Jaiprakash Associates' Insolvency Process To Continue, NCLAT Upholds NCLT Order

The National Company Law Appellate Tribunal on Friday upheld the insolvency resolution process of Jaiprakash Associates Ltd., thereby rejecting the construction company's challenge to the order of admission into insolvency.

In doing so, the NCLAT has upheld the National Company Law Tribunal's order that admitted the Jaiprakash Associates into insolvency earlier this year.

No grounds have been made out by Jaiprakash Associates to challenge the NCLT's June order, the NCLAT said.

Earlier this year, the Allahabad bench of the National Company Law Tribunal initiated insolvency proceedings against Jaiprakash Associates Ltd. in a plea moved by ICICI Bank Ltd. The tribunal held the construction company to be in default for Rs 1,269 crore.

ICICI Bank had sanctioned loans to Jaiprakash Associates under six different facilities between 2011 and 2015. These loans totalled a huge amount—nearly Rs 4750 crore.

In its 120-page-long order, the NCLT rejected Jaiprakash Associates’ contention that it faced a liquidity crunch and defaulted on debt repayments mainly due to delays in government approvals and prolonged litigation concerning land acquisition for the Yamuna Expressway and changes in government policies.

Once the NCLT admitted Jaiprakash Associates into insolvency, a moratorium was imposed on its assets, and an interim resolution professional was appointed to oversee the process.

This prompted Jaiprakash Associates to challenge the NCLT’s order before the National Company Law Appellate Tribunal, which reserved its judgement in the case last month.