Holding

The Adjudicating Authority has limited jurisdiction under Sections 30(2) and 31 of the IBC and cannot interfere with the commercial wisdom of the Committee of Creditors; if a resolution plan fails to meet specified parameters, the Authority may only send it back to the Committee for reconsideration.

Summary

The Supreme Court considered appeals concerning the corporate insolvency resolution process (CIRP) of Jaypee Infratech Limited (JIL) under the Insolvency and Bankruptcy Code, 2016. The resolution plan submitted by NBCC (India) Ltd. was approved by the Committee of Creditors (CoC) with a 97.36% voting share, but various stakeholders challenged it. The Court examined the limited jurisdiction of the Adjudicating Authority (NCLT) in approving resolution plans, holding that it cannot interfere with commercial decisions of the CoC or modify commercial terms. The Court found that the NCLT erred in modifying the plan regarding dissenting financial creditors, fixed deposit holders, and the treatment of INR 750 crores deposited by JAL. It also held that homebuyers as a class having assented to the plan cannot individually challenge it. The Court remitted the matter back to the CoC for reconsideration, extending the CIRP timeline by 45 days and allowing NBCC and Suraksha Realty to submit modified or fresh resolution plans.

Issues considered

What is the extent of jurisdiction of the Adjudicating Authority in dealing with a resolution plan approved by the Committee of Creditors?
Whether simultaneous voting over two resolution plans by the Committee of Creditors vitiates the approval?
Whether the Adjudicating Authority erred in not approving stipulations regarding contingent liability for additional land acquisition compensation and in modifying those stipulations?
Whether the Adjudicating Authority erred in not approving the treatment of dissenting financial creditors and in modifying the plan to direct cash payment?
Whether the Adjudicating Authority erred in directing the resolution applicant to make provision for unclaimed fixed deposit holders?
Whether the resolution plan unauthorisedly deals with assets of Jaypee Healthcare Limited?
Whether the stipulation for cancellation of certain agreements is unfair?
Whether minority shareholders are entitled to challenge the resolution plan?
Whether individual homebuyers or associations can challenge the resolution plan after the class assented?
Whether the resolution plan violates the Real Estate (Regulation and Development) Act, 2016?
Whether the amount of INR 750 crores deposited by JAL is its property and cannot be used by JIL?
Whether Clause 23 of Schedule 3 extinguishing security interest of JAL's lenders is valid?
Whether adequate provision is required for utilisation of 758 acres of land freed from encumbrance?
Whether the Appellate Authority was justified in constituting an Interim Monitoring Committee?

Legislation cited

Companies Act, 2013s. 230
Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016s. 36A, s. 36B, s. 37, s. 38, s. 39, s. 39B
Insolvency and Bankruptcy Code, 2016s. 21, s. 238, s. 25A, s. 30(2), s. 30(4), s. 31, s. 32A, s. 53, s. 5(8), s. 61
Real Estate (Regulation and Development) Act, 2016s. 18, s. 19
Uttar Pradesh Industrial Area Development Act, 1976s. 6-A

Subjects

Insolvency and Bankruptcy CodeCorporate Insolvency Resolution ProcessResolution PlanCommittee of CreditorsCommercial WisdomJudicial ReviewDissenting Financial CreditorsHomebuyersReal Estate (Regulation and Development) ActArticle 142 of the ConstitutionPreferential TransactionsSecurity InterestLand Acquisition CompensationFixed Deposit HoldersMinority ShareholdersInterim Monitoring Committee

Judgment

[2021] 12 S.C.R. 603 603

JAYPEE KENSINGTON BOULEVARD APARTMENTS A
WELFARE ASSOCIATION & ORS.
v.
NBCC (INDIA) LTD. & ORS.
(Civil Appeal No. 3395 of 2020) B
MARCH 24, 2021
[A. M. KHANWILKAR, DINESH MAHESHWARI AND
SANJIV KHANNA, JJ.]
Insolvency and Bankruptcy Code, 2016 – ss. 30(2) and 31 –
C
Contours of the jurisdiction of Adjudicating Authority in dealing
with a resolution plan – Held: The Adjudicating Authority has limited
jurisdiction in the matter of approval of a resolution plan, which is
well-defined and circumscribed by ss.30(2) and 31 of the Code – In
the adjudicatory process concerning a resolution plan under IBC,
there is no scope for interference with the commercial aspects of D
the decision of the Committee of Creditors (CoC); and there is no
scope for substituting any commercial term of the resolution plan
approved by Committee of Creditors – If, within its limited
jurisdiction, the Adjudicating Authority finds any shortcoming in
the resolution plan vis-à-vis the specified parameters, it would only
E
send the resolution plan back to the Committee of Creditors, for re-
submission after satisfying the parameters delineated by the Code
and exposited by the Supreme Court.
Insolvency and Bankruptcy Code, 2016 – Resolution plan –
Activities of the corporate debtor had impact on a large number of
F
persons/ entities, including buyers of flats/apartments in its real
estate development projects – Whether approval of the resolution
plan of NBCC was vitiated because of simultaneous voting over
two resolution plans in the Committee of Creditors – Held: The
process of simultaneous voting over two plans for electing one of
them could not be faulted in the present case; and approval of the G
resolution plan of NBCC was not vitiated because of simultaneous
consideration and voting over two resolution plans by the Committee
of Creditors.
Insolvency and Bankruptcy Code, 2016 – Resolution plan –
Activities of the corporate debtor had impact on a large number of H
603
604 SUPREME COURT REPORTS [2021] 12 S.C.R.

A persons/ entities, including buyers of flats/apartments in its real
estate development projects – Whether, after approval of the
resolution plan of NBCC by the Committee of Creditors, where
homebuyers as a class assented to the plan, any individual
homebuyer or any association of homebuyers could maintain a
challenge to the resolution plan and could be treated as a dissenting
B
financial creditor or an aggrieved person – Whether any housing
project which was completed or nearing completion ought to be
kept out of the purview of the resolution plan – Held: On facts, the
homebuyers as a class having assented to the resolution plan of
NBCC, any individual homebuyer or any association of homebuyers
C cannot maintain a challenge to the resolution plan and cannot be
treated as a dissenting financial creditor or an aggrieved person;
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 was completed or nearing completion.
D
The instant matters essentially related to a resolution plan
in the corporate insolvency resolution process (CIRP) under the
Insolvency and Bankruptcy Code, 2016 concerning the corporate
debtor, Jaypee Infratech Limited (JIL), whose activities had
impact on a large number of persons/ entities, including buyers
E of flats/apartments in its real estate development projects. CIRP
in relation to the corporate debtor JIL had been entangled in
various disputes in the past and even when the resolution plan
submitted by the resolution applicant, NBCC (India) Limited was
approved by the Committee of Creditors by a substantial majority
of 97.36% of voting share of the financial creditors, several
F
disputes/objections came up from various stakeholders and role
players, voicing the concerns of their own, like dissenting financial
creditors, dissatisfied homebuyers, displeased land providing
agency, disillusioned creditor of a wholly-owned subsidiary of the
corporate debtor and disappointed minority shareholders. Apart
G from all these, the holding company of the corporate debtor,
namely, Jaiprakash Associates Limited (JAL) and its
stakeholders had several questions over the resolution process
in question and were particularly concerned with the sum of INR
750 crores, which was deposited by JAL pursuant to the orders
passed by this Court in the first round of litigation. The principal
H points calling for determination were:
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A. What is the extent of, and limitations over, the powers A
and jurisdiction of the Adjudicating Authority while dealing with
the resolution plan approved by the Committee of Creditors?
B. As to whether approval of the resolution plan of NBCC
is vitiated because of simultaneous voting over two resolution
plans in the Committee of Creditors? B
C.(i) As to whether the Adjudicating Authority erred in not
approving the stipulations in the resolution plan for meeting with
the contingent liability of additional amount of land acquisition
compensation; and has also erred in modifying these stipulations?
(ii) As to whether the Adjudicating Authority erred in not C
approving the mechanism provided in the resolution plan for
transfer, of the concessionaire’s rights and obligations under the
Concession Agreement with Yamuna Expressway Industrial
Development Authority (YEIDA), to the SPVs proposed to be
incorporated; and has also erred in modifying the relevant
stipulations? (iii) As to whether the Adjudicating Authority erred D
in not approving the reliefs and concessions sought for in the
resolution plan in relation to YEIDA?
D. As to whether the Adjudicating Authority erred in not
approving the treatment of dissenting financial creditor like ICICI
Bank Limited in the resolution plan, as being not in accord with E
Section 30(2)(b) of the Code read with Regulation 38(1)(b) of the
CIRP Regulations; and erred in modifying the terms of resolution
plan and in directing payment to the dissenting financial creditor
in monetary terms?
E. As to whether the Adjudicating Authority erred in F
modifying the step provided in the resolution plan in regard to
the fixed deposit holders and in directing the resolution applicant
to make provision towards the dues of unclaimed fixed deposit
holders also?
F. (i) As to whether the resolution plan unauthorisedly G
purports to deal with the assets of Jaypee Healthcare Limited
(JHL)? (ii) As to whether the Adjudicating Authority erred in
assuming that YES Bank Limited had agreed for constitution of a
committee to take forward the disinvestment process of Jaypee
Healthcare Limited?
H
606 SUPREME COURT REPORTS [2021] 12 S.C.R.

A G. As to whether the stipulation in the resolution plan for
cancellation of certain agreements/sub-leases is unfair and the
Adjudicating Authority erred in not modifying the same?
H. As to whether the minority shareholders are entitled to
state their claims/objections despite having not approached the
B Adjudicating Authority; and as to whether the resolution plan
does not provide fair treatment to the minority shareholders?
I. (i) As to whether, after approval of the resolution plan of
NBCC by the Committee of Creditors, where homebuyers as a
class assented to the plan, any individual homebuyer or any
C association of homebuyers could maintain a challenge to the
resolution plan and could be treated as a dissenting financial
creditor or an aggrieved person? (ii) As to whether the stipulations
in the resolution plan stand in violation of the provisions of the
Real Estate (Regulation and Development) Act, 2016? (iii) As to
D whether the resolution plan is violative of the requirements of
CIRP Regulations? (iv) As to whether any housing project which
has been completed or is nearing completion ought to be kept
out of the purview of the resolution plan?
J. (i) As to whether the amount of INR 750 crores, which
E was deposited by JAL pursuant to the orders passed by this 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 NBCC is impermissible? (ii) As
to whether any amount is receivable by JIL and/or its homebuyers
from JAL; and the accounts between JAL and JIL need
F reconciliation?
K. (i) As to whether Clause 23 of Schedule 3 of the
resolution plan providing for extinguishment of security interest
of lenders of JAL could not have been approved by the
Adjudicating Authority? (ii) As to whether adequate provision is
G required to be made in the resolution plan as regards utilisation
of the land bank of 758 acres, that has become available to JIL in
terms of the judgment dated 26.02.2020 by this Court?
L. What should be the appropriate orders on the other
issues raised by the resolution applicant seeking clarification/
H directions?
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M. As to whether the Appellate Authority was justified in A
providing for an Interim Monitoring Committee for
implementation of the resolution plan in question during the
pendency of appeals?
Disposing of the matters, the Court
HELD: B

A. The Adjudicating Authority has limited jurisdiction in
the matter of approval of a resolution plan, which is well-defined
and circumscribed by Sections 30(2) and 31 of the Code. In the
adjudicatory process concerning a resolution plan under IBC,
there is no scope for interference with the commercial aspects of C
the decision of the CoC; and there is no scope for substituting
any commercial term of the resolution plan approved by
Committee of Creditors. If, within its limited jurisdiction, the
Adjudicating Authority finds any shortcoming in the resolution
plan vis-à-vis the specified parameters, it would only send the D
resolution plan back to the Committee of Creditors, for re-
submission after satisfying the parameters delineated by the Code
and exposited by this Court.
B. The process of simultaneous voting over two plans for
electing one of them cannot be faulted in the present case; and E
approval of the resolution plan of NBCC is not vitiated because
of simultaneous consideration and voting over two resolution
plans by the Committee of Creditors.
C. The stipulations in the resolution plan, as regards
dealings with YEIDA and with the terms of Concession Agreement, F
have rightly not been approved by the Adjudicating Authority
but, for the stipulations which have not been approved, the only
correct course for the Adjudicating Authority was to send the
plan back to the Committee of Creditors for reconsideration.
D. The Adjudicating Authority had not erred in disapproving
G
the proposed treatment of dissenting financial creditor like ICICI
Bank Limited in the resolution plan; but erred in modifying the
related terms of the resolution plan and in not sending the matter
back to the Committee of Creditors for reconsideration.
E. The Adjudicating Authority erred in issuing directions
to the resolution applicant to make provision to clear the dues of H
608 SUPREME COURT REPORTS [2021] 12 S.C.R.

A unclaimed fixed deposit holders. Paragraph 125 of the impugned
order dated 03.03.2020 of the Adjudicating Authority (NCLT) is
set aside.
F. The issues related with the objections of YES Bank
Limited and pertaining to JHL, the subsidiary of the corporate
B debtor JIL, are left for resolution by the parties concerned, who
will work out a viable solution in terms of paragraphs 141 and
142 of this judgment.
G. In the overall scheme of the resolution plan, the
stipulation in Clause 21 of Schedule 3 thereof cannot be said to
C be unfair; and the observations in paragraphs 132 and 133 of the
order dated 03.03.2020 justly take care of the right of any
aggrieved party (agreement holder) to seek remedy in
accordance with law and ensures viability of the resolution plan.
H. It cannot be said that the resolution plan does not
D 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.
I. The homebuyers as a class having assented to the
resolution plan of NBCC, any individual homebuyer or any
E 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
F 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.
J. (i) The amount of INR 750 crores (which was deposited
G by JAL pursuant to the orders passed by this 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. (ii) The question as to whether any amount is
H
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ASSOCIATION v. NBCC (INDIA) LTD.

receivable by JIL and/or its homebuyers from JAL, against A
advance towards construction and with reference to the admitted
liability to the tune of INR 195 crores as on 31.03.2020, shall be
determined by NCLT after reconciliation of accounts in terms of
the directions contained in paragraphs 189 to 191.1 of this
judgment. The amount, if found receivable by JIL, be made over
B
to JIL and the remaining amount together with accrued interest
be refunded to JAL in an appropriate account. The present matter
being related to CIRP of JIL, no other orders are passed in
relation to the amount that would be refunded to JAL because
treatment of the said amount in the asset pool of JAL shall remain
subject to such orders as may be passed by the competent C
authority dealing with the affairs of JAL.
K. (i) Clause 23 of Schedule 3 of the resolution plan,
providing for extinguishment of security interest of the lenders
of JAL could not have been approved by the Adjudicating
Authority, particularly in relation to the security interest that D
has not been discharged. This part of the order dated 03.03.2020
is set aside. (ii) Adequate provision is required to be made in the
resolution plan as regards utilisation of the land bank of 758 acres,
that has become available to JIL free from encumbrance, in terms
of the judgment dated 26.02.2020 of this Court in the case of
Anuj Jain. E

L. (i) The impugned order dated 03.03.2020 of the
Adjudicating Authority (NCLT) shall be read as modified in
relation to Clause 7 of Schedule 3 of the resolution plan; and the
said clause shall stand approved. (ii) As regards possession/control
over the project sites/lands of JIL, it is left open for the resolution F
applicant to take recourse to the appropriate proceedings in
accordance with law, whenever occasion so arise.
M. The Appellate Authority was not justified in providing
for an Interim Monitoring Committee for implementation of the
resolution plan in question during the pendency of appeals. The G
impugned order dated 22.04.2020 passed by NCLAT is set aside.
[Para 216][893-F-H; 894-A-H; 895-A-H; 896-A-D]
2. Some of the terms and stipulations of the resolution plan
of NBCC, which was voted for approval by 97.36% of the voting
H
610 SUPREME COURT REPORTS [2021] 12 S.C.R.

A share of the Committee of Creditors, do not meet with approval.
Although, barring such terms and stipulations, all other terms
and propositions of the resolution plan stand approved. To be
specific, the terms and stipulations in the resolution plan which
do not meet with approval are those concerning: (a) the land
providing agency [as held in Point C]; (b) the dissenting financial
B
creditor [as held in Point D]; (c) the undischarged security interest
of the lender of JAL [as held in Point K (i)]. [Para 217][896-D-F]
3. The decision of the Adjudicating Authority in relation to
the said amount of INR 750 crores with accrued interest has been
disapproved. This amount is the property of JAL and the
C stipulations in the resolution plan concerning its usage by JIL or
the resolution applicant cannot be approved [as held in Point J
(i) (supra)]. However, the final treatment of the said amount of
INR 750 crores with accrued interest shall be determined by
NCLT after the reconciliation of accounts between JAL and JIL
D and in terms of the directions contained in this judgment. [Para
217.1][896-F-G]
4. Adequate provision is required to be made by the
resolution applicant for utilisation of the land bank of 758 acres
on which, security interest of the lenders of JAL stands
E discharged in terms of the judgment of this Court in Anuj Jain.
[Para 217.2][896-H; 897-A]
5. The matters aforesaid, one way or the other, relate to
the commercial terms of the resolution plan and carry their own
financial implications. [Para 217.3][897-A-B]
F 6. When several shortcomings are found in the resolution
plan approved by the Committee of Creditors vis-à-vis the
specified parameters, the plan cannot be approved and the matter
is required to be sent back to the Committee of Creditors. But
the course to be adopted in the present matter carries its own
G share of complications. [Para 218][897-B-C]
7. In this matter twice over in the past, this Court had to
invoke its plenary powers under Article 142 of the Constitution
of India, so that the insolvency resolution process concerning
JIL could be taken to its logical fruition but within the discipline
H
JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 611
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of IBC. Having regard to the circumstances, this Court had A
provided windows for completion of CIRP while essentially
discounting on the time spent in the course of litigations. [Para
219][897-D]
8. In the judgment dated 09.08.2018 in Chitra Sharma, this
Court revived the CIRP after taking note of the peculiarities of B
the case and later amendment to IBC whereby, the doubts about
the status of homebuyers were removed and they were duly
accorded the recognition as financial creditors. Then, in the
judgment dated 06.11.2019 in Jaiprakash Associates Ltd., this
Court provided another period of 90 days for completion of the
CIRP from the date of judgment, after observing that delay in C
completion of CIRP was attributable to the process of law and
neither the homebuyers nor any other financial creditor was to
be blamed for pendency of the proceedings. This Court also
observed that extraordinary situation had arisen because of
constant experimentation at different levels due to lack of clarity D
on the matters crucial to the decision making process of CoC
and besides, there had been further legislative changes whereby,
the scope of resolution plan was expanded. This Court also took
note of the fact that there was unanimity amongst all the parties
appearing before the Court that liquidation of JIL must be
eschewed and an attempt be made to salvage the situation by E
finding out some viable arrangement which could subserve the
interests of all concerned. The Court further took into account
the third proviso to Section 12(3) of the Code whereby, another
period of 90 days was provided in relation to the pending
insolvency resolution process. All these factors led this Court to F
issue directions under Article 142 of the Constitution of India for
the second time in this matter, to do substantial and complete
justice to the parties and in the interest of all the stakeholders.
[Para 220][897-E-H; 898-A-B]
9. It appears that the resolution applicant, as also a large G
number of homebuyers of JIL having substantial voting share in
CoC, carried a misplaced notion that the said amount of INR 750
crores and accrued interest has become an asset of JIL. At the
same time, it appears that there had been lack of clarity as regards
the treatment of contingent liability of the additional amount of
H
612 SUPREME COURT REPORTS [2021] 12 S.C.R.

A compensation. The lack of clarity percolated in the decision of
the Adjudicating Authority too, where it was assumed by the
Adjudicating Authority that some of the questionable terms/
stipulations of the resolution plan could be modified/ modulated
by it. [Para 221][898-C-D]
B 10. The consequence and impact of the judgment of this
Court in Anuj Jain dated 26.02.2020 was also not properly taken
in comprehension by the Adjudicating Authority and, it was
assumed by the Adjudicating Authority in its order dated
03.03.2020 that the entire ‘858’ acres of land stood discharged
from the burden of security. Although the so-called correction of
C errors was carried out by the Adjudicating Authority on
17.03.2020 and the figure was corrected to ‘758’ acres but the
consequences of such a material correction were not examined.
[Para 221.1][898-E]
11. Nevertheless, encumbrance over 758 acres of land
D (which is said to be carrying a valuation of over INR 5000 crores)
is removed; and availability of the said land parcel has a substantial
impact on the position of assets and liquidity of the corporate
debtor JIL. [Para 221.1][898-F]
12. The entire substratum of the corporate insolvency
E resolution concerning JIL has undergone a sea of change. The
added features in the continuing processes had been that JAL
asserts to have carried out several works to reduce its liability
towards JIL and on the other hand, IRP has asserted to have
carried out further construction works and having made Offers
F of Possession to several homebuyers. [Para 222][898-G-H]
13. Taking all the facts and circumstances into account and
in keeping with the spirit and purport of the orders passed in the
past, this Court is inclined to again exercise the powers under
Article 142 of the Constitution of India and to enlarge the time
G for completion of CIRP concerning JIL while extending
opportunity to the said resolution applicants Suraksha Realty and
NBCC to submit modified/fresh resolution plans, which are
compliant with the requirements of the Code and the CIRP
Regulations and are in accord with the observations and findings
in this judgment. [Para 223][899-A-B]
H
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14.1. Accordingly, while once again exercising powers under A
Article 142 of the Constitution to do substantial and complete
justice to the parties and in the interest of all the stakeholders of
JIL, 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
B
another period of 45 days from the date of this judgment. [Para
225.1][900-B]
14.2. The IRP is directed to complete the CIRP within the
extended time of 45 days. For this purpose, 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 C
same within 2 weeks from the date of this judgment. [Para
225.2][900-C]
14.3. The IRP shall not entertain any expression of interest
by any other person nor shall be required to issue any new
information memorandum. The said resolution applicants shall D
be expected to proceed on the basis of the information
memorandum already issued by IRP and shall also take into
account the facts noticed and findings recorded in this judgment.
[Para 225.3][900-D]
14.4. After receiving the resolution plans as E
aforementioned, the IRP shall take all further steps in the manner
that the processes of voting by the Committee of Creditors and
his submission of report to the Adjudicating Authority (NCLT)
are accomplished in all respects within the extended period of
45 days from the date of this judgment. The Adjudicating Authority F
shall take final decision in terms of Section 31 of the Code
expeditiously upon submission of report by the IRP. [Para
225.4][900-E-F]
14.5. These directions, particularly for enlargement of time
to complete the process of CIRP, are being issued in exceptional G
circumstances of the present case and shall not be treated as a
precedent. [Para 225.5][901-A]
K. Sashidhar v. Indian Overseas Bank and Ors. (2019)
12 SCC 150: [2019] 3 SCR 845; Committee of
Creditors of Essar Steel India Limited v. Satish Kumar
H
614 SUPREME COURT REPORTS [2021] 12 S.C.R.

A Gupta and Ors.: (2020) 8 SCC 531: [2019]16 SCR 275;
Maharashtra Seamless Limited v. Padmanabhan
Venkatesh and Ors. (2020) 11 SCC 467 and India
Thermal Power Ltd. v. State of M.P. and Ors. (2000) 3
SCC 379 : [2000] 1 SCR 925 – relied on.
B Chitra Sharma and Ors. v. Union of India and Ors.
(2018) 18 SCC 575 : [2018] 12 SCR 1044; Jaiprakash
Associates Limited and Anr. v. IDBI Bank Ltd. and Anr.
(2020) 3 SCC 328; Anuj Jain, Interim Resolution
Professional for Jaypee Infratech Limited v. Axis Bank
Limited Etc. Etc., (2020) 8 SCC 401; Pioneer Urban
C Land and Infrastructure Ltd. & Anr. v. Union of India
& Ors. (2019) 8 SCC 416 : [2019] 10 SCR 381;
Embassy Property Development Pvt. Ltd. v. State of
Karnataka and Ors. (2019) SCC OnLine SC 1542;
Swiss Ribbons Private Limited and Anr. v. Union of India
D and Ors. (2019) 4 SCC 17 : [2019] 3 SCR 535; Savitri
Devi v. State of U.P. & Ors. (2015) 7 SCC 21 : [2015] 7
SCR 512; Kerala State Electricity Board and Anr. v.
Kurien E. Kalathil and Ors. (2000) 6 SCC 293 : [2000]
1 Suppl. SCR 581; Municipal Corporation of Greater
Mumbai (MCGM) v. Abhilash Lal and Ors. (2019) SCC
E OnLine SC 1479; Nand Kishore Gupta & Ors. v. State
of U.P. & Ors. (2010) 10 SCC 282 : [2010] 11
SCR 356; Himachal Pradesh Housing and Urban
Development Authority and Anr. v. Ranjit Singh Rana
(2012) 4 SCC 505 : [2012] 2 SCR 427; Commissioner
F of Income Tax, Madhya Pradesh & Bhopal v. Shrimati
Sodra Devi AIR 1957 SC 832 : [1958] SCR 1; Kolkata
Metropolitan Development Authority v. Gobinda
Chandra Makal and Anr. (2011) 9 SCC 207 : [2011]
14 SCR 373; Indian Handicrafts Emporium and Ors.
v. Union of India and Ors. (2003) 7 SCC 589 : [2003]
G 3 Suppl. SCR 43; CIT, Bangalore v. Venkateswara
Hatcheries (P) Ltd. (1999) 3 SCC 632 : [1999] 2 SCR
177 and Union of India v. Sankalchand Himatlal Sheth
and Anr. (1977) 4 SCC 193 : [1978] 1 SCR 423; State
through Central Bureau of Investigation v.
H Parmeshwaran Subramani and Anr. (2009) 9 SCC 729
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: [2009] 14 SCR 385; Rathi Khandsari Udyog and Ors. A
v. State of Uttar Pradesh and Ors. (1985) 2 SCC 485
: [1985] 2 SCR 966; Dadi Jagannadham v. Jammulu
Ramulu and Ors. (2001) 7 SCC 71 : [2001] 2 Suppl.
SCR 60; Vodafone International Holdings BV v. Union
of India and Anr. (2012) 6 SCC 613 : [2012] 1
B
SCR 573; Wg. Cdr. Arifur Rahman Khan & Ors. v. DLF
Southern Homes Pvt. Ltd. & Ors. (2020) SCC OnLine
SC 667; ONGC and Anr. v. Association of Natural Gas
Consuming Industries and Ors. (2001) 6 SCC 627 :
[2001] 1 Suppl. SCR 50 and South Eastern Coalfields
Ltd. v. State of M.P. & Ors. (2003) 8 SCC 648 : [2003] C
4 Suppl. SCR 651 – referred to.
Pradumna Kumar Jain v. U.P. Secondary Education
Service Commission, Allahabad and Ors. (1997) 30
ALR 339; Gajraj and Ors. v. State of U.P. and Ors.
(2011) SCC OnLine All 1711 – referred to. D
Samuel Katkin and Doris Katkin v. Commissioner of
Internal Revenue 570 F.2d 139 [Decision of the Court
of Appeal for the 6th Circuit, USA]; White v. Elmdene
Estates Ltd. 1959 ALL ER 605 – referred to.
Case Law Reference E

[2018] 12 SCR 1044 referred to Para 4.2
(2020) 3 SCC 328 referred to Para 4.3
(2020) 8 SCC 401 referred to Para 4.4
F
(2020) 11 SCC 467 relied on Para 45
[2019] 10 SCR 381 referred to Para 45
[2019] 3 SCR 535 referred to Para 63.2
[2019] 3 SCR 845 relied on Para 63.2
G
[2019] 16 SCR 275 relied on Para 63.2
[2015] 7 SCR 512 referred to Para 88
[2000] 1 SCR 925 relied on Para 95.1
[2000] 1 Suppl. SCR 581 referred to Para 95.1
H
616 SUPREME COURT REPORTS [2021] 12 S.C.R.

A [2010] 11 SCR 356 referred to Para 99.5
[2012] 2 SCR 427 referred to Para 113.2.1
[1958] SCR 1 referred to Para 113.2.3
[2011] 14 SCR 373 referred to Para 113.2.3
B [2003] 3 Suppl. SCR 43 referred to Para 113.2.3
[1999] 2 SCR 177 referred to Para 113.2.3
[1978] 1 SCR 423 referred to Para 113.2.3
[2009] 14 SCR 385 referred to Para 113.2.4
C
[1985] 2 SCR 966 referred to Para 114.3
[2001] 2 Suppl. SCR 60 referred to Para 115
[2012] 1 SCR 573 referred to Para 139
[2001] 1 Suppl. SCR 50 referred to Para 178.4
D
[2003] 4 Suppl. SCR 651 referred to Para 186
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3395
of 2020.
From the Judgment and Order dated 22.04.2020 of the National
E Company Law Appellate Tribunal, New Delhi in Company Appeal(AT)
(Insolvency) No. 475 of 2020.
With
Civil Appeal No. 3396 of 2020, T.C (C) Nos. 234, 235, 236, 237,
238, 239, 240, 241, 242, 243 Of 2020, Civil Appeal No. 1056 of 2021,
F Civil Appeal No. 1057 of 2021 and Diary No. 20274 of 2020.
Tushar Mehta, SG., Dhruv Mehta, Gopal Sankarnarayanan, Jaideep
Gupta, Huzefa Ahmadi, Arvind P. Datar, Anupam Lal Das, Krishnan
Venugopal, Shyam Divan, Neeraj Kishan Kaul, Ravindra Shrivastava,
Abhishek Manu Singhvi, Ritin Rai, Sidharth Luthra, R. Balasubramanian,
G Sr. Advs., Prateek Kumar, Siddharth Srivastava, Mohit Kishore,
Ms. Raveena Rai, Anubhav Ray, Snehal Kakrania, Sahil Narang,
Bishwajit Dubey, Uday Khare, Shatrajit Banerji, Sumit Attri, M/S. Cyril
Amarchand Mangaldas, Kunal Chatterji, Ms. Maitrayee Banerjee, Pravar
Veer Mishra, Amit Kumar Mishra, Shashank Manish, Ms. Manasi
H Chatpalliwar, Ms. Smriti Shah, Ms. Twinkle Kataria, Ms. Nidhi Sahay,
JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 617
ASSOCIATION v. NBCC (INDIA) LTD.

Shivam Pandey, Buddy A. Ranganadhan, Raunak Jain, Hasan Murtaza, A
Vishal Gupta, Sumeet Sharma, Divyanshu Gupta, Zinnea Mehta, Paras
Choudhary, Ms. Misha, Nikhil Mathur, Ms. Shreya Prakash, S.S. Shroff,
P. Nagesh, Ms. Soumya Dutta, Anshuman Shrivastava, Abhijeet
Shrivastava, Ms. Garima Tiwari, Ms. Harneet Khanuja, Arpit Jain,
B. Ramana Murthy, Anush Raajan, Ms. Ashima Chauhan, Ms. Mansi
B
Gupta, Punit Dutt Tyagi, Raghavendra M. Bajaj, Ms. Garima Bajaj, Joel,
Amit Dwivedi, Saifi Sham, Amar Gupta, Divyam Agarwal, Ashish Joshi,
Ms. Pallavi Kumar, Sumant Batra, Sanjay Bhatt, Rabin Majumder,
Ms. Niharika Sharma, Ms. Akansha Srivastava, Sachin Sharma, Rohan
Jaitely, Tanvir Nayar, Akshay Sharma, Ram Lal Roy, Himanshu Shekhar,
Jamnesh Kumar, L.K. Bhushan, Mohit Sharma, M/S. Dua Associates, C
Ms. Revaty Raghvan, Shariq Ahmed, Tariq Ahmed, Ms. Prashi Tyagi,
Sunil Kumar Verma, Amit Pawan, Advocates for the appearing Parties.
The Judgment of the Court was delivered by
DINESH MAHESHWARI, J.
D
Introductory
1. Permission to file special leave petition(s) and leave granted in
respective Petition(s) for Special Leave to Appeal.
2. This batch of civil appeals, special appeals and transfer cases
essentially relate to the resolution plan1 in the corporate insolvency E
resolution process2 under the Insolvency and Bankruptcy Code, 20163
concerning the corporate debtor, Jaypee Infratech Limited4, whose
activities do impact a large number of persons/entities, including the buyers
of flats/apartments5 in its real estate development projects.
2.1. As shall be noticed hereafter, CIRP in relation to the corporate F
debtor JIL has been entangled in various disputes in the past and even
when the resolution plan submitted by the resolution applicant, NBCC
(India) Limited6 has been approved by the Committee of Creditors7 by a
substantial majority of 97.36% of voting share of the financial creditors,

1
G
Hereinafter, at some places, it has also been referred to as ‘the plan’.
2
‘CIRP’ for short.
3
Hereinafter also referred to as ‘the Code’ or ‘IBC’.
4
Hereinafter also referred to as ‘JIL’.
5
Hereinafter generally referred to as ‘the homebuyers’.
6
Hereinafter also referred to as ‘NBCC’.
7
‘CoC’ for short. H
618 SUPREME COURT REPORTS [2021] 12 S.C.R.

A several disputes/objections have come up from various stakeholders and
role players, voicing the concerns of their own, like dissenting financial
creditors, dissatisfied homebuyers, displeased land providing agency,
disillusioned creditor of a wholly-owned subsidiary of the corporate debtor
and disappointed minority shareholders. Apart from all these, the holding
company of the corporate debtor, namely, Jaiprakash Associates Limited8
B
and its stakeholders have several questions over the resolution process
in question and are particularly concerned with the sum of INR 750
crores, which was deposited by JAL pursuant to the orders passed by
this Court in the first round of litigation.
3. Looking to a multiload of issues arising from variegated
C propositions/objections put forward by different parties, it appears
appropriate to draw a brief outline and sketch of the matter at the outset.
Brief outline and sketch
4. The cases involved in this batch have got assimilated in this
D Court in the following circumstances:
4.1. The corporate insolvency resolution process in relation to the
corporate debtor JIL got initiated on 09.08.2017 when the National
Company Law Tribunal9, Allahabad Bench admitted the petition filed by
one of the financial creditors, IDBI Bank Limited, under Section 7 of the
E Code. However, when the Interim Resolution Professional10 invited claims
in this CIRP, the treatment of homebuyers became an issue contentious,
because they were treated only as ‘other creditors’, not at par with
financial and operational creditors.
4.2. The aforesaid position led to the proceedings in this Court,
F which were dealt with in a batch of petitions led by Writ Petition (Civil)
No. 744 of 2017: Chitra Sharma and Ors. v. Union of India and
Ors.11 wherein, several orders were passed by this Court from time to
time, inter alia, with directions to JAL, the holding company of JIL, for
making deposits in the Court, particularly looking to the claim of refund
being made by some of the homebuyers. While finally disposing of the
G 8
Hereinafter also referred to as ‘JAL’.
9
Hereinafter also referred to as ‘the Adjudicating Authority’ or ‘NCLT’. As shall be
noticed, the matter before the Allahabad Bench was later on transferred to the New
Delhi Bench of the Tribunal. These expressions ‘the Tribunal’ or ‘NCLT’ or ‘the
Adjudicating Authority’ refer to the said transferee Bench too, as per the given context.
10
‘IRP’ for short.
11
H Final judgment therein has since been reported as (2018) 18 SCC 575.
JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 619
ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

matters on 09.08.2018, this Court took note of several factors, including A
the nature of projects, interests of a large number of homebuyers and
unanimity amongst all the concerned that liquidation of the corporate
debtor shall not be in the interest of any stakeholder. This Court also
took note of the fact that even the statutorily extended period for
concluding the CIRP was over but, there had been a relevant supervening
B
event where, by way of an Amendment Ordinance that came into force
on 06.06.2018, the doubts about the status of homebuyers were removed
and they were expressly recognised as financial creditors. Having regard
to the facts and circumstances, this Court issued a slew of directions for
ensuring complete justice in the cause, while exercising its powers under
Article 142 of the Constitution of India, by providing for further extended C
period for conclusion of CIRP; for constitution of CoC afresh; and
permitting the IRP to invite fresh expressions of interest for the submission
of resolution plans. This Court also provided that the amount of INR 750
crores, ‘which has been deposited in this Court by JAL/JIL shall
together with the interest accrued thereon’ be transferred to NCLT,
D
which would abide by the directions as may be issued by NCLT.
4.3. While the proceedings thus restored by this Court were
pending, further question cropped up as to the manner of reckoning the
voting percentage of homebuyers in CoC. Two members of NCLT
differed in their opinion and the matter was referred to the third member.
In the meantime, IDBI Bank sought exclusion, of the period of pendency E
of the application for such clarification as to the voting percentage, from
the period of 270 days for completion of CIRP. While this application
was pending, NCLT called upon the concerned parties to file reply on
the necessity to proceed further with the CIRP, for considering the
resolution plan received from the bidder, subject to the outcome of the F
pending application. The orders passed by NCLT in relation to these
aspects were challenged before the National Company Law Appellate
Tribunal, New Delhi12. The Appellate Authority, by its judgment dated
30.07.2019, provided for exclusion of 90 days for the purpose of counting
the total period of 270 days and disposed of the appeals with some more
observations. This gave rise to further appeals in this Court, led by Civil G
Appeal No. 8437 of 2019 [@ D No. 27229 of 2019]: Jaiprakash
Associates Limited and Anr. v. IDBI Bank Ltd. and Anr.13, which

12
Hereinafter also referred to as ‘the Appellate Authority’ or ‘NCLAT’.
13
Final judgment therein has since been reported as (2020) 3 SCC 328. H
620 SUPREME COURT REPORTS [2021] 12 S.C.R.

A were decided on 06.11.2019. Therein, this Court found that delay in
completion of CIRP was attributable to the process of law and neither
the homebuyers nor any other financial creditor was to be blamed for
pendency of the proceedings; and under the plenary powers, this Court
passed yet further orders so as to ensure that an attempt was made for
revival of the corporate debtor by submission of revised resolution plans.
B
4.4. Running parallel to the proceedings noticed hereinabove, there
had been another set of proceedings involving two issues: one, relating
to an application filed by IRP before the Adjudicating Authority seeking
orders for avoidance of the certain transactions, whereby several parcels
of land were put under mortgage with the lenders of JAL, the holding
C company of JIL; and second, involving the claim of two of the lender
banks of JAL to be included in the category of financial creditors of JIL.
These two aspects eventually came up for adjudication of this Court in
another batch of appeals led by Civil Appeal Nos. 8512-8527 of 2019:
Anuj Jain, Interim Resolution Professional for Jaypee Infratech
D Limited v. Axis Bank Limited etc. etc., which were decided on
26.02.202014. This Court held that six out of seven transactions in question
were preferential within the meaning of Section 43 of the Code and the
directions by NCLT for avoidance of such transactions were upheld.
On the second issue, this Court held that the applicant banks were not
the financial creditors of the corporate debtor JIL and the respective
E orders passed in that regard by NCLT were restored.
4.5. We shall be dilating on the relevant attributes of the aforesaid
previous rounds of litigation at the appropriate stage and juncture hereafter.
Suffice it to notice for the purpose of brief outline that the resolution
plans submitted by two applicants were put to vote of the Committee of
F Creditors and finally, the resolution plan submitted by NBCC (India)
Limited was approved by the CoC on 17.12.2019, by a vast majority of
over 97% of voting share of the financial creditors. Thereafter, on
19.12.2019, the Interim Resolution Professional moved an application
before the National Company Law Tribunal, Allahabad Bench, being
G C.A. No. 5 of 2020 in CP (IB) No. 77/ALD/2017, 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
14
Final judgment therein has since been reported as Jaypee Infratech Ltd. Interim
Resolution Professional v. Axis Bank Ltd. and Ors.: (2020) 8 SCC 401.
H
JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 621
ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

Persons) Regulations, 201615. Later on, the proceedings pending before A
the Allahabad Bench of the National Company Law Tribunal were
transferred to its Principal Bench at New Delhi wherein, several
objections/suggestions/propositions were submitted by different
stakeholders, going for or against the resolution plan or even off on a
tangent.
B
4.6. By its order dated 03.03.2020, the Adjudicating Authority
(NCLT), proceeded to approve the resolution plan with some modifications
and certain directions while accepting some of the objections like those
of the dissenting financial creditor bank and the land providing agency
but while rejecting some other, including those of the holding company
of JIL and while leaving a few propositions open for adjudication in the C
appropriate forum16.
4.7. The resolution applicant NBCC preferred an appeal against
the aforesaid order dated 03.03.2020 before the National Company Law
Appellate Tribunal, New Delhi, being Company Appeal (AT) (Insolvency)
No. 465 of 2020 wherein the Appellate Authority, while issuing notice to D
the unrepresented parties, made an interim order dated 22.04.2020 that
the approved resolution plan may be implemented subject to the outcome
of appeal but at the same time, also provided that IRP may constitute an
‘Interim Monitoring Committee’ comprising of the successful resolution
applicant (NBCC) and three major institutional financial creditors, who E
were the members of CoC.
4.8. As against the aforesaid order dated 22.04.2020, six
associations of homebuyers in the real estate development projects of
the corporate debtor and a few individual homebuyers approached this
Court seeking permission to maintain their appeals under Section 62 of F
the Code. Notices were issued on the prayers so made, returnable on
06.08.2020.
4.9. On 06.08.2020, it was urged before us that several appeals
against the said order dated 03.03.2020 were pending before NCLAT;
and the parties agreed that those appeals may be withdrawn to this G
Court and be heard alongwith the aforesaid appeals of the associations
and homebuyers to avoid the likelihood of further delay in the matter.

15
Hereinafter also referred to as ‘the CIRP Regulations’.
16
A few typographical errors in this order dated 03.03.2020 were corrected by NCLT
by its order dated 17.03.2020. H
622 SUPREME COURT REPORTS [2021] 12 S.C.R.

A Acceding to the request, we had withdrawn the mentioned appeals for
analogous hearing with the matters pending before us. By way of interim,
while staying the operation of the impugned order dated 22.04.2020, we
had provided that the IRP shall continue to manage the affairs of the
subject company i.e., JIL. Accordingly, the appeals pending before the
NCLAT, being Company Appeal (AT) (Insolvency) Nos. 486, 488, 475,
B
478, 480, 489, 506, 547, 544 and 630 of 2020 have been transferred to
this Court and are registered as transferred cases. Further to this, three
more matters have been filed directly in this Court, with the respective
petitioners/appellants having different sets of grievances against the
NCLT’s order dated 03.03.2020. A few impleadment/intervention
C applications have also been filed in these matters with the applicants
seeking to project their own propositions/viewpoints and/or objections in
relation to the resolution plan in question.
5. It is, therefore, apparent that the resolution plan, as approved
by the CoC on 17.12.2019 and the order dated 03.03.2020, as passed by
D the Adjudicating Authority (NCLT) in approval of the resolution plan
with certain directions and modifications, are the pivots of the present
litigation and a subsidiary of these pivots is the interim order dated
22.04.2020, as passed by NCLAT in the appeal filed by the resolution
applicant NBCC, providing for composition of an ‘Interim Monitoring
Committee’ while implementing the resolution plan.
E
The parties and their respective roles and interests in the
matter
6. For what has been noticed in the outline, and in view of the
adjudication required of various issues raised and different reliefs claimed
F in these matters, with several parties carrying different roles and status,
worthwhile it would be to narrate, in brief, the relevant particulars of the
key parties involved, with their feasible classification in terms of their
respective interests.17
6.1. The main parties before us in this batch, in terms of their
G respective stands, contentions and viewpoints vis-à-vis the aforementioned
pivots could be broadly divided in two categories. One category is of the
parties who stand for the resolution plan, as approved by the CoC but

17
This introduction of persons/entities is to broadly co-relate the parties with the
points to be taken up for determination; and is not intended to be an exhaustive list of
H the parties involved.
JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 623
ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

who state grievance against a few parts of the aforesaid orders dated A
03.03.2020 and 22.04.2020, insofar as providing for modification of the
resolution plan and modified mechanism for its implementation. The other
category is of the parties who carry grievances against the resolution
plan for one or more of its prescriptions or omissions; and/or who are
dissatisfied with the order dated 03.03.2020 insofar as their objections
B
have either been rejected or not taken into account; and/or who are
dissatisfied with the order dated 22.04.2020 for the reasons different
than those of the parties of first part.
The parties standing for the resolution plan
7. The two entities who need not, as such, be aligned with any of C
the other contesting parties but for practical purposes, stand for the
resolution plan as approved by CoC are: (i) the corporate debtor company
in whose relation the resolution plan has been adopted and approved;
and (ii) the Interim Resolution Professional. They may be introduced as
under:
D
7.1. Jaypee Infratech Limited (JIL):
It is the corporate debtor company in whose relation CIRP has
been taken up and the resolution plan has been made and approved.
This company was essentially set up as a special purpose vehicle18 after
its holding company Jaiprakash Associates Limited (JAL) was awarded E
the rights for construction of an Expressway from Noida to Agra; and a
Concession Agreement19 was entered into with the Yamuna Expressway
Industrial Development Authority20. With setting up of this company JIL,
apart from other projects, housing plans were envisaged for construction
of real estate projects in two locations of the land acquired, one in Wish
Town, Noida and another in Mirzapur. A substantial mass of disputes in F
the present matters has its roots in the dealings of this company JIL with
the real estate development projects as also in its dealings with the
homebuyers and the lending institutions.
7.2. The Interim Resolution Professional Anuj Jain (IRP):
G
He is the Interim Resolution Professional in CIRP concerning
JIL. He has taken steps and proceedings from time to time as envisaged
by the Code, including dealing with the claims of a variety of creditors;
18
‘SPV’ for short.
19
‘CA’ for short.
20
‘YEIDA’ for short. H
624 SUPREME COURT REPORTS [2021] 12 S.C.R.

A making an application for avoidance of certain transactions as being
preferential, which was finally dealt with and accepted by this Court in
the aforementioned judgment dated 26.02.2020; presenting the resolution
plans for voting by CoC; and submitting the approved resolution plan to
the Adjudicating Authority. In relation to the order dated 03.03.2020 as
passed by NCLT, the appeal filed by him before NCLAT, essentially
B
questioning the jurisdiction of NCLT to modify the resolution plan and to
change the mode of payment to the dissenting financial creditors, being
Company Appeal (AT) (Insolvency) No. 486 of 2020, stands transferred
to this Court and is registered as T.C. (C) No. 234 of 2020. He is
respondent in almost all other cases.
C 8. The major set of parties who stand for the approved resolution
plan and seek its implementation while stating objections/grievances
against the modification parts of the order dated 22.04.2020 as passed
by NCLAT and the order dated 03.03.2020 as passed by NCLT are the
following:
D 8.1. NBCC (India) Limited (NBCC):
NBCC (India) Limited is the resolution applicant and had prepared
the resolution plan for JIL, which was approved by a majority of 97.36%
of the voting share of the CoC. NBCC seeks setting aside of those parts
of the order dated 03.03.2020 where the NCLT has modified some of
E the terms of resolution plan and/or has issued certain directions. The
appeal filed by this company, being Company Appeal (AT) (Insolvency)
No. 475 of 2020, stands transferred to this Court and is registered as
T.C. (C) No. 236 of 2020. This company is also the respondent in various
other appeals/petitions and has comprehensively opposed the objections
F raised against the resolution plan.21
8.2. IDBI Bank Limited:
This bank is standing in the capacity of an institutional financial
creditor of the corporate debtor JIL. The corporate insolvency resolution
process in relation to the corporate debtor JIL, which has culminated in
G the approval of the resolution plan submitted by NBCC, got initiated
pursuant to an application moved by this bank under Section 7 of the
21
This company has introduced itself in its resolution plan as “Navratna” status Central
Public Sector Enterprise, under the aegis of Ministry of Housing and Urban Affairs,
Government of India, having diversified its areas of operation in various segments
H including real estate.
JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 625
ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

Code before the NCLT. This bank leads a set of nine institutional financial A
creditors including itself, who have voted in favour of the resolution plan
in question; and stands in support of the resolution plan while opposing
the contentions urged on behalf of the parties on the other side.
8.3. Jaypee Kensington Boulevard Apartments Welfare
Association and 5 others: B
They are the associations of homebuyers who have invested in
the housing projects floated by JIL. They are appellants in Civil Appeal
No. 3395 of 202022, questioning the order dated 22.04.2020 as passed
by NCLAT and essentially submit that the resolution plan as approved
by NCLT deserves to be implemented. C
8.4. Ishwar Jha and 6 others:
They are individual homebuyers of the flats in the development
projects initiated by JIL. They are appellants in Civil Appeal No. 3396 of
202023, questioning the order dated 22.04.2020 as passed by NCLAT
and they also essentially submit that the resolution plan as approved by D
NCLT deserves to be implemented without further delay.
8.5. Krishna Dev Mishra and 2 others:
They are also individual homebuyers of the flats in the development
projects initiated by JIL. They are applicants of I.A. No. 87967 of 2020
E
in Civil Appeal No. 3395 of 2020 and similarly submit that the resolution
plan as approved by NCLT deserves to be implemented without further
delay.
8.6. Major General Praveen Kumar and Colonel V.S. Gaur:
They are the homebuyers who have moved applications for F
impleadment/intervention in Civil Appeal No. 3395 of 2020, being I.A.
Nos. 73323 of 2020 and 73330 of 2020 respectively, essentially seeking
directions to NBCC to complete the remaining works on priority basis in
Tower Nos. 5 to 12 and 14 to 16 in Kensington Park – 1, Jaypee Greens,
Noida so that the possession of flats could be handed over to the buyers.
G
The objectors
9. The persons/entities who carry grievance/s against the resolution
plan for one reason or the other; and/or who are dissatisfied with the
22
@ Civil Appeal Diary No. 14741 of 2020.
23
@ Civil Appeal Diary No. 15061 of 2020. H
626 SUPREME COURT REPORTS [2021] 12 S.C.R.

A order passed by the NCLT and/or by the NCLAT, may be grouped with
reference to the objections/propositions they stand for.
10. The first set of objectors consists of such persons/entities
who otherwise belong to the class of ‘homebuyers’ but have their own
grievances in relation to the resolution plan and the subsequent orders.
B This set of parties could be introduced as follows:
10.1. Wish Town Home Buyers Welfare Society:
This is a society of homebuyers in the projects of JIL who seeks
implementation of the projects but carries reservations on some of the
terms of the resolution plan, where the requisite compensation in relation
C to the delayed implementation of the projects by JIL has not been
provided, particularly in terms of Section 18 of the Real Estate (Regulation
and Development) Act, 201624. It has also been suggested that the plan
of another resolution applicant Suraksha Realty was far better than that
of NBCC. This society also has the grievance that NBCC has failed to
D specify in the resolution plan the treatment and utilisation of the sum of
INR 750 crores received from JAL as also 758 acres of land that had
come to JIL after the judgment of this Court dated 26.02.2020. This
society had filed Company Appeal (AT) (Insolvency) No. 506 of 2020
before NCLAT against the said order dated 03.03.2020 that stands
transferred to this Court and is registered as T.C. (C) No. 243 of 2020.
E This society has also moved an application, I.A. No. 72707 of 2020 in
Civil Appeal No. 3395 of 2020 with the submissions against continuation
of NBCC in the proposed ‘Interim Monitoring Committee’.
10.2. Jaypee Aman Owners Welfare Association:

F This is an association of homebuyers in one of the projects of JIL
namely, Jaypee Greens Aman in Sector 151 Noida. This association
maintains that in substance, ‘Project Aman’ stands completed; that Offer
of Possession25 has already been issued to the allottees of 22 Towers;
that delayed penalty ought to be allowed in relation to Tower Nos. 23
and 24 for which, OOP has been issued by IRP; and that IRP ought to
G take steps for OOP for flats in Tower Nos. 25 and 27 for which, the
application for Occupancy Certificate26 has already been moved. This
association is aggrieved of the projected date/s of completion and
24
Hereinafter also referred to as ‘RERA’.
25
‘OOP’ for short.
26
‘OC’ for short.
H
JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 627
ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

proportional increase in delay, as provided in the resolution plan. As against A
the said order dated 03.03.2020, this association had filed Company
Appeal (AT) (Insolvency) No. 480 of 2020 before NCLAT that stands
transferred to this Court and is registered as T.C. (C) No. 240 of 2020.
10.3. Ashish Mohan Gupta & Anr.:
These are the homebuyers who seek to oppose the resolution B
plan while raising questions over the proceedings of the Committee of
Creditors as also on various other grounds, which may be running common
to the grounds urged by the homebuyers/associations who are objecting
to the plan and its approval. They had filed Company Appeal (AT)
(Insolvency) No. 489 of 2020 before NCLAT that stands transferred to C
this Court and is registered as T.C. (C) No. 242 of 2020.
10.4. Jaypee Orchard Resident Welfare Society:
This is another society of homebuyers in the projects of JIL who
seeks implementation of the projects of JIL but has its own reservations
on the terms of the resolution plan where the requisite compensation in D
relation to the delayed implementation of the projects by JIL has not
been provided in terms of RERA. This society has not filed the appeal
before NCLAT but in view of other appeals having been withdrawn to
this Court, has preferred the petition for special leave to appeal, being
SLP Diary No. 18129 of 2020 in this Court, seeking to challenge the said E
order dated 03.03.2020.
10.5. Ishwar Kewalramani and 76 Others:
These are the applicants of another impleadment application being
I.A. No. 88795 of 2020 in Civil Appeal No. 3395 of 2020; they are
homebuyers of the projects undertaken by JIL and are aggrieved by the F
order dated 03.03.2020 insofar as NCLT has failed to specify the use of
758 acres of unencumbered land now available with JIL; and another
grievance is that NBCC has violated the statutory provisions by not
providing compensation to the homebuyers due to delayed possession.
10.6. Ashok Chandra: G
He is another homebuyer who has moved I.A. No. 84309 of 2020
in Civil Appeal No. 3395 of 2020 and seeks direction to determine
adequate and fair amount of compensation to be paid to the homebuyers
due to the unreasonable delay in completion. He has also suggested that
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628 SUPREME COURT REPORTS [2021] 12 S.C.R.

A different mechanism is required to be provided for dealing with the CIRP
in question, in displacement of the resolution plan of NBCC.
11. Other objectors to the resolution plan and the order of NCLT
dated 03.03.2020 could be broadly sub-divided into three: one being the
holding company of the corporate debtor JIL and the persons/entities
B related with these companies; second being the dissenting institutional
financial creditor of the corporate debtor JIL; and third being the other
stakeholders.
12. In the first sub-sect of objectors, the main parties before us
are as follows:
C 12.1. Jaiprakash Associates Limited (JAL):
It is the holding company of the corporate debtor JIL; it had
approximately 71.64% equity shareholding in JIL as on 31.03.2017. This
company had deposited the sum of INR 750 crores as per the orders
passed by this Court in the case of Chitra Sharma (supra). Apart from
D a few other objections, this company JAL is seeking refund of INR 750
crores with accrued interest; and it is contended that the said amount is
not the property of the corporate debtor JIL and it cannot be utilised for
the CIRP of JIL. This holding company had filed Company Appeal (AT)
(Insolvency) No. 478 of 2020 before NCLAT against the said order
E dated 03.03.2020 that stands transferred to this Court and is registered
as T.C. (C) No. 238 of 2020.
12.2. Pankaj Sharma and 3 others:
They are homebuyers of the projects being developed by JAL
and are similarly contending that the said sum of INR 750 crores with
F accrued interest cannot be utilised for the CIRP of the corporate debtor
JIL. They too had filed an appeal before NCLAT against the said order
dated 03.03.2020, being Company Appeal (AT) (Insolvency) No. 544 of
2020 that stands transferred to this Court and is registered as T.C. (C)
No. 237 of 2020.
G 12.3. Knights Court Social Welfare Association:
This is an association representing the homebuyers in the ‘Knights
Court’ project of JAL who are aggrieved by the fact that the project has
been left incomplete by JAL and who are equally aggrieved by the
provision made in the resolution plan of JIL for utilisation of the said
H
JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 629
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amount of INR 750 crores. This association has directly challenged the A
said order of NCLT dated 03.03.2020 in this Court by way of Special
Leave Petition (Civil) No. 10543 of 2020.
12.4. Manoj Gaur, suspended MD of corporate debtor JIL:
He is the suspended Managing Director of the corporate debtor
JIL and has also stated himself to be the Executive Chairman of JAL. B
He has been arrayed as third respondent in the appeal filed by IRP. It is
also noticed that he, along with the holding company JAL, filed an
impleadment application (I.A. No. 1508 of 2020) in the appeal filed by
NBCC that was allowed by NCLAT on 15.07.2020 and that is how he
became the seventh respondent in the appeal of NBCC. According to C
his submissions, the IRP failed to ensure that the resolution plan did not
contravene the law for the time being in force; and that approval by
CoC leaves much to be desired. Several of the stipulations and
prescriptions in the resolution plan of NBCC are put to question by him.
13. The second sub-sect of objectors to the resolution plan consists D
of the institutional financial creditor of the corporate debtor JIL, being
ICICI Bank Limited.
13.1. The directions issued by NCLT in modification of the
resolution plan in regard to the claim of this bank for payment, in its
capacity as the dissenting financial creditor of JIL, is one of the major E
grounds of challenge by the persons/entities standing in favour of the
resolution plan in question. This bank has also objected to the clauses in
the resolution plan in regard to the treatment of the said sum of INR 750
crores. In its another capacity as the lender of JAL and having mortgage
over the land of JIL in security of such lending to JAL, this bank has
levied another challenge to the resolution plan in regard to the release of F
its security interest. This bank had challenged the said order dated
03.03.2020 before NCLAT in Company Appeal (AT) (Insolvency) Diary
No. 21936 of 2020 and has moved Transfer Petition (C) Diary No. 20274
of 2020 in this Court, seeking transfer of its appeal before NCLAT for
analogous hearing with the present batch of matters. G
14. The third sub-sect of the objectors to the resolution plan
comprises of different entities/persons, mostly carrying their own claims/
grievances. They are as follows:
14.1. Yamuna Expressway Industrial Development Authority:
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630 SUPREME COURT REPORTS [2021] 12 S.C.R.

A This Authority, constituted under Section 3 of the Uttar Pradesh
Industrial Area Development Act, 1976 27 was initially called Taj
Expressway Industrial Development Authority28; subsequently it was
renamed as Yamuna Expressway Industrial Development Authority29
by a notification dated 11.07.2018. It had been the land provider for
execution of various projects by JAL/JIL under the Concession
B
Agreement. The provisions in the resolution plan for dealing with the
available parcels of land and for meeting with the contingent liability (as
regards payment of additional compensation towards acquisition of land)
are the main areas of concern of this Authority, who had filed its
objections to the resolution plan. The directions issued in modification of
C the resolution plan in regard to YEIDA is also one of the major grounds
of challenge by the persons/entities standing in favour of the resolution
plan.
14.2. YES Bank Limited:
This bank is the financial creditor of a wholly-owned subsidiary
D of JIL, being Jaypee Healthcare Limited30. This bank asserts that the
assets of JHL, said to be mortgaged with it, are not within the purview
of CIRP of JIL to be disposed by NBCC; and it seeks modifications in
the resolution plan accordingly. This bank filed an appeal before NCLAT
against the said order dated 03.03.2020, being Company Appeal (AT)
E (Insolvency) No. 488 of 2020 that stands transferred to this Court and is
registered as T.C. (C) No. 235 of 2020.
14.3. Rajesh Gupta and 2 others:
These three persons, said to have entered into respective
agreements with the corporate debtor, carry their own grievance against
F the prescription in the resolution plan where the resolution applicant has
reserved its right to cancel such agreements/sub-lease deeds. They seek
direction for entering into sale deed/s of plot/s in Jaypee Greens Wish
Town or for refund. They had also filed an appeal before NCLAT against
the said order dated 03.03.2020, being Company Appeal (AT) (Insolvency)
G No. 547 of 2020 that stands transferred to this Court and is registered as
T.C. (C) No. 241 of 2020.

27
Hereinafter also referred to as the ‘U.P. Act of 1976’.
28
‘TEA’ for short.
29
‘YEIDA’ for short.
30
H ‘JHL’ for short.
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14.4. Raman Prakash Mangala and 29 others: A
They are minority shareholders of JIL and their assertion is that
the resolution plan approved by CoC ought to consider the interests of
minority shareholders by giving fair market value of the equity shares
held by them. Their appeal against the order dated 03.03.2020 before
NCLAT, being Company Appeal (AT) (Insolvency) No. 630 of 2020, B
also stands transferred to this Court and is registered as T.C. (C) No.
239 of 2020.
14.5. Gyanendra Kumar Raveendra:
He is also a minority shareholder of JIL and has moved an
application for impleadment in Civil Appeal No. 3395 of 2020, being I.A. C
No. 89429 of 2020. He is similarly aggrieved by the action of NBCC to
extinguish the right of the minority shareholders without giving them a
‘fair value’ of their shares.
Points for determination
D
15. Having drawn a brief sketch and outline of the matter and
having introduced the principal parties to this litigation with their respective
interests, we may now indicate the major points, which arise for
determination in view of diverse propositions advanced before us, coupled
with the stipulations in the resolution plan in question and the modifications
ordered by NCLT and NCLAT by way of the orders impugned. The E
principal points calling for determination in this batch are:
A. What is the extent of, and limitations over, the powers and
jurisdiction of the Adjudicating Authority while dealing with the
resolution plan approved by the Committee of Creditors?
F
B. As to whether approval of the resolution plan of NBCC is
vitiated because of simultaneous voting over two resolution plans
in the Committee of Creditors?
C. (i) As to whether the Adjudicating Authority has erred in not
approving the stipulations in the resolution plan for meeting with
the contingent liability of additional amount of land acquisition G
compensation; and has also erred in modifying these stipulations?
(ii) As to whether the Adjudicating Authority has erred in not
approving the mechanism provided in the resolution plan for
transfer, of the concessionaire’s rights and obligations under the
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632 SUPREME COURT REPORTS [2021] 12 S.C.R.

A Concession Agreement with YEIDA, to the SPVs proposed to be
incorporated; and has also erred in modifying the relevant
stipulations?
(iii) As to whether the Adjudicating Authority has erred in not
approving the reliefs and concessions sought for in the resolution
B plan in relation to YEIDA?
D. As to whether the Adjudicating Authority has erred in not
approving the treatment of dissenting financial creditor like ICICI
Bank Limited in the resolution plan, as being not in accord with
Section 30(2)(b) of the Code read with Regulation 38(1)(b) of the
C CIRP Regulations; and has erred in modifying the terms of
resolution plan and in directing payment to the dissenting financial
creditor in monetary terms?
E. As to whether the Adjudicating Authority has erred in modifying
the step provided in the resolution plan in regard to the fixed deposit
D holders and in directing the resolution applicant to make provision
towards the dues of unclaimed fixed deposit holders also?
F. (i) As to whether the resolution plan unauthorisedly purports to
deal with the assets of Jaypee Healthcare Limited?
(ii) As to whether the Adjudicating Authority has erred in
E assuming that YES Bank Limited had agreed for constitution of a
committee to take forward the disinvestment process of Jaypee
Healthcare Limited?
G. As to whether the stipulation in the resolution plan for
cancellation of certain agreements/sub-leases is unfair and the
F Adjudicating Authority has erred in not modifying the same?
H. As to whether the minority shareholders are entitled to state
their claims/objections despite having not approached the
Adjudicating Authority; and as to whether the resolution plan does
not provide fair treatment to the minority shareholders?
G I. (i) As to whether, after approval of the resolution plan of NBCC
by the Committee of Creditors, where homebuyers as a class
assented to the plan, any individual homebuyer or any association
of homebuyers could maintain a challenge to the resolution plan
and could be treated as a dissenting financial creditor or an
H aggrieved person?
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(ii) As to whether the stipulations in the resolution plan stand in A
violation of the provisions of the Real Estate (Regulation and
Development) Act, 2016?
(iii) As to whether the resolution plan is violative of the
requirements of CIRP Regulations?
(iv) As to whether any housing project which has been B
completed or is nearing completion ought to be kept out of the
purview of the resolution plan?
J. (i) As to whether the amount of INR 750 crores, which was
deposited by JAL pursuant to the orders passed by this Court in
the case of Chitra Sharma, and accrued interest thereupon, is C
the property of JAL and stipulation in the resolution plan concerning
its usage by JIL or NBCC is impermissible?
(ii) As to whether any amount is receivable by JIL and/or its
homebuyers from JAL; and the accounts between JAL and JIL
need reconciliation? D
K. (i) As to whether Clause 23 of Schedule 3 of the resolution
plan providing for extinguishment of security interest of lenders
of JAL could not have been approved by the Adjudicating
Authority?
E
(ii) As to whether adequate provision is required to be made in
the resolution plan as regards utilisation of the land bank of 758
acres, that has become available to JIL in terms of the judgment
dated 26.02.2020 by this Court?
L. What should be the appropriate orders on the other issues
F
raised by the resolution applicant seeking clarification/directions?
M. As to whether the Appellate Authority was justified in providing
for an Interim Monitoring Committee for implementation of the
resolution plan in question during the pendency of appeals?
N. What should be the final order and relief? G
Relevant factual and background aspects
16. For determination of the points so arising, we need to examine
the relevant provisions contained in IBC and CIRP Regulations and apply
the same to the process related with consideration and approval of the
H
634 SUPREME COURT REPORTS [2021] 12 S.C.R.

A resolution plan in question; and to the terms, prescriptions and stipulations
of the impugned resolution plan as also to the modifications, as ordered
(or as declined) by the Adjudicating Authority (NCLT) in the impugned
order dated 03.03.2020. However, in the given set of facts and
circumstances, before examining the relevant provisions and before
dilating on the relevant features of the resolution plan and the order
B
impugned, it is expedient to take note of the crucial background aspects
relating to the present CIRP and key attributes of the orders passed by
this Court in previous rounds of litigation concerning this very CIRP.
17. For a clearer picture of the subject matter of this litigation, a
few glimpses of the relevant history shall be apposite.
C
17.1. By way of a notification dated 24.04.2001, the Government
of Uttar Pradesh, in exercise of its powers under Section 3 of the U.P.
Act of 1976, proceeded to set up Taj Expressway Industrial Development
Authority (‘TEA’) for anchoring development of Taj Expressway Project,
being that of a six-lane 160 km long Super Expressway with service
D roads and associated facilities connecting Noida and Agra, passing through
a so-called virgin area along the river Yamuna.
17.2. At the initial stages, the said Taj Expressway Industrial
Development Authority invited bids for selecting the entity for execution
of the project. In this process, ultimately, the company known as
E Jaiprakash Industries Limited came out as the successful bidder. This
company, Jaiprakash Industries Limited, is now named as Jaiprakash
Associates Limited (‘JAL’).
17.3. After the said bidding process, a Concession Agreement
dated 07.02.2003 was executed between the principal TEA and the
F successful bidder Jaiprakash Industries Limited, who came to be referred
to as the “concessionaire”. Various terms and stipulations of this
Concession Agreement form the subject matter of one segment of dispute
in the present litigation, as discussed at the relevant stages hereafter. At
the present stage, worthwhile it is to notice that under this CA, the
G concessionaire was to be provided land for constructing Expressway
and its allied facilities; and was also to be provided other land for
development. In this regard, the concessionaire was given lease of
Expressway land with a right to collect toll from the users of the road for
36 years; and the land adjacent to the road was provided to the
concessionaire for commercial exploitation on a lease for 90 years. As
H regards premium for the land being so transferred, the stipulations in the
JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 635
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CA had been to the effect that such premium shall be equivalent to A
acquisition cost plus a lease rent of INR 100 per hectare per year. In
Clause 18.1 of CA, it was also agreed to between the parties that in
case the concessionaire and TEA would consider it necessary to transfer
the rights and obligations of concessionaire to a special purpose vehicle
(‘SPV’), the concessionaire would do so in a reasonable time for which,
B
documents as may be required shall be executed amongst the
concessionaire, the TEA and the SPV. For accomplishment of the project,
the Government of Uttar Pradesh proceeded to acquire land for laying
of the Expressway; and also proceeded to acquire additional land along
the road for development of the same for commercial, amusement,
industrial, institutional and residential purposes. C
17.4. Coming on the heels of this project and in terms of the said
Clause 18.1 of CA, the corporate debtor Jaypee Infratech Limited (‘JIL’)
was set up as a special purpose vehicle by the concessionaire and
thereafter, the rights and obligations under CA were transferred to JIL
by way of an assignment agreement dated 19.10.2007 and deed of D
agreement dated 27.11.2007. In this manner, the corporate debtor JIL
came to be accepted as the concessionaire. Later on, by way of a
notification dated 11.07.2008, Taj Expressway Industrial Development
Authority was renamed as Yamuna Expressway Industrial Development
Authority (‘YEIDA’). The net result of the dealings aforesaid has been
that the rights and obligations under the said Concession Agreement E
dated 07.02.2003 now relate to the corporate debtor JIL as the
concessionaire and YEIDA as the land providing agency.
17.5. As noticed, the corporate debtor JIL was set up as the SPV
by the original concessionaire JAL; and JAL had approximately 71.64%
equity shareholding in JIL as on 31.03.2017. Admittedly, JAL had been F
the holding company of JIL. When JIL was set up as an SPV for the
purpose of execution of the project/s under the said CA, finances were
obtained from a consortium of banks against the partial mortgage of
land acquired and a pledge of 51% of the shareholding held by JAL.
Accordingly, JIL took up those two projects; the Expressway was laid G
and JIL also started developing real estate projects in two locations of
the land acquired, one in Wish Town, Noida and another in Mirzapur.
17.6. However, JIL defaulted in several of its obligations, including
those in completion of the real estate projects as proposed and in payment
of dues of the lender financial institutions. H
636 SUPREME COURT REPORTS [2021] 12 S.C.R.

A 18. The default on the part of JIL in payment of its dues led the
lender bank, IDBI Bank Limited, instituting a petition under Section 7 of
the Code before the NCLT, for initiation of the corporate insolvency
resolution process against JIL. The applicant bank alleged that JIL had
committed a default in repayment of its dues to the tune of INR 526.11
crores. JIL filed its objections to the petition but later on, withdrew the
B
objections and furnished its consent for resolution plan under the provisions
of the Code.
18.1. In view of the above, on 09.08.2017, NCLT initiated the CIRP
in respect of JIL. An order of moratorium was issued under Section 14
of the Code by which, the institution of suits and continuation of pending
C proceedings, including execution proceedings, were prohibited and an
Interim Resolution Professional was appointed. On 14.08.2017, IRP, in
pursuance of the order of NCLT, called for submissions of claims by
financial creditors in Form-C, by operational creditors in Form-B, by the
workmen and employees in Form-E and by other creditors in Form-F.
D On 16.08.2017, the Insolvency and Bankruptcy Board of India31 made
an amendment to its Regulations whereby, Regulation 9(a) was inserted
to include the claims by other creditors; and then, on 18.08.2017, the
Board released a press note that the homebuyers could fill in Form-F, as
they could not be treated at par with financial and operational creditors.
E 19. The aforesaid position led to several petitions in this Court,
particularly by the aggrieved homebuyers. As noticed, those petitions
were dealt with by this Court as a batch, led by the case of Chitra
Sharma (supra). Several orders were passed by this Court in the said
batch of petitions from time to time, inter alia, to the effect that IRP
was permitted to take over the management of JIL and was directed to
F ensure that necessary provisions were made to protect the interests of
homebuyers. Various orders were also made with directions to JAL, as
holding company of JIL, for making deposits in the Court, particularly
looking to the claim of refund being made by some of the homebuyers.
While finally disposing of the matters, this Court took note of the interests
G of homebuyers as also the creditors of JAL and JIL; and also took note
of the status of proceedings and the statutory provisions as then obtaining,
including the fact that the statutory period of 180 days, and even the
extended period of 90 days, for concluding the CIRP had come to an
end but then, by way of the Insolvency and Bankruptcy (Amendment)
31
H Hereinafter also referred to as ‘the Board’.
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Ordinance, 2018, which came into force on 06.06.2018, the doubts about A
the status of homebuyers were removed and they were expressly
recognised as financial creditors of the corporate debtor. In the given
set of facts and circumstances, this Court provided a reprieve to the
CIRP in question while making further orders in the interests of
homebuyers and other creditors.
B
19.1. The proceedings and the orders passed by this Court in the
said case of Chitra Sharma are of material bearing in the present case
and, therefore, may be usefully recounted in necessary details.
Orders and directions in the case of Chitra Sharma
20. As noticed, this Court was moved in the case of Chitra Sharma C
(supra) essentially for the reason that a large number of homebuyers,
who had invested in the real estate projects proposed by JAL and JIL,
were feeling distressed in the wake of the proposed CIRP concerning
JIL and who were likely to be left in the lurch because, at the given
stage, while IBC recognised three categories of stakeholders namely, (i) D
corporate debtors; (ii) financial creditors; and (iii) operational creditors
but, the homebuyers, otherwise having a direct and substantial interest
in CIRP with investment of lifetime, were being treated only as ‘other
creditors’. In the given scenario, on being moved, this Court issued notice
on 04.09.2017 in the said batch of petitions; the proceedings before the
NCLT at Allahabad were stayed until further orders; a copy of the E
proceedings was ordered to be served on the office of the learned Attorney
General for India; and the applications for impleadment and intervention
were allowed.
20.1. Thereafter, on 11.09.2017, while dealing with an application
moved by IDBI Bank Limited for vacation of the ad-interim order dated F
04.09.2017, several facets of the matter and ramifications of the stay
order passed by this Court were projected with reference to the scheme
of the provisions contained in the Code. On the other hand, it was argued
on behalf of the homebuyers that they were of lower and middle income
groups, who had invested their life savings with JIL and JAL and their G
interests were required to be protected. It was argued that if CIRP was
restored, there should be a representative from the homebuyers or the
Court may appoint someone on CoC to espouse the interests of the
homebuyers.

