the aforesaid purpose of reconciliation of accountsbetween JAL and JIL, the NCLT shall, within 7 days of receipt of copyof this judgment, nominate an independent accounting expert; and theaccounting expert so nominated by NCLT shall carry out the process ofFreconciliation while involving IRP of JIL and one representative of JAL.Looking to the underlying urgency, the accounting expert shall completethe entire process of reconciliation of accounts and submission of hisreport to NCLT within 10 days of his nomination. The professionalcharges and expenses for the task assigned to the accounting expertshall be determined by NCLT and shall be borne equally by JAL andGJIL.

190.1. After receiving the report from the accounting expert, theNCLT 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 ofinsolvency resolution or liquidation of JAL, such claims against JAL shall have to standHin the queue as per the discipline of IBC.

found receivable by JIL/homebuyers of JIL, the same shall be madeover to JIL from out of the said amount of INR 750 crores and accruedinterest; and remainder thereof shall be returned to JAL in an appropriateaccount and that shall abide by the directions of the competent authoritydealing with the proceedings concerning JAL. The NCLT would beexpected to pass appropriate orders within 2 weeks of submission ofreport by the accounting expert.

190.2. However, we need to make it clear that this process ofreconciliation is not meant for determination of any claim otherwise soughtto be levied against JAL by IRP or homebuyers of JIL or by the resolutionapplicant; and only the accounts concerning the amount/s advanced toJAL by JIL towards construction contracts (vide paragraph 178.1.4.)are to be examined and reconciled with reference to the extent of liabilitiesdischarged by JAL and then to find the extent of excessive amount, ifany, available with JAL which is receivable by JIL/homebuyers of JIL.

191. In regard to the aforesaid directions concerning reconciliationof accounts and disposal of the said amount of INR 750 crores andaccrued interest, few more comments and observations appearnecessary. We have taken note of the submissions made on behalf ofNBCC as also on behalf of various homebuyers of JIL that this money isrequired for construction of houses and if it goes to JAL, there would beacute shortage of funds for construction. We are also aware of the factsthat have come on record that JAL is itself in distress and CIRP in itsrelation is looming large. We have further taken note of the submissionsmade by the financial creditor of JAL to place this sum of money withintheir control in an escrow account. However, we have not accepted anyof these submissions in entirety.

191.1. As observed hereinabove, after having found that the saidmoney is the property of JAL, ordinarily, the consequence would havebeen of directing its refund to JAL but the other entangled features ofthe case relating to the amount otherwise payable by JAL to JIL cannotbe ignored altogether, particularly when it was an admitted position onbehalf of JAL before NCLT that an amount of INR 274 crores waspayable by it to JIL and even before this Court, this obligation to pay hasbeen admitted on behalf of JAL, albeit to the tune of INR 195 crores ason 31.03.2020; and it appears that JAL has been taking steps (maybecrippled steps) to carry out construction and to reduce its liability. Weare not determining the extent of amount payable by JAL to JIL because

Athat would be matter of reconciliation of accounts but, having regardto the background in which, and the purpose for which, JAL made thesaid deposit pursuant to the orders of this Court and also having regardto the present position of these two companies, adopting this courseappears to be in the balance of the legal rights of the respectivestakeholders as also in the balance of equities. We would hasten toBobserve that ordinarily, the equitable considerations do not directly comeinto play in corporate insolvency resolution process but the matterconcerning this amount of INR 750 crores and accrued interest thereuponis convoluted and stand-alone issue, having the peculiarities of its ownand hence, we have adopted the course as contemplated above. ThisCprocess is otherwise not of determination of the claims of individualstakeholders, be it operational creditors or financial creditors. In theinterest of justice, it is also made clear that disposal of the said sum ofINR 750 crores shall otherwise not be treated as determinative of therights and obligations of any stakeholder in any of these two companies,JAL and JIL.D192. Before closing on this point for determination, we may indicatethat few of the arguments on this point have gone off on tangent, ascould be noticed from the submissions made by an association ofhomebuyers of JAL, who has directly approached this Court against theorder of NCLT, that INR 160 crores be designated out of the said amountEof INR 750 crores for completing the houses of the members of thatassociation; and that in RERA proceedings, JAL was demanding moneyfrom its members, though, there was unexplained delay of 5 to 7 years incompletion of project by JAL. We are unable to find any logic in thesubmission of this nature against JAL by its homebuyers having beenFmade in these proceedings. It goes without saying that the dealing betweenJAL and its homebuyers is not the subject matter of the presentproceedings. Similarly, the submission by some of the dissatisfiedhomebuyers of JIL, that NBCC is aiming at profiteering by getting holdof this money but without making corresponding provision in the resolution

plan for the appropriate use of this money for the benefit of homebuyers,Galso remains baseless and redundant in view of what has already beendiscussed hereinbefore. Another block of submissions on behalf of someof the homebuyers of JIL, like seeking directions against NBCC that itshall not withdraw and should expedite construction as also seeking auditover the quality of construction, have gone far too beyond the real issuesHrequiring determination in the present litigation. In regard to these and

other submissions of similar nature, we would only leave the parties totake recourse to appropriate remedies in accordance with law, in caseof any legal grievance existing or arising in future.

