The insolvency appellate tribunal has approved the insolvency proceedings against debt-ridden Jaypee Cement, upholding an earlier order passed by the National Company Law Tribunal (NCLT).
A two-member bench of the NCLAT rejected the appeal filed by Alok Gaur against the order, saying the debt and default matter is proven, and it did not find any error in the order directing the initiation of insolvency proceedings.
The National Company Law Appellate Tribunal (NCLAT) rejected Gaur’s submission that its parent firm, Jaiprakash Associates Ltd (JAL), has signed an MRA (master restructuring agreement) with lenders, undertaken to discharge its liabilities.
As all debt stood transferred to JAL, now facing CIRP (Corporate Insolvency Resolution Process) for failure to implement the MRA, and the debt of both JAL and JCCL can be considered, an appropriate resolution can be done.
However, rejecting the order, the NCLAT said the debt, which was owned by JCCL, to the lenders “shall not be evaporated” merely by the fact that JAL has taken the liability to discharge its debts of JCCL and it does not stop the lenders from filing insolvency proceedings against it under Section 7 of the IBC.
“The submission of the appellant that JAL had undertaken the liability to clear the debts and defaults of JCCL, hence, JCCL has no liability and no application was maintainable against JCCL, also does not commend us,” said the NCLAT bench.
The appellate tribunal further said initiation of CIRP proceedings against JAL cannot be a ground to contend that no proceedings can be initiated against JCCL.
“JCCL has also given its securities for obtaining the various facilities from the SBI between 2012 and 2015. The financial creditor can always invoke the securities given by JCCL to realise the debt,” it said.