H
638 SUPREME COURT REPORTS [2021] 12 S.C.R.

A 20.1.1. Taking note of the submissions so made and in order to
safeguard the interests of stakeholders, this Court modified the earlier
order dated 04.09.2017 and issued material directions, inter alia, to the
effect that: (i) IRP shall take over the management of JIL and formulate
interim resolution plan with necessary provision to protect the interests
of homebuyers; (ii) Mr. Shekhar Naphade, learned senior counsel along
B
with Ms. Shubhangi Tuli, AOR shall participate in the meetings of CoC
to espouse the cause of the homebuyers and to protect their interests;
the Director or Managing Director of JIL or JAL on the date of institution
of insolvency proceedings as also on the date of order, except the nominee
Directors of lending institutions, shall not leave the country without prior
C permission of the Court; and all the suits and proceedings against JIL
shall remain stayed in terms of Section 14(1)(a) of the Code. In addition,
this Court also directed JAL to deposit a sum of INR 2,000 crores and
provided that if any assets or property of JAL had to be sold for the
purpose, that should be done after obtaining prior approval of this Court.
For its relevance, the aforesaid order dated 11.09.2017, carrying
D
significant observations and material directions of this Court, which are
of bearing on a substantial part of the present litigation, could be extracted,
in extenso, as under: -
“All the applications for intervention/impleadment are
allowed.
E
IA No. 87575 of 2017 in SLPs (C) Nos. 24001- 24002 of
2017 (D. Nos. 27277, 27579 and 27624 of 2017)
The present interlocutory application has been filed by the
IDBI Bank Ltd. in the special leave petitions which have been
F registered as SLPs (C) Nos. 24001 and 24002 of 2017.
This is an application for vacating/modification of the order dated
4-9-2017. On that day, this Court while issuing notice, had passed
the following order:
“2. …..In the meantime the impugned order(s) passed by the
G National Company Law Tribunal, Allahabad shall remain stayed
until further orders. A copy of the special leave petition be
served on the office of learned Attorney General for India. All
applications for impleadment/intervention stand allowed.”
Mr K.K. Venugopal, learned Attorney General for India
H appearing for Respondents 1 and 2 submitted that the order passed
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by this Court on 4-9-2017 needs to be vacated or modified because A
the consequence of the stay would be that the Management of
Respondent 3, Jaypee Infratech Ltd. would stand restored. This
was not a consequence intended by this Court. It is urged by him
that if the erstwhile Management of the said company continues,
it will affect the rights of the creditors and the consumers as well.
B
In the course of the hearing, we have been informed that
after the order of stay was passed by this Court, the Interim
Resolution Professional (IRP) has handed over records to
Respondent 3, Jaypee Infratech Ltd. (“JIL”). It is submitted by
Mr K.K. Venugopal, learned Attorney General that some time
should be granted to the IRP to formulate at least a preliminary C
scheme so that the interest of all stakeholders is protected. He
has also shown his concern for the interest of the homebuyers.
Dr Abhishek Manu Singhvi, learned Senior Counsel
appearing for IDBI Bank Ltd., (Respondent 6 in the writ petition)
submits that under the statutory scheme, the IRP has to take over D
otherwise the letter and spirit of the Act is likely to be affected.
The learned counsel appearing for the homebuyers, in
contra, submits that they belong to the lower and middle income
group and have invested life savings with JIL and with its holding
company, Jai Prakash Associates Ltd. (“JAL”). It has been E
assiduously urged that the investments of flat purchasers are with
JIL and JAL and, therefore, the interest of the purchasers may be
protected. It is also argued that if the IRP is restored, there should
be a representative from the homebuyers or this Court may appoint
someone on this Committee of Creditors and espouse the interests F
of the homebuyers.
Having heard the learned counsel for the parties at length,
in modification of the order dated 4-9-2017, we issue the following
directions:
a) The IRP shall forthwith take over the Management of JIL. G
The IRP shall formulate and submit an interim resolution plan
within 45 days before this Court. The interim resolution plan shall
make all necessary provisions to protect the interests of the
homebuyers;
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640 SUPREME COURT REPORTS [2021] 12 S.C.R.

A b) Mr Shekhar Naphade, learned Senior Counsel along with
Ms Shubhangi Tuli, Advocate-on-Record, shall participate in the
meetings of the Committee of Creditors under Section 21 of the
Insolvency and Bankruptcy Code, 2016 to espouse the cause of
the homebuyers and protect their interests;
B c) The Managing Director and the Directors of JIL and JAL shall
not leave India without the prior permission of this Court;
d) JAL which is not a party to the insolvency proceedings,
shall deposit a sum of Rs 2000 crores (Rupees two thousand
crores) before this Court on or before 27-10-2017. For the
C said purpose, if any assets or property of JAL have to be
sold, that should be done after obtaining prior approval of
this Court. Any person who was a Director or Managing
Director of JIL or JAL on the date of the institution of the
insolvency proceedings against JIL as well as the present
Directors/Managing Director shall also not leave the
D country without prior permission of this Court. The foregoing
restraint shall not apply to nominee Directors of lending institutions
(IDBI/ICICI/SBI);
e) All suits and proceeding instituted against JIL shall in terms of
Section 14(1)(a) remain stayed as we have directed the IRP to
E remain in Management.
Be it clarified that we have passed this order keeping in
view the provisions of the Act and also the interest of the
homebuyers.

F IA stands disposed of accordingly.
The matter be listed at 2.00 p.m. on 13-11-2017.
The prior date given by this Court i.e. 10-10-2017 stands
cancelled.”
(emphasis in bold supplied)
G
20.1.2. It could be readily noticed that in formulating the directions
aforesaid, this Court initiated steps to protect the interests of homebuyers
essentially for the reason that, at the given stage, homebuyers were not
regarded as financial creditors and they were not represented in the
CoC. Significantly, while evolving a workable and protective mechanism,
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this Court also took note of the crucial background aspects and the fact A
that JIL was essentially an alter ego of JAL; and thus, even while
consciously noting that JAL was not a party to the insolvency proceedings,
directed that JAL shall deposit a sum of INR 2,000 crores and restraints
were also put over disposal of assets or property of JAL and over the
movement of the Directors/Managing Directors of JIL or JAL away
B
from the country.
20.2. JAL moved an application (I.A. No. 102471 of 2017) for
modification/recall of the aforesaid direction for deposit of INR 2,000
crores or for a modification that would enable it to transfer the rights
under the Concession Agreement in respect of the Yamuna Expressway.
This application was considered and rejected by the Court on 25.10.2017 C
after noticing the submissions in opposition by the learned Attorney
General as also by the learned counsel appearing on behalf of IDBI
Bank and YEIDA. It was also submitted by the counsel for IRP that the
rights under the Concession Agreement belonged to JIL, which was
subject to proceedings under the IBC and therefore, such a request D
could not be granted. However, the time for depositing INR 2,000 crores
was extended until 05.11.2017. The relevant part of order dated 25.10.2017
reads as under: -
“It is submitted by Mr Kapil Sibal and Mr Mukul Rohatgi,
learned Senior Counsel appearing for the applicant that JAL may E
be permitted to transfer its rights under the concession agreement
in respect of Yamuna Expressway. The same is seriously opposed
by Mr K.K. Venugopal, learned Attorney General for India,
Dr Abhishek Manu Singhvi, learned Senior Counsel appearing for
the IDBI Ltd. and Mr Ravindra Kumar, learned counsel appearing
for the Yamuna Expressway Industrial Development Authority. F

It is also submitted by Mr Parag P. Tripathi, learned Senior
Counsel representing the Interim Resolution Professional (IRP)
that the rights under the concession agreement in respect of
Yamuna Expressway are of Jaypee Infratech Ltd. (JIL), which is
subject to proceeding under the Insolvency and Bankruptcy Code G
and, therefore, it cannot be transferred. Mr Ravinder Kumar,
learned counsel appearing for the Authority has submitted that
the rights under the concession agreement, are non-transferable.
We have also heard Mr Ajit Kumar Sinha, learned Senior
Counsel appearing for some of the homebuyers. There are other H
642 SUPREME COURT REPORTS [2021] 12 S.C.R.

A counsel who are representing the homebuyers who are interested
in having their flats. We do not want to address the said aspect
today.
We are not inclined to entertain the application for
modification of the order dated 11-9-2017. However, we extend
B the time to deposit the sum of Rs 2000 crores (Rupees two thousand
crores) till 5-11-2017.”
20.3. Then, on 13.11.2017, this Court appointed learned counsel
Mr. Pawanshree Agarwal as the amicus curiae, who was to open a
web portal on which details of homebuyers could be uploaded. All the
C Directors of JAL, except institutional Directors were ordered to remain
present before the Court on the next date with the affidavits disclosing
their personal assets. This order dated 13.11.2017 reads as under: -
“All the applications for impleadment/intervention stand
allowed. The homebuyers are directed to approach
D Mr Pawanshree Agarwal, learned counsel, who is appointed as
the Amicus Curiae in the matter to assist the Court and he shall
open a web portal so that the homebuyers can give their details to
Mr Pawanshree Agarwal. Let the matter be listed on 22-11-2017.
On that day, all the Directors except institutional Directors of
Jaiprakash Associates Ltd. (JAL) shall remain personally present
E in the Court with the affidavits disclosing their personal assets.”
20.4. On the next date, 22.11.2017, eight independent Directors
and five promoter Directors were present before the Court. On a
statement made on behalf of JAL, this Court permitted JAL to deposit
INR 275 crores during the course of the day and directed further deposit,
F of INR 150 crores by 13.12.2017 and INR 125 crores by 31.12.2017. A
restraint was imposed on the alienation of properties and assets of the
Directors and their families while maintaining the earlier direction for
the deposit of INR 2,000 crores; and the Directors concerned were
directed to remain present on the next date. The amicus curiae was
G asked to create a web portal within a week; and for that matter, learned
counsel appearing for JAL was to provide all the details as required by
the amicus and also to provide him a sum of INR 5 lakhs. The relevant
part of order dated 22.11.2017 reads as under: -
“It is submitted by learned Senior Counsel appearing for
Jaiprakash Associates Ltd. (JAL) that the company is ready with
H
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Rs 275 crores. The homebuyers raised their concern about the A
realisation of the amount. This Court appreciates the grievance
and the concern of the homebuyers.
We think it would be appropriate to direct as follows:
(a) A demand draft of Rs 275 crores be deposited by
Mr Anupam Lal Das, learned counsel appearing for the company, B
before the Registry of this Court, today.
(b) A sum of Rs 150 crores be deposited by 13-12-2017.
(c) A further sum of Rs 125 crores be deposited by 31-12-
2017. C
(d) Neither the independent Directors nor the promoter
Directors shall alienate their personal properties or assets in any
manner, and if they do so, they will not only be liable for criminal
prosecution but contempt of the court.
(e) That apart, we also direct that the properties and assets of D
their immediate and dependent family members should also not
be transferred in any manner, whatsoever.
Needless to say that direction for deposit of Rs 2000 crores
shall remain as it is. The only indulgence is to pay the same in
instalments. E
Mr Pawanshree Agrawal, who had been appointed as Amicus
Curiae on an earlier date, shall create a portal within a week and
do the needful as he has done in similar matters. Mr Anupam Lal
Das, learned counsel shall provide all the details as required by
Mr Pawanshree Agrawal. Mr Anupam Lal Das shall provide a F
sum of Rs 5 lakhs to Mr Pawanshree Agrawal for creation of the
portal and to carry on the consequential activities. Matters be
listed on 10-1-2018. On that day, all the independent Directors
and promoter Directors of Jaiprakash Associates Limited, shall
remain present. Copies of the affidavits deposed by all the five
promoter Directors, shall be served on the Central Agency, so G
that the learned Attorney General can be made aware of that.
Call on the date fixed.”
20.5. Next to the above, the matter was considered on 15.12.2017,
when the deposited INR 150 crores were ordered to be kept in a short-
H
644 SUPREME COURT REPORTS [2021] 12 S.C.R.

A term deposit and the time (for further payment) was extended until
25.01.2018. Further to that, on 10.01.2018, this Court took note of the
submissions made on behalf of the homebuyers of JAL as also an
application made by Reserve Bank of India32 seeking leave to move the
NCLT against JAL and issued the directions, inter alia, to the effect
that JAL shall file an affidavit disclosing its housing projects throughout
B
the country and the stage of their construction; the amicus shall open an
independent web portal for the homebuyers of JAL; the application of
RBI shall be considered at a later stage; and the Directors concerned
need not remain personally present before the Court unless so directed
but shall not leave the country. The relevant part of this order dated
C 10.01.2018 reads as under: -
“Having heard the learned counsel for the parties, we are
inclined to pass the following directions:
(i) Jaiprakash Associates Ltd. (JAL) shall file an affidavit stating
therein as to how many housing projects it has throughout the
D country and the stage of their construction. The said affidavit
shall be filed within a week hence.
(ii) Mr Pawanshree Agarwal, learned Amicus Curiae shall create
an independent web portal in respect of the homebuyers of JAL,
which shall reflect the details of the homebuyers.
E
(iii) The web portal created by Mr Pawanshree Agarwal qua
Jaypee Infratech Ltd. (JIL) shall be kept alive.
(iv) The application filed by Reserve Bank of India seeking
permission to move NCLT shall be considered at a later stage.
F (v) The independent Directors of JAL need not remain personally
present on every date of hearing unless so directed by this Court.
The independent Directors shall not leave the country without
leave of this Court.
(vi) The earlier order of injuncting JAL to create any kind of
G third-party interest in the assets is reiterated.
(vii) The applications for impleadment/intervention and directions
filed before this Court shall be served on Mr Pawanshree
Agarwal.”
32
‘RBI’ for short.
H
JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 645
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20.6. Further effective proceedings took place on 21.03.2018 A
when it was stated on behalf of JAL that INR 550 crores had already
been deposited and that only about 8% of homebuyers were interested
in seeking refund while others were desirous of seeking possession of
their flats. This Court indicated that at the given stage, only the matter in
relation to the homebuyers seeking refund was being examined and other
B
grievances shall be examined in the next phase of proceedings. Since
the order for deposit of INR 2,000 crores had not been complied with
despite the end of deadline, the Court issued directions for further deposit
of INR 200 crores, as agreed to by the Managing Director of JAL present
in the Court, where the first instalment of INR 100 crores was to be
deposited by 15.04.2018 and the second instalment in the like amount C
was to be deposited by 10.05.2018. The amicus curiae informed the
Court, with reference to his portal and the record of JAL, that a sum of
INR 1,300 crores was required to be refunded by way of principal alone
to the homebuyers who were seeking refunds, whereupon the amicus
was requested to submit a project-wise chart, indicating the number of
D
persons and the stage of completion. Taking note of the grievances of
the homebuyers that the developer was demanding monthly instalments
despite being unable to complete construction, the developer was
restrained from raising demands towards outstanding or future instalments
in respect of those buyers who had expressed a desire to obtain refunds.
Further to that, the IRP was permitted to finalise the resolution plan, to E
be implemented only with the leave of the Court. This Court also took
note of the inability expressed by the learned senior counsel, who was
earlier requested to espouse the cause of homebuyers in CoC and, in his
place, Mr. Gaurav Agarwal Advocate was appointed for the purpose.
This order dated 21.03.2018 reads as under: -
F
“Heard Mr Anupam Lal Das, learned counsel appearing
for Respondent 4 Jaiprakash Associates Ltd. (JAL). Though many
a contention has been raised by Mr Das, yet, we are not inclined
to entertain the same keeping in view our orders dated 11-9-2017
and 25-10-2017. We have been told by Mr Das that JAL has
deposited a sum of Rs 550 crores before the Registry of this G
Court. It is submitted by Mr Das that only 8% of the homebuyers/
allottees are inclined to take refund whereas others have
expressed their inclination to have the flats.

H
646 SUPREME COURT REPORTS [2021] 12 S.C.R.

A We would intend to make it absolutely clear that, for
the present, we are only concerned with those homebuyers
who intend to have refund. In the next phase, we may
consider the grievances, if any, of the homebuyers who
intend to have the flats. In that regard, we think it appropriate
to hear Mr Parag P. Tripathi, learned Senior Counsel appearing
B
for Interim Resolution Professional (IRP) and Mr Jayant Bhushan
and Mr Sanjay Hegde and others, learned Senior Counsel appearing
for some Associations of homebuyers who intend to have their
flats.
As our order for deposit of Rs 2000 crores has not been
C complied with, we intend to pass the following directions:
(a) JAL shall deposit a further sum of Rs 200 crores
in two instalments, as agreed by the Managing Director
who is present in Court today. The first instalment of Rs
100 crores shall be deposited by 15-4-2018 and the second
D instalment of Rs 100 crores shall be deposited by 10-5-
2018;
(b) It is submitted by Mr Pawanshree Agrawal, learned
Amicus Curiae that as per his portal an amount of Rs 1300
crores, at present, is required to be refunded towards the
E principal sum for those homebuyers who, as of today, seek
refund. The figure of Rs 1300 crores is as per the record of
JAL.
In view of the aforesaid, we would require Mr Agrawal
to prepare a projectwise chart indicating the number of
F persons in respect of that project and the stage of
completion of the respective projects so that appropriate
order can be passed for disbursement of the amount on
pro rata basis to the homebuyers;
(c) Mr Agrawal, learned Amicus Curiae shall keep the portal
G operational. However, the requests of only those persons on
the portal who have sought refund, as of today will be
considered at this stage;
(d) The submission of the homebuyers who are seeking
refund is that the developer is making demands towards monthly
H instalments. We direct that no demand towards outstanding or
JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 647
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future instalments shall be raised by the developer to the flat buyers A
who have, as of today, expressed the option to obtain refund. The
demands raised by the developer in respect of the homebuyers
who have already opted for refund till today, shall remain stayed;
(e) The IRP may proceed to finalise the resolution plan but
the same shall be implemented after taking leave of this Court. B
(f) The National Company Law Tribunal (NCLT) shall
decide subject to the directions which we have given hereinabove.
Before we fix the next date, we must note that we have been
apprised that Mr Shekhar Naphade, learned Senior Counsel who
was appointed to espouse the cause of the homebuyers before C
the Committee of Creditors has expressed his inability to continue
as such.
In view of the aforesaid, a need has arisen to appoint
someone else in place of Mr Shekhar Naphade and accordingly
we appoint Mr Gaurav Agrawal, Advocate. It is further clarified D
that Mr Gaurav Agrawal shall be guided by our previous orders.
Let the matter be listed on 16-4-2018 so that this Court can
take note of whether the developer has complied with the direction
of depositing the first instalment and to pass directions with regard
to disbursement of the amount deposited on pro rata basis on the E
basis of the report submitted by Mr Pawanshree Agrawal.”
(emphasis in bold supplied)
20.7. On 16.04.2018, apart from dealing with two applications
filed by the Managing Director and the Joint Managing Director of JAL
F
seeking permission to travel abroad, this Court took note of the deposit
of INR 100 crores by JAL and directed that the second instalment of
INR 100 crores be deposited by 10.05.2018. While reiterating liberty to
IRP to finalise the resolution plan in terms of the earlier order, this Court
also extended liberty to JAL to submit a representation to the competent
authority without expressing any opinion on that count and leaving the G
representation to be considered in accordance with law.33
33
As discussed a little later, it has appeared in the final judgment passed in the case of
Chitra Sharma that the referred representation had been in relation to the prayer of
JAL to participate as one of the intending bidders in the resolution plan which was
being formulated by the IRP; and such a participation by JAL was impermissible in
view of Section 29A introduced to the Code. H
648 SUPREME COURT REPORTS [2021] 12 S.C.R.

A 20.8. Thereafter, on 16.05.2018, apart from dealing with another
application filed by an independent Director of JAL seeking permission
to travel abroad, this Court took note of the fact that a sum of INR 750
crores was lying in deposit and it was observed that the same ‘has to be
disbursed on pro rata basis amongst the homebuyers’. It was also
directed that JAL, the holding company of JIL, shall deposit a further
B
sum of INR 1,000 crores ‘jointly and severally’ by 15.06.2018 subject
to which, stay was granted over further proceedings, only insofar as
concerning the liquidation. The relevant part of this order dated 16.05.2018
reads as under: -
“Having heard the learned counsel for the parties at length, it
C is directed that Jaiprakash Associates Ltd. (JAL), the
holding company of Jaypee Infratech Ltd. (JIL) shall deposit
a further sum of Rs 1000 crores jointly and severally by 15-
6-2018. Subject to the said deposit, there shall be a stay of further
proceedings only insofar as the liquidation is concerned. In the
D meantime, Interim Resolution Professional (IRP) shall remain in
management. If the amount is not deposited by 15-6-2018, the
statutory proceedings shall continue. As far as Rs 750 crores,
which is lying in deposit is concerned, it has to be disbursed
on pro rata basis amongst the homebuyers.”
E (emphasis in bold supplied)
20.9. Thereafter, on 13.07.2018, this Court took note of certain
proposals made by JAL, which were opposed by the petitioners. While
observing disinclination to entertain such proposals, this Court posted
the matters on 16.07.2018 ‘exclusively for the purpose of considering
F the issue of the rights of the homebuyers and the capability of JAL
and JIL to construct the projects’.
21. After the aforesaid proceedings, the petitions were finally heard
and disposed of by this Court by way of the judgement dated 09.08.2018.
Before taking note of the significant features and attributes of the final
G judgement in the case of Chitra Sharma, but to keep feasible track of
the chronology of events, we may indicate that parallel to the proceedings
in this Court, NCLT continued with CIRP concerning the corporate debtor
JIL and in that process, passed orders on 09.05.2018 and 15.05.2018,
approving the decision of IRP rejecting the claims of two lenders of JAL
to be recognised as financial creditors of the corporate debtor JIL on the
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strength of the mortgage created by the corporate debtor JIL as collateral A
security of the debts of its holding company JAL. Thereafter, on
16.05.2018, NCLT accepted an application, that was moved by IRP on
06.02.2018, for avoidance of certain transactions whereby the corporate
debtor JIL had mortgaged its properties as collateral securities for the
loans and advances made by the lender banks and financial institutions
B
to JAL, as being preferential, undervalued and fraudulent. These aspects
were finally dealt with by this Court in the judgement dated 26.02.2020,
as shall be noticed later.
22. We may now revert to the final judgement dated 09.08.2018
in the case of Chitra Sharma, and take into account the relevant features,
which do have a bearing on the issues raised in the present litigation. C

22.1. In final judgement dated 09.08.2018 in the case of Chitra
Sharma (supra), this Court took note of the past proceedings and also
the fact that when resolution plans were considered and examined by
the CoC, JAL too submitted its proposals which were rejected in view
of the bar contained in Section 29A IBC as also for the reason that JAL D
failed to convince the CoC of its ability to tie up the funds for construction.
However, even the other plans could not muster the support of the requisite
majority in CoC. Accordingly, IRP informed NCLT that no resolution
plan was approved by the CoC even within the extended period for
completing the CIRP, which came to an end on 12.05.2018. This Court E
took note of the mandate of Section 33 IBC whereby liquidation follows
upon rejection of a resolution plan but then, noticed unanimity of the
parties during the course of hearing that the liquidation of JIL was not
going to subserve the interests of the homebuyers who had made valuable
investments by contributing their hard-earned money in the hope of
obtaining a roof over their heads. This Court also observed that a home F
for the family was considered to be a part of the right to life and took
note of the appeal made by the homebuyers to ensure complete justice
rather than leaving them at the mercy of the liquidation process. While
appreciating the substance of that plea, this Court nevertheless indicated
the need to abide by the discipline of law and thereafter, proceeded to G
take a comprehensive view of the scheme of IBC; and also underscored
the fact that though IBC, as originally enacted, did not contain express
provisions in relation to the interests of homebuyers but, their concerns
were sought to be assuaged in the amendment brought about by the
Insolvency and Bankruptcy (Amendment) Ordinance, 2018, which came
H
650 SUPREME COURT REPORTS [2021] 12 S.C.R.

A into force on 06.06.2018 and whereby, the homebuyers were expressly
brought within the purview of financial creditors under the IBC. This
Court pointed out that now being duly recognised as financial creditors,
the homebuyers were necessarily a part of the CoC, constituted in terms
of Section 21 IBC. This Court also took note of the relevant provisions
in the Regulations relating to the voting share of the respective financial
B
creditors in CoC and selection of an authorised representative34 to
represent financial creditors in a particular class.
22.2. Proceeding further, this Court extensively referred to a
variety of submissions made on behalf of JAL, seeking to explain the
perspective of the developers with reference to the projects already
C accomplished by them and the projects being under execution; and their
proposal to deposit post-dated cheques to the tune of INR 600 crores
with the registry of this Court, if they were allowed to dispose of some
of the assets. The Court also took note of the fact that JAL had sought
directions to NCLT to decide an application for sanctioning the scheme
D of arrangement, propounded pursuant to a restructuring agreement
accepted by 32 creditors. The request of JAL was to continue with the
stay of liquidation proceedings against its deposit of post-dated cheques
of INR 600 crores and also to stay the directions of this Court whereby
IRP was allowed to remain in management of the corporate debtor. The
Court recorded the propositions of JAL as follows: -
E
“36. …..JAL has sought to assure that it would double the strength
of existing workers for the construction of its projects. JAL has
also stated that it would deposit postdated cheques of Rs 600
crores with the Registry of this Court. However, this is subject to
the condition that the Court should allow it to dispose of “identified
F cement assets” including its cement plan (sic) at Rewa in Madhya
Pradesh. In order to enable it to do so, JAL has sought a direction
to the NCLT at Allahabad to decide the application filed before it
for sanctioning a scheme of arrangement, propounded pursuant
to a master restructuring agreement signed and accepted by the
G 32 creditors. JAL seeks to continue the stay of liquidation
proceedings against its deposit of postdated cheques of Rs 600
crores. JAL also seeks a stay on the direction of this Court allowing
the IRP to remain in management.”

34
H ‘AR’ for short.
JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 651
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22.2.1. After careful consideration, this Court rejected the proposal A
submitted on behalf of JAL while explaining that accepting any such
proposal on behalf of JAL would cause serious prejudice to the discipline
of IBC. In that regard, this Court referred to the provisions contained in
Section 29A of the Code and the background in which certain specified
persons were made ineligible to be the resolution applicants.35 This Court,
B
inter alia, observed and explained as under: -
“39. Clauses (c) and (g) of Section 29-A would operate as a bar
to the promoters of JAL/JIL participating in the resolution process.
Under clause (c), a person who at the time of the submission of
the resolution plan has an account which has been classified a
non-performing asset under the guidelines of RBI or of a financial C
regulator is subject to a bar on participation for a stipulated period.
Under clause (g), a person who has been a promoter or in the
management or control of a corporate debtor in which a preferential
transaction, undervalued transaction, extortionate credit
transaction or fraudulent transaction has taken place and in respect D
of which an order has been made by the adjudicating authority
under the IBC is prohibited from participating. The Court must
bear in mind that Section 29-A has been enacted in the larger
public interest and to facilitate effective corporate governance.
Parliament rectified a loophole in the Act which allowed a backdoor
entry to erstwhile managements in the CIRP. Section 30 IBC, as E
amended, also clarifies that a resolution plan of a person who is
ineligible under Section 29-A will not be considered by the CoC:”
22.3. Apart from the above, this Court also took note of various
grounds urged on behalf of the homebuyers in opposition to the proposal
so submitted and, after examining the matter in its entirety, this Court F
was convinced that JAL/JIL were lacking in financial capacity and
resources to complete the unfinished projects; and allowing them to

35
We may point out that Section 29A was inserted to the Code along with a few other
amendments by way of the Insolvency and Bankruptcy Code (Amendment) Ordinance,
2017, promulgated on 23.11.2017. The Ordinance stated in its Preamble, inter alia, that
G
the same was being promulgated because it was considered necessary to provide for
prohibition of certain persons from submitting a resolution plan who, on account of
their antecedents, may adversely impact the credibility of the process under the Code.
This Ordinance later on took the shape of the Insolvency and Bankruptcy Code
(Amendment) Act, 2017 (No. 8 of 2018) that came into force with retrospective effect
from 23.11.2017. H
652 SUPREME COURT REPORTS [2021] 12 S.C.R.

A participate in the process of resolution would render the statutory
provisions nugatory.
22.3.1. Having regard to the issues involved herein, we are impelled
to take note of the grounds so urged on behalf of the homebuyers and
their due acceptance by this Court as follows: -
B “40. Mr Anand Grover appearing on behalf of the homebuyers
has opposed the proposal submitted by JAL/JIL on the following
grounds:
40.1. Loans given to JAL have been classified as non-performing
assets which renders JAL ineligible as a resolution applicant/new
C promoter under Section 29-A(b) IBC;
40.2. In addition to Section 29-A(b), JAL is also disqualified under
Section 29-A(g) IBC. Section 29-A(g) provides that a person
who is engaged in a fraudulent transaction should not be allowed
to bid for another company as such a person may again engage in
D fraudulent transactions. In May 2018, the NCLT, Allahabad set
aside a fraudulent transaction involving a mortgage of around 750
acres of JIL’s land in favour of the lenders of JAL. This mortgage
was without any consideration and the land of 750 acres may be
worth INR 5000 crores. The matter is now before the NCLAT,
E which has specifically framed an issue in this regard;
40.3. RBI is already before this Court seeking initiation of
insolvency proceedings against JAL. JAL’s proposal, although
presented under the garb of protecting the interest of homebuyers,
is aimed at the twin benefits of avoiding insolvency of JAL and
F regaining control of JIL, thereby defeating RBI’s application for
insolvency proceedings of JAL as well as Section 29-A IBC;
40.4. The reasons pleaded by JAL/JIL to excuse their failure to
complete the housing projects such as the stay order granted by
the National Green Tribunal have been rejected by the orders of
the National Consumer Disputes Redressal Commission as there
G
was no stay. One such order was passed by NCDRC on 2-5-
2016, in Developers Township Property Owners Welfare Society
v. Jaiprakash Associates Ltd.;
40.5. The contention of JAL that they faced impediments on
account of the purported stay imposed by NGT is patently
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incorrect as the stay by NGT was only on handing over possession A
without an occupation certificate, which had no bearing on the
construction. Moreover, JAL carried out construction during that
period as is evidenced inter alia by the fact that they raised demands
for construction linked payments during this period;
40.6. During the pendency of the CIRP from 9-8-2017, B
construction work was done under the aegis of the IRP under
whom JAL was a mere contractor;
40.7. The claim by JAL that flats have been delivered is a
fractured claim as flats have been delivered in incomplete stages
and are not in accordance with the allotment letters. The flooring C
is not complete, doors and windows are missing, no-objection
certificates have not been obtained from the Fire Department
and the offer of possession is being made without the occupation
certificate;
40.8. JAL does not have the capacity to deliver the flats and 22,000 D
homebuyers are suffering due to delays of more than four years
in completion of various projects of JAL and JIL;
40.9. Under the contracts, JAL and JIL are jointly and
severally liable to deliver the flats. If JAL was serious about
delivering the flats, the present situation would not have E
arisen. Further, JAL would have avoided the insolvency
process of JIL and would not have cast the homebuyers to
the uncertainties of insolvency;
40.10. There are serious doubts about the credentials of
JAL which has diverted funds from JIL towards its other F
businesses. The applicant associations had appointed ASA
Financial Services to conduct an audit of JIL’s financials and the
audit report demonstrates that JAL may have diverted more than
INR 10,000 crores from JIL;
40.11. JAL is undergoing a serious financial crisis. This is clear
G
from the following facts:
40.11.1. JAL has not yet honoured the order of this Court
asking it to deposit Rs 2000 crores for protection of the
interest of the homebuyers. JAL has paid only Rs 750 crores
out of Rs 2000 crores, after the expiry of almost 10 months
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654 SUPREME COURT REPORTS [2021] 12 S.C.R.

A from 11-9-2017 which was the date of the initial order of
this Court;
40.11.2. JAL has failed to pay even the latest instalment of
Rs 1000 crores by 15-6-2018 in accordance with the order
of this Court dated 16-5-2018;
B 40.11.3. JAL is a defaulter of more than 30 banks to the extent of
around Rs 30,000 crores. JAL has also defaulted on fixed deposits,
foreign currency convertible bonds and payments to Noida
Authority;
40.11.4. Even in the latest proposal, the proposal to deposit
C Rs 600 crores is spread over time indicating that JAL has no
resources; and
40.11.5. The proposal of doubling the strength of workers from
4000 to 8000 would only mean doubling the strength from 17
workers per tower to 35 workers per tower (228 towers to be
D built by 8000 workers). This would amount to 2 workers in each
floor of 4 flats (21,532 flats in 228 towers by 8000 workers). At
this rate, completion of flats may take several years.
41. Similar submissions have been urged on behalf of the
homebuyers by other learned counsel.
E
42. The bar under Section 29-A would preclude JAL/JIL
from being allowed to participate in the resolution process.
Moreover, the facts which have been drawn to the attention
of the Court leave no manner of doubt that JAL/JIL lack
the financial capacity and resources to complete the
F unfinished projects. To allow them to participate in the
process of resolution will render the provisions of the Act
nugatory. This cannot be permitted by the Court.”
(emphasis in bold supplied)
22.4. It was, however, submitted on behalf of JAL/JIL that with
G expiry of timelines for CIRP, the only option would be to liquidate the
corporate debtor which may not be in the interest of homebuyers and in
that situation, the only way out would be to provide for an arrangement
outside the provisions of IBC. It was also submitted that unless a group
of independent professionals came to a conclusion that it was not
H financially viable for JAL/JIL to complete the remaining work in a time-
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bound manner, their role as developers should not be discounted. Hence, A
it was submitted that an independent committee of experts be constituted
by the Court to evaluate the financial capability of JAL/JIL to continue
executing the ongoing projects. It was also submitted that only 8% of
the homebuyers had opted for refunds while 92% had chosen not to
claim refunds, thereby implying a confidence in the ability of JIL/JAL to
B
complete the project. However, on the other hand, the homebuyers
uniformly opposed the submissions so made and it was urged before the
Court that they had no confidence in the ability of either JIL or JAL to
complete the outstanding projects. In the third dimension, it was submitted
on behalf of the IRP that Court may revive the CIRP by extending the
time specified in IBC in order to enable fresh consideration to be made C
of the prospect for a resolution which would take into account the interests
of homebuyers under the amended IBC; and the second option would
be to appoint a committee under the supervision of the Court to explore
the possibility of a resolution which would obviate the need for liquidation.
Having pondered over the diverse propositions, the requirement of
D
balancing the discipline of the Code, to do complete justice and to secure
the interests of all the concerned, this Court found it just and proper to
accept the suggestion that CIRP be revived and CoC be reconstituted
as per the amended provisions of IBC with recourse to the powers under
Article 142 of the Constitution of India. This Court observed and held as
under: - E
“47. In considering the rival submissions, several important facets
of the case need to be underscored.
47.1. First and foremost, the CIRP was initiated on 9-8-2017,
following the order of NCLT admitting the proceedings. The period
of 180 days for concluding the CIRP came to an end on 6-2-2018 F
and the extended period ended on 12-5-2018. When the CIRP
was initiated and until the period of 270 days concluded, the
homebuyers did not have the status of financial creditors under
the provisions of IBC. They had no statutory voting rights in the
CoC. Under the interim directions of this Court, a workable G
arrangement was sought to be put into place by appointing a
representative of the homebuyers on the CoC to facilitate their
interests being duly borne in mind. But the point to be noted is that
in the absence of a statutory recognition of the position of the
homebuyers as financial creditors, the law did not allow for real
H
656 SUPREME COURT REPORTS [2021] 12 S.C.R.

A and substantive entitlements to them in the CoC. These statutory
entitlements have been brought in by the Ordinance in order to
recognise the vital interests of the homebuyers in a real estate
project and to allow them a statutory status in the insolvency
resolution process. Unfortunately by the time that the Ordinance
came into being on 6-6-2018, the period of 270 days had expired;
B
the resolution plan of Lakshdeep was rejected and the IRP
informed NCLT that no resolution plan had been approved within
the extended period of 270 days on 12-5-2018.
47.2. Having regard to the material change which has been
brought about by the amendment of the IBC by the
C Ordinance and the fact that this Court has been in seisin of
the proceedings to ensure that the homebuyers are
protected, we are of the view that it is but appropriate and
to do complete justice to secure the interests of all
concerned that the CIRP should be revived and CoC
D reconstituted as per the amended provisions to include the
homebuyers. In the facts of the present case, recourse to the
power under Article 142 would be warranted to render complete
justice. Parliament has undoubtedly provided a period of 180 days
and an extended period of 90 days to complete the process. But
in the present case a peculiar situation has arisen as a result of
E which the status of the homebuyers which had not been recognised
prior to 6-6-2018 has now been expressly recognised as a result
of the amending Ordinance.
47.3. The learned counsel for the IRP submitted that in the CoC
which will be reconstituted under the amended IBC, the
F homebuyers would have a substantial voting power so as to be
able to effectively protect their interests. Moreover, this Court
should follow the discipline of IBC which has been enacted by
Parliament specifically to streamline the resolution of corporate
insolvencies. Matters involving corporate insolvencies require
G expert determination. The legislature has made specific provisions
which are conceived in public interest and to facilitate good
corporate governance. The Court should not take upon itself the
burden of supervising the intricacies of the resolution process.
Accepting the suggestion of Mr Nariman (and one of the two
options proposed by Mr Tripathi) of the Court appointing a
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committee to supervise the resolution process outside IBC will A
involve the Court in an insuperable burden of evaluating intricate
matters of financial expertise on which Parliament has legislated
to create specific mechanisms.
47.4. We are emphatically of the view that it would not be
appropriate for the Court to appoint a committee to oversee the B
CIRP and assume the task of supervising the work of the
Committee. We must particularly be careful not to supplant
the mechanisms which have been laid down in the IBC by
substituting them with a mechanism under judicial
directions. Such a course of action would in our view not be
consistent with the need to ensure complete justice under Article C
142, under the regime of law. Hence, the power under Article 142
should be utilised at the present stage for the limited purpose of
recommencing the resolution process afresh from the stage of
appointment of IRP by the order dated 9-8-2017 and resultantly
renew the period which has been prescribed for the completion D
of the resolution process. We have furnished above, the reasons
for doing so. Chief amongst them is the fact that in the present
case the period of 270 days expired before the Ordinance
conferring a statutory status on homebuyers as financial creditors
came into existence. In the circumstances, it would be
necessary to revive the period prescribed by the statute E
by another 180 days commencing from the date of this
order. During this period, the IRP shall follow the provisions
of the IBC afresh in all respects. A new CoC should be
constituted in accordance with the amended provisions IBC
to enforce the statutory status of the allottees as financial F
creditors. We also clarify that apart from the three bidders whose
bids were found to be eligible by the IRP, it would be open to the
IRP to invite fresh bids to facilitate a wider field of choice before
the CoC. In that process, the offers made by the intervenors in
these proceedings can also be considered by CoC anew. We are
not inclined to evaluate the merits of the bids submitted by the G
bidders who were left in the fray, two of whom have intervened.
All bids must follow the discipline IBC. We have, however,
not accepted the submission to allow JIL or JAL and the
erstwhile promoters to participate in the process. Their
participation is expressly prohibited by Section 29-A and H
658 SUPREME COURT REPORTS [2021] 12 S.C.R.

A we decline to make any exception which would breach a salutary
and express provision made in the IBC.”
(emphasis in bold supplied)
22.5. Thereafter, this Court also took into consideration the
submissions made on behalf of some of the homebuyers for issuance of
B directions to facilitate pro rata disbursement of INR 750 crores lying in
deposit pursuant to the interim directions. This Court observed that even
when the claim of the refund seekers was to be considered with empathy,
such request could not be acceded to and specified four major reasons
for declining this prayer. The consideration of this Court in relation to the
C said sum of INR 750 crores, being also directly relevant for the present
purpose, could be usefully extracted as under: -
“48. As we have stated earlier, an amount of Rs 750 crores is
lying in deposit before this Court pursuant to the interim directions,
on which interest has accrued. The homebuyers have earnestly
D sought the issuance of interim directions to facilitate a pro rata
disbursement of this amount to those of the homebuyers who seek
a refund. We are keenly conscious of the fact that the claim of
the homebuyers who seek a refund of monies deserves to be
considered with empathy. Yet, having given our anxious
consideration to the plea and on the balance, we are not inclined
E to accede to it for more than one reason.
48.1. Firstly, during the pendency of the CIRP, it would as a matter
of law, be impermissible for the Court to direct a preferential
payment being made to a particular class of financial creditors,
whether secured or unsecured. For the present, we leave open
F the question as to whether the homebuyers are unsecured creditors
(as was urged by Mr Tripathi) or secured creditors (as was urged
by counsel appearing for them). Directing disbursement of the
amount of Rs 750 crores to the homebuyers who seek
refund would be manifestly improper and cause injustice to
G the secured creditors since it would amount to a preferential
disbursement to a class of creditors. Once we have taken
recourse to the discipline IBC, it is necessary that its
statutory provisions be followed to facilitate the conclusion
of the resolution process.

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48.2. Secondly, the figures which have been made available A
presently, following the opening of the web portal by the Amicus
Curiae, indicate that 8% of the homebuyers have sought a refund
of their monies while 92% would evidently prefer possession of
the homes which they have purchased. We cannot be unmindful
of the interests of 92% of the homebuyers many of whom
B
would also have obtained loans to secure a home. They
would have a legitimate grievance if the corpus of Rs 750
crores (together with accrued interest) is distributed to the
homebuyers who seek a refund. The purpose of the process
envisaged by IBC for the evaluation and approval of a resolution
plan is to form a composite approach to deal with the financial C
situation of the corporate debtor. Allowing a refund to one class
of financial creditors will not be in the overall interest of a
composite plan being formulated under the provisions of
the IBC.
48.3. Thirdly during the course of the hearing, the Court has been D
apprised of the concerns of the secured creditors, chief among
them being IDBI Bank Ltd. In its submissions before this Court,
IDBI Bank has emphasised that one of the major reasons for the
enactment of IBC was to protect the interest of lenders. The debt
owing to the banks and financial institutions has been secured by
the assets of JIL, to protect their interests. This debt originates in E
the public deposits of the banks and financial institutions, who are
answerable to their stakeholders.
48.4. Fourthly, RBI has moved this Court for permission to initiate
an insolvency resolution process. Parliament enacted the Banking
Regulation (Amendment) Act 2017 by introducing Section F
35-AA and Section 35-AB into the Banking Regulation Act 1949.
The amendment empowers the Central Government to authorise
RBI to issue directions to any banking company to initiate an
insolvency resolution process in respect of a default as understood
under the IBC. Such an order was issued by the Central G
Government on 5-5-2017. The RBI constituted an Internal Advisory
Committee (IAC) consisting primarily of its independent Directors.
The IAC took up for consideration accounts which were classified
either partly or wholly non-performing from amongst the top 500
exposures in the banking system as on 31-3-2017. As a first step,
H
660 SUPREME COURT REPORTS [2021] 12 S.C.R.

A the IAC recommended all such non-performing asset accounts
with fund and non-fund based outstandings exceeding Rs 5000
crores. The IAC has initially taken up twelve accounts involving
total exposure of Rs 1,79,769 crores. JIL was one of the twelve
accounts in respect of which directions have been issued to banks
for initiating insolvency resolution. Subsequently, the IAC
B
recommended that in respect of those accounts where 60% or
more had been classified as NPAs as on 30-6-2017, banks may
be directed to implement a viable resolution plan within six months
failing which the accounts may be directed for a reference under
the IBC by 31-12-2017. JAL was one such entity. No viable
C resolution plan could be found as a result of which it is also required
to be referred for CIRP. RBI has carried out this exercise as a
matter of economic policy in its capacity as the prime banking
institution in the country, entrusted with a supervisory role, and
the power to issue binding directions……..”
D (emphasis in bold supplied)
22.6. Having said so, this Court acceded to the request made on
behalf of the RBI to initiate a CIRP against JAL under IBC and thereafter
proceeded to conclude on the matter with the following directions: -
“50. We, accordingly, issue the following directions:
E
50.1. In exercise of the power vested in this Court under Article
142 of the Constitution, we direct that the initial period of 180
days for the conclusion of the CIRP in respect of JIL shall
commence from the date of this order. If it becomes
necessary to apply for a further extension of 90 days, we
F permit the NCLT to pass appropriate orders in accordance
with the provisions of the IBC;
50.2. We direct that a CoC shall be constituted afresh in
accordance with the provisions of the Insolvency and
Bankruptcy (Amendment) Ordinance, 2018, more
G particularly the amended definition of the expression
“financial creditors”;
50.3. We permit the IRP to invite fresh expressions of
interest for the submission of resolution plans by applicants,
in addition to the three shortlisted bidders whose bids or, as
H the case may be, revised bids may also be considered;
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50.4. JIL/JAL and their promoters shall be ineligible to participate A
in the CIRP by virtue of the provisions of Section 29-A;
50.5. RBI is allowed, in terms of its application to this Court to
direct the banks to initiate corporate insolvency resolution
proceedings against JAL under the IBC;
50.6. The amount of Rs 750 crores which has been deposited B
in this Court by JAL/JIL shall together with the interest
accrued thereon be transferred to NCLT and continue to
remain invested and shall abide by such directions as may
be issued by NCLT.”
(emphasis in bold supplied) C

23. Thus, the ternary, of anxiety on the part of stakeholders to
avoid liquidation of the corporate debtor JIL; of due recognition by the
legislature of the homebuyers as financial creditors; and concern of this
Court to do complete justice in the cause while maintaining the discipline
of law, led to the improvisation in Chitra Sharma, as noticeable in the D
preceding paragraphs, with revival of CIRP in relation to the corporate
debtor JIL and re-constitution of CoC with the basic aim to ensure the
resolution of insolvency of the corporate debtor JIL by way of the methods
envisaged by, and permissible under, the Code.
Another round in this Court and further enlargement of E
time for CIRP in question.
24. However, this resolution process concerning the corporate
debtor JIL again landed in rough weather, now due to passage of time at
different stages while dealing with another grey area i.e., method of
counting of votes in the Committee of Creditors, which led to another F
round of litigation; and this Court had to again invoke its plenary powers
to salvage the situation in the judgment dated 06.11.2019 in the case of
Jaiprakash Associates Ltd. (supra). For their relevance, the
observations made and directions issued in that case may also be
recapitulated.
G
25. The second round of litigation concerning this CIRP came up
to this Court in the following circumstances:
25.1. Consequent to the aforesaid directions in the case of Chitra
Sharma, the matter proceeded before the NCLT being the Adjudicating
Authority. The IRP issued public notice inviting claims from all the H
662 SUPREME COURT REPORTS [2021] 12 S.C.R.

A stakeholders of JIL, including the homebuyers and submitted his report
on formation of the Committee of Creditors before the Adjudicating
Authority on the following basis:
37.3% in case of financial institutions,
62.3% homebuyers, and
B
0.4% fixed deposit holders.
25.2. However, on 17.09.2018, an application came to be made
before the Adjudicating Authority by one of the associations of homebuyers
seeking clarification as to the manner in which the voting percentage of
C the homebuyers would be reckoned. The two members of NCLT
expressed difference of opinion on the issue as a result of which, reference
was made to the President of NCLT to place the matter before the third
member. Eventually, an order was passed by the third member on
24.05.2019. This order was challenged by one of the associations of
homebuyers before NCLAT. In the meantime, IDBI Bank filed an
D application before NCLT for excluding the period of pendency of the
said application for clarification regarding the manner of counting the
votes of the concerned financial creditors, from the period of 270 days
for completion of CIRP. However, during the pendency of such an
application, the NCLT, by its order dated 06.05.2019, called upon the
E authorities, the representatives of allottees and others to file reply on the
necessity to proceed further with CIRP for considering the resolution
plan received from the concerned bidder. The IDBI Bank assailed this
order of NCLT by way of another appeal before the NCLAT.
25.3. The aforesaid two appeals were decided together by
F NCLAT by way of its judgment dated 30.07.2019. The NCLAT took
note of the fact that no regulation had been framed under the Code as to
how the voting share of thousands of allottees (homebuyers) would be
counted when all of them fell within the meaning of ‘financial creditors’
and hence, were the members of CoC. The NCLAT observed that this
had been an extraordinary situation where the law was silent and there
G was no guideline which led to difference of opinion between the two
members and the matter was finally decided by the third member. The
NCLAT opined that in the given situation, certain period could be excluded
while counting the total period of 270 days. In this judgement dated
30.07.2019, NCLAT provided for exclusion of 90 days for the purpose
of counting 270 days of CIRP from the date of receipt of the copy of its
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judgement. The NCLAT also commented that the aforesaid exclusion A
was being provided to enable calling of fresh resolution plans but reiterated
that no liberty was available to JAL in view of the observations and
decision of this Court in Chitra Sharma (supra).
25.3.1. Those observations and directions of NCLAT in its
judgment dated 30.07.2019, as reproduced in the judgement of this Court B
dated 06.11.2019, could be usefully recounted as follows: -
“22. In view of the aforesaid extraordinary situation, we are of
the view that the period from 17-9-2018 i.e. the date of application
filed by the association of the allottees for clarification for the
order and till the final decision i.e. 4-6-2019 i.e. the date the matter C
was finally decided by the Third Hon’ble Member (total 260 days),
can be excluded for the purpose of counting the 270 days.
However, as the matter is pending since long, we are not inclined
to exclude the total period of 260 days and instead in the interest
of the allottees, we exclude 90 days for the purpose of counting
the period of 270 days of “corporate insolvency resolution process”, D
which should be counted from the date of receipt of the copy of
this order.
23. The aforesaid period is excluded to enable the “resolution
professional”/”committee of creditors” to call for fresh “resolution
plans” and to consider them, if so required after negotiations pass E
appropriate order under sub-section (5) of Section 30 of the I&B
Code preferably within a period of 45 days. Rest of the period of
45 days margin is given to remove any difficulty and appropriate
order as may be passed by the adjudicating authority.
The voting share of the allottees should be counted in terms of F
“I&B Code” as existing on the date of voting/”Regulation” and/
or in accordance with majority decision of the adjudicating
authority.
24. It is made clear that all the earlier “resolution plan(s)” including
the plan submitted by the “NBCC”, cannot be considered, having G
been rejected by the “committee of creditors”. However, it will
be open to the “NBCC” to file a fresh improved “resolution plan”.
It is informed that “Adani Infra (I) Ltd.” also proposed to file
“resolution plan” but we are not expressing any opinion with regard
to the same. We have given opportunity to all the eligible persons
H
664 SUPREME COURT REPORTS [2021] 12 S.C.R.

A to file “expression of interest”/(improved) “resolution plan”,
individually or jointly or in concert with any person, but those who
are ineligible in terms of Section 29-A, are barred from filing such
plan. No liberty is given to “Jaiprakash Associates Ltd.”, in view
of the aforesaid observation and decision of Hon’ble Supreme
Court in Chitra Sharma.”
B
26. The aforesaid judgement of NCLAT was assailed in this Court
by JAL and by the Wish Town Homebuyers’ Welfare Society. These
appeals raised essentially two issues before this Court: one, as to whether
NCLT or NCLAT had the power to exclude any period from the statutory
period in exercise of inherent powers sans any express provision in the
C Code in that regard; and second, whether it was open to allow the bidder
whose resolution plan had already been rejected by CoC, to submit revised
plan or to invite fresh resolution plans to be considered by CoC after the
statutory period specified for submission of such plans?
27. After cogitating over the submissions made in support of the
D appeals, it was clear that the inevitable fallout of accepting the stand
taken by the appellants would be to set aside the impugned judgment
and relegate the parties to a situation where the only option would be to
proceed with the liquidation process concerning JIL on the premise that
no resolution plan was received before the expiry of the period of CIRP
E or being a case of rejection of the resolution plan under Section 31 of the
Code. However, during the arguments, there was complete unanimity
(again) between all the stakeholders, including the appellants before this
Court, that the liquidation of JIL must be eschewed as it would do more
harm to the interests of the stakeholders, in particular the large number
of homebuyers.
F
28. In the given set of circumstances and considering the position
taken by the stakeholders, this Court found it neither necessary nor
appropriate to dilate on the issues as urged and instead, proceeded to
again exercise the plenary powers under Article 142 of the Constitution
of India in order to ensure substantial justice in the cause. In the process,
G this Court, of course, rejected the suggestions given by a section of
homebuyers to keep the entire process outside the dispensation under
the Code with reference to the observations already made in the case of
Chitra Sharma (supra), but found it justified to modulate a part of such
directions, to the extent such modulation would not stand in conflict with
H the legislative intent and subserve the cause of justice, by providing a
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window to find out a viable solution. This Court also took note of various A
amendments brought about to the Code and the CIRP Regulations; and
the overall circumstances of the case, where delay in completion of
CIRP relating to JIL was attributable to law’s delay and neither
homebuyers nor other financial creditors were to be blamed for pendency
of proceedings before NCLT and before NCLAT. In the peculiar, rather
B
extraordinary, situation obtaining in the matter, this Court considered it
appropriate to ensure that an attempt was made for revival of the
corporate debtor JIL, lest it was exposed to liquidation process and for
that matter, to permit IRP to reissue the request for resolution plan to the
two bidders who had earlier submitted the plans and to call upon them to
submit revised resolution plans, which could be placed before CoC. In C
the process, this Court also took note of the time limit for completion of
insolvency resolution process as per third proviso to Section 12(3) of the
Code, which came into effect from 16.08.2019. The relevant observations
of this Court could be usefully reproduced as under: -
“16. Suffice it to note that an extraordinary situation had arisen D
because of the constant experimentation which went about at
different level due to lack of clarity on matters crucial to the
decision-making process of CoC. Besides that, in view of the
recent legislative changes, the scope of resolution plan stands
expanded which may now include provision for restructuring the
corporate debtor including by way of merger, amalgamation and E
demerger and more so the power bestowed on CoC to consider
not only the feasibility and viability of the resolution plan but also
the manner of distribution proposed, which may take into account
the order of priority amongst the creditors. Additionally, the recently
inserted Section 12-A enables the adjudicating authority to allow F
the withdrawal of an application filed under Section 7 or Section 9
or Section 10, on an application made by the applicant with the
approval of 90% voting share of the CoC. Similarly, sub-clause
(7) of Regulation 36-B inserted with effect from 4-7-2018, dealing
with the request for resolution plans unambiguously postulates
that the resolution professional may, with the approval of the G
Committee, reissue request for resolution plans, if the resolution
plans received in response to earlier request are not satisfactory,
subject to the condition that the request is made to all prospective
resolution applicants in the final list. In the present case, finally
only two bidders had participated and submitted their resolution H
666 SUPREME COURT REPORTS [2021] 12 S.C.R.

A plan which was placed before CoC and stated to have been
rejected. However, applying the principle underlying Regulation
36-B(7), we deem it appropriate to permit IRP to reissue request
for resolution plans to the two bidders (Suraksha Realty and
NBCC) and/or to call upon them to submit revised resolution
plan(s), which can be then placed before CoC for its due
B
consideration.
17. In the present case, as aforementioned, there is unanimity
amongst all the parties appearing before this Court including the
resolution applicant that liquidation of JIL must be eschewed and
instead an attempt be made to salvage the situation by finding out
C some viable arrangement which would subserve the interests of
all concerned.
18. In view of the legislative changes referred to above, we are
of the considered opinion that we need to and must exercise our
plenary powers to make an attempt to revive the corporate debtor
D (AIL), lest it is exposed to liquidation process under Chapter III
of Part II of the I & B Code. We are inclined to do so because the
project has been implemented in part and out of over 20,000
homebuyers, a substantial number of them have been put in
possession and the remaining work is in progress and in some
E cases at an advanced stage of completion. In this backdrop, it
would be in the interest of all concerned to accept a viable plan
reflecting the recent legislative changes.
19. Indeed, the third proviso to Section 12(3) predicates time-limit
for completion of insolvency resolution process, which has come
F into effect from 16-8-2019. The same reads thus:
“Provided also that where the insolvency resolution process of
a corporate debtor is pending and has not been completed within
the period referred to in the second proviso, such resolution
process shall be completed within a period of ninety days from
G the date of commencement of the Insolvency and Bankruptcy
Code (Amendment) Act, 2019.”
Taking an overall view of the matter, we deem it just, proper and
expedient to issue directions under Article 142 of the Constitution
of India to all concerned to reckon 90 days’ extended period from
the date of this order instead of the date of commencement of the
H
JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 667
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Insolvency and Bankruptcy Code (Amendment) Act, 2019. That A
means, in terms of this order, the CIRP concerning JIL shall be
completed within a period of 90 days from today.
20. We do not deem it necessary to dilate on the arguments of the
respective counsel for the nature of order that we intend to pass,
including about the locus standi of JAL which, in our opinion, B
already stands answered against JAL by virtue of Section 29-A
of the Act as expounded in Chitra Sharma.”
29. In the given circumstances, this Court passed the following
order for the purpose of substantial and complete justice and in the interest
of all the stakeholders: - C
“21. Accordingly, we pass the following orders to do substantial
and complete justice to the parties and in the interest of all the
stakeholders of JIL:
21.1. We direct the IRP to complete the CIRP within 90 days
from today. In the first 45 days, it will be open to the IRP to invite D
revised resolution plan only from Suraksha Realty and NBCC
respectively, who were the final bidders and had submitted
resolution plan on the earlier occasion and place the revised plan(s)
before CoC, if so required, after negotiations and submit report to
the adjudicating authority NCLT within such time. In the second E
phase of 45 days commencing from 21-12-2019, margin is provided
for removing any difficulty and to pass appropriate orders thereon
by the adjudicating authority.
21.2. The pendency of any other application before the NCLT or
NCLAT, as the case may be, including any interim direction given F
therein shall be no impediment for the IRP to receive and process
the revised resolution plan from the above named two bidders
and take it to its logical end as per the provisions of the I & B
Code within the extended timeline prescribed in terms of this order.
21.3. We direct that the IRP shall not entertain any expression of
G
interest (improved) resolution plan individually or jointly or in concert
with any other person, much less ineligible in terms of Section 29-
A of the I & B Code.
21.4. These directions are issued in exceptional situation in the
facts of the present case and shall not be treated as a precedent.
H
668 SUPREME COURT REPORTS [2021] 12 S.C.R.

A 21.5. This order may not be construed as having answered the
questions of law raised in both the appeals, including as recognition
of the power of NCLT/NCLAT to issue direction or order not
consistent with the statutory timelines and stipulations specified
in the I & B Code and the Regulations framed thereunder.”
B 30. The passages above-quoted give insight as to what had been
the concern of all and what had been the intent of the orders passed by
this Court in its plenary powers. It is not far to seek that even where
CIRP in relation to JIL had been facing one hurdle after another, the
principal part of delay was not attributable to any of the stakeholders;
and then, all through, there had been unanimity that liquidation of JIL
C was to be avoided and a viable solution ought to be searched. The
aforesaid directions in the judgement dated 06.11.2019 ultimately led the
revised resolution plans by the two applicants being placed before CoC
and voting of CoC in favour of the resolution plan proposed by NBCC
which is the bone of contention in this batch of matters.
D 31. For completion of the narrative in regard to the second round
of litigation, we may also point out that after the judgment dated
06.11.2019, even though the process relating to the submission of revised
plans and consideration by CoC took place, but culmination of the proposal
in approval of the resolution plan got delayed. Hence, IRP filed one
E miscellaneous application in this Court (M.A. No. 540 of 2020), pointing
out various difficulties and unavoidable circumstances which had caused
the delay though the proposal was submitted within the time frame
prescribed. While accepting the reasons stated in the application so filed
by the IRP, this Court, by another order dated 03.02.2020, extended the
time by four weeks for approval of the resolution plan. This is how the
F process of approval of resolution plan culminated in the impugned order
dated 03.03.2020 by the Principal Bench of NCLT at New Delhi.36
32. Before dilating on the resolution plan in question, it appears
just and proper to narrate the features relating to yet another litigation
directly impacting the CIRP concerning the corporate debtor JIL. As
G indicated, that litigation had been in relation to the application made by
36
It may be indicated in the passing that later on, a few miscellaneous applications as
also interlocutory applications were filed in relation to the case of Chitra Sharma
(supra), most of which were disposed of by this Court on 18.12.2019, in view of the
aforesaid order dated 06.11.2019. Having regard to the points requiring determination
H herein, it is not necessary to dilate on those applications.
JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 669
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IRP for avoidance of certain transactions as preferential; and in relation A
to the claim of some of the lender institutions of JAL to be recognised as
financial creditors of JIL on the strength of the mortgage transactions
whereby the property of JIL was mortgaged to secure the debts of JAL.
Yet another litigation in this Court relating to preferential
transactions and lenders of JAL B
33. The other litigation concerning this CIRP, leading to the
judgment dated 26.02.2020 in the case of Anuj Jain (supra), came up in
the following circumstances:
33.1. As already noticed, even during the pendency of proceedings
in this Court in the case of Chitra Sharma (supra), the IRP had filed an C
application on 06.02.2018 seeking avoidance of certain transactions,
whereby the corporate debtor had mortgaged several parcels of its land
as collateral security for the loans and advances made by the lender
banks and financial institutions to the holding company JAL. The IRP
alleged that the transactions in question were preferential, undervalued D
and fraudulent, in terms of Sections 43, 45 and 66 of the Code. By its
order dated 16.05.2018, the NCLT accepted the application so made by
IRP in relation to six out of seven transactions that were put in question
and held that those transactions were to be avoided as being fraudulent,
preferential and undervalued. In other words, in relation to such six
transactions, the security interest was ordered to be discharged and the E
properties involved therein were vested in the corporate debtor, with
release of encumbrances. In appeal, the NCLAT, however, took an
entirely opposite view of the matter and by its judgement dated
01.08.2019, upturned the order so passed by NCLT, while holding that
the transactions in question do not fall within the mischief of being F
preferential or undervalued or fraudulent; and that the lenders in question
(the lenders of JAL) were entitled to exercise their rights under the
Code. Aggrieved, the IRP as also one of the creditors of the corporate
debtor JIL and the associations of homebuyers preferred appeals in this
Court.
G
33.2. Apart from the above, during the course of CIRP, two of
the lender banks of JAL sought inclusion in the category of financial
creditors of JIL but IRP did not agree and declined to recognise them as
such. Being aggrieved, the said banks preferred separate applications
under Section 60(5) of the Code before NCLT while asserting their
H
670 SUPREME COURT REPORTS [2021] 12 S.C.R.

A claim to be recognised as financial creditors of the corporate debtor JIL,
on account of the securities provided by JIL for the facilities granted to
JAL. The NCLT rejected the applications so filed by the said banks, by
way of its orders dated 09.05.2018 and 15.05.2018, while concluding
that on the strength of the mortgage created by the corporate debtor
JIL, as collateral security of the debt of its holding company JAL, the
B
lenders of JAL could not be categorised as financial creditors of JIL.
The appeals filed by the aggrieved lenders of JAL against the said orders
dated 09.05.2018 and 15.05.2018 were purportedly allowed as per the
result recorded in the impugned order dated 01.08.2019. Aggrieved, one
of the lenders of the corporate debtor JIL preferred an appeal in this
C Court, while asserting that such mortgagees could not be taken as
financial creditors of the corporate debtor JIL.
34. The aforesaid two appeals, relating to avoidance of preferential
transactions and the claim of lender banks of JAL to be recognised as
financial creditors of JIL, were considered together and allowed by this
D Court by way of the common judgement dated 26.02.2020 in the case of
Anuj Jain (supra).
34.1. As regards the transactions in question, this Court held that
they had been of deemed preference to related party by the corporate
debtor JIL during the look-back period of two years and were covered
E within the period envisaged by Section 43(4) of the Code. This Court
also held that clause (a) of sub-section (3) of Section 43 of the Code
called for purposive interpretation so as to ensure that the provision
operates in sync with the intention of legislature; and therefore, the
expression “or”, appearing as disjunctive between the expressions
“corporate debtor” and “transferee”, ought to be read as “and”; so as to
F be conjunctive of the two expressions i.e., “corporate debtor” and
“transferee”. Having interpreted the provision so, this Court held that
the impugned transactions did not fall within the ordinary course of business
of the corporate debtor JIL and hence, were not of excepted transfers in
terms of Section 43(3) of the Code. Accordingly, this Court held as under:-
G “Summation: The transactions in question are hit by Section
43 IBC
30. For what has been discussed hereinabove, we are clearly of
the view that the transactions in question are hit by Section 43 of
the Code and the adjudicating authority, having rightly held so,
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had been justified in issuing necessary directions in terms of Section A
44 of the Code in relation to the transactions concerning Properties
Nos. 1 to 6. NCLAT, in our view, had not been right in interfering
with the well-considered and justified order passed by NCLT in
this regard.”
34.2. As regards the second question concerning the status of B
the lenders of JAL, this Court observed that when the transactions in
question were found preferential and hit by Section 43 of the Code, they
were denuded of their value and worth; and the security interest created
by the corporate debtor JIL over the property involved in those
transactions stood discharged in whole; and, therefore, such lenders of
JAL cannot claim any status as creditors of the corporate debtor JIL C
much less as financial creditors. However, the question as regards the
status of such lenders of JAL qua the corporate debtor JIL was examined
independent of the findings that the transactions in question were hit by
Section 43 of the Code, with the following observations: -
“34.4. We may, of course, reiterate that in view of the conclusion D
that we have reached in relation to the principal issue, the
transactions in question are denuded of their value and worth, per
the force of the order by NCLT under Section 44 of the Code,
which has been approved by us. To be most specific, the security
interests created by the corporate debtor JIL over the properties E
in question stand discharged in whole. Therefore, the respondent
lenders cannot claim any status as creditors of the corporate debtor
JIL and there could arise no question of their making any claim to
be treated as financial creditors as such. However, for its relevance,
we deem it appropriate to determine the issue as to whether the
lenders of JAL, because of creation of the mortgages in question, F
could be treated as financial creditors of JIL, independent of the
finding that the transactions in question are hit by Section 43 of
the Code.”
34.3. Thereafter, this Court dealt with the rival submissions relating
to the status of such lenders of JAL and held that they, on the strength of G
the mortgages in question, might fall in the category of secured creditors
but, for the reason that the corporate debtor did not owe them any financial
debt, such lenders of JAL were not falling in the category of financial
creditors of the corporate debtor JIL. This Court summed up the
conclusion on this issue in the following terms: - H
672 SUPREME COURT REPORTS [2021] 12 S.C.R.

A “Summation on second issue
57. For what has been discussed hereinabove, on the issue as to
whether lenders of JAL could be treated as financial creditors,
we hold that such lenders of JAL, on the strength of the mortgages
in question, may fall in the category of secured creditors, but such
B mortgages being neither towards any loan, facility or advance to
the corporate debtor nor towards protecting any facility or security
of the corporate debtor, it cannot be said that the corporate debtor
owes them any “financial debt” within the meaning of Section
5(8) of the Code; and hence, such lenders of JAL do not fall in the
category of the “financial creditors” of the corporate debtor JIL.”
C
35. It would be relevant to notice that the parcels of land forming
the subject of seven questioned transactions were admeasuring about
858 acres; and while leaving 100 acres of land forming the subject of
seventh transaction, which was not declared as preferential, a chunk of
758 acres of land, which earlier carried encumbrances because of the
D mortgages in favour of the lenders of JAL, got released with the
judgement delivered by this Court and stood vested in JIL free from
encumbrances. The judgement was delivered by this Court on 26.02.2020,
after voting by CoC on the resolution plan in question but before the
impugned order of NCLT dated 03.03.2020.
E 36. The foregoing narrative in relation to the past litigations has
essentially been to flag and accentuate those attributes of the decisions
of this Court which carry their own relevance, bearing and implications
on the issues involved in the present batch of matters.
37. Continuing with the narrative, we may now take up the
F impugned resolution plan, propounded by the resolution applicant NBCC
and voted in favour by CoC with an overwhelming majority of 97.36%.
The Resolution Plan
38. As noticed, by the order dated 06.11.2019, this Court directed
IRP to complete the CIRP within 90 days from the date of the order;
G
and for that matter, it was provided that in the first 45 days, it would be
open to the IRP to invite revised resolution plans only from the two
applicants namely Suraksha Realty and NBCC, who were the final
bidders and had submitted resolution plans on the earlier occasion, and
to place the revised plan(s) before the CoC.
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JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 673
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38.1. From the facts stated before us, it is borne out that the A
revised resolution plans were called from the said applicants and were
placed for consideration in the 16th Meeting of CoC held on 07.12.2019.
Having considered the resolution plans, the members of CoC requested
the resolution applicants to improve their offers and thereupon, both the
resolution applicants agreed to submit addendums to their revised
B
resolution plans. Accordingly, Suraksha Realty submitted an addendum
to the resolution plan on 07.12.2019 and NBCC submitted its addendum
to the resolution plan on 08.12.2019. Then, with the certificate dated
08.12.2019 from IRP that the resolution plans submitted by Suraksha
Realty and NBCC were fully compliant under Section 30(3) of the Code
read with Regulation 39(2) of the CIRP Regulations, the plans along C
with the respective addendums were put to e-voting from 9 a.m. of
10.12.2019, until 11.59 p.m. of 16.12.2019.
38.2. In the voting by CoC, the resolution plan submitted by NBCC
along with addendum was approved by a vote of 97.36% of voting share
of the financial creditors in favour. On the other hand, the plan submitted D
by Suraksha Realty could muster only a vote of 2.12% of voting share
of the financial creditors. The voting results were circulated by the IRP
to the members of CoC on 17.12.2019; and, on the instructions of CoC,
the IRP issued the Letter of Intent on 17.12.2019, which was duly accepted
by NBCC.
E
38.3. In compliance of the order dated 06.11.2019 passed by this
Court, the IRP filed the application bearing C.A. No. 5 of 2020 in C.P.
(IB) No. 77/ALD/2017 seeking approval of the resolution plan of NBCC
under Section 30(6) read with Section 31 of the Code before the Allahabad
Bench of NCLT on 20.12.2019. Later on, the Principal Bench of NCLT
at New Delhi transferred the proceeding to itself and that is how the F
impugned order dated 03.03.2020 came to be passed by the Adjudicating
Authority (NCLT, New Delhi) within the time allowed by this Court.
39. For its very nature and for various requirements of the
provisions contained in the Code as also in the CIRP Regulations, the
resolution plan in question is a vast document carrying business plans, G
financial proposals including that of treatment of creditors, equity
commitment, projected steps and expected reliefs and concessions. We
shall refer to the particular stipulation/s in this plan at the relevant stage
while dealing with the specific issue related therewith. However, an
overview of the resolution plan shall be apposite to take note of its concept H
674 SUPREME COURT REPORTS [2021] 12 S.C.R.

A and salient features. In this regard, we may usefully reproduce the
summary of resolution plan placed before us by the IRP. This summary
is subdivided into different parts namely, (1) claims and their treatment;
(2) implementation of the plan; (3) key reliefs sought for by NBCC; (4)
status of project; and (5) annexure 1, being a part of the implementation
process.
B
39.1. The summary of claims and their treatment under the
resolution plan is as under: -

C

D

E

F

G

H
JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 675
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A

B

C

D

E

F

G

H
676 SUPREME COURT REPORTS [2021] 12 S.C.R.

