At least three private sector lenders — ICICI Bank, Standard Chartered and Axis Bank — are challenging the National Company Law Tribunal’s (NCLT) order that asked them to return insolvency-hit Jaypee Infratech’s 758 acres, that was mortgaged in a “fraudulent, preferential and undervalued” manner.
The land was mortgaged in favour of these banks to secure loans of Jaiprakash Associates’s (JAL’s) loans from these lenders, which according to NCLT was not in line with provisions of IBC as Jaypee Infratech was already in a deep loan crisis and LIC had classified it as a non-performing asset.
Sources told TOI that the banks are arguing that there was nothing wrong with the transactions as it is a common business practice and was done in normal course of business. These banks have argued that the transaction was not done with an intent to defraud Jaypee Infratech as assets of several subsidiaries are often used to secure interests of their parents.
The move by the banks comes days after JAL announced its decision to challenge the NCLT order delivered last week even as public sector lenders, such as SBI and IDBI Bank, are yet to firm up their stand in the case that was initiated by resolution professional Anuj Jain. JAL had also indicated that the transactions were done at the behest of the lenders. The order can have a severe impact on JAL’s already stressed finances since it will have to provide fresh collateral to its lenders with the land valued at around Rs 2,000 crore.
Jaypee Infratech is one of the most high-profile insolvency cases.