Supreme Court in Jaypee Infratech

April 20, 2020 > India >

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Written by Jyoti B Singh and Mayank Samuel.

Supreme Court in Jaypee Infratech: Third-party security holders are not financial creditors of the mortgagor entity.

The Division Bench of the Hon’ble Supreme Court of India (“Supreme Court<”/ “Court”) in Anuj Jain, IRP for Jaypee Infratech Ltd v. Axis Bank Ltd and Ors. (Civil Appeal Nos. 8512-8527 of 2019 with Civil Appeal Nos. 6777-6797 of 2019) (“Jaypee Infratech”), vide judgment dated February 26, 2020, decided on the following issues: –

Whether the transactions in question, being mortgage of immovable properties belonging to Jaypee Infratech Limited (“JIL” / “Corporate Debtor”) to secure the loans of Jaiprakash Associates Limited (“JAL” / “Holding Company”), deserve to be avoided as being preferential, undervalued and fraudulent, in terms of Sections 43, 45 and 66 of the Insolvency and Bankruptcy Code (“the Code”)?

Whether the lenders of JAL could be categorized as financial creditors of JIL, on the strength of mortgage created by JIL for securing the debt of JAL?

Ruling of the Supreme Court

On the first issue, the Supreme Court held that the transactions in question were hit by Section 43 of the Code and National Company Law Tribunal, Allahabad Bench (“Adjudicating Authority”) having rightly held so, had been justified in passing directions in terms of Section 44 of the Code, in relation to the transactions concerning six immovable properties belonging to the Corporate Debtor. The Supreme Court observed that the Hon’ble National Company Law Appellate Tribunal (“NCLAT”) had not been correct in interfering with the well-considered and justified order passed by the Adjudicating Authority in this regard.

On the second issue, the Supreme Court held that the debts in question being in the form of third-party security having been given by the Corporate Debtor for securing the loans obtained by Holding company from the respondent-lenders, the said debt could not be considered as a ‘financial debt’ due and payable by the Corporate Debtor within the meaning of Section 5(8) of the Code and hence, the respondent-lenders of the Holding company were not the financial creditors of the Corporate Debtor, under Section 5(7) of the Code.

The Court further observed that though the lenders of Holding Company, on the strength of the mortgages in question created by the Corporate Debtor, may fall in the category of secured creditors, such mortgages being neither towards any loan, facility or advance to the Corporate Debtor nor towards protecting any facility or security thereof, it cannot be said that the Corporate Debtor owes any financial debt within the meaning of Section 5(8) of the Code to the respondent-lenders of the Holding Company.

Accordingly, the Court set aside the impugned order of NCLAT dated August 1, 2019 and upheld the order of Adjudicating Authority dated May 16, 2018 which had ruled that the transactions in question were preferential within the meaning of Section 43 of the Code and passed directions for avoidance of such transactions. The Court also upheld the respective orders of Adjudicating Authority recording the findings that the lenders of JAL could not be categorized as the financial creditors of the Corporate Debtor.

Facts and background of Jaypee Infratech

The Holding Company of the Corporate Debtor, viz. JAL, was incorporated as a public limited company on November 15, 1995[1] and is presently listed on the Bombay Stock Exchange and National Stock Exchange, having approximately 567,000 public shareholders as on December 31, 2019.[2] The Holding Company, along with all subsidiaries including the Corporate Debtor, is commonly referred to as the Jaypee Group which is a diversified infrastructure conglomerate with business interests in Engineering and Construction, Cement, Power, Real Estate, Expressways, Fertilizers, Hospitality, Healthcare, Sports, Information Technology and Education (not-forprofit).[3] In 2003, the Holding Company was awarded the rights for construction of an expressway which would significantly reduce the travel time between New Delhi and Agra and accordingly, a Concession Agreement was executed on February 7, 2003 between Yamuna Expressway Authority and the Holding Company (formerly, Jaiprakash Industries Limited) for the development of Yamuna Expressway Project.[4]