A 39.2. In the summary of the implementation process, by way of a
flow chart, various steps have been indicated which include formation
of different SPVs; raising of fresh debts of about INR 2,000 crores by
securitisation of Yamuna Expressway; transfer of rights of Yamuna
Expressway against equity shares and debt disbursement; transfer of
1,526 acres of land worth INR 5,001 crores, bank loan of INR 5,000
B
crores and issuance of equity of INR 1 crore; diversification of JHL;
infusion of INR 120 crores equity etc. etc.
39.2.1. The IRP has, in this summary, also indicated other key
implementation provisions, most of which are the matters of contention
in this litigation. That summary reads as under: -
C
“Other key implementation provisions
- Deemed approval of YEIDA for transfer of Land and Toll road
to designated SPV’s without incurring any cost such as stamp
duty, transfer charges, Etc.
D - Liability for additional farmer compensation (presently sub-judice)
not payable by JIL. Alternatively, if found payable, YEIDA to
collect is directly from end user.
- Transfer of INR 750 crores (plus interest) deposited by JAL,
pursuant to the order of the Hon’ble Supreme Court to be
E transferred to JIL and to be used exclusively for construction of
houses.
- JAL to pay amount due to JIL (approx. INR 500) (INR 716
Crores on insolvency commencement date) to JIL.”
39.3. The key reliefs sought for by NBCC in the resolution plan
F
are summarised as under: -

G

H
JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 677
ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

A

B

C

D

E

F

G

H
678 SUPREME COURT REPORTS [2021] 12 S.C.R.

A

B

C

D

39.4. The timelines and methods for implementation have been
E indicated in the annexure to this summary which reads as under: -

F

G

H
JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 679
ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

A

B

C

D

E

F

G

H
680 SUPREME COURT REPORTS [2021] 12 S.C.R.

A

B

C

D

E

F

G

H
JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 681
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40. As noticed, on this resolution plan being presented for approval A
before the Adjudicating Authority, various objections were raised by
various stakeholders. All such objections and the prayer for approval of
the resolution plan were considered analogously; and the Adjudicating
Authority has, by its order dated 03.03.2020, proceeded to approve the
plan with a few modifications and with certain directions. This order
B
dated 03.03.2020 is the matter of challenge for one reason or another by
the parties before us. For their relevance, it would be appropriate to take
note of the salient features of this order in necessary details.
Order dated 03.03.2020 by the Adjudicating Authority in
approval of the resolution plan with modifications
C
41. The order dated 03.03.2020, as passed by NCLT in exercise
of its jurisdiction under Section 31 of the Code, could be reasonably
divided in five segments. In the first place, the NCLT recounted the
relevant background aspects leading to the CIRP in question and the
orders passed by this Court in the aforementioned three rounds of litigation
in the cases of Chitra Sharma, Jaiprakash Associates Ltd. and Anuj D
Jain (supra). Secondly, the NCLT dealt with the issue relating to the
said INR 750 crores deposited by JAL in terms of the interim orders
passed by this Court in the case of Chitra Sharma and which was to
abide by the directions of NCLT in terms of the final judgement in Chitra
Sharma. Thirdly, the NCLT examined the resolution plan and E
summarised its propositions, projections and stipulations. Thereafter, in
the fourth segment, the NCLT dealt with the objections against the
resolution plan by several persons/entities, including JAL and its
stakeholders, ICICI Bank, YEIDA, some of the aggrieved homebuyers,
YES Bank and the agreement holders. In the fifth segment, the NCLT
generally dealt with the clauses relating to the reliefs and concessions in F
the resolution plan as also various other applications filed by different
stakeholders. For their relevance, the material observations and findings
of the Adjudicating Authority (NCLT) in its order dated 03.03.2020 could
be relayed sequentially.
42. In the first part of the order dated 03.03.2020, the NCLT G
referred to the very same background aspects which we have already
recited hereinbefore, namely, the award of contract for construction of
Expressway to JAL, incorporation of JIL as special purpose vehicle, the
Concession Agreement extended by YEIDA, taking up of the projects
by JIL for laying of Expressway and developing residential flats, JIL H
682 SUPREME COURT REPORTS [2021] 12 S.C.R.

A having collected money from homebuyers but having failed to deliver
flats to them and having also defaulted in payment of loan instalments,
initiation of CIRP and litigation in this Court in the case of Chitra Sharma
(supra). The NCLT traversed through all the aforementioned relevant
interim orders and final judgment in Chitra Sharma. The NCLT also
took note of the directions of this Court in the judgment dated 06.11.2019
B
in the case of Jaiprakash Associates Ltd. and in the judgment dated
26.02.2020 in the case of Anuj Jain.
43. In the second part, in relation to the said amount of INR 750
crores and accrued interest thereupon, the NCLT took note of a vast
variety of submissions made by different claimants, which may also be
C usefully recounted as follows.
43.1. It was submitted on behalf of JAL, who moved an
application seeking return of the said sum of INR 750 crores, that when
the Supreme Court had declined the request of homebuyers for pro
rata distribution of the said amount and had transferred the same to
D NCLT, the amount could not be appropriated for any purpose other than
refunding it to JAL. It was submitted that the said deposit of INR 750
crores had acquired the character of constructive trust and this amount
was required to be refunded to JAL on the principles enshrined in Sections
77 and 83 of the Indian Trusts Act. It was further submitted that since
E the Supreme Court had nowhere directed either to pay the remaining
balance or to utilise this money towards refund of homebuyers’ money,
it had to be treated as the money of JAL and returned accordingly. It
was also submitted that as per CIRP Regulations 36 and 37, only the
properties of the corporate debtor were subject to the resolution process
and the amount deposited by JAL, being not the asset of the corporate
F debtor, was required to be returned. Such submissions of JAL were duly
supported by ICICI Bank, the leader of the consortium of banks, who
had lent money to JAL and it was further submitted that in the case of
Chitra Sharma (supra), the Supreme Court directed the promoters of
JAL to deposit INR 2,000 crores in order to ensure that the homebuyers
G were not left remediless and their money could be refunded but after
amendment to IBC, the Supreme Court neither ordered such refund nor
insisted upon the promoters of JAL to deposit the remaining balance of
INR 1,250 crores, but simply delegated this work to the NCLT to proceed
with CIRP and to approve the resolution plan in accordance with IBC. It
was submitted on behalf of ICICI Bank that there being no specific
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direction by the Supreme Court to utilise this money for the financial A
creditors of JIL, the same was required to be returned to JAL. The
promoter-directors of the corporate debtor also filed an affidavit stating
that no part of this money was deposited by JIL and the same was not
handed over to JIL for any purpose whatsoever; and that the Supreme
Court had never held that JAL was legally bound to contribute funds
B
required for completing the projects of JIL. On similar lines, the appellant
Pankaj Sharma and other homebuyers of JAL also prayed for release of
the said amount to JAL so that it could be utilised for the homebuyers of
JAL. It was submitted that JAL itself was in financial distress and if
such a huge amount belonging to it was given to another company, the
interests of the stakeholders of JAL would be jeopardised. It also C
submitted that the purpose for which the deposit was made had not been
fulfilled and it was not meant for construction of the flats of JIL and this
money, being not an asset of JIL, should be returned to JAL.
43.2. In opposition, it was submitted by the lenders of JIL, led by
IDBI Bank that in the judgement dated 09.08.2018, the Supreme Court D
was conscious of the fact that this amount could not be disbursed only to
one class of creditors and hence, it was not allowed to be used for the
purpose of the refund seekers. It was further submitted that the corporate
debtor was generating revenue through collection from Yamuna
Expressway but this money, rather than being utilised for servicing the
loans provided by the institutional lenders, was being utilised towards E
construction work and for running the corporate debtor as a going
concern; and in this scenario, the said amount of INR 750 crores with
interest should be distributed on pro rata basis to the lenders of JIL in
accordance with the voting share in the CoC. Along with others, IRP
also made submissions that there were 32,754 allottees to whom flats F
were sold as per the records of JIL and as on 05.10.2018, 24,296 of
them were waiting for possession of their flats; and if the money was
ordered to be released for construction and development of the projects
of the corporate debtor, it would provide a boost to the construction
activity and serve the larger purpose. It was submitted by IRP that as
per the orders passed by this Court in Chitra Sharma (supra), this G
money was intended to protect the interests of homebuyers only. It was
also pointed out that as per the tripartite agreement involving JAL, JIL
and homebuyers, JAL was the developer of the project and was
responsible for delivering possession of flats to the homebuyers. The
IRP also referred to various orders passed by this Court in the course of H
684 SUPREME COURT REPORTS [2021] 12 S.C.R.

A proceedings in the case of Chitra Sharma as also a settlement proposal
given by JAL on 15.02.2019, stating that the said sum of INR 750 crores
was to be utilised towards revival of the business of JIL irrespective of
the outcome of legal proceedings. In the backdrop of these facts and
circumstances, it was submitted that the said amount being for the cause
of homebuyers, it was not open to JAL or its lenders or promoters or
B
homebuyers to seek reopening of the issue concluded by the decision of
this Court.
43.3. Having noticed the length and breadth of the arguments on
the two sides, where one was supporting for utilisation of the said amount
of INR 750 crores and accrued interest for the benefit of the homebuyers
C of JIL and where other side was arguing for return of the money to JAL,
the NCLT proceeded to consider as to how this money was to be dealt
with.
43.4. The NCLT referred to the background in which this Court
had passed the order for deposit of the said amount where promoter–
D directors of JAL and JIL were one and the same; and JIL/JAL had
failed to deliver flats to the homebuyers of JIL within the timelines given
by them. The NCLT observed that in the orders of this Court, JIL/JAL
were directed to deposit a sum of INR 2,000 crores towards refund of
the money of homebuyers; the Court had never treated that money as
E the property of JAL; and the only reason for this Court not distributing
the deposited amount to the homebuyers was that only 8% of them
were seeking refund whereas 92% had asked for possession of the flats
and, in order to avoid preferential treatment, this issue was relegated to
the NCLT. The NCLT further observed that though JAL was per se not
a debtor to the homebuyers but, when the money had come on behalf of
F the debtor in relation to a debt obligation or for discharge of an obligation,
neither the person depositing it could subsequently say that he was the
owner of the money nor the money could be construed as a trust money.
The NCLT held that this money had to be utilised to the obligation owed
to the creditors of the corporate debtor and any decision for refund of
G money to JAL would be overreaching the wisdom of the Supreme Court.
The NCLT, accordingly, disposed of all the applications with respect to
the issue of INR 750 crores and held that this money is to be treated as
the asset of the corporate debtor. The relevant passages of the
observations and findings of NCLT in regard to this issue could be
extracted as under: -
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“51. On reading the judgments and orders of Hon’ble Supreme A
Court, it is evident that the Hon’ble Supreme Court is aware of
the fact that JAL has deposited the money. It is aware of the fact
that JIL money has gone to JAL for construction of the towers to
the homebuyers of JIL, it is a fact that promoter-directors of JIL
and JAL are one and the same. It is a fact that JIL/JAL failed to
B
deliver flats to the homebuyers of JIL within the timelines given
by them. In all the orders of the Hon’ble Supreme Court, it has
only been said that JIL/JAL shall deposit Rs. 2000 crore towards
the refund of homebuyers money. It has not been treated that
money as the money of JAL. On reading all the orders of the
Hon’ble Supreme Court, all that could be ascertained is the C
Hon’ble Supreme Court endeavoured to claw back the
homebuyers’ money from JIL and JAL. In that pursuance, JAL
deposited Rs. 750 crore. The only criteria for not distributing this
Rs. 750 crore to the homebuyers is that only 8% of the homebuyers
sought for refund of the money whereas 92% homebuyers have
D
asked for flats, therefore to avoid preferential treatment, this issue
has been relegated to the NCLT to deal with in accordance with
IBC. One more fact is, though Hon’ble Supreme Court initially
stayed the proceedings of CIRP, subsequently vacated the stay
and allowed the IRP to proceed with CIRP.
52. In the backdrop of these facts and in the light of submissions E
made by either side, let us see what the Honourable Supreme
Court held in Chitra Sharma “Directing disbursement of the
amount of Rs. 750 Crore to the Homebuyers who seek refund
would be manifestly improper and cause injustice to the
Secured Creditors since it would amount to preferential F
treatment to a class of creditors” (Para 48.1 of Chitra Sharma
case (2018) 18 SCC). This being the observation, now the point
before us is how to go about it. It has not been said anywhere in
the observation that this money should go back to JAL. Moreover
the Hon’ble Supreme Court has not asked JAL/JIL to deposit the
money on the condition that it would be returned to JAL in the G
event it has not been distributed to JIL homebuyers. It has not
been said anywhere that it is the money of JAL.
53. It is a fact that if homes are not delivered within the time, the
only recourse is either to complete the homes or to refund the
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686 SUPREME COURT REPORTS [2021] 12 S.C.R.

A money. Once a contract is not performed as stated under an
agreement entered between the parties, if the party advanced
money is entitled for refund of the money, the jural relation in
between the person given the money and the person taken the
money will become creditor and debtor relation. When such
money has come back from the debtor to the creditor or to a
B
person in between for the cause of the creditor, it can never be
called as the money of the debtor, it has to be treated as money
returned to the creditor.
54. In this case, JAL has admittedly failed to complete the projects
as stated by JIL and JAL. It is not the case that this money was
C given for charitable purpose. It is not the case that this money
was deposited with the Hon’ble Supreme Court on the condition
that it would be returned to JAL in the event it has not been
distributed to the homebuyers. As long as debtor is liable to pay
money to the creditor, once it has been deposited towards that
D payment, it can’t be stated that money belongs to the debtor.
*** *** ***
56. ICICI Bank Counsel has argued that money is fungible,
therefore unless money has gone out from JAL for repayment, it
can’t be said as money deposited by JIL is the money payable to
E JIL homebuyers.
57. No doubt money is fungible, but obligation to repay is not
fungible, therefore when money is deposited or clawed back to
repay it to the creditor, the money being fungible and there being
an obligation for repayment, it can no more be considered as money
F owned by the debtor. Though JAL is per se not a debtor to the
Homebuyers, when money has come on behalf of the debtor in
relation to a debt obligation or for discharge of an obligation, the
person deposited it towards that obligation cannot subsequently
say that he is the owner of the money, therefore entitled for return
G of it.
58. If trust concept is examined, we will know that trust is a
relationship where property/money held by one party for the benefit
of another party. Trustee holds the property/money for the benefit
of the trust beneficiaries. Trustee is under fiduciary duty to ensure
that the property of the owner is maintained and the benefit thereof
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is reached to the persons to whom it is intended to. In the case of A
trust, the owner is under no obligation to pass on the benefit to the
beneficiary, therefore, the owner/settler being the owner of the
property, he is entitled to take it back in the event it is not utilized
for the purpose the owner intended to. But that is not the case
when money from the Debtor or on behalf of the Debtor has
B
gone out towards discharge of an obligation. In the case of trust,
ownership of that property or money remains with the owner as
long as it is not utilized for the purpose intended to. That owner
has no obligation to part with his property/money.
59. In case of homebuyers’ issue, once homebuyers entered into
an agreement with a developer and when their relations entered C
into turbulence and not in a position to become normal, the relation
in between them will become creditor and debtor and the person
under obligation shall refund the money of the homebuyers. In the
given case, JAL deposited money on behalf of JIL for utilization
of the same to the homebuyers of the Corporate Debtor. Therefore, D
it is evident that this deposit is made towards an obligation. When
any money is received towards an obligation, it can neither be
construed as trust money nor construed as governed by constructive
trust, therefore we have not found any merit to say that this money
is governed by trust concept.
E
60. In this case, the homebuyers’ money has been lying with the
Corporate Debtor and JAL, it is an admitted fact that money come
from the Homebuyers has gone to JAL in the name of construction.
It is not the case of the JAL that JIL money has not come for
construction. Moreover, JAL, by the time it has deposited, was
aware that it was depositing that money towards the obligation F
owned to JIL homebuyers.
61. Here there could not be any assumption or presumption to say
that JAL deposited this money before the Honourable Supreme
Court with an assumption that it would come back to it in the
event this money has not been utilized for the distribution of it to G
the homebuyers of JIL.
62. As long as the Hon’ble Supreme Court has not stated that this
money has to be returned to JAL, it has to be construed that the
Hon’ble Supreme Court has consciously retained the money within
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688 SUPREME COURT REPORTS [2021] 12 S.C.R.

A the custody of it and thereafter transferred this money to NCLT
with a direction that the parties shall abide by the directions of
NCLT. Had the Hon’ble Supreme Court has felt that it should go
back to JAL, the Honourable Supreme Court would have returned
it to JAL, but it has not been done. Whenever any payment is
made towards any liability, it has to be treated as a payment made
B
towards that liability. It does not matter who paid the money, it
matters as to whether it has been paid towards an obligation or
not. Since JAL has without any objection or condition paid to the
homebuyers of JIL on behalf of JIL, it has to be treated that the
payment is towards the obligation of JIL. Though it has not been
C explicitly explained that JAL paid on behalf of JIL, the matter
pending before the Hon’ble Supreme Court being with regard to
homebuyers of JIL, when money was asked to be deposited
towards refund of JIL homebuyers, and the same being paid by
JAL, now it is not open to JAL to say that it is JAL’s money.
D 63. As to the argument saying that for Rs. 750 Crore has not gone
into the books of Corporate Debtor (JIL), therefore it cannot be
treated as the asset of JIL, when money has been deposited on
the directions of Honourable Supreme Court and that has not been
returned by Honourable Supreme Court, we are only limited to
understand that the Honourable Supreme Court has not refunded
E the money because refunding to a few creditors in preference to
other creditors would become a preferential treatment, therefore
such observation cannot be extrapolated to say that the Hon’ble
Supreme Court has refused to refund the money on the assumption
that this money has to go back to JAL.
F 64. If we see the situation in the perspective of the historical
facts, it is evident that homebuyers paid money, JIL and JAL failed
to deliver homes to the homebuyers, therefore the obligation lies
upon JIL to satisfy that obligation either by refunding the money
or by delivering homes to the homebuyers, for neither of the things
G being done, the money having passed from JIL to JAL, and part
of it having come back as per the orders of the Hon’ble Supreme
Court, now it is not open either to JAL or its creditors to canvass
that this money is belonging to JAL.
65. In view thereof, we hereby consider that this money has to be
H utilized to the obligation owed to the creditors of the Corporate
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Debtor and in case this Bench for any reason passes any order A
for return of this money to JAL, it would be nothing but
overreaching the wisdom of the Hon’ble Supreme Court and its
directions. When money has been paid by JAL towards an
obligation as per directions of the Hon’ble Supreme Court, it can
no more be considered as the assets of JAL. As to whether it has
B
been stated in the information memorandum that this Rs. 750 Crore
is an asset of the Corporate Debtor or not, every case has to be
seen in the context of its facts. If at all for any reason, this is not
shown as the asset of the corporate Debtor in the information
memorandum, can it be said that the Hon’ble Supreme Court
transferring the deposit to NCLT has no meaning? Any order that C
has been passed by the Hon’ble Supreme Court, is binding on all
Courts and Tribunals, for there being no direction to return this
money to JAL or to determine as to whether it has to be paid to
JAL or not, it is not open to this Bench to draw any inference
other than an inference considering that this money is an asset of
D
the Corporate Debtor. Since JAL is not under further obligation to
complete construction of homes, there is no occasion to assume
that if this money go back to JAL, it would be utilized for the
cause of the creditors of the Corporate Debtor, in view thereof,
we hereby dispose of all CAs related to Rs. 750 Crore issue by
holding that this money is to be treated as the asset of the Corporate E
Debtor.”
44. After having dealt with the issue of INR 750 crores, the NCLT
took up the issue with regard to the approval of the resolution plan and
for that matter, in the third segment of the impugned order, summarised
the salient features of the resolution plan, which have already been noticed F
hereinbefore and need not be repeated. The objections dealt with by the
NCLT in the fourth segment of its order dated 03.03.2020 could now be
noticed with reference to the objector and the subject matter.
45. It was submitted on behalf of JAL that the resolution plan
could not be approved for the reasons that it was being used as a device G
for enrichment of NBCC at the cost of the corporate debtor where
NBCC was attempting to acquire JIL having worth of about INR 8,257
crores for a petty sum of INR 120 crores; that the resolution plan was a
contingent one where NBCC reserved its right to withdraw if the said
sum of INR 750 crores was not treated as part of the resolution plan and
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690 SUPREME COURT REPORTS [2021] 12 S.C.R.

A JIL was not discharged of PMLA and other investigations; that the
approval was inconsistent with Section 11(4)(g) of RERA; that
simultaneous voting on two resolution plans was not permissible in law;
that the resolution applicant wrongly suggested that there was no haircut
in the proposed settlement of dues of financial creditors because the
haircut was as far high as INR 6,101 crores which was 62.36% of the
B
debt of INR 9,783 crores. These contentions were countered by IRP
with the submissions that the promoters of JAL and JIL had no locus to
question the offer accepted by the CoC and as per the decision of this
Court in the case of Maharashtra Seamless Limited v. Padmanabhan
Venkatesh and Ors. (C.A. No. 4242 of 2019)37, no provision in the
C Code required the resolution applicant to match the liquidation value;
that no provision in the Code prevented simultaneous voting over two
plans; and that as per the decision of this Court in the case of Pioneer
Urban Land and Infrastructure Ltd. & Anr. v. Union of India &
Ors.: (2019) 8 SCC 416, RERA and IBC co-exist and have to be
interpreted harmoniously and in the event of a clash, RERA must give
D
way to IBC. It was also submitted that when the homebuyers who were
entitled to raise RERA objections had themselves voted in favour of the
plan, the promoters/directors could not raise any grievance. There was
a question of claim of the corporate debtor against JAL, being the amount
given as mobilisation advance on which, there was a discrepancy in the
E accounting, but it was admitted on behalf of JAL that an amount of INR
274 crores was net receivable by JIL from JAL. To this, the NCLT
directed payment of the said amount to JIL and for reconciliation of the
account as regards the remaining dues. The NCLT had also brushed
aside the submissions regarding the contingent nature of the plan with
reference to its finding on the issue related to the said deposited sum of
F
INR 750 crores and Section 32A inserted to the Code by way of
amendment with effect from 28.12.2019. The relevant observations of
NCLT read as under: -
“69. With regard to these two issues, this Bench has already
decided that Rs. 750 Crore lying with NCLT shall be utilized for
G the cause of the creditors of the Corporate Debtor and with regard
to PMLA proceedings, for Section 32A being brought into
existence by way of Amendment to the Code 28.12.2019, now
there need not be any separate protection from the PMLA

37
H Since reported as (2020) 11 SCC 467.
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proceedings over the assets of the Corporate Debtor, therefore A
we have not dealt with this issue, therefore the argument saying
that plan is conditional has no merit.
*** *** ***
72. Moreover, the calculation of figures given by JAL to say that
figures placed by the Resolution Plan are not supported by material, B
in any event, this being an issue to be taken up by the CoC, this
Bench cannot decide the fate of the resolution plan on the figures
shown by the promoters of JIL and JAL, unless such plan is vitiated
by fraud.
73. Apart from this, it is not the case of promoter/directors that C
company has positive net worth entitling the promoters of the
company to receive the residual proceeds in the event company
is liquidated. As long as liabilities are more than the assets of the
company, the promoters/directors’ arguments cannot be seen as
a point having bearing on the resolution plan approved by the CoC. D
74……….This objection over simultaneous voting per se does
not look as an act in violation of the Code or Regulations thereto.
No provision has envisaged that two plans should not be put to
voting. Moreover there is no mandate that if two plans are put to
voting, the plan voted in favour to be declared non est in law. E
Doctrine of severance could be applied by validating the action
doable under the law as valid. If any excess has happened, such
excess can be taken out. Besides this, both the plans are not
approved. In addition to it, unsuccessful Resolution Applicant has
no grievance to the plan present before us.
F
75. With regard to RERA issue, the IRP submits that the Hon’ble
Supreme court in para 28 of Pioneer Urban Land &
Infrastructure Limited & anr. Vs. Union of India & Ors. (WP
(c) no. 43 of 2019) held that RERA and IBC must be held to co-
exist and be interpreted harmoniously and in the event of
clash, RERA must give way to IBC. G
76. When the home-buyers, who are entitled to raise RERA
objection themselves have voted in favour of the plan, RERA
violation if any, it cannot be the grievance of the promoters/
directors.
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692 SUPREME COURT REPORTS [2021] 12 S.C.R.

A 77. With regard to Rs. 716 Crores claim against JAL by the
Corporate Debtor, the IRP submits that after setting off the amount
paid to JAL, the amount to be refunded by JAL is a sum of
Rs. 594 Crores as on 31.12.2019. It is an admitted fact that
mobilisation advance of Rs. 586 Crores is due and payable by
JAL and JIL as on 31.12.2019, out of which JAL says, after setting
B
off, the amount due and payable to JIL by JAL is only Rs. 274
Crores. However, JAL counsel has not placed material supporting
the figures shown as set off, since JAL Counsel himself has stated
that net receivable by JIL from JAL amounts to Rs. 274 crores,
JAL shall forthwith pay Rs. 274 crores to JIL, as to remaining
C money as sought by the Resolution Applicant, JIL and JAL shall
draft a reconciliation statement, accordingly payment has to be
made to whomever any outstanding is payable.”
46. Another major part of objections, in terms of magnitude and
implication, came up from the dissenting financial creditor ICICI Bank.
D It was submitted by this lender bank that being a dissenting financial
creditor, it was entitled to receive payment as per the liquidation value in
terms of Section 30(2)(b) of the Code read with Regulation 38(1)(b) of
CIRP Regulations but in the resolution plan, it was sought to be provided
only the land and equity in the SPVs proposed to be incorporated; and
such a provision in the resolution plan was entirely impermissible. It was
E also submitted that while the assenting financial creditors were allowed
to receive upfront payment of INR 300 crores on the basis of fresh
debts raised by Expressway but the same benefit was not being extended
to the dissenting financial creditors. The NCLT noted the star argument
of the learned counsel for ICICI Bank that distribution of equity or the
F land parcels to the dissenting financial creditors does not satisfy the
requirement of “payment” under Section 30(2) of the Code read with
Regulation 38(1)(b) of the CIRP Regulations; and such payment has to
be a liquidated sum, as stated under Section 53 of the Code. Per contra,
it was contended on behalf of the resolution applicant and the IRP that it
was nowhere envisaged in Section 30(2) of the Code that payment of
G liquidation value to dissenting financial creditors has to be in cash; that
even Regulation 38(1)(b) of the CIRP Regulations only provided for the
priority of payment to the dissenting financial creditors before the
assenting financial creditors and the mode of payment to be in cash was
not mentioned; that when the assenting financial creditors were not being
H paid in cash and had accepted equity and land parcels, payment to the
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dissenting financial creditors in cash would cause prejudice to the rights A
of the assenting financial creditors. Meaning of the word “payment” in
Black’s Law Dictionary was also cited and it was argued that the money
or other valuable thing delivered to discharge the obligation is to be
construed as payment under Section 30(2) of the Code.
46.1. While dealing with the rival submissions in relation to this B
claim of the dissenting financial creditor, the NCLT referred to the binding
nature of agreement between JIL and the said creditor as also the rights
of a dissenting financial creditor in terms of Sections 30(2) and 53 of the
Code and concluded that the only recourse available was payment in
cash to such dissenting financial creditor a sum equivalent to the liquidated
sum he would be entitled to receive under Section 53 of the Code. The C
NCLT said,-
“91. If you come to the resolution under IBC, there are two
outcomes in it. One is some creditors agreeing for a resolution to
the existing situation. Another is, some creditors may not agree
for the resolution. The persons agree for the resolution, they are D
no doubt bound by the arrangement they agreed upon. But as to
the dissenting creditors, who have not agreed for the resolution,
they are governed by sections 30(2) & 53 of the Code. In the
case of dissenting creditor, the Corporate Debtor or the Resolution
Applicant stepping into the shoes of the Corporate Debtor is bound E
by the earlier contract entered between the Corporate Debtor
and the dissenting financial creditor and then by the pro rata
distribution entitled u/s 53 of the Code. The only recourse available
is, the dissenting creditor shall be paid in cash equivalent to the
liquidated sum he is entitled to receive u/s 53 of the Code. It is a
deeming fiction to calculate the liquidated sum payable to the F
dissenting financial creditor and pay the same to the dissenting
creditor as if the company is liquidated. To make such payment,
the company need not be factually liquidated.”
46.2. The word “payment”, as defined in Black’s Law Dictionary
was also analysed by NCLT and it was stated that the obligation has to G
be seen and in the instant case, the obligation was repayment of money
lent along with interest. It was observed, that the dissenting financial
creditors were to be paid in cash not just by virtue of Section 53 of the
Code but also by virtue of the terms and conditions of the agreement
between JIL and the dissenting financial creditor, in the following words:- H
694 SUPREME COURT REPORTS [2021] 12 S.C.R.

A “92….Therefore this argument will not be ticking to say that
payment in kind to the promise is discharge of obligation. If the
promisee has agreed to give up the payment obligation, he is free
to do so. In this case, for the dissenting financial creditor has not
agreed to the approval of the resolution plan, they shall be paid in
cash, not only by virtue of the mandate under Section 53 of the
B
Code but also by virtue of terms and conditions of the agreement
between the Corporate Debtor and the dissenting financial
creditor.”
46.3. The NCLT further observed that upon approval of the plan
by the CoC, it was not open to the parties to say that, since the assenting
C creditors were not getting better treatment than the dissenting creditor,
the dissenting creditor shall remain bound to the plan; and when a
particular issue was governed by law, something not present in the law
could not be thrust upon any party under the cover of equity. The NCLT,
thereafter, proceeded to analyse the requirements of Section 30(2) of
D the Code with Section 53 and Regulation 38 of the CIRP Regulations;
and also examined its powers to deal with those aspects of the resolution
plan which were not compliant with Section 30(2) of the Code. Having
examined and analysed thus, the NCLT held that when the resolution
plan is found non-compliant with Section 30(2), the IRP or the resolution
applicant cannot say that the approval being within the ambit of
E commercial wisdom of CoC, all what was decided by CoC was binding
on the dissenting financial creditor; and it was within its (NCLT’s)
jurisdiction to modify the plan so as to make it compliant with the
requirements of law without altering its basic structure. The NCLT
observed and held as under: -
F “98. If section 30(2) (b) (ii) is carefully examined, and read in the
context of the said clause, it is clear that payment will be the
amount to be paid to the financial creditors under Section 53 of
the code, because it is for payment of the debts of the financial
creditors, thereafter it has been further stated it shall be not less
than the amount to be paid to them in accordance with Section 53
G
of the code.
99. When all these provisions and IBBI specifications made clear
payment to the dissenting financial creditors means payment of
amount, the resolution professional or the resolution applicant
cannot argue that the payment can, not only be in cash but also in
H kind.
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100. The persons agreeing for something, they may agree for A
anything, it does not mean that the persons disagreeing shall also
be treated as the assenting financial creditors are treated. When
any financial creditor disagreed for a resolution, he knows that he
has to be compromised with the situation befall upon him under
Section 53 of the code. It does not matter as to whether his
B
entitlement under Section 53 is more or less than the treatment
assenting financial creditors getting. Their rights are already
compromised under section 53 slating them to their entitlement on
pro rata basis. They cannot be put to further sufferance at the
wish of the Resolution Applicant or the CoC. As Section 30 (2)
has referred to section 53 entitlement, and this Bench being made C
custodian to verify as to whether section 30(2) compliance has
been accomplished or not, the RP or the resolution plan applicant
cannot say that plan approval is within the ambit of commercial
wisdom of the CoC therefore what all that is decided by the CoC
is binding upon the dissenting financial creditors. Whenever such
D
compliance is not present in the plan, this Bench is authorised to
examine the same and interfere with the plan despite the plan has
been approved as contemplated under Section 30(4) of the code.
101. Looking at the resolution plan treatment to the dissenting
financial creditor in the light of the aforesaid legal proposition,
since it has not been said in the Code that plan should be approved E
as submitted by the resolution professional under Section 30(6) of
the code, we are of the view that this Bench has jurisdiction to
approve the plan by modifying the plan to the extent that does not
alter the basic structure of the plan.”
(underlining is in original) F

46.4. Having thus held on the requirements of modification of the
plan in relation to the treatment of the dissenting financial creditor while
retaining its basic structure, the NCLT observed that the two aspects
which were made the basic conditions by the resolution applicant namely,
getting the said sum of INR 750 crores and extinguishing of PMLA G
proceedings were duly taken care of, respectively by the decision in
relation to the said corpus of INR 750 crores and by the amendment of
law. The NCLT further observed that for the sake of viability and feasibility,
the plan could be modified to make it compliant with Section 30(2) of the
Code. Having said so, NCLT proceeded to modify the terms of resolution H
696 SUPREME COURT REPORTS [2021] 12 S.C.R.

A plan in the manner that the resolution applicant shall pay to the dissenting
financial creditor the amount receivable in terms of Section 53 of the
Code in twelve monthly instalments along with interest starting from six
months from the date of order with default conditions of interest. The
NCLT ordered as under: -
B “103. In view of the same, for the sake of viability and feasibility
of the plan, we hereby modify this plan to make it in compliance
with the section 30(2) (b) (ii) of the code by holding that the
Resolution Applicant shall pay to ICICI an amount that it is entitled
to receive u/s 53 of the code within 18 months from the date of
approval of this plan, that is in 12 equal monthly instalments along
C with interest over the admitted claim starting from six months
hereof. In the event, the Resolution Applicant has failed to repay
as stated above, ICICI is entitled to claim commercial interest
over the admitted claim from the date of default, that is from the
first month of 12 monthly instalments.”
D 47. Another major contentious issue before the Adjudicating
Authority related to the objections of YEIDA. As noticed, YEIDA had
been the land providing agency and had entered into Concession
Agreement for leasing the land for construction of Expressway and also
for the purpose of development of the surrounding parcels of land.
E 47.1. The NCLT noticed that as per the said CA, the
concessionaire (JIL) was to bear the acquisition cost for the project land
given to it and in consideration, the concessionaire would obtain the right
to develop land for commercial exploitation and the right to operate the
Expressway and collect toll for a period of 36 years; and after the expiry
F of 36 years from the grant of concession, the Expressway shall revert to
YEIDA. As to the land for development, it was given on lease for 90
years. It was essentially submitted on behalf of YEIDA that the question,
of additional compensation of the land acquired, cropped up with the
directions of the Allahabad High Court; and that the liability in regard to
the additional compensation in relation to the land acquired and leased to
G JIL was that of the corporate debtor JIL. It was also pointed out that the
question of such additional compensation by JIL was subjected to
arbitration proceedings where an award was made to the effect that the
corporate debtor need not pay this amount of additional compensation
but the award has been questioned by YEIDA in the proceedings under
H
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Section 34 of the Arbitration and Conciliation Act, 199638-39. YEIDA A
stated its objection to the stipulation in the resolution plan that in case of
the award being overruled, YEIDA would collect the amount of additional
compensation from the end-users of the project land. It was submitted
in this regard that in the CA, two payment components were present -
one being of acquisition cost payable by the concessionaire and another
B
being of lease rent, which could be paid by the sub-lessee/end-user as
the case may be. It was submitted that given such components, the IRP
or the resolution applicant could not insist that YEIDA has to collect the
acquisition cost directly from the end-users. It was also submitted that
even if the land utilised for Expressway was to revert to YEIDA after
36 years, the CA nevertheless provided as key components that the C
concessionaire would collect toll for this period and has to bear all the
cost including the cost of acquisition; and there was no exemption as
regards the land of Expressway. It was also submitted that the resolution
applicant cannot split the transferred land into two and say that the
payment of additional compensation would be applicable to the land used
D
for development alone. It was further submitted that in view of Clause
18.1 of CA, in case of the necessity to transfer the concessionaire’s
rights and obligations to an SPV, there has to be necessary documentation
involving YEIDA, the concessionaire and the SPV incorporated, so that
YEIDA could keep exercising its rights over the SPV concerned; and
the resolution applicant or CoC could not have unilaterally transferred E
the rights and obligations of the corporate debtor to an SPV without the
consent of YEIDA. A decision of this Court in the case of Embassy
Property Development Pvt. Ltd. v. State of Karnataka and Ors.:
2019 SCC OnLine SC 1542 was also referred to submit that IBC will
not have overriding effect on every enactment which is applicable to the
F
transactions related to the corporate debtor. It was further submitted
that the requirement of withdrawal of arbitration case could not be thrust
upon YEIDA under the cover of the plan; and for the resolution plan
having set out so many provisions curtailing the rights held by YEIDA,
the same was required to be rejected. However, the Adjudicating
Authority also noticed that despite such objections, the counsel appearing G
on behalf of YEIDA submitted that since the project was for public
cause, it would have no objection for approval of the resolution plan
38
Hereinafter also referred as to ‘the Arbitration Act’.
39
It appears from the corrigendum dated 17.03.2020 and the submissions of the parties
that the issue is pending before the Court of District Judge, Gautam Budh Nagar. H
698 SUPREME COURT REPORTS [2021] 12 S.C.R.

A provided necessary changes were made in it ‘by removing the fall outs
from the concession agreement’.
47.2. In regard to this issue relating to the objections and submissions
on behalf of YEIDA, the NCLT was of the view that CoC should not
have approved the resolution plan stating that the additional compensation
B would be collected from the end-users; and proceeded to modulate the
terms of the resolution plan to read that YEIDA shall have the right to
collect the acquisition cost through the SPVs concerned. As regards the
issue as to whether additional compensation need not be paid with regard
to the Expressway for the same would revert to YEIDA after 36 years,
the NCLT found it appropriate to read down the resolution plan as leaving
C it open to the parties to have proper recourse over this issue in the
competent forum when occasion so arise. The NCLT also observed
that the Concession Agreement was based on the statute created by the
State Government and, therefore, any violation of terms and conditions
of the same would be the violation of law in force. The NCLT, however,
D again recorded the submissions on behalf of YEIDA that their endeavour
was only for compliance of the terms and conditions of CA in order to
ensure proper monitoring on realisation of dues and supervision over the
work of corporate debtors or SPVs but not for rejection of the resolution
plan. The relevant observations, findings and directions of YEIDA in
regard to this issue read as under: -
E
“118. On hearing the submissions of either side, with regard to
payment of additional compensation, in the event any direction
has been given in the arbitration proceedings to the Corporate
Debtor to pay additional compensation, as per concession
agreement, additional cost shall be paid by the concessionaire.
F We don’t go into the point as to whether additional compensation
is part of the acquisition cost because i.e. a point already
Adjudicated by the Arbitral Authority and the issue is pending
before the Hon’ble High Court of Delhi, now the limited point to
be dealt with is, as to whether such compensation, if directed to
G be paid, is to be paid by the concessionaire or by the end users.
119. As said above, there are two payment components come
from the concessionaire one is acquisition cost, two is the lease
rentals. In the concession agreement, it is obvious that acquisition
cost (actual cost) shall be paid by the concessionaire, as to lease
H rentals are concerned, it has been dealt with in detail that lease
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rentals could be collected either from sub-lessee or from the end A
users, wherever the interest is transferred either to the sub-lessee
or the end users. Therefore, CoC should not have approved the
resolution plan stating that the compensation, if awarded, shall be
collected from the end users.
120. To iron out all these creases and to make this resolution plan B
viable, we hereby direct that the resolution plan shall be read as
YEIDA has right to collect acquisition cost through the SPVs
concerned.
121. With regard to other objections that additional compensation
need not be paid with regard to Expressway land on the premise C
that since Expressway will revert to YEIDA after 36 years, YEIDA
counsel submits that this land has been given on consideration of
collection of toll for about 36 years.
122. In the backdrop of this factual scenario, we are of view that
both are governed by concession agreement, therefore the
D
Resolution Plan is to be read that it is left open to both the parties
to have proper recourse over this issue before Competent Forum
of law when time comes for payment of additional compensation.
123. On transfer of concessionaire’s rights and obligations to SPVs,
as per the concession agreement, it is clear that this Corporate
Debtor is a concessionaire, for the first time concessionaire having E
proposed to transfer its rights and obligations to the aforesaid two
SPVs, we are of the view that documents shall be executed
between the concessionaire, YEIDA and each of the SPVs. At
last we must say that the concession Agreement is based on the
statute created by the State Government, therefore any violation F
of the terms and conditions of the concession agreement is violation
of the law in force as contemplated under section 30(2) of the
Code, it has been decided as above.
124. Despite YEIDA counsel representing the State Government
Authorities with regard to its rights, the counsel has categorically G
mentioned that YEIDA’s endeavour is only for compliance of the
terms and conditions of concession agreement so that the State
Agencies will have proper monitoring on realization of its dues
and will have proper supervision over the works of the Corporate
Debtor or its SPVs, but not to ensure that this resolution plan is
rejected by this Bench on the grounds aforementioned.” H
700 SUPREME COURT REPORTS [2021] 12 S.C.R.

A 48. After having dealt with the aforesaid major issues relating to
INR 750 crores, objections of JAL and its stakeholders, ICICI Bank and
YEIDA, the NCLT proceeded to deal with the other issues relating to
the fixed deposit holders, some of the aggrieved homebuyers, YES Bank
and the agreement holders.
B 48.1. As regards fixed deposit holders, the NCLT provided that
the resolution applicant shall make a provision to clear their dues as and
when the unclaimed fixed deposit holder claims it, and this right will
remain in force as long as they were entitled to claim under the Companies
Act, 2013. These directions of NCLT in the impugned order read as
under: -
C
“125. Regarding FD holders payments who have not made claims
which have been reflected in the records of the Corporate Debtor,
the Plan Applicant shall make a provision to clear their dues as
and when the unclaimed FD holder claims it, and this right will
remain in force as long as they are entitled to claim under
D Companies Act 2013.”
48.2. The NCLT also took note of the submissions of some of
the homebuyers who were not agreeing with the resolution plan in
question. Those dissatisfied homebuyers submitted that the timelines given
in the resolution plan for completion of flats were not workable; there
E was no clause for refund of money in the event flats not being completed
within the timelines envisaged, except to the extent of nominal interest;
and that the voting share of homebuyers being only 57.66%, it cannot be
said that cent percent consent had been given for approval of the
resolution plan by CoC. The NCLT declined to recognise such objectors
F as dissenting financial creditors because authorised representative of
this class of creditors had voted in favour of the resolution plan. The
NCLT observed and held as under: -
“126. One Rashmi Singhal and another applicant calling themselves
as dissenting home-buyers, filed IA 871/2020, stating that the time
G lines given in the Resolution Plan for completion of flats are not
workable and for there being no clause for refund of money in the
event flats are not completed within the time lines envisaged,
except to the extent of nominal interest mentioned in the plan,
these two submit that they have dissented for the approval of the
Resolution Plan. They have further relied upon voting share saying
H homebuyers voting share is only 57.66% therefore, it cannot be
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called that cent percent consent has been given for approval of A
the Resolution Plan by CoC. For there being a rule under IBC,
whenever more than 50% voting has come from a class of creditors
represented by an authorized representative, the approval given
to the authorized representative for more than 50% will become
100% approval, therefore it cannot be said that dissenting
B
homebuyers before authorised representative to be considered as
dissenting financial creditors against the total voting of CoC. If
the authorized representative dissented in the CoC, then the
respective class of creditors would be considered as dissenting
financial creditors. Moreover, if at all any dissenting financial
creditor is there, his only look out is as to whether he has been C
paid as per Section 30(2) of the Code or not but not to see whether
the Resolution Plan is workable or not.”
48.3. As regards the objections raised by YES Bank, which had
given loan to Jaiprakash Healthcare Ltd., a wholly-owned subsidiary of
JIL, against dealing with the shares of its borrower (JHL) in the resolution D
plan, the NCLT observed that the resolution applicant and the said Bank
having agreed for constitution of a Committee to deal with the shares
and assets of JHL, that issue was not required to be discussed. The
NCLT said, -
“127. YES Bank, which has given loan to Jaiprakash Health Care E
subsidiary of JIL, has also raised an objection against dealing with
the shares of the Health Care belonging to the Corporate Debtor.
However, since the Resolution Applicant and YES Bank having
agreed for constitution of a Committee to deal with the shares
and assets of the subsidiary company, we are under no obligation
to discuss this issue any further.” F

48.4. As regards the right reserved by the resolution applicant to
cancel the transactions where certain parcels of land were transferred
by the corporate debtor without proper agreement/sub-lease deed, NCLT
noticed the submission made by such agreement holders that the
agreements were executed by the corporate debtor in the normal course G
of its business prior to the commencement of CIRP and monies were
also advanced; and therefore, such agreements could not be terminated
unilaterally. The NCLT also noticed the counter submissions by IRP and
NBCC that the agreements allegedly executed between the corporate
debtor and the agreement holders had not been determined, but the H
702 SUPREME COURT REPORTS [2021] 12 S.C.R.

A resolution applicant has reserved its right to cancel such instruments
wherever the corporate debtor had entered into deals without proper
agreements and without support of consideration. In this regard, the
NCLT observed that if an agreement was not valid in law and suffered
from want of consideration, it was not even required to be said that such
agreement could be cancelled by the party concerned. However, the
B
NCLT further observed that even when such a clause had been
mentioned, the agreement holders had not lost their right to seek remedy
in the competent forum; and determined this part of the matter in the
following words: -
“132. It is a trite law when an agreement is not valid in the eyes
C of law and consideration has not been paid, then it need not be
separately said that such agreement could be cancelled by the
effected party.
133. Though such clause has been mentioned, it does not mean
that the agreement holders have lost their rights to seek remedy
D for its grievances before Competent Forum, in view thereof, this
clause need not be considered as clause effecting the rights of
the alleged agreement holders.”
48.5. The NCLT also made observations as regards the objections
raised by JAL and other objectors against inclusion of 858 acres 40 as
E part of the resolution plan and pointed out that such an objection lost its
relevance after the decision of this Court dated 26.02.2020 in the case
of Anuj Jain (supra).
49. Having thus dealt with the relevant objections, the NCLT
entered into the fifth segment of its order and generally dealt with the
F provisions relating to the reliefs and concessions with the observations/
directions as under: -
“134. The clauses already covered in the aforesaid discussion will
not be discussed again, but as to the clauses not covered above
are hereby dealt with as follow: -
G
Clauses 1 to 5 have already been covered in the above discussion.
Clause No. 6:- With regard to the past liabilities of income tax
authority, they shall stand extinguished.
40
This figure was corrected on 17.03.2020 by NCLT as ‘758 acres’ in terms of the order
H of this Court dated 26.02.2020.
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Clause No. 7:- Since reduction of the share capital of the corporate A
debtor is not part of this resolution, this Adjudicating Authority
cannot waive the procedure for reduction of share capital in relation
to the companies not yet incorporated.
Clause No. 8 & 10:- Payment of stamp duty mentioned in clause
8 is waived to the extent permissible under law. B
Clause No. 9:- Any non-compliance arising out of past claims
prior to CIRP initiation shall not have any bearing on this corporate
debtor from hereof.
Clause No. 11:- The lenders to the corporate debtor shall regularise
all the accounts and ensure that such classification of the loan C
account is standard in their books with effect from the transfer
dates.
Clause No. 12:- All claims which have been placed before the RP
and any criminal proceedings appurtenant to those claims are
hereby extinguished. D
Clause No. 13:- As to the contracts relating to the development of
land by JAL, the Resolution applicant can reserve its right to
terminate the same, as to the claims, if any, the resolution applicant
has right to take appropriate action against JAL.
E
Clause No. 14:- With regard to liability arising out of concession
agreement in relation to YEIDA, since those issues are governed
by concession agreement, this Bench cannot nullify the rights of
YEIDA against the corporate debtor emanating from the
concession agreement.
F
Clause No. 15:- The agreements for subleases executed between
the corporate debtor and the third parties, which are not in
accordance with law and not supported by material proof, the
Resolution applicant will have a right to terminate in accordance
with law.
Clause No. 16 to 18:- The resolution applicant is granted 12 months’ G
time from the approval date to ensure compliances in relation to
the non-compliance of applicable laws by the corporate debtor or
of its subsidiary pertaining to any period up to the approval date
and licenses if any, to be obtained.
H
704 SUPREME COURT REPORTS [2021] 12 S.C.R.

A Clause No. 19:- In respect to the lands shown as transferred to
JAL for real estate development, where the title and ownership is
still lying with the corporate debtor, the resolution applicant is at
liberty to proceed in accordance with law.
Clause No. 20:- It goes without saying that the IRP will not be
B held responsible with regard to discharge of his duties during CIR
Process. The IRP and the Resolution Applicant will not be liable
for any transactions carried out by the ex-management of the
corporate debtor.
Clause No. 21:- This point has already been dealt with in the
C above discussion.
Clause No. 22:- For the purpose of consolidation of the books of
the CD with the resolution applicant, the effective date shall be
treated as the first day of the quarter immediately succeeding
quarter in which the resolution applicant completes the takeover
D of the CD.
Clause No. 23:- This point is not clear as to whether it is referring
to the land of the Corporate Debtor mortgaged to the lenders of
JAL, if that is so, since it has been decided by the Honourable
Supreme Court, it need not be reiterated.
E Clause No. 24:- This generalization of cancellation of all agreements
cannot be granted unless each transaction is specifically dealt
with.
Clause No. 25:- The resolution applicant cannot modify the
resolution plan once it is approved by the CoC.
F
Clause No. 26:- As to the claims placed before the IRP and other
liabilities of the CD which are shown in the records of the company
and where notice has been given to such creditors, they can be
construed as withdrawn after the approval date.
Clause No. 27:- With regard to extension of concession period by
G YEIDA, it is YEIDA to decide as to whether such extension should
be given or not.
Clause No. 28:- This Adjudicating Authority can only direct the
Central Government and Reserve Bank of India to accord
permissions to the extent permissible under law.”
H
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50. As regards other applications/objections, the NCLT disposed A
them of with comments wherever required. We need not elaborate on
all such observations but could usefully point out the rejection of two
such applications.
50.1. One such application was filed by a financer of one of the
homebuyers seeking its induction in the CoC. This application was B
dismissed as misconceived in the following words: -
“CA-74/2019 filed by PNB Housing Finance Ltd. for directions
to the IRP to induct this applicant in the CoC and if any amount is
refunded to the home-buyers, the amount due to the applicant
ought to be paid to this applicant because it is the lender to the C
home-buyers. This application is dismissed as misconceived, as
the lender to the home-buyers will not have any right to be financial
creditors of the CD.”
50.2. Another application was filed by three homebuyers seeking
the relief of quashing the minutes of CoC dated 01.03.2019; for direction D
to conduct a forensic land audit of the corporate debtor; and for various
directions to IRP, like those for taking legal opinion on Concession
Agreement, analysis of Expressway cost escalation, providing information
and answers to the queries of homebuyers etc. etc. The NCLT noted
the propositions of these applicants and dismissed the application with
the observations that they were three persons out of thousands of E
homebuyers and if such issues were to be examined and decided, the
resolution process could never be completed; and at the stage of approval
of the resolution plan, if objections of this kind were allowed, there would
be no end to it. The NCLT said, -
“It is an application filed by Mr. Hemant Kumar & two others, F
who do not have direct voting in the CoC, because there are
thousands of home-buyers, out of them these three are minuscule
in number, if at all these issues are to be examined and decided,
and remain waiting for the remedies, this resolution process will
not complete even after two years from hereof. Moreover, at the G
time of approval of this resolution plan, if objections of this kind
are allowed there cannot be any end to it, therefore, this application
is hereby dismissed.”
51. With the aforesaid, the Adjudicating Authority (NCLT)
concluded on the matter while disposing of all the applications and while
H
706 SUPREME COURT REPORTS [2021] 12 S.C.R.

A holding that all the stakeholders shall remain bound by the order so passed.
However, various stakeholders have various submissions to make and
various objections to take against the order so passed by the Adjudicating
Authority.
52. Having taken note of the relevant contents of the order dated
B 03.03.2020, as passed by the Adjudicating Authority (NCLT) in exercise
of its jurisdiction under Section 31 of the Code, it would be worthwhile to
summarise the significant attributes of, and takeaways from, this order
because a substantial part of the forthcoming discussion shall be revolving
around the findings recorded and directions given therein. The relevant
aspects could be summarised as follows:
C
(a) As regards the said sum of INR 750 crores, the Adjudicating
Authority, with reference to the orders passed by this Court in the case
of Chitra Sharma (supra), held that the deposit made by JAL became
an asset of the corporate debtor JIL; and the said money was to be
utilised towards securing the interests of homebuyers. As regards the
D question of the amount payable by JAL to JIL, it was directed that JAL
shall make payment of the admitted amount of INR 274 crores; and
after reconciliation of accounts, further payment shall be made to
whomsoever outstanding was found payable.
(b) As regards the objections by the dissenting financial creditor
E ICICI Bank, the Adjudicating Authority held that payment to such
dissenting financial creditor shall be made in cash, as per the amount it
would be entitled to under Section 53 of the Code, in the form of twelve
monthly instalments with interest to be accrued six months post the order.
It was also observed by the Adjudicating Authority that it had the
F necessary jurisdiction to modify the resolution plan to make sure it
complied with Section 30(2) of the Code, so long as its basic structure
was not altered.
(c) As regards the objections by YEIDA, the Adjudicating Authority
held that YEIDA shall have the right to collect the acquisition cost through
G the SPVs proposed to be incorporated so as to make the resolution plan
compliant with the terms of the Concession Agreement; however, the
Adjudicating Authority refrained from adjudicating on the issue of
additional compensation in relation to the land under Expressway and
left it for the parties to take appropriate action at the appropriate stage.
The Adjudicating Authority also held that for transfer of rights and
H
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obligations to the two SPVs, necessary documents shall be executed A
involving the concessionaire (JIL), YEIDA and the SPV concerned.
These alterations were ordered by the Adjudicating Authority ‘to iron
out all these creases and to make this resolution plan viable’.
(d) As regards the issue relating to the fixed deposit holders, the
Adjudicating Authority provided that the resolution applicant shall make B
a provision to clear the dues even of those fixed deposit holders who had
not made the claims. In other words, the Adjudicating Authority directed
for another modification of the resolution plan, for satisfying the dues of
unclaimed fixed deposit holders.
(e) The Adjudicating Authority brushed aside the objections sought C
to be taken by some of the aggrieved homebuyers, while holding that
they could not be categorised or treated as dissenting financial creditors.
(f) As regards the objections by YES Bank, the Adjudicating
Authority pointed out that no intervention was required since YES Bank
agreed to settle its objections with NBCC by forming a Committee. D
(g) As regards the agreement holders, the Adjudicating Authority
observed that if an agreement was not valid in law and suffered from
want of consideration, it was not even required to be said that such
agreement could be cancelled by the party concerned. However, the
Adjudicating Authority also observed that even when such a clause had E
been mentioned in the resolution plan, the agreement holders had not
lost their right to seek remedy in the competent forum.
(h) The Adjudicating Authority generally dealt with the clauses
relating to the ‘reliefs and concessions’ in Schedule 3 of the resolution
plan as also various other applications filed by different stakeholders. F
Some of the reliefs and concessions sought for by the resolution applicant
were not granted or were declined, for the reasons specified against the
relevant clauses. The other applications/objections were disposed of with
a few comments.
Order dated 22.04.2020 by NCLAT making interim
G
arrangement
53. As noticed at the outset, the aforesaid order dated 03.03.2020
was challenged in various appeals before the Appellate Authority
(NCLAT), which have since been withdrawn to this Court after we took
note of all the factors concerning this litigation and accepted the requests
H
708 SUPREME COURT REPORTS [2021] 12 S.C.R.

A made by the parties concerned. Such requests were made when the
matters first appeared before us in challenge to an interim order dated
22.04.2020 passed by NCLAT, whereby the NCLAT made an interim
arrangement of constitution of an Interim Monitoring Committee for
implementation of the plan in question. The said order dated 22.04.2020,
being also a subject of challenge in this batch, could be usefully noticed
B
to complete the narrative.
54. The resolution applicant NBCC preferred an appeal against
the aforesaid order dated 03.03.2020 insofar as it felt aggrieved of the
modifications in the resolution plan. In that appeal, the NCLAT, while
issuing notice to the unrepresented parties, directed that the approved
C resolution plan may be implemented subject to the outcome of appeal
but at the same time, it was also provided that IRP may constitute an
Interim Monitoring Committee comprising of the successful resolution
applicant (NBCC) and three major institutional financial creditors, who
were the members of CoC. This impugned interim order dated 22.04.2020
D reads as under: -
“22.04.2020 The Appellant – NBCC (India) Ltd., which has
emerged as the Successful Resolution Applicant in ‘Corporate
Insolvency Resolution Process’ initiated against Jaypee Infratech
Ltd. (JIL) is aggrieved of modifications made by the learned
E Adjudicating Authority in the ‘Resolution Plan’ submitted by it
and as approved by the ‘Committee of Creditors’ to the extent it
allows objections of ICICI Bank Ltd. and Yamuna Expressway
Industrial Development Authority and directs payment to
unclaimed Fixed Deposit Holders. It is submitted that the learned
Adjudicating Authority could not intercede the business decision
F of the ‘Committee of Creditors’ taken by the prescribed voting
shares and the learned Adjudicating Authority exceeded its
jurisdiction in making such modifications.
Issue notice to the Respondents through Speed Post in the main
appeal as well as in the Interim Application.
G
On behalf of ICICI Bank Ltd., Ms. Misha, learned Counsel accepts
notice. On behalf of Respondent No.4 – Interim Resolution
Professional, Mr. Sumant Batra, learned Counsel accepts notice.
On behalf of Respondent No.5 – IDBI Bank, Mr. Bidhwajit Dubey,
learned Counsel accepts Notice. No further notice be served upon
H these Respondents. The above Respondents may file their reply
JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 709
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affidavits within two weeks. Rejoinders, if any be filed within one A
week thereof.
Let notice be served upon Respondent Nos.2 and 3. Requisites
along with process fee be filed within three days. If the Appellant
provides email addresses of the Respondents, let service be
effected through email also. B
Mr. Sumant Batra, learned Counsel representing the ‘Resolution
Professional’ intends to file an Appeal in regard to some
observations made in paragraph 103 of the impugned order.
We are told that the implementation of the ‘Successful Resolution
Plan’ would involve participation of the ‘Successful Resolution C
Applicant’, i.e. NBCC (India) Ltd. as also the three major
Institutional Financial Creditors, who are Members of the
‘Committee of Creditors’ i.e., IDBI Bank Ltd., IIFCL and LIC.
Meanwhile, till further orders, the approved ‘Resolution Plan’ may
be implemented subject to outcome of this Appeal. The Interim D
Resolution Professional may constitute ‘Interim Monitoring
Committee’ comprising of the ‘Successful Resolution Applicant’,
i.e., the Appellant and the three major Institutional Financial
Creditors, who were Members of the ‘Committee of Creditors’
as named above. E
Mr. Sumant Batra, learned Counsel submits that as of now he is
continuing and managing the affairs of the ‘Corporate Debtor’.
The Resolution Professional, who would be constituent of the
‘Interim Monitoring Committee’ shall continue to be paid as may
be deemed reasonable by the ‘Interim Monitoring Committee’ F
from the date of this order. If any fee is outstanding for the past
services rendered by the Resolution Professional during the
‘Corporate Insolvency Resolution Process’, the same shall be paid
as per the decision of the ‘Committee of Creditors’. These
directions will last till the disposal of this Appeal.
G
List the matter for ‘admission after notice’ on 15th May, 2020.”
The relevant statutory provisions
55. Having taken note of the parties and their respective interests;
the principal points for determination; the relevant factual and background
aspects, particularly with reference to the three decisions of this Court H
710 SUPREME COURT REPORTS [2021] 12 S.C.R.

A dated 09.08.2018, 06.11.2019 and 26.02.2020; the salient features of the
resolution plan; and key aspect of the orders impugned, we may now go
through the provisions that would be relevant for determination of the
points arising in this batch of matters.
56. While the expressions generally used in the Code are defined
B in Section 3 but then, the expressions employed for the purpose of Part
II of the Code, dealing with insolvency resolution and liquidation of
corporate persons, are defined in Section 5 thereof.
56.1. The relevant definitions as occurring in Section 3 are as
under: -
C “Section 3(8): “corporate debtor” means a corporate person who
owes a debt to any person;
Section 3(10): “creditor” means any person to whom a debt is
owed and includes a financial creditor, an operational creditor, a
secured creditor, an unsecured creditor and a decree-holder;
D
Section 3(11): “debt” means a liability or obligation in respect of
a claim which is due from any person and includes a financial
debt and operational debt;
Section 3(12): “default” means non-payment of debt when whole
or any part or instalment of the amount of debt has become due
E
and payable and is not paid by the debtor or the corporate debtor,
as the case may be;
Section 3(30): “secured creditor” means a creditor in favour of
whom security interest is created;
F Section 3(31): “security interest” means right, title or interest or
a claim to property, created in favour of, or provided for a secured
creditor by a transaction which secures payment or performance
of an obligation and includes mortgage, charge, hypothecation,
assignment and encumbrance or any other agreement or
arrangement securing payment or performance of any obligation
G of any person:
Provided that security interest shall not include a performance
guarantee;”
56.2. The relevant definitions occurring in Section 5 for the purpose
H of Part II of the Code are as under: -
JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 711
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“Section 5(1): “Adjudicating Authority”, for the purposes of this A
Part, means National Company Law Tribunal constituted under
section 408 of the Companies Act, 2013 (18 of 2013);
Section 5(7): “financial creditor” means any person to whom a
financial debt is owed and includes a person to whom such debt
has been legally assigned or transferred to; B
Section 5(8): “financial debt” means a debt alongwith interest, if
any, which is disbursed against the consideration for the time value
of money and includes-
(a) money borrowed against the payment of interest;
C
(b) any amount raised by acceptance under any acceptance credit
facility or its de-materialised equivalent;
(c) any amount raised pursuant to any note purchase facility or
the issue of bonds, notes, debentures, loan stock or any similar
instrument; D
(d) the amount of any liability in respect of any lease or hire
purchase contract which is deemed as a finance or capital lease
under the Indian Accounting Standards or such other accounting
standards as may be prescribed;
(e) receivables sold or discounted other than any receivables sold E
on non-recourse basis;
(f) any amount raised under any other transaction, including any
forward sale or purchase agreement, having the commercial effect
of a borrowing;
41
[Explanation.- For the purposes of this sub-clause,- F

(i) any amount raised from an allottee under a real estate project
shall be deemed to be an amount having the commercial effect of
a borrowing; and
(ii) the expressions, “allottee” and “real estate project” shall have G
the meanings respectively assigned to them in clauses (d) and
(zn) of section 2 of the Real Estate (Regulation and Development)
Act, 2016 (16 of 2016);]

41
This Explanation was inserted by Act 26 of 2018 w.r.e.f. 06.06.2018. H
712 SUPREME COURT REPORTS [2021] 12 S.C.R.

A (g) any derivative transaction entered into in connection with
protection against or benefit from fluctuation in any rate or price
and for calculating the value of any derivative transaction, only
the market value of such transaction shall be taken into account;
(h) any counter-indemnity obligation in respect of a guarantee,
B indemnity, bond, documentary letter of credit or any other instrument
issued by a bank or financial institution;
(i) the amount of any liability in respect of any of the guarantee or
indemnity for any of the items referred to in sub-clauses (a) to (h)
of this clause;
C Section 5(20): “operational creditor” means a person to whom
an operational debt is owed and includes any person to whom
such debt has been legally assigned or transferred;
Section 5(21): “operational debt” means a claim in respect of
the provision of goods or services including employment or a debt
D in respect of the payment of dues arising under any law for the
time being in force and payable to the Central Government, any
State Government or any local authority;
Section 5(25): “resolution applicant” means a person, who
individually or jointly with any other person, submits a resolution
E plan to the resolution professional pursuant to the invitation made
under clause (h) of sub-section (2) of section 25;
Section 5(26): “resolution plan” means a plan proposed by
resolution applicant for insolvency resolution of the corporate debtor
as a going concern in accordance with Part II
F 42
[Explanation.- For removal of doubts, it is hereby clarified that
a resolution plan may include provisions for the restructuring of
the corporate debtor, including by way of merger, amalgamation
and demerger;]
Section 5(27): “resolution professional”, for the purposes of this
G Part, means an insolvency professional appointed to conduct the
corporate insolvency resolution process and includes an interim
resolution professional; and

42
H Inserted by Act 26 of 2019, sec. 2 (w.e.f. 16.08.2019).
JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 713
ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

Section 5(28): “voting share” means the share of the voting rights A
of a single financial creditor in the committee of creditors which
is based on the proportion of the financial debt owed to such
financial creditor in relation to the financial debt owed by the
corporate debtor.”
57. As already indicated, and which is not far to seek, the B
Explanation inserted to sub-clause (f) of clause (8) of Section 5 with
effect from 06.06.2018 made it clear that any amount raised from an
allottee under a real estate project is deemed to be having the commercial
effect of a borrowing and thereby, it answers to the description of a
“financial debt”. The pertinent consequence of this clarificatory
amendment is that such an allottee under a real estate project stands in C
the capacity of a financial creditor of the corporate debtor. Prior to this
amendment, such an allottee was sought to be regarded only as an ‘other
creditor’ and that had been the principal cause behind the litigation in
this Court in Chitra Sharma (supra). For a complete and meaningful
understanding of this Explanation inserted to Section 5(8)(f) of the Code, D
it would be in concordance to take note of the meanings assigned to the
expressions “allottee” and “real estate project” in RERA. The referred
clauses (d) and (zn) of Section 2 of RERA read as under: -
“Section 2(d): “allottee” in relation to a real estate project, means
the person to whom a plot, apartment or building, as the case may E
be, has been allotted, sold (whether as freehold or leasehold) or
otherwise transferred by the promoter, and includes the person
who subsequently acquires the said allotment through sale, transfer
or otherwise but does not include a person to whom such plot,
apartment or building, as the case may be, is given on rent;
F
Section 2(zn): “real estate project” means the development of a
building or a building consisting or apartments, or converting an
existing building or a part thereof into apartments, or the
development of land into plots or apartments, as the case may be,
for the purpose of selling all or some of the said apartments or
plots or building, as the case may be, and includes the common G
areas, the development works, all improvements and structures
thereon, and all easement, rights and appurtenances belonging
thereto;”
58. We may now take note of the relevant provisions contained in
the Code, as amended from time to time and as applicable to the case at H
714 SUPREME COURT REPORTS [2021] 12 S.C.R.

A hand, particularly Section 18 relating to the duties of interim resolution
professional; Section 21 specifying the composition of the Committee of
Creditors and matters related with it; Section 24 laying down the norms
for meeting of the Committee of Creditors; Section 25 relating to the
duties of the resolution professional; Section 25A, as inserted with effect
from 06.06.2018 and as amended with effect from 16.08.2019, in regard
B
to the rights and duties of the authorised representative of the financial
creditors; Section 30 on the essentials of a resolution plan and its
submission to the Committee of Creditors by the resolution professional;
Section 31 relating to the approval of resolution plan by the Adjudicating
Authority; Sections 32 and 61 relating to the appeal against an order
C approving the resolution plan and grounds for such an appeal; Section 53
relating to distribution of assets in case of liquidation; and Section 238 on
the overriding effect of the Code. These provisions read as under: -
“Section 18. Duties of interim resolution professional.- The
interim resolution professional shall perform the following duties,
D namely:-
(a) collect all information relating to the assets, finances and
operations of the corporate debtor for determining the financial
position of the corporate debtor, including information relating to-
(i) business operations for the previous two years;
E (ii) financial and operational payments for the previous two
years;
(iii) list of assets and liabilities as on the initiation date; and
(iv) such other matters as may be specified;
F (b) receive and collate all the claims submitted by creditors to
him, pursuant to the public announcement made under sections
13 and 15;
(c) constitute a committee of creditors;
(d) monitor the assets of the corporate debtor and manage its
G operations until a resolution professional is appointed by the
committee of creditors;
(e) file information collected with the information utility, if
necessary; and
(f) take control and custody of any asset over which the corporate
H debtor has ownership rights as recorded in the balance sheet of
JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 715
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the corporate debtor, or with information utility or the depository A
of securities or any other registry that records the ownership of
assets including-
(i) assets over which the corporate debtor has ownership rights
which may be located in a foreign country;
(ii) assets that may or may not be in possession of the corporate B
debtor;
(iii) tangible assets, whether movable or immovable;
(iv) intangible assets including intellectual property;
(v) securities including shares held in any subsidiary of the C
corporate debtor, financial instruments, insurance policies;
(vi) assets subject to the determination of ownership by a court
or authority:
(g) to perform such other duties as may be specified by the Board.
D
Explanation.–For the purposes of this [section] 43, the term
“assets” shall not include the following, namely:-
(a) assets owned by a third party in possession of the corporate
debtor held under trust or under contractual arrangements including
bailment;
E
(b) assets of any Indian or foreign subsidiary of the corporate
debtor; and
(c) such other assets as may be notified by the Central Government
in consultation with any financial sector regulator.
44
Section 21. Committee of creditors.-(1) The interim F
resolution professional shall after collation of all claims received
against the corporate debtor and determination of the financial
position of the corporate debtor, constitute a committee of creditors.
43
Substituted by Act 26 of 2018, sec. 14, for “sub-section” (w.r.e.f. 06.06.2018).
44
This Section 21 has undergone various changes in its amendment by Act 26 of 2018 G
w.r.e.f. 06.06.2018 which include substitution/omission of certain expressions as also
insertion of certain provisions. While leaving aside all the minute details, we may, of
course, indicate that by this very amendment, sub-sections (6A) and (6B) were also
inserted and sub-sections (7) and (8) were substituted. Before their substitution, sub-
sections (7) and (8) stood as under:
“(7) The Board may specify the manner of determining the voting share in
respect of financial debts issued as securities under sub-section (6). H
716 SUPREME COURT REPORTS [2021] 12 S.C.R.

A (2) The committee of creditors shall comprise all financial
creditors of the corporate debtor:
Provided that a financial creditor or the authorised
representative of the financial creditor referred to in sub-section
(6) or sub-section (6A) or sub-section (5) of section 24, if it is a
B related party of the corporate debtor, shall not have any right of
representation, participation or voting in a meeting of the committee
of creditors.
Provided further that the first proviso shall not apply to a
financial creditor, regulated by a financial sector regulator, if it is a
C related party of the corporate debtor solely on account of
conversion or substitution of debt into equity shares or instruments
convertible into equity shares, prior to the insolvency
commencement date.
(3) Subject to sub-sections (6) and (6A), where the corporate
D debtor owes financial debts to two or more financial creditors as
part of a consortium or agreement, each such financial creditor
shall be part of the committee of creditors and their voting share
shall be determined on the basis of the financial debts owed to
them.

E (4) Where any person is a financial creditor as well as an
operational creditor,-
(a) such person shall be a financial creditor to the extent of
the financial debt owed by the corporate debtor, and shall be included
in the committee of creditors, with voting share proportionate to
F the extent of financial debts owed to such creditor;
(b) such person shall be considered to be an operational
creditor to the extent of the operational debt owed by the corporate
debtor to such creditor.
(5) Where an operational creditor has assigned or legally
G transferred any operational debt to a financial creditor, the

(8) All decisions of the committee of creditors shall be taken by a vote of not
less than seventy-five per cent of voting share of the financial creditors:
Provided that where a corporate debtor does not have any financial creditors,
the committee of creditors shall be constituted and comprise of such persons to exercise
H such functions in such manner as may be specified by the Board.”
JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 717
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assignee or transferee shall be considered as an operational creditor A
to the extent of such assignment or legal transfer.
(6) Where the terms of the financial debt extended as part
of a consortium arrangement or syndicated facility provide for a
single trustee or agent to act for all financial creditors, each financial
creditor may- B
(a) authorise the trustee or agent to act on his behalf in the
committee of creditors to the extent of his voting share;
(b) represent himself in the committee of creditors to the
extent of his voting share;
C
(c) appoint an insolvency professional (other than the
resolution professional) at his own cost to represent himself in the
committee of creditors to the extent of his voting share; or
(d) exercise his right to vote to the extent of his voting
share with one or more financial creditors jointly or severally. D
(6A) Where a financial debt—
(a) is in the form of securities or deposits and the terms of
the financial debt provide for appointment of a trustee or agent to
act as authorised representative for all the financial creditors, such
trustee or agent shall act on behalf of such financial creditors; E
(b) is owed to a class of creditors exceeding the number as
may be specified, other than the creditors covered under clause
(a) or sub-section (6), the interim resolution professional shall make
an application to the Adjudicating Authority along with the list of
all financial creditors, containing the name of an insolvency F
professional, other than the interim resolution professional, to act
as their authorised representative who shall be appointed by the
Adjudicating Authority prior to the first meeting of the committee
of creditors;
(c) is represented by a guardian, executor or administrator, G
such person shall act as authorised representative on behalf of
such financial creditors,
and such authorised representative under clause (a) or clause (b)
or clause (c) shall attend the meetings of the committee of
H
718 SUPREME COURT REPORTS [2021] 12 S.C.R.

