NCLAT sets aside order directing return of land to Jaypee Infratech

NEW DELHI: The National Company Law Appellate Tribunal (NCLAT) has given control of 759 acres of mortgaged land back to the lenders of Jaiprakash Associates (JAL), whose subsidiary Jaypee Infratech had mortgaged the land to secure loans of over Rs 25,000 crore for JAL. The NCLAT set aside an order of the Allahabad bench of the National Company Law Tribunal (NCLT), which had earlier ruled that the transactions to use the aforementioned land as security for loans from a number of lenders were fraudulent, preferential and undervalued.

The NCLT had also noted that the land was mortgaged against the wishes of the joint lender’s forum of Jaypee Infratech, which is undergoing insolvency proceedings.

Jaypee Infratech owes lenders over Rs 9,800 crore and has failed to deliver around 23,000 flats to homebuyers. “We have seen that none of the transactions were ‘preferential transaction’ or ‘undervalued transaction’,” a two-member NCLAT bench led by justice SJ Mukhopadhaya said, allowing appeals by a number of lenders including Axis Trustee Services, State Bank of India, ICICI Bank and Standard Chartered Bank.


The NCLAT bench said the transactions were made in the ordinary course of business and, in the absence of any evidence to show that they were made to defraud the creditors of Jaypee Infratech, the transactions would not come under the meaning of fraudulent or wrongful trading. The bench also clarified that it was not making any observations against the promoters or directors of JAL whose lenders have moved the NCLT to begin insolvency proceedings against it.