NCLAT refuses to stay insolvency order against Jaiprakash Associates

The National Company Law Appellate Tribunal (NCLAT) has declined to stay an order admitting infrastructure firm Jaiprakash Associates Limited into insolvency resolution process. This decision came on June 10 after the Interim Resolution Professional assured that neither the company’s 25,000 employees nor ongoing projects would be affected, as they intended to run the company as a going concern.

The stay was sought by Sunil Kumar Sharma, a suspended company director. The NCLAT has directed banks to respond to the appeal and consider the company’s one-time settlement offer. The case will now be heard on June 24.

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Senior advocate Sandeep Sethi, representing Sharma, told the court that the insolvency order had jeopardized many infrastructure projects in India and abroad. The company had offered a one-time settlement plan, but the NCLT admitted the company into insolvency resolution before a decision could be made.

Sethi stated that the company had already deposited Rs 200 crore out of the outstanding Rs 1200 crore it owed to ICICI Bank. The one-time settlement would have worked out in four and a half months if the NCLT had not passed the insolvency order.

However, senior advocate Sanjib Sen, appearing for ICICI Bank, argued that it was not a straightforward case and the NCLAT should not stay the insolvency process. He said the company owed more than Rs 30,000 crore to various banks and Rs 1,200 crore to ICICI Bank. Staying the proceedings would set a wrong example.

Sen further stated that the case had been pending in courts for a decade, and Jaiprakash Associates had tried to defer the insolvency proceedings for seven years on one pretext or another.

While refusing to stay the NCLT’s order, the NCLAT vacation bench said it would pass a detailed order with instructions to the lenders.

Jaiprakash Associates has a debt of Rs 29,361 crore, including interest, with exposure to 22 lenders. The company has been trying to sell its cement plants to trim the debt, but media reports suggest the fate of the deal with Dalmia Cement remains uncertain.