A creditors, and vote on behalf of each financial creditor to the extent
of his voting share.
(6B) The remuneration payable to the authorised
representative-
(i) under clauses (a) and (c) of sub-section (6A), if any, shall
B be as per the terms of the financial debt or the relevant
documentation; and
(ii) under clause (b) of sub-section (6A) shall be as specified
which shall form part of the insolvency resolution process costs.

C (7) The Board may specify the manner of voting and the
determining of the voting share in respect of financial debts covered
under sub-sections (6) and (6A).
(8) Save as otherwise provided in this Code, all decisions
of the committee of creditors shall be taken by a vote of not less
D than fifty-one per cent. of voting share of the financial creditors:
Provided that where a corporate debtor does not have any
financial creditors, the committee of creditors shall be constituted
and shall comprise of such persons to exercise such functions in
such manner as may be specified.
E (9) The committee of creditors shall have the right to require
the resolution professional to furnish any financial information in
relation to the corporate debtor at any time during the corporate
insolvency resolution process.
(10) The resolution professional shall make available any
F financial information so required by the committee of creditors
under sub-section (9) within a period of seven days of such
requisition.
45
Section 24. Meeting of committee of creditors.-(1) The
members of the committee of creditors may meet in person or by
G such electronic means as may be specified.
(2) All meetings of the committee of creditors shall be
conducted by the resolution professional.

45
This Section 24 has also undergone a few changes in its amendment by Act 26 of 2018
H w.r.e.f. 06.06.2018 which are essentially of sequel to the amendment of Section 21.
JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 719
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(3) The resolution professional shall give notice of each A
meeting of the committee of creditors to-
(a) members of committee of creditors, including the
authorised representatives referred to in sub-sections (6) and (6A)
of section 21 and sub-section (5);
(b) members of the suspended Board of Directors or the B
partners of the corporate persons, as the case may be;
(c) operational creditors or their representatives if the amount
of their aggregate dues is not less than ten per cent of the debt.
(4) The directors, partners and one representative of C
operational creditors, as referred to in sub-section (3), may attend
the meetings of committee of creditors, but shall not have any
right to vote in such meetings:
Provided that the absence of any such director, partner or
representative of operational creditors, as the case may be, shall D
not invalidate proceedings of such meeting.
(5) Subject to sub-sections (6), (6A) and (6B) of section
21, any creditor who is a member of the committee of creditors
may appoint an insolvency professional other than the resolution
professional to represent such creditor in a meeting of the
E
committee of creditors:
Provided that the fees payable to such insolvency
professional representing any individual creditor will be borne by
such creditor.
(6) Each creditor shall vote in accordance with the voting F
share assigned to him based on the financial debts owed to such
creditor.
(7) The resolution professional shall determine the voting
share to be assigned to each creditor in the manner specified by
the Board. G
(8) The meetings of the committee of creditors shall be
conducted in such manner as may be specified.
Section 25. Duties of resolution professional.-(1) It shall be
the duty of the resolution professional to preserve and protect the
H
720 SUPREME COURT REPORTS [2021] 12 S.C.R.

A assets of the corporate debtor, including the continued business
operations of the corporate debtor.
(2) For the purposes of sub-section (1), the resolution
professional shall undertake the following actions, namely:-
(a) take immediate custody and control of all the assets of
B
the corporate debtor, including the business records of the corporate
debtor;
(b) represent and act on behalf of the corporate debtor with
third parties, exercise rights for the benefit of the corporate debtor
in judicial, quasi-judicial or arbitration proceedings;
C
(c) raise interim finances subject to the approval of the
committee of creditors under section 28;
(d) appoint accountants, legal or other professionals in the
manner as specified by Board;
D
(e) maintain an updated list of claims;
(f) convene and attend all meetings of the committee of
creditors;
(g) prepare the information memorandum in accordance
E with section 29;
46
[(h) invite prospective resolution applicants, who fulfil such
criteria as may be laid down by him with the approval of committee
of creditors, having regard to the complexity and scale of operations
of the business of the corporate debtor and such other conditions
F as may be specified by the Board, to submit a resolution plan or
plans.]
(i) present all resolution plans at the meetings of the
committee of creditors;
(j) file application for avoidance of transactions in
G
accordance with Chapter III, if any; and

46
This clause (h) was substituted by Act 8 of 2018, sec. 4, w.r.e.f. 23.11.2017. Clause
(h), before substitution, stood as under:
“(h) invite prospective lenders, investors, and any other persons to put
H forward resolution plans;”.
JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 721
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(k) such other actions as may be specified by the Board. A
47
Section 25A. Rights and duties of authorised
representative of financial creditors.-(1) The authorised
representative under sub-section (6) or sub-section (6A) of section
21 or sub-section (5) of section 24 shall have the right to participate
and vote in meetings of the committee of creditors on behalf of B
the financial creditor he represents in accordance with the prior
voting instructions of such creditors obtained through physical or
electronic means.
(2) It shall be the duty of the authorised representative to
circulate the agenda and minutes of the meeting of the committee C
of creditors to the financial creditor he represents.
(3) The authorised representative shall not act against the
interest of the financial creditor he represents and shall always
act in accordance with their prior instructions:
Provided that if the authorised representative represents D
several financial creditors, then he shall cast his vote in respect of
each financial creditor in accordance with instructions received
from each financial creditor, to the extent of his voting share:
Provided further that if any financial creditor does not give
prior instructions through physical or electronic means, the E
authorised representative shall abstain from voting on behalf of
such creditor.
(3A) Notwithstanding anything to the contrary contained in
sub-section (3), the authorised representative under sub-section
(6A) of section 21 shall cast his vote on behalf of all the financial F
creditors he represents in accordance with the decision taken by
a vote of more than fifty per cent. of the voting share of the
financial creditors he represents, who have cast their vote:
Provided that for a vote to be cast in respect of an application
under section 12A, the authorised representative shall cast his G
vote in accordance with the provisions of sub-section (3).
(4) The authorised representative shall file with the
committee of creditors any instructions received by way of physical
47
This Section 25A was inserted by Act 26 of 2018 (w.r.e.f. 06.06.2018). Herein, sub-
section (3A) was inserted by Act No. 26 of 2019 (w.e.f. 16.08.2019). H
722 SUPREME COURT REPORTS [2021] 12 S.C.R.

A or electronic means, from the financial creditor he represents, for
voting in accordance therewith, to ensure that the appropriate
voting instructions of the financial creditor he represents is
correctly recorded by the interim resolution professional or
resolution professional, as the case may be.
B Explanation.-For the purposes of this section, the
“electronic means” shall be such as may be specified.
48
Section 30. Submission of resolution plan.-(1) A resolution
applicant may submit a resolution plan 49[along with an affidavit
stating that he is eligible under section 29 A] to the resolution
C professional prepared on the basis of the information memorandum.
(2) The resolution professional shall examine each resolution
plan received by him to confirm that each resolution plan-
(a) provides for the payment of insolvency resolution process
costs in a manner specified by the Board in priority to the
D 50
[payment] of other debts of the corporate debtor;
51
[(b) provides for the payment of debts of operational
creditors in such manner as may be specified by the Board which
shall not be less than-
(i) the amount to be paid to such creditors in the event of a
E
liquidation of the corporate debtor under section 53; or
(ii) the amount that would have been paid to such creditors, if
the amount to be distributed under the resolution plan had been
distributed in accordance with the order of priority in sub-section
(1) of section 53,
F
48
This Section 30 has undergone various changes in its amendments by Acts 8 of 2018,
26 of 2018 and 26 of 2019. Several aspects relating to the requirements of Section 30
have formed the matters of contention herein. For their relevance, all the concerned
amendments are being indicated.
49
Inserted by Act 26 of 2018, sec. 23(i) (w.r.e.f. 06.06.2018).
50
G Substituted by Act 26 of 2018, sec. 23 (ii)(A), for “repayment” (w.r.e.f. 06.06.2018).
51
Substituted by Act 26 of 2019, sec. 6(a), for clause (b) (w.e.f. 16.08.2019). Earlier
clause (b) was amended by Act 26 of 2018, sec. 23(ii)(A) (w.r.e.f. 06.06.2018). Clause
(b), before substitution, stood as under:
“(b) provides for the payment of the debts of operational creditors in such
manner as may be specified by the Board which shall not be less than the
amount to be paid to the operational creditors in the event of a liquidation of
H the corporate debtor under section 53;”
JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 723
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whichever is higher, and provides for the payment of debts of A
financial creditors, who do not vote in favour of the resolution
plan, in such manner as may be specified by the Board, which
shall not be less than the amount to be paid to such creditors in
accordance with sub-section (1) of section 53 in the event of a
liquidation of the corporate debtor.
B
Explanation 1.—For the removal of doubts, it is hereby
clarified that a distribution in accordance with the provisions of
this clause shall be fair and equitable to such creditors.
Explanation 2.—For the purposes of this clause, it is hereby
declared that on and from the date of commencement of the C
Insolvency and Bankruptcy Code (Amendment) Act, 2019, the
provisions of this clause shall also apply to the corporate insolvency
resolution process of a corporate debtor-
(i) where a resolution plan has not been approved or rejected
by the Adjudicating Authority; D
(ii) where an appeal has been preferred under section 61 or
section 62 or such an appeal is not time barred under any
provision of law for the time being in force; or
(iii) where a legal proceeding has been initiated in any court
against the decision of the Adjudicating Authority in respect of E
a resolution plan;]
(c) provides for the management of the affairs of the
Corporate debtor after approval of the resolution plan;
(d) the implementation and supervision of the resolution plan;
F
(e) does not contravene any of the provisions of the law for
the time being in force;
(f) conforms to such other requirements as may be specified
by the Board.
52
[Explanation.—For the purposes of clause (e), if any G
approval of shareholders is required under the Companies Act,
2013 (18 of 2013) or any other law for the time being in force for
the implementation of actions under the resolution plan, such

52
Inserted by Act 26 of 2018, sec. 23(ii)(B) (w.r.e.f. 06.06.2018). H
724 SUPREME COURT REPORTS [2021] 12 S.C.R.

A approval shall be deemed to have been given and it shall not be a
contravention of that Act or law.]
(3) The resolution professional shall present to the committee
of creditors for its approval such resolution plans which confirm
the conditions referred to in sub-section (2).
B 53
[(4) The committee of creditors may approve a resolution
plan by a vote of not less than 54[sixty-six] per cent. of voting
share of the financial creditors, after considering its feasibility
and viability, 55[the manner of distribution proposed, which may
take into account the order of priority amongst creditors as laid
C down in sub-section (1) of section 53, including the priority and
value of the security interest of a secured creditor] and such other
requirements as may be specified by the Board:
Provided that the committee of creditors shall not approve
a resolution plan, submitted before the commencement of the
D Insolvency and Bankruptcy Code (Amendment) Ordinance, 2017
(Ord. 7 of 2017), where the resolution applicant is ineligible under
section 29A and may require the resolution professional to invite
a fresh resolution plan where no other resolution plan is available
with it:

E Provided further that where the resolution applicant referred
to in the first proviso is ineligible under clause (c) of section 29A,
the resolution applicant shall be allowed by the committee of
creditors such period, not exceeding thirty days, to make payment
of overdue amounts in accordance with the proviso to clause (c)
of section 29A:
F
Provided also that nothing in the second proviso shall be
construed as extension of period for the purposes of the proviso
to sub-section (3) of section 12, and the corporate insolvency
resolution process shall be completed within the period specified
in that sub-section.]
G
53
Substituted by Act 8 of 2018, sec. 6, for sub-section (4) (w.r.e.f. 23.11.2017). Sub-
section (4), before substitution, stood as under:
“(4) The committee of creditors may approve a resolution plan by a vote of not
less than seventy five per cent of voting share of the financial creditors.”.
54
Substituted by Act 26 of 2018, sec. 23(iii)(a) for “seventy-five” (w.r.e.f. 06.06.2018).
55
H Inserted by Act 26 of 2019, sec. 6(b) (w.e.f. 16.08.2019).
JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 725
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56
[Provided also that the eligibility criteria in section 29A as A
amended by the Insolvency and Bankruptcy Code (Amendment)
Ordinance, 2018 (Ord. 6 of 2018) shall apply to the resolution
applicant who has not submitted resolution plan as on the date of
commencement of the Insolvency and Bankruptcy Code
(Amendment) Ordinance, 2018 (Ord. 6 of 2018).]
B
(5) The resolution applicant may attend the meeting of the
committee of creditors in which the resolution plan of the applicant
is considered:
Provided that the resolution applicant shall not have a right
to vote at the meeting of the committee of creditors unless such C
resolution applicant is also a financial creditor.
(6) The resolution professional shall submit the resolution
plan as approved by the committee of creditors to the Adjudicating
Authority.
57
Section 31. Approval of resolution plan.-(1) If the D
Adjudicating Authority is satisfied that the resolution plan as
approved by the committee of creditors under sub-section (4) of
section 30 meets the requirements as referred to in sub-section
(2) of section 30, it shall by order approve the resolution plan
which shall be binding on the corporate debtor and its employees, E
members, creditors, 58[including the Central Government, any State
Government or any local authority to whom a debt in respect of
the payment of dues arising under any law for the time being in
force, such as authorities to whom statutory dues are owed,]
guarantors and other stakeholders involved in the resolution plan:
59
F
[Provided that the Adjudicating Authority shall, before
passing an order for approval of resolution plan under this sub-
section, satisfy that the resolution plan has provisions for its
effective implementation.]

G
56
Inserted by Act 26 of 2018, sec. 23(iii)(b) (w.r.e.f. 06.06.2018).
57
This Section 31 has also undergone various changes in its amendments by Act 26 of
2018 and 26 of 2019. For their relevance, all the concerned amendments of this Section
31 are also indicated.
58
Inserted by Act 26 of 2019, sec. 7 (w.e.f. 16.08.2019).
59
Inserted by Act 26 of 2018, sec. 24(a) (w.r.e.f. 06.06.2018). H
726 SUPREME COURT REPORTS [2021] 12 S.C.R.

A (2) Where the Adjudicating Authority is satisfied that the
resolution plan does not confirm to the requirements referred to in
sub-section (1), it may, by an order, reject the resolution plan.
(3) After the order of approval under sub-section (1),-
(a) the moratorium order passed by the Adjudicating
B Authority under section 14 shall cease to have effect; and
(b) the resolution professional shall forward all records
relating to the conduct of the corporate insolvency resolution
process and the resolution plan to the Board to be recorded on its
database.
C
60
[(4) The resolution applicant shall, pursuant to the resolution
plan approved under sub-section (1), obtain the necessary approval
required under any law for the time being in force within a period
of one year from the date of approval of the resolution plan by the
Adjudicating Authority under sub-section (1) or within such period
D as provided for in such law, whichever is later:
Provided that where the resolution plan contains a provision
for combination as referred to in section 5 of the Competition Act,
2002 (12 of 2003), the resolution applicant shall obtain the approval
of the Competition Commission of India under that Act prior to
E the approval of such resolution plan by the committee of creditors.]
Section 32. Appeal.-Any appeal from an order approving the
resolution plan shall be in the manner and on the grounds laid
down in sub-section (3) of section 61.
Section 61. Appeals and Appellate Authority.-(1)
F
Notwithstanding anything to the contrary contained under the
Companies Act, 2013 (18 of 2013), any person aggrieved by the
order of the Adjudicating Authority under this part may prefer an
appeal to the National Company Law Appellate Tribunal.
(2) Every appeal under sub-section (1) shall be filed within
G thirty days before the National Company Law Appellate Tribunal:
Provided that the National Company Law Appellate Tribunal
may allow an appeal to be filed after the expiry of the said period

60
H Inserted by Act 26 of 2018, sec. 24(b) (w.r.e.f. 06.06.2018).
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of thirty days if it is satisfied that there was sufficient cause for A
not filing the appeal but such period shall not exceed fifteen days.
(3) An appeal against an order approving a resolution plan
under section 31 may be filed on the following grounds, namely:–
(i) the approved resolution plan is in contravention of the
provisions of any law for the time being in force; B

(ii) there has been material irregularity in exercise of the powers
by the resolution professional during the corporate insolvency
resolution period;
(iii) the debts owed to operational creditors of the corporate C
debtor have not been provided for in the resolution plan in the
manner specified by the Board;
(iv) the insolvency resolution process costs have not been
provided for repayment in priority to all other debts; or
(v) the resolution plan does not comply with any other criteria D
specified by the Board.
(4) An appeal against a liquidation order passed under section
33 may be filed on grounds of material irregularity or fraud
committed in relation to such a liquidation order.
Section 53. Distribution of assets.–(1) Notwithstanding E
anything to the contrary contained in any law enacted by the
Parliament or any State Legislature for the time being in force,
the proceeds from the sale of the liquidation assets shall be
distributed in the following order of priority and within such period
and in such manner as may be specified, namely:- F
(a) the insolvency resolution process costs and the liquidation
costs paid in full;
(b) the following debts which shall rank equally between
and among the following:-
G
(i) workmen’s dues for the period of twenty-four months
preceding the liquidation commencement date; and
(ii) debts owed to a secured creditor in the event such
secured creditor has relinquished security in the manner
set out in section 52;
H
728 SUPREME COURT REPORTS [2021] 12 S.C.R.

A (c) wages and any unpaid dues owed to employees other
than workmen for the period of twelve months preceding the
liquidation commencement date;
(d) financial debts owed to unsecured creditors;
(e) the following dues shall rank equally between and among
B the following:-
(i) any amount due to the Central Government and the State
Government including the amount to be received on account
of the Consolidated Fund of India and the Consolidated Fund
of a State, if any, in respect of the whole or any part of the
C period of two years preceding the liquidation commencement
date;
(ii) debts owed to a secured creditor for any amount unpaid
following the enforcement of security interest;

D (f) any remaining debts and dues;
(g) preference shareholders, if any; and
(h) equity shareholders or partners, as the case may be.
(2) Any contractual arrangements between recipients under
sub-section (1) with equal ranking, if disrupting the order of priority
E under that sub-section shall be disregarded by the liquidator.
(3) The fees payable to the liquidator shall be deducted
proportionately from the proceeds payable to each class of
recipients under sub-section (1), and the proceeds to the relevant
recipient shall be distributed after such deduction.
F
Explanation.–For the purpose of this section-
(i) it is hereby clarified that at each stage of the
distribution of proceeds in respect of a class of recipients
that rank equally, each of the debts will either be paid in
G full, or will be paid in equal proportion within the same
class of recipients, if the proceeds are insufficient to
meet the debts in full; and
(ii) the term “workmen’s dues” shall have the same
meaning as assigned to it in section 326 of the Companies
Act, 2013 (18 of 2013).
H
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Section 238. Provisions of this Code to override other laws.- A
The provisions of this Code shall have effect, notwithstanding
anything inconsistent therewith contained in any other law for the
time being in force or any instrument having effect by virtue of
any such law.
59. We may also take note of Regulations 16A, 37, 38, 39 and B
39B in CIRP Regulations, as applicable at the relevant time as follows: -
“6116A. Authorised representative.-(1) The interim resolution
professional shall select the insolvency professional, who is the
choice of the highest number of financial creditors in the class in
Form CA received under sub-regulation (1) of regulation 12, to C
act as the authorised representative of the creditors of the
respective class:
Provided that the choice for an insolvency professional to
act as authorised representative in Form CA received under sub-
regulation (2) of regulation 12 shall not be considered. D
(2) The interim resolution professional shall apply to the
Adjudicating Authority for appointment of the authorised
representatives selected under sub-regulation (1) within two days
of the verification of claims received under sub-regulation (1) of
regulation 12. E
(3) Any delay in appointment of the authorised representative
for any class of creditors shall not affect the validity of any decision
taken by the committee.
(4) The interim resolution professional shall provide the list
of creditors in each class to the respective authorised F
representative appointed by the Adjudicating Authority.
(5) The interim resolution professional or the resolution
professional, as the case may be, shall provide an updated list of
creditors in each class to the respective authorised representative
as and when the list is updated. G
Clarification: The authorised representative shall have no
role in receipt or verification of claims of creditors of the class he
represents.
61
This Regulation 16A was inserted w.e.f. 04.07.2018.
H
730 SUPREME COURT REPORTS [2021] 12 S.C.R.

A (6) The interim resolution professional or the resolution
professional, as the case may be, shall provide electronic means
of communication between the authorised representative and the
creditors in the class.
(7) The voting share of a creditor in a class shall be in
B proportion to the financial debt which includes an interest at the
rate of eight per cent per annum unless a different rate has been
agreed to between the parties.
(8) The authorised representative of creditors in a class
shall be entitled to receive fee for every meeting of the committee
C attended by him in the following manner, namely:-
Number of creditors in the class Fee per meeting of the committee
(Rs.)
10-100 15,000
101-1000 20,000
More than 1000 25,000
D
(9) The authorised representative shall circulate the agenda
to creditors in a class and announce the voting window at least
twenty-four hours before the window opens for voting instructions
and keep the voting window open for at least twelve hours.
62
E 37. Resolution Plan.-A resolution plan shall provide for the
measures, as may be necessary, for insolvency resolution of the
corporate debtor for maximization of value of its assets, including
but not limited to the following:-
(a) transfer of all or part of the assets of the corporate debtor
F to one or more persons;
(b) sale of all or part of the assets whether subject to any
security interest or not;
(ba) restructuring of the corporate debtor, by way of merger,
amalgamation and demerger;
G
(c) the substantial acquisition of shares of the corporate debtor,
or the merger or consolidation of the corporate debtor with one or
more persons;
62
This Regulation 37 was substituted for the earlier one w.e.f. 06.02.2018. Clause (ba)
was inserted to this Regulation w.e.f. 28.11.2019; and clause (ca) was inserted w.e.f.
H 04.07.2018.
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(ca) cancellation or delisting of any shares of the corporate A
debtor if applicable:
(d) satisfaction or modification of any security interest;
(e) curing or waiving of any breach of the terms of any debt
due from the corporate debtor; B
(f) reduction in the amount payable to the creditors;
(g) extension of a maturity date or a change in interest rate or
other terms of a debt due from the corporate debtor;
(h) amendment of the constitutional documents of the corporate C
debtor;
(i) issuance of securities of the corporate debtor, for cash,
property, securities, or in exchange for claims or interests, or other
appropriate purpose;
(j) change in portfolio of goods or services produced or rendered D
by the corporate debtor;
(k) change in technology used by the corporate debtor; and
(l) obtaining necessary approvals from the Central and State
Governments and other authorities. E
63
38. Mandatory contents of the resolution plan.-64[(1) The
amount payable under a resolution plan-
(a) to the operational creditors shall be paid in priority over
financial creditors; and F

63
This Regulation 38 has also undergone several changes. The relevant amendments to
sub-regulation (1) and (3) are separately indicated hereinbelow. That apart, sub-regulation
(1A) was inserted w.e.f. 05.10.2017 and sub-regulation (1B) was inserted w.e.f. G
24.01.2019
64
Sub-regulation (1) was amended w.e.f. 04.07.2018; then was substituted w.e.f.
05.10.2018; and then was again substituted w.e.f. 28.11.2019. Before the last substitution,
this sub-regulation (1), stood as under:-
“(1) The amount due to the operational creditors under a resolution plan
shall be given priority in payment over financial creditors.”
H
732 SUPREME COURT REPORTS [2021] 12 S.C.R.

A (b) to the financial creditors, who have a right to vote under
sub-section (2) of Section 21 and did not vote in favour of the
resolution plan, shall be paid in priority over financial creditors
who voted in favour of the plan.]
(1A) A resolution plan shall include a statement as to how it
B has dealt with the interests of all stakeholders, including financial
creditors and operational creditors, of the corporate debtor.
(1B) A resolution plan shall include a statement giving details if
the resolution applicant or any of its related parties has failed to
implement or contributed to the failure of implementation of any
C other resolution plan approved by the Adjudicating Authority at
any time in the past.
(2) A resolution plan shall provide:
(a) the term of the plan and its implementation schedule;
D (b) the management and control of the business of the corporate
debtor during its term; and
(c) adequate means for supervising its implementation.
65
[(3) A resolution plan shall demonstrate that-
E
(a) it addresses the cause of default;
(b) it is feasible and viable;
(c) it has provisions for its effective implementation;

F (d) it has provisions for approvals required and the timeline for
the same; and
(e) the resolution applicant has the capability to implement the
resolution plan.]

G
65
Sub-regulation (3) was inserted w.e.f. 07.11.2017 and then was substituted w.e.f.
04.07.2018. Before substitution, this sub-regulation (3), stood as under:-
“(3) A resolution plan shall contain details of the resolution applicant and
other connected persons to enable the committee to assess the credibility of
such applicant and other connected persons to take a prudent decision while
H considering the resolution plan for its approval.”.
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66
39. Approval of resolution plan.-67[(1) A prospective A
resolution applicant in the final list may submit resolution plan
or plans prepared in accordance with the Code and these
regulations to the resolution professional electronically within
the time given in the request for resolution plans under regulation
36B along with-
B
(a) an affidavit stating that it is eligible under section
29A to submit resolution plans;
68
[***]
(c) an undertaking by the prospective resolution applicant
that every information and records provided in connection with C
or in the resolution plan is true and correct and discovery of
false information and record at any time will render the applicant
ineligible to continue in the corporate insolvency resolution
process, forfeit any refundable deposit, and attract penal action
under the Code. D
(1A) A resolution plan which does not comply with the
provisions of sub-regulation (1) shall be rejected.]
69
[(2) The resolution professional shall submit to the
committee all resolution plans which comply with the
requirements of the Code and regulations made thereunder E
along with the details of following transactions, if any, observed,
found or determined by him-

66
This Regulation 39 has also undergone wide ranging amendments, the relevant of
which are indicated hereinbelow.
67
Sub-regulation (1) was substituted w.e.f. 01.01.2018 and that was replaced by sub- F
regulation (1) and (1A) w.e.f. 04.07.2018. Before 04.07.2018, sub-regulation (1) stood
as under: –
“(1) A resolution applicant shall submit resolution plan(s) prepared in
accordance with the Code and these regulations to the resolution professional within
the time given in the invitation made under clause (h) of sub-section (2) of section 25.”
68
Clause (b) was omitted w.e.f. 05.10.2018. Before omission, it stood as under:
“(b) an undertaking that it will provide for additional funds to the extent
G
required for the purposes under sub-regulation (1) of regulation 38; and”.
69
Sub-regulation (2) was substituted w.e.f. 07.11.2017. Prior to this substitution, this
sub-regulation (2) stood as under:
“(2) The resolution professional shall present all resolution plans that meet
the requirements of the Code and these Regulations to the committee for its
consideration.” H
734 SUPREME COURT REPORTS [2021] 12 S.C.R.

A (a) preferential transactions under section 43;
(b) undervalued transactions under section 45;
(c) extortionate credit transactions under section 50; and
(d) fraudulent transactions under section 66,
B and the orders, if any, of the adjudicating authority in respect of
such transactions.]
70 71
- [(3) The committee shall evaluate the resolution plans received
under sub-regulation (1) strictly as per the evaluation matrix to
identify the best resolution plan and may approve it with such
C modifications as it deems fit:
Provided that the committee shall record its deliberations
on the feasibility and viability of the resolution plans.]

D 70
This sub-regulation (3) was substituted w.e.f. 04.07.2018; before its substitution it
stood as under:
“(3) The committee may approve any resolution plan with such modifications
as it deems fit”
Its proviso was substituted w.e.f. 25.07.2019; before its substitution it
stood as under:
E “Provided that the committee shall record the reasons for approving or
rejecting a resolution plan.”
There had also been an insertion of sub-regulation (3A) w.e.f. 06.02.2018
but the same was omitted w.e.f. 05.10.2018.
71
We may further indicate that w.e.f. 07.08.2020, entire of this sub-regulation (3) has
been substituted and sub-regulations (3A) and (3B) have been inserted, essentially
dealing with the eventuality of consideration of more than one resolution plans by the
F CoC.
Though the amendment w.e.f. 07.08.2020, would not directly apply to
the present case but, for reference, we may reproduce the newly substituted
sub-regulation (3),(3A) and (3B) as under:
“(3) The committee shall-
(a) evaluate the resolution plans received under sub-regulation (2) as
per evaluation matrix;
G (b) record its deliberations on the feasibility and viability of each
resolution plan; and
(c) vote on all such resolution plans simultaneously.
(3A) Where only one resolution plan is put to vote, it shall be considered
approved if it receives requisite votes.
(3B) Where two or more resolution plans are put to vote simultaneously,
the resolution plan, which receives the highest votes, but not less than requisite
H
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72
[(4) The resolution professional shall endeavour to submit A
the resolution plan approved by the committee to the Adjudicating
Authority at least fifteen days before the maximum period for
completion of corporate insolvency resolution process under section
12, along with a compliance certificate in Form H of the Schedule
and the evidence of receipt of performance security required under
B
sub-regulation (4A) of regulation 36B.]
(5) The resolution professional shall forthwith send a copy
of the order of the Adjudicating Authority approving or rejecting a
resolution plan to the participants and the resolution applicant.
(6) A provision in a resolution plan which would otherwise
require the consent of the members or partners of the corporate C
debtor, as the case may be, under the terms of the constitutional
documents of the corporate debtor, shareholders’ agreement, joint
venture agreement or other document of a similar nature, shall
take effect notwithstanding that such consent has not been
obtained. D
(7) No proceedings shall be initiated against the interim
resolution professional or the resolution professional, as the case
may be, for any actions of the corporate debtor, prior to the
insolvency commencement date.
(8) A person in charge of the management or control of the E
business and operations of the corporate debtor after a resolution
plan is approved by the Adjudicating Authority, may make an
application to the Adjudicating Authority for an order seeking the
assistance of the local district administration in implementing the
terms of a resolution plan.
73 F
[(9) A creditor, who is aggrieved by non-implementation
of a resolution plan approved under sub-section (1) of section 31,
may apply to the Adjudicating Authority for directions.]”
votes, shall be considered as approved:
Provided that where two or more resolution plans receive equal votes,
but not less than requisite votes, the committee shall approve any one of them, G
as per the tie-breaker formula announced before voting:
Provided further that where none of the resolution plans receives
requisite votes, the committee shall again vote on the resolution plan that
received the highest votes, subject to the timelines under the Code.”
72
This sub-regulation was substituted for the earlier one w.e.f. 04.07.2018 and was also
amended w.e.f. 24.01.2019.
73
This sub-regulation was inserted w.e.f. 24.01.2019. H
736 SUPREME COURT REPORTS [2021] 12 S.C.R.

74
A 39B. Meeting liquidation cost.-(1) While approving a
resolution plan under sub-section (4) of section 30 or deciding to
liquidate the corporate debtor under sub-section (2) of section 33,
the committee may make a best estimate of the amount required
to meet liquidation costs, in consultation with the resolution
professional, in the event an order for liquidation is passed under
B
section 33.
(2) The committee shall make a best estimate of the value of the
liquid assets available to meet the liquidation costs, as estimated in
sub-regulation (1).
C (3) Where the estimated value of the liquid assets under sub-
regulation (2) is less than the estimated liquidation costs under
sub-regulation (1), the committee shall approve a plan providing
for contribution for meeting the difference between the two.
(4) The resolution professional shall submit the plan approved under
D sub-regulation (3) to the Adjudicating Authority while filing the
approval or decision of the committee under section 30 or 33, as
the case may be.
Explanation.-
For the purposes of this regulation, ‘liquidation costs’ shall have
E the same meaning as assigned to it in clause (ea) of sub-regulation
(1) of regulation (2) of the Insolvency and Bankruptcy Board of
India (Liquidation Process) Regulations, 2016.
60.We would hasten to reiterate that in the foregoing extractions
of the provisions, we have indicated the amendments/substitutions/
F
insertions in the related footnotes to the extent relevant for the present
purpose; and not necessarily all the changes as brought about from time
to time.
JIL’s CIRP: Chronicle of complications
G 61. The factual and background aspects relating to this batch of
matters make it evident that the insolvency resolution of the corporate
debtor JIL carries with it vexed and strikingly intricate issues where
twice over this Court had exercised its plenary powers under Article
142 of the Constitution of India to ensure complete justice in the cause
74
H This sub-regulation was inserted w.e.f. 25.07.2018.
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and yet, for a variety of reasons, the insolvency resolution is eluding the A
corporate debtor JIL; and even when the resolution plan is said to have
been approved by a vast majority of 97.36% of the voting share of
Committee of Creditors, several issues are still hovering over with an
assortment of grievances of different stakeholders and role players. Even
the very process taken up by the Committee of Creditors has been
B
questioned apart from several questions over one or the other stipulation
in the resolution plan. Further, several questions have spurt up on the
order passed by the Adjudicating Authority, wherein some of the objections
have been accepted and the plan has been modified while a few other
objections have been rejected. Modification of the resolution plan by the
Adjudicating Authority has given the resolution applicant and even IRP C
several causes to be discontented with and at the same time, rejection of
some of the objections has also been challenged by the objectors. This
apart, some of the stakeholders, who did not raise objections before the
Adjudicating Authority, have also raised their grievances against the plan.
Put in a nutshell, this process of resolution is yet to pass through a maze
D
of hurdles.
61.1. Having regard to the peculiar circumstances of this case,
we had withdrawn all the appeals pending before NCLAT to this Court
and have heard the entire matter at sufficient length, while extending
opportunity of making oral and written submissions to practically all the
parties who wished to put their say on record. E

61.2. We have examined the submissions so made as also the
material placed on record with reference to the law applicable and have
given anxious consideration to the relevant submissions, which are
reflected in the points for determination formulated hereinbefore.
F
62. Before proceeding further, we may also recapitulate that while
entertaining these matters and transferring the cases pending before
NCLAT to this Court by order dated 06.08.2020, we had directed that
the IRP shall continue to manage the affairs of the subject company i.e.,
JIL. We may point out that the IRP has filed an affidavit dated 05.09.2020,
stating the status of the corporate debtor and the major part of activities G
relating to construction of flats and issuing Offers of Possession which,
according to the IRP, has resulted in reduction of liability to the real
estate allottees. The relevant paragraphs of this affidavit read as under:-
“I state that as part of management of the affairs of the
Corporate Debtor, the Deponent inter alia is continuing the H
738 SUPREME COURT REPORTS [2021] 12 S.C.R.

A construction of residential and commercial dwelling units forming
part of the real estate projects of the Corporate Debtor. I further
state during the corporate insolvency resolution process
(hereinafter, “CIR Process”), the IRP continued construction of
residential and commercial dwelling units and has issued Offer of
Possessions (OOPs) for 7996 units based on occupancy
B
certificates received from the NOIDA Authority, from time to
time. That out of these OOPs issued, sub-lease registration of
6,429 has been completed. The process of issuance of OOPs as
started by the Deponent after the receipt of such occupancy
certificates continues.
C I further state that for approximately 2,688 allottees to whom
OOPs providing for delay rebate was issued prior to 17.12.2019,
either the Sub-Lease Deed is still to be executed or the Sub-
Lease Deed is pending for registration before the Registrar of
Assurances of Noida.
D I state that the delivery of units and their transfer by way
of sub-lease registration has resulted in a reduction of Financial
Creditors’ (Real-Estate Allottees) liability by more than Rs. 2,250
Crores since commencement of the CIR Process in the Corporate
Debtor.”
E The objectives and scheme of IBC
63. For dealing with the questions involved, worthwhile it would
be to begin the discussion broadly on the scheme of the Code and
assignments of some of the relevant role players in the corporate
insolvency resolution process.
F
63.1. As noticed from the Preamble, the Code came to be enacted
to consolidate and amend the laws relating to reorganisation and
insolvency resolution of corporate persons, partnership firms and
individuals in a time bound manner; the objectives, inter alia, being for
maximisation of the value of assets of such persons and balance of
G interests of all the stakeholders. The Preamble reads as under: -
“An Act to consolidate and amend the laws relating to
reorganisation and insolvency resolution of corporate persons,
partnership firms and individuals in a time bound manner
for maximisation of value of assets of such persons, to promote
H entrepreneurship, availability of credit and balance the
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interests of all the stakeholders including alteration in the A
order of priority of payment of Government dues and to
establish an Insolvency and Bankruptcy Board of India, and
for matters connected therewith or incidental thereto.”
63.2. In the judgment delivered on 25.01.2019 in the case of Swiss
Ribbons Private Limited and Anr. v. Union of India and Ors.: (2019) B
4 SCC 1775, this Court traversed through the historical background and
scheme of the Code in the wake of challenge to the constitutional validity
of various provisions therein. One part of such challenge had been
founded on the ground that the classification between ‘financial creditor’
and ‘operational creditor’ was discriminatory and violative of Article 14
of the Constitution of India. This ground as also several other grounds C
pertaining to various provisions of the Code were rejected by this Court
after elaborate dilation on the vast variety of rival contentions. In the
course, this Court took note, inter alia, of the pre-existing state of law
as also the objects and reasons for enactment of the Code. While
observing that focus of the Code was to ensure revival and continuation D
of the corporate debtor, where liquidation would be the last resort, this
Court pointed out that on its scheme and framework, the Code was a
beneficial legislation to put the corporate debtor on its feet, and not a
mere recovery legislation for the creditors. This Court said, -
“27. As is discernible, the Preamble gives an insight into what is E
sought to be achieved by the Code. The Code is first and foremost,
a Code for reorganisation and insolvency resolution of corporate
debtors. Unless such reorganisation is effected in a time-bound
manner, the value of the assets of such persons will deplete.
Therefore, maximisation of value of the assets of such persons so
that they are efficiently run as going concerns is another very F
important objective of the Code. This, in turn, will promote
entrepreneurship as the persons in management of the corporate
debtor are removed and replaced by entrepreneurs. When,
therefore, a resolution plan takes off and the corporate
debtor is brought back into the economic mainstream, it is G
able to repay its debts, which, in turn, enhances the viability
of credit in the hands of banks and financial institutions.
Above all, ultimately, the interests of all stakeholders are
looked after as the corporate debtor itself becomes a
75
Hereinafter also referred to as the case of ‘Swiss Ribbons’. H
740 SUPREME COURT REPORTS [2021] 12 S.C.R.

A beneficiary of the resolution scheme—workers are paid,
the creditors in the long run will be repaid in full, and
shareholders/investors are able to maximise their
investment. Timely resolution of a corporate debtor who is in
the red, by an effective legal framework, would go a long way to
support the development of credit markets. Since more investment
B
can be made with funds that have come back into the economy,
business then eases up, which leads, overall, to higher economic
growth and development of the Indian economy. What is interesting
to note is that the Preamble does not, in any manner, refer to
liquidation, which is only availed of as a last resort if there is
C either no resolution plan or the resolution plans submitted are not
up to the mark. Even in liquidation, the liquidator can sell the
business of the corporate debtor as a going concern. (See
ArcelorMittal76 at para 83, fn 3)
28. It can thus be seen that the primary focus of the
D legislation is to ensure revival and continuation of the
corporate debtor by protecting the corporate debtor from
its own management and from a corporate death by
liquidation. The Code is thus a beneficial legislation which
puts the corporate debtor back on its feet, not being a mere
recovery legislation for creditors. The interests of the corporate
E debtor have, therefore, been bifurcated and separated from that
of its promoters/those who are in management. Thus, the resolution
process is not adversarial to the corporate debtor but, in fact,
protective of its interests…..”
(emphasis in bold supplied)
F
64. Keeping in view the objectives of the Code and observations
of this Court, we may now take an overview of the scheme and structure
of the relevant parts of the Code. Part I thereof contains the provisions
regarding title, extent, commencement and application of the Code as
also the definition and meaning of various expressions used in the Code.
G Different provisions have come into force on different dates, as
permissible under proviso to sub-section (3) of Section 1. Part II of the
Code deals with insolvency resolution and liquidation for corporate
persons. Chapter I of Part II makes provision for its applicability and
also defines various expressions used in this Part (Sections 4 and 5).
76
H ArcelorMittal (India) (P) Ltd. v. Satish Kumar Gupta & Ors: (2019) 2 SCC 1.
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Chapter II of Part II contains the provisions for corporate insolvency A
resolution process in Sections 6 to 32 whereas Chapter III of this Part II
contains the provisions for liquidation process in Sections 33 to 54 77.
64.1. A glance at Chapter II of Part II would inform that it contains
the blueprint for the process of insolvency resolution in relation to the
corporate debtors to whom this Part applies, while specifying the persons B
who could initiate the process; the manner and impact of such initiation;
the roles and rights as also duties of key persons and entities to be involved
in the resolution process like the resolution professional, the Committee
of Creditors, the authorised representative of financial creditors and the
resolution applicant; the matters essential for preparation of the resolution
plan; the submission and approval of the resolution plan; and the appeal C
against approval of the resolution plan.
Approval of resolution plan: Crucial steps and role players
65. As noticed, as per the requirements of the Code read with the
orders passed by this Court in the cases of Chitra Sharma and D
Jaiprakash Associates Ltd. (supra), the insolvency resolution process
in relation to the corporate debtor JIL has already passed through the
stages of initiation, appointment of interim resolution professional,
constitution and reconstitution of the Committee of Creditors, submission
and resubmission of resolution plans, approval of the resolution plan of
NBCC by the Committee of Creditors, submission of the said resolution E
plan to the Adjudicating Authority, and its approval by the Adjudicating
Authority, albeit with some modifications.
65.1. The issues now raised before us basically relate to the
contents of the resolution plan in question; its approval by the Committee
of Creditors; and the order passed by the Adjudicating Authority in its F
approval with modifications. Thus, on the issues raised and points arising
for determination, the focus in the present case is on the dispensation
governing the process of approval of the resolution plan by CoC who,
under Section 30(4) of the Code, considers and votes at the resolution
plan after it has been verified by the resolution professional as being G
compliant with the statutory requirements specified in Section 30(2) of
the Code; and on the approval of resolution plan by the Adjudicating
Authority in terms of Section 31 of the Code. Having regard to the
77
Sections 4 to 32 came into force on 01.12.2016 whereas Section 33 to 54 came into
force on 15.12.2016. H
742 SUPREME COURT REPORTS [2021] 12 S.C.R.

A issues involved, we may usefully take note of the relevant principles
enunciated by this Court in relation to these crucial steps of CIRP.
66. The relevant aspects relating to the steps in CIRP for approval
of the resolution plan have come up for interpretation before this Court
in at least three major decisions, in the cases of K. Sashidhar v. Indian
B Overseas Bank and Ors.: (2019) 12 SCC 150 (decided on 05.02.2019),
Committee of Creditors of Essar Steel India Limited v. Satish Kumar
Gupta and Ors.: (2020) 8 SCC 531 (decided on 15.11.2019), and
Maharashtra Seamless Limited v. Padmanabhan Venkatesh and
Ors.: (2020) 11 SCC 467 (decided on 22.01.2020). The contesting
parties have also relied upon these decisions in support of their respective
C contentions. We shall be referring to these cases in a little detail in the
later part of this judgment while determining Point A concerning the
scope of the jurisdiction of the Adjudicating Authority in dealing with the
resolution plan approved by the Committee of Creditors. At this juncture,
we may only indicate the importance of a few essential role players in
D the process, as discernible from the relevant provisions of the Code and
as exposited by this Court.
66.1. In the scheme of IBC, the script of corporate insolvency
resolution process, to a large extent, revolves around the resolution
professional. When CIRP gets initiated with admission of the application
E by the Adjudicating Authority as per Sections 7, 9 or 10, as the case may
be, an interim resolution professional is appointed by the Adjudicating
Authority in terms of Section 13(1)(c) and in the manner laid down in
Section 16. Collating and admitting the claims of all creditors; appointing
and convening the meetings of the Committee of Creditors; and running
the business of the corporate debtor as a going concern during the
F intermediate period are the key tasks assigned to the interim resolution
professional, as distinctly appears from Sections 15, 17, 18 and 20 of the
Code. Further, in the scheme of IBC, the Committee of Creditors, in its
first meeting to be held within seven days of its constitution, has to resolve
to appoint the interim resolution professional as a resolution professional
G or to replace him by another resolution professional (vide Section 22
IBC). In terms of Section 23, the resolution professional is to conduct
the entire CIRP and manage the operations of the corporate debtor during
the period of CIRP. His duties and responsibilities extend to the conduct
of all the meetings of the Committee of Creditors, giving notice of such
meetings to the members of CoC, to the members of the suspended
H
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Board of Directors and to the operational creditors, if amount of their A
aggregate dues is not less than 10% of the debt. Akin to the duties of the
interim resolution professional under Section 18 of the Code, the resolution
professional is also required to preserve and protect the assets of the
corporate debtor while continuing with the business operations and while
undertaking the actions contemplated by Section 25(2) of the Code.
B
Significantly, the resolution professional is also required to prepare the
information memorandum in terms of Section 29 of the Code; invite
prospective resolution applicants; and present the resolution plans at the
meeting of the Committee of Creditors, while duly examining them as
required by Section 30 of the Code. These compliances are duly regulated
by Regulations 35, 36, 36A and 36B of the CIRP Regulations. C
66.1.1. Taking note of the relevant provisions, this Court in the
case of Essar Steel (supra) summed up the key role of the resolution
professional in the following terms: -
“48. The detailed provisions that have been stated hereinabove
make it clear that the resolution professional is a person who is D
not only to manage the affairs of the corporate debtor as a going
concern from the stage of admission of an application under
Sections 7, 9 or 10 of the Code till a resolution plan is approved by
the Adjudicating Authority, but is also a key person who is to appoint
and convene meetings of the Committee of Creditors, so that they E
may decide upon resolution plans that are submitted in accordance
with the detailed information given to resolution applicants by the
resolution professional. Another very important function of the
resolution professional is to collect, collate and finally admit claims
of all creditors, which must then be examined for payment, in full
or in part or not at all, by the resolution applicant and be finally F
negotiated and decided by the Committee of Creditors.”
66.2. Further, the role of prospective resolution applicant has also
been explained in Essar Steel with reference, inter alia, to UNCITRAL
Legislative Guide as also Regulations 37 and 38 of the CIRP Regulations
on the contents of a resolution plan, while pointing out the rights of a G
prospective resolution applicant to receive necessary information as also
its duty to prepare the resolution plan providing for necessary measures
for insolvency resolution of the corporate debtor with maximisation of
the value of its assets.
H
744 SUPREME COURT REPORTS [2021] 12 S.C.R.

A Committee of Creditors: the protagonist of CIRP
67. While in their representative roles, the resolution professional
and the resolution applicant are duty bound to ensure that the resolution
plan is prepared in conformity with the requirements of the Code and
the CIRP Regulations and is properly presented for consideration, the
B central role in taking the decision as to whether a resolution plan be
adopted or not, in the same form as presented to it or in a modified form;
and as to whether the attempt for revival of corporate debtor be made
or not, ultimately rests with the pivotal body, comprising of the financial
creditors of the corporate debtor and termed as “Committee of Creditors”.
As noticed from the provisions above-quoted, the final decision on a
C resolution plan is taken by the Committee of Creditors; and, for approval,
a resolution plan is required to be voted in favour by not less than 66% of
the voting share of the financial creditors, as per Section 30(4) of the
Code. It is also relevant to point out that though the resolution professional
is to run the business of the corporate debtor as a going concern during
D the corporate insolvency resolution process but, as per Section 28(3) of
the Code, he cannot take certain decisions relating to the management
of the corporate debtor without prior approval of the Committee of
Creditors by a vote of at least 66% of the voting shares78.
67.1. It is, therefore, evident that corporate insolvency resolution,
E with approval of the plan of resolution, is ultimately in the exclusive
domain of the Committee of Creditors. Even during the resolution process,
major decisions as regards management and finances of the corporate
debtor are in the control of the Committee of Creditors. As per the
composition delineated in Section 21 of the Code, the Committee of
Creditors is comprised of all financial creditors of the corporate debtor;
F and the frame of Section 21 puts it beyond doubt that the voting share of
each financial creditor is determined on the basis of financial debt owed
to it. It is also clear from Section 30(4) as also Section 28(3) that the
major decisions of approval are to be taken by the Committee of Creditors
by a vote of at least 66% of the voting share of the financial creditors
G and not by a simple majority. The reasons and purpose for assigning
such a unique and decisive role in corporate insolvency resolution to the
Committee of Creditors and for that matter, to a substantial block of not
78
This percentage of minimum votes of CoC, for approval of resolution plan as also for
prior approval of certain actions, was ‘seventy-five’ in the Code as originally enacted
H and was altered to ‘sixty-six’ by way of an amendment with effect from 06.06.2018.
JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 745
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less than 2/3rd of voting share of the financial creditors, were extensively A
delineated in the report of the Bankruptcy Law Reforms Committee of
November, 2015 while remarking on the essential theme that the
‘appropriate disposition of a defaulting firm is a business decision,
and only the creditors should make it’.
67.2. In the case of K. Sashidhar (supra), while setting out the B
relevant extracts from the said Report, this Court exposited on the primacy
of the commercial wisdom of the Committee of Creditors in the corporate
insolvency resolution process in the following terms: -
“52. As aforesaid, upon receipt of a “rejected” resolution plan the
adjudicating authority (NCLT) is not expected to do anything more; C
but is obligated to initiate liquidation process under Section 33(1)
of the I&B Code. The legislature has not endowed the adjudicating
authority (NCLT) with the jurisdiction or authority to analyse or
evaluate the commercial decision of CoC much less to enquire
into the justness of the rejection of the resolution plan by the
dissenting financial creditors. From the legislative history and the D
background in which the I&B Code has been enacted, it is noticed
that a completely new approach has been adopted for speeding
up the recovery of the debt due from the defaulting companies. In
the new approach, there is a calm period followed by a swift
resolution process to be completed within 270 days (outer limit) E
failing which, initiation of liquidation process has been made
inevitable and mandatory. In the earlier regime, the corporate
debtor could indefinitely continue to enjoy the protection given
under Section 22 of the Sick Industrial Companies Act, 1985 or
under other such enactments which has now been forsaken.
Besides, the commercial wisdom of CoC has been given F
paramount status without any judicial intervention, for ensuring
completion of the stated processes within the timelines prescribed
by the I&B Code. There is an intrinsic assumption that
financial creditors are fully informed about the viability of
the corporate debtor and feasibility of the proposed G
resolution plan. They act on the basis of thorough
examination of the proposed resolution plan and assessment
made by their team of experts. The opinion on the subject-
matter expressed by them after due deliberations in CoC
meetings through voting, as per voting shares, is a
H
746 SUPREME COURT REPORTS [2021] 12 S.C.R.

A collective business decision. The legislature, consciously,
has not provided any ground to challenge the “commercial
wisdom” of the individual financial creditors or their
collective decision before the adjudicating authority. That
is made non-justiciable.
B 53. In the report of the Bankruptcy Law Reforms Committee of
November 2015, primacy has been given to CoC to evaluate the
various possibilities and make a decision. It has been observed
thus:
“The key economic question in the bankruptcy process
C When a firm (referred to as the corporate debtor in the draft
law) defaults, the question arises about what is to be done.
Many possibilities can be envisioned. One possibility is to
take the firm into liquidation. Another possibility is to
negotiate a debt restructuring, where the creditors accept
D a reduction of debt on an NPV basis, and hope that the
negotiated value exceeds the liquidation value. Another
possibility is to sell the firm as a going concern and use
the proceeds to pay creditors. Many hybrid structures of
these broad categories can be envisioned.

E The Committee believes that there is only one correct forum
for evaluating such possibilities, and making a decision:
a creditors committee, where all financial creditors have
votes in proportion to the magnitude of debt that they hold.
In the past, laws in India have brought arms of the
Government (legislature, executive or judiciary) into this
F question. This has been strictly avoided by the Committee.
The appropriate disposition of a defaulting firm is a
business decision, and only the creditors should make it.”
(emphasis in bold supplied; emphasis in italics is in original)
67.3. In Essar Steel (supra), a 3-Judge Bench of this Court
G
surveyed almost all the relevant provisions concerning corporate
insolvency resolution process; and, as noticed above, explained the
assignments of different role players in this process. In that context, this
Court again explained the primacy endowed on the commercial wisdom
of the Committee of Creditors and reasons therefor, with a further detailed
H reference to the aforesaid report of the Bankruptcy Law Reforms
JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 747
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Committee of November, 2015. Apart from the passage from the said A
report that was noticed in K. Sashidhar (reproduced hereinabove), the
Court noticed various other passages from this report in Essar Steel;
and one part thereof, which further underscores the rationale for only
financial creditors handling the process of resolution, could be usefully
reproduced as under (part of paragraph 56 at p. 578 of SCC): -
B
“5.3.1. Steps at the start of the IRP
***
4. Creation of the creditors committee
The creditors committee will have the power to decide the C
final solution by majority vote in the negotiations. The majority
vote requires more than or equal to 75 per cent of the creditors
committee by weight of the total financial liabilities. The majority
vote will also involve a cram down option on any dissenting
creditors once the majority vote is obtained. …
D
The Committee deliberated on who should be on the
creditors committee, given the power of the creditors committee
to ultimately keep the entity as a going concern or liquidate it. The
Committee reasoned that members of the creditors committee
have to be creditors both with the capability to assess viability,
as well as to be willing to modify terms of existing liabilities E
in negotiations. Typically, operational creditors are neither
able to decide on matters regarding the insolvency of the
entity, nor willing to take the risk of postponing payments for
better future prospects for the entity. The Committee concluded
that, for the process to be rapid and efficient, the Code will F
provide that the creditors committee should be restricted to
only the financial creditors.”
(emphasis in italics is in original)
67.4. In Essar Steel, the Court referred to the above-quoted and
other passages from the judgement in K. Sashidhar (supra) and G
explained the decisive role of the commercial wisdom of the Committee
of Creditors, inter alia, in the following passages: -
“54. Since it is the commercial wisdom of the Committee of
Creditors that is to decide on whether or not to rehabilitate
the corporate debtor by means of acceptance of a particular H
748 SUPREME COURT REPORTS [2021] 12 S.C.R.

A resolution plan, the provisions of the Code and the
Regulations outline in detail the importance of setting up
of such Committee, and leaving decisions to be made by the
requisite majority of the members of the aforesaid Committee in
its discretion.……
B *** *** ***
59. Even though it is the resolution professional who is to run the
business of the corporate debtor as a going concern during the
intermediate period, yet, such resolution professional cannot take
certain decisions relating to management of the corporate debtor
C without the prior approval of at least 66% of the votes of the
Committee of Creditors…….
60. Thus, it is clear that since corporate resolution is
ultimately in the hands of the majority vote of the Committee
of Creditors, nothing can be done qua the management of
D the corporate debtor by the resolution professional which
impacts major decisions to be made in the interregnum
between the taking over of management of the corporate
debtor and corporate resolution by the acceptance of a
resolution plan by the requisite majority of the Committee
of Creditors. Most importantly, under Section 30(4), the
E Committee of Creditors may approve a resolution plan by
a vote of not less than 66% of the voting share of the
financial creditors, after considering its feasibility and
viability, and various other requirements as may be
prescribed by the Regulations.
F *** *** ***
64. Thus, what is left to the majority decision of the Committee of
Creditors is the “feasibility and viability” of a resolution plan, which
obviously takes into account all aspects of the plan, including the
manner of distribution of funds among the various classes of
G creditors. As an example, take the case of a resolution plan which
does not provide for payment of electricity dues. It is certainly
open to the Committee of Creditors to suggest a modification to
the prospective resolution applicant to the effect that such dues
ought to be paid in full, so that the carrying on of the business of
the corporate debtor does not become impossible for want of a
H
JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 749
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most basic and essential element for the carrying on of such A
business, namely, electricity. This may, in turn, be accepted by the
resolution applicant with a consequent modification as to
distribution of funds, payment being provided to a certain type of
operational creditor, namely, the electricity distribution company,
out of upfront payment offered by the proposed resolution applicant
B
which may also result in a consequent reduction of amounts
payable to other financial and operational creditors. What is
important is that it is the commercial wisdom of this majority
of creditors which is to determine, through negotiation with
the prospective resolution applicant, as to how and in what
manner the corporate resolution process is to take place.” C
(emphasis in bold supplied)
67.5. In the case of Maharashtra Seamless Ltd. (supra), again,
a 3-Judge Bench of this Court referred extensively to the enunciations
in Essar Steel (supra) and reiterated the primacy assigned to the
commercial wisdom of the Committee of Creditors in the matter of D
corporate insolvency resolution.
68. For what has been noticed hereinabove, it would not be an
exaggeration in terms that, in corporate insolvency resolution process,
the role of Committee of Creditors is akin to that of a protagonist, giving
finality to the process (subject, of course, to approval by the Adjudicating E
Authority), who takes the key decisions in its commercial wisdom and
also takes the consequences thereof. As noticed, the process is aimed at
bringing the corporate debtor back on its feet and it is acknowledged
that appropriate disposition of a defaulting corporate debtor and the choice
of solution, to keep the corporate debtor as a going concern or to liquidate F
it, is to be made by the financial creditors, who could assess the viability
and may take decisions in modification of the terms of the existing
liabilities. In other words, the decision as to whether the corporate debtor
be resurrected or not, by acceptance of a particular resolution plan, is
essentially a business decision and hence, is left to the committee
consisting of the financial creditors, that is, the Committee of Creditors G
but, with the requirement that the resolution plan, for its approval, ought
to muster not less than 66% votes of the voting share of the financial
creditors.
69. The significance of primacy of the Committee of Creditors in
the process of corporate insolvency resolution unfolds itself when we H
750 SUPREME COURT REPORTS [2021] 12 S.C.R.

A examine the contours of the jurisdiction of Adjudicating Authority dealing
with a resolution plan after the same has been voted at by the Committee
of Creditors. We have formulated the questions relating to such contours
as the first point for determination in view of the fact that most of the
other questions involved in this batch of matters revolve around the order
dated 03.03.2020 as passed by the Adjudicating Authority in approval of
B
the resolution plan of NBCC with certain modifications. The decision on
legality and validity of the order passed by the Adjudicating Authority on
any particular objection or issue would largely depend on the question as
to whether the Adjudicating Authority has acted within its jurisdiction or
has overstepped its jurisdiction or has acted illegally or with material
C irregularity in exercise of its jurisdiction. In fact, contours of the jurisdiction
of the Adjudicating Authority are also delineated by this Court in the
aforesaid decisions, as shall be noticed infra.
70. With the foregoing observations and while keeping the
aforementioned enunciations in view, we may now take up the points
D arising for determination in this case.
Point A
Contours of the jurisdiction of Adjudicating Authority in dealing
with a resolution plan

E 71. As noticed, the resolution plan in relation to the corporate
debtor JIL, as propounded by NBCC, has been approved by the
Committee of Creditors with the votes of 97.36% of the voting share of
financial creditors. However, the Adjudicating Authority (NCLT), while
passing the impugned order dated 03.03.2020, has modified some of the
terms of the resolution plan while also declining modification in relation
F to some other terms of the resolution plan. In relation to either of the
events, whether of modifying the terms of the plan or declining the prayer
for modification, invariably the question pertaining to the jurisdiction of
the Adjudicating Authority would arise for consideration.
72. The contours of the powers and jurisdiction of Adjudicating
G Authority dealing with a resolution plan approved by the Committee of
Creditors have been clearly defined, delineated and described by this
Court in the aforesaid decisions in K. Sashidhar, Essar Steel and
Maharashtra Seamless Ltd. Appropriate it would be to take note of
the principles emanating from these decisions with a brief reference to
the relevant factual aspects of each of these cases.
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73. The first in this series of judgments relating to the process of A
approval of resolution plan in CIRP proceedings had been the case of
K. Sashidhar (supra) where the matters in issue related to two different
corporate debtors, Kamineni Steel & Power (India) (P) Ltd. (‘KSPIPL’)
and Innovative Industries Ltd. (‘IIL’).
73.1. Shorn of unnecessary details, the relevant factual aspects B
of the case of KSPIPL had been that the said company had filed a
petition under Section 10 of the Code seeking initiation of CIRP that was
admitted on 10.02.2017 by NCLT, Hyderabad and IRP was appointed
with directions to constitute CoC. Accordingly, CoC was constituted
and there had been a few rounds of consideration of the matter by CoC,
where different propositions were mooted for insolvency resolution. C
Ultimately, on 30.10.2017, the voting share of consenting banks expressly
approving the proposed resolution plan was 66.67% and the voting share
of dissenting lender banks was 26.97%. Bank of Maharashtra, having
6.36% voting share, neither approved nor rejected the plan nor abstained
from voting but conveyed that they remained ‘open to consider the D
resolution plan’. Be it noted that at the relevant time, the requirement for
approval of the resolution plan, as per Section 30(4) of the Code, was
that it ought to be approved by a vote of not less than 75% of voting
share of the financial creditors.
73.1.1. The position as obtainable after the aforesaid voting was E
that the resolution plan fell short of receiving minimum 75% votes of the
voting share of the financial creditors. IRP filed an affidavit of the outcome
before the Adjudicating Authority (NCLT, Hyderabad) on 03.11.2017.
However, the Managing Director of the corporate debtor submitted
before the Adjudicating Authority that the majority ought to be counted
without taking into account the voting share of the financial creditor who F
chose not to participate in the voting. It was the submission that with
such exclusion, the percentage of voting share in approval of the plan
would be 78.63% and, therefore, the plan could be taken as approved by
the CoC. The NCLT, by its order dated 20.11.2017, allowed the petition
so filed and approved the resolution plan with certain directions. The G
three dissenting financial creditors, including the said Bank of
Maharashtra, filed an appeal before NCLAT against the order of NCLT
in approving the resolution plan despite the same having not received the
approval of minimum 75% votes of the voting share of financial creditors.
The Managing Director of the corporate debtor also filed an appeal
H
752 SUPREME COURT REPORTS [2021] 12 S.C.R.

A challenging the observation made by NCLT regarding the corporate
guarantee to be proceeded with.
73.2. The factual aspects relating to the other corporate debtor
IIL had been that its lender bank filed insolvency application that was
admitted by NCLT, Mumbai on 17.01.2017. In the CoC meeting relating
B to this corporate debtor, the financial creditors holding 66.57% voting
share voted in favour of approving the proposed resolution plan, whereas
dissenting financial creditors, having 33.43% voting share, voted against.
Resultantly, the proposed plan was not approved for want of support of
the requisite percentage of voting share. The resolution applicant filed
an application seeking permission to submit a revised resolution plan and
C to invite fresh votes. The impending liquidation proceedings were objected
to by the workers’ union too. The NCLT, however, rejected the
applications and directed initiation of liquidation proceedings by its order
dated 23.11.2017. An appeal was filed challenging the order so passed
by the NCLT.
D 73.3. The Appellate Authority (NCLAT) took up both the appeals
relating to KSPIPL and IIL together and the same were disposed of by
a common judgment dated 06.09.2018, wherein it was held that the
statutory requirement of approval of resolution plan by vote of not less
than 75% of the voting share of financial creditors, as laid down under
E Section 30(4) of the Code, was mandatory and the plans in question
were not approved by the requisite majority. Therefore, the appeals were
dismissed.
73.4. The common judgment so passed by NCLAT was in
challenge before this Court. During the pendency of appeals in this Court,
F the aforesaid amendment to Section 30(4) was made and the requisite
voting share for approval of resolution plan was reduced to 66% with
effect from 06.06.2018.
73.5. After examining the long length of rival submissions, this
Court proceeded to determine the questions as to whether the percentage
G of voting share of the financial creditors specified in Section 30(4) of
IBC was mandatory; as to whether the votes of the financial creditors
who had abstained from voting were required to be ignored for the
purpose of computing the required percentage of voting share; as to
whether the amendments brought into force during the pendency of
appeals were applicable to those cases; and as to whether it was open
H
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to the Adjudicating Authority/Appellate Authority to reckon any factor A
other than those specified in Sections 30(2) or 61(3) of IBC, as the case
may be, for rejection of the resolution plan?
73.6. This Court analysed the entire scheme of the Code,
particularly concerning the resolution plan and its approval by the
Committee of Creditors and then by the Adjudicating Authority; and B
held that the percentage of voting share was not directory and in the
light of the provisions contained in the Code and the CIRP Regulations,
the approving votes must fulfil the requisite percentage of voting share.
The Court also held that the amendment to Section 30(4), prescribing
new qualifying standard for approval of resolution plan was neither
retrospective in operation nor was having retroactive effect. The Court C
also rejected the suggestion for different percentage of voting share in
the case of KSPIPL. These aspects are not much relevant for the present
purpose. The aspects relevant are the enunciations in relation to the
respective roles of the Committee of Creditors and the Adjudicating
Authority. As already noticed, this Court explained in detail the primacy D
given to the commercial wisdom of the Committee of Creditors and
such commercial wisdom being made non-justiciable. Having said so,
this Court also proceeded to define the strict limits of the jurisdiction of
NCLT/NCLAT while dealing with the matter relating to approval of
resolution plan in the following passages: -
E
“55. Whereas, the discretion of the adjudicating authority (NCLT)
is circumscribed by Section 31 limited to scrutiny of the resolution
plan “as approved” by the requisite per cent of voting share of
financial creditors. Even in that enquiry, the grounds on which
the adjudicating authority can reject the resolution plan is
in reference to matters specified in Section 30(2), when F
the resolution plan does not conform to the stated
requirements. Reverting to Section 30(2), the enquiry to
be done is in respect of whether the resolution plan
provides: (i) the payment of insolvency resolution process
costs in a specified manner in priority to the repayment of G
other debts of the corporate debtor, (ii) the repayment of
the debts of operational creditors in prescribed manner,
(iii) the management of the affairs of the corporate debtor,
(iv) the implementation and supervision of the resolution
plan, (v) does not contravene any of the provisions of the
H
754 SUPREME COURT REPORTS [2021] 12 S.C.R.

A law for the time being in force, (vi) conforms to such other
requirements as may be specified by the Board. The Board
referred to is established under Section 188 of the I&B
Code. The powers and functions of the Board have been
delineated in Section 196 of the I&B Code. None of the
specified functions of the Board, directly or indirectly,
B
pertain to regulating the manner in which the financial
creditors ought to or ought not to exercise their commercial
wisdom during the voting on the resolution plan under
Section 30(4) of the I&B Code. The subjective satisfaction of
the financial creditors at the time of voting is bound to be a mixed
C baggage of variety of factors. To wit, the feasibility and viability
of the proposed resolution plan and including their perceptions
about the general capability of the resolution applicant to translate
the projected plan into a reality. The resolution applicant may have
given projections backed by normative data but still in the opinion
of the dissenting financial creditors, it would not be free from
D
being speculative. These aspects are completely within the domain
of the financial creditors who are called upon to vote on the
resolution plan under Section 30(4) of the I&B Code.
56. For the same reason, even the jurisdiction of NCLAT being
in continuation of the proceedings would be circumscribed
E in that regard and more particularly on account of Section 32 of
the I&B Code, which envisages that any appeal from an order
approving the resolution plan shall be in the manner and on the
grounds specified in Section 61(3) of the I&B Code…….
57. On a bare reading of the provisions of the I&B Code, it would
F appear that the remedy of appeal under Section 61(1) is against
an “order passed by the adjudicating authority (NCLT)”, which
we will assume may also pertain to recording of the fact that the
proposed resolution plan has been rejected or not approved by a
vote of not less than 75% of voting share of the financial creditors.
G Indubitably, the remedy of appeal including the width of jurisdiction
of the appellate authority and the grounds of appeal, is a creature
of statute. The provisions investing jurisdiction and authority
in NCLT or NCLAT as noticed earlier, have not made the
commercial decision exercised by CoC of not approving
the resolution plan or rejecting the same, justiciable. This
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position is reinforced from the limited grounds specified A
for instituting an appeal that too against an order “approving
a resolution plan” under Section 31. First, that the approved
resolution plan is in contravention of the provisions of any
law for the time being in force. Second, there has been
material irregularity in exercise of powers “by the resolution
B
professional” during the corporate insolvency resolution
period. Third, the debts owed to operational creditors have
not been provided for in the resolution plan in the
prescribed manner. Fourth, the insolvency resolution plan
costs have not been provided for repayment in priority to
all other debts. Fifth, the resolution plan does not comply C
with any other criteria specified by the Board. Significantly,
the matters or grounds—be it under Section 30(2) or under Section
61(3) of the I&B Code—are regarding testing the validity of the
“approved” resolution plan by CoC; and not for approving the
resolution plan which has been disapproved or deemed to have
D
been rejected by CoC in exercise of its business decision.
58. Indubitably, the inquiry in such an appeal would be limited to
the power exercisable by the resolution professional under Section
30(2) of the I&B Code or, at best, by the adjudicating authority
(NCLT) under Section 31(2) read with Section 31(1) of the I&B
Code. No other inquiry would be permissible. Further, the E
jurisdiction bestowed upon the appellate authority (NCLAT) is also
expressly circumscribed. It can examine the challenge only in
relation to the grounds specified in Section 61(3) of the I&B Code,
which is limited to matters “other than” enquiry into the autonomy
or commercial wisdom of the dissenting financial creditors. Thus, F
the prescribed authorities (NCLT/N CLAT ) have been
endowed with limited jurisdiction as specified in the I&B
Code and not to act as a court of equity or exercise plenary
powers.”
(emphasis in bold supplied) G
74. A few months after the decision in the case of K. Sashidhar,
the aforesaid provisions relating to the approval of resolution plan came
up for further exposition before a 3-Judge Bench of this Court in the
case of Essar Steel (supra).
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756 SUPREME COURT REPORTS [2021] 12 S.C.R.

A 74.1. On the background aspects, while omitting details, suffice
it to notice for the present purpose that in the case of Essar Steel, the
NCLT, Ahmedabad admitted the petition filed by a lender bank and after
a few rounds of proceedings, the negotiated resolution plan of Arcelor
Mittal (India) (P) Ltd. was approved by CoC by a majority of 92.24%.
After several further proceedings, the Adjudicating Authority, by its order
B
dated 08.03.2019, disposed of the application to approve the resolution
plan. However, in the appeal, the NCLAT modified the terms of the
resolution plan and proceeded to redistribute the proceeds while, inter
alia, holding that financial creditors and operational creditors deserve
equal treatment under a resolution plan and while further holding that
C CoC was not empowered to decide the manner in which distribution
was to be made between one or other creditors, as there would be a
conflict of interest between financial and operational creditors. The order
so passed by the NCLAT was in challenge before this Court.
74.2. In the given backdrop, the roles of resolution professional,
D resolution applicant and Committee of Creditors as also the jurisdiction
of Adjudicating Authority and Appellate Authority came up for further
and fuller exposition by this Court in Essar Steel (supra). We have already
noticed the passages from this decision in regard to the scheme of IBC
and the pivotal role of Committee of Creditors in the process of insolvency
resolution of a corporate debtor. As regards the jurisdiction of Adjudicating
E Authority and Appellate Authority in this process of insolvency resolution,
in Essar Steel, this Court extensively referred to the principles laid down
and explained in K. Sashidhar and thereafter held as under: -
“Thus, it is clear that the limited judicial review available,
which can in no circumstance trespass upon a business
F decision of the majority of the Committee of Creditors, has
to be within the four corners of Section 30(2) of the Code,
insofar as the Adjudicating Authority is concerned, and Section
32 read with Section 61(3) of the Code, insofar as the Appellate
Tribunal is concerned, the parameters of such review having been
G clearly laid down in K. Sashidhar.”
(emphasis in bold supplied)
74.3. In Essar Steel, it was however argued that sub-section (5)
of Section 60 was not considered in K. Sashidhar and in that context,
this Court examined the rights of operational creditors and the reasons
H set forth in the Insolvency Committee Report, 2018 and then, reiterated
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the primacy of Committee of Creditors while declaring the law in no A
uncertain terms that the Adjudicating Authority cannot interfere on merits
with the commercial decision taken by the Committee of Creditors; the
limited judicial review available to it was to see that the Committee of
Creditors had taken into account the requirement of keeping the corporate
debtor as a going concern with maximisation of the value of assets and
B
the interests of all stakeholders including operational creditors were taken
care of. Significantly, in Essar Steel, this Court laid down that if the
Adjudicating Authority would find that the requisite parameters had not
been kept in view, it may send the resolution plan back to the Committee
of Creditors to resubmit the same after satisfying the parameters. This
Court laid down as under: - C
“73. There is no doubt whatsoever that the ultimate
discretion of what to pay and how much to pay each class or
sub-class of creditors is with the Committee of Creditors,
but, the decision of such Committee must reflect the fact
that it has taken into account maximising the value of the D
assets of the corporate debtor and the fact that it has
adequately balanced the interests of all stakeholders
including operational creditors. This being the case, judicial
review of the Adjudicating Authority that the resolution plan as
approved by the Committee of Creditors has met the requirements
referred to in Section 30(2) would include judicial review that is E
mentioned in Section 30(2)(e), as the provisions of the Code are
also provisions of law for the time being in force. Thus, while
the Adjudicating Authority cannot interfere on merits with
the commercial decision taken by the Committee of
Creditors, the limited judicial review available is to see F
that the Committee of Creditors has taken into account
the fact that the corporate debtor needs to keep going as a
going concern during the insolvency resolution process;
that it needs to maximise the value of its assets; and that
the interests of all stakeholders including operational
creditors has been taken care of. If the Adjudicating G
Authority finds, on a given set of facts, that the aforesaid
parameters have not been kept in view, it may send a
resolution plan back to the Committee of Creditors to re-
submit such plan after satisfying the aforesaid parameters.
The reasons given by the Committee of Creditors while approving H
758 SUPREME COURT REPORTS [2021] 12 S.C.R.

