“Payment Means Money”: Supreme Court mandates cash payout to dissenting financial creditors under IBC Section 30(2)(b); reaffirms strict limits on NCLT’s powers; clarifies simultaneous voting and public-law contracts in Jaypee Kensington v. NBCC

Introduction

This landmark judgment resolves multiple, long-litigated questions arising from the corporate insolvency resolution process (CIRP) of Jaypee Infratech Limited (JIL), a special purpose vehicle developing the Yamuna Expressway and large real estate townships, and addresses the fates of over 20,000 homebuyers, numerous lenders, and public authorities. The Supreme Court’s decision is the fourth decisive intervention in the Jaypee saga, following:

Chitra Sharma v. Union Of India (2018): revival of JIL’s CIRP with homebuyers recognized as financial creditors and deposit of funds by JAL.
Jaiprakash Associates Ltd. v. IDBI Bank (2019): a further 90-day window to avoid liquidation and invite revised plans from NBCC (India) Ltd. and Suraksha.
Anuj Jain v. Axis Bank (2020): declaration of six mortgages of JIL’s land (758 acres) as preferential transactions; lenders of JAL held not to be JIL’s financial creditors.

Here, the Supreme Court adjudicates challenges to the National Company Law Tribunal’s (NCLT) approval of NBCC’s resolution plan (with modifications) and the National Company Law Appellate Tribunal’s (NCLAT) interim directions. The Court answers 15+ tightly interconnected questions: the extent of NCLT/NCLAT powers, meaning of “payment” to dissenting financial creditors, the legal status of public concession agreements, simultaneous voting on plans, the treatment of a ₹750 crore deposit made by JAL pursuant to earlier orders, homebuyer voting dynamics, and more. Importantly, while endorsing much of the framework of the Insolvency and Bankruptcy Code (IBC) as previously construed in K. Sashidhar, Essar Steel, and Maharashtra Seamless, the Court breaks new ground on the meaning of “payment” under Section 30(2)(b).

Summary of the Judgment

Cash-only payout to dissenting financial creditors: “Payment” in Section 30(2)(b) read with Section 53 means payment in money (or via enforcement of security to realise money), not land, equity, or other non-cash consideration. NCLT rightly rejected in-kind treatment but erred in re-writing payment terms; the plan must go back to the Committee of Creditors (CoC).
Strict limits on NCLT/NCLAT review: Adjudicating and Appellate Authorities cannot alter the commercial terms of an approved resolution plan; if a plan is non-compliant with Section 30(2) or the regulations, it must be returned to CoC for reconsideration.
Simultaneous voting validated: CoC can simultaneously vote on more than one plan; the August 2020 amendment to Regulation 39(3) is clarificatory.
YEIDA Concession Agreement (CA) not a statutory contract, but cannot be unilaterally re-written: The plan cannot modify CA obligations without YEIDA’s consent; transfer of the concession to SPVs requires tripartite documentation (YEIDA–JIL–SPV). Provisions seeking to shift additional land compensation liabilities to end-users/YEIDA or to extend CA tenure were disapproved.
₹750 crores deposit belongs to JAL: The deposit made by JAL pursuant to earlier orders and interest thereon is JAL’s property. However, before refund, NCLT must supervise a time-bound reconciliation to determine and set off any amounts due from JAL to JIL (e.g., construction advances), then refund the remainder to JAL.
Security interest on the un-avoided 100 acres persists: Clause extinguishing all mortgages was set aside; for the 100 acres (Tappal Property 1) not avoided in Anuj Jain, the mortgage in favour of ICICI continues. The plan must address this.
Freed 758 acres must be built into value-maximising plan: The plan should make adequate provision for utilising the now-unencumbered 758 acres in JIL’s interests.
Homebuyer voting is by class and binding: Once the Authorised Representative (AR) casts the class vote under Section 25A(3A), individual homebuyers or associations cannot challenge the plan as dissentients; RERA yields to IBC in case of conflict.
NCLAT’s Interim Monitoring Committee set aside: Such a committee during appeal is not contemplated by the IBC.
Other holdings: NCLT’s direction to pay unclaimed FD holders was set aside; clause granting deemed company-law approvals (capital reduction etc.) for JIL was approved; minority shareholder objections were rejected.
Article 142 directions: Given multiple defects, the Court remitted the plan to CoC; enlarged CIRP by 45 days; invited modified/fresh plans only from NBCC and Suraksha; directed swift reconciliation and disposal by NCLT.

