Supeme Court allows Yeida to develop Jaypee residential projects

Hindustan Times

19-05-2025

The Supreme Court on Monday allowed the Yamuna Expressway Industrial Development Authority (Yeida) to appoint new developers to complete residential projects of Jaiprakash Associates Limited (JAL), after the authority's decision to cancel a 1,000-hectare lease to JAL was upheld by the Allahabad high court in March.
A bench of justice Sanjay Kumar, while permitting Yeida to proceed in line with the HC judgment, disallowed the authority from making a final decision without the top court's permission. The court listed the matter for July 29.
The order came against the backdrop of the JAL, currently under insolvency, challenging the Allahabad high court's March 10 order in the top court. In April, the top court issued notice and sought Yeida's response, but did not grant a stay.
Senior advocate Shyam Divan, appearing for JAL's resolution professional along with advocate Malak Manish Bhatt, sought a stay on further action by Yeida. 'We want a status quo protection as the land involved is 965.74 hectares. They have terminated the allotment, and new developers are being appointed for development of the land,' Divan said.
The court, however, said that the process may take time and that there was no purpose in restraining the authority. The bench, also comprising justice KV Viswanathan, said, 'To balance the competing interests, we deem it appropriate to permit the authorities, including YEIDA and the committee constituted pursuant to the HC direction, to proceed. Any decision taken pursuant to such decision shall not be given effect to without the permission of this court.'
JAL contended that the high court order failed to consider that the land parcel was a corporate asset, and thus, could not be interfered with during the corporate insolvency resolution process (CIRP) that was initiated in June 2024.
Besides JAL's resolution professional, banks and financial institutions that provided loans to the distressed company on the land mortgage also objected to the high court order.
Senior advocate Neeraj Kishan Kaul, appearing for National Asset Reconstruction Company Limited, objected to the manner in which the high court failed to consider their interests while cancelling the allotment. Kaul sought the status quo to protect their interests over the land.
In its last order, the court had asked Yeida how it proposed to clear the dues of lenders. In its response, Yeida said that the interest of banks and financial institutions was considered in the high court order, as it required JAL to deposit the entire amount paid to Yida at the disposal of the National Company Law Tribunal (NCLT) for this purpose.
Additional Solicitor General (ASG) N Venkataraman, appearing for the authority, said that JAL started the residential projects in 2010 and until 2025, completed only 5% of the work, incurring a cost of ₹25,000 crore. 'There is something seriously wrong if with ₹25,000 crore, only 5% progress is made. The homebuyers are left in the lurch and if the process is stayed at this stage, it will send wrong signals,' the ASG said.
JAL sold over 2,500 residential plots and flats between 2011 and 2016, but these were yet to be completed. The ASG said that the authority's immediate concern was to ensure the completion of the projects.
Yida cancelled JAL's six allotments in February 2020, citing lapses in the payment timeline as per the lease agreement. The company challenged the cancellation in the Allahabad high court and initially, secured the status quo.
JAL said that as of the date of cancellation of allotments, the company had paid 91% of dues to Yeida, pegged at around ₹2,300 crore and only ₹218 crore was outstanding, which was paid in the high court.
While the high court later confirmed the cancellation order of Yeida, JAL contended that the lease deed did not have a cancellation clause. It contended that Yeida had delayed sanctions for building plans and the delays made the housing projects financially unviable, causing loss to the company.
In its appeal to the Supreme Court, JAL said the high court 'has created a parallel law' that was contrary to the settled principles of the Insolvency and Bankruptcy Code (IBC), which creates a moratorium on all assets owned and in possession of the corporate debtor (JAL). It contended that the high court failed to realise that the IBC overrides the UP Industrial Development Act, 1976.
JAL argued that it pumped in over ₹6,000 crore to construct a Formula-1 racing track as the land for a special development zone (SDZ) intended to raise amounts from the core area involving commercial ventures to fund housing projects forming part of the non-core sector.