A a resolution plan may thus be looked at by the Adjudicating
Authority only from this point of view, and once it is satisfied that
the Committee of Creditors has paid attention to these key features,
it must then pass the resolution plan, other things being equal.”
(emphasis in bold supplied)
B 74.4. Thereafter, this Court dealt with the matter on merits in
relation to certain claims and objections which need not be elaborated;
suffice it would be to notice that this Court did not approve the impugned
order of NCLAT and directed that CIRP of the corporate debtor shall
take place in accordance with the amended resolution plan, as accepted
C by the Committee of Creditors.
75. Maharashtra Seamless Ltd. (supra) has been yet another
decision in which interference with the decision of Committee of Creditors
by NCLAT met with total disapproval of this Court.
75.1. In Maharashtra Seamless Ltd., the matter related to CIRP
D concerning the corporate debtor United Seamless Tubular Private Ltd.
where resolution plans of four different applicants were considered and
CoC approved the resolution plan filed by the appellant Maharashtra
Seamless Ltd. by a majority of 87.10% of the voting share of financial
creditors. Certain differences arose with respect to the liquidation value
E of the assets of corporate debtor and the CoC took an average of the
closest estimate. However, NCLAT ordered re-determination of
liquidation value and accordingly, the revised value was arrived at.
Thereafter, the CoC again approved the resolution plan of the appellant
considering the revised liquidation value. Then, NCLT approved the
resolution plan submitted by the appellant which included an upfront
F payment of INR 477 crores for infusion in the capital of the corporate
debtor. A promoter of the corporate debtor and a financial creditor filed
appeals before NCLAT contending that the resolution plan gave unfair
advantage to the resolution applicant whereupon, the Appellate Authority
proceeded to give a direction to the resolution applicant to enhance its
G fund inflow upfront.
75.2. In the aforesaid backdrop, the matter was considered in
appeal filed by the resolution applicant. After having examined the
relevant provisions of the Code and the CIRP Regulations as also the
enunciations in Essar Steel (supra), this Court observed that there was
no provision in the Code or Regulations under which the bid of any
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resolution applicant has to match the liquidation value; that the object A
behind such valuation process was to assist the CoC to take a proper
decision on the resolution plan; and once the plan was approved by CoC,
the Adjudicating Authority was only to ascertain if the resolution plan
was meeting the requirements of sub-sections (2) and (4) of Section 30.
The Court observed that in the given case, the Appellate Authority had
B
proceeded on equitable perceptions rather than commercial wisdom.
Even while observing that release of assets at the value 20% below the
liquidation value arrived by valuers appeared inequitable, this Court
observed that the adjudicatory process ought to cede ground to the
commercial wisdom of the creditors rather than assess the resolution
plan on the basis of quantitative analysis. While disapproving interference C
by the Appellate Authority, this Court observed and held as under: -
“27. Now the question arises as to whether, while approving a
resolution plan, the adjudicating authority could reassess a resolution
plan approved by the Committee of Creditors, even if the same
otherwise complies with the requirement of Section 31 of the Code. D
The learned counsel appearing for Indian Bank and the said
erstwhile promoter of the corporate debtor have emphasised that
there could be no reason to release property valued at Rs 597.54
crores to MSL for Rs 477 crores. The learned counsel appearing
for these two respondents have sought to strengthen their
submission on this point referring to the other resolution applicant E
whose bid was for Rs 490 crores which is more than that of the
appellant MSL.
28. No provision in the Code or Regulations has been brought to
our notice under which the bid of any resolution applicant has to
match liquidation value arrived at in the manner provided in F
Regulation 35 of the Insolvency and Bankruptcy Board of India
(Insolvency Resolution Process for Corporate Persons)
Regulations, 2016. This point has been dealt with in Essar Steel.
We have quoted above the relevant passages from this judgment.
29. It appears to us that the object behind prescribing such valuation G
process is to assist the CoC to take decision on a resolution plan
properly. Once, a resolution plan is approved by the CoC, the
statutory mandate on the adjudicating authority under Section 31(1)
of the Code is to ascertain that a resolution plan meets the
requirement of sub-sections (2) and (4) of Section 30 thereof.
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760 SUPREME COURT REPORTS [2021] 12 S.C.R.

A We, per se, do not find any breach of the said provisions in the
order of the adjudicating authority in approving the resolution plan.
30. The appellate authority has, in our opinion, proceeded
on equitable perception rather than commercial wisdom.
On the face of it, release of assets at a value 20% below its
B liquidation value arrived at by the valuers seems
inequitable. Here, we feel the Court ought to cede ground
to the commercial wisdom of the creditors rather than
assess the resolution plan on the basis of quantitative
analysis. Such is the scheme of the Code. Section 31(1) of
the Code lays down in clear terms that for final approval of a
C resolution plan, the adjudicating authority has to be satisfied that
the requirement of sub-section (2) of Section 30 of the Code has
been complied with. The proviso to Section 31(1) of the Code
stipulates the other point on which an adjudicating authority has to
be satisfied. That factor is that the resolution plan has provisions
D for its implementation. The scope of interference by the
adjudicating authority in limited judicial review has been laid down
in Essar Steel, the relevant passage (para 54) of which we have
reproduced in earlier part of this judgment. The case of MSL in
their appeal is that they want to run the company and infuse more
funds. In such circumstances, we do not think the appellate
E authority ought to have interfered with the order of the adjudicating
authority in directing the successful resolution applicant to enhance
their fund inflow upfront.”
(emphasis in bold supplied)
76. The expositions aforesaid make it clear that the decision as to
F whether corporate debtor should continue as a going concern or should
be liquidated is essentially a business decision; and in the scheme of
IBC, this decision has been left to the Committee of Creditors, comprising
of the financial creditors. Differently put, in regard to the insolvency
resolution, the decision as to whether a particular resolution plan is to be
G accepted or not is ultimately in the hands of the Committee of Creditors;
and even in such a decision making process, a resolution plan cannot be
taken as approved if the same is not approved by votes of at least 66%
of the voting share of financial creditors. Thus, broadly put, a resolution
plan is approved only when the collective commercial wisdom of the
financial creditors, having at least 2/3rd majority of voting share in the
H Committee of Creditors, stands in its favour.
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77. In the scheme of IBC, where approval of resolution plan is A
exclusively in the domain of the commercial wisdom of CoC, the scope
of judicial review is correspondingly circumscribed by the provisions
contained in Section 31 as regards approval of the Adjudicating Authority
and in Section 32 read with Section 61 as regards the scope of appeal
against the order of approval.
B
77.1. Such limitations on judicial review have been duly
underscored by this Court in the decisions above-referred, where it has
been laid down in explicit terms that the powers of the Adjudicating
Authority dealing with the resolution plan do not extend to examine the
correctness or otherwise of the commercial wisdom exercised by the
CoC. The limited judicial review available to Adjudicating Authority lies C
within the four corners of Section 30(2) of the Code, which would
essentially be to examine that the resolution plan does not contravene
any of the provisions of law for the time being in force, it conforms to
such other requirements as may be specified by the Board, and it provides
for: (a) payment of insolvency resolution process costs in priority; (b) D
payment of debts of operational creditors; (c) payment of debts of
dissenting financial creditors; (d) for management of affairs of corporate
debtor after approval of the resolution plan; and (e) implementation and
supervision of the resolution plan.
77.2. The limitations on the scope of judicial review are reinforced E
by the limited ground provided for an appeal against an order approving
a resolution plan, namely, if the plan is in contravention of the provisions
of any law for the time being in force; or there has been material
irregularity in exercise of the powers by the resolution professional during
the corporate insolvency resolution period; or the debts owed to the
operational creditors have not been provided for; or the insolvency F
resolution process costs have not been provided for repayment in priority;
or the resolution plan does not comply with any other criteria specified
by the Board.
77.3. The material propositions laid down in Essar Steel (supra)
on the extent of judicial review are that the Adjudicating Authority would G
see if CoC has taken into account the fact that the corporate debtor
needs to keep going as a going concern during the insolvency resolution
process; that it needs to maximise the value of its assets; and that the
interests of all stakeholders including operational creditors have been
taken care of. And, if the Adjudicating Authority would find on a given H
762 SUPREME COURT REPORTS [2021] 12 S.C.R.

A set of facts that the requisite parameters have not been kept in view, it
may send the resolution plan back to the Committee of Creditors for re-
submission after satisfying the parameters. Then, as observed in
Maharashtra Seamless Ltd. (supra), there is no scope for the
Adjudicating Authority or the Appellate Authority to proceed on any
equitable perception or to assess the resolution plan on the basis of
B
quantitative analysis. Thus, the treatment of any debt or asset is essentially
required to be left to the collective commercial wisdom of the financial
creditors.
77.4. During the course of submissions, one of the parties
(YEIDA), seeking to support modification of the resolution plan
C concerning some of the terms and stipulations, has referred to a decision
by a learned Single Judge of the Allahabad High Court in the case of
Pradumna Kumar Jain v. U.P. Secondary Education Service
Commission, Allahabad and Ors.: (1997) 30 ALR 339 to submit
that the power to approve or disapprove includes the power to modify;
D and it has been strongly argued that the power to modify is inherent in
the power of approval in terms of Section 31 of the Code. It is noticed
that the questions involved in the cited decision related to the powers
under Regulation 8 of the U.P. Secondary Education Services Commission
(Procedure for Approval of Punishment) Regulations, 1985, which
provided that ‘the Commission shall after due consideration approve
E or disapprove the punishment proposed or may issue any other
directions deemed fit in the case’. While interpreting the said provision,
where the Commission was to act as a superior authority and the provision
itself postulated that the said authority could ‘issue any other directions
deemed fit’, the Court held that the expressions indicated the existence
F of the power to modify. We are afraid, the principles stated in the said
decision or in other decisions of like nature cannot be imported to read
the power to modify the resolution plan into Section 31 of the Code.
77.5. In fact, the power of approval conferred on the Adjudicating
Authority in Section 31 of the Code is required to be visualised with
G reference to the overall scheme of the Code and the purposes for which
such powers have been conferred. The power of judicial review in
Section 31 is not akin to the power of a superior authority to deal with
the merits of the decision of any inferior or subordinate authority. As
succinctly stated in Essar Steel (supra), the limited judicial review
available is to see that the Committee of Creditors has adhered to the
H specified parameters, of keeping the corporate debtor going as a going
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concern during the resolution process; maximisation of the value of its A
assets; and taking care of the interests of all stakeholders. This Court
has, in no uncertain terms, held that if the specified parameters have not
been kept in view, the Adjudicating Authority may send a resolution plan
back to the Committee of Creditors to re-submit such plan after satisfying
the parameters. The reasons given by the Committee of Creditors are,
B
thus, looked at by the Adjudicating Authority only from this point of view.
It is not a jurisdiction to decide as to what ought to be the terms of the
resolution plan. That jurisdiction, in the scheme of IBC, is conferred on
the Committee of Creditors alone, who has to take such a decision in its
commercial wisdom, while keeping in view the applicable provisions and
the specified parameters; of course, its decision of approval has to be by C
the requisite majority of minimum 66% of the voting share.
77.6. In yet another set of submissions, on behalf of the erstwhile
director of JIL and JAL, it has been repeatedly asserted that the
Committee of Creditors had failed in its statutory duty to ensure
maximisation of JIL’s assets and protecting the interests of all D
stakeholders; and it is submitted that the Committee of Creditors failed
to visualise that there was no justification for NBCC seeking to acquire
JIL on a meagre amount of INR 120 crores despite the net worth of JIL
being much higher.
77.6.1. The assessment about maximisation of the value of assets, E
in the scheme of the Code, would always be subjective in nature and the
question, as to whether a particular resolution plan and its propositions
are leading to maximisation of value of assets or not, would be the matter
of enquiry and assessment of the Committee of Creditors alone. When
the Committee of Creditors takes the decision in its commercial wisdom
and by the requisite majority; and there is no valid reason in law to F
question the decision so taken by the Committee of Creditors, the
adjudicatory process, whether by the Adjudicating Authority or the
Appellate Authority, cannot enter into any quantitative analysis to adjudge
as to whether the prescription of the resolution plan results in maximisation
of the value of assets or not. The generalised submissions and objections G
made in relation to this aspect of value maximisation do not, by themselves,
make out a case of interference in the decision taken by the Committee
of Creditors in its commercial wisdom.
78. To put in a nutshell, the Adjudicating Authority has limited
jurisdiction in the matter of approval of a resolution plan, which is well- H
764 SUPREME COURT REPORTS [2021] 12 S.C.R.

A defined and circumscribed by Sections 30(2) and 31 of the Code read
with the parameters delineated by this Court in the decisions above-
referred. The jurisdiction of the Appellate Authority is also circumscribed
by the limited grounds of appeal provided in Section 61 of the Code. In
the adjudicatory process concerning a resolution plan under IBC, there
is no scope for interference with the commercial aspects of the decision
B
of the CoC; and there is no scope for substituting any commercial term
of the resolution plan approved by the CoC. Within its limited jurisdiction,
if the Adjudicating Authority or the Appellate Authority, as the case may
be, would find any shortcoming in the resolution plan vis-à-vis the specified
parameters, it would only send the resolution plan back to the Committee
C of Creditors, for re-submission after satisfying the parameters delineated
by Code and exposited by this Court.
79. The other points arising in this batch of matters, particularly
with reference to the findings and directions by the Adjudicating Authority
in the impugned order dated 03.03.2020 and with reference to the other
D related aspects, may now be examined within the framework of the
parameters aforesaid and the principles laid down by this Court.
Point B
Simultaneous voting over two resolution plans by CoC

E 80. While dealing with a plethora of disputes and objections
concerning the resolution plan of NBCC and the process of its approval,
we deem it appropriate to deal, first of all, with a part of objections that
approval of the resolution plan of NBCC by CoC is vitiated because of
the fact that two resolution plans, of Suraksha Realty and NBCC, were
put to simultaneous voting whereas such simultaneous voting on the
F resolution plans was not permissible. If this part of objections is accepted,
perhaps, nothing more would require consideration.
81. It has been argued on behalf of the objectors that at the time
of voting by CoC in the present matter, there was no provision in the
Code permitting the voting by CoC at more than one resolution plan at a
G time and in the very scheme of the Code and the requirements of due
consideration, it was necessary that one plan was considered at one
point of time. The process of simultaneous voting in the present case
has vitiated the decision of CoC. It has also been argued that Regulation
39(3B), permitting the CoC to put more than one resolution plan to vote,
was inserted to CIRP Regulations only with effect from 07.08.2020 and
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being prospective in operation, would not apply to the present process. A
Per contra, it is contended by the parties standing with the approval of
the plan in question that there had not been any prohibition or restriction
in the Code for putting more than one resolution plan to vote at the same
time. On behalf of IRP, it has also been contended that in terms of sub-
section (3) of Section 30, he was required to present the CoC such
B
resolution plans, which were conforming to the conditions referred in
sub-section (2); and as per sub-section (4) of Section 30, the CoC ‘may
approve a resolution plan’. It is, therefore, submitted that in the present
process, both the plans were rightly placed before the CoC; and the
CoC rightly voted on such plans and approved one of them. It is submitted
that the amendment brought about with effect from 07.08.2020 is C
clarificatory in nature and only gives out the methodology for putting
more than one resolution plan to vote.
82. Having examined the objection against simultaneous voting
with reference to the material on record and the law applicable, we are
unable to find any substance whatsoever in this objection. D
83. It is noteworthy that there has not been any prohibition in the
scheme of IBC and CIRP Regulations that CoC could not simultaneously
consider and vote upon more than one resolution plan at the same time
for electing one of the available options. It has rightly been contended on
behalf of IRP that in terms of sub-section (3) of Section 30 of the Code, E
he was obliged to place both the plans before CoC when they were
found conforming to the conditions referred to in sub-section (2) of Section
30; and thereafter, it was for the CoC to consider the plans and to vote
upon the same. Of course, the CoC could have approved only one
resolution plan; and that has precisely been done in the present case.
There does not appear any flaw or fault in the process adopted in the F
present case as regards voting over the resolution plans by the CoC.
83.1. Moreover, as noticed, the legislature itself has made the
position clear by way of a later amendment with effect from 07.08.2020,
by specifically making stipulations for simultaneous voting over more
than one resolution plan by the CoC, particularly with amendment of G
sub-regulation (3) of Regulation 39 of CIRP Regulations and insertion of
sub-regulations (3A) and (3B) thereto. 79 Such an amendment could only
be visualised as clarificatory in nature; and, in any case, even before
79
vide second footnote to sub-regulation (3) of Regulation 39 of CIRP Regulations,
ibid. H
766 SUPREME COURT REPORTS [2021] 12 S.C.R.

A amendment, there had not been any prohibition in putting two or more
conforming resolution plans to vote simultaneously.
84. It is also noticeable that when the matter was considered in
the second round of litigation and this Court issued various necessary
directions in the order dated 06.11.2019 in exercise of its plenary powers
B under Article 142 of the Constitution of India, it was specifically provided
that the two applicants viz., Suraksha Realty and NBCC would be invited
to submit revised plans for consideration. The minutes of CoC meeting
have also been placed before us by IRP and it appears that this very
aspect was duly deliberated in the meeting where IDBI Bank proposed
for simultaneous voting over the two plans and this suggestion was
C accepted by almost all CoC members except ICICI Bank Ltd. and Axis
Bank Ltd., who were having together the voting share of only about
2.3%. Due deliberations in this regard, in the meeting of Committee of
Creditors dated 07.12.2019, read as under: -
“The IRP enquired from CoC about the Resolution Plan that need
D to be put for voting by CoC. IDBI Bank on behalf of lenders
proposed that given the unique nature of this case both plans should
be put to vote as this will provide equal opportunity for individual
members of COC to select their preferred Resolution Plan. The
main reason for proposing joint vote on both plans was -
E -Specific directions of Hon’ble Supreme Court under its
special powers (Article 142) where COC/IRP was required to
consider Resolution Plans from only NBCC and Suraksha in
accordance with law and regulation.
-Ideally it would like to propose the H1 Resolution Plan to
F vote, but since the total overall evaluation scores were very close
and there is no consensus amongst members of COC on the
evaluation methodology used.
-Giving equal opportunity to all members of COC (including
Home buyers and FD holders) to approve the plan most preferred
G by them.
-Given the unique and complex nature of this Resolution
process.
All CoC members except ICICI Bank Limited, Axis Bank
Limited (together having vote share of approx. 2.3%) agreed with
H
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the suggestion made by IDBI Bank and decided to put both the A
Resolution Plans simultaneously to vote. Accordingly, it was
decided that both the Resolution Plans will be put to vote
simultaneously and in the event both secure the minimum threshold
of 66% votes, the plan securing overall higher vote will be
considered as the preferred resolution plan. The IRP agreed to
B
follow the COC’s instructions and organise the voting.
It was pointed out by CAM in the CoC meeting that since
both the Resolution Plans are being put to vote, we might end up
in a situation where both the Resolution Plans will receive more
than 66% votes, thus creating doubts as to whether both resolution
applicants are equally entitled to have their plans submitted to the C
adjudicating authority for approval. Therefore, to avoid such a
situation, the CoC members should be allowed to vote on either of
the two Resolution Plans only. The Authorised Representative of
the Home Buyers informed that almost all home buyer does not
want liquidation of the corporate debtor. In case there is a spilt of D
vote between Home Buyers and other members of COC, there
are more chances of no resolution plan getting approved and
situation of liquidation may arise. Majority of home buyers who
have written to AR of Home Buyers have indicated NBCC as its
preferred choice. Home Buyers are also fully aware that without
support of other members of COC, none of the resolution plan E
will get approved by COC. Para 21(i) of Hon’ble Supreme Court
judgment dated 06.11.2019 also directed to “place the revised
plan(s) before the CoC, if so required, after negotiations and
submit report to the adjudicating authority NCLT within such
time.” F
To avoid scenario of liquidation or non-compliance of
Hon’ble Supreme Court direction, AR of Home Buyers insisted
that both the Resolution Plans should be put to vote and the CoC
members should be allowed to vote on both the Resolution Plans
and in the event that both the Resolution Plans receive more than G
66% votes, then the successful Resolution Applicant will be decided
basis (sic) the Resolution Plan that has received higher number of
votes.”
85. In view of the above, we are unable to find any fault in
simultaneous consideration and voting over two resolution plans by CoC H
768 SUPREME COURT REPORTS [2021] 12 S.C.R.

A for electing one of them; and we would have no hesitation in giving our
imprimatur to such a process. The baseless objection in this regard has
rightly been rejected by the Adjudicating Authority.
Point C
Matters related with the land providing agency YEIDA
B
86. We may now enter into the first major point for determination
in this batch of matters; and that relates to the stipulations in the resolution
plan concerning the land providing agency YEIDA. The frontal aspect
of this issue is about the provision made in the resolution plan for meeting
with the contingent liability of additional compensation for land acquisition.
C The other aspect pertains to the directions by the Adjudicating Authority
for execution of tripartite agreement amongst YEIDA, the corporate
debtor JIL and the SPVs proposed to be set up in terms of the resolution
plan. An ancillary aspect relates to certain reliefs and concessions sought
for by the resolution applicant.
D 87. As noticed, the rights under the land in question were provided
to the original concessionaire under the Concession Agreement dated
07.02.2003 and later on, JIL was recognised as the concessionaire. In
the broad framework, one chunk of land was provided to the
concessionaire for constructing the Expressway and its allied facilities,
E for which the CA provided, inter alia, as under: -
“4.1 Land for construction of Expressway shall be provided by
TEA to the Concessionaire, generally in a width of 100 meters
along the alignment of the Expressway with additional land width,
where required, for developing other facilities like Toll Plazas etc.,
F on following terms & conditions.
*** *** ***
b. The land shall be leased for a period starting from the date of
transfer till the end of the Concession Period through such lease
deed as may be mutually agreed between the Parties.
G *** *** ***
d. The sole premium of the transferred land shall be equivalent to
the acquisition cost plus a lease rent of Rs. 100.00 (Rupees one
hundred) only per hectare per year. The acquisition cost shall be
the actual compensation paid to the land owners without any
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additional charge and shall be payable by the Concessionaire as A
per applicable rules. The lease rent shall be payable annually.”
Another chunk of land was provided to the concessionaire for
commercial exploitation, for which the CA provided, inter alia, as under:-
“4.3 Land for development shall be transferred by TEA to the
Concessionaire free from all Encumbrances on following terms B
& conditions:
a. It shall be on lease for a period of 90 (ninety) years from the
date of transfer through such lease deeds as may be mutually
agreed between the Parties.
*** *** *** C
c. The sole premium of the transferred land shall be equivalent to
the acquisition cost plus a lease rent of Rs. 100.00 (Rupees one
hundred) only per hectare per year. The acquisition cost shall be
the actual compensation paid to the land owners without any
additional charge and shall be payable by the Concessionaire as D
per applicable rules. The rent shall be payable annually for 90
(Ninety) years from the date of transfer of land.
d. The Concessionaire shall be entitled to further sub-lease
developed / undeveloped land to sub-lessees / end-users in its
sole discretion without any further consent or approval or payment E
of any charges / fee etc. to TEA or any other relevant authority.
e. After sub-lease of part of the land by the Concessionaire, the
same can be transferred / assigned without requiring any consent
or approval of or payment of any additional charges, transfer fee,
premiums etc. to TEA or to any other relevant authority and/or
F
there can be subsequent multiple sub-leases of the land in smaller
parts. The lease rent of the respective sub-leased portion of land
shall be paid by the sub-lessees / transferees to TEA directly on
pro-rata basis @ Rs. 100.00 (Rupees one hundred) per hectare
per year. The Concessionaire shall be required to pay lease rent
to TEA for the portion of land remaining in its possession after G
sub-lease, on pro-rata basis at the aforesaid prescribed rate. Total
lease rent paid by the Concessionaire and various sub-lessees /
transferees shall be Rs. 100.00 (Rupees one hundred) per hectare
per year.
*** *** *** H
770 SUPREME COURT REPORTS [2021] 12 S.C.R.

A g. The Concessionaire may make a request to TEA to execute
the lease deed directly in favour of Concessionaire’s subsidiaries,
assigns, transferees etc. in respect of any portion of the land on
the same terms and conditions as mentioned above, and on receipt
of such request TEA shall execute the lease deed in respect of
such portion of land directly in favour of such subsidiaries, assigns
B
and transferees.
h. In case TEA and the Concessionaire consider it appropriate,
tripartite agreement for sub-lease deed may be executed between
the TEA, Concessionaire and the Sub-Lessee.
C 4.4 The Concessionaire shall be free to decide the purpose for
which transferred land will be used i.e. for commercial,
amusement, industrial, institutional, residential etc. and also for
the area of land to be allocated for different uses. The
Concessionaire shall also be free to decide whether the sub-leased
land shall be in the form of plots or constructed properties. No
D permission of TEA shall be required either for the land use or for
transfer of leasehold / sub-leasing / multiple sub-leasing of land.
The land use shall however be as per applicable Master Plan and
other regulations.”
Another stipulation, in Clause 18.1 of the CA, which has its own
E relevance to the present case, may also be taken note of as under:-
“TRANSFER OF CONCESSIONAIRE’S RIGHTS AND
OBLIGATIONS TO SPV
18.1 In case the Concessionaire and the TEA consider it necessary
F to transfer Concessionaire’s rights and obligations under this
Agreement to a SPV, the Concessionaire shall, in a reasonable
time, transfer all its rights and obligations under this Agreement to
a SPV for which documents as may be required shall be executed
between the Concessionaire, the TEA and the SPV without
G additional cost to the Concessionaire or the SPV.”
87.1. It is not in dispute that under the said Concession Agreement,
JIL got the rights: (a) to construct and operate the Expressway and
collect toll for a period of 36 years; and (b) to use the land along the
Expressway for commercial exploitation for a period of 90 years.
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88. The issue pertaining to additional amount of land acquisition A
compensation cropped up in the wake of a decision of the Full Bench of
Allahabad High Court dated 21.10.2011 in the case of Gajraj and Ors.
v. State of U.P. and Ors.: 2011 SCC OnLine All 1711, wherein the
High Court ruled in favour of payment of additional compensation to the
land owners involved therein. The said decision in Gajraj was upheld by
B
this Court in the case of Savitri Devi v. State of U.P. & Ors.: (2015) 7
SCC 21. In sequel, a spate of litigation in Allahabad High Court
concerning other parcels of land came up and several other land owners,
including whose land stood acquired for the project in question, demanded
additional compensation. It is stated by YEIDA that looking to such
litigations and agitations, the Government of U.P. proceeded to set up a C
committee called the ‘Chaudhary Committee’; and the said committee
recommended for grant of additional compensation (to the extent of
64.7%) to the land owners whose land had been acquired. While accepting
these recommendations, the Government of U.P. proceeded to issue
G.O. dated 29.08.2014, directing YEIDA to ensure payment of additional
D
compensation to all the land owners. In this turn of events, YEIDA
demanded the amount of additional compensation from JIL to the tune
of INR 2591.78 crores by its communication dated 20.01.2015 and yet
another amount of approximately INR 247 crores by its communication
dated 31.05.2017.
88.1. The aforesaid communications of YEIDA and the said G.O. E
dated 29.08.2014 were challenged by JIL by way of a writ petition before
the High Court of Allahabad but, later on, JIL sought permission to
withdraw with a view to seek recourse to the alternative remedy of
arbitration, as provided in the CA. The High Court of Allahabad, by its
order dated 03.11.2016, permitted JIL to withdraw and to pursue the F
alternative remedy of arbitration80. Thereafter, the concessionaire JIL
took up the matter in arbitration which led to the arbitral award dated
02.11.2019 in its favour, holding that the demand made by YEIDA was
not sustainable. This award has been challenged by YEIDA under Section
34 of the Arbitration and Conciliation Act, 1996 and those proceedings,
being Arbitration Case No. 3 of 2020, are pending in the Court of District G
Judge, Gautam Budh Nagar. It has also been pointed out that the said
G.O. was struck down by the Allahabad High Court in other petitions;

80
As per the facts stated, the said order of High Court was challenged by YEIDA in this
Court in D. No. 15058 of 2017, which was dismissed on 01.09.2017. H
772 SUPREME COURT REPORTS [2021] 12 S.C.R.

A and the order so passed by the High Court has been challenged in SLP
(Civil) No. 10015-10034 of 2020, pending in this Court.
89. At the stage of drawing up the resolution plan in question, the
said arbitral award had been made with the result that the liability towards
the amount of additional compensation was not standing against JIL.
B However, for the reason that the matter was sub judice, the resolution
applicant considered it appropriate to make a provision for meeting with
the contingency, in case this liability would ultimately get fastened on
JIL; and proposed in the resolution plan as under: -
“1.2 Treatment of creditors
C As part of the Resolution Plan, it is proposed that:
(i) As mentioned in this Plan, this Resolution Plan assumes that no
amount is payable by the Corporate Debtor in relation to the
Landowner Compensation Debt in view of the Award. However,
if the said position changes on account of the Award being
D overruled then in relation to the Landowner Compensation Debt,
the amounts payable to the landowners shall be collected directly
by YEIDA in the following manner for the following parcels of
lands (in relation to which such debt accrues), from the ultimate
end-users:
E (i) Land under development (real estate projects) – the
compensation in this regard shall be collected by YEIDA from
the Home Buyers;
(ii) Land already subleased to other entities by the Corporate
Debtor – the compensation shall be collected from the
F respective sub-lessees to whom the lands have been subleased
by the Corporate Debtor either directly or indirectly;
(iii) Unutilized land parcels – the compensation shall be collected
from the end users in whose favour such land shall be
transferred/subleased by the Corporate Debtor; and
G (iv) Yamuna Expressway – Yamuna Expressway is a project
of public utility and the ultimate owner of the project land is
YEIDA, who will get the ultimate ownership of the Yamuna
Expressway after the expiry of the concession period under
the Concession Agreement and accordingly the compensation
H in this regard shall be payable by YEIDA.”
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90. Apart from the above, the resolution applicant also proposed A
to set up two separate SPVs, one being Expressway SPV and another
being Land Bank SPV. It was proposed that the assets and liabilities
pertaining to Expressway shall be transferred to the Expressway SPV
by way of transfer of 100% shareholding and the concession rights under
the CA; and that out of the unutilised parcels of land available with the
B
corporate debtor, 1,526 acres shall be transferred to Land Bank SPV;
and that Land Bank SPV will also take over the admitted financial debt
to the tune of INR 5,100 crores. In the resolution plan, the applicant also
stated about the approvals required and its assumptions in that regard in
the following terms: -
“BUSINESS PLAN / FINANCIAL PROJECTIONS C

*** *** ***
(d) Provisions for the Approvals required and the timeline for
the same
*** *** *** D
(ii) The Resolution Applicant is of the view that the approval of
this Resolution Plan by the Adjudicating Authority shall be deemed
to have waived all the requirements in relation to transfer of
Yamuna Expressway and land bank asset by way of business
transfer and no approval/consent shall be necessary from any E
other person (including Yamuna Expressway Industrial
Development Authority (“YEIDA”) or any other Governmental
Authority), in this regard.”
91. Moreover, in Clauses 4, 14 and 27 of Schedule 3 of the
resolution plan, while seeking ‘reliefs and concessions’, the resolution F
applicant mooted a few more propositions concerning YEIDA and the
Concession Agreement, which have also contributed to the intricacies
of the matter.
91.1. In Clause 4 of Schedule 3 of the resolution plan, NBCC
expected that YEIDA shall withdraw its challenge to another award G
dated 23.01.2017, pertaining to the issue of additional FAR, in the following
terms: -
“4. YEIDA to withdraw the appeal filed in the District Court,
Gautam Budh Nagar being Arbitration Case No. 69 of 2017
challenging the award dated January 23, 2017 passed by arbitral H
774 SUPREME COURT REPORTS [2021] 12 S.C.R.

A tribunal pertaining to additional FAR and the Corporate Debtor to
get the right to use additional FAR as per details contained in
Annexure-P at all five land parcels immediately (on withdrawal
of such appeal) without any additional payment for the same.
However, the Resolution Applicant shall make a payment of INR
1 Cr in consideration of full and final settlement of YEIDA’s claim
B
if any arising out of such appeal, considering YEIDA’s claim as
Operational Debt in terms of IBC and to ensure equitable treatment
to all the Operational Creditors.”
91.2. Further, in Clause 14 of Schedule 3 of the plan, the resolution
applicant sought extinguishment of liability towards capital cost pertaining
C to Noida-Greater Noida Expressway in the following terms: -
“14. The liability arising out of the Concession Agreement, to repay
the capital cost pertaining to Noida-Greater Noida Expressway
(treated as interest free loan from YEIDA to the Corporate Debtor)
shall stand extinguished, on account of failure of YEIDA to allow
D the Corporate Debtor to collect and retain toll/fee from the users
of the Noida-Greater Noida Expressway during the term of the
Concession Agreement, as agreed under Clause 3.7 of the
Concession Agreement.”
91.3. Yet further, in Clause 27 of Schedule 3, the resolution
E applicant expected an extension of the period under the CA by 10 years.
This Clause reads as under: -
“27. To ensure feasibility and viability of this Resolution Plan,
YEIDA and other concerned authorities shall extend the
concession period (currently 36 years) under the Concession
F Agreement for an additional period of ten years.”
92. YEIDA took exception to several parts of the stipulations
aforesaid before the Adjudicating Authority and essentially submitted
that the liability towards the amount of additional compensation, in relation
to the land acquired and leased to JIL, was that of JIL, although such a
G question was sub judice in challenge to the arbitral award under Section
34 of the Arbitration Act. It was submitted on behalf of YEIDA that in
case the liability is ultimately mulcted on JIL, YEIDA cannot be driven
to collect the amount of additional compensation from the end-users as
proposed in the plan. It was asserted that the terms of CA provided for
two payment components: one being of acquisition cost payable by the
H
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concessionaire and other being of leased rent to be paid by the sub- A
lessee/end-user; and given such components, it could not have been
provided that YEIDA would collect the acquisition cost directly from the
end-users.
92.1. It was also submitted that the resolution applicant was not
entitled to split the transferred land into two, and to say that the payment B
of additional compensation would be applicable only towards the land
used for development and not for the land used for Expressway.
92.2. As regards the expected exemption to pay the acquisition
cost pertaining to the land utilised for Expressway, it was submitted that
even if Expressway was to revert to YEIDA after 36 years, JIL was C
allowed to collect toll for this period and there could be no exemption as
regards cost of acquisition for the land of Expressway.
93. Another part of objection was that if the concessionaire’s rights
and obligations were proposed to be transferred to SPVs, proper
documentation was required, so that YEIDA could exercise its rights D
over the SPVs concerned. It was yet further submitted that withdrawal
of the arbitration case could not be thrust upon YEIDA.
94. As noticed, the Adjudicating Authority observed in regard to
these issues concerning YEIDA that looking to the terms of CA, the
Committee of Creditors should not have approved the resolution plan E
stating that the compensation, if awarded, shall be collected from the
end-users. However, the Adjudicating Authority proceeded to modulate
such terms ‘to make the plan viable’ and provided that the resolution
plan be read to mean that YEIDA shall have a right to collect acquisition
cost through the SPVs concerned. With regard to the issue of additional
compensation concerning the land of Expressway, the Adjudicating F
Authority considered it appropriate to read the resolution plan in the way
that it is left open to both the parties to have proper recourse over this
issue before a competent forum when the time would come for payment
of additional compensation. As regards transfer of concessionaire’s rights
and obligations to SPVs, the Adjudicating Authority was of the view G
that, when JIL as concessionaire was, for the first time, proposing to
transfer its rights and obligations to SPVs, the documents involving the
concessionaire JIL, YEIDA and the SPV concerned were required to
be executed. The NCLT also observed that the CA was based on the
statute created by the State Government and, therefore, violation of its
H
776 SUPREME COURT REPORTS [2021] 12 S.C.R.

A terms and conditions would be a violation of the law in force and would
not be permissible in terms of Section 30(2) of the Code.
94.1. Interestingly, the other reliefs and concessions in regard to
YEIDA, as sought for in the aforementioned Clauses 14 and 27, were
specifically declined by the Adjudicating Authority (vide the comments
B on these clauses in paragraph 134 of the order dated 03.03.2020).
However, as regards Clause 4 of the ‘reliefs and concessions’ that YEIDA
shall withdraw the arbitration case filed under Section 34 of the Arbitration
Act, though the Adjudicating Authority noticed this aspect in the arguments
of the parties but, did not make any specific order in that regard and in
paragraph 134 of the impugned order dated 03.03.2020, merely observed
C that Clauses 1 to 5 were covered by the previous discussion.
95. On behalf of the resolution applicant (NBCC), while questioning
the directions and observations of the Adjudicating Authority in relation
to the dealings with YEIDA and particularly in relation to the contingent
liability of additional compensation, a detailed reference has been made
D to all the background aspects and extensive arguments have been made
in support of the stipulations in the resolution plan.
95.1. It is submitted on behalf of the resolution applicant that as
on date, there is no claim of YEIDA against JIL in relation to the additional
amount of compensation but, keeping the larger interests in view, the
E resolution plan has provided for this eventuality in the manner that YEIDA
would be able to collect the amounts from the end-users. While taking
exception to the observations in the order impugned, it is submitted that
the Adjudicating Authority has seriously erred in seeking to construe the
CA because that was an issue pending in the arbitration case. It is further
F submitted that in terms of Regulation 37 of CIRP Regulations, the
resolution plan can propose modifications/alterations of contracts of the
corporate debtors and in fact, all the contracts are being modified under
the plan, of course, subject to the approval by the CoC with requisite
majority. As regards legal status of the Concession Agreement, it is
submitted that the Adjudicating Authority has erred in assuming as if it
G were a statutory contract. In this regard, with reference to Section 6-A
of the U.P. Act of 1976 81, it is contended that YEIDA may by an
81
Section 6-A of U.P. Act of 1976 reads as under: -
“6-A Notwithstanding anything to the contrary contained in any other
provisions of this Act and subject to such terms and conditions as may be
H specified in the regulations, the Authority may, by Agreement, authorize any
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agreement authorise any person to provide or maintain, or continue to A
provide or maintain, any infrastructure or amenities and therefore, once
an agreement was reached between JIL and YEIDA, their relationship
would be governed by that contract (Concession Agreement). It is
submitted that while enacting Section 6-A of the U.P. Act of 1976, the
intent of the legislature has been to carve out a contractual relationship
B
distinct from the statute and this goes against the whole construct of
‘statutory contract’ which YEIDA is trying to project. The decisions of
this Court in the cases of India Thermal Power Ltd. v. State of M.P.
and Ors.: (2000) 3 SCC 379 and Kerala State Electricity Board
and Anr. v. Kurien E. Kalathil and Ors.: (2000) 6 SCC 293 have
been referred to submit that merely for YEIDA being a statutory body, C
the contract in question does not partake the character of a statutory
contract. This issue relating to contingent liability of additional
compensation, according to NBCC, is required to be settled for proper
implementation of the resolution plan or else, it may lead to serious
impediment in future.
D
95.2. As regards those observations of the Adjudicating Authority
where the issue of additional compensation qua the Expressway land
has been left open for decision in the competent forum, it is submitted
that the observations are not in accord with the decision in Essar Steel
(supra), that there ought to be finality of claims against the corporate
debtor. According to YEIDA, if this issue is left to be decided in any E
other proceedings, the same would lead to ‘hydra head’ popping up in
the future.
95.3. It is further submitted that Expressway land would admittedly
revert to YEIDA after the end of concession period and, therefore,
YEIDA is the end-user of the Expressway. It is submitted that since the F
plan proposed the payment by end-users and this principle was approved
by CoC, YEIDA has to be the entity liable towards additional
compensation in relation to the land of Expressway, for it being the end-
user with the land reverting to it. It has also been submitted that YEIDA
has otherwise stated no objection to the pass-through proposition as regards G
liability towards additional compensation to the end-users and hence, its
objection towards this liability qua Expressway land remains unjustified.

person to provide or maintain or continue to provide or maintain any
infrastructure or amenities under this Act and to collect taxes or fees, as the case
may be, levied therefore.” H
778 SUPREME COURT REPORTS [2021] 12 S.C.R.

A It is also submitted that in the resolution plan, a debt of INR 2,000 crores
is proposed to be raised on the Expressway for the purpose of
construction of flats; and in the event this liability of additional
compensation on the Expressway land is not passed on to the end-user,
raising of the loan may become difficult.
B 95.4. NBCC has further stated its objection to the proposed
tripartite agreement with reference to Clauses 4.3(d), 4.3(e) and 4.4 of
CA and it is submitted that the right of transfer being available to the
concessionaire, foisting of tripartite agreement with YEIDA is not justified.
It is submitted that so far as the execution of tripartite agreement in
relation to the Expressway SPV is concerned, this part of the order is
C not being challenged but as regards Land Bank SPV, there is no
requirement of entering into a tripartite agreement because JIL has
unfettered rights under CA to transfer the land to any person.
95.5. As regards decision of this Court in the case of Municipal
Corporation of Greater Mumbai (MCGM) v. Abhilash Lal and Ors.:
D (2019) SCC OnLine SC 1479, which is relied upon by YEIDA, it is
submitted that the said decision is not applicable to the facts of the present
case because therein, MCGM had not entered into a binding lease
agreement containing the terms similar to the CA applicable to the parties
herein. Moreover, in the said decision, the statute, i.e., Municipal
E Corporation of Greater Mumbai Act, 1888, itself provided that the only
way MCGM’s properties could be dealt with was through lease or by
way of creation of any other interest with the prior permission of MCGM,
but there is no similar provision in the U.P. Act of 1976.
96. On behalf of the IRP, it has been submitted that granting or
F refusing the reliefs sought for under Schedule 3 of the resolution plan is
a matter within the discretion of the Adjudicating Authority and even if
the same have not been granted, they do not form a part of the commercial
terms of the plan; and the referred clauses of ‘reliefs and concessions’
are not hit by Section 30(2)(e) of the Code.

G 97. The associations of homebuyers as also the individual
homebuyers standing in support of the plan have contended that the
alleged terms of the Concession Agreement and any alleged breach
thereof does not amount to a breach under Section 30(2)(e) of the Code
and therefore, the Adjudicating Authority has acted wholly without
jurisdiction in dealing with such terms because they do not come within
H the scope of Section 31 of the Code.
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97.1. However, one of the homebuyers, who has moved an A
application for intervention, I.A. No. 84309 of 2020, has made several
submissions questioning the dealings of JIL and YEIDA and has submitted
that the Concession Agreement having not been provided to the
homebuyers, the CIRP proceedings are rendered void.
98. In response to the aforesaid submissions in favour of the B
resolution plan, several counter arguments have been made by different
parties. To avoid prolixity and repetition, we take into account the
submissions of the parties directly related with these issues namely,
YEIDA. Added to that, we may also refer to the submissions made on
behalf of the erstwhile director of the corporate debtor JIL as also its
holding company JAL. C

99. It has been stated and reiterated, as had been the submissions
before the NCLT, that YEIDA does not stand to oppose the resolution
plan only for the sake of opposition; rather it would like the plan to succeed
but, it has a public duty to ensure that the framework under CA is
preserved; and the issues being raised by it are solely intended to preserve D
the CA and to enforce the terms therein. Again, a detailed reference has
been made to the background aspects concerning the land in question
and the Concession Agreement as also to the findings of NCLT and
thereafter, the contentions urged on behalf of the resolution applicant
have been refuted. E
99.1. In the first place, YEIDA has submitted that the resolution
applicant is not correct in suggesting that the Adjudicating Authority has
dealt with the interpretation of CA to hold that compensation was to be
paid by the concessionaire and by the proposed SPVs. Paragraph 118 of
the impugned order dated 03.03.2020 has been referred wherein, the F
Adjudicating Authority stated that the question, as to whether additional
compensation was a part of the acquisition cost, was not being examined
because it had already been adjudicated in arbitration and is pending in
the Court.
99.2. While supporting the other part of impugned order dated G
03.03.2020, it is submitted that there being no privity of contract between
YEIDA and the end-users, the amount towards additional compensation
could only be collected from the SPVs and not directly from the end-
users. According to YEIDA, the Adjudicating Authority has rightly
modified the mechanism in the resolution plan for collection of additional
compensation in the manner that instead of collecting the amount directly H
780 SUPREME COURT REPORTS [2021] 12 S.C.R.

A from the end-users, YEIDA would now be collecting it through the SPVs
concerned. This has, according to YEIDA, no impact on the commercial
aspects of the resolution plan.
99.3. It is also submitted that the contract in question, that is, the
Concession Agreement, is a statutory contract entered into by YEIDA
B for public purpose and it cannot be altered or modified through a resolution
plan as an ordinary commercial contract. It is submitted that the CA
grants and governs the rights of corporate debtor JIL over the land of
YEIDA; that such rights are limited and distinct from ownership rights;
and that the resolution applicant cannot unilaterally alter the CA and
improve upon the rights granted thereunder to enhance the assets of the
C corporate debtor.
99.4. As regards the land falling under Expressway, YEIDA has
questioned the contentions urged on behalf of NBCC and it is submitted
that such a ground was not taken in the appeal filed against the impugned
order and was raised for the first time in written submissions.
D Nevertheless, according to YEIDA, the argument is patently incorrect,
for it ignores the fact that the corporate debtor JIL and its successor
SPVs would derive the benefits of both, the toll collected from Expressway
for 36 years as also from the other land for development. It has also
been submitted that the additional compensation for Expressway, when
E to be passed on to the end-users, could only be passed on to the
commuters in the form of appropriate adjustment in the toll, but not
otherwise.
99.5. Moving on to the questions related with creation of SPVs,
transfer of land to them and the aforesaid stipulations in the resolution
F plan, it is submitted that the project in question is an integrated and
indivisible one, as held by this Court in the case of Nand Kishore Gupta
& Ors. v. State of U.P. & Ors.: (2010) 10 SCC 282 and hence, its
bifurcation is impermissible.
99.6. It is also submitted that the assumption in the resolution
G plan, that the approval of NCLT would waive the requirement of YEIDA’s
approval, is misconceived. Regulation 37 of CIRP Regulations has been
referred to submit that the plan has to provide for necessary measures
for insolvency resolution including approvals from the Central and State
Governments and other authorities. Therefore, according to YEIDA,
such pre-emptory waiver as envisaged in the plan is contrary to the
H CIRP Regulations. A further reference has been made to Clause 18.1 of
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the CA and it is contended that in terms thereof, in case any SPV is to A
be set up, necessary documents involving the concessionaire JIL, YEIDA
and SPV have to be executed. It is reiterated that despite such objections,
YEIDA is taking a practical view of the matter so as to ensure the
success of the resolution plan and, therefore, the Adjudicating Authority
(NCLT) has also rightly provided for such documentation without
B
disturbing the commercial effect of the plan while ensuring that all the
future dealings shall be in terms of the CA and thereby, fulfilling the
requirements of Section 30(2) of the Code.
99.7. As regards the contentions on the part of the resolution
applicant that Land Bank SPV is not governed by the CA or that there is
no restriction on the corporate debtor’s ability to sub-lease, it is submitted C
that the rights for development of the land along the proposed Expressway
were to be provided at five or more locations with one location in Noida
or Greater Noida in terms of Clause 3.3 of the CA. Therefore, the
suggestion that this land may not be governed by CA is not correct. As
regards the right to sub-lease, it is submitted on behalf of YEIDA that as D
per the terms of plan, it is not a mere sub-lease in favour of Land Bank
SPV but the chunk of land for development is sought to be transferred
to the Land Bank SPV by way of business transfer; and in any case, in
terms of the referred clauses of CA, execution of tripartite agreement is
a condition indispensable.
E
99.8. It has also been submitted that YEIDA has consistently taken
the stand that it would be ready to do everything within its power to
ensure that the plan is a success but even after long length of time, the
resolution applicant has not even approached YEIDA for execution of
necessary documents. While relying on the aforesaid decision in MCGM,
it has been argued that the provisions of the Code cannot override a F
public body’s right and duty to control and regulate as to how its properties
are to be dealt with.
99.9. As regards the powers of the Adjudicating Authority to
modify the plan, reliance is placed on the decision in ArcelorMittal (supra),
where this Court has held that the Adjudicating Authority is to apply G
judicial mind to a resolution plan to satisfy itself that the plan meets the
requirements under Section 30 of the Code. It is further submitted that
even in Essar Steel (supra), this Court has recognised the Adjudicating
Authority’s power of judicial review. Further, with reference to the
decision of Allahabad High Court in the case of Pradumna Kumar H
782 SUPREME COURT REPORTS [2021] 12 S.C.R.

A Jain (supra), it is submitted that the power to approve or reject a plan
must necessarily include the power to modify a plan. According to
YEIDA, such power of the Adjudicating Authority is implicit in Section
31; and if the Adjudicating Authority finds that a resolution plan does not
conform to the Code but would do so by modifications, such modifications
deserve to be upheld, lest the corporate debtor is pushed to liquidation. It
B
is re-emphasised that the modifications provided in the impugned order
dated 03.03.2020 have no commercial implications and they relate only
to the mechanism prescribed by the resolution plan, which are required
to be modified to uphold the CA, a statutory contract.
99.10. Apart from the above, it has also been submitted on behalf
C of YEIDA, that the resolution plan carries such other terms and
stipulations which cannot be approved; and objections of YEIDA to such
terms were upheld but, NBCC has not appealed against that part of the
order of the Adjudicating Authority. Therefore, those stipulations deserve
not to be approved. In this regard, it has been pointed out that YEIDA
D has taken objection to Clause 4 of Schedule 3 requiring it to give up the
litigation under the Arbitration Act; and this objection was noted by the
Adjudicating Authority and NBCC has not challenged those observations.
Such a relief, according to YEIDA, cannot be claimed in a resolution
plan and ought to be declined. It has further been pointed out that the
stipulations in the said Clauses 14 and 27 of Schedule 3 of the resolution
E plan, respectively for extinguishment of the liability arising under the CA
and for extension of term of CA, have not been granted by the
Adjudicating Authority; and these aspects having not been appealed
against, the clauses in question deserve to be deleted from the resolution
plan.
F 100. The submissions so made on behalf of YEIDA have been
supported by the erstwhile director of JIL with reference to the decision
in Embassy Property (supra) and with the submissions that YEIDA
being a statutory body created under the U.P. Act of 1976, the agreement
entered into between YEIDA and the corporate debtor is statutory in
G nature and this relationship is not just contractual but is statutorily
governed. The requirement that YEIDA must collect compensation from
the homebuyers or end-users in case it succeeds in the arbitration case,
according to the erstwhile director, is in contravention of the law for the
time being in force, for it violates the U.P. Act of 1976. It is further
submitted that the Adjudicating Authority has rightly ordered execution
H
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of tripartite agreement involving the proposed SPVs. In essence, the A
submission has been that the treatment of YEIDA in the resolution plan
is not in conformity with the law and the order passed by the Adjudicating
Authority calls for no interference.
101. While dealing with the rival submissions, we may indicate at
the outset that some of the objections like questioning the dealings of JIL B
and YEIDA and want of availability of CA with the homebuyers have
unnecessarily been raised and carry no meaning to the real questions in
controversy. They require no discussion and are left at that.
102. Coming to the real questions in controversy, in the first place,
we deem it appropriate to observe that the suggestion on behalf of YEIDA C
and erstwhile director of the corporate debtor, that the Concession
Agreement in question is a statutory contract, is not correct and cannot
be accepted. It has rightly been pointed out on behalf of the resolution
applicant NBCC that the said CA is not a statutory contract; it has only
been executed by YEIDA in exercise of its enabling powers conferred
by the statute, that is, U.P. Act of 1976 but the same is neither an D
agreement provided by the statute nor executed under a statute. This
Court has clarified the law in this respect in the case of India Thermal
Power Ltd. (supra) in the following terms: -
“11. It was contended by Mr Cooper, learned Senior Counsel
appearing for appellant GBL and also by some counsel appearing E
for other appellants that the appellant/IPPs had entered into PPAs
under Sections 43 and 43-A of the Electricity Supply Act and as
such they are statutory contracts and, therefore, MPEB had no
power or authority to alter their terms and conditions. This
contention has been upheld by the High Court. In our opinion the F
said contention is not correct and the High Court was wrong in
accepting the same. Section 43 empowers the Electricity Board
to enter into an arrangement for purchase of electricity on such
terms as may be agreed. Section 43-A(1) provides that a generating
company may enter into a contract for the sale of electricity
generated by it with the Electricity Board. As regards the G
determination of tariff for the sale of electricity by a generating
company to the Board, Section 43(1)(2) provides that the tariff
shall be determined in accordance with the norms regarding
operation and plant-load factor as may be laid down by the authority
and in accordance with the rates of depreciation and reasonable H
784 SUPREME COURT REPORTS [2021] 12 S.C.R.

A return and such other factors as may be determined from time to
time by the Central Government by a notification in the Official
Gazette. These provisions clearly indicate that the agreement can
be on such terms as may be agreed by the parties except that the
tariff is to be determined in accordance with the provision contained
in Section 43-A(2) and notifications issued thereunder. Merely
B
because a contract is entered into in exercise of an enabling
power conferred by a statute that by itself cannot render
the contract a statutory contract. If entering into a contract
containing the prescribed terms and conditions is a must
under the statute then that contract becomes a statutory
C contract. If a contract incorporates certain terms and
conditions in it which are statutory then the said contract
to that extent is statutory. A contract may contain certain
other terms and conditions which may not be of a statutory
character and which have been incorporated therein as a
result of mutual agreement between the parties. Therefore,
D
the PPAs can be regarded as statutory only to the extent that
they contain provisions regarding determination of tariff and other
statutory requirements of Section 43-A(2). Opening and
maintaining of an escrow account or an escrow agreement are
not the statutory requirements and, therefore, merely because
E PPAs contemplate maintaining escrow accounts that obligation
cannot be regarded as statutory.”
(emphasis in bold supplied)
102.1.Applying the principles aforesaid to the facts of the present
case, we are clearly of the view that the agreement in question does not
F acquire the status of a statutory contract merely for having been executed
in terms of the powers with YEIDA under Section 6-A of the U.P. Act
of 1976.
102.2.Apart from above, another part of the submissions on behalf
of YEIDA with reference to the case of Nand Kishore Gupta (supra)
G against incorporation of two SPVs cannot be accepted. The observations
of this Court in the case of Nand Kishore Gupta (supra) came in the
wake of challenge to the very acquisition process concerning the land
parcels for the project in question, that is Yamuna Expressway Project.
One of the arguments therein was that about 25 million square kilometres
H of land was being acquired for 5 parcels of land to be given for
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commercial exploitation. This Court found the High Court right in A
commenting that such creation of 5 zones for industry, residence,
amusement etc. was going to be complementary to the creation of
highway. However, the observations in Nand Kishore Gupta (supra),
holding all the parcels of land to be part of integrated and indivisible
project, cannot be read to mean that creation of two SPVs by the
B
concessionaire, one for the Expressway and another for the remaining
land for commercial development, can never be provided.
102.3.However, even if the submissions of YEIDA are not correct
in regard to the aforesaid two aspects, all other submissions made on its
behalf cannot be discarded and rather, on substance, they deserve
acceptance to a large extent. C

103. The contract in question, the CA, even though not a statutory
one, is nevertheless a contract entered into between the concessionaire
and statutory authority, that is, YEIDA. It is needless to observe that
even if in the scheme of IBC, a resolution plan could modify the terms of
a contract, any tinkering with the contract in question, that is, the D
Concession Agreement, could not have been carried out without the
approval and consent of the authority concerned, that is, YEIDA. Any
doubt in that regard stands quelled with reference to Regulation 37 of
CIRP Regulations that requires a resolution plan to provide for various
measures including ‘necessary approvals from the Central and State E
Governments and other authorities’. The authority concerned in the
present case, YEIDA, is the one established by the State Government
under the U.P. Act of 1976 and its approval remains sine qua non for
validity of the resolution plan in question, particularly qua the terms related
with YEIDA. The stipulations/assumptions in the resolution plan, that
approval by the Adjudicating Authority shall dispense with all the F
requirements of seeking consent from YEIDA for any business transfer
are too far beyond the entitlement of the resolution applicant. Neither
any so-called deemed approval could be foisted upon the governmental
authority like YEIDA nor such an assumption stands in conformity with
Regulation 37 of the CIRP Regulations. G
104. Furthermore, the suggestion that Clause 18.1 of the CA had
been a one-time measure and that stands exhausted with creation of JIL
as SPV and transfer of original concessionaire’s rights to JIL, has its
own shortcomings. The concept and purport of Clause 18.1, of course,
at the relevant time had been of the obligation on the original H
786 SUPREME COURT REPORTS [2021] 12 S.C.R.

A concessionaire to execute the documents for creation of SPV and this
clause came in operation when JIL was created as an SPV. However, it
would be wholly unrealistic to say that once JIL was created as an SPV,
the said Clause 18.1 stood exhausted and there remained no obligation
on the part of JIL (as the substituted concessionaire) to execute the
necessary documents if it would propose to transfer its rights and
B
obligations under the CA to another SPV; and it could do so without the
consent of YEIDA. This suggestion carries an inherent fallacy because
if Clause 18.1 is removed from the CA, a serious question would arise
as to how the rights and obligations of the substituted concessionaire JIL
could at all be transferred to another SPV? Looking to the pith and
C substance of the CA, the said Clause 18.1 has to be applied for creation
of any SPV by or on behalf of JIL.
104.1.The other clauses in CA permitting creation of sub-lease
could hardly be applied for en bloc transfer of land to the SPVs, as
proposed in the resolution plan. The referred Clauses 4.3(d) and 4.3(e)
D were essentially meant for creation of sub-leases when the land given to
the concessionaire for development, or part thereof, was to be sub-leased
to the end-user/s. Even in that regard, the provisions were made for the
concessionaire to make a request to the land providing agency to execute
the lease-deed directly in favour of its subsidiaries, assigns or transferees;
and in case the agency and the concessionaire would consider it
E appropriate, tripartite agreement for sub-lease may be executed. Taking
all the relevant clauses together with the substance and purport of CA,
it is difficult to countenance that the proposed transfer to SPVs could be
treated as an ordinary sub-lease for which, no documentation involving
YEIDA would be required.
F 104.2.Although, as urged, the proposal to create two separate
SPVs may not be impermissible looking to the framework of the CA,
where different stipulations were made in relation to the land for
constructing Expressway with its allied facilities and the land for
commercial exploitation, respectively in Clauses 4.1 and 4.3 of the CA,
G but the question is as to the method of transfer of concessionaire’s rights
and obligations to such SPVs. That could only be in accordance with the
approval of YEIDA and with the execution of necessary tripartite
documents as envisaged by CA.
104.3. As observed hereinbefore, looking to the terms and purport
H of the CA, creation of two SPVs, one for Expressway and another for
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the remaining land for commercial development, is not altogether prohibited A
but then, it cannot be suggested by NBCC that such creation of SPVs
could be even without necessary documentation involving YEIDA. In
this regard, YEIDA seems to be right in its contentions that such
documentation is even otherwise required for avoiding any ambiguity
about the rights and obligations and also for itself (YEIDA) to properly
B
monitor the functioning of SPVs, each of which would stand in the
capacity of concessionaire and would be carrying the rights and obligations
under the CA.
104.4. For what has been discussed above, we need not delve
into the decision of this Court in MCGM (supra), where the statutory
provision itself required prior approval of the local body before dealing C
with its properties through lease or by creation of any other interest.
Though in the present case, there is no such statutory embargo but for
that matter, all the terms of the Concession Agreement cannot be
forsaken. Any alteration in the essentials of the Concession Agreement
would require the consent of YEIDA. D
104.5. The Adjudicating Authority (NCLT), while disapproving the
stipulations in the resolution plan whereby documentation for such transfer
was sought to be avoided, proceeded to order execution of such
documents. According to YEIDA, this modification has no commercial
effect and therefore, has rightly been ordered by NCLT. Although this E
modification, prima facie, does not appear to be having any commercial
effect, for it being only a matter of proper documentation but, interlaced
with this process of documentation are the other stipulations, which do
impact the commercial terms of the resolution plan, particularly those
relating to the amount of additional compensation, if payable.
F
105. With the observations foregoing, we may now take up another
important aspect of the objections, which relates to the provisions in the
resolution plan towards the amount of additional compensation, if payable.
105.1. Concisely put, as per the resolution plan, the contingent
liability concerning additional amount of land acquisition compensation is G
proposed to be dealt with in the manner that in the event any such amount
of additional compensation is to be paid, YEIDA would collect the same
from the end-users; and as regards the land of Expressway, such additional
compensation shall be payable by YEIDA because YEIDA will be the
end-user on getting ownership of the land of Expressway after expiry of
the concession period. NBCC has justified these propositions on various H
788 SUPREME COURT REPORTS [2021] 12 S.C.R.

A grounds as noticed hereinabove. YEIDA takes serious exception to them
and particularly to the stipulation that additional compensation in regard
to the land of Yamuna Expressway would be payable by it. The
Adjudicating Authority has made two-fold modifications in this regard.
In paragraph 120 of the impugned order dated 03.03.2020, the
Adjudicating Authority has said that to iron out creases and to make the
B
resolution plan viable, it would direct that the plan shall be read to mean
that YEIDA has a right to collect acquisition cost through the SPVs
concerned. On the other hand, concerning the Expressway land, the
Adjudicating Authority has provided in paragraph 122 of the impugned
order that the resolution plan would be read to mean that it is left open to
C both the parties to have proper recourse before competent forum when
the time comes for payment of additional compensation. In the submissions
of YEIDA, such modifications were necessary to make the plan compliant
with the rights and obligations under the CA.
105.2. We find the prescriptions in the resolution plan in regard to
D the contingent liability of additional compensation to be questionable on
more than one count.
106. The question is yet to be finally determined as to whether
such a liability towards additional amount of compensation rests with the
corporate debtor JIL or with YEIDA, because the arbitral award made
E in favour of JIL is the subject matter of challenge in the Court. However,
the contingency was required to be provided in the plan in case liability
would be ultimately fastened on the corporate debtor JIL. It has not
been suggested that any such bifurcation of liability, qua the land under
Expressway on one hand and other parcels on the other, is a subject
matter of the arbitration proceedings. However, going by the terms of
F the CA, prima facie, we are unable to find any indication therein that the
liability for compensation with reference to the land under Expressway
is not of the concessionaire. In any case, while making a provision for
meeting with this contingent liability of additional amount of compensation,
the resolution applicant could not have decided of its own that there will
G not be any liability of the concessionaire or its assigns towards the land
under Expressway.
106.1. It appears that while proposing to create two different SPVs,
the resolution applicant stumbled on an idea that the liability for additional
compensation as regards Expressway land could be simply deflected to
H YEIDA with reference to the fact that YEIDA will get this land back
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after 36 years; and reflected this idea by way of the questioned proposition A
in the resolution plan. The Adjudicating Authority has chosen to leave
this issue open, for being litigated at the appropriate time and before the
competent forum. In our view, such a prescription as regards Expressway
land amounts to alterations of the material terms of CA and cannot be
made without the consent of YEIDA. This aspect could have only been
B
disapproved.
106.2. Similarly, the resolution applicant, of its own, could not have
decided that end-user would mean sub-lessee and thereby deflect even
collection of the amount towards this liability on YEIDA and that too
when YEIDA was not going to be a party in creation of any sub-lease.
The structuring of these propositions regarding contingent liability turns C
out to be wholly illogical, apart from being at loggerheads with the terms
of the Concession Agreement.
106.3. It needs no great deal of discussion to find that the said
aspect concerning the provision for additional compensation, if not
approved on material terms, is of significant commercial impact. Even D
the other modification by the Adjudicating Authority, that YEIDA shall
have a right to collect acquisition cost through SPVs concerned, carry
their own commercial implications. These are not the terms which could
be taken up for modification without disturbing the financial proposal of
the resolution plan. While these prescriptions could not have been E
approved, in our view, the Adjudicating Authority could not have entered
into any process of modification. The only course open for the
Adjudicating Authority (NCLT) was to send the plan back to the
Committee of Creditors for reconsideration.
107. Apart from the aforesaid, the reliefs and concessions as sought F
for by the resolution applicant in relation to YEIDA in Clauses 4, 14 and
27 of Schedule 3 are also required to be disapproved. We are unable to
countenance the proposition that by way of a resolution plan, it could be
enjoined upon an agency of the government like YEIDA to give up or
withdraw from a pending litigation. Similarly, extinguishment of existing
liability qua YEIDA is not a relief that could be given to the resolution G
applicant for askance. For the same reason, the resolution applicant cannot
seek extension of time period of the Concession Agreement by way of a
clause of ‘relief’ in the resolution plan without the consent of a
governmental body like YEIDA.
H
790 SUPREME COURT REPORTS [2021] 12 S.C.R.

A 108. Before concluding on this point for determination where we
have accepted the major parts of the objections of YEIDA, we may, in
fairness to all the parties concerned, reiterate that despite stating its
objections, YEIDA has consistently maintained before the NCLT as also
before this Court82 that it does not stand to oppose the resolution plan
only for the sake of opposition; rather it would like the plan to succeed
B
but, it has a public duty to ensure that the framework under CA is
preserved and else, it would be ready to do everything within its power
to ensure that the plan is a success. Thus, it would not be out of place to
add a sanguine hope that being the owner of the land in question and
public authority, YEIDA, who had envisaged and promoted the entire
C project, would, in future dealing with the matter, act with caution and
circumspection, while earnestly reflecting upon the practical impact of
its propositions/decisions on various stakeholders, including the
homebuyers.
109. For what has been discussed hereinabove, we are constrained
D to hold that the stipulations in the resolution plan, as regards dealings
with YEIDA and with the terms of Concession Agreement, have rightly
not been approved and the stipulations in question, when not being
consented to by YEIDA, are required to be disapproved. Further, in the
cumulative effect of the stipulations which have not been approved, the
only correct course for the Adjudicating Authority was to send the plan
E back to the Committee of Creditors for reconsideration.
Point D
Treatment of the debt of dissenting financial creditor ICICI Bank
Limited
F 110. Now, we need to enter into another area of major dispute,
which relates to the objections of a dissenting financial creditor, ICICI
Bank Limited.
111. For dealing with the issue concerning dissenting financial
creditor, we need to look closely at the relevant prescriptions in the
G resolution plan of NBCC. As noticed, in Schedule 2 of the resolution
plan, detailed steps are mentioned for acquisition of control of the corporate
debtor and implementation of the resolution plan. Steps 6A and 6B relate
to the institutional financial creditors. The preceding steps, in their
chronology, are (1) incorporation of NBCC SPV and acquisition of the
82
H vide paragraphs 47.2, 99 and 99.8 (supra)
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corporate debtor by the resolution applicant through that SPV; (2) A
incorporation of Expressway SPV by the corporate debtor and transfer
of Yamuna Expressway to that SPV and securitisation of toll cash flow;
(3) payment of unpaid CIRP costs; (4) payment of total operational debt;
and (5) incorporation of Land Bank SPV. The sixth step is divided in two
parts, being Step 6A concerning upfront payment to the institutional
B
financial creditors and 6B concerning treatment of institutional financial
creditors for the remaining amount. In the second part of Step 6B, specific
stipulations are contained as regards the dissenting financial creditors.
For comprehension of the gamut of such prescriptions, we may reproduce
Steps 6A and 6B in the resolution plan as under: -
“STEP 6A: UPFRONT PAYMENT TO THE INSTITUTIONAL FINANCIAL C
CREDITOR
1. Part of the Admitted Financial Debts of the Institutional Financial
Creditors shall be settled to an extent of INR [Fresh Debt- 2,000]
Cr by making upfront Payment of ~ INR [Fresh Debt - (less)
2,000] Cr by the Expressway SPV, to be incorporated by the D
Corporate Debtor under Step 2 above. No prepayment penalty
shall be payable to the Institutional Financial Creditors, in the event
of any upfront payment of debt of as provided above.
2. In this regard, it is clarified that upon payment of upfront amount
aggregating to INR [Fresh Debt - (less) 2,000] Cr to the E
Institutional Financial Creditors, their charge over the Yamuna
Expressway and toll cash flow shall be automatically released,
without any further deed or act by the parties.
“STEP 6B: TREATMENT OF INSTITUTIONAL FINANCIAL CREDITORS
FOR THE REMAINING AMOUNT F
After upfront payment is made to the Institutional Financial
Creditors as contemplated under Step-6A above, the remaining
Admitted Financial Debt due to the Institutional Financial Creditors
shall be settled in its entirety in the following manner.
G
Conversion of part of Admitted Financial Debt (due to
Institutional Financial Creditors) into equity shares of the
Corporate Debtor and subsequent reduction of share capital
to extinguish the shareholding of Institutional Financial Creditors
in the Corporate Debtor in entirety;
H
792 SUPREME COURT REPORTS [2021] 12 S.C.R.

A Transfer of 100% shareholding of Land Bank SPV from the
Corporate Debtor to the Institutional Financial Creditors;
Transfer of 100% shareholding of Expressway SPV from the
Corporate Debtor to the Institutional Financial Creditors for a
consideration equal to their then outstanding debt to be paid by
B way of settlement of the outstanding debt to the same extent;
and
It is also proposed that the Resolution Applicant shall enter into:
(i) a management agreement with the Land Bank SPV (to be
owned by the Institutional Financial Creditors) for the purpose
C of monetizing the land held by the Land Bank SPV for an
initial tenure of 5 years subject to a fixed/success-based fee
to be mutually agreed between the Institutional Financial
Creditors and the Resolution Applicant. Detailed terms and
conditions of such management agreement, including any
D escrow mechanism may be mutually agreed between the
Institutional Financial Creditors and the Resolution Applicant.
Additionally, the Resolution Applicant reserves its first right to
buy back the land held by the Land Bank SPV, at the then
prevailing market rate.

E (ii) an operations & maintenance agreement with the Expressway
SPV (to be owned by the Institutional Financial Creditors) to
operate and maintain the Expressway for a tenure of 5 years
subject to a fee to be mutually agreed between the Institutional
Financial Creditors and the Resolution Applicant. Detailed terms
and conditions of such O&M agreement, including any escrow
F mechanism may be mutually agreed between the Institutional
Financial Creditors and the Resolution Applicant.
We have structured the transaction in a tax efficient manner to
the best of our knowledge. However, in the event any income tax
liability or goods and services tax (GST) liability, arises in future
G on account of transfer of land parcels, same shall be borne by the
Institutional Financial Creditors in a pro rata manner without any
recourse, express or implied, to the Resolution Applicant.
As per IBC, Dissenting Financial Creditors are required to be
paid a minimum of amounts in the nature of liquidation value due
H to them in terms of Sections 30(2) and 53 of the IBC. However,
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as per the amendment to the CIRP Regulations on 31 December A
2017, the requirement for disclosing the Liquidation Value of a
corporate debtor undergoing resolution to the resolution applicants
has been dispensed with and accordingly, the Liquidation Value
for the Corporate Debtor is currently not available with us.
However, as per our estimate, the liquidation value owed to the
B
Dissenting Financial Creditors, in terms of Sections 30 and 53 of
the IBC read with Regulation 38 of the CIRP Regulations is
expected to be nil.;
However, in the event the Dissenting Financial Creditors are
entitled to some amount in the nature of liquidation value in terms
of Sections 30 and Section 53 of the IBC read with Regulation 38 C
of the CIRP Regulations, then the Dissenting Financial Creditors
would be provided the liquidation value owed to them in terms of
Section 30(2) and Section 53 of the IBC read with Regulation 38
of the CIRP Regulations in the form of proportionate share in the
equity of the Expressway SPV and transfer of certain land parcels D
belonging to the Corporate Debtor. For avoidance of doubt it is
clarified that on account of the transfer of equity and transfer of
land parcels in favour of Dissenting Financial Creditors as
stipulated above there will be a corresponding decrease in the
equity and area of land parcels being transferred to the Institutional
Financial Creditors (through the Land SPV) who vote in favour E
of the Plan. Further the Resolution Applicant shall have the sole
discretion to determine the location of the land parcels to be
transferred to the Dissenting Financial Creditors and the value of
such land parcels being transferred shall be same as that proposed
under this Resolution Plan for the Institutional Financial Creditors F
who vote in favour of the Plan.
Provided further that the Dissenting Financial Creditors shall bear
the stamp duty, registration costs, and other applicable taxes
including goods and services tax (GST) involved in the transfer of
land parcels in their favour as stipulated hereinabove. G
Notwithstanding anything contained in this Resolution Plan, the
Dissenting Financial Creditors shall neither be entitled to nor shall
they receive any other amounts other than the amounts due to
them in the nature of liquidation value as stipulated hereinabove.”
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794 SUPREME COURT REPORTS [2021] 12 S.C.R.

