In this edition, we focus on land grabs in the NCR region by the Max group and other real estate companies, wherein the chosen methods are illegal acquisition of assets and mis-statements, causing loss to the Uttar Pradesh government, bankers and retail buyers.
The Max Square project in Sector 129, Noida is replete with illegalities. The Max group acquired this prime commercial plot at undervalued rates from Axis Bank, the lenders of the bankrupt Jaypee group. Time schedules are indicative of a deep collusive arrangement between Max group and Axis Bank to steal assets during the ‘look back’ period of Insolvency proceedings thereby causing loss to other financial creditors. The apex court in a detailed judgement dated February 20, 2020 had held such transactions illegal as the banks cannot move assets of a bankrupt borrower to a third party and cause loss to other claimants. But this is what precisely happened.
Both, Jaypee Infratech Ltd (JIL) and its holding company Jaypee Associate Ltd (JAL) had borrowed money from a host of bankers including Axis Bank, and individuals flat allottees had also advanced money to JAL/ JIL. Hundreds of ordinary families who had invested their life-savings in the Jaypee group did not get any refunds/ interests. Homebuyers are also to be treated as financial creditors at par with secured lenders such as banks, the Supreme Court has held. JIL /JAL loans were declared NPA first by LIC in September 30, 2015, and by March 31, 2016 several other banks also did the same. The IBC Act became operational on December 1, 2016. It was clear that JIL / JAL would go under insolvency proceedings. NCLT admitted the petition of a lender on August 9, 2017.
Four months before this happened, Axis Bank struck a debt swap deal and acquired three prime commercial land parcels from JAL/JIL. Back to back release deed and subsequent sub-lease deeds were executed in favour of Axis Bank (March 23-25, 2017). This transaction of corporate debtor JAL/JIL was within the look-back period of one year preceding the date of commencement of Corporate Insolvency Resolution Process and is disallowed under Sections 44 & 46 of IBC 2016. Plainly put, this acquisition is legally untenable.
This illegally acquired land was then sold to Max group company at a throwaway price and has been developed as Max Square project. It has not been registered with UP Real Estate Regulatory Authority (UP-RERA). Read the cover story for details on how investments were made in this project. Also, in the edition, how tainted promoters rolled out Noida World One and Alphathum projects by grabbing IT & ITeS Park lands.