Point K

Security interest of the lenders of JAL and effect of judgmentdated 26.02.2020

193. Two separate questions formulated in this point fordetermination carry their intrinsic correlation and hence are taken up fordetermination together.

193.1. The genesis of these questions lies in seven suchtransactions whereby, the financial facilities obtained by JAL weresecured by way of mortgages created over various parcels of JIL’sland, aggregating to 858 acres. During the present CIRP proceedings,the IRP questioned these transactions as being preferential, undervaluedand fraudulent within the meaning of Sections 43, 45 and 66 of the Code.An application moved by IRP for avoidance of these transactions wasaccepted in part by the Adjudicating Authority in its order dated 16.05.2018and directions were issued for avoidance of six of these transactions.However, one such transaction was found by the Adjudicating Authorityto be not falling within relevant time, as provided in Section 43 of theCode and hence, the same was not avoided. The order so passed by theAdjudicating Authority (NCLT) was, however, reversed by the AppellateAuthority (NCLAT). Hence, the matter came in appeal before this Courtand was dealt with in the case of Anuj Jain (supra), decided on26.02.2020.

194. In the judgment dated 26.02.2020 in Anuj Jain (supra), thisCourt took note of all the relevant particulars of the said seven transactionsand the one, which was not found falling within relevant time, was noticedby this Court as follows: -

“7.5. Yet another transaction was questioned by IRP as beingavoidable but the adjudicating authority held the same to be notfalling within the relevant time as provided under Section 43 ofthe Code. The particulars of this transaction are as follows:

Mortgage deed dated 12-5-2014 for 100 acres of landsituated at Village Tappal, Tehsil Khair, District Aligarh, UttarPradesh executed by JIL in favour of ICICI Bank Ltd. against

884SUPREME COURT REPORTS

Athe facility agreement dated 12-12-2013 granting term loan of Rs1500 crores and overdraft amount of Rs 175 crores to JAL(hereinafter also referred to as “Property No. 7”) (As regardsthis description, it is pointed out on behalf of the respondent ICICIBank that it had been of “term loan of Rs 1500 crores under thecorporate rupee loan facility agreement and general conditionsBdated 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 NCLTwas upheld in relation to six of these transactions with the finding thatthe transactions in question were hit by Section 43 of the Code and theCAdjudicating Authority (NCLT) was justified in issuing necessarydirections in terms of Section 44 of the Code. However, as noticed, theabove-noted seventh transaction pertaining to the mortgage dated12.05.2014 and relating to 100 acres of land, remained intact. The propertyinvolved in the said transaction, which was not covered under avoidance

Dprovisions is referred to as ‘Tappal Property 1’, for being situated atvillage Tappal for which, the mortgage was created on 12.05.2014.

194.2. We have also noticed hereinbefore that in the case of AnujJain (supra), this Court had examined another issue, that is, as to whetherthe lenders of JAL could be categorised as financial creditors of JIL. InEthis regard, this Court though observed that when the transactions inquestion were hit by Section 43 of the Code, they were denuded of theirvalue and worth and the security interest created over the property ofJIL involved in those transactions stood discharged in whole; and,therefore, such lenders of JAL were not entitled to claim any status ascreditors of the corporate debtor JIL much less as financial creditors butFthen, this Court examined the question as regards the status of suchlenders of JAL qua the corporate debtor JIL independent of the findingsthat 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, thisCourt held that they, on the strength of the mortgages in question, mightGfall in the category of secured creditors but, for the reason that thecorporate debtor did not owe them any financial debt, such lenders ofJAL would not fall in the category of financial creditors of the corporatedebtor JIL.[90]

90 The relevant conclusions in the case of Anuj Jain have been reproduced in paragraphsH34.1 to 34.3, hereinbefore.

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

195. In the resolution plan, apart from various stipulations in regardto the land of JIL and creation of two SPVs with transfer of certainparcels of land, the resolution applicant stated in Clause 23 of Schedule3 relating to ‘reliefs and concessions’ as under: -

“23. The JAL Lenders Mortgaged Land shall continue to be vestedin the Corporate Debtor free of any mortgage, charge andencumbrance.”

196. The Adjudicating Authority, in its impugned order dated03.03.2020, while noticing the terms of the resolution plan and key reliefs,

summarised the matter relating to the land mortgaged with JAL lendersin the following part of tabulation: -

FG(bold is in original)H

A196.1.As regards the land under mortgage, the AdjudicatingAuthority stated its consideration in paragraph 128 of the order impugnedin the following terms: -

“128. With regard to the objections raised by JAL and otherobjectors for inclusion of 858 acres as part of the resolutionBplan, for the Hon’ble Supreme Court on 26.02.2020 held thatmortgaged of 858 acres of JIL land to the lenders of JAL is anavoidance transaction, it can no more be an objection from JALor from consortium of ICICI Bank to say that land cannot be partof the resolution plan for it has been mortgaged to the financialcreditors of JAL.”C