The Corporate Debtor, viz. JIL, is an Indian infrastructure development company which was engaged in the construction and development of the Yamuna Expressway, a 6lane, 165 km long access-controlled expressway connecting Greater Noida with Agra, and related real estate projects. A subsidiary of JAL, the Corporate Debtor was incorporated as a public limited company on April 5, 2007[5] for the special purpose of developing, operating and maintaining the Yamuna Expressway as well as developing approximately 6,175 acres of land along the Yamuna Expressway at five locations for residential, commercial, amusement, industrial and institutional purposes.[6] JIL is listed on the Bombay Stock Exchange and National Stock Exchange, having approximately 137,000 public shareholders as on December 31, 2019[7], while the Holding Company had 60.98% shareholding in the Corporate Debtor as on the said date.[8]

Subsequently, on September 30, 2015, the loan accounts of the Corporate Debtor were declared as Non-Performing Asset (“NPA”) by Life Insurance Corporation of India and thereafter, by other lenders on March 31, 2016. The lead lender of Corporate Debtor, viz. Industrial Development Bank of India (“IDBI Bank”), then instituted a petition under Section 7 of the Code before the Adjudicating Authority for initiation of Corporate Insolvency Resolution Process (“CIRP”) against the Corporate Debtor, on account of default amounting approximately to Rs.5.26 Billion. The Adjudicating Authority, vide its order dated August 9, 2017, admitted the said petition filed under Section 7 of the Code and ordered for the commencement of CIRP against the Corporate Debtor as well as appointed an Interim Resolution Professional (“IRP”) for the management of affairs of the said Corporate Debtor.

The IRP had filed an application in terms of Sections 43(1), 45(1) and 66(1) of the Code on February 6, 2018, seeking directions from the Adjudicating Authority for avoidance of transactions which had been entered into by the directors and promoters of Corporate Debtor, viz. the Holding Company, for creating mortgages over 858 acres of immovable property belonging to the Corporate Debtor for securing the debts of Holding Company, for being preferential, undervalued, wrongful and fraudulent. The Adjudicating Authority, vide order dated May 16, 2018, allowed this application of IRP and passed orders for the avoidance of six out of seven transactions which were found to be preferential, undervalued and fraudulent and accordingly, discharged the security interest, created by the Corporate Debtor over its properties in favour of the lenders of JAL, over 758 acres of land. Further, the Adjudicating Authority, vide orders dated May 9, 2018 and May 15, 2018 in the applications filed by lenders of JAL, viz. ICICI Bank and Axis Bank respectively, under Section 60(5) of the Code, had held that the said lenders of JAL could not be treated as financial creditors of the Corporate Debtor, viz. JIL, on the basis of the mortgages created by JIL to secure the debts of JAL.

The lenders of JAL challenged the aforesaid orders of Adjudicating Authority before NCLAT which, vide its impugned order dated August 1, 2019, set aside the order of Adjudicating Authority dated May 16, 2018 and held that such lenders of JAL were entitled to exercise their rights under the Code against the Corporate Debtor. The impugned order also allowed the appeals of ICICI Bank and Axis Bank, which had been filed challenging the orders of Adjudicating Authority dated May 9, 2018 and May 15, 2018 that the lenders of JAL could not be categorised as financial creditors of JIL; however the impugned NCLAT order had not adjudicated upon this issue at all and was completely silent on the reasons for allowing the said appeals.

The set of appeals before the Supreme Court, viz. Civil Appeal Nos. 8512-8527 of 2019 with Civil Appeal Nos. 6777-6797 of 2019, giving rise to the present judgment, had been preferred by the IRP, one of the financial creditors of Corporate Debtor, viz. IIFCL, and the associations of home buyers in the projects of Corporate Debtor, challenging therein the common impugned order of NCLAT dated August 1, 2019.