Analysis

Precedents Cited and Their Influence

K. Sashidhar v. Indian Overseas Bank (2019): Established non-justiciability of CoC’s commercial wisdom; NCLT’s remit under Section 31 is limited to Section 30(2) compliance. The Court relied on this to reiterate that NCLT cannot modify commercial terms—only send plans back if non-compliant.
Committee of Creditors of Essar Steel v. Satish Kumar Gupta (2019): Clarified scope of judicial review, meaning of fair and equitable distribution, and primacy of CoC over manner of distribution; used here to: (i) cabin NCLT/NCLAT power; (ii) insist that if statutory parameters aren’t met, the plan must be returned to CoC; (iii) reject hydra-headed post-approval claims; (iv) confirm that “homebuyers as class” are bound by AR voting.
Maharashtra Seamless v. Padmanabhan Venkatesh (2020): Reinforced that neither NCLT nor NCLAT can insist on matching liquidation value or re-work commercial contours; applied to stress why NCLT’s modifications to payment modality were impermissible.
Pioneer Urban Land & Infrastructure v. Union of India (2019): Upheld homebuyers as financial creditors; described RERA-IBC interplay; and explained Section 25A(3A). Used to (i) bind dissenting homebuyers to class vote; (ii) resolve RERA-IBC conflicts in favour of IBC.
Anuj Jain v. Axis Bank (2020): Held six of seven JIL land mortgages (758 acres) as preferential and avoidable; lenders of JAL are not JIL’s financial creditors; the seventh (100 acres) stands. Crucial for (i) retaining the 100-acre mortgage; (ii) implementing value-accretive use of 758 acres freed-up land.
Swiss Ribbons v. Union of India (2019): Reiterated IBC’s revival-first objective; referenced for legislative experimentation and balancing stakeholder interests.
MCGM v. Abhilash Lal (2019), Embassy Property (2019): Emphasised that third-party/public-law assets and approvals cannot be rewritten by an IBC plan; mapped to YEIDA’s CA context, albeit with the Court clarifying CA is contractual (not statutory) but still requires YEIDA’s consent for key alterations.

Legal Reasoning and Holdings

1) Narrow remit of NCLT/NCLAT

NCLT’s approval power is confined to Section 30(2)/Regulation compliance; it cannot reprice or rewrite commercial terms approved by CoC. If non-compliance exists, the plan must be remitted to CoC.
NCLAT cannot create implementation committees while appeals are pending; Section 61(3) grounds for appeal are exhaustive.

2) Payment to dissenting financial creditors means cash

The Court construed “payment” under Section 30(2)(b) read with Section 53 by using ordinary commercial meaning—delivery of money—and statutory context.
Non-cash instruments (equity in SPVs, land parcels) cannot be forced on dissenting financial creditors. However, if a dissenting creditor has a subsisting, valid security over the corporate debtor’s assets, the plan may allow enforcement to realise money to the extent of entitlement.
Result: NCLT correctly rejected in-kind payment, but erred in ordering instalment-based cash payouts by modifying plan terms; the issue must go back to CoC.

3) Simultaneous voting on multiple plans is valid

IBC/Regulations did not prohibit simultaneous voting; post-facto Regulation 39(3) amendments are clarificatory.
The Jaypee CoC’s process—presenting both NBCC and Suraksha, with the higher-voted plan succeeding—was upheld.

4) YEIDA Concession Agreement—consent indispensable

CA is not a statutory contract but it binds; the plan cannot unilaterally shift additional compensation liabilities or transfer concession rights to SPVs without YEIDA’s consent and tripartite documentation (CA Clause 18.1).
Proposals to deem approvals, extend concession period, or extinguish liabilities under CA were disapproved. These must go back to CoC; YEIDA’s cooperation is expected but cannot be compelled contrary to law.

5) ₹750 crores deposit: property of JAL

The deposit was taken in Chitra Sharma to protect homebuyers pending legislative recognition; it was never declared an asset of JIL.
Direction: NCLT to appoint an independent accounting expert; reconcile JIL–JAL accounts (limited to construction advances and related set-offs indicated on record); from the ₹750 crores with interest, first pay any sum found due to JIL/homebuyers; refund the balance to JAL for further treatment in any CIRP/liquidation of JAL.
Result: Plan clause using the deposit for JIL or treating it as JIL’s asset set aside.

6) Security interests—100 acres persists; 758 acres to be utilised

Clause extinguishing all mortgages disallowed: ICICI’s mortgage over the 100 acres not avoided in Anuj Jain stands; the plan must address this.
Plan must make explicit, value-maximising provision for the 758 acres now free from encumbrance.

7) Homebuyers’ challenges rejected; RERA yields to IBC

Once the AR casts the class vote (>50% of those homebuyers who voted), no individual homebuyer/association can litigate as a dissenting creditor or as an “aggrieved person” under Section 61.
RERA-based claims for pre-plan compensation/interest cannot override a compliant resolution plan; RERA is in addition to, not in derogation of, IBC.
No project-wise carve-outs based on completion levels; the plan must comprehensively bind all assets and liabilities.

8) Other findings

FD holders: NCLT’s direction to pay unclaimed FD holders beyond admitted claims was set aside as inconsistent with IBC’s claim timelines and finality principles.
Minority shareholders: Exit consideration of ₹1 crore is not unfair given waterfall priorities; extinguishment of promoter equity and delisting were in line with the plan and IBC framework. Section 30(2)(e) Explanation deems shareholder approvals as given.
JHL (subsidiary hospital company): Plan deals with JIL’s shares in JHL (an asset of JIL), not JHL’s business/assets. YES Bank (JHL’s lender) and NBCC must devise a sale/disinvestment mechanism; NCLT may be approached for implementation modalities.
Deemed approvals clause (Schedule 3, Clause 7): Approved to the extent it relates to JIL (reductions/issuances necessary to implement the plan).