However, while concluding on Clause 23 of Schedule 3 of theresolution plan, the Adjudicating Authority observed (in paragraph 134)thus: -

“Clause No. 23:- This point is not clear as to whether it is referringDto the land of the Corporate Debtor mortgaged to the lenders ofJAL, if that is so, since it has been decided by the HonourableSupreme 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 theEfigure of extent of land pertaining to avoidance transactions at ‘858acres’ in paragraph 128 of the impugned order were incorrect and theAdjudicating Authority corrected these errors in the corrigendum dated17.03.2020 in the manner that the cross-reference is to ‘Clause 23 ofSchedule 3 of the resolution plan’ and the extent of land held by thisCourt to be of avoidance transactions is ‘758 acres’.F197. 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 theresolution plan, NBCC sought the relief that such land shall continue toremain vested in the corporate debtor JIL free from any mortgage, chargeGand encumbrance; 758 acres, out of this 858 acres, of land got releasedfrom mortgage in terms of the judgment in Anuj Jain (supra); 100 acresof land, being ‘Tappal Property 1’, however, continued to remain under

91 The aforesaid observations, as occurring in paragraphs 128 and 134 of the impugnedorder dated 03.03.2020, have been extracted hereinbefore in the narratives but we haveHre-extracted them for continuity of the present discussion.

mortgage with ICICI Bank; and, as regards this mortgage, ICICI Bankwas not recognised as financial creditor of JIL even if falling in thecategory of secured creditors; the Adjudicating Authority has not renderedany specific decision as regards such mortgaged land and as regards therelief claimed by the resolution applicant while assuming that the entirematter stands concluded with the judgment of this Court dated 26.02.2020in Anuj Jain (supra).

198. Now, the aforesaid terms of the resolution plan and the orderof the Adjudicating Authority have given rise to two major issues. Thefirst one is the grievance of ICICI Bank, who is the mortgagee in thesaid mortgage transaction relating to ‘Tappal Property 1’, that was nothit by Section 43 of the Code for having been entered into beyond thelook-back period.

199. The mortgagee bank would submit that in terms of thejudgment of this Court in Anuj Jain, the said mortgage in relation to‘Tappal Property 1’ continues to remain in force and thereby, the bank isa secured creditor of the corporate debtor JIL; and this mortgage cannotbe taken away through resolution plan without assigning any value. Itis submitted that the stipulations in the resolution plan in regard to thismortgage remain invalid where the resolution applicant has erroneouslyassumed that the effect of implementation of the plan would be that allencumbrances and charges on the property of the corporate debtor forthe loans given to third party shall stand extinguished. It is contendedthat legal right in the property cannot be taken away except by dueprocess of law; that the process under the Code provides for reckoningand accounting of claims against the corporate debtor; and that onlythose claims which are accounted for and dealt with as part of thisprocess could possibly be dealt with in resolution plan but, the claimswhich have not been accounted for and reckoned in this process cannotstand extinguished. It is submitted that this bank, in its capacity asmortgagee of the said ‘Tappal Property 1’, is left to suffer from doublewhammy where its claim under the mortgage has not been reckoned inthe CIRP and then, the approved resolution plan proceeds to go aheadand extinguish the mortgage itself. It is argued that all these aspectshave not been examined by the Adjudicating Authority and hence, itsorder, in regard to this issue, cannot be approved. This bank had filed abelated appeal before NCLAT, being D. No. 21936 of 2020 and hassought transfer of the same in this Court by way of Transfer Petition -D. No. 20274 of 2020.

DEF

A200. In response to the aforesaid submissions of ICICI Bank, theresolution applicant has contended, with reference to the findings andconclusion of this Court in the case of Anuj Jain (supra), that the saidbank is not financial creditor of JIL and hence, has no locus in thematter and cannot claim payment of liquidation value of the debt owedby JAL. Without prejudice, it is also submitted that the resolution planBadequately deals with the treatment of the terms of securities, guarantees,indemnities, pledge, charge or encumbrances of any kind in relation toany debt and in this regard, the prescription in the resolution plan at page362 of the appeal filed by NBCC has been referred. That part of theresolution plan pertains to the terms/stipulations under the sub-heading,C‘Effects of Settlement of Admitted Financial debt due to FinancialCreditors’ which in turn, occurs under the heading ‘1.2. Proposal forFinancial Creditors’. The referred term provides for release anddischarge of all liabilities under such securities etc., other than continuationof guarantee benefits with the institutional financial creditors as laid downin the resolution plan.D

201. Apart from the issue raised by ICICI Bank in relation to thesaid mortgaged land of 100 acres, another issue raised by some of thehomebuyers is that adequate provisions have not been made in theresolution plan in relation to 758 acres of land, that was earlier coveredby the other six mortgage transactions but now stands released fromEencumbrance.

