The insolvency appellate tribunal has directed the NCLT to promptly decide on the stay of the process of inviting Expression of Interest (EOI) regarding two Jaiprakash Associates group's investments in Jaiprakash Power Venture and Jaypee Fertilisers & Industry. In an order on April 29, 2025, the Allahabad bench of the National Company Law Tribunal stayed the process of inviting EoI by the Resolution Professional of debt-ridden Jaiprakash Associates Ltd (JAL), which is currently going through the Corporate Insolvency Resolution Process (CIRP).
This order was immediately challenged by the National Asset Reconstruction Company Ltd (NARCL), which is the assignee of 85 per cent of debts of the banks to JAL and the Resolution Professional (RP), before the National Company Law Appellate Tribunal.
However, a three-member bench of the NCLAT, led by Chairperson Justice Ashok Bhushan, observed that the matter is already scheduled for hearing before the Allahabad bench on May 26, 2025, hence it directed it to consider the reply filed by the lenders' body CoC (Committee of Creditors) and RP.
"The application having been fixed for May 26, 2025, we request the Adjudicating Authority (NCLT) to consider the application as well as the reply submitted by the RP and CoC to take a decision with regard to further process without being influenced by any observation made in the impugned order," the National Company Law Appellate Tribunal (NCLAT) said in its order passed on May 20.
"Looking to the facts that CIRP is a time-bound process, the Adjudicating Authority (NCLT) shall endeavour to dispose of the application on the date fixed or as early as possible," it said.
The NCLAT also asked Sunil Kumar Sharma, the suspended director of JAL, on whose plea the NCLT stayed the process of EoI, to file a rejoinder, if any, and mentioned that it has "not expressed any opinion on the respective submissions" of the parties before it.
The appellate tribunal was hearing appeals filed by the National Asset Reconstruction Company Ltd (NARCL) and Resolution Professional (RP), challenging the status quo granted by the NCLT on the issuance of EoI.
Under the Insolvency & Bankruptcy Code, RP issues EoIs for companies under CIRP, to invite potential resolution applicants to submit their resolution plans for the debt-ridden company.
On April 29, 2025, though the NCLT issued notice to the resolution professional of JAL, it also directed to stay the process of inviting bids for Jaiprakash Power Ventures and Jaypee Fertilizers.
"Meanwhile, with regard to the relief sought by the Applicant to issue ex-parte ad-interim stay on inviting EOI as resolved by the Committee of Creditors in the 11th meeting of the Committee of Creditors for the sale of investment of Corporate Debtor in Jaiprakash Power Ventures Limited (JPVL) and Jaypee Fertilizers & Industries Limited and/or Kanpur Fertilizers & Chemicals Limited (JFIL/KFCL), the status quo deserves to be maintained till further order," the NCLAT had said.
NARCL submitted before the appellate tribunal that the NCLT has not given any reasons in the impugned order for passing the order of status quo whereas reasons, if any, were only for issuing notice.
It contended that there have to be reasons for passing an interim order, including irreparable loss, balance of convenience and prima facie case for passing of an interim order, which has the effect of staying the process of CIRP (Corporate Insolvency Resolution Process), which is a time-bound process.
Sunil Kumar Sharma has submitted that NCLT had raised concerns regarding the process to invite bids for the sale of certain investments, citing the proposed sale being premature, lacking transparency, and risking prejudice to the stakeholders' interests.
The applicant had pointed out the failure to consider existing encumbrances, proper valuation, and the need for prior CoC approval, emphasising that any asset sale must ensure maximum realisation and legal compliance governing the CIRP process. However, despite his objection, RP convened a CoC meeting.
Investments of JAL in Jaiprakash Power Ventures are encumbered, while investments in Jaypee Fertilisers & Industry are unencumbered.
Sharma further submitted that there are certain mandatory preconditions under the IBC to be fulfilled for a valid sale, which include the sale must pertain to unencumbered assets, there must be a formed opinion that such a sale is necessary for better realisation of value under the circumstances; the book value of all assets sold during the CIRP must not exceed 10 per cent of the total admitted claims.
This order was immediately challenged by the National Asset Reconstruction Company Ltd (NARCL), which is the assignee of 85 per cent of debts of the banks to JAL and the Resolution Professional (RP), before the National Company Law Appellate Tribunal.
However, a three-member bench of the NCLAT, led by Chairperson Justice Ashok Bhushan, observed that the matter is already scheduled for hearing before the Allahabad bench on May 26, 2025, hence it directed it to consider the reply filed by the lenders' body CoC (Committee of Creditors) and RP.
"The application having been fixed for May 26, 2025, we request the Adjudicating Authority (NCLT) to consider the application as well as the reply submitted by the RP and CoC to take a decision with regard to further process without being influenced by any observation made in the impugned order," the National Company Law Appellate Tribunal (NCLAT) said in its order passed on May 20.
"Looking to the facts that CIRP is a time-bound process, the Adjudicating Authority (NCLT) shall endeavour to dispose of the application on the date fixed or as early as possible," it said.
The NCLAT also asked Sunil Kumar Sharma, the suspended director of JAL, on whose plea the NCLT stayed the process of EoI, to file a rejoinder, if any, and mentioned that it has "not expressed any opinion on the respective submissions" of the parties before it.
The appellate tribunal was hearing appeals filed by the National Asset Reconstruction Company Ltd (NARCL) and Resolution Professional (RP), challenging the status quo granted by the NCLT on the issuance of EoI.
Under the Insolvency & Bankruptcy Code, RP issues EoIs for companies under CIRP, to invite potential resolution applicants to submit their resolution plans for the debt-ridden company.
On April 29, 2025, though the NCLT issued notice to the resolution professional of JAL, it also directed to stay the process of inviting bids for Jaiprakash Power Ventures and Jaypee Fertilizers.
"Meanwhile, with regard to the relief sought by the Applicant to issue ex-parte ad-interim stay on inviting EOI as resolved by the Committee of Creditors in the 11th meeting of the Committee of Creditors for the sale of investment of Corporate Debtor in Jaiprakash Power Ventures Limited (JPVL) and Jaypee Fertilizers & Industries Limited and/or Kanpur Fertilizers & Chemicals Limited (JFIL/KFCL), the status quo deserves to be maintained till further order," the NCLAT had said.
NARCL submitted before the appellate tribunal that the NCLT has not given any reasons in the impugned order for passing the order of status quo whereas reasons, if any, were only for issuing notice.
It contended that there have to be reasons for passing an interim order, including irreparable loss, balance of convenience and prima facie case for passing of an interim order, which has the effect of staying the process of CIRP (Corporate Insolvency Resolution Process), which is a time-bound process.
Sunil Kumar Sharma has submitted that NCLT had raised concerns regarding the process to invite bids for the sale of certain investments, citing the proposed sale being premature, lacking transparency, and risking prejudice to the stakeholders' interests.
The applicant had pointed out the failure to consider existing encumbrances, proper valuation, and the need for prior CoC approval, emphasising that any asset sale must ensure maximum realisation and legal compliance governing the CIRP process. However, despite his objection, RP convened a CoC meeting.
Investments of JAL in Jaiprakash Power Ventures are encumbered, while investments in Jaypee Fertilisers & Industry are unencumbered.
Sharma further submitted that there are certain mandatory preconditions under the IBC to be fulfilled for a valid sale, which include the sale must pertain to unencumbered assets, there must be a formed opinion that such a sale is necessary for better realisation of value under the circumstances; the book value of all assets sold during the CIRP must not exceed 10 per cent of the total admitted claims.
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