Observations of the Supreme Court in Jaypee Infratech

The issue- wise important observations of the Supreme Court in Jaypee Infratech are as follows:

1st Issue– Whether transactions involving creation of mortgage by the Corporate Debtor over its properties, as collateral securities for the loans and advances made to the Holding Company, are avoidance transactions for being preferential, undervalued and fraudulent, in terms of Sections 43, 45 and 66 of the Code?

  • Where a corporate person is already undergoing financial stress and either insolvency resolution is to take place or liquidation is imminent, transactions having an adverse impact on the financial health of the distressed corporate person and/or having the effect of turning the scales in favour of one or a few of its creditors or third parties at the cost of other stakeholders of such corporate person, are viewed by courts with considerable disfavour.
  • Though the provisions relating to “Preferential transactions and relevant time”, occurring in Section 43 of the Code, and “Orders in case of preferential transactions”, occurring in Section 44 of the Code, fall within Chapter III of Part II of the Code which pertains to the liquidation process, such provisions, being for avoidance of certain transactions and having significant bearing on the CIRP by their very nature, equally operate over the CIRP and hence, the Resolution Professional (“RP”) is obligated, by virtue of Section 25(2)(j) of the Code, to file application for avoidance of the stated transactions in accordance with Chapter III.
  • The provisions contained in Section 43 of the Code indicate the legislative intent that when a transaction is falling within the coordinates defined therein, the same shall be deemed to be a preference given at a relevant time and therefore, intent is of no defence or support of any preferential transaction falling within the ambit of Section 43 of the Code.
  • For a preference to become an offending one for the purpose of Section 43, the prime requirement to be satisfied is that such preference should have been given within and during the “relevant time” as per Section 43(4) of the Code. However, under Section 43(3) of the Code, a preference for the purposes of Section 43(2) will exclude, inter alia, transfers made in the ordinary course of business or financial affairs of the corporate debtor or transferee.
  • As Sections 43(2) and 43(4) of the Code are deeming provisions, the legal fiction would come into play upon existence of the ingredients stated in the said provisions. The net concentrate of Section 43 of the Code is that if a transaction entered into by a corporate debtor is not falling in either of the exceptions provided under Section 43(3) and satisfies the three-fold requirements under Sections 43(2) and 43(4), it would be deemed to be a preferential transaction during a relevant time, whether or not in fact it were so and whether or not it were intended or anticipated to be so. However, a transaction may not be regarded as an offending preference, even on satisfaction of the requirements under Sections 43(2) and 43(4), if the said transaction falls in either or both exceptions provided under Section 43(3).
  • Under Section 44 of the Code, which provides for the consequences of an offending preferential transaction, the Adjudicating Authority may pass orders for reversing the effect of such preferential transaction, inter alia, requiring any property, transferred in connection with giving of preference, to be vested in the corporate debtor or discharge (wholly or in part) of any security interest created by the corporate debtor.
  • In the present case, the mortgage deeds entered into between the Corporate Debtor and the lenders of Holding Company, viz. JAL, to secure the debts of JAL, amounts to creation of security interest for the benefit of JAL which is not only a related party of the Corporate Debtor but also a creditor as well as surety thereof. Hence, the Court had opined that the Corporate Debtor had given a preference, by way of the said mortgage transactions, to a related party, viz. the Holding Company for and on account of the antecedent financial debts, operational debts and other liabilities owed to the Holding Company which had the effect of putting the Holding Company in a beneficial position, at the cost and in exclusion of the other creditors and stakeholders of the Corporate Debtor, than it would have been in the event of distribution of assets under Section 53 of the Code.
  • Further, since the preference under Section 43(2) of the Code had been given to the Holding Company, which is a related party of the Corporate Debtor, the look back period under Section 43(4)(a) of the Code would be two years preceding the insolvency commencement date of Corporate Debtor i.e., August 9, 2017; hence, the transactions commencing from August 10, 2015 till the insolvency commencement date will fall under the scanner of the Adjudicating Authority. The Court observed that the transactions in question in the present case satisfied the requirements under Sections 43(2) and 43(4).