202. Having examined the matter in its totality, we find force inthe submissions so made by the mortgagee bank as also by thehomebuyers.F203. The resolution applicant has overtly relied upon the fact that

F203. The resolution applicant has overtly relied upon the fact thatthe objector bank was not accepted as financial creditor of JIL by thisCourt in Anuj Jain (supra) and has contended on this basis that theobjections so raised by this bank are required to be rejected. Thesesubmissions of the resolution applicant NBCC suffer from severalshortcomings. Even when the said bank has not been recognised as aGfinancial creditor because the mortgage in question was not relating toany financial debt of the corporate debtor JIL, its capacity as securedcreditor, for being the holder of security in the form of mortgage whichhas not been avoided and which remains existing, cannot be denied; andhas not been denied by this Court in Anuj Jain (supra).

203.1. This bank appears right in its contention that when thesecurity in question was not even taken up as part of the resolutionprocess, it could not have been extinguished on the ipse dixit of theresolution applicant. Unfortunately, Adjudicating Authority totally missedout the real issue before it in regard to this mortgage transaction because,in the order as originally passed on 03.03.2020, the Adjudicating Authorityassumed that all the mortgages in favour of the lenders of JAL (coveringthe entire 858 acres of JIL land) were annulled by this Court in AnujJain (supra) as avoidance transactions. Of course, in the corrigendumdated 17.03.2020, the Adjudicating Authority rectified the error of thefigure ‘858’, as occurring in paragraph 128 of the original order dated03.03.2020, and corrected it to ‘758’ but, did not examine theconsequences thereof. In other words, while making the correction on17.03.2020, the Adjudicating Authority failed to advert to the relevantquestion as to what would be the proper order as regards the remaining100 acres of land, if only 758 acres was released in terms of the judgmentin Anuj Jain (supra).203.2. The fact that the Adjudicating Authority dealt with thissegment rather cursorily is yet further seen from the part of the tablereproduced hereinabove where, while making reference to the mortgagesin favour of the lenders of JAL, an incorrect cross-reference was madeto Clause 1 of Schedule 3 of the resolution plan. This error was alsocorrected in the order dated 17.03.2020 and correct reference was madeto Clause 23 of Schedule 3 but, again, the implication of this correctiontotally escaped the attention of the Adjudicating Authority.

203.3. As noticed, in the said Clause 23, fleeting suggestion onthe part of the resolution applicant had been that ‘JAL lenders mortgagedland shall continue to be vested in the corporate debtor free fromany mortgage, charge and encumbrance’. The Adjudicating Authoritydealt with the said clause of the resolution plan in an equally cursorymanner by observing that the point was not clear but, if it was referringto the land mortgaged with the lenders of JAL, the issue had alreadybeen decided by the Supreme Court and need not be reiterated. In thisentire process of mistakes/errors (might be accidental) and correctionsas also cursory observations, the Adjudicating Authority totally missedout that one transaction relating to 100 acres of land, being ‘TappalProperty 1’, remained unaffected by the judgment in Anuj Jain (supra);and that the security creating over this land could not have been annulledin the manner suggested in the plan.

A204. It cannot be denied that the claim of ICICI Bank pertainingto the said mortgage over 100 acres of land was not reckoned in theCIRP of JIL and without any specific provision in that regard, theresolution applicant merely suggested by way of the Clause 23 ofSchedule 3 as if such mortgage shall stand annulled and the land shallvest in the corporate debtor free from any encumbrances. To say theBleast, the said Clause 23 does not appear to be standing in conformitywith any principal of law for discharge of security interest, particularlyof third party who is not included in the insolvency resolution processof corporate debtor. We would hasten to make it clear that the capacityof ICICI Bank in relation to the said mortgage of 100 acres of land ofC‘Tappal Property 1’ is entirely different than its status as the dissentingfinancial creditor of JIL, to the extent JIL directly owed financial debtto it. Those aspects pertaining to its capacity as dissenting financialcreditor, to the extent of its share of financial debt, have already beendiscussed in Point hereinbefore.D205. For what has been discussed above, neither the said Clause23 of Schedule 3 of the resolution plan relating to ‘reliefs and concessions’could be approved nor the order of the Adjudicating Authority in thisregard.

206. Similarly, the grievance voiced by some of the homebuyersEis also justified that adequate provisions are required for dealing with theother chunk of 758 acres of land (that now stands released from mortgagein consequence of the judgment of this Court in Anuj Jain). This isanother aspect which is required to be examined by the Committee ofCreditors for ensuring viability of the plan and maximisation of the valueof the assets of the corporate debtor JIL. We need not make muchFcomment in this regard but it cannot be gainsaid that availability of thischunk of land free from encumbrances has its own bearing on the entiregamut of insolvency resolution of JIL. The other aspects arising fromthe availability of this chunk of land shall be dealt with, when examiningthe question of final orders to be passed in these matters in Point NGinfra.

