NCLAT Upholds Suraksha Realty’s Bid for Jaypee Infratech, Requires Additional Rs 1,334 crore in Compensation to Farmers

The National Company Law Appellate Tribunal (NCLAT) has upheld Suraksha Realty’s bid to acquire the debt-ridden Jaypee Infratech, but with a condition: Suraksha must pay an additional Rs 1,334 crore in compensation to farmers. This decision aims to bring relief to over 20,000 homebuyers stuck in Jaypee’s stalled real estate projects.

The corporate insolvency process for Jaypee Infratech began in August 2017 following an application by an IDBI Bank-led consortium. In March 2023, the National Company Law Tribunal (NCLT) approved Suraksha Realty’s bid to buy the company. However, several parties, including the Yamuna Expressway Industrial Development Authority (YEIDA), challenged this decision in the NCLAT.

In its recent order, the NCLAT confirmed the NCLT’s decision but modified the compensation arrangement for farmers. The tribunal directed Suraksha Realty to pay Rs 1,334.31 crore to YEIDA, covering 79% of YEIDA’s claim of Rs 1,689 crore, matching the payments made to other secured creditors.

Suraksha Realty has already committed to paying Rs 1,216 crore by April 18, 2024. The additional Rs 118.31 crore needed to match other creditors’ payments will also be paid within the same timeframe.

In its final resolution plan, Suraksha Realty offered over 2,500 acres of land and nearly Rs 1,300 crore through non-convertible debentures to lenders. The plan also includes completing all pending flats within the next four years.

Jaypee Infratech’s lenders have claimed Rs 9,783 crore. The NCLAT’s ruling, which follows 14 months after the NCLT’s initial approval, should enable the completion of more than 20,000 housing units in Noida and Greater Noida.

A monitoring committee, set up by the Interim Resolution Professional, is working to ensure the resolution plan is implemented quickly.

Jaypee Infratech was among the first 12 companies the Reserve Bank of India directed banks to approach the NCLT for insolvency proceedings. Suraksha Realty won the fourth round of bidding in 2021 with 98.66% of the votes from 12 banks and over 20,000 homebuyers, narrowly beating state-owned NBCC.

Earlier bids from Suraksha and NBCC were rejected in previous rounds. In November 2019, the Supreme Court directed fresh bids from only NBCC and Suraksha. In the third round, NBCC’s plan was approved by the CoC and the NCLT but was challenged in higher courts. The Supreme Court eventually ordered another round of bidding between NBCC and Suraksha in March 2021.