[Jaypee Infra] NCLT has limited jurisdiction in approval of resolution plan under IBC, cannot interfere with commercial aspects: Supreme Court

The National Company Law Tribunal (NCLT) has limited jurisdiction in the matter of approval of a resolution plan that is well-defined and circumscribed by Sections 30(2) and 31 of the Insolvency and Bankruptcy Code (IBC), the Supreme Court ruled on Wednesday [Jaypee Kensington Boulevard Apartments Welfare Association v. NBCC (India) Limited]. .The judgment was delivered by a Bench of Justices AM Khanwilkar, Dinesh Maheshwari and Sanjiv Khanna in a batch of appeals and petitions in the case relating to the insolvency of Jaypee Infratech..In the adjudicatory process concerning a resolution plan under the IBC, there is no scope for interference with the commercial aspects of the decision of the Committee of Creditors (CoC) including substituting any commercial term of the resolution plan approved by CoC, the Court said..“If, within its limited jurisdiction, the Adjudicating Authority (NCLT) finds any shortcoming in the resolution plan vis-à-vis the specified parameters, it would only send the resolution plan back to the Committee of Creditors, for re-submission after satisfying the parameters delineated by the Code and exposited by this Court,” the judgment said..It, therefore, set aside the order of the NCLT Principal Bench which had made modifications to the resolution plan approved by the CoC..The Court further directed that the Interim Resolution Profession (IRP) should complete the insolvency proceedings of Jaypee within 45 days.“The matter regarding approval of the resolution plan stands remitted to the Committee of Creditors of JIL and the time for completion of the process relating to CIRP of JIL is extended by another period of 45 days from the date of this judgment,” the Court said..For this purpose, the Court clarified, it will be open to the IRP to invite modified/fresh resolution plans only from Suraksha Realty and NBCC, respectively, giving them time to submit the same within 2 weeks from the date of the judgment..It was made clear that the IRP shall not entertain any expression of interest by any other person nor shall be required to issue any new information memorandum, the Court added..By way of background, the corporate insolvency resolution process (CIRP) in relation to the corporate debtor Jaypee was initiated on August 9, 2017 when the NCLT Allahabad Bench admitted the petition filed by one of the financial creditors, IDBI Bank Limited, under Section 7 of IBC.The resolution plans submitted by two applicants, Suraksha Realty and NBCC were put to vote and finally, the resolution plan submitted by NBCC (India) Limited was approved by the CoC on December 17, 2019, by a vast majority of over 97 per cent of voting share of the financial creditors..Thereafter, on December 19, 2019, the IRP moved an application before the NCLT Allahabad Bench, for submission and approval of the resolution plan in terms of Section 30(6) read with Sections 31 and 60(5) of the Code and Regulation 39(4) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016..Later on, the proceedings pending before the Allahabad Bench of the NCLT were transferred to its Principal Bench at New Delhi, before which several objections/suggestions/propositions were submitted by different stakeholders, going for or against the resolution plan. By its order dated March 3, 2020, the NCLT approved the resolution plan with some modifications and certain directions. It accepted some objections like those of the dissenting financial creditor bank and the land providing agency while rejecting some others, including those of the holding company of JIL. The NCLT also left a few propositions open for adjudication before an appropriate forum.The resolution applicant NBCC preferred an appeal against the NCLT order before the National Company Law Appellate Tribunal, New Delhi (NCLAT). The NCLAT while issuing notice to the unrepresented parties, passed an interim order dated April 22, 2020 that the approved resolution plan may be implemented subject to the outcome of appeal. But at the same time, it also provided that the IRP may constitute an ‘Interim Monitoring Committee’ comprising the successful resolution applicant (NBCC) and three major institutional financial creditors, who were the members of the CoC.Various appeals were filed against the interim order before the Supreme Court..The Court in its judgment held, inter alia, the following:- The NCLT did not err in disapproving the proposed treatment of dissenting financial creditor like ICICI Bank Limited in the resolution plan;- The NCLT erred in modifying the related terms of the resolution plan and in not sending the matter back to the Committee of Creditors for reconsideration.- The NCLT erred in issuing directions to the resolution applicant to make provision to clear the dues of unclaimed fixed deposit holders..- It cannot be said that the resolution plan did not adequately deal with the interests of minority shareholders. The grievances as suggested by the minority shareholders cannot be recognised as legal grievances. Their objections stand rejected.- The homebuyers as a class having assented to the resolution plan of NBCC, any individual homebuyer or any association of homebuyers cannot maintain a challenge to the resolution plan and cannot be treated as a dissenting financial creditor or an aggrieved person; the question of violation of the provisions of the RERA does not arise; the resolution plan in question is not violative of the mandatory requirements of the CIRP Regulations; and when the resolution plan comprehensively deals with all the assets and liabilities of the corporate debtor, no housing project of the corporate debtor could be segregated merely for the reason that same has been completed or is nearing completion.- The amount of INR 750 crores which was deposited by Jaiprakash Associates Limited (JAL, the holding company of Jaypee) pursuant to the orders passed by the Supreme Court in the case of Chitra Sharma and accrued interest thereupon, is the property of JAL and stipulation in the resolution plan concerning its usage by JIL or the resolution applicant cannot be approved. The part of the order of NCLT placing this amount in the asset pool of JIL is set aside.- The matter regarding approval of the resolution plan stands remitted to the Committee of Creditors of JIL and the time for completion of the process relating to CIRP of JIL is extended by another period of 45 days from the date of this judgment.[Read Judgment]