  • The Court rejected the contentions of the respondent-lenders of JAL that most of the impugned transactions were not of creation of any new encumbrance by the Corporate Debtor, observing that the mortgage ceases to exist on release by the mortgagee and the re-mortgage of properties belonging to Corporate Debtor, for all its legal effects and connotations, could only be regarded as a fresh mortgage.
  • The underlying concept of Section 43 of the Code is to disregard and practically annul such transactions which appear, in the course of insolvency resolution or liquidation, to be preferential so as to minimise the potential loss to creditors and other stakeholders of the Corporate Debtor. For a transfer to remain out of the ambit of Section 43(2) and not fall within the mischief of being preferential, Value enhancement or strengthening of the corporate debtor should be the result of such transfer.
  • The contents of Section 43(3)(a) of the Code require purposive interpretation so as to ensure that the said provision operates in sync with the intention of legislature and achieves the objectives of the Code. Therefore, the expression “or”, appearing as disjunctive between the expressions “corporate debtor” and “transferee”, ought to be read as “and” so as to be conjunctive of the two expressions. The Court was of the view that the ordinary course of business or financial affairs of the Corporate Debtor under Section 43(3)(a) could not mean to provide mortgages for securing the loans and facilities obtained by the Holding Company, at the cost of its own financial health, when the Corporate Debtor was already reeling under heavy debts, with its loan accounts having been declared as NPA by the lenders, and was also under heavy pressure to honour its commitments to the home buyers. Hence, the Court concluded that the impugned transactions were not made in ordinary course of business or financial affairs of the Corporate Debtor.
  • The Court was also of the view that where lenders are entering into a mortgage transaction with a third party, including the subsidiary company, in the ordinary course of their business, they are obliged to undertake further due diligence so as to ensure that the third party security is a prudent and viable one and not likely to be hit by any law. Hence, the said lenders are under an obligation to assure themselves that such third party, whose security is being taken as collateral, is not already indebted or in red and is not likely to fail in dealing with its own indebtedness, which further becomes imperative in context of the provisions contained in Part II, Chapter II of the Code. The Court observed that in the present case, several of the respondent-lenders of JAL were also direct creditors of the Corporate Debtor, to the extent of the advances made to the Corporate Debtor, and hence such creditors, along with other corespondents who were lenders of JAL, cannot plead ignorance about the actual state of affairs and the financial position of the Corporate Debtor.
  • While the Court did not adjudicate upon the questions of the impugned transactions being undervalued and/or fraudulent (having already held the impugned transactions to be an offending preferential transaction), it observed that in the scheme of the Code, the parameters, requisite enquiries and the consequences in relation to transactions being undervalued and/or fraudulent, are entirely different. For instance, the question of intent is not involved in Section 43 and by virtue of legal fiction, upon existence of the given ingredients, a transaction is deemed to be of giving preference at a relevant time. However, whether a transaction is undervalued requires a different enquiry as per Sections 45, 46 and/or 47 of the Code and the Adjudicating Authority may also look at the intent in case of undervalued transactions to examine if such undervaluation was made to defraud the creditors under Section 49 of the Code. The Court was of the view that specific material facts should be pleaded in case a transaction is sought to be brought under the mischief of being undervalued or fraudulent under Sections 45/46/47 or Section 66 of the Code respectively, since the scope of enquiry involved in the questions of preferential transaction under Section 43 is entirely different.

2nd Issue- Whether the lenders of Holding Company, viz. JAL, could be categorized as the financial creditors of Corporate Debtor, viz. JIL, on the strength of mortgage created by JIL for securing the debt of JAL?

