The National Company Law Appellate Tribunal (NCLAT) has reserved its decision on Jaiprakash Associates Ltd's appeal against the NCLT's insolvency admission order, prompted by ICICI Bank's plea for unpaid debts of INR 1,269 crore. JAL contends that its debt was restructured under a master restructuring agreement (MRA), claiming the default date cited by lenders is legally invalid. Meanwhile, the lenders argue that this debt was not included in the MRA. JAL has also challenged a land allocation cancellation by YEIDA in the Allahabad High Court, asserting the land's value exceeds its total debt.
The National Company Law Appellate Tribunal (NCLAT) has reserved its order regarding Jaiprakash Associates Ltd's (JAL) appeal against the National Company Law Tribunal's (NCLT) decision to admit the company into insolvency. Earlier this year, the NCLT in Allahabad issued an order for insolvency admission based on a plea from ICICI Bank, determining that the construction and infrastructure firm had defaulted on payments totalling INR 1,269 crore.
JAL contended that its total debt had been restructured under a master restructuring agreement (MRA) and argued that the default date cited by the lenders predates the MRA, which they believe is legally untenable. JAL's legal representative stated that the date of default is overridden by the restructuring agreement.
In response, the lenders, led by ICICI Bank, countered this assertion, arguing that the debt in question was never included in any MRA. JAL's counsel further claimed that the NCLT erred by not waiting for the outcome of their petition submitted to the Allahabad High Court. The company has filed a petition with the high court challenging the order from the Yamuna Expressway Industrial Development Authority (YEIDA), which revoked the allocation of land parcels to JAL.
JAL has informed the appellate tribunal that the value of the land exceeds its total debt and asserted that if the land was reinstated, the company could easily repay its debts. The lenders have cited the Chitra Sharma judgment, claiming that the apex court had mandated the initiation of insolvency proceedings against JAL.
Nevertheless, JAL has rejected this argument, asserting that the Supreme Court had not authorised any commencement of insolvency proceedings against the company, particularly given that a debt resolution agreement had been reached between JAL and the lenders.
The ongoing legal battle over Jaiprakash Associates' insolvency highlights the complexities surrounding debt restructuring and insolvency proceedings in India. With JAL's appeal pending, the outcome will have significant implications for the company and its creditors. As the appellate tribunal considers the arguments presented, the resolution of this case could set important precedents for similar disputes in the construction and infrastructure sectors, impacting the broader financial landscape.
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