A 111.1. Thus, the proposal in the resolution plan is to the effect that,
if the dissenting financial creditors would be entitled to some amount in
the nature of liquidation value in terms of Sections 30 and Section 53 of
the IBC read with Regulation 38 of the CIRP Regulations, they would
be provided such liquidation value ‘in the form of proportionate share
in the equity of the Expressway SPV and transfer of certain land
B
parcels belonging to the Corporate Debtor’.
112. The dissenting financial creditor of JIL, namely, ICICI Bank
Limited, took exception to the stipulations aforesaid and submitted before
the Adjudicating Authority that being a dissenting financial creditor, it
was entitled to receive cash payment as per the liquidation value in terms
C of Section 30(2)(b) of the Code read with Regulation 38(1)(b) of the
CIRP Regulations; and providing for land and equity in the proposed
SPVs in lieu of the requisite payment was entirely impermissible. These
objections were countered by IRP and NBCC with the submissions that
it was nowhere provided in the scheme of the Code and CIRP Regulations
D that payment of liquidation value to the dissenting financial creditor has
to be in cash. It was also submitted that when mode of discharge of
obligation towards dissenting financial creditor was not envisaged only
by way of cash payment, money or other valuable thing delivered to
discharge the obligation would be construed as “payment”, fulfilling the
requirement of Section 30(2) of the Code. It was also submitted that
E when the assenting financial creditors were not being paid in cash, any
such payment to the dissenting financial creditors would cause prejudice
to the rights of the assenting financial creditors. As noticed, the
Adjudicating Authority rejected the stand so taken by IRP and NBCC
and observed that all the provisions and specifications of the Board made
F it clear that payment to dissenting financial creditors means payment of
the amount; and it cannot be argued that the payment could also be in a
manner other than cash. The Adjudicating Authority also rejected the
contention made with reference to the treatment assigned to the assenting
financial creditors while observing that a person agreeing might agree
for anything but the same may not be acceptable to the person disagreeing.
G Accordingly, the Adjudicating Authority (NCLT) did not approve the
proposal in the resolution plan as regards treatment of the dissenting
financial creditors.
112.1. However, after disapproving, the Adjudicating Authority
proceeded on the lines that this objectionable part of the resolution plan
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could be modified without altering the basic structure of the plan. Having A
said so, the Adjudicating Authority proceeded to modify the resolution
plan in the manner that the resolution applicant shall pay to the dissenting
financial creditors the amount, that was receivable in terms of Section
53 of the Code, in twelve monthly instalments together with interest with
other stipulations, as contained in paragraph 103 of its order, which we
B
have reproduced in paragraph 46.4 hereinbefore. This part of the order
of the Adjudicating Authority has been challenged by NBCC as also by
IRP in their respective appeals. The assenting financial creditors, including
IDBI Bank and the assenting homebuyers have also supported this
challenge. Their submissions have been countered by the dissenting
financial creditor ICICI Bank as also by the erstwhile director of the C
corporate debtor.
113. We may now summarise the essential contents of extensive
submissions made by the parties in challenge to this part of the order of
the Adjudicating Authority, while avoiding repetition of the same contention
by different parties. D
113.1. It has been strenuously contended on behalf of the IRP that
the Adjudicating Authority has acted wholly without jurisdiction in
modifying the terms of the resolution plan that was approved by 97.36%
of the voting share of the Committee of Creditors. It is submitted that
the resolution plan in question is duly compliant with the requirements of E
Section 30 of the Code and if the Adjudicating Authority was at all of the
view that the plan did not meet with any particular requirement, it could
have only sent it back to CoC to consider the proposed modifications, so
as to afford an opportunity to the resolution applicant to modify the plan
and to the CoC to reconsider and vote upon the same. It is submitted
that the Adjudicating Authority, by itself, could not have made any F
modification in the resolution plan, particularly on any commercial aspect
of the plan which remains exclusively within the domain of the CoC.
113.1.1. It has also been submitted on behalf of IRP that in the
meeting of CoC dated 28.11.2019, ICICI Bank did not raise any objection
to the mode of payment and only objected to the amount provided by the G
resolution applicant and that being the position, it could not have raised
any objection at a later stage.
113.1.2. It is further submitted that the requirements in Section
30(2)(b) of the Code stress upon the ‘value’ a dissenting financial creditor
H
796 SUPREME COURT REPORTS [2021] 12 S.C.R.

A is entitled to receive but, it has nowhere been provided that the manner
of payment has to be in cash; rather the manner of payment has been
left to be specified by the Board and the Board has also not specified
that such payment has to be in cash only.
113.1.3. Further, according to IRP, if the word “payment” is given
B a prescriptive meaning, it would result in clause (b) of sub-section (2) of
Section 30 prescribing the manner of distribution and that would amount
to amending the word “creditor” in sub-section (4) of Section 30. It is
submitted that in the scheme of the Code, dissenting financial creditors
are bound to accept the manner of distribution in the resolution plan as
approved by the majority of 66% or more of the voting share in the CoC
C and if they are not held so bound, the provisions permitting the CoC to
take decisions with requisite majority would be rendered nugatory.
113.2. The resolution applicant NBCC has also made long ranging
submissions in challenge to the directions in paragraph 103 of the order
of the Adjudicating Authority while defending the terms and stipulations
D in the resolution plan. It is submitted that Step 6B in the resolution plan
has been formulated in due compliance of the requirements of Section
30(2) of the Code and Regulation 38(1) of the CIRP Regulations. It is
stated in its written submissions that the requirements of law are duly
satisfied as follows:
E “3. Thus, the requirements of law have been met in the following
manner:
a. Payment of liquidation value in terms of payment of
proportionate share in the Land Bank SPV and Expressway SPV;
and
F
b. the payment to the Dissenting Financial Creditors shall be
made in terms of Regulation 38 of the CIRP Regulations and
further states that on account of the payments to the Dissenting
Financial Creditors in the form of proportionate equity in the
Expressway SPV and transfer of certain land parcels, there would
G be corresponding decrease in the equity and land parcels being
transferred to the lenders who vote in favour of the plan.”
113.2.1. As regards the expression “payment” for the purpose of
Section 30(2) of the Code, the meaning of this term stated in Black’s
Law Dictionary (9th Edition) has been referred. Further, reliance is
H placed on the decisions of this Court in the case of Pioneer Urban
JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 797
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(supra), Himachal Pradesh Housing and Urban Development A
Authority and Anr. v. Ranjit Singh Rana: (2012) 4 SCC 505; and on
the decision of the Court of Appeal for the 6th Circuit, USA in the case
of Samuel Katkin and Doris Katkin v. Commissioner of Internal
Revenue: 570 F.2d 139 as also on a decision of the High Court of
Calcutta wherein, a decision of the Court of Appeal of England in White
B
v. Elmdene Estates Ltd.: 1959 ALL ER 605 has been relied upon.
With reference to the Dictionary meaning and the cited decisions, the
contention has been that “payment” means the discharge of an obligation
by delivery of money or its equivalent; and the expression “payment” is
not restricted to delivery of money or legal tender only.
113.2.2. It is argued that Section 8 of the Code, as relied upon by C
ICICI Bank, uses the term “payment” to denote the payment of amounts
that are “operational debts” before commencement of the insolvency
resolution process, whereas the same term is used under Section 30(2)
to denote the payment under a resolution plan. The language employed
under Section 8(2)(b) of the Code includes payment by way of electronic D
transfer or by cheque. On the other hand, Section 30(2) of the Code is in
relation to payment under a resolution plan, and does not in any manner
stipulate the mode of payment.
113.2.3. It is also contended that the word ‘payment’ is required
to be interpreted with reference to its context and placement; and to E
support the submissions on contextual interpretation, reliance is placed
on the decisions in Commissioner of Income Tax, Madhya Pradesh
& Bhopal v. Shrimati Sodra Devi: AIR 1957 SC 832; Kolkata
Metropolitan Development Authority v. Gobinda Chandra Makal
and Anr.: (2011) 9 SCC 207; Indian Handicrafts Emporium and
Ors. v. Union of India and Ors.: 2003 (7) SCC 589; CIT, Bangalore F
v. Venkateswara Hatcheries (P) Ltd.: (1999) 3 SCC 632; and Union
of India v. Sankalchand Himatlal Sheth and Anr.: (1977) 4 SCC
193.
113.2.4. It has also been submitted that the context in relation to
the word “payment” needs to be examined in terms of the object and G
purpose of resolution of insolvency and not in terms of recovery of debt;
and in the light of the fact that for the purpose of insolvency resolution,
a resolution plan may provide for various ways of settlement of claims.
On the scheme of the Code and object and purpose of resolution, the
decisions in ArcelorMittal and Swiss Ribbons (supra) have been referred. H
798 SUPREME COURT REPORTS [2021] 12 S.C.R.

A Regulation 37(1) of the CIRP Regulations has also been referred wherein
it is provided that a resolution plan may provide for securities in exchange
of claims. It is also submitted that limiting the word “payment” only to
mean cash would defeat the purpose of resolution and would rather
incentivise dissent. It is submitted that such mode of payment by cash
should not be read in the statute, when not provided therein. The decision
B
of this Court in the case of State through Central Bureau of
Investigation v. Parmeshwaran Subramani and Anr.: (2009) 9 SCC
729 has been referred.
113.2.5. It has also been submitted that the “value” under Section
53 is only a guiding factor for the CoC to exercise its commercial wisdom
C and the reference to “value” in Section 53 does not mean that the
dissenting financial creditor has to be paid such value only in cash. It is
also submitted that the liquidation value is not known to the resolution
applicant and there is no requirement of mentioning the liquidation value
in the resolution plan. It is pointed out that earlier, sub-clauses (j) and
D (k) of Regulation 36(2) provided for inclusion of liquidation value of the
corporate debtor and liquidation value due to the operational creditors as
part of information memorandum, but these clauses were deleted w.e.f.
31.12.2017 and the resolution applicant is not given access to the
liquidation value of the corporate debtor. It is also submitted that as per
the decision in Maharashtra Seamless Ltd. (supra), there is no
E requirement for a resolution applicant to match the liquidation value of a
corporate debtor. It has been vehemently contended that all the amounts
being raised or made available to NBCC are going to be utilised for
construction of homes and any requirement of payment in cash would
be detrimental to the object of completing the construction on time, which
F would cause prejudice to the homebuyers. It is also submitted that
‘payment in kind’ is accepted under banking norms and in this regard, it
is also indicated that on an earlier occasion, the objector ICICI Bank
itself had accepted land-debt swap as a method of payment for discharge
of the debt of JIL.
G 113.2.6. Apart from above, NBCC has also referred to its affidavit
filed during the course of hearing while submitting that the admitted debt
of ICICI Bank is INR 304.1 crores which is 1.31% of total financial
debt and as per the final statement available, the proportionate liquidation
value payable to this bank would be about INR 238.84 crores. Thereafter,
particulars of the parcels of land proposed to be offered to ICICI Bank
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and their estimated value as also the estimated value of equity in A
Expressway have been stated to suggest that adequate provision is being
made for payment of debt of this bank while indicating that the bank
would also be entitled to its proportionate share under Step 6A of the
resolution plan.
113.3. The assenting financial creditor, IDBI Bank, has also B
supported the submissions aforesaid. The additional parts of its
submissions are that ICICI Bank is using its dissent to obtain an advantage
over the assenting financial creditors, by seeking to be paid in cash purely
by virtue of dissent. It is also submitted that resolution plan was approved
by 97.36% of the voting share of the creditors in CoC in its commercial
wisdom after assessing the viability and feasibility of the resolution plan; C
and if the other institutional financial creditors also wanted to receive
their money, they would have simply voted for liquidation which would
have deprived thousands of homebuyers of any chance of getting their
homes. It is also submitted that if cash payment is considered to be the
only mode of payment available to the dissenting financial creditors, it D
would incentivise the financial creditors to go for dissent, leading to more
liquidations and fewer resolutions and thereby defeating the theme and
spirit of the Code. It has also been submitted in the alternative that if at
all, this Court upholds the related part of the order of NCLT and permits
cash payment, the interests of the assessing financial creditors need to
be safeguarded and such payment should not result in any dilution or E
reduction in the amount payable to the assenting financial creditors.
114. While opposing the submissions so made and supporting the
modification of the resolution plan by NCLT, it has been emphatically
argued on behalf of the dissenting financial creditor, ICICI Bank, that
the resolution plan in question had been non-compliant with the F
requirements of law and had it not been amended to provide for payment
of the amounts admittedly owed to it by the corporate debtor, the only
course would have been of rejection of the plan; and that would have
jeopardised the entire resolution process carried out for more than two
years under exceptional circumstances and would have pushed the G
corporate debtor to liquidation, much to the disappointment of
homebuyers.
114.1. With reference to Section 30(2)(b) of the Code and
Regulation 38(1)(b) of the CIRP Regulations, it is submitted that as per
the statutory mandate, a resolution applicant is required to pay a minimum H
800 SUPREME COURT REPORTS [2021] 12 S.C.R.

A of liquidation value [in terms of Section 53(1) of the Code] to the dissenting
financial creditors in priority over the assenting financial creditors; and if
a resolution plan does not provide for this mandatory payment in priority,
the same cannot be approved.
114.2. It is submitted that, admittedly, the corporate debtor owed
B an amount of INR 304.1 crores to ICICI Bank as on the insolvency
commencement date; and this bank, holding 1.3% voting share in the
CoC, voted against the resolution plan proposed by NBCC and therefore,
came to be categorised as a dissenting financial creditor. Consequently,
this bank has the right and entitlement to be paid, and in priority over the
assenting financial creditors, the amount against its dues, which shall be
C not less than the amount payable in accordance with Section 53(1) of
the Code, that is, the liquidation value; and this payment could only be
made in terms of cash and not by any other mode or method.
114.3. It is contended that Section 53 contemplates the proceeds
from the sale of the liquidation assets to be utilised to pay the dissenting
D financial creditors and there is no such conceivable possibility that the
assets of a corporate debtor would be liquidated in any other consideration,
apart from cash. The payment, for the purpose of Section 30(2)(b) of
the Code, would only be in terms of money or a legal tender; and it is
entirely impermissible for a resolution applicant to pay such liquidation
E value to the dissenting financial creditor in kind, unless the latter accepts
such form of payment. Various decisions on the process of interpretation
have been referred on behalf of the objector bank including those in
Sankalchand Himatlal Sheth (supra) and Rathi Khandsari Udyog
and Ors. v. State of Uttar Pradesh and Ors.: (1985) 2 SCC 485.

F 114.4. It is further submitted that in the resolution plan, the treatment
of the dissenting financial creditors is inferior to the assenting financial
creditors inasmuch as the latter is being provided an upfront payment of
INR 300 crores, whereas the former is not provided with any cash at all.
Such treatment defeats the purpose of Section 30(2)(b) of the Code,
which has been amended to protect the interests of the dissenting financial
G creditors.
114.5. Yet further, it is submitted that the presumption of NBCC
that the liquidation value towards the dissenting financial creditors shall
be nil is baseless; and the treatment of dissenting financial creditors in
the resolution plan is vague and incapable of precise valuation as it is
H based on speculation rather than current market figures.
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114.6. While questioning the valuation suggested in the resolution A
plan, it is submitted that valuation of the land proposed to be transferred
to the Land Bank SPV is INR 5001 crores which is based on future
potential. On the other hand, the valuations conducted by the IRP comes
at INR 2509 crores and by the others equals to INR 3643 crores which
is significantly less than the value arrived at by NBCC. The treatment
B
under the plan also mentions that the land so transferred shall carry with
it the liabilities attached and the dissenting financial creditor shall bear
such uncertain and unquantified liabilities. This, it is submitted, raises a
doubt as to whether this provision even satisfies the liquidation value
payable to the dissenting financial creditors.
114.7. It is further submitted that the contention of NBCC, that C
the intent of the legislature while using the word “amount” cannot be
restricted to only payment in cash, does not have any basis in law. ICICI
Bank submits that even a look at the language of Section 8 of the Code
makes it clear that when it comes to the requirement of payment in
relation to corporate insolvency resolution, the same has to be in monetary D
terms. It is submitted that once the language of a statute is clear, the
meaning of the provisions cannot be altered by judicial interpretation.
114.8. It is further submitted that the purpose of guaranteeing
liquidation value to the dissenting financial creditors is to protect their
interests so as to make sure that they are not in a worse position than E
they would have been in the event of liquidation but, the treatment provided
in the resolution plan for dissenting financial creditors is done in a way
that they get punished for their dissent.
114.9. It is further submitted that once the resolution plan is put
forth before the Adjudicating Authority for its approval, judicial mind is F
applied to see as to whether such plan fulfils the mandatory requirements
under the Code, which involves firstly, compliance with Section 30(2) of
the Code; secondly, whether the plan is fair and equitable and balances
the interests of all the stakeholders; and thirdly, whether the plan maximises
the value of assets. Such approval of NCLT is never a formality, but a
necessity. According to the objector bank, the Adjudicating Authority, G
while modifying the resolution plan, has made sure that the modifications
do not alter the basic structure of the plan and hence, has not violated
the principle of judicial review. Therefore, the contention that NCLT has
acted beyond its jurisdiction and has overridden the commercial wisdom
of CoC is incorrect. H
802 SUPREME COURT REPORTS [2021] 12 S.C.R.

A 114.10. It is also submitted that just because ICICI Bank has
voted against the approval of both the resolution plans, it does not mean
that the intention of the Bank would be the liquidation of the corporate
debtor. Such contention of NBCC furthers its mala fide intentions and
is placed only to undermine the dissentient bank.
B 115. The submissions so made on behalf of the dissenting financial
creditor bank have also been supported by the erstwhile director of the
corporate debtor JIL and JAL. It is submitted that the proposition in the
resolution plan to satisfy the claim of the dissenting financial creditors in
the form of share and equity or transfer of land parcels is not in conformity
with the requirements of Section 30(2)(b) of the Code. It is also submitted
C that proposing to satisfy the claim of the dissenting financial creditors by
a mode other than monetary payment is tantamount to reading the word
‘equivalent’ in the relevant provision, which is entirely impermissible in
law. The decision of this Court in the case of Dadi Jagannadham v.
Jammulu Ramulu and Ors.: (2001) 7 SCC 71, has been referred. It
D is also submitted that reliance of NBCC on Regulation 37 of the CIRP
Regulations, to justify the manner in which dissenting financial creditors
are to be paid, is misplaced because instead of Regulation 37, the relevant
provision which needs consideration is Regulation 38(1)(b), as it is directly
related to Section 30(2)(b)(ii) of the Code. It is, therefore, maintained
that the resolution plan, as regards prescription for the dissenting financial
E creditors, being violative of the requirements of law, could not have been
approved.
116. Having examined the rival submissions with reference to the
law applicable in relation to the treatment of the debt of dissenting financial
creditor in CIRP under the Code, we find the objections taken by the
F dissenting financial creditor in the present case fully justified; and the
interpretation suggested by the IRP, the resolution applicant and the
assenting financial creditor cannot be accepted.
117. An overview of the Insolvency and Bankruptcy Code, 2016
gives the basic idea that even while the avowed objects of the Code are
G towards insolvency resolution in a time bound manner for maximisation
of value of assets of the corporate debtors and balance of interests of all
the stakeholders, the core provisions of the Code, a comparatively new
legislation, have already undergone several amendments from time to
time. In fact, in Pioneer Urban (supra), this Court has recognised the
H
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legislature’s right to experiment when coming to the economic legislation A
like the Code, while observing as under: -
“The Legislature’s right to experiment in matters economic
15. In Swiss Ribbons, this Court was at pains to point out,
referring, inter alia, to various American decisions in paras 17 to
24, that the legislature must be given free play in the joints when B
it comes to economic legislation. Apart from the presumption of
constitutionality which arises in such cases, the legislative
judgement in economic choices must be given a certain degree of
deference by the courts. In para 120 of the said judgment, this
Court held: (SCC p. 112) C
“120. The Insolvency Code is a legislation which deals
with economic matters and, in the larger sense, deals with the
economy of the country as a whole. Earlier experiments, as
we have seen, in terms of legislations having failed, “trial” having
led to repeated “errors”, ultimately led to the enactment of the D
Code. The experiment contained in the Code, judged by the
generality of its provisions and not by so-called crudities and
inequities that have been pointed out by the petitioners, passes
constitutional muster. To stay experimentation in things
economic is a grave responsibility, and denial of the right to
experiment is fraught with serious consequences to the nation. E
We have also seen that the working of the Code is being
monitored by the Central Government by Expert Committees
that have been set up in this behalf. Amendments have been
made in the short period in which the Code has operated, both
the code itself as well as to subordinate legislation made under F
it. This process is an ongoing process which involves all
stakeholders, including the petitioners.”
It is in this background that the constitutional challenge to
the Amendment Act will have to be decided.”
118. A few aspects of the vast variety of amendments to IBC G
have been noticed hereinbefore and are being dealt with in this judgment,
to the extent relevant for the issues involved. One part of such
amendments relates to Section 30, with which we are concerned in this
point for determination. As noticed, the earlier clause (b) of sub-section
(2) of Section 30 of the Code required that the resolution plan should
H
804 SUPREME COURT REPORTS [2021] 12 S.C.R.

A provide for payment of debts of operational creditors, which should not
be less than the amount to be paid to the operational creditors in the
event of liquidation. The treatment of various classes of creditors in the
scheme then existing had been a matter of debate at various levels and
in several decisions. It acquired attention of the legislature that a balance
was required to be brought about in treatment of different creditors and
B
‘critical gaps’ were noticed in the corporate insolvency framework,
including those in the treatment of dissenting financial creditors. This led
to the introduction of Bill No. XXVI of 2019, being the Insolvency and
Bankruptcy Code (Amendment) Bill, 2019, in the Rajya Sabha in July
2019. The Statement of Objects and Reasons for this Bill, giving a
C reasonable insight as to what was sought to be achieved, reads as under:-
“STATEMENT OF OBJECTS AND REASONS
The Insolvency and Bankruptcy Code, 2016 (the Code) was
enacted with a view to consolidate and amend the laws relating to
reorganization and insolvency resolution of corporate persons,
D partnership firms and individuals in a time-bound manner for
maximization of value of assets of such persons, to promote
entrepreneurship, availability of credit and balance of interests of
all the stakeholders including alteration in the order or priority of
payment of Government dues and to establish an Insolvency and
E Bankruptcy Board of India.
2. The Preamble to the Code lays down the objects of the
Code to include “the insolvency resolution” in a time bound manner
for maximization of value of assets in order to balance the interests
of all the stakeholders. Concerns have been raised that in some
F cases extensive litigation is causing undue delays, which may
hamper the value maximization. There is a need to ensure that
all creditors are treated fairly, without unduly burdening
the Adjudicating Authority whose role is to ensure that the
resolution plan complies with the provisions of the Code.
Various stakeholders have suggested that if the creditors were
G treated on an equal footing, when they have different pre-insolvency
entitlements, it would adversely impact the cost and availability of
credit. Further, views have also been obtained so as to bring clarity
on the voting pattern of financial creditors represented by the
authorized representative.
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3. In view of the aforesaid difficulties and in order to fill A
the critical gaps in the corporate insolvency framework, it
has become necessary to amend certain provisions of the
Insolvency and Bankruptcy Code. The Insolvency and Bankruptcy
Code (Amendment) Bill, 2019, inter alia, provides for the
following, namely:-
B
(a) to amend clause (26) of section 5 of the Code so as to
insert an Explanation in the definition of “resolution plan” to clarify
that a resolution plan proposing the insolvency resolution of
corporate debtor as a going concern may include the provisions
for corporate restructuring, including by way of merger,
amalgamation and demerger to enable the market to come up C
with dynamic resolution plans in the interest of value maximization;
(b) to amend sub-section (4) of section 7 of the Code to
provide that if an application has not been admitted or rejected
within fourteen days by the Adjudicating Authority, it shall provide
the reasons in writing for the same; D

(c) to amend sub-section (3) of section 12 of the Code to
mandate that the insolvency resolution process of a corporate
debtor shall not extend beyond three hundred and thirty days from
the insolvency commencement date, which will include the time
taken in legal proceedings, in order to prevent undue delays in the E
completion of the Corporate Insolvency Resolution Process.
However, if the process, including time take in legal proceedings,
is not completed within the said period of three hundred and thirty
days, an order requiring the corporate debtor to be liquidated under
clause (a) of sub-section (1) of section 33 shall be passed. It is F
clarified that the time taken for the completion of the corporate
insolvency resolution process shall include the time taken in legal
proceedings;
(d) to insert sub-section (3A) in section 25A of the Code to
provide that an authorized representative under sub-section (6A) G
of section 21 will cast the vote for all financial creditors he
represents in accordance with the decision taken by a vote of
more than fifty per cent. of the voting share of the financial
creditors he represents, who have cast their vote, in order to
facilitate decision making in the committee of creditors, especially
when financial creditors are large and heterogeneous group; H
806 SUPREME COURT REPORTS [2021] 12 S.C.R.

A (e) to amend sub-section (2) of section 30 of the Code
to provide that –
(i) the operational creditors shall receive an amount
that is not less than the liquidation value of their debt or
the amount that would have been received if the amount to
B be distributed under the resolution plan had been
distributed in accordance with the order of priorities in
section 53 of the Code, whichever is higher;
(ii) the financial creditors who do not vote in favour of
the resolution plan shall receive an amount that is not less
C than the liquidation value of their debt;
(iii) the provisions shall apply to the corporate insolvency
resolution process of a corporate debtor-
(A) where a resolution plan has not been approved or rejected by
the Adjudicating Authority; or
D
(B) an appeal is preferred under section 61 or 62 or such appeal is
not time barred under any provision of law for the time being in
force; or
(C) where a legal proceeding has been initiated in any court against
the decisions of the Adjudicating Authority in respect of a resolution
E
plan;
(f) to amend sub-section (1) of section 31 of the Code to clarify
that the resolution plan approved by the Adjudicating Authority
shall also be binding on the Central Government, any State
Government or any local authority to whom a debt in respect of
F
payment of dues arising under any law for the time being in force,
such as authorities to whom statutory dues are owed, including
tax authorities;
(g) to amend sub-section (2) of section 33 of the Code to clarify
that the committee of creditors may take the decision to liquidate
G the corporate debtor, in accordance with the requirements provided
in sub-section (2) of section 33, any time after the constitution of
the committee of creditors under sub-section (1) of section 21
until the confirmation of the resolution plan, including at any time
before the preparation of the information memorandum.
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4. The Bill seeks to achieve the above objectives.” A
(emphasis in bold supplied)
118.1. The aforesaid Bill ultimately took the shape of the Insolvency
and Bankruptcy Code (Amendment) Act, 2019, being Act 26 of 2019.
This Amendment Act of 2019 not only provided that operational creditors
would receive an amount that is not less than liquidation value of their B
debts or the amount that would have been received if the amount to be
distributed under the resolution plan had been distributed in accordance
with the order of priorities in Section 53 but, in addition to that, this
amendment ensured that the dissenting financial creditors would also be
paid a certain minimum amount, which would not be less than the amount C
to be paid in the event of liquidation; and the Explanation clarified that
the distribution in accordance with clause (b) would be fair and equitable
to all the creditors. The purport and connotation of this amendment came
to be tersely explained by this Court in the case of Essar Steel as under:-
“128. When it comes to the validity of the substitution of Section D
30(2)(b) by Section 6 of the Amending Act of 2019, it is clear that
the substituted Section 30(2)(b) gives operational creditors
something more than was given earlier as it is the higher of the
figures mentioned in sub-clauses (i) and (ii) of sub-clause (b)
that is now to be paid as a minimum amount to operational
creditors. The same goes for the latter part of sub-clause (b) E
which refers to dissentient financial creditors. Ms Madhavi Divan
is correct in her argument that Section 30(2)(b) is in fact a
beneficial provision in favour of operational creditors and
dissentient financial creditors as they are now to be paid a
certain minimum amount, the minimum in the case of operational F
creditors being the higher of the two figures calculated under sub-
clauses (i) and (ii) of clause (b), and the minimum in the case of
dissentient financial creditor being a minimum amount that was
not earlier payable. As a matter of fact, pre-amendment, secured
financial creditors may cramdown unsecured financial creditors
who are dissentient, the majority vote of 66% voting to give them G
nothing or next to nothing for their dues. In the earlier regime it
may have been possible to have done this but after the
amendment such financial creditors are now to be paid the
minimum amount mentioned in sub-section (2). Ms Madhavi
Divan is also correct in stating that the order of priority of payment H
808 SUPREME COURT REPORTS [2021] 12 S.C.R.

A of creditors mentioned in Section 53 is not engrafted in sub-section
(2)(b) as amended. Section 53 is only referred to in order
that a certain minimum figure be paid to different classes
of operational and financial creditors. It is only for this
purpose that Section 53(1) is to be looked at as it is clear
that it is the commercial wisdom of the Committee of
B
Creditors that is free to determine what amounts be paid
to different classes and sub-classes of creditors in accordance
with the provisions of the Code and the Regulations made
thereunder.
129. As has been held in this judgment, it is clear that
C Explanation 1 has only been inserted in order that the
Adjudicating Authority and the Appellate Tribunal cannot
enter into the merits of a business decision of the requisite
majority of the Committee of Creditors. As has also been
held in this judgment, there is no residual equity jurisdiction in the
D Adjudicating Authority or the Appellate Tribunal to interfere in
the merits of a business decision taken by the requisite majority of
the Committee of Creditors, provided that it is otherwise in
conformity with the provisions of the Code and the Regulations,
as has been laid down by this judgment.”
E (emphasis in bold supplied)
118.2. As noticed, the decision of this Court in Essar Steel was
delivered on 15.11.2019. A few days after this decision, i.e., on 28.11.2019,
amendment was carried out in clause (1) of Regulation 38 of the CIRP
Regulations, which has direct co-relation with the aforesaid amended
F clause (b) of Section 30(2) of the Code. By way of this amendment of
Regulation 38(1), the priority for the amount payable came to be specified,
not only to the operational creditors but also to the dissenting financial
creditors over their assenting counterparts. The aforesaid amendments
and the expositions of this Court in Essar Steel make it clear that the
interests of dissenting financial creditors are duly taken care of, while
G providing for the minimum amount they are entitled to and, for that matter,
in priority over the assenting financial creditors.
118.3. Even when the legislature has filled in the gaps in IBC,
particularly qua the dissenting financial creditors; and their interests are
sought to be taken care of by making it mandatory to provide for the
H payment of their dues in terms of liquidation value, another grey area
JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 809
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has surfaced in the present case. It is concerning the mode of translating A
such assured returns to reality. Putting it differently, there is no doubt
that now the dissenting financial creditors shall get payment and that
too, in priority over the assenting financial creditors but, the question
remains about the mode of fulfilling such obligations towards dissentient
financial creditors.
B
119. In the present case, the resolution plan has, in the first place,
stated that according to the estimate of the resolution applicant, the
liquidation value to be received by the dissenting financial creditors was
likely to be nil but then, has provided for discharge of any likely obligation
towards them in the manner that they shall be provided a proportionate
share in the equity of Expressway SPV and land parcels but not any C
payment in terms of money. The dissenting financial creditor, ICICI Bank,
is thoroughly dissatisfied with such a prescription whereby its dues shall
be satisfied by a mode other than direct payment in cash. On the other
hand, the IRP, the resolution applicant and even the assenting financial
creditor would assert that such a prescription satisfies all the essential D
requirements of Section 30(2)(b) and Regulation 38(1)(b). Both these
provisions essentially use the expressions “payment”; “the amount to be
paid”; “the amount payable”; and “shall be paid”. ICICI Bank asserts
that these expressions refer only to the payment in monetary terms,
whereas the submissions are countered with the assertions that the term
“payment” is with reference to discharge of obligation and that could be E
brought about by any of the methods permissible in law and not necessarily
by way of payment in terms of money alone. This takes us to the principles
of interpretation and assigning appropriate meaning to the expressions
used.
119.1. The principles in the decisions cited by the learned counsel F
for the contesting parties are not of much debate and hence, we need
not elaborate on every cited decision. The contextual interpretation remains
one of the fundamental guiding principles; and the relevant observations
in paragraph 54 of the decision in Sankalchand Himatlal Sheth (supra),
which have been referred to by the contesting parties, would suffice for G
the purpose, which read as under: -
“54. Now, it is undoubtedly true that where the language of an
enactment is plain and clear upon its face and by itself susceptible
to only one meaning, then ordinarily that meaning would have to
be given by the Court. In such a case the task of interpretation H
810 SUPREME COURT REPORTS [2021] 12 S.C.R.

A can hardly be said to arise. But language at best is an imperfect
medium of expression and a variety of significations may often lie
in a word or expression. It has, therefore, been said that the words
of a statute must be understood in the sense which the legislature
has in view and their meaning must be found not so much in a
strictly grammatical or etymological propriety of language, nor in
B
its popular use, as in the subject or the occasion on which they are
used and the object to be attained. It was said by Mr. Justice
Holmes in felicitous language in Town v. Eisner that “a word is
not a crystal, transparent and unchanged; it is the skin of a living
thought and may vary greatly in colour and content according to
C the circumstances and the time in which it is used”. The words
used in a statute cannot be read in isolation: their colour
and content are derived from their context and, therefore,
every word in a statute must be examined in its context.
And when I use the word ‘context’, I mean it in its widest sense
“as including not only other enacting provisions of the same statute
D
but its preamble, the existing state of the law, other statutes in
pari materia and the mischief which – the statute was intended
to remedy”. The context is of the greatest importance in
the interpretation of the words used in a statute. “It is quite
true”, pointed out Judge Learned Hand in Helvering v. Gregory
E “that as the articulation of a statute increases, the room for
interpretation must contract; but the meaning of a sentence may
be more than that of the separate words, as a melody is more
than the notes, and no degree of particularity can every obviate
recourse to the setting in which all appear, and which all collectively
create”. Again, it must be remembered that though the words
F
used are the primary, and ordinarily the most reliable, source of
interpreting the meaning of any writing, be it a statute, or contract,
or anything else, it is one of the surest indexes of a mature and
developed jurisprudence not to make a fortress out of the dictionary,
but to remember that a statute always has some purpose or object
G to accomplish, whose sympathetic and imaginative discovery, is
the surest guide to its meaning. The literal construction should not
obsess the Court, because it has only prima facie preference, the
real object of interpretation being to find out the true intent
of the law maker and that can be done only by reading the
statute as an organic whole, with each part throwing light
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on the other and bearing in mind the rule in Heydon’s case A
which requires four things to be “discerned and
considered” in arriving at the real meaning : (1) what was
the law before the Act was passed; (2) what was the mischief
or defect for which the law had not provided; (3) what
remedy Parliament has appointed; and (4) the reason of
B
the remedy. There is also another rule of interpretation which is
equally well settled and which seems to follow as a necessary
corollary, namely, where the words, according to their literal
meaning “produce an inconsistency, or an absurdity or
inconvenience so great as to convince the Court that the intention
could not have been to use them in their ordinary signification”, C
the Court would be justified in “putting on them some other
signification, which, though less proper, is one which the Court
thinks the words will bear”. Vide River Wear Commissioners v.
Admson. It is in the light of these principles of interpretation that
I must proceed to consider what is the true meaning and effect of
D
clause (1) of Article 222: whether it permits transfer of a Judge
from one High Court to another, irrespective of his consent.”
(emphasis in bold supplied)
119.2. There is no doubt on the principles that, depending upon
context, the same word may be used in different parts of the statute E
with different meanings, as observed in Kolkata Metropolitan
Development Authority (supra); and the same word in the context of
one provision of the enactment may convey one meaning and another
meaning in different context, as pointed out in Venkateswara Hatcheries
(supra). However, it is also fundamental that construction of a statute
leading to absurdity is required to be rejected and if more than one meaning F
or interpretation is possible, the one which favours the objects of the
statute ought to be adopted. When it comes to the world of business and
commerce, the observations of the majority in Rathi Khandsari Udyog
(supra) are pertinent where, in paragraph 34 of the decision, this Court
observed that in the legislations pertaining to the world of business and G
commerce, the dictionary to be referred to is the dictionary of the
inhabitants of that world. It is also a settled principle of statutory
interpretation that the statute is required to be read as a whole; and for
that matter, it would be rather pre-elementary to say that for understanding
the meaning and connotation of a particular expression in a particular
H
812 SUPREME COURT REPORTS [2021] 12 S.C.R.

A statutory provision, the provision itself is required to be read as a whole.
When we look at the ‘context’ for the purpose of a particular expression,
which has otherwise not been defined in the statute elsewhere, a
comprehension of the sentence or phrase in which the expression occurs
coupled with the frame of the provision taken as a whole and, on the
broad sphere, the entire statute with its objects and intents would lead to
B
the true construction of the expression under reference; of course, while
also keeping in view the other relevant principles, including the basics
that natural and ordinary meaning of a word or expression is not ignored,
unless there be any reason therefor.
120. Keeping the principles aforesaid in view, we may embark
C upon the interpretation required in this case, of the expressions used in
the relevant provisions of Section 30(2)(b) of the Code and Regulation
38(1)(b) of the CIRP Regulations.
120.1.The expression “payment” occurs in Section 30(2) of the
Code, which lays down certain basics which the resolution professional
D has to find in the resolution plan before he presents the same to the
Committee of Creditors. As per clauses (a) and (b) of sub-section (2) of
Section 30, the resolution plan ought to provide for: (a) payment of
insolvency resolution process costs; and (b) payment of debts of
operational creditors as also dissenting financial creditors. Such payment
E has to be in the manner specified by the Board and the resolution process
costs rank top in priority. This provision, read with Regulation 38(1),
makes it clear that the next priority is of operational creditors who are
followed by the dissenting financial creditors. The question is as to what
is intended by these provisions and as to how the action of “payment” is
to be performed?
F
120.2.The referred observations in the case of Pioneer Urban
that the expression “payment” is elastic enough to include “recompense”
and “repayment” had been with reference to following passages in the
case of Ranjit Singh Rana (supra): -

G “13. Webster Comprehensive Dictionary (International Edn.) Vol.
2 defines “payment”:
“Payment.- (1) the act of paying.
(2) Pay; requital; recompense.”

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14. The Law Lexicon by P. Ramanatha Aiyar, 2nd Edn. Reprint, A
inter alia, states:
“payment is defined to be the act of paying, or that which is
paid; discharge of a debt, obligation or duty; satisfaction of claim;
recompense; the fulfilment of a promise or the performance of an
agreement; the discharge in money of a sum due”. B
15. The word “payment” may have different meaning in different
context but in the context of Section 37(1)(b); it means
extinguishment of the liability arising under the award. It signifies
satisfaction of the award. The deposit of the award amount into
the court is nothing but a payment to the credit of the decree- C
holder. In this view, once the award amount was deposited by the
appellants before the High Court on 24-5-2001, the liability of
post-award interest from 24-5-2001 ceased. The High Court, thus,
was not right in directing the appellants to pay the interest @ 18%
p.a. beyond 24-5-2001.”
D
120.3.We need not enter into the other observations regarding the
words “pay” and “payment”, made in the context of different statutes
and different provisions but, we may profitably look at the meaning
assigned to these expressions in the relevant dictionaries and lexicons.
In Black’s Law Dictionary (Tenth Edition, page 1309), the verb “pay”,
which leads to the derivative “paid” is defined as follows: - E

“Pay, vb. (13c) 1. To give money for a good or service that one
buys; to make satisfaction <pay by credit card>. 2. To transfer
money that one owes to a person, company, etc. <pay the utility
bill>. 3. To give (someone) money for the job that he or she does;
to compensate a person for his or her occupation; COMPENSATE F
(1) <she gets paid twice a month>. 4. To give (money) to someone
because one has been ordered by a court to do so <pay the
damages>. 5. To be profitable; to bring in a return <the venture
paid 9%>.”
On the same page in Black’s Law Dictionary (Tenth Edition, page G
1309), the expression “payment” is defined in the following terms: -
“Payment. (14c) 1. Performance of an obligation by the delivery
of money or some other valuable thing accepted in partial or full
discharge of the obligation. 2. The money or other valuable thing
so delivered in satisfaction of an obligation.” H
814 SUPREME COURT REPORTS [2021] 12 S.C.R.

A 120.4.In the Law Lexicon by P. Ramanatha Aiyar (Fifth Edition,
Volume 3 at page 3796), several connotations of the expression “payment”
have been mentioned. We may reproduce the relevant part thereof as
under: -
“Payment is defined to be the act of paying, or that which is paid;
B discharge of a debt, obligation, or duty; satisfaction of claim;
recompense; the fulfilment of a promise or the performance of an
agreement; the discharge in money of a sum due.
In legal contemplation, payment is the discharge of an obligation
by the delivery of money or its equivalent, and is generally made
C with the assent of both parties to the contract.”
120.5.Significantly, the “payment”, as envisaged by clause (b) of
Section 30(2) as also Regulation 38(1), is of the “amount”. The word
“amount” in its noun form is defined in Webster’s Third New International
Dictionary (at page 72) in the parlance of accounting as under: -
D “3 accounting: a principal sum and the interest on it”
121. Taking up the provisions under debate, it is but clear that as
per sub-section (2) of Section 30, the resolution plan ought to provide for
certain payments; and first of that is the insolvency resolution process
costs. An action of “payment” being that of discharge of an obligation
E by delivery of money or other valuable thing accepted in discharge of
obligation, one could at once notice that proposing to pay the insolvency
resolution process costs in any form other than money would be an
exercise in absurdity. Such a payment has to be in terms of money alone.
Then comes clause (b) whereby and whereunder, the resolution plan is
F to provide for payment of debts of operational creditors and the minimum
quantum is specified in terms of ‘amount to be paid’ or ‘amount that
would have been paid’ with reference to the event of liquidation and/or
distribution in terms of Section 53 of the Code. Here again, if any
proposition is suggested for payment of debts of operational creditors by
way of something other than money, and that too in the form of equities
G in the other corporate entities to be carved out of the corporate debtor,
that would not be shunning off the debts of operational creditors but
would only be keeping them glued to the corporate debtor or its successor
entities. Such a method of payment could least be a step towards
insolvency resolution. The same features, with necessary variations,
would apply to the second part of clause (b) of sub-section (2) of Section
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30 in regard to the dissenting financial creditors. The operational creditors A
as also the dissenting financial creditors are to be paid in terms of the
amount to be determined with reference to Section 53 of the Code and
are to be paid in priority, as described in Regulation 38(1) of the CIRP
Regulations.
121.1.Therefore, when, for the purpose of discharge of obligation B
mentioned in the second part of clause (b) of Section 30(2) of the Code,
the dissenting financial creditors are to be “paid” an “amount” quantified
in terms of the “proceeds” of assets receivable under Section 53 of the
Code; and the “amount payable” is to be “paid” in priority over their
assenting counterparts, the statute is referring only to the sum of money
and not anything else. In the frame and purport of the provision and also C
the scheme of the Code, the expression “payment” is clearly descriptive
of the action of discharge of obligation and at the same time, is also
prescriptive of the mode of undertaking such an action. And, that action
could only be of handing over the quantum of money, or allowing the
recovery of such money by enforcement of security interest, as per the D
entitlement of the dissenting financial creditor.
121.2.We would hasten to observe that in case a dissenting
financial creditor is a secured creditor and a valid security interest is
created in his favour and is existing, the entitlement of such a dissenting
financial creditor to receive the “amount payable” could also be satisfied E
by allowing him to enforce the security interest, to the extent of the
value receivable by him and in the order of priority available to him.
Obviously, by enforcing such a security interest, a dissenting financial
creditor would receive “payment” to the extent of his entitlement and
that would satisfy the requirement of Section 30(2)(b) of the Code 83. In
any case, that is, whether by direct payment in cash or by allowing F
recovery of amount via the mode of enforcement of security interest,
the dissenting financial creditor is entitled to receive the “amount payable”
in monetary terms and not in any other term.
122. The indications as emerging from the text of other provisions
as also from the scheme of the Code, are to the effect that the resolution G
applicant, with approval of resolution plan, is to proceed on a clean slate
83
Though it is obvious, but is clarified to avoid any ambiguity, that the “security
interest” referred herein for the purpose of money recovery by dissenting financial
creditor would only be such security interest which is relatable to the “financial debt”
and not to any other debt or claim. H
816 SUPREME COURT REPORTS [2021] 12 S.C.R.

A rather than carrying the cargo of such debts which need to be satisfied
(to the extent required) and then jettisoned. The expressions “payment”
and “amount to be paid”, when read in the context and on the canvass of
the objects and purposes of the Code, in our view, these expressions
only convey their ordinary meaning, as understood in ordinary business
parlance, that is, delivery of money alone; and there is no reason to
B
construe these expressions to be conveying the meaning of ‘delivery of
money or its equivalent’.
123. A good length of arguments on behalf of IRP are devoted to
the stand that, what CoC considers in sub-section (4) of Section 30 is
the manner of distribution proposed; and such manner of distribution
C ought to be fair and equitable, as explained in Explanation 1 to clause
(b) of Section 30(2). It is contended that if legislature intended the word
“payment” to have a prescriptive meaning, that is, payment by way of
payment of money only, there would have been no need to add
Explanation 1 to clause (b) which provides that distribution under clause
D (b) to operational and dissenting financial creditors shall be fair and
equitable because in such a case, the distribution would only mean a
crystallised sum of money with no room to test if distribution was fair
and equitable. The argument is, again, of stretching the plain words beyond
their real intent and meaning. The said Explanation is for removal of
doubts and for clarification that distribution in terms of clause (b) shall
E be fair and equitable to the creditors covered thereunder that is,
operational and dissenting financial creditors. This Explanation appears
to have been necessitated for the reason that quantification of the
minimum amount payable under clause (b) of Section 30(2) is in the
realm of certain guesswork or estimate with reference to the distribution
F envisaged by Section 53 of the Code. This Explanation cannot and
does not provide meaning to the expressions “payment” and “amount to
be paid”. These and other arguments of similar nature, could only be
rejected.
123.1. A submission made on behalf of IRP suggesting estoppel
G against the dissenting financial creditor for having not raised the issue in
the meeting of the Committee of Creditors also remains baseless. This
is for the simple reason that no estoppel could operate against the
statutory right of the dissenting financial creditor to receive payment in
terms of Section 30(2)(b) of the Code.

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123.2. The submission that commercial banks are permitted by A
the Banking Regulations Act, 1949 to swap the debt for land and equity
has its own shortcomings, rather shortfalls. The expressions “payment”
and “amount to be paid” and “amount payable” as occurring in Section
30(2) and Regulation 38(1) cannot be interpreted only for the purpose of
banks as financial creditors; the provisions refer to “financial creditors”
B
as such and it would be too far stretched to say that these expressions
may have different meanings for different financial creditors in the manner
that a financial creditor who could accept payment by any mode other
than money could be “paid” by that mode and the other financial creditors
who cannot accept anything except money shall be receiving payment
in cash. This kind of interpretation would not only be reading words but C
even phrases and provisos in the statutory provisions, which is entirely
impermissible.
123.3. Similarly, the suggestion that the Government and the
Governmental bodies, which are not permitted by law to swap debt with
equity or land will have to be paid by way of money and to that extent, D
the meaning of “payment” in the first part of clause (b) of Section 30(2)
will have contextually different meaning, is, again, seeking to provide
multiple sub-sects of the mode of payment, whereas no such differentiation
or classification is indicated in the provisions under reference or in any
other provision contained in the Code.
E
123.4.The suggestion about prejudice being caused to the assenting
financial creditors by making payment to the dissenting one has several
shortcomings. As noticeable, in the scheme of IBC, a resolution plan is
taken as approved, only when voted in favour by a majority of not less
than 66% of the voting share of CoC. Obviously, the dissenting sect
stands at 34% or less of the voting share of CoC. Even when the financial F
creditors having a say of not less than 2/3rd in the Committee of Creditors
choose to sail with the resolution plan, the law provides a right to the
remainder (who would be having not more than 34% of voting share)
not to take this voyage but to disembark, while seeking payment of their
outstanding dues. Even this disembarkment does not guarantee them G
the time value for money of the entire investment in the corporate debtor;
what they get is only the liquidation value in terms of Section 53 of the
Code. Of course, in the scheme of CIRP under the Code, the dissenting
financial creditors get, whatever is available to them, in priority over
their assenting counterparts. In the given scheme of the statutory
H
818 SUPREME COURT REPORTS [2021] 12 S.C.R.

A provisions, there is no scope for comparing the treatment to be assigned
to these two divergent sects of financial creditors. The submissions made
on behalf of assenting financial creditors cannot be accepted.
123.5.The other submissions and counters with reference to the
phraseology of Section 8 of the Code do not require much dilation because,
B the said provision essentially relates to the dues of an operational debtor
and the steps envisaged before commencement of insolvency resolution
process. Nevertheless, “payment” for the purpose of the said provision
is also of money transfer; and not by any other mode.
124. To sum up, in our view, for a proper and meaningful
C implementation of the approved resolution plan, the payment as envisaged
by the second part of clause (b) of sub-section (2) of Section 30 could
only be payment in terms of money and the financial creditor who chooses
to quit the corporate debtor by not putting his voting share in favour of
the approval of the proposed plan of resolution (i.e., by dissenting), cannot
be forced to yet remain attached to the corporate debtor by way of
D provisions in the nature of equities or securities. In the true operation of
the provision contained in the second part of sub-clause (ii) of clause (b)
of sub-section (2) of Section 30 (read with Section 53), in our view, the
expression “payment” only refers to the payment of money and not
anything of its equivalent in the nature of barter; and a provision in that
E regard is required to be made in the resolution plan whether in terms of
direct money or in terms of money recovery with enforcement of security
interest, of course, in accordance with the other provisions concerning
the order of priority as also fair and equitable distribution. We are not
commenting on the scenario if the dissenting financial creditor himself
chooses to accept any other method of discharge of its payment
F obligation but as per the requirements of law, the resolution plan ought to
carry the provision as aforesaid.
125. For what has been observed and held hereinabove, we have
no hesitation in rejecting the contentions urged in challenge to that part
of the decision of NCLT where the proposition in the resolution plan,
G concerning the method of meeting with the liability towards dissenting
financial creditors, has been disapproved. That part of the decision of
NCLT is unexceptionable and is approved.
126. However, as noticed, after disapproving the terms of the
resolution plan concerning dissenting financial creditors, the Adjudicating
H Authority proceeded on the assumption that the offending terms could
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be modified without changing the basic structure of the plan; and then A
proceeded to make such modifications by providing that payment shall
be made to the dissenting financial creditor bank in instalments. The
question is as to whether the Adjudicating Authority could have done
so? The answer is simply in the negative.
127. As noticed and held in Point A (supra), the Adjudicating B
Authority has no jurisdiction to enter into the commercial aspects of the
resolution plan and to interfere with the wisdom of the Committee of
Creditors. The terms as provided in the resolution plan for discharging
the obligations towards the dissenting financial creditors were clearly
and directly pertaining to the financial model proposed by the resolution
applicant and accepted by the requisite majority of the Committee of C
Creditors. The submissions made on behalf of the IRP in this regard are
correct that if the Adjudicating Authority was of the view that the plan
did not meet with any particular requirement, it could have only sent it
back to the CoC to consider the proposed modifications, so as to afford
an opportunity to the resolution applicant to modify the plan and to the D
CoC to reconsider and vote upon the same.
128. In other words, the Adjudicating Authority, of its own, could
not have made any modification in the resolution plan, particularly on
any commercial aspect thereof. The suggestions that in carrying out the
requisite modifications by the Adjudicating Authority, the basic structure E
of the resolution plan is not altered do not merit acceptance, particularly
because the terms taken up for modification by the Adjudicating Authority
belong to the thick of commercial aspects of the resolution plan; and any
alteration thereof goes to the very root of the financial model propounded
by the plan.
F
129. The upshot of the discussion foregoing is that though the
Adjudicating Authority has not erred in disapproving the treatment of
dissenting financial creditor like ICICI Bank in the resolution plan but,
has erred in modifying the terms of the resolution plan and in not sending
the matter back to the Committee of Creditors for reconsideration while
extending an opportunity to the resolution applicant to make the necessary G
modifications.
130. For what has been discussed and held hereinabove, we see
no reason to enter into the other area of suggestions and disputes
concerning the particular parcels of land being offered by the resolution
applicant to the objector bank. These aspects are rendered redundant H
820 SUPREME COURT REPORTS [2021] 12 S.C.R.

A once we have held that the payment envisaged by Section 30(2)(b) read
with Section 53 of the Code has to be in monetary terms and not in any
other mode.
Point E
Matters related with fixed deposit holders
B
131. As regards payment to the fixed deposit holders, it is noticed
that the resolution plan has provided for 100% upfront payment to the
fixed deposit holders whose claims were forming part of the admitted
financial debt in the following terms (Schedule 2 to the plan relating to
the steps for implementation): -
C
“VIII. STEP 7: PAYMENT TO FD HOLDERS
Following the Approval Date, the Admitted Financial Debt of the
FD Holders shall be settled by making 100% upfront payment of
their principal dues within 90 days from the Approval Date but
D after payment of the CIRP Cost and the Admitted Operational
Debt.
It is clarified that other than the Claims of FD Holders forming
part of the Admitted Financial Debt, no other payment shall be
made to any other FD Holder.”
E 132. It is also noticed from the minutes of CoC meeting dated
07.12.2019 that the authorised representative of the fixed deposit holders
made the submissions for honouring the claims received until the date of
approval of the resolution plan, which was recorded as under: -
“Payment to FD Holders: Authorised Representative (“AR”)
F of Fixed Deposit (“FD”) holders submitted to CoC that FD claims
have increased to INR 29 Crores as per the latest CoC
reconstitution dated 30.11.2019 and both the Resolution Applicants
have fixed the amount to FD holders at INR 28 Crores which
shall be paid on pro rata basis, therefore the principal amount to
FD holders shall be reduced proportionately. AR of FD holders
G requested CoC that all the claims received from FD holders till
the Resolution Plan approval date should be honored by the
Resolution Applicants to avoid any sort of litigation by FD holders.”
133. However, the NCLT, in paragraph 125 of its order has
proceeded to modify the said term of the resolution plan as approved by
H
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CoC and has provided that the resolution applicant shall make provision A
to clear even the dues of unclaimed fixed deposit holders when they
would make a claim and such a right will remain in force as long as they
were entitled to make a claim under the Companies Act, 2013.
134. The aforesaid modification of the terms of resolution plan
has been challenged by NBCC with the submissions that such directions B
of the Adjudicating Authority are wholly unjustified and are beyond the
mandate of this Court in Essar Steel (supra). In our view, the submissions
of NBCC deserve to be accepted.
135. In the scheme of the process for corporate insolvency
resolution, it is preliminarily provided in Section 13 of the Code that, C
after admission of an application for corporate insolvency resolution
process, the Adjudicating Authority, apart from declaring moratorium
and appointing an interim resolution professional, is also required to cause
a public announcement of the initiation of CIRP and ‘call for submission
of claims under Section 15’. As per Section 15, the material information
in the public announcement is to contain, inter alia, ‘the last date for D
submission of claims, as may be specified’. The IRP is enjoined with
several duties under Section 18 and as per clause (b) thereof, he is to
‘receive and collate all the claims submitted by the creditors to him,
pursuant to the public announcement made under sections 13 and
15’. CIRP Regulations make the position clearer still, where, by virtue E
of Regulation 12, a creditor is required to submit his claim with proof ‘on
or before the last date mentioned in the public announcement’; and
a creditor who fails to submit the claim within the stipulated time, may
yet submit the claim with proof ‘on or before the ninetieth day of the
insolvency commencement date’. As per Regulation 13, the resolution
professional concerned is to verify the claims within seven days of the F
last date of receipt of claims.
135.1.Due adherence to the timelines provided in the Code and
the related Regulations and punctual compliance of the requirements is
fundamental to the entire process of resolution; and if a claim is not
made within the stipulated time, the same cannot become a part of the G
Information Memorandum to be prepared by IRP and obviously, it would
not enter into consideration of the resolution applicant as also of the
Committee of Creditors. In the very scheme of the corporate insolvency
resolution process, a resolution applicant cannot be expected to make a
provision in relation to any creditor or depositor who has failed to make H
822 SUPREME COURT REPORTS [2021] 12 S.C.R.

A a claim within the time stipulated and the extended time as permitted by
Regulation 12. In Essar Steel (supra), while dealing with the topic
‘Extinguishment of Personal Guarantees and Undecided Claims’,
this Court disapproved that part of the NCLT judgment which held that
other claims, that might exist apart from those decided on merits by the
resolution professional and by the Adjudicating Authority/Appellate
B
Tribunal, could be decided in an appropriate forum in terms of Section
60(6) of the Code. This Court specifically held that a resolution applicant
cannot be made to suddenly encounter undecided claims after resolution
plan submitted by him has been accepted; and in the scheme of the
Code, all claims must be submitted to, and decided by, the resolution
C professional so that the resolution applicant could proceed on a fresh
plate. This Court, inter alia, held as under: -
“107. For the same reason, the impugned NCLAT judgment in holding
that claims that may exist apart from those decided on merits by
the resolution professional and by the Adjudicating Authority/
D Appellate Tribunal can now be decided by an appropriate forum
in terms of Section 60(6) of the Code, also militates against the
rationale of Section 31 of the Code. A successful resolution
applicant cannot suddenly be faced with “undecided” claims after
the resolution plan submitted by him has been accepted as this
would amount to a hydra head popping up which would throw into
E uncertainty amounts payable by a prospective resolution applicant
who would successfully take over the business of the corporate
debtor. All claims must be submitted to and decided by the resolution
professional so that a prospective resolution applicant knows
exactly what has to be paid in order that it may then take over and
F run the business of the corporate debtor. This the successful
resolution applicant does on a fresh slate, as has been pointed out
by us hereinabove. For these reasons, NCLAT judgment must also
be set aside on this count.”
135.2.It has not been the case of anyone that in the process in
G question, any of the requirements of Sections 13, 15 and 18 had not been
complied with. It has also not been anybody’s case that any claim made
by any fixed deposit holder within the stipulated time was not taken into
account by IRP.
136. In the given fact situation and in view of the law declared by
H this Court, we find no justification for the directions contained in paragraph
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125 of the order passed by NCLT. Those directions are required to be A
annulled.
Point F
Objections of the financial creditor of subsidiary of the corporate
debtor
B
137. Indisputably, the corporate debtor JIL owns 100% equity
shareholding in JHL which is having three operational hospitals in the
State of Uttar Pradesh. Substantial part of the shareholding of JHL is
pledged with its lenders. In the resolution plan, NBCC has proposed in
regard to JHL as follows: -
C
“Since, majority of shareholding of Jaypee Healthcare
Limited is already pledged to the lenders to the hospitals to secure
the indebtedness of Jaypee Healthcare Limited, it is proposed to
divest the entire shareholding of Jaypee Healthcare Limited by
inviting bids for the same and utilize the divestment funds for
settlement of outstanding debt obligations of Jaypee Healthcare D
Limited, without any additional payment by the Corporate Debtor.
In this regard, the pledge over shareholding of JIL (shares of
Jaypee Healthcare Limited held by JIL) created in favour of the
lenders of Jaypee Healthcare Limited shall stand released in terms
of this Resolution Plan immediately upon the approval of this E
Resolution Plan by the Adjudicating Authority. Such release would
inter alia be in consideration of the proposed repayment of the
outstanding debt of the lenders of Jaypee Healthcare Limited.
Such repayment would not include levy of any penalties or charges
including prepayment penalty, penal charges, etc. In furtherance
of the aforesaid objective the lenders of Jaypee Healthcare Limited F
shall not be entitled to deal with the assets of Jaypee Healthcare
Limited or adversely interfere with the continued business
operations of Jaypee Healthcare Limited in any manner
whatsoever including enforcement of any security created in their
favour by the Corporate Debtor or by Jaypee Healthcare Limited G
(pledge, mortgage, etc.), entering into operation and maintenance
agreements or any other agreements with any person which has
an effect of selling, leasing or otherwise disposing off the whole
or substantially the whole of the undertaking of Jaypee Healthcare
Limited, take any action which would otherwise require the consent
of the shareholders of Jaypee Healthcare Limited or take any H
824 SUPREME COURT REPORTS [2021] 12 S.C.R.

A other steps which may be contrary to the treatment proposed for
Jaypee Healthcare Limited under this Resolution Plan.
Further, the Resolution Applicant also reserves its right to cause
the Corporate Debtor to transfer its entire shareholding in Jaypee
Healthcare Limited into a trust. Such trust would be settled by the
B Corporate Debtor, the beneficiary of the trust would be the
Resolution Applicant and the trustee would be a professional entity
(to be appointed by the Resolution Applicant). The trust property
would comprise inter alia of the entire shareholding of the
Corporate Debtor in Jaypee Healthcare Limited.”
C 138. The objector YES Bank Limited, as being the financial creditor
of JHL, had raised objections as regards such stipulations and proposals
while asserting that the assets of its debtor JHL could not have been
dealt with in this resolution plan. The Adjudicating Authority, though took
up such objections for consideration but observed that the resolution
applicant NBCC and YES Bank having agreed for constitution of a
D committee to deal with the shares and assets of the subsidiary company,
this issue was not required to be discussed.
139. The objector YES Bank has taken exception to the aforesaid
part of the order impugned with the submissions that no such settlement
was drawn out with NBCC and the Adjudicating Authority has failed to
E consider the objections on rather incorrect assumptions. It is submitted
that the resolution plan interferes with the statutorily protected rights of
the lenders of JHL, who are effectively the third parties and not the
members of CoC of JIL. It is also submitted that the transfer of the
entire undertaking and business of JHL, a wholly-owned subsidiary of
F JIL, under the garb of sale of equity is not permissible as per the Section
18(f) read with its Explanation (b) and Regulation 37(a) of the CIRP
Regulations whereby, the resolution plan is only limited to the assets of
the corporate debtor. With reference to various decisions, including that
in the case of Vodafone International Holdings BV v. Union of India
and Anr.: (2012) 6 SCC 613, it is submitted that holding company
G does not own the undertaking or business of subsidiary company even if
it holds all the shares therein. It is also contended that the CIRP of JHL
must be independently conducted as the sale of business or undertaking
in the manner suggested by NBCC severely prejudices the rights of the
creditors of JHL to recover their legitimate dues. It is yet further submitted
H that the shares of JIL, the corporate debtor, are subject to the pledge
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created by them to secure the debts of JHL and the resolution plan A
cannot unilaterally extinguish the security interest provided to the lenders
of JHL, who are not the creditors of JIL and therefore, not the part of
the CoC of JIL. This objector bank submits that the resolution plan does
not account for the total debts incurred by JHL and the securities or
encumbrances, to the extent of 63.65% of the shares, as created by
B
JHL over its assets. It has, therefore, been prayed that this objector
bank be allowed to continue with its appeal before the Allahabad Bench
of NCLT against JHL and the portion of resolution plan dealing with
JHL and its assets be deleted.
139.1.It is noticed that without prejudice to the aforesaid and other
submissions, the objector YES Bank has given out its proposition for C
evolving a workable mechanism with certain stipulations in sub-paragraphs
“ff” and “gg” of paragraph 7 of the memo of appeal, which read as
under: -
“ff. Without prejudice to any of the above and the following legal
grounds raised in the present proceedings, the Appellant in the D
best interest of all the interested parties including the interests of
the Resolution Applicant and in spirit of reconciliatory approach is
still willing to work with the Resolution Applicant in finding a
working solution so that JHL assets can be monetized in a timely
manner. Provided, the Respondent No. 2 / Resolution Applicant E
is willing to accept the proposals and the safeguards as requested
by the Appellant. For brevity’s sake, the Appellant’s proposal for
a workable mechanism is set out in the Written Submissions filed
before the Ld. Adjudicating Authority, which is reiterated below:
(i) The lenders of JHL led by YBL will take all necessary F
preparatory measures required for finding a viable buyer to take
over the JHL units in a completely transparent manner.
(ii) To the above cause, JHL lenders shall be permitted to
prepare an information memorandum, seek bids from prospective
buyers, appoint independent, impartial and reputed investment G
bankers to run the process of JHL monetisation.
(iii) This is proposed to be done through fullest co-operation
from RP of JIL as well as Board and Management of JHL as
information and engagement will be critical to run an efficient and
effective sale process.
H
826 SUPREME COURT REPORTS [2021] 12 S.C.R.

A (iv) JHL lenders shall liaise with the IRP, Mr. Jain and share
the status of the steps periodically with IRP and NBCC.
(v) A Sale Committee to bet set up with participation of
lenders of JHL and NBCC, for sale of JHL;
(vi) The decision to accept the bid of a particular buyer
B shall be taken by a unanimous vote of NBCC and YBL (on behalf
of the lenders of JHL);
(vii) The sale process shall be finalised within a period on 3
months from the date of approval of the resolution plan by Hon’ble
NCLT and latest by June 30, 2020 and until such time rights of
C lenders of JHL vis-à-vis assets of JHL as well as pledge of JHL
Shares (held by JIL as investment) in favour of JHL lenders shall
be kept intact;
(viii) In the event of successful disinvestment of JHL, the
disinvestment funds shall be utilized for settlement of debt of JHL
D lenders in priority, in accordance with existing Resolution Plan;
(xi) During the period above, until June 30, 2020, there shall
be a moratorium on the rights of the JHL lenders to enforce its
securities held in JHL including the share pledge by JIL;
(x) Should the sale still not be finalised before June 30,2020,
E
for any reason whatsoever (including any delay due to legal
proceedings), then the moratorium over enforcement of pledged
shares as well as other assets of JHL, shall stand lifted; and
(xi) Thereafter, JHL lenders will have all rights to enforce
its securities against JHL to recover its outstanding dues including
F
but not limited to enforcement of pledge, and, or continuation of
CIRP against JHL.
gg. If the Respondent No. 2 is agreeable to accept the above
mechanism then the Appellant shall not press its remedies for
challenging the Resolution Plan. Failing which the entire Resolution
G Plan insofar as it relates to JHL Assets is required to be severed
and set aside.”
140. In response, it is submitted that as a resolution applicant,
NBCC is entitled to get the management of the corporate debtor on a
clean slate (as observed by this Court in the case of Essar Steel); and
H
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when NBCC under its plan is extinguishing all the contingent liabilities, A
disinvestment of JHL shares cannot be taken exception of. It has also
been submitted that in the resolution plan, it was made clear that NBCC
does not possess the expertise to run the operation of a healthcare
business and, therefore, seeks to divest the entire shareholding of JHL
to a third party and/or a trust who would have the requisite expertise to
B
deal with the requirements of healthcare business. It is also submitted,
with reference to Section 18(f)(v) of the Code, that the assets of the
corporate debtor include securities and shares held in any subsidiary;
and shares of a subsidiary company are held as the assets of the parent
company in its books, as held by this Court in the case of Vodafone
(supra). C
140.1.Apart from the above, NBCC has referred to the
proceedings before the Adjudicating Authority before passing of the order
dated 03.03.2020 and it is pointed out that the Adjudicating Authority, in
its order dated 04.02.2020 observed that a settlement may be reached
between NBCC and YES Bank and pursuant thereto, YES Bank and D
NBCC held a meeting on 06.02.2020 to discuss the mechanism for sale
of shares of JHL and thereafter, on 07.02.2020, a proposal for sale of
shares of JHL was given by YES Bank to which NBCC, in its email
dated 14.02.2020 stated that “NBCC is agreeable for constitution of
a committee which will take forward the disinvestment process of
JHL after approval of the resolution plan as submitted by NBCC.” E
Thus, according to NBCC, there has been an agreement between the
parties on the manner of sale to be carried out of JHL shares. This
apart, NBCC has also referred to the aforesaid proposal stated in the
memo of appeal and while reproducing the first part of the above-quoted
paragraph “gg”, has stated its acceptance of the proposal so made by F
YES Bank subject to the approval of resolution plan.
141. We have carefully examined the submissions made by the
parties. In the totality of circumstances of the case and the stance of
respective parties, when it is noticed that the aforesaid proposal of YES
Bank, as stated in sub-paragraphs “ff” and “gg” of paragraph 7 of the G
memo of appeal, is acceptable to NBCC, subject to approval of the
resolution plan, we do not find any reason to say anything further on this
score and would leave the parties to work out a viable solution in the
best interest of all the stakeholders; and for that purpose, the parties
concerned, if necessary, may seek appropriate orders from NCLT, as
regards mode and modalities of the process to be carried out. H
828 SUPREME COURT REPORTS [2021] 12 S.C.R.

A 142. In view of the above, we do not consider it necessary to
render any other finding in this point for determination except the
observation that the resolution plan essentially deals with the assets of
the corporate debtor JIL and not that of its subsidiary JHL. Differently
put, what the resolution plan deals with are the shares in JHL, which are
regarded as assets of the corporate debtor JIL. As observed, no further
B
comments are required and we leave this aspect of the matter at that
only.
Point G
Grievance of agreement holders
C 143. As regards certain transfers without proper agreement/sub-
lease deed and without consideration, the resolution applicant had
reserved a right in itself to cancel such instruments or term sheets without
any corresponding obligation to the counter party in the following terms
(Clause 21 Schedule 3 of the resolution plan): -
D “21. With respect to any alleged transfer of land parcels by the
Corporate Debtor to third parties without any proper agreement/
sub-lease deeds and where the consideration amount has not been
paid to the Corporate Debtor inter alia including the land parcels
listed in Annexure G, the Resolution Applicant reserve a right to
E cancel such instruments/agreements/term sheets and upon
cancellation the title in such land parcels will continue to be legally
vested in the Corporate Debtor without any liability/obligation to
the counter-party.”
144. The NCLT has observed that when an agreement is invalid
F and consideration has not been paid, no separate stipulation is required
to be made that such agreement could be cancelled. However, at the
same time, NCLT has also observed that even though such a clause has
been mentioned in the resolution plan, that did not mean that the agreement
holders have lost their right to seek remedy before the competent forum.
145. The agreement holders, while questioning this part of the
G
resolution plan in their appeal, have given the details of five term sheets/
agreements with the corporate debtor between 01.05.2017 to 08.08.2017
i.e., before the date of initiation of CIRP (09.08.2017). It is submitted
that those term sheets were rectified by CoC in its meetings dated
10.11.2017 and 28.11.2017 and upon assurances of IRP for external
H development and providing of other services, the appellants had made
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further part payment, in addition to the amounts already paid. It is further A
submitted that the resolution plan is contrary to Section 30(2)(e) of IBC
as the term sheets/agreements were found valid during the CIRP by the
CoC and they cannot become improper agreements overnight on the
mere saying of the resolution applicant. The grievance of the appellants
is that even after holding that the appellants have not lost their right to
B
seek remedy before a competent forum, the questioned Clause 21 (in
‘reliefs and concessions’) of the resolution plan was not modified by
NCLT. According to the appellants, the approved resolution plan carrying
such a clause purports to take away their rights without due process of
law in contravention of Article 300-A of the Constitution of India and
hence, is violative of Section 30(2)(e) of IBC. The appellants also submit C
that the Development Plan of the concerned area has not yet been
renewed by the Noida Authority and the status of the development is
also uncertain.
145.1.With these submissions, the appellants have stated their
prayer in the manner that they are willing to pay the balance amount D
within 1 year in respect of the property at C-1/E, Sector 133 Noida,
which is in their possession and to cancel the other 4 term sheets/
agreements relating to the land at Sector 151 Noida with adjustment of
the payments made therein towards the property at Sector 133 Noida;
and to execute the sale deed and get the master plan sanctions for the
next 5 years. Alternatively, the appellants pray for the refund of the E
amount deposited by them, to the tune of INR 24.03 crores approximately,
with appropriate interest.
146. Per contra, NBCC maintains that the resolution plan as
approved by CoC and the Adjudicating Authority is binding on all the
stakeholders including the appellants and in any case, the relief in question, F
as provided in the resolution plan, is limited to such instances where no
proper agreements/sub-lease deeds have been executed by the corporate
debtor with counter parties and therefore, Article 300-A of the
Constitution is not violated and the relief provided in the resolution plan
is not arbitrary or unfair. It is also submitted by NBCC that while dealing G
with the segment of ‘reliefs and concessions’, the Adjudicating Authority
has not passed any favourable order in regard to the said relief; and
even while granting the right to NBCC to cancel the agreement, has
kept intact the right of an affected party to seek remedy in a competent
forum.
H
830 SUPREME COURT REPORTS [2021] 12 S.C.R.