  • The Court, in view of their ruling on the 1st issue, observed at the outset that the respondent-lenders of JAL could not make a claim to be treated as the financial creditors of the Corporate Debtor, as the security interest created by the Corporate Debtor over its properties stood discharged in whole. However, considering the relevance of this issue, the Court proceeded to adjudicate upon the same, independent of their findings that the impugned transactions were hit by Section 43 of the Code.
  • The gist of this issue is whether the impugned mortgage transactions, entered into between the Corporate Debtor and the respondent-lenders of JAL, could be categorised as ‘financial debts’ owed and payable by the Corporate Debtor within the meaning of Section 5(8) of the Code, so as to confer the status of ‘financial creditors’ upon the respondents, viz. lenders of JAL. The Court had indicated their prima facie view on this issue, in the order dated December 10, 2019, that the lenders of JAL cannot be categorised as the financial creditors of the Corporate Debtor, while staying the operation of the impugned NCLAT order to that extent.
  • The Court placed reliance on the findings of the Adjudicating Authority, in their orders dated May 9, 2018 and May 15, 2018, that the basic ingredient of financial debt i.e., ‘debt along with interest, if any, which is disbursed against the consideration for the time value of money’ was lacking in the impugned mortgage transactions in Jaypee Infratech. The Court also relied on their earlier decisions in Swiss Ribbons[9], Pioneer Urban[10] and Essar Steel[11] where the expressions “financial creditor” and “financial debt” had come up for consideration. The most important feature, as this Court had observed in Swiss Ribbons, is that a financial creditor is, from the very beginning, involved in assessing the viability of the corporate debtor and can engage in restructuring of the loan as well as reorganisation of the corporate debtor’s business when there is financial stress; hence, a financial creditor is not only concerned with the repayment of dues but also has to play parental and nursing roles for the well-being of the corporate debtor. The stakes of a financial creditor are intrinsically inter-woven with the well-being of the corporate debtor.
  • The Court, while relying on Pioneer Urban as a whole and with reference to its context, observed that it had not enunciated therein that the scope of the expression ‘financial debt’ has to be read as if to encompass any debt of whatsoever nature. For a debt to become ‘financial debt’ for the purposes of Part II, Chapter II of the Code, the basic elements are that it ought to be a disbursal against the consideration for time value of money, which may include any of the modes for raising money or incurring liability as prescribed under sub-clauses (a) to (i) of Section 5(8). The requirement of the existence of a debt which is disbursed against the consideration for the time value of money remains an essential part in respect of any of the transactions/modes stated in sub-clauses (a) to (i) of Section 5(8), even if not necessarily stated therein. The definition, by its very frame, cannot be read so expansively that the root requirements of ‘disbursement against the consideration for the time value of money’ are forsaken in the manner that any transaction could stand alone to become a financial debt. The essential element of disbursal against the consideration for time value of money needs to be found in the genesis of any debt, before it may be treated as ‘financial debt’ within the meaning of Section 5(8) of the Code.
  • The root requirement for a creditor to become “financial creditor” under Section 5(7) of the Code is the existence of a financial debt which is owed to such creditor. Hence, for a person to be designated as a financial creditor of the corporate debtor, it has to be shown that the corporate debtor owes a financial debt to such person. Applying this logic, it becomes clear that a third party, to whom the corporate debtor does not owe any financial debt, cannot become the financial creditor of such corporate debtor for the purpose of Part II, Chapter II of the Code. It is clear from the provisions of the Code that the legislature intended to maintain a distinction amongst the expressions ‘financial creditor’, ‘operational creditor’, ‘secured creditor’ and ‘unsecured creditor’. Though every secured creditor would be a creditor and every financial creditor would also be a creditor but every secured creditor may not be a financial creditor.
  • A person having only security interest over the assets of corporate debtor (like the third party security provided by the Corporate Debtor in the instant case), even if falling within the description of ‘secured creditor’ by virtue of the collateral security extended by the corporate debtor, would nevertheless stand outside the description of ‘financial creditor’ as per the definition contained in Section 5(7) of the Code. Further, if a corporate debtor has mortgaged its properties to secure the debts of a third party without having entered into a contract of surety or indemnity with the lenders of such third party, it may, at the best, fall within the definition of ‘debt’ under Section 3(10) of the Code and cannot partake the character of a ‘financial debt’ within the meaning of Section 5(8) of the Code.
  • The Court was of the view that the position and role of a secured creditor, having only security interest over the assets of the corporate debtor, could easily be contrasted with the role of a financial creditor, considering the objectives of the Code. While the interest of a secured creditor will be limited merely to realising the value of its security without any regard to the corporate debtor’s growth or equitable liquidation, a financial creditor would not only seek to safeguard its own interests but also be simultaneously interested in the rejuvenation, revival and growth of the corporate debtor. Hence, if a secured creditor of the corporate debtor was to be included as a financial creditor thereof and allowed to have a say in the CIRP of the Corporate Debtor, the growth and revival of the corporate debtor would be the casualty, thereby defeating the very objective and purpose of the Code to resolve the insolvency and underlying stress of the corporate debtor.

