Highlights
- The National Company Law Appellate Tribunal ruled that the events leading to the filing of Section 7 application against Jaiprakash Associates Limited were significant factors for the National Company Law Tribunal’s decision to not approve the Scheme of Arrangement.
- The National Company Law Tribunal deemed the ongoing litigation regarding the assets in question as a valid reason for rejecting the scheme proposed by Jaiprakash Associates Limited and Jaypee Infrastructure Development Limited.
- ICICI Bank argued that the financial situation of Jaiprakash Associates Limited had changed since 2017, rendering the initially devised scheme unviable, and the pending Section 7 application justified the rejection of the second motion petition.
The National Company Law Appellate Tribunal has held that the events leading to filing of Section 7 application against the Jaiprakash Associates Limited which culminated into admission of Section 7 application were relevant factors which weighed with the National Company Law Tribunal for not approving the Scheme of Arrangement between Jaiprakash Associates Limited, Jaypee Infrastructure Development Limited and Lenders.
The NCLAT observed that the first reason given by the NCLT that the assets in question is under dispute (litigation) to be a valid reason for not approving the scheme.
The JAL submitted that the scope of the inquiry under Section 230-232 of the Companies Act, 2013 is very restrictive and the role of the NCLT while scrutinising the scheme is supervisory and peripheral and not appellate.
The ICICI bank submitted that the scheme which was devised on the basis of financial position of the JAL in 2017 is no longer viable. Further noting that the Section 7 application having already initiated against JAL under the direction of the RBI and the Supreme Court the second motion petition deserved rejection on that ground alone.
Further highlighting that the consent given to the Scheme at the time of moving of first motion cannot act as an estoppel against ICICI Bank.
The NCLAT, New Delhi Bench pronounced its Order filed before it against the Order of NCLT, Allahabad not approving the Scheme of Arrangement between Jaiprakash Associates Limited, Jaypee Infrastructure Development Limited and Lenders.
The matter was heard before the bench of Justice Ashok Bhushan (Chairperson), and Barun Mitra and Arun Baroka (Technical Member).
