IDBI Bank Limited V/s. Jaypee Infratech Limited Insolvency Case in NCLT

The present application was filed by IDBI Bank (Financial Creditor – Applicant) under Section 7 of the Insolvency and Bankruptcy Code, 2016 (“Code”) before the NCLT, Allahabad Bench, Allahabad (“Adjudicating Authority”) against Jaypee Infratech Limited (Corporate Debtor).

Brief facts

  • Applicant is a banking company and was incorporated in the year 2004, while, Corporate Debtor was incorporated in the year 2007.
  • The applicant provided various financial facilities to the Corporate Debtor. The former sanctioned four (4) loans aggregating to Rs. 4,650 crores and disbursed the entire said amount.
  • Thereafter, the applicant sold the debt amount of Rs. 900 crores to India Infrastructure Finance Company Limited and all rights and obligations in respect of the said amount were assigned to India Infrastructure Finance Company Limited. Thus, the total debt to Corporate Debtor came to be Rs. 3,750 crores /-.
  • In order to obtain above financial assistance, Corporate Debtor executed Deed of Hypothecation, personal guarantee, Indentures of mortgage and Pledge.
  • In support of the existing financial debts, applicant annexed copy of audited Balance Sheet, Balance Confirmation acknowledging the debt, RBI directives, CIBIL Report etc.

Submissions of Corporate Debtor 

  • Initially, Corporate Debtor appeared before the Adjudicating Authority, had filed objections. However, during the hearing on 04.08.2017, Corporate Debtor, in presence of its officer, withdrew the said objections and conceded that application may be admitted.
  • The Adjudicating Authority suggested the Corporate Debtor to file a formal memo. Pursuant thereto, the Chairman-cum-Managing Director of Corporate Debtor Shri Manoj Gaur, filed a memo. The memo stated that the Corporate Debtor desired early approval of the resolution plan which was already under consideration of its lenders and the no objection was given considering the interest of all stakeholders of Corporate Debtor including “home buyers and depositors”.
  • Decision of Adjudicating Authority and reasons thereof The Adjudicating Authority observed the provisions of Section 7 of the Code. It was also observed that the application filed by applicant was complete in all respect and all documents had been produced. Further, the total amount of default was also more than the prescribed amount of default.
  • Considering the above, the Adjudicating Authority noted that in terms of judgment in Innoventive Industries vs. ICICI Bank (passed by NCLAT), it is to satisfy itself that default has occurred. The Adjudicating Authority observed that perusal of the documents submitted, memo filed and the submissions made, it was satisfied that default had occurred.
  • Accordingly, the Adjudicating Authority admitted the application, ordered moratorium and appointed an Interim Resolution Professional.

Subsequent developments

Soon after the judgment was passed by Adjudicating Authority admitting the application, confusion and anxiety arose among the homebuyers with regard to:

  • Whether home buyers are “creditors”?
  • Whether they are “financial creditor” or “operational creditor”?
  • Which form is to be used for submission of claims etc.

 

In the meanwhile, Insolvency and Bankruptcy Board of India (“Board”) came out with amendment to IBBI (Corporate Insolvency Resolution Process) Regulations, 2016 wherein regulation 9A was inserted which provided for filing of claims by ‘other creditors’ who are neither Financial Creditors nor Operational Creditors along with bringing out Form ‘F’ for filing of such claims by ‘other creditors’. 

It has been reported that claims can be filed before the IRP till 24th August, 2017, including the home-buyers

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