Takeaways from Jaypee Infratech

The landmark ruling of the Court in Jaypee Infratech provides invaluable lessons to the primary stakeholders involved in the process of insolvency resolution, viz. the Resolution Professional (“RP”), lending banks and financial institutions and the Adjudicating Authority under the Code, in cases of preferential, undervalued and fraudulent transactions.

  • Checkpoints for the RP: – o In case of preferential transactions under Section 43 of the Code, the RP is required to sift through the entire cargo of transactions relating to the property or an interest thereof of the corporate debtor backwards, from the insolvency commencement date up to the preceding two years therefrom. Accordingly, the RP shall identify the beneficiaries involved in such transactions and segregate them into two categories being firstly, the persons falling within the definition of ‘related party’ under Section 5(24) of the Code and secondly, the remaining persons. This would lead to a bifurcation of the identified transactions into two sub-sets with each sub-set requiring different analysis. The sub-set of identified transactions concerning unrelated party(s) shall further be trimmed to include only such transactions which have been undertaken in the period preceding one year from the insolvency commencement date.
  • Thereafter, every transaction in each of the aforesaid two sub-sets would be required to be examined by the RP to find: (i) whether the transaction concerns transfer of property or an interest thereof of the corporate debtor; and (ii) whether the beneficiary involved in such transaction stands in the capacity of creditor or surety or guarantor qua the corporate debtor. Accordingly, such transactions which carry the potential of being preferential would have to be shortlisted.
  • The said shortlisted transactions would have to be further scrutinised by the RP to find if the transfer in question was made for or on account of an antecedent financial debt or operational debt or other liability owed by the corporate debtor. If the answer thereof is in positive, such transaction would be in satisfaction of the ingredients under Section 43(2)(a) of the Code. The transactions which are found to be covered under Section 43(2)(a) will have to be further examined by the RP to check whether the transfer in question had the effect of putting such creditor or surety or guarantor in a beneficial position than it would have been in the event of distribution of assets per Section 53 of the Code. If this question is being answered in affirmative, the transaction under examination shall be deemed to be of preference within a relevant time, provided it does not fall within the exclusion provided under Section 43(3) of the Code.
  • A transaction, which otherwise is to be of deemed preference, shall answer in negative to the exceptions stipulated under Sections 43(3)(a) and 43(3)(b) of the Code, for such transaction to be a preferential transaction under Section 43. Accordingly, the RP will be required to apply to the Adjudicating Authority for necessary order(s) in relation to such transaction(s) that had answered in positive to the tests contained in Sections 43(2) and 43(4) and in negative to the test contained in Section 43(3) of the Code.
  • Considering the scheme of the Code where the parameters, requisite enquiries and the consequences in relation to transactions being undervalued and/or fraudulent are entirely different from preferential transactions, the RP is required to place on record specific material facts, in its application to the Adjudicating Authority under the Code, where a transaction is also sought to be brought under the mischief of being undervalued or fraudulent under Sections 45/46/47 or Section 66 of the Code respectively, since the scope of enquiry involved in such cases are entirely different from each other.
  • Checkpoints for the lending banks and financial institutions: – o The lending banks and financial institutions seeking to enter into a mortgage transaction with a third party, including the subsidiary company, in the ordinary course of their business, must undertake further due diligence for ensuring that the third-party security is prudent and viable, and not likely to be hit by any law in force. Hence, the lending banks and financial institutions must absolutely assure themselves that such third party, whose security is being taken as collateral, is not already indebted or in red and is not likely to fail in dealing with its own indebtedness, which further becomes imperative in context of the provisions contained in Part II of the Code.
  • The creation of every third-party security cannot be always deemed to have been done in the ordinary course of business; such ‘ordinary course of the business’ for the purposes of Section 43(3)(a) will be determined on the basis of the circumstances in which the third party had given its properties as collateral. In the present case, considering that the Corporate Debtor had already defaulted on its debts and was under immense pressure to honour its commitments to the homebuyers, securing the loans and advances made to the Holding Company under such circumstances could not be construed to have been done in the ordinary course of business of the Corporate Debtor.
  • Nevertheless, the lenders which have taken third party security as collateral would not be considered as the financial creditors of such third party under the Code, unless they satisfy the essential condition of ‘disbursement against the consideration for the time value of money’ in terms of Section 5(8) of the Code.
  • Checkpoint for the Adjudicating Authority under the Code: – o The Court in Jaypee Infratech observed that while the Adjudicating Authority had, in its detailed and considered order, essentially dealt with only the features of preferential transactions at a relevant time occurring under Sections 43, it had however recorded combined findings on the impugned transactions being preferential, undervalued and fraudulent. As the parameters, scope of enquiry and consequences arising out of an undervalued transaction is quite different from that of a fraudulent transaction and preferential transaction and vice-versa, the Court observed the need for the Adjudicating Authority to deal with the different types of avoidance transactions separately and distinctively.