Impact and Practical Implications

IBC drafting and CoC processes:
- Plans must expressly provide cash (or secured enforcement mechanisms) for dissenting financial creditors. In-kind options need explicit consent of dissenting creditors.
- Any non-compliance with Section 30(2) parameters will lead to remand, not NCLT re-drafting.
- Simultaneous voting is permissible; codified in Regulation 39(3) but treated as clarificatory even pre-amendment.
Public authorities and concession contracts:
- Even if not “statutory” contracts, public concessions cannot be recast without the authority’s consent; tripartite instruments may be required (e.g., YEIDA–JIL–SPVs) for transfers.
- Plans seeking extension, waiver, or risk-shifting under such agreements must engage with the authority and reflect negotiated outcomes.
Asset pools and third-party money:
- Funds deposited pursuant to Court orders are not ipso facto corporate debtor assets. Resolution applicants must scrutinise provenance.
- NCLT can supervise account reconciliation as a targeted equitable exercise ancillary to CIRP (here, limited to construction advance set-offs) before directing refunds.
Homebuyers’ governance:
- Section 25A(3A) is outcome-determinative; class voting binds all. Associations must influence the AR’s vote rather than plan on post-approval litigation.
- RERA–IBC interface: IBC prevails in conflicts; post-approval hydra-headed claims are impermissible.
Judicial discipline:
- NCLT/NCLAT cannot innovate implementation structures (e.g., interim monitoring committees) not envisaged by the IBC.
- Courts retain Article 142 equitable levers in exceptional situations to prevent liquidation and cure process defects without re-writing statute-backed roles.
Real-estate CIRPs:
- This decision provides template guidance for large real-estate insolvencies with public authorities, homebuyer classes, and layered SPV structures.
- Value from freed-up land (e.g., 758 acres) must be transparently and maximally harnessed through the plan.

Complex Concepts Simplified

CoC (Committee of Creditors): The body of financial creditors deciding the fate of a corporate debtor; commercial wisdom of a 66%+ majority is binding; NCLT cannot second-guess it.
IRP/RP: Interim/Resolution Professional administers the debtor as a going concern, collates/admits claims, prepares the information memorandum, and places compliant plans before CoC.
Dissenting financial creditor: A financial creditor voting against a plan; under Section 30(2)(b), must receive at least liquidation value and be paid in money (or via secured enforcement realising money), with priority over assenting financial creditors.
Liquidation value: Estimated realisable value of assets if the debtor were liquidated; used as a floor for payments to operational creditors and dissenting financial creditors.
Concession Agreement (CA): A contract (here, between YEIDA and JIL) granting rights (build/operate/collect toll; land development) subject to terms; not “statutory” but cannot be unilaterally altered in a resolution plan absent authority consent.
SPV (Special Purpose Vehicle): A new company to which assets/rights may be transferred; here, Expressway SPV and Land Bank SPV proposed; CA clause 18.1 requires tripartite documents for such transfers.
Preferential transactions: Transfers made within look-back periods that prefer certain creditors; avoidable under Section 43; in Anuj Jain, 758 acres of JIL land mortgaged for JAL’s loans were avoided (one 100-acre mortgage survived).
Section 25A(3A): Binding class voting for homebuyers—AR casts the vote in accordance with a majority (>50%) of those who actually cast votes; binds the entire class.
RERA–IBC interplay: RERA is in addition to IBC; where there is a clash, IBC prevails (Pioneer Urban).

Conclusion

Jaypee Kensington is a pivotal decision that crystallises unresolved IBC questions and sets process-safe guardrails. Three messages stand out. First, “payment means money” under Section 30(2)(b): plan proponents must provide cash (or secured-money realisation paths) to dissenting financial creditors, not in-kind substitutions absent consent. Second, NCLT/NCLAT cannot tinker with plan economics; their role is to ensure compliance with Section 30(2)/Regulations and, if unmet, remit to CoC. Third, public-law interfaces—YEIDA’s concession and similar frameworks—cannot be reshaped unilaterally; consented tripartite documentation is indispensable.

Simultaneous voting on competing plans is lawful; homebuyers’ class vote binds all; post-approval hydra-headed claims are not permitted. The Court resolves a long-pending controversy around the ₹750 crores deposit—declaring it JAL’s property but protecting JIL/homebuyer entitlements via a concise, supervised reconciliation. Finally, the Court again uses Article 142, not to rewrite the Code, but to avert liquidation and direct a time-bound, commercially faithful reset: 45 days for revised submissions by NBCC and Suraksha, with CoC reconsideration and NCLT disposal.

In practical effect, Jaypee Kensington will:

Recalibrate plan drafting for dissenting creditor payouts and public concession compliance;
Disincentivise litigation strategies aimed at NCLT re-crafting plan economics;
Strengthen homebuyer class governance via the AR model; and
Guide large real-estate insolvency plans to explicitly harness freed-up asset value and honour third-party rights.

The judgment is an authoritative restatement and refinement of India’s insolvency jurisprudence, aligning process fidelity with stakeholder justice—without surrendering to the “hydra-heads” that derail timely resolution.