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Jaypee Kensington Boulevard Apartments Welfare Association & Ors. v. NBCC (India) Ltd. & Ors.

Civil Appeal · 2021 INSC 206Decided 24 Mar 2021
Civil Appeal No. 3395 of 2020
Justice A.M. Khanwilkar · Justice Dinesh Maheshwari · Justice Sanjiv Khanna

Background

This batch of appeals concerned the stalled insolvency resolution of Jaypee Infratech Limited (JIL), a real-estate developer whose unfinished housing projects affected a huge number of homebuyers. After years of litigation (including two earlier rounds before the Supreme Court), the Committee of Creditors approved a resolution plan by NBCC (India) Ltd. with 97.36% voting share, but the National Company Law Tribunal approved it only with several modifications, and the NCLAT further imposed an interim monitoring arrangement, both of which were challenged by homebuyers' associations, dissenting creditors, the land-providing authority (YEIDA), the corporate debtor's holding company (Jaiprakash Associates Ltd.), minority shareholders and others, each raising separate objections to how the plan treated their interests.

Decision Breakdown

The Supreme Court went through each disputed issue (treatment of the land-providing agency YEIDA, the dissenting financial creditor ICICI Bank, fixed-deposit holders, minority shareholders, homebuyers as a class, and an INR 750 crore deposit made earlier by JAL) and found that several specific terms of the NBCC plan could not be approved as modified by the NCLT, including how the plan dealt with YEIDA, the dissenting creditor's dues, unclaimed fixed deposits, and the INR 750 crore amount (which it held remains JAL's property, not an asset of JIL). It held that homebuyers who were part of the majority could not challenge the plan individually, and rejected the minority shareholders' objections. Rather than scrapping the process, invoking its special constitutional power under Article 142 for a third time, the Court remitted the resolution plan to the Committee of Creditors, extended the CIRP timeline by 45 days, and allowed only the two existing applicants (NBCC and Suraksha Realty) to submit fresh or modified plans addressing the Court's findings, directing NCLT to then decide the matter afresh and expeditiously.

Lesson Learnt

In large insolvency resolutions affecting ordinary people such as homebuyers, courts will scrutinize whether a resolution plan properly balances the competing rights of all stakeholder classes, and rather than simply approving or rejecting a plan wholesale, may send flawed portions back for reconsideration while using extraordinary constitutional powers to prevent years of process from collapsing into liquidation.

Official source (sci.gov.in)View Judgment (PDF)

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