A 147. In our view, looking to the nature of dealings and the
propositions advanced by agreement holders, the observations made by
the Adjudicating Authority, in addendum to Clause 21 of ‘reliefs and
concessions’ in the resolution plan but, without encroaching upon the
commercial wisdom of CoC, only work towards viability of the plan
while extending a fair treatment to the agreement holders, by keeping
B
their right to seek remedy in a competent forum intact. The resolution
applicant, NBCC, also does not appear to be having any qualms about it.
148. Thus, in the overall scheme of the resolution plan, the
stipulation in question cannot be said to be unfair; and the observations
of the Adjudicating Authority in paragraphs 132 and 133 of the impugned
C order dated 03.03.2020 remain just and proper. No further orders are
required in this regard. This point stands determined accordingly.
Point H
Grievance of minority shareholders
D 149. The other set of objectors is of the non-promoter shareholders
of the corporate debtor, who are also referred to as the minority
shareholders. Their grievance is that the resolution plan does not deal
with their interests and they have not been provided with a fair exit
option. It is submitted that such non-promoter shareholders have invested
their hard-earned money in the equity of the corporate debtor much
E before initiation of CIRP; that they had made the investment on the
basis of the financial statements filed by the corporate debtor, suggesting
the valuation of various assets including the Expressway and other land
parcels; and the corporate debtor has adequate and appreciating assets
to take care of all the liabilities and interests of the stakeholders.
F 150. These shareholders have referred to a valuation report, said
to have been prepared by India Infrastructure Finance Co. Ltd., on
31.03.2017 suggesting that even after accounting for liabilities, net worth
of the corporate debtor was about INR 7,377 crores. It is submitted that
the IRP itself had valued the corporate debtor at INR 8,257 crores but
G NBCC is attempting to acquire the company for a meagre sum of INR
120 crores and extinguishing the entire public shareholding of the
corporate debtor by paying a sum of INR 1 crore in total, as against the
fair value per share at INR 56.68; and the offer of NBCC is
unconscionable, is against the principles of proportionality, results in
misappropriation of funds of these shareholders, and is being used as a
H device to enrich the resolution applicant at the cost of stakeholders.
JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 831
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150.1. It is also submitted that the plan is in contravention of A
Section 230 of the Companies Act, 2013, which provides for the power
to compromise or make arrangements with any creditor or member of a
company; that the minority shareholders, even if not a part of the CoC,
have a right to know and participate in any compromise or arrangement
which affects their rights; that they have a right to dissent with any
B
terms of the compromise or arrangement which affects their rights and
for that matter, they would be deemed to be dissenting shareholders,
who need to be provided a reasonable exit option or opportunity. It is
further submitted, while referring to the decision in Essar Steel (supra),
that the ultimate decision of what amount to pay may rest with the CoC,
but the decision should be made by taking into account the maximum C
value of the assets of the corporate debtor and after adequately balancing
the interests of all stakeholders including operational creditors.
150.2. These minority shareholders further contend that when
the intent of the IBC is to keep the corporate debtor as a going concern,
the action of delisting the public shareholding of the corporate debtor D
totally defeats the objective. It is also submitted that the resolution plan
has not been formulated in accordance with the procedure envisaged by
the Securities and Exchange Board of India (Delisting of Equity Shares)
Regulations, 200984 which require that an exit opportunity ought to be
provided for de-listing of shares from the stock exchange.
E
150.3. It is submitted that though the said shareholders were not
part of CoC and did not get the opportunity to attend the meetings of
CoC, they made all efforts to voice their concerns and even got issued
the notice dated 19.02.2020 to IRP and the resolution applicant but the
notice failed to evoke any response. According to these objectors, the
resolution plan, as approved by the NCLT, is not in accord with Regulation F
38(1A) of the CIRP Regulations and is contrary to the intent of IBC
inasmuch as it has failed to maximise the value of assets of corporate
debtor and to protect the interests of all the stakeholders. It is also
contended that the interests of all the stakeholders ought to have been
protected but the Adjudicating Authority has not even considered the G
matter relating to the interests of the minority shareholders.
150.4. With the aforesaid submissions, it has been prayed that
appropriate orders are required to safeguard the interests of minority

84
Hereinafter also referred to as ‘Delisting Regulations’. H
832 SUPREME COURT REPORTS [2021] 12 S.C.R.

A shareholders and the respondents deserve to be directed to device a
reasonable exit scheme for them whereby, they are given a price at
least as per the book value of shares at the time of initiation of CIRP or
an order be issued to swap the shares of existing minority shareholders
with the shares of NBCC.
B 151. The contentions so urged are opposed by NBCC with the
submission that these shareholders have, for the first time, approached
in appeal though they were aware of the proceeding before the
Adjudicating Authority, as is evidenced by the letter sent by their advocate
on 19.02.2020; and the issue has been raised at this stage only to create
unnecessary hindrances and to cause prejudice to the entire process.
C
151.1. As regards fairness of the treatment given to the minority
shareholders, it is submitted that the resolution plan provides an exit
option to the existing public shareholders at a price which is higher than
the liquidation value; and they are being paid an exit price of INR 1
crore, which is in contrast to the treatment being accorded to promoter
D
shareholders, whose shareholding is being extinguished and cancelled in
its entirety without any consideration.
151.2. It is submitted that the liquidation value as determined by
the valuers appointed by the IRP under the Code is approximately INR
17,876 crores (as per RBSA) and INR 17,658 crores (as per GAA),
E
whereas the total debt owed to financial creditors is approximately INR
23,247 crores. In the aforesaid scenario, according to NBCC, where the
minority shareholders are not entitled to any value, the resolution plan,
with offer of exit at a price of INR 1 crore, is neither unfair nor arbitrary.
151.3. It has further been submitted that in the scheme of IBC,
F
specific and novel method of insolvency resolution is provided wherein,
by way of amendment brought about by Act 26 of 2018 w.e.f. 06.06.2018,
the Explanation to Section 30(2)(e) has been inserted, providing for
deemed approval of shareholders and, therefore, the submissions on behalf
of the minority shareholders do not deserve consideration.
G
152. Having given anxious consideration to the rival submissions,
we are clearly of the view that objections sought to be taken by the
minority shareholders must fail.
153. It is noticed from the resolution plan that the Delisting
Regulations, as amended on 31.05.2018, have been duly taken note of;
H
JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 833
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and the step for delisting and extinguishment of existing shareholding is A
provided in Schedule 2 thereof, in the following terms: -
“IX. S TEP 8: DELISTING AND E XTINGUISHMENT OF E XISTING
SHAREHOLDING
1. As an integral part of the Resolution Plan, post implementation
B
of Step 1, the shares of the Corporate Debtor shall be de-listed, in
terms of SEBI (Delisting of Equity Shares) Regulations, 2009.
(“Delisting Regulations”), as amended by Amendment to
Delisting Regulations dated May 31, 2018, which prescribes that
the procedure under the Delisting Regulations are not applicable
for any delisting pursuant to an approved resolution plan under C
the Code, if:
(a) the resolution plan sets out a specific delisting procedure; or
(b) the resolution plan provides an exit option to existing public
shareholders at a price which is higher of the liquidation value (as
D
applied in the order of priority of claims prescribed under Section
53 of IBC) and the exit price being paid to the promoters.
In this regard, the Non-Promoter Shareholders (i.e. the public
shareholders) shall be paid an exit price aggregating to INR 1 Cr
and pursuant to the same, their shareholding shall be extinguished.
E
2. In terms of the definition of Public Shareholders under the
Delisting Regulations, Existing Promoters are specifically carved
out. Accordingly, simultaneous to the de-listing, the issued equity
share capital of the Corporate Debtor as held by the Existing
Promoters i.e. 84.70 Cr equity shares of face value of INR 10
F
(Rupees Ten each) shall be extinguished and cancelled in its entirety
without any consideration.
3. Extinguishment of shares of Corporate Debtor may be done
through Capital Reduction or selective Capital Reduction.
4. Extinguishment of shares of Corporate Debtor may be done G
through credit to Capital Reserve Account.
The equity shareholding of the Corporate Debtor post De-listing
and Capital Reduction shall be as follows:

H
834 SUPREME COURT REPORTS [2021] 12 S.C.R.

A

B

It cannot be said that the resolution plan is not compliant with the
C
requirements of Regulation 38(1A) of the CIRP Regulations.
153.1. As noticed, by way of Explanation to Section 30(2)(e) of
the Code, it has been made clear by the legislature that if any approval
of shareholders is required under the Companies Act, 2013 or any other
law for the time being in force for implementation of actions under the
D resolution plan, such approval shall be deemed to have been given and it
shall not be a contravention of that Act or law. The attempt on the part
of minority shareholders to raise objection against the resolution plan
simply flies in the face of this Explanation to Section 30(2)(e) of the
Code.
E 153.2. Needless to reiterate that in the scheme of IBC, only the
CoC is entrusted with the task of dealing with and approving the plan of
insolvency resolution; and the shareholders of a corporate debtor, who is
already reeling under debts, have not been provided any participation in
the insolvency resolution process. It goes without saying that in the case
F of a corporate debtor like JIL, if the process of liquidation is resorted to
under Chapter III of the Code, there is a very little likelihood of the
shareholders getting even dewdrops out of the waterfall of distribution
of assets, as delineated in Section 53 of the Code, where the preference
shareholders and equity shareholders stand last in the order of priority.
In the totality of circumstances, when the promoters’ shareholding is
G extinguished and cancelled in toto without any consideration, even nominal
exit price of INR 1 crore for minority shareholders cannot be termed as
unfair or inequitable. In any case, a decision in regard to the aforesaid
step in the resolution plan had been that of the commercial wisdom of
the Committee of Creditors and is not amenable to judicial review.
H
JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 835
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153.3. Reference to Section 230 of the Companies Act, 2013, A
which deals with power to compromise or make arrangements with
creditors and members is entirely inapt in the context of the present
case because no such proceedings for compromise or arrangements are
in contemplation. On the contrary, in the present case, the proceedings
of CIRP under the Code have reached an advanced stage with approval
B
of resolution plan by the CoC and the Adjudicating Authority.
153.4. Apart from the above, NBCC also appears right in
contending that once the resolution plan stands approved by the
Adjudicating Authority, the objecting shareholders, who did not even raise
any grievance before the Adjudicating Authority, cannot now, for the
first time, object to the arrangement arrived under the resolution plan, in C
view of Section 31 read with Section 238 of the Code which provide that
the approved resolution plan shall be binding on all stakeholders and that
the provisions of IBC shall prevail not only over the laws but also the
instruments having effect by virtue of any such law.
154. Viewed from any angle, in our view, it cannot be said that the D
resolution plan does not adequately deal with the interests of minority
shareholders. The grievances as suggested by these shareholders cannot
be recognised as legal grievances; and do not provide them any cause of
action to maintain their objections. The objections by the minority
shareholders stand rejected. E
Point I
Matters related with dissatisfied homebuyers of JIL
155. We may now take up the issues raised by a section of
homebuyers of JIL against the resolution plan of NBCC. For dealing F
with this segment of disputes, a bit of prelude concerning the status and
position of homebuyers in CIRP shall be apposite.
156. Not much of discussion is required to notice that the largest
block of stakeholders, who are likely to bear the brunt in the event of
liquidation of JIL and conversely, who are likely to find succor in case of
G
resolution of insolvency of JIL, is that of the homebuyers, who have
invested their hard-earned money in the projects of JIL. In the first two
rounds of litigation, they had been the focal point of consideration where
this Court invoked its powers under Article 142 of the Constitution of
India to ensure that the insolvency resolution process of JIL is taken
ahead within the discipline of IBC while obviating the likelihood of H
836 SUPREME COURT REPORTS [2021] 12 S.C.R.

A liquidation. As narrated in sufficient detail hereinbefore, during the
pendency of the case of Chitra Sharma, by the amendment of IBC
with insertion of Explanation to Section 5(8)(f), the doubts about the
status of homebuyers got clarified and, for being duly recognised as
financial creditors of the corporate debtor, the homebuyers got their say
in the Committee of Creditors. In fact, such an amendment and inclusion
B
of homebuyers in the Committee of Creditors had far-reaching and
ground-breaking effects in the present case for the reason that the
homebuyers, as a class, acquired a dominant status in the Committee of
Creditors, with more than half of the voting share with them. Obviously,
no effective decision of the Committee of Creditors could have been
C taken without the involvement and assent of the homebuyers. As noticed,
the resolution plan in question had been approved by CoC of JIL with
more than 97% of the voting share in its favour. In this voting, the
homebuyers had the voting share of more than 57%. It goes without
saying that if the homebuyers were not to vote for this plan, the same
would have not seen its approval with minimum 66% of the voting share
D
of financial creditors, as required by the Code. The other plan of Suraksha
Realty got less than 3% votes. If both the plans were unable to muster
the requisite (not less than 66%) voting share, the only consequence
would have been liquidation of JIL, which every stakeholder wanted to
avoid.
E 157. In the process envisaged by the Code, where the CoC may
approve a resolution plan by a vote of not less than 66% of voting share,
there remains an obvious possibility of some of the financial creditors
not voting for approval of the plan but by the very nature of process,
they would be having the voting share of not more than 34% and could
F be conveniently described as ‘dissenting financial creditors’. The
resolution plan is required to carry specific provision for payment of
debts of such dissenting financial creditors, more particularly in view of
the requirements of the second part of Section 30(2)(b) of the Code. All
the features related with such provisions and their operation have been
examined in Point D (supra) concerning the dissenting financial creditor,
G who has indeed not voted in favour of the plan in question.
158. The relevant aspect for the present point for determination is
that apart from such dissenting financial creditors, a few of the
associations of homebuyers and some of the individual homebuyers carry
their own grievances against the resolution plan and seek to submit that
H
JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 837
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their interests have not been safeguarded and they are being denied of A
their legal rights. These dissatisfied associations and individual
homebuyers seek to contend that the resolution plan is lacking in various
requisite arrangements; is violative of the CIRP Regulations; and is also
violative of the provisions of RERA and therefore, it could not have
been approved. One block of such objectors is rather differently
B
dissatisfied for the reason that according to them, the housing projects
which have been completed or are nearing completion ought to be kept
out of the purview of this plan of resolution. In counter, it is contended
on behalf of the resolution applicant that these dissatisfied homebuyers
or associations have no right to maintain any objection as if being the
dissenting financial creditors because the homebuyers have voted as a C
class in favour of the resolution plan and are bound as a class with ‘drag
along’ provisions in the Code. The objections have been refuted on merits
too. These rival submissions have led to the formulation of four different
questions in this point for determination.
159. The associations and the individual homebuyers who are D
dissatisfied with the resolution plan and the process of its approval have
made various overlapping and repeat submissions; we may summarise
the substance thereof, while avoiding prolixity, as far as possible.
159.1. It is contended on behalf of the association of homebuyers,
who has filed the appeal (in T.C. No. 243 of 2020) and has also filed an E
intervention application in the appeal filed by other associations, that the
homebuyers have the locus standi to file an appeal even though they
belong to a class of creditors represented through an authorised
representative, who voted in favour of the resolution plan of NBCC.
This association of dissatisfied homebuyers submits that sub-section (3A)
of Section 25A of the Code is only intended to iron out the logistical F
issues and technical difficulties which arise due to the large number of
creditors; and the mere fact that more than 51% of the homebuyers
voted in favour of the resolution plan cannot take away the statutory
right of appeal.
159.1.1. As regards the major part of grievances, it is contended G
on behalf of this association that the resolution plan in question is patently
illegal and is in contravention of the provisions of RERA and its rules.
With reference to Section 30(2)(e) of the Code, it has been argued that
the resolution plan must be in conformity with other laws in force and
merely because IBC has a non-obstante provision over other laws would H
838 SUPREME COURT REPORTS [2021] 12 S.C.R.

A be no ground to hold that a resolution plan framed under the scheme
must also be elevated to such status; that RERA is one such legislation
which expressly deals with the rights of the homebuyers and if there is
any inconsistency between IBC and RERA, the former would prevail
but, the same cannot be said about a resolution plan under IBC. It is
submitted that Sections 13(2), 18 and 19(4) of RERA as also U.P. RERA
B
(Agreement for Sale/Lease) Rules, 2018 are in violation as the resolution
plan does not provide an option to the homebuyers to seek refund in
case the flat is not delivered within the time period prescribed in the
revised schedule; and does not provide interest as well as compensation
on the amounts already paid by homebuyers, in case they seek refund.
C Therefore, according to this association, if the resolution plan as existing
is approved, it would take away all the rights bestowed upon the
homebuyers under RERA and homebuyers will be at the mercy of ‘one
sided agreements’ made by NBCC with no future remedies available to
them. It is also submitted that the resolution plan actually recognises the
interest amount to be paid to the homebuyers as part of the ‘Admitted
D
Amount’ but does not pass on this amount to the homebuyers.
159.1.2. In another line of submissions, it has been contended that
758 acres of land is returned to JIL as per the judgment of this Court
dated 26.02.2020 in the case of Anuj Jain (supra) but NBCC has failed
to specify anything in the resolution plan regarding the treatment and
E
utilisation of this big parcel of land though the same ought to be put to
use for the purpose of providing delay penalty/interest to the homebuyers.
It is submitted that NBCC cannot be allowed to unjustly enrich itself at
the cost of the corporate debtor’s unencumbered assets and ought to
use this land bank to make its resolution plan compliant with the provisions
F of RERA.
159.1.3. In yet another line of submissions, it has been contended
that the IRP, while filing Form-H along with the approval application,
has not placed on record the liquidation costs; and this cost is required
for assessing the feasibility and viability of the resolution plan. Therefore,
G there had been complete violation of Regulation 39B of the CIRP
Regulations. It is also submitted that the resolution plan in question, being
a conditional one in terms of Clauses 1 and 2 of Schedule 3 thereof,
could not have been taken as a resolution plan standing in conformity
with the requirements of Regulation 36A(7) of the CIRP Regulations.
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JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 839
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159.1.4. Of course, as regards the said amount of INR 750 crores A
deposited by JAL, this association maintains that the same was to protect
the interests of homebuyers of JIL and forms the part of corpus of JIL
but, it is also submitted that if there be any ambiguity with respect to the
homebuyers of JAL and they are also to be covered under the deposit so
made by JAL, then the amount may be used by the corporate debtor and
B
JAL on a pro rata basis so as to secure the interests of the homebuyers
of both these companies. It has also been prayed that NBCC be directed
to start the construction within 30 days and to complete the entire project
within 3 years; that NBCC be barred from withdrawing; and that NBCC
be prohibited from charging the homebuyers with any extra amount
towards arbitrary increase in the name of ‘Super Built-Up Area’, which C
would be illegal without corresponding increase in the carpet area.
159.2. Another society of homebuyers of the projects undertaken
by JIL has directly approached this Court against the order dated
03.03.2020 passed by NCLT, and is essentially aggrieved that the
resolution plan does not provide for the interest to be accrued to the D
homebuyers or compensation for delay period on their deposits.
159.2.1. On behalf of this society also, the aforesaid submissions
relating to 758 acres of land, violation of the provisions of RERA and
proposed changes in ‘Super Built-Up Area’ are re-emphasised. This
apart, it is submitted that the resolution plan provides for unfair treatment E
to the homebuyers of JIL inasmuch as they are liable to pay interest at
18% p.a. in the event of default to pay the remaining instalments but, on
the other hand, a meagre delay compensation, amounting to INR 5/- per
square feet per month, is offered to them in case of delay in construction
and the same is stated to be due only after the expiry of one year from
the date of delivery of possession. It is submitted that the “financial F
debt” in terms of Section 5(8) of IBC is that of “disbursal against the
consideration for the time value of money”, which means compensation
for the length of time for which the money has been disbursed. Thus, the
provisions for the homebuyers in the resolution plan ought to mandatorily
include a just and fair interest to account for the period of delay. G
159.3. As noticed, in paragraph 126 of the order dated 03.03.2020,
the Adjudicating Authority rejected the submissions sought to be made
by a few other homebuyers, who asserted themselves to be the
“dissenting” homebuyers, because the authorised representative on
behalf of the homebuyers had assented to the resolution plan while H
840 SUPREME COURT REPORTS [2021] 12 S.C.R.

A observing that ‘it cannot be said that dissenting homebuyers before
authorised representative to be considered as dissenting financial
creditors against the total voting of CoC’. These homebuyers have
filed a separate appeal (in T.C. No. 242 of 2020) with many a submissions
running common to those of the contesting associations. While avoiding
repetition, we may take note of the other material submissions on behalf
B
of these appellants-homebuyers.
159.3.1. It is contended on behalf of these homebuyers that they
and several other homebuyers have consistently dissented from the
resolution plan as the proposed timelines for completion are not workable
and there is no clause for refund of money in a situation that the
C construction is not completed within time; and cent percent approval has
not been given for effectuating the resolution plan. The grievance is that
their application was rejected by NCLT on the ground that AR on behalf
of the homebuyers had assented to the resolution plan but without dealing
with the specific objection raised by the appellants with regard to the
D proceedings before the CoC and the procedure adopted by it; and they
were not even allowed to make all their submissions before NCLT.
According to these appellants, NCLT has applied two standards while
dealing with objections of two dissenting financial creditors i.e., ICICI
Bank on one hand and the appellants on the other, which amounts to
unfair discrimination amongst the same class of creditors; and the findings
E in paragraph 126 of the impugned order are in the teeth of NCLT’s
findings in paragraphs 100 and 101 of the same order.
159.3.2. It is submitted that in the 16th meeting of CoC, there was
no consensus with regard to the resolution plan to be adopted; and on
evaluation of the resolution plans, it was found that the plan of Suraksha
F Realty was better than that of NBCC considering the scores given by
the experts. The appellants have submitted that in the resolution plan by
Suraksha Realty, provision was made for delay penalty pertaining to
previous period in the form of fixed compensation by way of transfer of
land worth INR 250 crores at Mirzapur and for this purpose, creation of
G a Trust was proposed; and it was also proposed that the said resolution
applicant shall endeavour to monetise the land for 4 years and the sale
proceeds would be distributed amongst the eligible homebuyers.
According to the appellants, the plans were put to vote contrary to the
provisions of IBC and yet, IRP moved an application for approval of the
plan submitted by NBCC, which was objected by them and various other
H
JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 841
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parties with the submissions that the resolution plan of NBCC was unfairly A
adopted through illegal voting; and that the plan of NBCC was in
contravention of RERA.
159.3.3. It is submitted that in the resolution plan in question,
Schedule 2 Step 9 provides for treatment of homebuyers and refund
seekers in the manner that the claim of homebuyers shall be satisfied by B
ensuring delivery of flats in accordance with the schedule at Annexure
A, whereby project completion period is provided as 42 months with
moratorium period of one year and therefore, for 54 months, the appellants
and other homebuyers would not get any compensation and thereafter
only a delay penalty of INR 5/- per square feet per month is provided,
which is also subject to non-occurrence of any force majeure event. C

159.3.4. While questioning the process of voting and the proposition
that homebuyers have as a class assented to the plan of NBCC, these
appellants have submitted that the voting percentage in respect of
NBCC’s plan was distributed in the following manner:
D
Home Buyers voting share 57.66%;
Assenting 34.10%;
Dissenting 1.05%;
Abstained 22.51%
E
Therefore, according to the appellants, the claim that 97.02%
homebuyers have voted for NBCC’s plan is misleading; and as per the
voting percentage, rough ratio is that for every 3 homebuyers who voted
for NBCC, 2 have dissented/abstained. The appellants have further
contended that the authorised representative of homebuyers made two
F
wrong statements before the Committee of Creditors: one, that both the
resolution plans of Suraksha Realty and NBCC would be put to vote and
second, that the majority of homebuyers had written to him indicating
NBCC as the preferred choice. It is submitted that both these statements
on behalf of the homebuyers were grossly incorrect and contrary to
record and as such, the entire voting process of the CoC, as contemplated G
under Section 21(8) of the Code, is vitiated. There had been no such
written instruction to the authorised representative of the homebuyers
and he could not have determined what was the majority mark of
homebuyers. It is further submitted that even if the said authorised
representative could have consented to put both the resolution plans to
H
842 SUPREME COURT REPORTS [2021] 12 S.C.R.

A vote contrary to the mandate of Regulation 39(3), CoC could not have
acted contrary to the provisions of IBC as there could be no waiver of
the statute. It is submitted that these objections could have been, and
had rightly been, raised before the Adjudicating Authority because there
is no other forum to raise these concerns; but the Adjudicating Authority
has not addressed them at all.
B
159.3.5. The issue relating to the said land parcel of 758 acres
has also been raised by these appellants with the submissions that after
the judgment of this Court dated 26.02.2020, the said land ought to have
been included in the resolution plan and used in the interest of homebuyers
but the Adjudicating Authority has not examined this aspect of the matter
C either.
159.4. The submissions on behalf of yet another association of
homebuyers (appellant in T.C. No. 240 of 2020) are considerably different,
where it is prayed that the project related with its members being
substantially complete, deserves to be separated from the resolution plan.
D
159.4.1. It is submitted on behalf of this association that the
construction of all 4228 flats in 26 towers of the project “Jaypee Greens
Aman” is complete and only the finishing works for Tower Nos. 23, 24,
25 & 27 are pending due to delay in execution of the agreements. It is
also submitted that out of 18153 homebuyers of the corporate debtor
E forming part of the financial creditors, only 459 homebuyers in Project
Aman (which amount to 2.53 %) were part of the creditors at the time
of voting for the resolution plan. According to this association, “Jaypee
Greens Aman” is an inhabited project where more than 1500 families
have already started living and it is situated over 10 kms away from the
F location of “Wish Town” and hence, should be considered as an
independent housing colony and ought to be separated from the resolution
plan; and any order on the resolution plan should not have an adverse
impact on this project. It is submitted that in relation to the project in
question, the resolution applicant is only to complete the finishing work
which could be carried out by the IRP himself to avoid further delay
G whereas, if the resolution plan is followed, these homebuyers shall have
to wait for another 18 months to receive possession of the completed
flats which would add to their mental agony.
159.4.2. It has also been submitted that the members of this
association had deposited an Interest Free Maintenance Deposit
H (‘IFMD’) and a Maintenance Advance and also executed Maintenance
JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 843
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Agreements with JAL; and even though this refundable security deposit A
was not a part of the information memorandum, the resolution plan in
question stakes claim over this amount while ignoring the basic rules of
business and to siphon off the hard-earned/borrowed money of the
allottees. According to the association, this amount ought to be refunded
to the allottees concerned.
B
159.4.3. It is also submitted that the approved resolution plan only
talks about the date of completion of the construction of flats but does
not indicate the completion date of the entire project of “Jaypee Greens
Aman”; and as construction of flats of this project is carried out, specific
directions need to be issued for completion of the project with all amenities
and finishing works. C

159.4.4. This association has also relied upon decision of this Court
in the case of Wg. Cdr. Arifur Rahman Khan & Ors. v. DLF Southern
Homes Pvt. Ltd. & Ors.: (2020) SCC OnLine SC 667 and has prayed
for a relief of 6% p.a. simple interest which shall be attached to the
allottees of the project “Jaypee Greens Aman” on the total amount paid D
towards the purchase of the flats in addition to the delay period penalty.
It is also submitted that the allottees of Tower Nos. 23, 24, 25 & 27
should not be discriminated and must be treated at par with other allottees,
who have already received the penalty for delayed period.
159.4.5. This association has also prayed for directions to IRP to E
release the payments in a time bound manner to keep the project and its
activities as a going concern as the work at the project “Jaypee Greens
Aman” has come to a standstill for want of requisite payment of bills of
contractors. This association has made yet another prayer for directions
to the Noida Authority to issue the necessary Occupancy Certificate. F
159.5. Apart from the above-mentioned appellants, a few more
homebuyers have filed intervention applications in the leading appeal
while essentially reiterating the same contentions that the resolution plan
of NBCC is not compliant with the requirements of RERA and that the
homebuyers would be put to prejudice in relation to their rights under G
RERA. The issue relating to the said 758 acres of land has also been
raised.
159.6. For completing the panorama of diverse submissions, we
may take note of the fact that the applicant of I.A. No. 84309 of 2020
has filed separate written submissions and has contended that there had
H
844 SUPREME COURT REPORTS [2021] 12 S.C.R.

A been diversion of the money deposited by homebuyers to YEIDA and
the same was accepted by JIL and the lenders constituting the CoC
without considering that it was a wrongful and fraudulent diversion
against accepted norms; that JIL and YEIDA have remained silent on
the issue and allowed homebuyers’ money to be used in Yamuna
Expressway, which acted as an interest free loan to JIL for almost 10
B
years and therefore, the homebuyers ended up funding 25% of the project
of Expressway and the said investment ought to be returned to the
homebuyers; that the provisions of the Concession Agreement regarding
curing the defaults were never addressed before NCLT and before this
Court; that when JIL caused a delay in delivering possession of the flats
C to the homebuyers, the material adverse effect clause should have been
invoked, rather than initiation of the CIRP; that the homebuyers were
made aware of liquidation of JIL as the only possibility; that the
homebuyers were not provided with the Concession Agreement and
even when it was demanded from the IRP, it was not furnished.
Therefore, not sharing CA and not providing any such legal advice on
D
CA has put the CIRP proceedings under the scanner and the same be
held null and void. It has further been contended that the resolution plan
of NBCC ought to have been rejected as it contravenes several of the
provisions of law including that of RERA. It is also contended that the
homebuyers to whom flats were delivered could not have been taken
E out of CoC once it had been constituted; and such taking out has impacted
a few thousand homebuyers and thereby, the voting weightage by about
10%. The applicant has further submitted that the present one is an
exceptional case requiring innovative approach and has even suggested
the alternative that Government of Uttar Pradesh takes over the full
project as it is, provided it meets all rights of the homebuyers! It is
F
submitted that this could be a possibility under Article 142 of the
Constitution of India.
160. The submissions so made have been duly opposed by the
persons/entities standing in favour of the resolution plan as approved by
the Adjudicating Authority. For avoiding unnecessary expansion, we deem
G it appropriate to take note of the submissions made on behalf of IRP and
NBCC as also the financial creditor of JIL in this regard.
160.1. It is submitted on behalf of IRP and NBCC that these
associations and homebuyers have no locus standi to challenge the
approved resolution plan because, in terms of Section 25A(3A) read
H with Section 21(6A) of the Code, the homebuyers vote in the CoC as a
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class; even a dissenting individual within the class is bound by the decision A
of the majority of that class; and as such, this decision operates as a
statutory estoppel against the members of the entire class. It is submitted
that the manner of voting by homebuyers has been extensively dealt
with by this Court in Pioneer Urban (supra) and the Adjudicating
Authority has, in accordance with Section 25A(3A) and the law laid
B
down in Pioneer Urban, rightly dealt with the issue of ‘dissenting
homebuyers’ in paragraph 126 of the order impugned. It is further
submitted that the legislature has recognised the likelihood of conflicting
interests among the groups of homebuyers and accordingly, the IBC
amendment dated 16.08.2019 has provided a ‘drag along’ mechanism
so far as voting by homebuyers in relation to the approval of a resolution C
plan is concerned, by way of insertion of sub-section (3A) to Section
25A of the Code. It is, therefore, evident that the minority shall be dragged
along with the majority in voting on approval of a resolution plan and
hence, the appellants are bound by the decision taken by the collective
majority of the homebuyers.
D
160.2. It is also submitted that as per Section 61 of the Code, an
appeal can be filed by a person who is aggrieved by the approval of the
resolution plan but, considering that homebuyers as a class have assented
to the resolution plan of NBCC, individual homebuyers cannot be treated
as dissenting creditors or even aggrieved persons within the meaning of
Section 61 of the Code. It is, therefore, submitted that such appeals E
ought to be dismissed for having been filed without any locus.
160.3. It is yet further submitted that the appellant Wish Town
Society attempted to submit an application and objections that were
rejected by the Adjudicating Authority on 31.01.2020, essentially on the
grounds that the society had failed to implead itself as the party to the F
application; that only 448 homebuyers had voted against the resolution
plan but the society was claiming to represent 1500 homebuyers without
mentioning as to who were the persons who authorised filing of the
objections; and that the society had no locus to raise objections. It is
submitted that now the society is seeking to place on record a list of G
alleged 1248 members but no such list was produced before the
Adjudicating Authority and cannot be allowed to be introduced at the
appellate stage.
160.4. As regards the questions related with RERA, it is submitted
that the alleged violation of RERA has been contended by these H
846 SUPREME COURT REPORTS [2021] 12 S.C.R.

A homebuyers without demonstrating the manner in which any provision
under RERA is being violated; and that the resolution plan, at no instance,
states that it would not comply with the applicable laws. However, it is
submitted that in the event there is any conflict between the approved
resolution plan and the provisions of RERA, the approved resolution
plan shall remain binding on all stakeholders under Section 31 of the
B
Code and would override the provisions of RERA in accordance with
Section 238 of the Code.
160.5. It is also submitted that resolution plan can alter the
contracts with financial creditors and the Code gives wide powers to the
resolution applicant to modify financial and operational contracts so as
C to best serve the interests of all the stakeholders. It is submitted that, as
per the proposal under the resolution plan, NBCC would construct and
deliver the flats to homebuyers but would not be paying outstanding
interests to any homebuyer, and such a proposition is permissible under
Regulation 37(f) of CIRP Regulations, that permits a resolution plan to
D reduce any debts due to any creditors; and such an amendment to the
contracts having been agreed to by the overwhelming majority of the
CoC, remains binding on all the homebuyers.
160.6. As regards liquidation costs, it is submitted that under
Regulation 39B of the CIRP Regulations, CoC has been given a discretion
E to ascertain the liquidation costs at the time of approval of a resolution
plan or deciding to liquidate a company; and, as per the Explanation to
Regulation 39B, liquidation costs have the same meaning as given to it
under Regulation 2(1)(ea) of the Insolvency and Bankruptcy Board of
India (Liquidation Process) Regulations 2016, whereunder ‘liquidation
costs’ have been defined to mean, inter alia, the costs in the liquidation
F process of a company. It is submitted that non-submission of liquidation
costs under Form-H is not an irregularity that is fatal to the CIRP or the
resolution plan; that the liquidation costs have no bearing on the feasibility
and viability of a resolution plan; and liquidation costs are different from
liquidation value, which has been defined under Regulation 2(k) of the
G CIRP Regulations to mean ‘the estimated realisable value of the assets
of the corporate debtor, if the corporate debtor were to be liquidated
on the insolvency commencement date’. The IRP under Form-H has
mentioned the fair value and liquidation value of the corporate debtor.
160.7. As regards the objections raised by Jaypee Aman Owners
H Welfare Association for exclusion from resolution plan, it is submitted
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that the NBCC’s resolution plan is intended to cover all the homebuyers A
of JIL, where the creditor-debtor relationship continues to subsist i.e.,
where the final settlement between the homebuyer and JIL, through
execution of sub-lease deed, has not been achieved. With reference to
the provisions in the resolution plan, it is submitted that the plan specifically
provides that “Aman Project” shall be completed within a period of 15
B
months from the date resolution applicant acquires the shareholding of
the corporate debtor; and such an indicative period has been provided in
respect of all the pending projects of JIL, which are to be completed by
NBCC in terms of the resolution plan. It is further submitted that the
contents of the plan including the indicative delivery schedules were
available to all homebuyers and they had, in full cognizance of the same, C
chosen to approve the plan in question which would remain binding on
all the stakeholders of the corporate debtor in terms of Section 31 of the
Code once it is approved; and therefore, the said association is estopped
from challenging, or seeking an exit from, the resolution plan as the plan
stands approved. In regard to the submission that the IRP may be directed
D
to do certain things like apply for OCs in respect of certain towers or
issue OOPs, it is submitted that the IRP has disclosed in an affidavit
before the Court that during the CIRP process, he has been managing
JIL as a going concern and has continued construction of residential and
commercial dwelling units and has issued OOPs for 7996 units based on
the OCs received from the Noida Authority; and out of the OOPs issued, E
sub-lease registration of 6429 has been completed. It is submitted that
the claims of a homebuyer vis-à-vis JIL stand settled on execution of the
sub-lease deed and, therefore, all those homebuyers whose sub-lease
deeds have not been executed shall be bound by the resolution plan
approved by the CoC of JIL.
F
160.8. Again, as regards IFMD, Step 9 in Schedule 2 has been
referred and it is submitted that the above provision is only in relation to
the monies paid by the homebuyers to JAL (either directly or indirectly,
including payment through JIL) as the resolution applicant does not and
will not have any control over JAL.
G
160.9. Apart from the above, it has also been submitted on behalf
of IRP that Regulation 36A(7) applies only to expression of interest
which cannot be conditional but that provision does not apply to the
resolution plan and it is no one’s case that the expression of interest
submitted by NBCC was conditional. The amendment to the Code with
H
848 SUPREME COURT REPORTS [2021] 12 S.C.R.

A effect from 28.12.2019, that is, before passing of the order by NCLT
has also been referred to submit that with Section 32A having been
inserted to the Code, NBCC would be entitled to claim the protection
thereunder and the question of withdrawing from the resolution plan for
the reason stated in Clause 2 of Schedule 3 does not arise.
B 160.10. The financial creditor of JIL has also opposed the
submissions made by these dissatisfied homebuyers and it is submitted
that they have erroneously identified ICICI Bank to be similarly situated
with them. It is submitted that this bank is a dissenting financial creditor
in terms of the resolution plan unlike those dissatisfied homebuyers; and
this bank is entitled to a different treatment in terms of Section 30(2)(b)
C of the Code.
161. We have given anxious consideration to the wide variety of
submissions made by dissatisfied homebuyers and the counters thereto.
162. Before proceeding further, it appears appropriate to point
D out that the contentions urged in regard to simultaneous voting over two
resolution plans have already been discussed and rejected in Point B
hereinbefore. These contentions, in our view, have unnecessarily been
taken by the persons who wish to remain on the dissenting side of the
fence by carving out every possible objection, whether of substance or
not. The issue relating to 758 acres of land, that is now available to JIL
E after the judgment of this Court in the case of Anuj Jain, is being
considered separately in Point K infra. Likewise, the issue relating to
the amount of INR 750 crores deposited by JAL pursuant to the directions
in the case of Chitra Sharma as also other areas of accounting between
JAL and JIL including the issue relating to IFMD are being considered
F separately in Point J infra. These issues, thus, would require no comment
herein.
163. Taking up other aspects of the rival submissions and having
examined the scheme of the Code in relation to a plan of insolvency
resolution, we are clearly of the view that the propositions of some of
G the associations and individual homebuyers to claim themselves as
‘dissenting homebuyers’ and thereby, ‘dissenting financial creditors’ do
not stand in conformity with the scheme of the Code and the manner of
voting on a plan of resolution by the Committee of Creditors.
164. As noticed, for the purpose of approval of a resolution plan in
CIRP, what is required is its approval by a vote of not less than 66% of
H
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the voting share of financial creditors; and what is counted for the requisite A
percentage (66) is the voting share of the financial creditors and not the
individual votes of financial creditors. The expression ‘voting share’ has
been precisely defined in clause (28) of Section 5 to mean the voting
rights of a single financial creditor in the Committee of Creditors, which
is based on the proportion of the financial debt owed to such a financial
B
creditor vis-à-vis the financial debt owed by the corporate debtor. In the
scheme of the Code with Explanation to Section 5(8)(f), the debt owed
by the corporate debtor towards allottees of the real estate project is
considered to be a financial debt but for that matter, every individual
allottee does not become an independent financial creditor of the corporate
debtor, if the number of allottees are 10 or more, in terms of the meaning C
assigned to the expression “class of creditors” in CIRP Regulations 85.
The allottees, like the homebuyers of JIL, falling within clause (f) of
sub-section (8) of Section 5, do carry the status of financial creditors but
they would be falling in a class collectively; and the voting share of that
class would be in terms of the financial debt owed to that class as a
D
whole.
164.1. Specific provisions have been made for voting on behalf of
a class of creditors in terms of clause (b) of sub-section (6A) of Section
21 by the authorised representative. The rights and duties of the authorised
representative of financial creditors are also delineated in Section 25A
of the Code and any doubt, as to how he would vote and how his vote is E
counted, is put to rest by insertion of sub-section (3A) to Section 25A,
which provides that notwithstanding anything to the contrary contained
in sub-section (3), the AR shall cast his vote on behalf of all the financial
creditors he represents ‘in accordance with the decision taken by a
vote of more than fifty per cent. of the voting share of the financial F
creditors he represents, who have cast their vote’.
164.2. At this juncture, we may usefully take note of the enunciation
of this Court in the case of Pioneer Urban (supra) that has direct bearing
on the questions raised herein. The decision in Pioneer Urban was
rendered by this Court in the backdrop of challenge to the said amendment G
made to the Code whereby, the allottees of real estate projects were
85
The relevant definition clause in CIRP Regulations, inserted with effect from
04.07.2018 reads as under: -
“(aa) “class of creditors” means a class with at least ten financial creditors
under clause (b) of sub-section (6A) of section 21 and the expression, “creditors in a
class” shall be construed accordingly;” H
850 SUPREME COURT REPORTS [2021] 12 S.C.R.

A provided the status of financial creditors by way of insertion of
Explanation to sub-clause (f) of clause (8) of Section 5 of the Code
and with corresponding insertion of Section 25A as also sub-section (6A)
to Section 21. While dealing with such a challenge, in Pioneer Urban
(supra), this Court extensively referred to the objects and reasons for
these amendments as also their meaning, connotation and effect. The
B
relevant part of the matter, in regard to the issue at hand, is that along
with the aforesaid amendment, this Court also examined the amendment
of Section 25A with insertion of sub-section (3A) by Act 26 of 2019.
This Court explained the connotation of the said amendment and its
logic, while rejecting the challenge to Section 21(6A) and 25A of the
C Code, in the following: -
“63. Given the fact that allottees may not be a homogeneous
group, yet there are only two ways in which they can vote
on the Committee of Creditors—either to approve or to
disapprove of a proposed resolution plan. Sub-section
D (3-A) goes a long way to ironing out any creases that may
have been felt in the working of Section 25A in that the
authorised representative now casts his vote on behalf of
all financial creditors that he represents. If a decision taken
by a vote of more than 50% of the voting share of the
financial creditors that he represents is that a particular
E plan be either accepted or rejected, it is clear that the
minority of those who vote, and all others, will now be bound
by this decision. As has been stated by us in Swiss Ribbons,
the legislature must be given free play in the joints to experiment.
Minor hiccups that may arise in implementation can always be
F sorted out later. Thus, any challenge to the machinery provisions
contained in Sections 21(6-A) and 25A of the Code must be
repelled.”
(emphasis in bold supplied)
164.3. In the face of clear language of sub-section (3A) of Section
G 25A of the Code, read with the law declared by this Court in Pioneer
Urban (supra), the suggestion on behalf of the dissatisfied homebuyers
that the said provision was only intended to iron out the logistical issues
and technical difficulties is required to be rejected altogether. The said
provision, as held by this Court, is to iron out the creases that might have
H been felt in the proper working of Section 25A; and it is made explicit
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that the allottees, even if not a homogeneous group, they could vote only A
either to approve the resolution plan or to disapprove the same.
Divergence of the views within their own class may exist but, when
coming to the vote in the Committee of Creditors, their vote would be
that of a class.
164.4. Having regard to the scheme of IBC and the law declared B
by this Court, it is more than clear that once a decision is taken, either to
reject or to approve a particular plan, by a vote of more than 50% of the
voting share of the financial creditors within a class, the minority of
those who vote, as also all others within that class, are bound by that
decision. There is absolutely no scope for any particular person standing
within that class to suggest any dissention as regards the vote over the C
resolution plan. It is obvious that if this finality and binding force is not
provided to the vote cast by the authorised representative over the
resolution plan in accordance with the majority decision of the class he
is authorised to represent, a plan of resolution involving large number of
parties (like an excessively large number of homebuyers herein) may D
never fructify and the only result would be liquidation, which is not the
prime target of the Code. In the larger benefit and for common good, the
democratic principles of the determinative role of the opinion of majority
have been duly incorporated in the scheme of the Code, particularly in
the provisions relating to voting on the resolution plan and binding nature
of the vote of authorised representative on the entire class of the financial E
creditor/s he represents.
164.5. To put it in more clear terms qua the homebuyers, the
operation of sub-section (3A) of Section 25A of the Code is that their
authorised representative is required to vote on the resolution plan in
accordance with the decision taken by a vote of more than 50% of the F
voting share of the homebuyers; and this 50% is counted with reference
to the voting share of such homebuyers who choose to cast their vote
for arriving at the particular decision. Once this process is carried out
and the authorised representative has been handed down a particular
decision by the requisite majority of voting share, he shall vote accordingly G
and his vote shall bind all the homebuyers, being of the single class he
represents.
165. In the present case, on one hand, it has consistently been
submitted by the stakeholders, particularly the homebuyers, that liquidation
of JIL should be eschewed, but on the other hand, some of the associations H
852 SUPREME COURT REPORTS [2021] 12 S.C.R.

A and homebuyers have attempted to find faults with the resolution plan to
which their majority, who voted, took the decision for approval. There is
no scope for any homebuyer suggesting himself to be a dissenting financial
creditor merely because he was not with majority within the class. His
dissatisfaction does not partake the legal character of a dissenting
financial creditor.
B
165.1. A rather overambitious attempt has been made by the
homebuyers who have filed separate appeal (T.C. No. 242 of 2020) to
refer to the percentage of voting share of homebuyers and it has been
suggested that out of the total voting share of homebuyers i.e., 57.66%,
the assenting voting share was only 34.10%, whereas 22.51% abstained
C and 1.05% dissented. It is submitted that roughly, for every 3 homebuyers
who voted for NBCC, 2 had dissented/abstained. Even assuming the
percentage as stated by these appellants to be correct, we are at a loss
to find any logic in the submissions so made. A re-look at sub-section
(3A) of Section 25A would make it clear that ‘50%’ for the purpose of
D the said provision is of those homebuyers who cast their vote. On the
percentage figures as given before us, out of the total voting share of
homebuyers at 57.66%, the persons carrying 22.51% voting share simply
abstained and of the persons casting their votes, ayes were having the
voting share of 34.10% whereas nays were having the voting share of
1.05%. Obviously, 50% would be counted only of the persons who chose
E to vote where, much higher than 50% of the homebuyers who cast their
vote, stood for approval of the resolution plan of NBCC86. Such a voting
cannot be set at naught for the purported dissatisfaction of a miniscule
minority, which was about 3.69% in terms of the number of persons
voting; and about 1.05% in terms of the voting share. They have to sail
F along with the overwhelming majority. That is the purport and effect of
‘drag along’ or ‘sail along’ provisions in the scheme of the Code.
85
The IRP has given the details of voting by the allottees in the following terms (in
paragraph 4 of its written submissions under the heading- ‘Issues raised by
homebuyers’):-
“…. In the present case, out of 21781 allottees forming the class of
G allottees, 12147 cast their vote on the Resolution Plan. (It is pertinent to
mention that through the resolution plan process of JIL, around 9000 allottees
have always remained non-responsive and abstained from voting at any time.)
Out of 12147 allottees who cast their vote (present and voting), 11699 allottees
voted in favour of the Resolution Plan while 448 voted against the Resolution
Plan. Thus, the number of allottees who voted in favour of the Resolution Plan,
this 11699, comprise 96.31% of the total number of allottees present and
H voting….”
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166. For what has been discussed hereinabove, the suggestions A
that there was no cent percent approval of the resolution plan, or that
there was no consensus amongst homebuyers, or that the plan of
Suraksha Realty was considered better, are required to be rejected. It is
not the case that the AR of homebuyers has not voted in accordance
with the decision taken by a vote of more than 50% of the voting share
B
of homebuyers who did cast their vote. In the given set of facts, we
have no hesitation in thoroughly disapproving the unnecessary imputations
made by one set of homebuyers against the AR that he made any
incorrect statement before the CoC. That being the position, and the
authorised representative having voted in accordance with the instructions
given to him from the class of financial creditors i.e., homebuyers, every C
individual falling in this class remains bound by his vote and any association
or homebuyer of JIL cannot be acceded the locus to stand differently
and to project its/his own viewpoint or grievance by way of objections or
by way of appeal. All such objections and appeals are required to be
rejected on this ground alone.
D
167. The suggestion about the so-called statutory right of appeal
has only been noted to be rejected. The homebuyers as a class shall be
deemed to have voted in favour of approval of the resolution plan of
NBCC; and once having voted so, any particular constituent of that
class cannot be heard in opposition to the plan by way of objection or
appeal. The statute, that is IBC, has itself provided for estoppel against E
any such attempted opposition to the plan by a constituent of the class
that had voted in favour of approval.
168. The misplaced assumptions on the part of dissatisfied
homebuyers have gone to the extent that they have attempted to put
themselves at par with the dissenting financial creditors like ICICI Bank, F
who carry an entirely different legal status in CIRP, for being not within
the class of homebuyers and being of a different class of financial
creditors. The said financial creditor has rightly opposed these submissions
and has rightly pointed out that its rights in terms of Section 30(2)(b) of
the Code stand at an entirely different footing. G
169. Another attempt has been made as regards calculation of
voting weightage by suggesting that the homebuyers to whom flats have
been delivered could not have been taken out of CoC. Even this
suggestion remains bereft of substance. When a person does not stand
in the capacity of a financial creditor i.e., to whom no financial debt is H
854 SUPREME COURT REPORTS [2021] 12 S.C.R.

A owed by the corporate debtor, he could only be taken out of the block of
financial creditors. We are impelled to observe that consideration and
voting at the resolution plan is not a process or event where any objection
or grievance could be raised even by a person who does not stand in the
capacity of a financial creditor. His remedies, in accordance with law,
could be elsewhere but not in this process of approval of resolution plan
B
under the Code.
169.1. For the same reasons as above, the suggestion to keep any
housing project which is already complete or nearing completion out of
the purview of the resolution plan is required to be rejected. When
approval of the resolution plan is to be voted by CoC; and its composition
C is specified by the Code, there is no such concept of keeping any
particular homebuyer out of CoC even if the relationship of creditor and
debtor subsists between him and the corporate debtor.
170. To sum up this part of discussion, in our view, after approval
of the resolution plan of NBCC by CoC, where homebuyers as a class
D assented to the plan, any individual homebuyer or association cannot
maintain any challenge to the resolution plan nor could be treated as
carrying any legal grievance.
171. Once we have held that these dissatisfied homebuyers and
associations are not entitled to put up any challenge to the resolution
E plan contrary to the decision of the requisite majority of their class, all
their objections are required to be rejected outright. Yet, in the interest of
justice, we have examined these objections to find if there be any aspect
worth consideration within the periphery of Section 30(2) of the Code.
We find none.
F 171.1.The major part of the objections of these dissatisfied
homebuyers relate to the purported rights under RERA. We are afraid,
even such propositions do not stand in conformity with law. The interplay
of RERA and IBC also came up for fuller exposition in the case of
Pioneer Urban (supra) and this Court rejected the contentions urged
G on behalf of the petitioners that RERA being a special enactment dealing
with real estate development projects must be given precedence over
the Code. In Pioneer Urban, this Court noticed Section 238 of the Code
and held as under: -
“25. It is significant to note that there is no provision similar to that
of Section 88 of RERA in the Code, which is meant to be a
H
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complete and exhaustive statement of the law insofar as its subject- A
matter is concerned. Also, the non obstante clause of RERA came
into force on 1-5-2016, as opposed to the non obstante clause of
the Code which came into force on 1-12-2016. Further, the
amendment with which we are concerned has come into force
only on 6-6-2018. Given these circumstances, it is a little difficult
B
to accede to arguments made on behalf of the learned Senior
Counsel for the petitioners, that RERA is a special enactment
which deals with real estate development projects and must,
therefore, be given precedence over the Code, which is only a
general enactment dealing with insolvency generally. From the
introduction of the Explanation to Section 5(8)(f) of the Code, it is C
clear that Parliament was aware of RERA, and applied some of
its definition provisions so that they could apply when the Code is
to be interpreted. The fact that RERA is in addition to and not
in derogation of the provisions of any other law for the time
being in force, also makes it clear that the remedies under RERA
D
to allottees were intended to be additional and not exclusive
remedies. Also, it is important to remember that as the authorities
under RERA were to be set up within one year from 1-5-2016,
remedies before those authorities would come into effect only on
and from 1-5-2017 making it clear that the provisions of the Code,
which came into force on 1-12-2016, would apply in addition to E
RERA.”
*** *** ***
29. It is clear, therefore, that even by a process of harmonious
construction, RERA and the Code must be held to co-exist, and,
in the event of a clash, RERA must give way to the Code. F
RERA, therefore, cannot be held to be a special statute
which, in the case of a conflict, would override the general
statute viz. the Code.
30. As a matter of fact, the Code and RERA operate in completely
different spheres. The Code deals with a proceeding in rem in G
which the focus is the rehabilitation of the corporate debtor. This
is to take place by replacing the management of the corporate
debtor by means of a resolution plan which must be accepted by
66% of the Committee of Creditors, which is now put at the helm
of affairs, in deciding the fate of the corporate debtor. Such H
856 SUPREME COURT REPORTS [2021] 12 S.C.R.

A resolution plan then puts the same or another management in the
saddle, subject to the provisions of the Code, so that the corporate
debtor may be pulled out of the woods and may continue as a
going concern, thus benefitting all stakeholders involved. It is only
as a last resort that winding up of the corporate debtor is resorted
to, so that its assets may be liquidated and paid out in the manner
B
provided by Section 53 of the Code. On the other hand, RERA
protects the interests of the individual investor in real estate
projects by requiring the promoter to strictly adhere to its provisions.
The object of RERA is to see that real estate projects come to
fruition within the stated period and to see that allottees of such
C projects are not left in the lurch and are finally able to realise their
dream of a home, or be paid compensation if such dream is
shattered, or at least get back monies that they had advanced
towards the project with interest. At the same time, recalcitrant
allottees are not to be tolerated, as they must also perform their
part of the bargain, namely, to pay instalments as and when they
D
become due and payable. Given the different spheres within which
these two enactments operate, different parallel remedies are given
to allottees under RERA to see that their flat/apartment is
constructed and delivered to them in time, barring which
compensation for the same and/or refund of amounts paid together
E with interest at the very least comes their way. If, however, the
allottee wants that the corporate debtor’s management itself be
removed and replaced, so that the corporate debtor can be
rehabilitated, he may prefer a Section 7 application under the Code.
That another parallel remedy is available is recognised by RERA
itself in the proviso to Section 71(1), by which an allottee may
F
continue with an application already filed before the Consumer
Protection Fora, he being given the choice to withdraw such
complaint and file an application before the adjudicating officer
under RERA read with Section 88. In similar circumstances, this
Court in Swaraj Infrastructure (P) Ltd. v. Kotak Mahindra
G Bank Ltd. has held that the Debts Recovery Tribunal proceedings
under the Recovery of Debts Due to Banks and Financial
Institutions Act, 1993 and winding-up proceedings under the
Companies Act, 1956 can carry on in parallel streams (see paras
21 and 22 therein).”
H (emphasis in bold supplied)
JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 857
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171.1.1. In view of the above, all the contentions regarding operation A
of RERA and claim thereunder or any other claim for compensation or
interest, when not standing in conformity with the approved resolution
plan, deserve to be rejected. In fact, the question as to what kind of
agreement should be entered into with financial creditors like homebuyers
is essentially a matter falling within the arena of commercial decision;
B
and needless to repeat that in the process of approval of a resolution
plan, the factors related with commerce are left to the wisdom of the
Committee of Creditors. When the Committee of Creditors has approved
the proposals of NBCC in the resolution plan, the same cannot be tinkered
with reference to the grievance of some of the homebuyers about
deprivation of adequate interest or compensation. In this view of the C
matter, the decision of this Court in the case of Wg Cdr. Arifur Rahman
Khan (supra) needs no discussion because that would not apply to the
issues presently under consideration.
172. Yet another objection as regards liquidation costs has rightly
been clarified by the IRP and NBCC that under Regulation 39B of the D
CIRP Regulations, the CoC has been given a discretion to ascertain
liquidation costs at the time of approval of the resolution plan or deciding
to liquidate the company. This aspect, essentially lying within the arena
of commerce, is also required to be left to the commercial wisdom of the
Committee of Creditors. In any case, this aspect cannot be said to have
a bearing on the decision as regards feasibility and viability of the E
resolution plan of NBCC and is required to be rejected. Similarly, the
objections with reference to Regulation 36A(7) are also required to be
rejected because there had not been any condition imposed by NBCC in
expression of interest. As regards the conditions in the resolution plan,
particularly Clauses 1 and 2 of Schedule 3 thereof, as already indicated, F
the matter relating to the said amount of INR 750 crores deposited by
JAL pursuant to the directions of this Court in Chitra Sharma (supra) is
being considered separately; and the stipulation in Clause 2 of Schedule
3 is even otherwise redundant in view of insertion of Section 32A to the
Code, as discussed by the Adjudicating Authority, which need not be
repeated. Suffice it to observe for the present purpose that the process G
of approval of the resolution plan is not vitiated because of such
stipulations. Needless to say that these observations are not to be
construed as our approval of Clause 1 of Schedule 3 of the resolution
plan, because its legality and validity is being examined separately in
Point J infra. H
858 SUPREME COURT REPORTS [2021] 12 S.C.R.

A 173. We have summarised the major aspects of multifarious
submissions, objections and suggestions projected before us but find that
the attempt to raise such objections is itself baseless for being not in
conformity with the provisions of the Code read with the law declared
by this Court in Pioneer Urban (supra). The objections and submissions
do not carry any merits either. In this view of the matter, we are not
B
entering into the other submissions made by NBCC as regards the number
of members of one of the appellant-association because nothing turns
upon that.
174. Before concluding on this segment of discussion, we are
impelled to indicate that the objections and suggestions by dissatisfied
C homebuyers have gone to the extent of suggesting that IRP should be
directed to release funds for raising construction; the Noida Authority
be directed to issue the necessary Occupancy Certificate; and NBCC
be directed to complete the entire project within 3 years and be prohibited
from charging the homebuyers with any extra amount towards arbitrary
D increase in the name of ‘Super Built-Up Area’. An objection is stated
that there had been diversion of the money deposited by homebuyers to
YEIDA; and the suggestion has gone to the extent that the project may
be taken over by the Government of Uttar Pradesh. These and other
similar nature submissions, which do not relate to the real questions in
controversy, neither carry any meaning nor any substance; they have
E only been noted to be rejected.
175. For what has been discussed above, we hold that 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
F dissenting financial creditor or an aggrieved person; the question of
violation of the provisions of the Real Estate (Regulation and
Development) Act, 2016 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
G and liabilities of the corporate debtor, no housing project could be
segregated merely for the reason that the same has been completed or
is nearing completion.
Point J
INR 750 crores and accounting between JAL and JIL
H
JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 859
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176. We now need to enter into another area of serious dispute in A
these matters, which relates to the claim over the amount of INR 750
crores (which was deposited by JAL pursuant to the directions of this
Court in the case of Chitra Sharma) and the interest accrued thereupon.
On one hand, JAL and the persons/entities related with it, including its
homebuyers and institutional financial creditor, assert that this money is
B
the property of JAL and ought to come back to JAL but, on the other
hand, the resolution applicant NBCC as also the persons/entities related
with the corporate debtor JIL, including its homebuyers and the institutional
financial creditor, assert that this money is a part of the assets of JIL and
the Adjudicating Authority has rightly held so. In a third angle, an
association of homebuyers of JAL submits that a part of this amount be C
designated to complete the construction work in relation to their project.
Yet another angle is projected by some of the dissatisfied homebuyers
of JIL, who suggest that NBCC is simply aiming at profiteering by getting
hold of this money but without making any corresponding provision in
the resolution plan for its appropriate use for the benefit of homebuyers.
D
Added to these rival claims are the other disputes of accounting, in relation
to the advance made by JIL and its homebuyers to JAL towards special
advance and Interest Free Maintenance Deposit etc. In fact, it has been
the submission on behalf of JAL that either the entire amount of INR
750 crores with accrued interest be returned to it or in the alternative,
after reconciliation of accounts, its liability towards JIL be adjusted from E
this corpus and balance be refunded to it. In this scenario, we have
formulated separate questions regarding the treatment of this amount of
INR 750 crores and accrued interest and regarding reconciliation of
accounts between JAL and JIL but, for being interlaced, these questions
are taken up for determination together.
F
177. Indisputably, this sum of INR 750 crores was deposited by
JAL pursuant to the orders passed by this Court in the case of Chitra
Sharma (supra). While finally deciding the case of Chitra Sharma by
the judgment dated 09.08.2018, this Court took note of myriad features
of the case and also took note of the claim of some of the homebuyers to
allow this money to be utilised for making refunds but declined such a G
prayer and transferred this money to the NCLT.
177.1. In the process taken up thereafter, the relevant facts
concerning this amount were spelt out by IRP in the information
memorandum. Thereafter, in the resolution plan, NBCC rather made
H
860 SUPREME COURT REPORTS [2021] 12 S.C.R.

A the availability of this corpus a condition precedent for implementation
of the plan in the very first clause of its ‘reliefs and concessions’ in the
following terms: -
“INR 750 Cr was deposited by JAL with the Hon’ble Supreme
Court and which amount (with the interest accrued thereon) was
B transferred to the Adjudicating Authority as per directions of the
Hon’ble Supreme Court, with a direction that such monies shall
continue to remain invested and parties shall bide by such directions
as may be issued by the Adjudicating Authority.
This amount of INR 750 Cr along with the interest accrued thereon
C will be made available to the Corporate Debtor/Resolution
Applicant. Post receipt by the Corporate Debtor, this amount of
INR 750 Cr will be treated in the books of accounts of the
Corporate Debtor as equity infusion by the Existing Promoters
and the corresponding equity of the Existing Promoters shall
subsequently be extinguished in a manner similar to that adopted
D for extinguishment of other equity holding of the Existing Promoters
under this Resolution Plan including by way of Capital Reduction
or selective Capital Reduction. In the event, the said amount of
INR 750 Cr along with the interest accrued is not made available
to the Resolution Applicant/Corporate Debtor then the Resolution
E Applicant has the right to withdraw from this process without any
liability of any nature on the Resolution Applicant.”
177.2. The resolution plan was approved by the Committee of
Creditors; meaning thereby that the aforesaid clause was accepted by
the Committee of Creditors. However, the claim towards this amount of
F INR 750 crores with accrued interest became a bone of contention when
the Adjudicating Authority (NCLT) took up the process of approval of
the resolution plan, particularly for JAL staking its claim over this amount
as being the rightful owner thereof. In this regard, the Adjudicating
Authority, after taking note of the orders passed by this Court in the
case of Chitra Sharma (supra), concluded that the deposit made by
G JAL was always meant for the benefit of the homebuyers of JIL and
became an asset of the corporate debtor JIL; and the said amount was
to be utilised towards securing the interests of homebuyers and fulfilling
the obligations made to them, i.e., offering possession of the residential
units after completing necessary construction or making refunds, as the
H case may be.
JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 861
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178. While questioning the aforesaid stipulation in the resolution A
plan and this part of the order impugned, vast variety of submissions
have been made on behalf of JAL, its institutional financial creditor and
its homebuyers.
178.1. It has been contended on behalf of JAL that the said sum
of INR 750 crores undisputedly belongs to JAL, as the same was B
deposited by it on the directions of this Court in the order dated 11.09.2017
in Chitra Sharma (supra). It is submitted that this Court ordered the
deposit to be made by JAL so as to provide an interim workable
arrangement and relief to the homebuyers, who were, at the relevant
time, not recognised as financial creditors of the corporate debtor and
had no say in the resolution process of a company in which, they had C
made deposits for their future homes. However, it is submitted, the
purpose of this deposit was not aimed at resolving the insolvency of JIL
so as to make it an asset of JIL; and it was clearly mentioned in the
information memorandum that the sum of INR 750 crores was deposited
by JAL and was not an asset of JIL. Moreover, the interest payable D
would also accrue to JAL and would be an asset of JAL.
178.1.1. It has been forcefully contended that the assets belonging
to a third party cannot be utilised towards the resolution of insolvency of
a corporate debtor, as held by this Court in the case of Embassy Property
(supra). The decision in Anuj Jain (supra) has also been referred to E
submit that therein too, this Court disallowed JIL’s assets from being
utilised for securing the dues owed by JAL.
178.1.2. With reference to the proceedings in the case of Chitra
Sharma, it is submitted that the purpose for which this deposit was
ordered has been achieved due to the amendment of IBC and there is F
no reason for allowing this amount to be treated as an asset of JIL. It is
also submitted that in Chitra Sharma, this Court directed opening of
the web-portals for the homebuyers of both JIL and JAL; and this makes
the position clear that the said amount was meant for the homebuyers of
JAL too. Hence, the Adjudicating Authority (NCLT) proceeded on an
erroneous premise that the amount was only for the refund of JIL’s G
homebuyers, thereby seriously prejudicing the homebuyers of JAL.
178.1.3. It is submitted that JAL is committed to make the pending
homes for its own homebuyers for which it requires funds; and utilisation
of the deposit made by JAL towards the insolvency resolution of JIL
H
862 SUPREME COURT REPORTS [2021] 12 S.C.R.

A would result in a ‘Domino Effect’ and would expose JAL to the risk of
insolvency and, on the other hand, would result in unjust enrichment of
the resolution applicant (NBCC).
178.1.4. In another limb of arguments, it is submitted that JAL is
conscious of its liability towards JIL, which was INR 195 crores as on
B 31.03.2020; and since JAL is not in a position to make this payment
unless the amount of INR 750 crores is refunded to it, in all fairness,
JAL offers that this admitted liability towards JIL could be discharged
by appropriating from the said amount of INR 750 crores and the balance
be refunded to JAL. It is submitted that the said payable amount may be
verified by IRP or by a chartered accountant appointed by him. In this
C regard, while referring to the background facts relating to the construction
contracts given to JAL and advance payment on that account made by
JIL, the term in the resolution plan providing for termination of construction
contracts has also been referred and it has been prayed that the balance
due from JAL could be adjusted from the said amount of INR 750 crores,
D if NBCC makes a formal submission to the effect that it would be
terminating the construction agreements. The written submissions on
behalf of JAL in this regard could be reproduced as under: -
“G. AMOUNTS DUE FROM JAL TO JIL
26. JIL has entered into various agreement(s)/ work contract(s)
E for development of Yamuna Expressway and development/
maintenance of other land parcels located at Noida, Jaganpur,
Mirzapur, Tappal & Agra. Pursuant thereto, at the request of JAL,
JIL has advanced to JAL a sum aggregating to Rs. 716 Crores
(as on 31.03.2018) which was recoverable from JAL’s RA Bill as
F also when construction work was carried out.
27. The said sum was accordingly been recovered from JAL’s
RA Bill since August 2017 leaving an outstanding of Rs.274 Crores
as on 31.12.2019. This has further reduced to a sum aggregate of
Rs.195 Crores as on 31.03.2020 (as per the audited accounts),
G and is likely to be reduced by approx. Rs.165 Crores within a
period of 12 months as per the work plan drawn by the RBSA
(Advisors to the CIRP) [@Pg.143 of JAL’s Additional Affidavit].
28. Therefore, JAL is conscious of the fact that liability towards
JIL now stands to Rs.195 Crores (as on 31.03.2020 and is reducing
per the construction work). Since JAL is not in a position to make
H
JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 863
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this payment independently unless the Rs.750 Crores is refunded A
back to it, hence, in all fairness and bonafide, JAL offers that this
admitted and undisputed liability towards JIL can be discharged
by appropriating the said liability from the Rs.750 Crores and the
balance may be directed to be refunded. This amount may be
verified by the RP or by a chartered accountant appointed by
B
him.
29. However, it is pertinent to mention herein that NBCC’s
Resolution Plan treats the contracts for construction (between
JIL and JAL) in the following manner [@Pg.47of JAL’s
Additional Affidavit dated 12.05.2020]:
C
“(vi) Resolution Applicant shall have a right to terminate
the current construction contracts with Jaiprakash
Associates Limited, (“JAL”), which are on cost plus basis
and enter into fresh construction contracts with the vendors
as may be selected by the Resolution Applicant in
accordance with its business policies and such contracts D
shall be entered into on arms’ length basis as per the market
standard. Provided that JAL shall not be entitled to
terminate such construction contracts for a period of 12
months from the Approval Date.” (Emphasis Supplied)
30. The above clearly shows that JAL is at the mercy of NBCC E
wherein NBCC is free to terminate the contracts for construction
unilaterally, whereas JAL cannot. Therefore, it is submitted that
the aforementioned balance of Rs.195 Crores (which was to be
appropriated towards the construction of JIL’s Projects) can only
be adjusted/ set off from the sum of Rs.750 Crores if NBCC F
makes a formal submission to the effect that it would be terminating
the construction agreements.”
(emphasis is in original)
178.1.5. It has, therefore, been prayed that the said sum of INR
750 crores along with accrued interest be ordered to be refunded to JAL G
or in the alternative, the refund may be ordered after appropriating the
amount of liability of JAL towards JIL, in terms of above-quoted
paragraph 30 of the written submissions.
178.2.While supporting the submissions for return of INR 750
crores, the homebuyers of JAL have contended that the said deposit H
864 SUPREME COURT REPORTS [2021] 12 S.C.R.

A was not meant to finance construction, or to grant equity, or loan, or for
any charitable purpose; that the Supreme Court ordered the deposit to
be made by JAL only to provide an interim workable arrangement and
for relief to the homebuyers, as they were not having the status of a
financial creditor under the Code; that the purpose of the deposit was
not for resolving the insolvency of JIL; and that the information
B
memorandum did not show this sum of INR 750 crores as an asset of
the corporate debtor JIL. With reference to the condition precedent
mentioned in the resolution plan involving the transfer of INR 750 crores
in favour of NBCC, it is submitted that the question requiring consideration
is as to whether NBCC could have laid a claim over the said sum of
C INR 750 crores as a condition of its bid? Further, an unjustified deprivation
of the rightful amount to JAL and deprivation of the right of utilisation of
the amount by the developer acts as a serious prejudice and detriment to
the legal rights and interests of the homebuyers of JAL. It is submitted
that the reasoning and findings of NCLT in the order dated 03.03.2020
are flawed and without any basis. The amount deposited has not been
D
shown in the books of accounts of JIL as its asset and the NCLT had no
authority to allow the same to be claimed by NBCC under a conditional
resolution plan. It is further submitted that the order of the NCLT puts
the homebuyers of JIL at an advantageous position at the cost of the
interests of the homebuyers of JAL, which is contrary to the provisions
E and spirit of the CIRP Regulations and the Code as a whole. The
homebuyers of JAL have prayed that this amount of INR 750 crores
with accrued interest be released to JAL so as to secure the interests of
its homebuyers.
178.3. An association of homebuyers of JAL has also challenged
F the said order of NCLT dated 03.03.2020 directly in this Court and has
submitted that “Knights Court Project” was supposed to be completed
by 2015 and the homebuyers have already paid 95% of the sale
consideration to JAL. It is submitted that the sum of INR 750 crores
was deposited by JAL for the benefit of homebuyers of JAL and JIL
and it was stated that 92% of the homebuyers wanted to obtain possession
G of the flat, which is possible only after necessary construction takes
place. It is further submitted that the money of the contributors of JAL
ought to be first utilised for the construction of the flats of “Knights
Court Project” and not towards the resolution plan of JIL or for returning
to JAL. This association has stated its own grievance that in the
H simultaneously held proceedings under RERA, JAL has demanded from
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its members another sum of INR 98 crores and it is submitted that the A
liability for completion and development of flats of the aforesaid project
was of JAL but there was an unexplained delay of 5-7 years on the part
of JAL; and therefore, it was onerous that JAL was demanding such an
amount from its members.
178.3.1. It has been submitted on behalf of this association of B
homebuyers of JAL that only an amount of INR 160 crores is required
to finish the aforesaid project and it has been prayed that the same be
made available from the said INR 750 crores deposited by JAL, for
completing the houses of the members of this association.
178.4. The institutional financial creditor of JAL has contended C
that the deposit of INR 750 crores was made by JAL out of its own
money and has continued to be its asset; and that in the absence of any
direction by the Supreme Court or any legal transfer, the ownership of
this deposit would not change, and this money is required to be returned
to JAL. It is submitted that this Court has consistently laid down that an
act of the Court cannot prejudice any party before it and in case it happens, D
the Court is bound to revert the party to the position prior to such an act
of the Court. The decision in the case of ONGC and Anr. v. Association
of Natural Gas Consuming Industries and Ors.: (2001) 6 SCC 627
has been referred. It is submitted that JAL deposited the money on the
directions of this Court for securing the interests of homebuyers but, E
since the Court did not make any direction for the utilisation of this deposit
and simply transferred the fund to NCLT, JAL is entitled to be restored
to its original position with return of this amount. It is reiterated that the
IRP cannot lay a claim over the assets of a third party, held in trust or in
possession of the corporate debtor. It is also re-emphasised that the
directions to JAL for making this deposit was to arrive at an interim F
workable arrangement and to protect the interests of the homebuyers;
but when the purpose became moot after the amendment of IBC, the
money is supposed to be returned to its owner, i.e., JAL. It is submitted
that JAL itself is in financial distress and is unable to meet with the
obligations towards its stakeholders and an application under Section 7 G
of the Code for the CIRP of JAL is pending. With these submissions, it
has been prayed that the deposited amount with accrued interest be
ordered to be returned to JAL and be further ordered to be kept in an
escrow account under the control of the lenders of JAL, led by ICICI
Bank.
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866 SUPREME COURT REPORTS [2021] 12 S.C.R.