Point L

Other issues requiring clarification/directions

207. In its detailed submissions, NBCC has also raised an issuethat in Clause 7 Schedule 3 of the resolution plan, reduction of shareH

capital is being sought for the corporate debtor and ‘not for thecompanies yet incorporated’ but the Adjudicating Authority haserroneously made the observations in its order that such reduction wasnot part of this resolution. The resolution applicant NBCC has soughtclarification in this regard. The relevant clause in the resolution planreads as under: -

“7. The approval of this Plan by the Adjudicating Authority shallbe deemed to have waived all the procedural requirements in termsof Section 66, Section 42, Section 62(1), Section 71 of the CA,2013 and relevant rules made thereunder, in relation to reductionof share capital of the Corporate Debtor, issuance of shares byExpressway SPV, Land Bank SPV, conversion of AdmittedFinancial Debt due to the Institutional Financial Creditors to equity,subscription of debentures by the Corporate Debtor or transfer ofshares of the Land Bank SPV from the Corporate Debtor toInstitutional Financial Creditors.”

208. The observations by the Adjudicating Authority as regardsthis clause are that since reduction of the share capital of corporatedebtor is not part of the resolution plan, the Adjudicating Authority‘cannot waive the procedure for reduction of share capital in relationto the companies not yet incorporated’.

209. When the resolution plan with all its reliefs and concessionswas approved by CoC and the plan was otherwise being approved bythe Adjudicating Authority (albeit with modifications), the aforesaidobservations in regard to Clause 7 of ‘reliefs and concessions’ cannotbe 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 itsapproval by CoC, we find no reason as to why the same may not beapproved. Hence, the impugned order of the Adjudicating Authority dated03.03.2020 shall be read as modified and in approval of the said Clause7 of ‘reliefs and concessions’.

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

Afor the resolution applicant to take recourse to the appropriate proceedingsin accordance with law, whenever occasion so arise.

Point M

Modified mechanism for implementation by the Appellate Authority

B211. We have formulated this point for determination only in viewof the fact that the interim order dated 22.04.2020, as passed by NCLATwhile dealing with the appeal filed by NBCC against the said order dated03.03.2020, has been challenged by the associations and individualhomebuyers before this Court. Although in view of what has beendiscussed and held hereinbefore, all the issues related with the resolutionCplan and the impugned order of NCLT dated 03.03.2020 stand determinedcomprehensively and the related appeals before NCLAT, alreadywithdrawn to this Court, shall also come to an end. Therefore, not muchof discussion is required on this point but, few comments in regard tothe proposition adopted by the Appellate Authority appear necessary.D212. It appears that the proposition, of providing for InterimMonitoring Committee comprising of the representatives of threeinstitutional financial creditors and the resolution applicant as also theresolution professional, was picked up by the Appellate Authority withreference to the stipulation in Point No. 2(a) of Part of the resolutionEplan, where it was provided under the heading ‘Management Team’and sub-heading ‘Appointment of Monitoring Agency’ that on andfrom the approval date and until the transfer date, the corporate debtorwill be managed by monitoring agency or any other person appointedby the resolution applicant in consultation with Steering Committeecomprising of three major institutional financial creditors.F

212.1. In our view, even if the resolution plan carried such amanagement framework, the Appellate Authority, while dealing with theappeal against approval of the resolution plan, could not have providedfor such mechanism which is not envisaged by the Code.

213. The Code lays down detailed procedure for corporateGinsolvency resolution process and such proposition, for constitution ofany Interim Monitoring Committee during the pendency of appeal beforethe Appellate Authority (NCLAT) is neither envisaged by law nor appearsjustified. It is apparent on bare perusal of sub-section (3) of Section 61of the Code that any challenge to the order approving resolution planH

under Section 31 could be maintained only on the grounds specifiedtherein. Obviously, while dealing with such appeals, the Appellate Authorityis required to remain within the confines of the boundaries delineated bythe Code rather than seeking to provide for mechanism, forimplementation of the plan.

214. Moreover, looking to the peculiar features of this resolutionprocess, which has its own complications, constitution of such aCommittee, consisting only of the resolution professional, the resolutionapplicant and the institutional financial creditors while leaving aside thebiggest chunk of stakeholders i.e., the homebuyers (having more than57% of the voting share in the CoC), would have caused more difficultiesin implementation of the resolution plan rather than serving any purpose.

215. While entertaining the captioned appeals and directing transferof the related cases pending before NCLAT to this Court by our orderdated 06.08.2020, we had stayed the operation of the impugned orderdated 22.04.2020 while allowing the IRP to continue with the managementof the affairs of the corporate debtor. While concluding on these matters,it appears appropriate and necessary that the said order dated 22.04.2020by NCLAT be disapproved and set aside.

Point N

Summation of findings; final order and conclusion

216. For what has been discussed and held on the relevant pointsfor determination, our findings and conclusions are as follows:

A. The Adjudicating Authority has limited jurisdiction in the matterof approval of resolution plan, which is well-defined andcircumscribed by Sections 30(2) and 31 of the Code. In theadjudicatory process concerning resolution plan under IBC, thereis no scope for interference with the commercial aspects of thedecision of the CoC; and there is no scope for substituting anycommercial term of the resolution plan approved by Committeeof Creditors. If, within its limited jurisdiction, the AdjudicatingAuthority finds any shortcoming in the resolution plan vis-à-visthe specified parameters, it would only send the resolution planback to the Committee of Creditors, for re-submission aftersatisfying the parameters delineated by the Code and expositedby this Court.

