Income-tax department to appeal against NCLT ruling in Jaypee Infratech case

The Indian Income Tax (I-T) department, along with Jaiprakash Associates, its chairman and CEO Manoj Gaur, and the Yamuna Expressway Industrial Development Authority (YEIDA), have filed an appeal against the National Company Law Tribunal's (NCLT) decision to award Jaypee Infratech to Suraksha Group. The appeals could cause delays in the commencement of construction, as Suraksha Group may want all legal challenges to be dealt with first before investing resources to complete projects.

In September 2017, the I-T department had filed claims of Rs 6,658 crore (including interest for two years). However, it was reported that the department may not pursue its claims following consultations with key central ministers, who sought to ensure that the resolution process was completed, and almost 20,000 homebuyers benefited from the exercise. In its petition, the I-T department has stated that it learned from the March 2023 order of the NCLT that only Rs 10 lakh has been provided towards its dues, despite its claim.

The petition argues that the resolution plan proposed by Suraksha erroneously stated that the I-T department had not filed its claim within the stipulated time frame, as per the Insolvency and Bankruptcy Code (IBC), without considering the claim filed on 28 September 2017, which was within the time limit as per Regulation 12(2) of IBBI (Resolution Process for Corporate Persons) Regulations, 2016. Additionally, the petition claims that the interim resolution professional did not serve a copy of the resolution plan, which was cleared by the committee of creditors.

Jaiprakash Associates, which was the majority shareholder of Jaypee Infratech, has said that the NCLT has rejected several reliefs and concessions proposed in the original resolution plan. This means that the decision is not in conformity with certain provisions of the Insolvency & Bankruptcy Code. The company argues that the only option available in such a scenario is to send back the resolution plan to the Committee of Creditors for resubmission after satisfying the parameters.

The Suraksha Group was chosen as the successful resolution applicant in the Jaypee Infratech insolvency case, and it received the NCLT's approval on 23 March 2023. Under the resolution plan, Suraksha will pay Rs 7,350 crore to settle Jaypee Infratech's dues, including those of financial creditors, homebuyers, and operational creditors. The plan also includes an upfront payment of Rs 500 crore and the transfer of 858 acres of land to YEIDA, which will be sold to settle the dues.

Jaypee Infratech was a real estate company that developed residential and commercial properties in India. The company ran into financial trouble due to delays in completing projects, as well as the slowdown in the real estate market. In August 2017, the Reserve Bank of India (RBI) directed banks to initiate insolvency proceedings against Jaypee Infratech, as the company had defaulted on a loan of Rs 526 crore. The company was later referred to the NCLT, and the proceedings began in December 2017.

The resolution of Jaypee Infratech's insolvency case has been a long-drawn-out process, with several twists and turns along the way. The resolution plan proposed by Suraksha Group was approved after several rounds of negotiations and consultations, and it was seen as a win-win situation for all stakeholders, including homebuyers, who had been waiting for years to get possession of their homes. However, the appeals filed by the I-T department, Jaiprakash Associates, and YEIDA may further delay the process.

Next (Maharashtra government streamlines vacant land tax collections)

Income-tax department to appeal against NCLT ruling in Jaypee Infratech case

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