Tower cranes operate while laborers work on residential buildings under construction at the Jaypee Wish Town Project in Noida. (Photographer: Prashanth Vishwanathan/Bloomberg)

NCLAT Overturns Jaypee Infratech Creditors’ Voting Process, Fresh Voting On May 31

The National Company Law Appellate Tribunal on Friday decided to junk the voting process that the committee of creditors for Jaypee Infratech Ltd. had started on Thursday, according to Bloomberg. The appellate tribunal said that a fresh voting process must begin from May 31 to decide whether a bid submitted by state-run NBCC Ltd. will be approved by the committee.

The NCLAT has also ordered that the creditors to Jaypee Infratech may not reject NBCC’s proposal until the appellate tribunal gives its nod, Bloomberg reported. This is a positive for homebuyers, who are also on the committee of creditors and couldn't get the lenders to agree with them on clearing a resolution proposal sent by Suraksha Asset Reconstruction Company Ltd. earlier.

The committee had started voting on NBCC’s proposal on Thursday, which was expected to close on Sunday. The bid was started after the Allahabad bench of the National Company Law Tribunal had ordered that the 270-day resolution period for Jaypee Infratech’s insolvency proceedings would be extended till May 21, from May 6 earlier.

The Jaypee Infratech insolvency case has seen considerable delays owing to courts taking up the rights of homebuyers who had bought residential properties at Jaypee Wishtown’s Noida project. While around 25,000 homebuyers have paid for their homes and continue to service their home loans for nearly a decade, they are yet to get possession of their homes as Jaypee Group was not able to complete construction.

Jaypee Infratech was one of the 12 large corporate accounts shortlisted by the Reserve Bank of India in June 2017 for immediate insolvency proceedings. Lenders led by IDBI Bank Ltd. had then admitted the case at the Allahabad bench of the NCLT in August 2017. In October 2018, the Supreme Court had restarted the insolvency process, after the first 270-day deadline ended and no resolution proposal was approved. The apex court also added representatives of homebuyers on the committee, to ensure that they have a say in the matter.

Homebuyers control over 58 percent of the votes in the Jaypee Infratech committee of creditors, with lenders and fixed deposit holders controlling the rest. A committee of creditors requires a minimum of 66 percent of votes to approve a proposal. This means that without the support of the lenders, homebuyers cannot get a resolution plan approved.