B. The process of simultaneous voting over two plans for electingone of them cannot be faulted in the present case; and approvalof the resolution plan of NBCC is not vitiated because ofsimultaneous consideration and voting over two resolution plansby the Committee of Creditors.

C. The stipulations in the resolution plan, as regards dealings withYEIDA and with the terms of Concession Agreement, have rightlynot been approved by the Adjudicating Authority but, for thestipulations which have not been approved, the only correct coursefor the Adjudicating Authority was to send the plan back to theCommittee of Creditors for reconsideration.

D. The Adjudicating Authority has not erred in disapproving theproposed treatment of dissenting financial creditor like ICICI BankLimited in the resolution plan; but has erred in modifying the relatedterms of the resolution plan and in not sending the matter back tothe Committee of Creditors for reconsideration.

E. The Adjudicating Authority has erred in issuing directions tothe resolution applicant to make provision to clear the dues ofunclaimed fixed deposit holders. Paragraph 125 of the impugnedorder dated 03.03.2020 is set aside.

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

G. In the overall scheme of the resolution plan, the stipulation inClause 21 of Schedule 3 thereof cannot be said to be unfair; andthe observations in paragraphs 132 and 133 of the order dated03.03.2020 justly take care of the right of any aggrieved party(agreement holder) to seek remedy in accordance with law andensures viability of the resolution plan.

H. It cannot be said that the resolution plan does not adequatelydeal with the interests of minority shareholders. The grievancesas suggested by the minority shareholders cannot be recognisedas legal grievances. Their objections stand rejected.

I. The homebuyers as class having assented to the resolutionplan of NBCC, any individual homebuyer or any association ofhomebuyers cannot maintain challenge to the resolution planand cannot be treated as dissenting financial creditor or anaggrieved person; the question of violation of the provisions of theRERA does not arise; the resolution plan in question is not violativeof the mandatory requirements of the CIRP Regulations; and whenthe resolution plan comprehensively deals with all the assets andliabilities of the corporate debtor, no housing project of the corporatedebtor could be segregated merely for the reason that same hasbeen completed or is nearing completion.J. (i) The amount of INR 750 crores (which was deposited byJAL pursuant to the orders passed by this Court in the case ofChitra Sharma) and accrued interest thereupon, is the propertyof JAL and stipulation in the resolution plan concerning its usageby JIL or the resolution applicant cannot be approved. The part ofthe order of NCLT placing this amount in the asset pool of JIL isset aside.

(ii) The question as to whether any amount is receivable byJIL and/or its homebuyers from JAL, against advance towardsconstruction and with reference to the admitted liability to thetune of INR 195 crores as on 31.03.2020, shall be determined byNCLT after reconciliation of accounts in terms of the directionscontained in paragraphs 189 to 191.1 of this judgment. The amount,if found receivable by JIL, be made over to JIL and the remainingamount together with accrued interest be refunded to JAL in anappropriate account. It is made clear that the present matter beingrelated to CIRP of JIL, no other orders are passed in relation tothe amount that would be refunded to JAL because treatment ofthe said amount in the asset pool of JAL shall remain subject tosuch orders as may be passed by the competent authority dealingwith the affairs of JAL.

K. (i) Clause 23 of Schedule 3 of the resolution plan, providing forextinguishment of security interest of the lenders of JAL couldnot have been approved by the Adjudicating Authority, particularlyin relation to the security interest that has not been discharged.This part of the order dated 03.03.2020 is set aside.

(ii) Adequate provision is required to be made in the resolutionplan as regards utilisation of the land bank of 758 acres, that hasbecome available to JIL free from encumbrance, in terms of thejudgment dated 26.02.2020 of this Court in the case of Anuj Jain(supra).

L. (i) The impugned order dated 03.03.2020 shall be read asmodified in relation to Clause 7 of Schedule 3 of the resolutionplan; and the said clause shall stand approved.

(ii) As regards possession/control over the project sites/lands of JIL, it is left open for the resolution applicant to takeCrecourse to the appropriate proceedings in accordance with law,whenever occasion so arise.

M. The Appellate Authority was not justified in providing for anInterim Monitoring Committee for implementation of the resolutionplan in question during the pendency of appeals. The impugnedDorder dated 22.04.2020 passed by NCLAT is set aside.

217. The net result of the discussion and findings hitherto is thatsome of the terms and stipulations of the resolution plan of NBCC, whichwas voted for approval by 97.36% of the voting share of the Committeeof Creditors, do not meet with approval. Although, barring such termsEand stipulations, all other terms and propositions of the resolution planstand approved. To be specific, the terms and stipulations in the resolutionplan which do not meet with approval are those concerning: (a) the landproviding agency [as held in Point (supra)]; (b) the dissenting financialcreditor [as held in Point (supra)]; (c) the undischarged security interestof the lender of JAL [as held in Point K (i) (supra)].F

217.1. Apart from the above, we have also disapproved thedecision of the Adjudicating Authority in relation to the said amount ofINR 750 crores with accrued interest and have held that this amount isthe property of JAL and the stipulations in the resolution plan concerningits usage by JIL or the resolution applicant cannot be approved [as heldGin Point J (i) (supra)]. However, the final treatment of the said amountof INR 750 crores with accrued interest shall be determined by NCLTafter the reconciliation of accounts between JAL and JIL and in termsof the directions contained in this judgment.

