Big blow to JP Associates from NCLT, rejects this argument, scatters shares

The NCLT has rejected the plea of ​​Jaiprakash Associates Ltd (JAL) that it faced cash crunch due to delay in government approvals, protracted litigation related to land acquisition for Yamuna Expressway and changes in government policies. The company also claimed that due to this it could not repay the loan. Earlier, the National Company Law Tribunal (NCLT) ordered the initiation of insolvency proceedings against JAL on Monday.

What did NCLT say?

The Allahabad bench of the NCLT said that as per the Supreme Court order, if a company is in debt, has defaulted in payment of the debt and the financial creditor has applied under Section 7 of the Insolvency and Bankruptcy Code, the bankruptcy petition can be filed. should be accepted. The tribunal also rejected JAL’s plea not to initiate insolvency proceedings on grounds such as the feasibility of initiating insolvency proceedings, the company’s overall financial position and the proceeds being used to repay outstanding loans.

Argument of Company Counsel

The NCLT, in a 120-page order, said that if there is a loan and there is default in repayment of such loan under Section 7, the submissions of JAL’s counsel cannot have any effect on initiation of proceedings under Section 7 of the IBC. IBC. A lawyer for JAL said the company faced cash crunch due to delays in government approvals, protracted litigation related to land acquisition for the Yamuna Expressway and changes in government policies, which led to loan defaults.

Stock reduction

On Tuesday, the shares of Jaiprakash Associates Ltd saw a big drop. On the second trading day of the week, the stock traded at Rs. It was closed at 13.32. The stock price was down 9.94% at the close of trading.

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