A 179. The submissions aforesaid, for refund of INR 750 crores
with accrued interest to JAL, have been duly countered by the persons/
entities standing for the resolution plan, while supporting the order passed
by the Adjudicating Authority. We may take note of the leading
submissions in this regard.
B 179.1. It has been contended on behalf of the resolution applicant
NBCC that the resolution plan introduced by it, which got approved by
the CoC and by the Adjudicating Authority, included this deposit of INR
750 crores by JAL to be treated in the CIRP of JIL and utilisation of this
amount has been a condition precedent to the implementation of the
resolution plan.
C
179.1.1. NBCC has elaborated on the submissions that the
stipulation in its resolution plan as regards this sum of INR 750 crores
was essentially based on the orders of this Court in the case of Chitra
Sharma; and on the fact that JAL was directed to deposit this money in
the proceedings which were filed in relation to CIRP of JIL. It is submitted
D with reference to various orders passed in the case of Chitra Sharma
that this money was clearly meant for the benefit of homebuyers and
though this Court initially discussed the proposition of pro rata
disbursement among the refund seekers but no such disbursement was
ordered after the Court noticed that an overwhelming majority of
E homebuyers was desirous of seeking possession of flats and disbursement
to refund seekers was going to cause prejudice to others. It is submitted
that intention of the Court, that the aforesaid amount shall inure to the
benefit of homebuyers, is also apparent from the fact that even after
amendment of the Code with effect from 06.06.2018, whereby the
homebuyers were included as financial creditors, this Court deemed it
F appropriate to retain the deposit for the benefit of JIL homebuyers and
did not pass any modification order in respect thereof or any order for
release of said amount to JAL.
179.1.2. With reference to the contents of the information
memorandum under sub-heading ‘Unique Investment/financing
G opportunity for the Resolution Applicant with adequate value to be
unlocked’ in the ‘Investment Highlights’, NBCC would submit that the
financial model of the resolution plan is based on the availability of this
sum of INR 750 crores, and if the same is not made available, it would
be handicapped in completing the flats of the homebuyers. NBCC has
H reiterated that availability of this amount being a condition precedent, it
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would have a right to withdraw from the resolution plan in the event this A
amount is not made available to it.
179.1.3. It has also been submitted that the deposit made by JAL
pursuant to the orders of this Court in Chitra Sharma was to secure
and protect the interests of homebuyers of JIL and in order to act on the
lines of the order of this Court, the deposit ought to be permitted to be B
used to achieve the purpose namely, the construction of dwelling units.
NBCC submits that the said sum of INR 750 crores did not remain an
asset of JAL after the same was deposited in this Court.
179.1.4. Apart from the aforesaid submissions and without
prejudice, NBCC has also stated, with reference to the observations C
made by this Court during the course of hearing, that if any reconciliation
of accounts has to be carried out before approval of the plan by this
Court, NBCC ought to be involved in such an exercise, for being the
successful resolution applicant and a part of the erstwhile Interim
Monitoring Committee.
D
179.1.5. NBCC has also referred to paragraph 77 of the impugned
order dated 03.03.2020, wherein the NCLT has recorded an admission
on behalf of JAL about its liability towards JIL to the tune of INR 274
crores and ordered that JAL shall make this payment to JIL; and regarding
the remaining amount, JAL and JIL shall draft a reconciliation statement
and proceed according to the outcome of such reconciliation. E

179.1.6. Long drawn submissions have been made on behalf of
NBCC in regard to the alleged liabilities of JAL towards JIL on various
scores. These aspects of accounting would not, as such, require
adjudication herein but have some bearing on the issues raised before us
and hence, a part of the written submissions on behalf of NBCC in this F
regard are reproduced as follows: -
“2. JAL has claimed by way of an additional affidavit filed in the
JAL Appeal claimed that as on 31 March 2020, the amount owed
by JAL to JIL has reduced to INR 218 Crores. It needs to be
highlighted that under the Resolution Plan, NBCC has reserved G
its right to terminate all existing contractual arrangements with
JAL.
3. It is submitted that as per the records of JIL provided by the
IRP and seen by NBCC during its presence in the IMC, it has
been observed that: H
868 SUPREME COURT REPORTS [2021] 12 S.C.R.

A The Home Buyer of JIL are required to pay amounts in the
nature of Interest Free Maintenance Deposit (“IFMD”) towards
the flat units purchased by them, and after the formation of
recognized Residents Welfare Associations (RWAs) this IFMD
is required to be transferred to RWA as per provisions of the UP
Apartments Act.
B
Since JAL is the designated maintenance agency for such
flat units as per the existing contractual arrangement between
JIL, JAL and the Home Buyers, this payment of IFMD was to be
paid by Home buyers to JAL and thereafter the transfer of IFMD
was to be made by JAL to the RWAs.
C
In the year 2016, on the request of JAL, JIL has paid to
JAL an advance amounting to INR 381 crore towards Interest
Free Maintenance Deposit (IFMD, with the understanding that
these amounts would be later on recovered by JIL form the Home
Buyers at the time of taking over of possession of their flat units
D by the Home Buyers and the advance paid will get adjusted.
However, JAL will transfer the IFMD to the RWAs.
i. Accordingly, during course of handing over of the flats, an
amount of approximately INR 115 Crores has been collected from
Home Buyers by JIL and same stands adjusted from the advance
E amount of INR 381 Crores but is now payable/transferable to the
RWAs of the Home Buyers by JAL.
ii.Therefore, an amount of INR 266 Crore (INR 381-INR 115
Cr) is still recoverable by JIL from JAL as per audited accounts
of JIL as on 31 March 2020. Overall, the Amount of Rs 115 Crore
F (ultimately to be transferred to RWA) along with 266 crores
(pertaining to JIL) i.e. 381 crores is recoverable from JAL towards
Interest Free Maintenance Deposit (IFMD) of Home Buyers.
This needs to be seen in the context that NBCC may terminate all
existing contractual arrangements with JAL and thus INR 115
G Crores which is money belonging to Home Buyers ought to be
paid by JAL to JIL for further transfer to the Home Buyers.
iii. Further, JIL has paid to JAL an advance amounting to INR 450
crore towards special advance in the year 2016, which was being
recovered on pro-rata basis from the JAL running bills. Till 31
Mar 2020, an amount approx. of INR 146 Crores is adjusted from
H
JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 869
ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

running bills of JAL and an amount of INR 304 Crore is still A
recoverable from JAL as on 31 March 2020 as per audited
accounts of JIL as on 31 March 2020.
iv. Apart from the above, an amount of INR 71 Crore is also
recoverable from JAL in respect of Land Swap Deal with JAL
lenders. B
v. From above details, it is apparent that a cash amount of INR
756 Cr (381 + 304 + 71 Cr) is payable by JAL to JIL as on
31.3.2020.
vi. It is pertinent to mention that the Hon’ble Court by judgment
dated 26.02.2020 in Civil Appeal No. 8512-8527 of 2019 Anuj C
Jain vs. Axis Bank Limited etc. etc. (2020 SCC Online SC 237)
(“758 Acres Judgment”) has set aside mortgage created on
758 acres of land belonging to JIL to secure the debts of JAL on
the ground that the same were preferential transactions. However,
apart from the said 758 acres of land, mortgage of 100 acres of D
land of JIL to secure JAL’s debts could not be set aside as the
same was beyond the look back period. Thus, at present a mortgage
of 100 acres of land of JIL still exists to secure the debts of JAL.
Hence, an amount equivalent to the market value of the 100 acre
mortgaged land (mortgaged against 1500 crore loan) could be
payable by JAL to JIL, subject to JIL exercising the remedies E
available to it under the law in this regard. The equivalent value of
the said land as per the valuation taken for the purpose of the
Resolution Plan (land proposed to be transferred through land
SPV) is INR 328 crores.
vii. Hence it is submitted that for effective implementation of the F
Resolution Plan and to ensure that the strict timelines prescribed
therein are met, JAL shall pay to JIL immediately upon the disposal
of these appeals and under the aegis of this Hon’ble Court a total
Amount of Rs 1084 Crores (756 crores + 328 Cr).
viii. The same shall be utilised for the construction in terms of the G
NBCC Resolution Plan.”
179.1.7. Apart from the above, the resolution applicant NBCC
has also indicated various other aspects of accounting in regard to the
defect liability of JAL as the master developer; and charging of excess
profit by JAL. However, it is also submitted that the suggested amounts H
870 SUPREME COURT REPORTS [2021] 12 S.C.R.

A are subject to final reconciliation and verification. With these submissions,
the prayer on behalf of NBCC is stated in the following terms: -
“9. Needless to state that the above amounts are subject to final
reconciliation and verification of accounts. In this regard it is
requested that such reconciliation should be carried out by an
B independent third party to be nominated by the Hon’ble Court
which would ensure that the rightful entitlement of JIL is provided
to it and the Resolution Plan is successfully and effectively
implemented.”
179.2. The associations of homebuyers of JIL, while supporting
C the submissions of the resolution applicant, have contended that returning
the said sum of INR 750 crores deposited by JAL would be contrary to
the orders of this Court, as the intention of the Court in Chitra Sharma
was to safeguard the interests of homebuyers and rehabilitation of JIL.
Moreover, direction by the Court to JAL for making such deposit, even
when it was aware that JAL was not a party to the CIRP of JIL, shows
D that the refund shall not be made to JAL. It is submitted that any such
refund may cause reduction of readily available funds to start the
construction of unfinished projects.
179.2.1. It has been prayed that the Court may confirm that the
said sum of INR 750 crores is to protect the interests of the homebuyers
E and forms a part of the assets of JIL. Alternatively, it has also been
prayed that reconciliation of accounts between JAL and JIL be done in
a time bound manner; and the refund of leftover funds be not permitted
until NBCC completes the construction of apartments and the
homebuyers get the possession of the flats. The homebuyers have also
F prayed for an injunction against NBCC, barring it from withdrawing and
for direction to NBCC to expedite the process of implementation. Yet
further prayers have been made to direct an audit of the quality of
construction by NBCC to make sure that it conforms to the quality agreed
upon by the homebuyers at the time of booking the apartments.

G 179.3. The other homebuyers of JIL, while supporting the
submissions aforesaid, have reiterated that the directions of this Court in
Chitra Sharma to JAL for making the said deposit was primarily to
safeguard the interests of the homebuyers and rehabilitation/restitution
of JIL; that it was a conscious decision of this Court keeping the interests
of the homebuyers in mind; that if the intention of this Court was to
H revert this deposit to JAL, an express direction would have been made
JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 871
ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

in that behalf but, despite multiple pleas of JAL, this Court did not do so; A
that the application of JAL seeking recall of the directions for depositing
INR 2,000 crores was dismissed by the order dated 25.10.2017 and it is
against the principles of res judicata for JAL to seek the same relief in
the present proceedings; that the IRP was conscious of the intention of
this Court regarding the fate of the deposit made by JAL and that is why
B
included this amount in the information memorandum with a caveat that
it is subject to the order of the NCLT. It is further submitted that any
direction for refund of this money to JAL would cause shortage of readily
available funds to start the construction, which may jeopardise the fate
of the entire project.
179.4. Even those associations of homebuyers of JIL, who have C
attempted to project themselves as ‘dissenting’ homebuyers, are ad idem
on this issue that the said sum of INR 750 crores is the property of JIL
and ought not be refunded to JAL. However, it is submitted by them that
NBCC is aiming at profiteering by getting hold of this money without
corresponding provision in the resolution plan for its use for the benefit D
of homebuyers.
179.5. The other persons/entities standing with JIL have also
opposed the submissions made on behalf of JAL for return of this sum
of INR 750 crores. It is submitted that even while permitting RBI to
allow the banks to initiate CIRP against JAL, this Court did not issue any E
direction for refund of the deposit made by JAL and rather allowed this
amount to be utilised for the CIRP of the corporate debtor JIL. Therefore,
this amount has rightly been taken in the resolution plan for being utilised
for the purposes of JIL.
180. From the long range of submissions aforesaid, two aspects F
emerge for determination: one, as regards the treatment of the said amount
of INR 750 crores and accrued interest; and second, as regards the
amount receivable by JIL from JAL and reconciliation of accounts
between these two companies. For dealing with extensive submissions
concerning the said amount of INR 750 crores and accrued interest,
worthwhile it would be to recapitulate the basic facts related with this G
deposit.
181. A comprehensive look at what had transpired during the course
of consideration of the matter involved in Chitra Sharma and what had
culminated in the final judgment dated 09.08.2018, a few pertinent features
come to the fore, which essentially relate to the concern of this Court H
872 SUPREME COURT REPORTS [2021] 12 S.C.R.

A towards homebuyers of JAL and JIL taken as a whole. As noticed,
when the proceedings were taken up by this Court in Chitra Sharma in
the month of September, 2017, the homebuyers were facing critical
predicaments inasmuch as, at that point of time, they were not recognised
as financial creditors of the corporate debtor. The matter, of course,
arose from the insolvency proceedings relating to JIL but the submissions
B
before the Court did not remain limited to the homebuyers of JIL alone;
rather the predicaments were placed before the Court on behalf of the
homebuyers of JAL and JIL as a whole lot and it was submitted that the
interests of the ‘flat purchasers’, who had invested with JAL and JIL,
need to be protected. On 11.09.2017, after noticing several facets of the
C matters, including the fact that JAL, the holding company, was not a
party to the insolvency proceedings concerning JIL, this Court issued a
slew of directions, including that for deposit of INR 2,000 crores by
JAL.
181.1. JAL made an avid effort to wriggle out of the rigour of the
D direction for deposit of INR 2,000 crores while seeking recall of the
order passed by this Court or for a modification that would enable it to
transfer the rights under the Concession Agreement in respect of the
Yamuna Expressway. This attempt on the part of JAL failed after this
Court noticed the submissions in opposition that the rights under the
Concession Agreement belonged to JIL. The directions of this Court,
E for deposit as made from time to time in the course of proceedings in
Chitra Sharma, resulted in JAL depositing INR 750 crores in instalments.
181.2. The fact of the matter remains, and unfolds from various
interim orders passed in the case of Chitra Sharma, that basic concern
of the Court was regarding the claim of the homebuyers of JAL and JIL
F taken as a whole; and it was not stated at any stage by this Court that
JAL was to part with this money exclusively for the purposes of JIL and,
for that matter, for the purposes of the homebuyers of JIL alone. As
noticed, during the course of proceedings, this Court appointed amicus
curiae, who was directed to open web-portal for the homebuyers of JIL
G and an independent web-portal for the homebuyers of JAL. As per the
order dated 22.11.2017, the learned counsel appearing for JAL was to
provide the requisite details to the amicus as also the amount for creation
of the portal and for carrying on the consequential activities.
181.3. On 21.03.2018, it was stated on behalf of JAL that an
H amount of INR 550 crores had already been deposited and that only
JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 873
ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

about 8% of the homebuyers were interested in seeking refund while A
others were desirous of seeking possession of their flats. This Court
indicated that at the given stage, only the matter in relation to the
homebuyers seeking refund was being examined and other grievances
would be examined in the next phase of proceedings. Since the order for
deposit of INR 2,000 crores had not been fully complied with, the Court
B
issued directions for further deposit of INR 200 crores in instalments. At
that stage, the Court was informed by the amicus curiae that as per his
portal and as per the record of JAL, an amount of INR 1,300 crores
was required to be refunded by way of principal alone to the homebuyers
who were seeking refunds.
181.4. Thereafter, on 16.05.2018, this Court took note of the fact C
that a sum of INR 750 crores was lying in deposit and it was observed
that the same ‘has to be disbursed on pro rata basis amongst the
homebuyers’. On that date, it was also directed that ‘Jaiprakash
Associates Ltd. (JAL), the holding company of Jaypee Infratech
Ltd. (JIL), shall deposit a further sum of Rs. 1000 crores jointly and D
severally by 15.06.2018’.
181.5. Lastly, on 13.07.2018, this Court, while expressing
disinclination to entertain the proposals advanced on behalf of JAL, posted
the matters on 16.07.2018 ‘exclusively for the purpose of considering
the issue of the rights of the homebuyers and the capability of JAL E
and JIL to construct the projects’. Thereafter, the matters were finally
heard and decided by way of the judgment dated 09.08.2018.
181.6. Even at the final consideration of the matter, further
proposals were mooted on behalf of JAL but were rejected by this Court
while explaining that accepting any such proposal on behalf of JAL would F
cause serious prejudice to the discipline of IBC; and this Court particularly
observed that clauses (c) and (g) of Section 29A operated as a bar to
the promoters of JAL/JIL participating in the resolution process. This
apart, after taking note of various grounds urged on behalf of the
homebuyers in opposition to the proposal, this Court was convinced that
JAL/JIL were lacking in financial capacity and resources to complete G
the unfinished projects. The reasons that were stated on behalf of the
homebuyers in opposition to the proposal of JAL were aplenty where it
was, inter alia, alleged that there had been questionable transactions
involving mortgage of around 758 acres of JIL’s land worth INR 5,000
crores in favour of the lenders of JAL without any consideration and the H
874 SUPREME COURT REPORTS [2021] 12 S.C.R.

A same were set aside by NCLT87; that the claim by JAL of delivering the
flats was also a fractured one because the flats were delivered incomplete
and OOP was being made without OC; that about 22,000 homebuyers
were suffering due to delays of more than four years in completion of
various projects of JAL and JIL; that under the contracts, JAL and JIL
were jointly and severally liable to deliver the flats; that there were serious
B
doubts about the credentials of JAL, who had diverted huge funds from
JIL towards its other businesses; JAL had been unable to honour the
order of this Court for depositing INR 2,000 crores, where only INR 750
crores were deposited after about 10 months from the initial order dated
11.09.2017 and where the instalment of INR 1,000 crores, as ordered on
C 16.05.2018, was not forthcoming. The aforesaid and all other facts and
factors indeed formed the basis of the conclusion by this Court that
JAL/JIL were lacking in financial capacity and resources to complete
the unfinished projects. There was, of course, a common refrain that
liquidation of the corporate debtor JIL would not be in the interest of
homebuyers.
D
181.7. In Chitra Sharma (supra), having pondered over diverse
propositions, the requirement of balancing the discipline of the Code, to
do complete justice and to secure the interests of all the concerned, this
Court considered it just and proper to revive the CIRP of JIL and to
reconstitute the CoC as per the amended provisions of IBC with recourse
E to the powers under Article 142 of the Constitution of India.
181.8. However, before concluding on the matter, this Court also
took into consideration the submissions made on behalf of some of the
homebuyers for issuance of directions to facilitate pro rata disbursement
of the amount of INR 750 crores lying in deposit pursuant to the interim
F directions. This Court observed that even when the claim of the refund
seekers was required to be considered with empathy, such a request
could not be acceded to; and specified four major reasons for declining
this prayer, which included the reason that there were other creditors
too and if the amount was utilised only for refund seekers, the homebuyers
G who were seeking their flats would have a legitimate grievance. Another
reason was that the insolvency resolution process qua JAL was also
being permitted. This was coupled with the position that this Court was
reviving the CIRP in relation to JIL.

87
The said order of NCLT was ultimately approved by this Court in the judgment
H dated 26.02.2020 in the case of Anuj Jain.
JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 875
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181.9. It is also noteworthy that though the homebuyers were A
earlier not recognised as financial creditors, the doubts about their status
as financial creditors were removed with amendment of the statute (IBC)
with effect from 06.06.2018 and that was a major reason that this Court
considered it appropriate, while deciding Chitra Sharma on 09.08.2018,
to revive the resolution process but while making it clear that it would
B
follow the discipline of IBC. However, this Court did not order that the
said sum of INR 750 crores shall stand forfeited to JIL but only transferred
the same together with accrued interest to NCLT, so as to abide by the
directions of NCLT.
182. Taking all the factors and the orders of this Court into account
cumulatively, it is difficult to find if the sum in question was ever ordered C
by this Court to be deposited by JAL in discharge of its obligations towards
JIL or towards homebuyers of JIL alone; and equally difficult it is to
accept the submissions made by the resolution applicant and other persons
standing with JIL that this corpus of INR 750 crores together with
accrued interest has become an asset of JIL. D
183. In an overall analysis, it appears that at the relevant time of
consideration of the matter in Chitra Sharma, the grievances that were
projected before this Court were not confined to the homebuyers of JIL
alone but they related to the homebuyers of JAL as well; and the
agreements with the homebuyers were also of a composite nature, with E
both JAL and JIL being the parties thereto. It had been in that hodgepodge
of the interwoven transactions that the homebuyers of JAL and JIL
projected their grievances as a whole lot before the Court in Chitra
Sharma. As noticed, at the initial stages, pro rata disbursement to the
refund seekers was under contemplation of the Court (as twice over
stated in the interim orders) but even those refund seekers were not the F
homebuyers of JIL alone. The figure of INR 1,300 crores, as being the
amount required for refund, was stated by the amicus curiae as per his
portal and ‘as per the record of JAL’.
183.1. Therefore, it is apparent that at the given stage, the said
deposit was taken for the purpose of the refund seeking homebuyers of G
JAL and JIL both; and at the final stage, when this Court found that the
interests of various other stakeholders were to be taken into account,
the money was transferred to NCLT. It is difficult to deduce from the
said proceedings and from the final order of this Court in Chitra Sharma
that the corpus comprising of INR 750 crores with accrued interest is to
be treated as the property of JIL. H
876 SUPREME COURT REPORTS [2021] 12 S.C.R.

A 183.2. The NCLT essentially proceeded on the considerations
that JAL had indeed received money from the homebuyers of JIL; that
JAL was asked by the Court to deposit the amount towards refund of
JIL homebuyers; and that there was no direction from the Court to return
this money to JAL. It appears that all the relevant facts and background
aspects concerning this deposit did not surface before NCLT, which led
B
it to draw an inference not standing in conformity with the meaning and
purport of the directions of this Court in the case of Chitra Sharma
(supra).
183.3. While deducing that the money in question became the
property of JIL in view of the directions for deposit to JAL by this Court,
C the NCLT omitted to consider that the directions to JAL by this Court
were not backed by any finding that in law JAL was liable to make good
the said some of money for the purpose of refund seeker homebuyers of
JIL alone. The directions and observations of this Court in the case of
Chitra Sharma when read ad seriatim with their context, it is clear
D that such directions for deposit to JAL were that of an attempt by this
Court to deal with the demands of refund seeking homebuyers of JAL
and JIL. Even such a tentative proposition did not reach its finality in
Chitra Sharma; and after taking note of the other factors and interests
of various other stakeholders, the money was transferred to NCLT. In a
comprehensive view of the matter, the inference drawn by NCLT in its
E impugned order dated 03.03.2020, that this money is an asset of the
corporate debtor JIL remains unsustainable.
184. Before switching over to the other leg of discussion in regard
to this sum of INR 750 crores, it may also be observed that the contentions
urged on behalf of the homebuyers of JIL, that this Court having rejected
F the application of JAL for recalling the directions for depositing the amount
of INR 2,000 crores, the claim for refund of deposited amount by JAL is
against the principles of res judicata, is also baseless. As noticed, during
the course of consideration of the matter in Chitra Sharma (supra),
this Court not only declined the prayer for recall of the directions for
G deposit but, even reiterated such directions on more than one occasion.
However, all such orders and directions were interim in nature and from
none of those interim orders or from the final judgment in Chitra Sharma,
it could be deduced that the issue concerning entitlement to the deposited
amount was finally decided by this Court against the depositor JAL.

H
JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 877
ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

185. Coming to the resolution plan, in our view, NBCC could not A
have prepared the same by assuming that this amount was the property
of JIL when it was neither stated so in the orders passed by this Court
nor by IRP in the information memorandum. The overt reliance by NBCC
on the contents of the information memorandum is also misplaced because
IRP never stated in the information memorandum that this amount of
B
INR 750 crores was a part of the assets of JIL. In the relevant heading
of ‘Investment/Financing Opportunity’, the IRP stated thus: -
“Unique investment/financing opportunity for the Resolution
Applicant with adequate value to be unlocked
• Unutilized land parcels (mortgaged and unencumbered land) C
of 3502 Acres
• 4,602 units (6.39 Mn sqft) of unsold inventory in LFD 1
(Noida), LFD 3 (Mirzapur), LFD 5 (Agra).
• More than INR 3,758 cr receivable (including amount not due)
as at Sep 30, 2018, against sold inventory, further approximately D
INR 184.45 cr is due against bulk sale of land
• Rights over the toll fee (along with revenue from road side
facilities and advertisement) to be collected on Yamuna
Expressway over the balance concession period of 30 years
as at date E
• 25% CAGR in toll revenue up to H1FY19
• Opportunity to exploit 3.4 mn sqft of road side facility area
across express way
• 100% equity shareholding in Jaypee Healthcare Limited, F
having two fully operational hospitals in Noida & Chitta and
one semi operational hospitals in Anoopshahr, UP
• Jaypee Hospital, Noida with 525 beds (338 operational beds)
is expandable to 1200 beds
• 750 Crores deposited by JAL lying with Hon’ble NCLT, G
utilization/ end use of same pending directions and decisions
of Hon’ble NCLT.”
(underlining supplied for emphasis)

H
878 SUPREME COURT REPORTS [2021] 12 S.C.R.

A 185.1.Therefore, even though various aspects relating to other
assets and their potential utilisation were indicated in the information
memorandum but, as regards this sum of INR 750 crores, the information
memorandum made it absolutely clear that the same was deposited by
JAL and was lying with NCLT; and that its end use was pending decision
of NCLT. In the face of such unequivocal expressions, it cannot be
B
accepted that in the information memorandum, any declaration was made
that this sum of INR 750 crores was readily available to the resolution
applicant. The submissions in this regard as made on behalf of NBCC
are required to be rejected.
186. We may observe that the decisions cited by the parties do
C not require much discussion. The principles in the cited decisions including
those in the case of Embassy Property (supra) that the assets belonging
to a third party cannot be utilised towards resolution of a corporate debtor
remain fundamental and beyond cavil. Equally, the reference to the maxim
actus curiae neminem gravabit, and to the decision in ONGC (supra)
D has been rather unnecessary because the said principle is essentially
employed for the purpose of restitution and putting a party in the position
where he would have been but for intervention or lapse of the Court. 88
The principle underlying this maxim is also fundamental to all the rules
of administration of justice and hence, an unintended result of any act or
omission on the part of the Court, which occurs for whatever reason, is
E not allowed to operate to the prejudice of any person. However, this
principle would not apply to the present case for the reasons that this
Court consciously directed the holding company JAL to make a deposit
but, added to that were the other conscious decisions where this amount
was not ordered to be forfeited to JIL nor there was any decree that this
F 88
This principle has been succinctly explained by this Court in the case of South
Eastern Coalfields Ltd. v. State of M.P. & Ors.: (2003) 8 SCC 648 in the following
words: -
“28. That no one shall suffer by an act of the court is not a rule confined
to an erroneous act of the court; the “act of the court” embraces within its
sweep all such acts as to which the court may form an opinion in any legal
proceedings that the court would not have so acted had it been correctly apprised
G of the facts and the law. The factor attracting applicability of restitution is not
the act of the court being wrongful or a mistake or error committed by the court;
the test is whether on account of an act of the party persuading the court to
pass an order held at the end as not sustainable, has resulted in one party
gaining an advantage which it would not have otherwise earned, or the other
party has suffered an impoverishment which it would not have suffered but for
H the order of the court and the act of such party…….”
JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 879
ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

amount had become property of JIL or the homebuyers of JIL. For what A
has been found and held hereinabove, we do not consider it necessary to
dilate further on these principles.
187. The upshot is that the said amount of INR 750 crores and
accrued interest thereupon, is not the property of JIL. In regard to this
amount, neither the stipulation in the resolution plan could be countenanced B
nor the order of NCLT could be approved.
188. Accordingly, we hold that the amount of INR 750 crores,
which was deposited by JAL pursuant to the orders passed by this Court
in the case of Chitra Sharma, and accrued interest thereupon, is the
property of JAL; and stipulation in the resolution plan concerning its C
usage by the resolution applicant of JIL cannot be approved. The part of
the impugned order dated 03.03.2020 placing this amount in the asset
pool of JIL is set aside.
189. After we have found that the impugned order dated 03.03.2020
placing the said amount of INR 750 crores and accrued interest in the D
asset pool of JIL is unsustainable, the question is as to what orders in
sequel be made regarding this money? In ordinary circumstances, the
consequence of the findings in the preceding paragraphs would have
been of direct refund of this money to JAL but the present matter carries
with it several entangled features relating to the amount otherwise payable
by JAL to JIL; and these features cannot be ignored altogether. E

189.1. As noticed, even when JAL and JIL are two separate
corporate entities, JIL is an alter ego of JAL, for having been set up as
an SPV and having been substituted as concessionaire in the Concession
Agreement aforesaid. The agreements with homebuyers had also been
of such a nature where JAL and JIL both were signatories thereto. F
Additionally, JAL had been extended construction contracts by JIL and,
as per the submissions made before us [vide paragraph 178.1.4 (supra)],
JAL had been carrying out the construction work and taking steps to
reduce the liability towards JIL that stood at a sum of INR 716 crores as
on 31.03.2018 and was purportedly reduced to INR 195 crores as on G
31.03.2020. Various homebuyers have allegedly made payments towards
IFMD to JAL. Moreover, JAL has submitted that balance of INR 195
crores, which was to be appropriated towards the construction of JIL’s
project, could be adjusted from the said sum of INR 750 crores, if the
resolution applicant makes a formal submission of terminating the
H
880 SUPREME COURT REPORTS [2021] 12 S.C.R.

A construction agreement. NBCC, on the other hand, has suggested several
other amounts to be recoverable from JAL.
189.2. Having comprehensively taken note of the complex and
interwoven features, even while we are not inclined to countenance the
other claims against JAL in these proceedings89, so far as the admitted
B amount towards construction advance is concerned, in our view, the
process had been a continuing one and admittedly an amount of INR
195 crores was due to JIL as on 31.03.2020. In the given circumstances,
it would serve the interests of all stakeholders, if the proposition for
reconciliation of accounts, as stated in the alternative submissions by
JAL as also by the resolution applicant, be partly accepted and after
C reconciliation, the payable amount be made over to JIL before refunding
the remainder to JAL.
189.3. On behalf of JAL, it is submitted that verification/
reconciliation could be carried out by IRP or by a chartered accountant
appointed by him, whereas NBCC would submit that such reconciliation
D should be carried out by an independent third party to be nominated by
this Court. However, as noticed, the said sum of INR 750 crores stood
transferred to NCLT in terms of the final directions in the case of Chitra
Sharma (supra). Having regard to all the relevant features of this case,
it appears appropriate that the process of reconciliation of accounts
E between JAL and JIL be taken up under the supervision of NCLT.
190. For the aforesaid purpose of reconciliation of accounts
between JAL and JIL, the NCLT shall, within 7 days of receipt of copy
of this judgment, nominate an independent accounting expert; and the
accounting expert so nominated by NCLT shall carry out the process of
F reconciliation while involving IRP of JIL and one representative of JAL.
Looking to the underlying urgency, the accounting expert shall complete
the entire process of reconciliation of accounts and submission of his
report to NCLT within 10 days of his nomination. The professional
charges and expenses for the task assigned to the accounting expert
shall be determined by NCLT and shall be borne equally by JAL and
G JIL.
190.1. After receiving the report from the accounting expert, the
NCLT shall pass appropriate orders in the manner that, if any amount is
89
This is because insolvency resolution of JAL itself is looming large and in case of
insolvency resolution or liquidation of JAL, such claims against JAL shall have to stand
H in the queue as per the discipline of IBC.
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found receivable by JIL/homebuyers of JIL, the same shall be made A
over to JIL from out of the said amount of INR 750 crores and accrued
interest; and remainder thereof shall be returned to JAL in an appropriate
account and that shall abide by the directions of the competent authority
dealing with the proceedings concerning JAL. The NCLT would be
expected to pass appropriate orders within 2 weeks of submission of
B
report by the accounting expert.
190.2. However, we need to make it clear that this process of
reconciliation is not meant for determination of any claim otherwise sought
to be levied against JAL by IRP or homebuyers of JIL or by the resolution
applicant; and only the accounts concerning the amount/s advanced to
JAL by JIL towards construction contracts (vide paragraph 178.1.4.) C
are to be examined and reconciled with reference to the extent of liabilities
discharged by JAL and then to find the extent of excessive amount, if
any, available with JAL which is receivable by JIL/homebuyers of JIL.
191. In regard to the aforesaid directions concerning reconciliation
of accounts and disposal of the said amount of INR 750 crores and D
accrued interest, a few more comments and observations appear
necessary. We have taken note of the submissions made on behalf of
NBCC as also on behalf of various homebuyers of JIL that this money is
required for construction of houses and if it goes to JAL, there would be
acute shortage of funds for construction. We are also aware of the facts E
that have come on record that JAL is itself in distress and CIRP in its
relation is looming large. We have further taken note of the submissions
made by the financial creditor of JAL to place this sum of money within
their control in an escrow account. However, we have not accepted any
of these submissions in entirety.
F
191.1. As observed hereinabove, after having found that the said
money is the property of JAL, ordinarily, the consequence would have
been of directing its refund to JAL but the other entangled features of
the case relating to the amount otherwise payable by JAL to JIL cannot
be ignored altogether, particularly when it was an admitted position on
behalf of JAL before NCLT that an amount of INR 274 crores was G
payable by it to JIL and even before this Court, this obligation to pay has
been admitted on behalf of JAL, albeit to the tune of INR 195 crores as
on 31.03.2020; and it appears that JAL has been taking steps (maybe
crippled steps) to carry out construction and to reduce its liability. We
are not determining the extent of amount payable by JAL to JIL because H
882 SUPREME COURT REPORTS [2021] 12 S.C.R.

A that would be a matter of reconciliation of accounts but, having regard
to the background in which, and the purpose for which, JAL made the
said deposit pursuant to the orders of this Court and also having regard
to the present position of these two companies, adopting this course
appears to be in the balance of the legal rights of the respective
stakeholders as also in the balance of equities. We would hasten to
B
observe that ordinarily, the equitable considerations do not directly come
into play in corporate insolvency resolution process but the matter
concerning this amount of INR 750 crores and accrued interest thereupon
is a convoluted and stand-alone issue, having the peculiarities of its own
and hence, we have adopted the course as contemplated above. This
C process is otherwise not of determination of the claims of individual
stakeholders, be it operational creditors or financial creditors. In the
interest of justice, it is also made clear that disposal of the said sum of
INR 750 crores shall otherwise not be treated as determinative of the
rights and obligations of any stakeholder in any of these two companies,
JAL and JIL.
D
192. Before closing on this point for determination, we may indicate
that a few of the arguments on this point have gone off on a tangent, as
could be noticed from the submissions made by an association of
homebuyers of JAL, who has directly approached this Court against the
order of NCLT, that INR 160 crores be designated out of the said amount
E of INR 750 crores for completing the houses of the members of that
association; and that in RERA proceedings, JAL was demanding money
from its members, though, there was unexplained delay of 5 to 7 years in
completion of project by JAL. We are unable to find any logic in the
submission of this nature against JAL by its homebuyers having been
F made in these proceedings. It goes without saying that the dealing between
JAL and its homebuyers is not the subject matter of the present
proceedings. Similarly, the submission by some of the dissatisfied
homebuyers of JIL, that NBCC is aiming at profiteering by getting hold
of this money but without making corresponding provision in the resolution
plan for the appropriate use of this money for the benefit of homebuyers,
G also remains baseless and redundant in view of what has already been
discussed hereinbefore. Another block of submissions on behalf of some
of the homebuyers of JIL, like seeking directions against NBCC that it
shall not withdraw and should expedite construction as also seeking audit
over the quality of construction, have gone far too beyond the real issues
H requiring determination in the present litigation. In regard to these and
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other submissions of similar nature, we would only leave the parties to A
take recourse to appropriate remedies in accordance with law, in case
of any legal grievance existing or arising in future.
Point K
Security interest of the lenders of JAL and effect of judgment
dated 26.02.2020 B

193. Two separate questions formulated in this point for
determination carry their intrinsic correlation and hence are taken up for
determination together.
193.1. The genesis of these questions lies in seven such C
transactions whereby, the financial facilities obtained by JAL were
secured by way of mortgages created over various parcels of JIL’s
land, aggregating to 858 acres. During the present CIRP proceedings,
the IRP questioned these transactions as being preferential, undervalued
and fraudulent within the meaning of Sections 43, 45 and 66 of the Code.
An application moved by IRP for avoidance of these transactions was D
accepted in part by the Adjudicating Authority in its order dated 16.05.2018
and directions were issued for avoidance of six of these transactions.
However, one such transaction was found by the Adjudicating Authority
to be not falling within relevant time, as provided in Section 43 of the
Code and hence, the same was not avoided. The order so passed by the E
Adjudicating Authority (NCLT) was, however, reversed by the Appellate
Authority (NCLAT). Hence, the matter came in appeal before this Court
and was dealt with in the case of Anuj Jain (supra), decided on
26.02.2020.
194. In the judgment dated 26.02.2020 in Anuj Jain (supra), this F
Court took note of all the relevant particulars of the said seven transactions
and the one, which was not found falling within relevant time, was noticed
by this Court as follows: -
“7.5. Yet another transaction was questioned by IRP as being
avoidable but the adjudicating authority held the same to be not
G
falling within the relevant time as provided under Section 43 of
the Code. The particulars of this transaction are as follows:
Mortgage deed dated 12-5-2014 for 100 acres of land
situated at Village Tappal, Tehsil Khair, District Aligarh, Uttar
Pradesh executed by JIL in favour of ICICI Bank Ltd. against
H
884 SUPREME COURT REPORTS [2021] 12 S.C.R.

A the facility agreement dated 12-12-2013 granting term loan of Rs
1500 crores and overdraft amount of Rs 175 crores to JAL
(hereinafter also referred to as “Property No. 7”) (As regards
this description, it is pointed out on behalf of the respondent ICICI
Bank that it had been of “term loan of Rs 1500 crores under the
corporate rupee loan facility agreement and general conditions
B
dated 12-12-2013 and mortgage deed was dated 10-3-2014”).”
194.1. As noticed, in final determination of the relevant issues,
this Court disapproved the order of NCLAT; and the order of NCLT
was upheld in relation to six of these transactions with the finding that
the transactions in question were hit by Section 43 of the Code and the
C Adjudicating Authority (NCLT) was justified in issuing necessary
directions in terms of Section 44 of the Code. However, as noticed, the
above-noted seventh transaction pertaining to the mortgage dated
12.05.2014 and relating to 100 acres of land, remained intact. The property
involved in the said transaction, which was not covered under avoidance
D provisions is referred to as ‘Tappal Property 1’, for being situated at
village Tappal for which, the mortgage was created on 12.05.2014.
194.2. We have also noticed hereinbefore that in the case of Anuj
Jain (supra), this Court had examined another issue, that is, as to whether
the lenders of JAL could be categorised as financial creditors of JIL. In
E this regard, this Court though observed that when the transactions in
question were hit by Section 43 of the Code, they were denuded of their
value and worth and the security interest created over the property of
JIL involved in those transactions stood discharged in whole; and,
therefore, such lenders of JAL were not entitled to claim any status as
creditors of the corporate debtor JIL much less as financial creditors but
F then, this Court examined the question as regards the status of such
lenders of JAL qua the corporate debtor JIL independent of the findings
that the transactions in question were hit by Section 43 of the Code.
Ultimately, on this issue relating to the status of such lenders of JAL, this
Court held that they, on the strength of the mortgages in question, might
G fall in the category of secured creditors but, for the reason that the
corporate debtor did not owe them any financial debt, such lenders of
JAL would not fall in the category of financial creditors of the corporate
debtor JIL.90
90
The relevant conclusions in the case of Anuj Jain have been reproduced in paragraphs
H 34.1 to 34.3, hereinbefore.
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194.3. The judgment dated 26.02.2020 in the case of Anuj Jain A
(supra) was delivered by this Court after the voting by CoC on the
resolution plan in question but before passing of the impugned order
dated 03.03.2020 by the Adjudicating Authority.
195. In the resolution plan, apart from various stipulations in regard
to the land of JIL and creation of two SPVs with transfer of certain B
parcels of land, the resolution applicant stated in Clause 23 of Schedule
3 relating to ‘reliefs and concessions’ as under: -
“23. The JAL Lenders Mortgaged Land shall continue to be vested
in the Corporate Debtor free of any mortgage, charge and
encumbrance.”
C
196. The Adjudicating Authority, in its impugned order dated
03.03.2020, while noticing the terms of the resolution plan and key reliefs,
summarised the matter relating to the land mortgaged with JAL lenders
in the following part of tabulation: -

D

E

F

G

(bold is in original) H
886 SUPREME COURT REPORTS [2021] 12 S.C.R.

A 196.1.As regards the land under mortgage, the Adjudicating
Authority stated its consideration in paragraph 128 of the order impugned
in the following terms: -
“128. With regard to the objections raised by JAL and other
objectors for inclusion of 858 acres as part of the resolution
B plan, for the Hon’ble Supreme Court on 26.02.2020 held that
mortgaged of 858 acres of JIL land to the lenders of JAL is an
avoidance transaction, it can no more be an objection from JAL
or from consortium of ICICI Bank to say that land cannot be part
of the resolution plan for it has been mortgaged to the financial
creditors of JAL.”
C
However, while concluding on Clause 23 of Schedule 3 of the
resolution plan, the Adjudicating Authority observed (in paragraph 134)
thus: -
“Clause No. 23:- This point is not clear as to whether it is referring
D to the land of the Corporate Debtor mortgaged to the lenders of
JAL, if that is so, since it has been decided by the Honourable
Supreme Court, it need not be reiterated.”91
196.2. Noteworthy it is that ‘cross-reference’ in the table above-
quoted, to ‘Clause 1 of Schedule 3 of the resolution plan’ as also the
E figure of extent of land pertaining to avoidance transactions at ‘858
acres’ in paragraph 128 of the impugned order were incorrect and the
Adjudicating Authority corrected these errors in the corrigendum dated
17.03.2020 in the manner that the cross-reference is to ‘Clause 23 of
Schedule 3 of the resolution plan’ and the extent of land held by this
Court to be of avoidance transactions is ‘758 acres’.
F
197. To put it in clear terms, the net outcome of the propositions,
proceedings and findings noticed in the preceding paragraphs is as follows:
858 acres of JIL’s land was mortgaged with the lenders of JAL; in the
resolution plan, NBCC sought the relief that such land shall continue to
remain vested in the corporate debtor JIL free from any mortgage, charge
G and encumbrance; 758 acres, out of this 858 acres, of land got released
from mortgage in terms of the judgment in Anuj Jain (supra); 100 acres
of land, being ‘Tappal Property 1’, however, continued to remain under
91
The aforesaid observations, as occurring in paragraphs 128 and 134 of the impugned
order dated 03.03.2020, have been extracted hereinbefore in the narratives but we have
H re-extracted them for continuity of the present discussion.
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mortgage with ICICI Bank; and, as regards this mortgage, ICICI Bank A
was not recognised as a financial creditor of JIL even if falling in the
category of secured creditors; the Adjudicating Authority has not rendered
any specific decision as regards such mortgaged land and as regards the
relief claimed by the resolution applicant while assuming that the entire
matter stands concluded with the judgment of this Court dated 26.02.2020
B
in Anuj Jain (supra).
198. Now, the aforesaid terms of the resolution plan and the order
of the Adjudicating Authority have given rise to two major issues. The
first one is the grievance of ICICI Bank, who is the mortgagee in the
said mortgage transaction relating to ‘Tappal Property 1’, that was not
hit by Section 43 of the Code for having been entered into beyond the C
look-back period.
199. The mortgagee bank would submit that in terms of the
judgment of this Court in Anuj Jain, the said mortgage in relation to
‘Tappal Property 1’ continues to remain in force and thereby, the bank is
a secured creditor of the corporate debtor JIL; and this mortgage cannot D
be taken away through a resolution plan without assigning any value. It
is submitted that the stipulations in the resolution plan in regard to this
mortgage remain invalid where the resolution applicant has erroneously
assumed that the effect of implementation of the plan would be that all
encumbrances and charges on the property of the corporate debtor for E
the loans given to third party shall stand extinguished. It is contended
that a legal right in the property cannot be taken away except by due
process of law; that the process under the Code provides for reckoning
and accounting of claims against the corporate debtor; and that only
those claims which are accounted for and dealt with as a part of this
process could possibly be dealt with in a resolution plan but, the claims F
which have not been accounted for and reckoned in this process cannot
stand extinguished. It is submitted that this bank, in its capacity as
mortgagee of the said ‘Tappal Property 1’, is left to suffer from double
whammy where its claim under the mortgage has not been reckoned in
the CIRP and then, the approved resolution plan proceeds to go ahead G
and extinguish the mortgage itself. It is argued that all these aspects
have not been examined by the Adjudicating Authority and hence, its
order, in regard to this issue, cannot be approved. This bank had filed a
belated appeal before NCLAT, being D. No. 21936 of 2020 and has
sought transfer of the same in this Court by way of Transfer Petition -
D. No. 20274 of 2020. H
888 SUPREME COURT REPORTS [2021] 12 S.C.R.

A 200. In response to the aforesaid submissions of ICICI Bank, the
resolution applicant has contended, with reference to the findings and
conclusion of this Court in the case of Anuj Jain (supra), that the said
bank is not a financial creditor of JIL and hence, has no locus in the
matter and cannot claim payment of liquidation value of the debt owed
by JAL. Without prejudice, it is also submitted that the resolution plan
B
adequately deals with the treatment of the terms of securities, guarantees,
indemnities, pledge, charge or encumbrances of any kind in relation to
any debt and in this regard, the prescription in the resolution plan at page
362 of the appeal filed by NBCC has been referred. That part of the
resolution plan pertains to the terms/stipulations under the sub-heading,
C ‘Effects of Settlement of Admitted Financial debt due to Financial
Creditors’ which in turn, occurs under the heading ‘1.2. Proposal for
Financial Creditors’. The referred term provides for release and
discharge of all liabilities under such securities etc., other than continuation
of guarantee benefits with the institutional financial creditors as laid down
in the resolution plan.
D
201. Apart from the issue raised by ICICI Bank in relation to the
said mortgaged land of 100 acres, another issue raised by some of the
homebuyers is that adequate provisions have not been made in the
resolution plan in relation to 758 acres of land, that was earlier covered
by the other six mortgage transactions but now stands released from
E encumbrance.
202. Having examined the matter in its totality, we find force in
the submissions so made by the mortgagee bank as also by the
homebuyers.

F 203. The resolution applicant has overtly relied upon the fact that
the objector bank was not accepted as a financial creditor of JIL by this
Court in Anuj Jain (supra) and has contended on this basis that the
objections so raised by this bank are required to be rejected. These
submissions of the resolution applicant NBCC suffer from several
shortcomings. Even when the said bank has not been recognised as a
G financial creditor because the mortgage in question was not relating to
any financial debt of the corporate debtor JIL, its capacity as a secured
creditor, for being the holder of security in the form of mortgage which
has not been avoided and which remains existing, cannot be denied; and
has not been denied by this Court in Anuj Jain (supra).
H
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203.1. This bank appears right in its contention that when the A
security in question was not even taken up as a part of the resolution
process, it could not have been extinguished on the ipse dixit of the
resolution applicant. Unfortunately, Adjudicating Authority totally missed
out the real issue before it in regard to this mortgage transaction because,
in the order as originally passed on 03.03.2020, the Adjudicating Authority
B
assumed that all the mortgages in favour of the lenders of JAL (covering
the entire 858 acres of JIL land) were annulled by this Court in Anuj
Jain (supra) as avoidance transactions. Of course, in the corrigendum
dated 17.03.2020, the Adjudicating Authority rectified the error of the
figure ‘858’, as occurring in paragraph 128 of the original order dated
03.03.2020, and corrected it to ‘758’ but, did not examine the C
consequences thereof. In other words, while making the correction on
17.03.2020, the Adjudicating Authority failed to advert to the relevant
question as to what would be the proper order as regards the remaining
100 acres of land, if only 758 acres was released in terms of the judgment
in Anuj Jain (supra).
D
203.2. The fact that the Adjudicating Authority dealt with this
segment rather cursorily is yet further seen from the part of the table
reproduced hereinabove where, while making reference to the mortgages
in favour of the lenders of JAL, an incorrect cross-reference was made
to Clause 1 of Schedule 3 of the resolution plan. This error was also
corrected in the order dated 17.03.2020 and correct reference was made E
to Clause 23 of Schedule 3 but, again, the implication of this correction
totally escaped the attention of the Adjudicating Authority.
203.3. As noticed, in the said Clause 23, a fleeting suggestion on
the part of the resolution applicant had been that ‘JAL lenders mortgaged
land shall continue to be vested in the corporate debtor free from F
any mortgage, charge and encumbrance’. The Adjudicating Authority
dealt with the said clause of the resolution plan in an equally cursory
manner by observing that the point was not clear but, if it was referring
to the land mortgaged with the lenders of JAL, the issue had already
been decided by the Supreme Court and need not be reiterated. In this G
entire process of mistakes/errors (might be accidental) and corrections
as also cursory observations, the Adjudicating Authority totally missed
out that one transaction relating to 100 acres of land, being ‘Tappal
Property 1’, remained unaffected by the judgment in Anuj Jain (supra);
and that the security creating over this land could not have been annulled
in the manner suggested in the plan. H
890 SUPREME COURT REPORTS [2021] 12 S.C.R.

A 204. It cannot be denied that the claim of ICICI Bank pertaining
to the said mortgage over 100 acres of land was not reckoned in the
CIRP of JIL and without any specific provision in that regard, the
resolution applicant merely suggested by way of the Clause 23 of
Schedule 3 as if such mortgage shall stand annulled and the land shall
vest in the corporate debtor free from any encumbrances. To say the
B
least, the said Clause 23 does not appear to be standing in conformity
with any principal of law for discharge of a security interest, particularly
of a third party who is not included in the insolvency resolution process
of a corporate debtor. We would hasten to make it clear that the capacity
of ICICI Bank in relation to the said mortgage of 100 acres of land of
C ‘Tappal Property 1’ is entirely different than its status as the dissenting
financial creditor of JIL, to the extent JIL directly owed a financial debt
to it. Those aspects pertaining to its capacity as dissenting financial
creditor, to the extent of its share of financial debt, have already been
discussed in Point D hereinbefore.
D 205. For what has been discussed above, neither the said Clause
23 of Schedule 3 of the resolution plan relating to ‘reliefs and concessions’
could be approved nor the order of the Adjudicating Authority in this
regard.
206. Similarly, the grievance voiced by some of the homebuyers
E is also justified that adequate provisions are required for dealing with the
other chunk of 758 acres of land (that now stands released from mortgage
in consequence of the judgment of this Court in Anuj Jain). This is
another aspect which is required to be examined by the Committee of
Creditors for ensuring viability of the plan and maximisation of the value
of the assets of the corporate debtor JIL. We need not make much
F comment in this regard but it cannot be gainsaid that availability of this
chunk of land free from encumbrances has its own bearing on the entire
gamut of insolvency resolution of JIL. The other aspects arising from
the availability of this chunk of land shall be dealt with, when examining
the question of final orders to be passed in these matters in Point N
G infra.
Point L
Other issues requiring clarification/directions
207. In its detailed submissions, NBCC has also raised an issue
that in Clause 7 Schedule 3 of the resolution plan, reduction of share
H
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capital is being sought for the corporate debtor and ‘not for the A
companies yet incorporated’ but the Adjudicating Authority has
erroneously made the observations in its order that such reduction was
not a part of this resolution. The resolution applicant NBCC has sought
clarification in this regard. The relevant clause in the resolution plan
reads as under: -
B
“7. The approval of this Plan by the Adjudicating Authority shall
be deemed to have waived all the procedural requirements in terms
of Section 66, Section 42, Section 62(1), Section 71 of the CA,
2013 and relevant rules made thereunder, in relation to reduction
of share capital of the Corporate Debtor, issuance of shares by
Expressway SPV, Land Bank SPV, conversion of Admitted C
Financial Debt due to the Institutional Financial Creditors to equity,
subscription of debentures by the Corporate Debtor or transfer of
shares of the Land Bank SPV from the Corporate Debtor to
Institutional Financial Creditors.”
208. The observations by the Adjudicating Authority as regards D
this clause are that since reduction of the share capital of corporate
debtor is not a part of the resolution plan, the Adjudicating Authority
‘cannot waive the procedure for reduction of share capital in relation
to the companies not yet incorporated’.
209. When the resolution plan with all its reliefs and concessions E
was approved by CoC and the plan was otherwise being approved by
the Adjudicating Authority (albeit with modifications), the aforesaid
observations in regard to Clause 7 of ‘reliefs and concessions’ cannot
be said to be of apt dealing with the relief sought. Be that as it may,
having regard to the purport and purpose of the said Clause 7 and its F
approval by CoC, we find no reason as to why the same may not be
approved. Hence, the impugned order of the Adjudicating Authority dated
03.03.2020 shall be read as modified and in approval of the said Clause
7 of ‘reliefs and concessions’.
210. In the last, NBCC has also prayed for directions to JAL and G
its sub-contractors or any other person having control over the project
sites/lands of JIL to immediately hand over possession/control thereof to
JIL and has also prayed for directions to the local administration for
necessary support in that regard. We do not find any reason to make
any such generalised observations or directions but would leave it open
H
892 SUPREME COURT REPORTS [2021] 12 S.C.R.

A for the resolution applicant to take recourse to the appropriate proceedings
in accordance with law, whenever occasion so arise.
Point M
Modified mechanism for implementation by the Appellate Authority
B 211. We have formulated this point for determination only in view
of the fact that the interim order dated 22.04.2020, as passed by NCLAT
while dealing with the appeal filed by NBCC against the said order dated
03.03.2020, has been challenged by the associations and individual
homebuyers before this Court. Although in view of what has been
discussed and held hereinbefore, all the issues related with the resolution
C plan and the impugned order of NCLT dated 03.03.2020 stand determined
comprehensively and the related appeals before NCLAT, already
withdrawn to this Court, shall also come to an end. Therefore, not much
of discussion is required on this point but, a few comments in regard to
the proposition adopted by the Appellate Authority appear necessary.
D 212. It appears that the proposition, of providing for Interim
Monitoring Committee comprising of the representatives of three
institutional financial creditors and the resolution applicant as also the
resolution professional, was picked up by the Appellate Authority with
reference to the stipulation in Point No. 2(a) of Part A of the resolution
E plan, where it was provided under the heading ‘Management Team’
and sub-heading ‘Appointment of Monitoring Agency’ that on and
from the approval date and until the transfer date, the corporate debtor
will be managed by a monitoring agency or any other person appointed
by the resolution applicant in consultation with a Steering Committee
comprising of three major institutional financial creditors.
F
212.1. In our view, even if the resolution plan carried such a
management framework, the Appellate Authority, while dealing with the
appeal against approval of the resolution plan, could not have provided
for such a mechanism which is not envisaged by the Code.
213. The Code lays down detailed procedure for corporate
G
insolvency resolution process and such a proposition, for constitution of
any Interim Monitoring Committee during the pendency of appeal before
the Appellate Authority (NCLAT) is neither envisaged by law nor appears
justified. It is apparent on a bare perusal of sub-section (3) of Section 61
of the Code that any challenge to the order approving a resolution plan
H
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under Section 31 could be maintained only on the grounds specified A
therein. Obviously, while dealing with such appeals, the Appellate Authority
is required to remain within the confines of the boundaries delineated by
the Code rather than seeking to provide for a mechanism, for
implementation of the plan.
214. Moreover, looking to the peculiar features of this resolution B
process, which has its own complications, constitution of such a
Committee, consisting only of the resolution professional, the resolution
applicant and the institutional financial creditors while leaving aside the
biggest chunk of stakeholders i.e., the homebuyers (having more than
57% of the voting share in the CoC), would have caused more difficulties
in implementation of the resolution plan rather than serving any purpose. C

215. While entertaining the captioned appeals and directing transfer
of the related cases pending before NCLAT to this Court by our order
dated 06.08.2020, we had stayed the operation of the impugned order
dated 22.04.2020 while allowing the IRP to continue with the management
of the affairs of the corporate debtor. While concluding on these matters, D
it appears appropriate and necessary that the said order dated 22.04.2020
by NCLAT be disapproved and set aside.
Point N
Summation of findings; final order and conclusion E
216. For what has been discussed and held on the relevant points
for determination, our findings and conclusions are as follows:
A. The Adjudicating Authority has limited jurisdiction in the matter
of approval of a resolution plan, which is well-defined and
circumscribed by Sections 30(2) and 31 of the Code. In the F
adjudicatory process concerning a resolution plan under IBC, there
is no scope for interference with the commercial aspects of the
decision of the CoC; and there is no scope for substituting any
commercial term of the resolution plan approved by Committee
of Creditors. If, within its limited jurisdiction, the Adjudicating
G
Authority 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.
H
894 SUPREME COURT REPORTS [2021] 12 S.C.R.

A B. The process of simultaneous voting over two plans for electing
one of them cannot be faulted in the present case; and approval
of the resolution plan of NBCC is not vitiated because of
simultaneous consideration and voting over two resolution plans
by the Committee of Creditors.
B C. The stipulations in the resolution plan, as regards dealings with
YEIDA and with the terms of Concession Agreement, have rightly
not been approved by the Adjudicating Authority but, for the
stipulations which have not been approved, the only correct course
for the Adjudicating Authority was to send the plan back to the
Committee of Creditors for reconsideration.
C
D. The Adjudicating Authority has not erred in disapproving the
proposed treatment of dissenting financial creditor like ICICI Bank
Limited in the resolution plan; but has erred in modifying the related
terms of the resolution plan and in not sending the matter back to
the Committee of Creditors for reconsideration.
D
E. The Adjudicating Authority has erred in issuing directions to
the resolution applicant to make provision to clear the dues of
unclaimed fixed deposit holders. Paragraph 125 of the impugned
order dated 03.03.2020 is set aside.

E F. The issues related with the objections of YES Bank Limited
and pertaining to JHL, the subsidiary of the corporate debtor JIL,
are left for resolution by the parties concerned, who will work out
a viable solution in terms of paragraphs 141 and 142 of this
judgment.

F G. In the overall scheme of the resolution plan, the stipulation in
Clause 21 of Schedule 3 thereof cannot be said to be unfair; and
the observations in paragraphs 132 and 133 of the order dated
03.03.2020 justly take care of the right of any aggrieved party
(agreement holder) to seek remedy in accordance with law and
ensures viability of the resolution plan.
G
H. It cannot be said that the resolution plan does 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.

H
JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 895
ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

I. The homebuyers as a class having assented to the resolution A
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
B
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.
J. (i) The amount of INR 750 crores (which was deposited by C
JAL pursuant to the orders passed by this 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 D
set aside.
(ii) The question as to whether any amount is receivable by
JIL and/or its homebuyers from JAL, against advance towards
construction and with reference to the admitted liability to the
tune of INR 195 crores as on 31.03.2020, shall be determined by E
NCLT after reconciliation of accounts in terms of the directions
contained in paragraphs 189 to 191.1 of this judgment. The amount,
if found receivable by JIL, be made over to JIL and the remaining
amount together with accrued interest be refunded to JAL in an
appropriate account. It is made clear that the present matter being
related to CIRP of JIL, no other orders are passed in relation to F
the amount that would be refunded to JAL because treatment of
the said amount in the asset pool of JAL shall remain subject to
such orders as may be passed by the competent authority dealing
with the affairs of JAL.
K. (i) Clause 23 of Schedule 3 of the resolution plan, providing for G
extinguishment of security interest of the lenders of JAL could
not have been approved by the Adjudicating Authority, particularly
in relation to the security interest that has not been discharged.
This part of the order dated 03.03.2020 is set aside.
H
896 SUPREME COURT REPORTS [2021] 12 S.C.R.

A (ii) Adequate provision is required to be made in the resolution
plan as regards utilisation of the land bank of 758 acres, that has
become available to JIL free from encumbrance, in terms of the
judgment dated 26.02.2020 of this Court in the case of Anuj Jain
(supra).
B L. (i) The impugned order dated 03.03.2020 shall be read as
modified in relation to Clause 7 of Schedule 3 of the resolution
plan; and the said clause shall stand approved.
(ii) As regards possession/control over the project sites/
lands of JIL, it is left open for the resolution applicant to take
C recourse to the appropriate proceedings in accordance with law,
whenever occasion so arise.
M. The Appellate Authority was not justified in providing for an
Interim Monitoring Committee for implementation of the resolution
plan in question during the pendency of appeals. The impugned
D order dated 22.04.2020 passed by NCLAT is set aside.
217. The net result of the discussion and findings hitherto is that
some of the terms and stipulations of the resolution plan of NBCC, which
was voted for approval by 97.36% of the voting share of the Committee
of Creditors, do not meet with approval. Although, barring such terms
E and stipulations, all other terms and propositions of the resolution plan
stand approved. To be specific, the terms and stipulations in the resolution
plan which do not meet with approval are those concerning: (a) the land
providing agency [as held in Point C (supra)]; (b) the dissenting financial
creditor [as held in Point D (supra)]; (c) the undischarged security interest
of the lender of JAL [as held in Point K (i) (supra)].
F
217.1. Apart from the above, we have also disapproved the
decision of the Adjudicating Authority in relation to the said amount of
INR 750 crores with accrued interest and have held that this amount is
the property of JAL and the stipulations in the resolution plan concerning
its usage by JIL or the resolution applicant cannot be approved [as held
G in Point J (i) (supra)]. However, the final treatment of the said amount
of INR 750 crores with accrued interest shall be determined by NCLT
after the reconciliation of accounts between JAL and JIL and in terms
of the directions contained in this judgment.
217.2.The added feature of the matter is that adequate provision
H is required to be made by the resolution applicant for utilisation of the
JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 897
ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

land bank of 758 acres on which, security interest of the lenders of JAL A
stands discharged in terms of the judgment of this Court in Anuj Jain
(supra).
217.3.The matters aforesaid, one way or the other, relate to the
commercial terms of the resolution plan and carry their own financial
implications. B
218. For what we have held hereinabove, when several
shortcomings are found in the resolution plan approved by the Committee
of Creditors vis-à-vis the specified parameters, the plan cannot be
approved and the matter is required to be sent back to the Committee of
Creditors. But the course to be adopted in the present matter carries its C
own share of complications.
219. We have anxiously pondered over all the peculiarities and
complications involved in this matter where twice over in the past, this
Court had to invoke its plenary powers under Article 142 of the
Constitution of India, so that the insolvency resolution process concerning D
JIL could be taken to its logical fruition but within the discipline of IBC.
Having regard to the circumstances, this Court had provided windows
for completion of CIRP while essentially discounting on the time spent in
the course of litigations.
220. As noticed, in the judgment dated 09.08.2018 in Chitra E
Sharma (supra), this Court revived the CIRP after taking note of the
peculiarities of the case and later amendment to IBC whereby, the doubts
about the status of homebuyers were removed and they were duly
accorded the recognition as financial creditors. Then, in the judgment
dated 06.11.2019 in Jaiprakash Associates Ltd. (supra), this Court
provided another period of 90 days for completion of the CIRP from the F
date of judgment, after observing that delay in completion of CIRP was
attributable to the process of law and neither the homebuyers nor any
other financial creditor was to be blamed for pendency of the proceedings.
This Court also observed that extraordinary situation had arisen because
of constant experimentation at different levels due to lack of clarity on G
the matters crucial to the decision making process of CoC and besides,
there had been further legislative changes whereby, the scope of
resolution plan was expanded. This Court also took note of the fact that
there was unanimity amongst all the parties appearing before the Court
that liquidation of JIL must be eschewed and an attempt be made to
salvage the situation by finding out some viable arrangement which could H
898 SUPREME COURT REPORTS [2021] 12 S.C.R.

A subserve the interests of all concerned. The Court further took into
account the third proviso to Section 12(3) of the Code whereby, another
period of 90 days was provided in relation to the pending insolvency
resolution process. All these factors led this Court to issue directions
under Article 142 of the Constitution of India for the second time in this
matter, to do substantial and complete justice to the parties and in the
B
interest of all the stakeholders.
221. Taking up the present position, it appears that the resolution
applicant, as also a large number of homebuyers of JIL having substantial
voting share in CoC, carried a misplaced notion that the said amount of
INR 750 crores and accrued interest has become an asset of JIL. At the
C same time, it appears that there had been lack of clarity as regards the
treatment of contingent liability of the additional amount of compensation.
The lack of clarity percolated in the decision of the Adjudicating Authority
too, where it was assumed by the Adjudicating Authority that some of
the questionable terms/stipulations of the resolution plan could be modified/
D modulated by it.
221.1. The consequence and impact of the judgment of this Court
in Anuj Jain (supra) dated 26.02.2020 was also not properly taken in
comprehension by the Adjudicating Authority and, as noticed, it was
assumed by the Adjudicating Authority in its order dated 03.03.2020 that
E the entire ‘858’ acres of land stood discharged from the burden of security.
Although the so-called correction of errors was carried out by the
Adjudicating Authority on 17.03.2020 and the figure was corrected to
‘758’ acres but the consequences of such a material correction were
not examined.

F 221.2. Nevertheless, it gets reiterated that encumbrance over 758
acres of land (which is said to be carrying a valuation of over INR 5000
crores) is removed; and availability of the said land parcel has a substantial
impact on the position of assets and liquidity of the corporate debtor JIL.
222. For all the features we have noticed hereinabove, it is at
G once clear that the entire substratum of the corporate insolvency
resolution concerning JIL has undergone a sea of change. The added
features in the continuing processes had been that JAL asserts to have
carried out several works to reduce its liability towards JIL and on the
other hand, IRP has asserted to have carried out further construction
works and having made Offers of Possession to several homebuyers.
H
JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 899
ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

223. Taking all the facts and circumstances into account and in A
keeping with the spirit and purport of the orders passed in the past, we
are inclined to again exercise the powers under Article 142 of the
Constitution of India and to enlarge the time for completion of CIRP
concerning JIL while extending opportunity to the said resolution
applicants Suraksha Realty and NBCC to submit modified/fresh resolution
B
plans, which are compliant with the requirements of the Code and the
CIRP Regulations and are in accord with the observations and findings
in this judgment.
223.1. We are conscious of the requirements of the discipline of
IBC and would hasten to observe that the course which is being adopted
is in the complex and peculiar features of this case but, this repeat C
exercise concerning the CIRP of JIL cannot be an unending process
and needs to be taken to its logical conclusion. As regards the time
frame, we are inclined to proceed on the theme and spirit of the judgment
dated 06.11.2019 wherein, first 45 days were allowed for invitation of
resolution plan and consideration by CoC. The later part of the extended D
time was provided for removing any difficulty and for passing appropriate
orders by the Adjudicating Authority.
223.2. Having regard to the circumstances, we deem it just and
proper to provide further time of 45 days from the date of this judgment
for submission of the modified/fresh resolution plans by the resolution E
applicants, for their consideration by CoC and for submission of report
by IRP to the Adjudicating Authority. This extended time includes the
reconciliation of accounts of JIL and JAL referred to in Point J. The
process of reconciliation of accounts may go on alongside the processing
of the resolution plans.
F
224. We also deem it appropriate to clarify that the processing of
the modified/fresh resolution plans, as permitted and envisaged by this
judgment, is required to be completed within the extended time and for
that matter, the other aspects like reconciliation of accounts between
JAL and JIL or resolution of the issues related with the financial creditor
of the subsidiary of the corporate debtor shall be the matters to be dealt G
with separately and decision on the resolution plan by the Committee of
Creditors need not wait the resolution of those issues. 92
92
In the passing, we may also observe that intrinsically interwoven transactions between
JAL and JIL cover another aspect of arrangements whereby certain land parcels were
transferred from JIL to JAL. The resolution plan in question, in clause 19 of Schedule H
900 SUPREME COURT REPORTS [2021] 12 S.C.R.

A 225. Accordingly, while once again exercising our powers under
Article 142 of the Constitution of India to do substantial and complete
justice to the parties and in the interest of all the stakeholders of JIL, we
conclude on these matters with the following order:
225.1. The matter regarding approval of the resolution plan stands
B 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.
225.2. We direct the IRP to complete the CIRP within the extended
time of 45 days from today. For this purpose, it will be open to the
C IRP to invite modified/fresh resolution plans only from Suraksha
Realty and NBCC93 respectively, giving them time to submit the
same within 2 weeks from the date of this judgment.
225.3. It is made clear that the IRP shall not entertain any
expression of interest by any other person nor shall be required to
D issue any new information memorandum. The said resolution
applicants shall be expected to proceed on the basis of the
information memorandum already issued by IRP and shall also
take into account the facts noticed and findings recorded in this
judgment.

E 225.4. After receiving the resolution plans as aforementioned, the
IRP shall take all further steps in the manner that the processes
of voting by the Committee of Creditors and his submission of
report to the Adjudicating Authority (NCLT) are accomplished in
all respects within the extended period of 45 days from the date
of this judgment. The Adjudicating Authority shall take final
F decision in terms of Section 31 of the Code expeditiously upon
submission of report by the IRP.
3, provided for termination of such arrangements where title and ownership was lying
with the corporate debtor JIL. The Adjudicating Authority approved the said proposition
while observing that the resolution applicant would be at liberty to proceed in accordance
with law. The erstwhile director of the corporate debtor has raised questions over this
G arrangement in his written submissions while submitting that such terminations may
create unprecedented crises and would cause prejudice to JAL’s homebuyers. We have
not commented on this aspect in the judgment essentially for the reason that the same
did not form the core of the principal issues involved in this matter. However, when the
matter is to be reconsidered, all the relevant aspects are left open for consideration of
the Committee of Creditors.
93
Only these resolution applicants were permitted to submit the revised plans in the
H judgment dated 06.11.2019.
JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE 901
ASSOCIATION v. NBCC (INDIA) LTD. [DINESH MAHESHWARI, J.]

225.5. These directions, particularly for enlargement of time to A
complete the process of CIRP, are being issued in exceptional
circumstances of the present case and shall not be treated as a
precedent.
225.6. As noticed in paragraphs 4.5 and 38.3 hereinabove, the
proceedings relating to CIRP of JIL were initiated by the Allahabad B
Bench of National Company Law Tribunal but, later on, the same
were transferred to its Principal Bench at New Delhi. Therefore,
the proceedings contemplated by this judgment shall be taken up
by the Principal Bench of the National Company Law Tribunal at
New Delhi.
C
226. All the appeals, transferred cases, transfer petitions and
interlocutory applications in this batch stand disposed of.
227. A copy of this order be forwarded to the NCLT, New Delhi
and IRP through email forthwith for compliance.
Acknowledgement D
228. While closing, we owe a duty to put on record our thanks
and compliments to the learned counsel for the respective parties, their
associates and their research assistants who all, despite challenging
circumstances due to the pandemic and virtual hearing, have rendered
invaluable assistance to the Court in dealing with vast variety of questions E
involved in these matters, by way of neatly articulated oral submissions
as also meticulously drawn written submissions.
Table of Contents

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902 SUPREME COURT REPORTS [2021] 12 S.C.R.

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H Bibhuti Bhushan Bose Matters disposed of.