The landmark judgment of the Supreme Court in Jaypee Infratech has not only put to rest the legal issues revolving around third-party mortgage, in case they are avoidance transactions for being preferential in terms of Section 43 of the Code, but also clarified that the mortgagees in such third-party mortgage transactions cannot be considered as the financial creditors of the third party mortgagor, in the absence of disbursal of loans to such mortgagor against the consideration for time value of money. The judgment also provides invaluable lessons to the banks and financial institutions which would now conduct a thorough due diligence on the feasibility and viability of thirdparty security as well as the financial capacity of the third-party mortgagor, before accepting such security.

[1] http://www.mca.gov.in/mcafoportal/companyLLPMasterData.do

[2] http://www.jalindia.com/financial/2019/Shareholding_Pattern_as_on_31–12–2019.pdf

[3] http://www.jalindia.com/profile.html

[4] http://yamunaexpresswayauthority.com/yep.html

[5] http://www.mca.gov.in/mcafoportal/companyLLPMasterData.do

[6] http://www.jaypeeinfratech.com/background.html

[7] http://www.jaypeeinfratech.com/shareholdingpattern/Shareholding_Pattern_for_the_Quarter_31_dec_2019 .pdf

[8] Ibid. 

[9] Swiss Ribbons Pvt. Ltd. and Anr. v. Union of India and Ors. (Writ Petition (Civil) No. 99 of 2018), decided on 25.01.2019

[10] Pioneer Urban Land and Infrastructure Limited and Anr. v. Union of India and Ors. (Writ Petition (Civil) No. 43 of 2019), decided on 09.08.2019

[11] Committee of Creditors of Essar Steel India Limited v. Satish Kumar Gupta & Ors. (Civil Appeal No. 8766-67 of 2019), decided on 15.11.2019

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