217.2.The added feature of the matter is that adequate provisionHis required to be made by the resolution applicant for utilisation of the

land bank of 758 acres on which, security interest of the lenders of JALstands discharged in terms of the judgment of this Court in Anuj Jain(supra).

217.3.The matters aforesaid, one way or the other, relate to thecommercial terms of the resolution plan and carry their own financialimplications.

218. For what we have held hereinabove, when severalshortcomings are found in the resolution plan approved by the Committeeof Creditors vis-à-vis the specified parameters, the plan cannot beapproved and the matter is required to be sent back to the Committee ofCreditors. But the course to be adopted in the present matter carries itsown share of complications.

219. We have anxiously pondered over all the peculiarities andcomplications involved in this matter where twice over in the past, thisCourt had to invoke its plenary powers under Article 142 of theConstitution of India, so that the insolvency resolution process concerningJIL could be taken to its logical fruition but within the discipline of IBC.Having regard to the circumstances, this Court had provided windowsfor completion of CIRP while essentially discounting on the time spent inthe course of litigations.

220. As noticed, in the judgment dated 09.08.2018 in ChitraSharma (supra), this Court revived the CIRP after taking note of thepeculiarities of the case and later amendment to IBC whereby, the doubtsabout the status of homebuyers were removed and they were dulyaccorded the recognition as financial creditors. Then, in the judgmentdated 06.11.2019 in Jaiprakash Associates Ltd. (supra), this Courtprovided another period of 90 days for completion of the CIRP from thedate of judgment, after observing that delay in completion of CIRP wasattributable to the process of law and neither the homebuyers nor anyother financial creditor was to be blamed for pendency of the proceedings.This Court also observed that extraordinary situation had arisen becauseof constant experimentation at different levels due to lack of clarity onthe matters crucial to the decision making process of CoC and besides,there had been further legislative changes whereby, the scope ofresolution plan was expanded. This Court also took note of the fact thatthere was unanimity amongst all the parties appearing before the Courtthat liquidation of JIL must be eschewed and an attempt be made tosalvage the situation by finding out some viable arrangement which could

Asubserve the interests of all concerned. The Court further took intoaccount the third proviso to Section 12(3) of the Code whereby, anotherperiod of 90 days was provided in relation to the pending insolvencyresolution process. All these factors led this Court to issue directionsunder Article 142 of the Constitution of India for the second time in thismatter, to do substantial and complete justice to the parties and in theBinterest of all the stakeholders.

221. Taking up the present position, it appears that the resolutionapplicant, as also large number of homebuyers of JIL having substantialvoting share in CoC, carried misplaced notion that the said amount ofINR 750 crores and accrued interest has become an asset of JIL. At theCsame time, it appears that there had been lack of clarity as regards thetreatment of contingent liability of the additional amount of compensation.The lack of clarity percolated in the decision of the Adjudicating Authoritytoo, where it was assumed by the Adjudicating Authority that some ofthe questionable terms/stipulations of the resolution plan could be modified/Dmodulated by it.221.1. The consequence and impact of the judgment of this Courtin Anuj Jain (supra) dated 26.02.2020 was also not properly taken incomprehension by the Adjudicating Authority and, as noticed, it wasassumed by the Adjudicating Authority in its order dated 03.03.2020 thatEthe entire ‘858’ acres of land stood discharged from the burden of security.Although the so-called correction of errors was carried out by theAdjudicating Authority on 17.03.2020 and the figure was corrected to‘758’ acres but the consequences of such material correction werenot examined.F221.2. Nevertheless, it gets reiterated that encumbrance over 758acres of land (which is said to be carrying valuation of over INR 5000crores) is removed; and availability of the said land parcel has substantialimpact on the position of assets and liquidity of the corporate debtor JIL.

222. For all the features we have noticed hereinabove, it is atGonce clear that the entire substratum of the corporate insolvencyresolution concerning JIL has undergone sea of change. The addedfeatures in the continuing processes had been that JAL asserts to havecarried out several works to reduce its liability towards JIL and on theother hand, IRP has asserted to have carried out further constructionworks and having made Offers of Possession to several homebuyers.H

223. Taking all the facts and circumstances into account and inkeeping with the spirit and purport of the orders passed in the past, weare inclined to again exercise the powers under Article 142 of theConstitution of India and to enlarge the time for completion of CIRPconcerning JIL while extending opportunity to the said resolutionapplicants Suraksha Realty and NBCC to submit modified/fresh resolutionplans, which are compliant with the requirements of the Code and theCIRP Regulations and are in accord with the observations and findingsin this judgment.

