NCLAT Upholds Suraksha Realty's Resolution Plan For Jaypee Infratech, Directs Additional ₹1,334 Crore Payment To YEIDA

The National Company Law Appellate Tribunal (NCLAT) confirmed the resolution plan proposed by Suraksha Realty Limited for Jaypee Infratech Limited (JIL) as part of its Corporate Insolvency Resolution Process (CIRP).

The NCLAT's bench, comprising Chairperson Justice Ashok Bhushan and Technical Member Barun Mitra, held that Suraksha Realty must pay ₹1,334.31 crore to YEIDA over the next four years. This payment is intended to enable YEIDA to increase land compensation for farmers. This is the obligation which stems from a concession agreement between Jaypee and YEIDA.

The order was issued in response to an appeal by YEIDA against the National Company Law Tribunal (NCLT), Allahabad's rejection of its objections to Suraksha's resolution plan. Jaypee Infratech was subjected to insolvency proceedings after it failed to deliver apartments in a housing project along the Noida-Greater Noida Expressway. Subsequently, homebuyers and other financial creditors approached the NCLT to initiate insolvency proceedings against Jaypee.

The housing project was part of a larger concession agreement between Jaypee and YEIDA, which included constructing a six-lane expressway and commercially exploiting over 6,000 acres of land adjacent to the expressway. When Jaypee entered insolvency, YEIDA filed claims with the resolution professional. Meanwhile, the Committee of Creditors approved Suraksha's resolution plan, which YEIDA contested unsuccessfully at the NCLT.

YEIDA argued that it has to protect its interests and ensure that dues were used for public purposes. The NCLAT held that YEIDA is a secured creditor and noted that additional compensation to farmers was part of the original concession agreement with Jaypee. Consequently, YEIDA was held to be entitled to receive ₹1,689 crore from Jaypee's successful resolution applicant, Suraksha, as additional compensation for farmers.

The bench held that:

“We have already held Appellant as secured Operational Creditor with respect to additional farmers' compensation of Rs.1689 crores. The Financial Creditors under Resolution Plan have been proposed the payment of 79% of their secured dues. The Appellant, who is also a secured Operational Creditor to the extent of Rs.1689 crores, is also entitled for payment of same percentage of amount, which has been offered to the Financial Creditors. We, thus, are of the view that towards additional farmers' compensation, the Appellant is entitled for 79% of its claim, i.e., 79% of Rs.1689 crores, which comes to Rs.1334.31 crores. The SRA has already offered to make payment of Rs.1216 crores. Thus, the SRA has to bear additional amount of Rs.118.31 crores.”

The NCLAT set aside the part of the National Company Law Tribunal's (NCLT) order that dealt with YEIDA's claim of ₹1,689 crore for additional farmers' compensation. However, the rest of the NCLT's order approving the resolution plan submitted by Suraksha Realty Limited was upheld.

The NCLAT directed the Successful Resolution Applicant (SRA), Suraksha Realty, to pay YEIDA 79% of its secured operational debt claim. This amount translated to ₹1,334.31 crore.

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