223.1. We are conscious of the requirements of the discipline ofIBC and would hasten to observe that the course which is being adoptedis in the complex and peculiar features of this case but, this repeatexercise concerning the CIRP of JIL cannot be an unending processand needs to be taken to its logical conclusion. As regards the timeframe, we are inclined to proceed on the theme and spirit of the judgmentdated 06.11.2019 wherein, first 45 days were allowed for invitation ofresolution plan and consideration by CoC. The later part of the extendedtime was provided for removing any difficulty and for passing appropriateorders by the Adjudicating Authority.

223.2. Having regard to the circumstances, we deem it just andproper to provide further time of 45 days from the date of this judgmentfor submission of the modified/fresh resolution plans by the resolutionapplicants, for their consideration by CoC and for submission of reportby IRP to the Adjudicating Authority. This extended time includes thereconciliation of accounts of JIL and JAL referred to in Point J. Theprocess of reconciliation of accounts may go on alongside the processingof the resolution plans.

224. We also deem it appropriate to clarify that the processing ofthe modified/fresh resolution plans, as permitted and envisaged by thisjudgment, is required to be completed within the extended time and forthat matter, the other aspects like reconciliation of accounts betweenJAL and JIL or resolution of the issues related with the financial creditorof the subsidiary of the corporate debtor shall be the matters to be dealtwith separately and decision on the resolution plan by the Committee ofCreditors need not wait the resolution of those issues.[92]

92 In the passing, we may also observe that intrinsically interwoven transactions betweenJAL and JIL cover another aspect of arrangements whereby certain land parcels weretransferred from JIL to JAL. The resolution plan in question, in clause 19 of Schedule

A225. Accordingly, while once again exercising our powers underArticle 142 of the Constitution of India to do substantial and completejustice to the parties and in the interest of all the stakeholders of JIL, weconclude on these matters with the following order:

225.1. The matter regarding approval of the resolution plan standsBremitted to the Committee of Creditors of JIL and the time forcompletion of the process relating to CIRP of JIL is extended byanother period of 45 days from the date of this judgment.

225.2. We direct the IRP to complete the CIRP within the extendedtime of 45 days from today. For this purpose, it will be open to theCIRP to invite modified/fresh resolution plans only from SurakshaRealty and NBCC[93] respectively, giving them time to submit thesame within 2 weeks from the date of this judgment.

225.3. It is made clear that the IRP shall not entertain anyexpression of interest by any other person nor shall be required toDissue any new information memorandum. The said resolutionapplicants shall be expected to proceed on the basis of theinformation memorandum already issued by IRP and shall alsotake into account the facts noticed and findings recorded in thisjudgment.

E225.4. After receiving the resolution plans as aforementioned, theIRP shall take all further steps in the manner that the processesof voting by the Committee of Creditors and his submission ofreport to the Adjudicating Authority (NCLT) are accomplished inall respects within the extended period of 45 days from the dateof this judgment. The Adjudicating Authority shall take finalFdecision in terms of Section 31 of the Code expeditiously uponsubmission of report by the IRP.

3, provided for termination of such arrangements where title and ownership was lyingwith the corporate debtor JIL. The Adjudicating Authority approved the said propositionwhile observing that the resolution applicant would be at liberty to proceed in accordancewith law. The erstwhile director of the corporate debtor has raised questions over thisGarrangement in his written submissions while submitting that such terminations maycreate unprecedented crises and would cause prejudice to JAL’s homebuyers. We havenot commented on this aspect in the judgment essentially for the reason that the samedid not form the core of the principal issues involved in this matter. However, when thematter is to be reconsidered, all the relevant aspects are left open for consideration ofthe Committee of Creditors.93 Only these resolution applicants were permitted to submit the revised plans in theHjudgment dated 06.11.2019.

225.5. These directions, particularly for enlargement of time tocomplete the process of CIRP, are being issued in exceptionalcircumstances of the present case and shall not be treated as aprecedent.

225.6. As noticed in paragraphs 4.5 and 38.3 hereinabove, theproceedings relating to CIRP of JIL were initiated by the AllahabadBench of National Company Law Tribunal but, later on, the same

were transferred to its Principal Bench at New Delhi. Therefore,the proceedings contemplated by this judgment shall be taken upby the Principal Bench of the National Company Law Tribunal atNew Delhi.

226. All the appeals, transferred cases, transfer petitions andinterlocutory applications in this batch stand disposed of.

227. copy of this order be forwarded to the NCLT, New Delhiand IRP through email forthwith for compliance.

Acknowledgement

228. While closing, we owe duty to put on record our thanksand compliments to the learned counsel for the respective parties, theirassociates and their research assistants who all, despite challengingcircumstances due to the pandemic and virtual hearing, have renderedinvaluable assistance to the Court in dealing with vast variety of questionsinvolved in these matters, by way of neatly articulated oral submissionsas also meticulously drawn written submissions.

Table of Contents

902SUPREME COURT REPORTS[2021] 12 S.C.R.ABCDEFG

HBibhuti Bhushan Bose

Matters disposed of.