Suraksha Realty Interest Clarification
Legal and Forensic Summary — Interest Extinguishment under IBC (Jaypee Infratech Case)
1. Statutory Foundation — Insolvency & Bankruptcy Code, 2016 (IBC)
The Insolvency & Bankruptcy Code explicitly governs the treatment of interest and penalties during insolvency proceedings.
Section 14(1)(a) states:
“During the moratorium, no interest, penalty or other charge shall accrue on any debt.”
→ This means all interest accruals are frozen from the date of the Corporate Insolvency Resolution Process (CIRP) — 9 August 2017 in the case of Jaypee Infratech Ltd.
Section 31(1) states:
“Once a resolution plan is approved, it shall be binding on the corporate debtor and all stakeholders.”
→ This creates a “clean slate” after plan approval. No past or retrospective interest can be revived once the plan is sanctioned.
Section 74(3) states:
“Any person who knowingly contravenes the terms of the approved plan shall be punishable with imprisonment and fine.”
→ Any attempt by Suraksha Realty Ltd. (the new resolution applicant) to levy interest beyond the approved plan constitutes a punishable offence.
2. NCLT — Allahabad Bench (Order dated 7 March 2023)
Case: IA 2836/2021 in CP (IB) No. 77 (ALD) / 2017
The National Company Law Tribunal (NCLT) approved the Suraksha Resolution Plan and made several key observations:
Paragraph 17.38 (p.62):
“Interest accrued during the CIRP period stands extinguished.
Paragraph 178(viii) (p.204):
“No further interest shall accrue till the approval of the plan.
Paragraph 20.11 (p.28):
"Possession to be offered without loading CIRP interest.
Paragraph 34.45 (p.110):
“Moratorium bars penalties post-approval.
Paragraph 178(i) (p.203):
“The approved resolution plan is binding on all stakeholders and no additional financial burden shall arise beyond its terms.
Effect:
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Only pre-CIRP simple contractual interest (till 9 August 2017) remains valid.
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All interest during the moratorium (2017–2024) is extinguished.
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No new or retrospective interest can be added after 24 May 2024 (Date of NCLAT).
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Any compounding or reloading of old dues violates the NCLT order.
3. NCLAT — Appellate Authority (Order dated 24 May 2024)
Case: Company Appeal (AT) (Insolvency) No. 1148 / 2023
The National Company Law Appellate Tribunal (NCLAT) upheld the NCLT’s decision, confirming the following:
Paragraph 55 (p.60):
“The clean-slate principle applies; penal interest is waived.
Paragraph 93 (p.82):
“Revival of interest is contrary to the objectives of the IBC."
Paragraph 100 (pp.84–85):
“Once a plan is approved under Section 31, its feasibility cannot be disturbed."
Paragraph 118 (pp.98–99):
“Contravention of an approved plan attracts penal consequences under Section 74 of the IBC."
Effect:
The NCLAT reaffirmed that any attempt to collect compound or retrospective interest after plan approval is a direct violation of the Insolvency Code and invites prosecution under Section 74.
4. Supreme Court — Key Judgments Supporting Clean Slate Principle
(a) Essar Steel India Ltd. v. Satish Kumar Gupta (2020) 8 SCC 531
Paragraph 67 (p.45):
“A resolution applicant must start with a clean slate; all past or contingent dues stand extinguished once the plan is approved.”
Effect:
This landmark decision established that all historical liabilities — including interest accrued before or during the moratorium — are wiped out upon plan approval.
(b) Jaypee Kensington Boulevard Apartments Welfare Assn. v. NBCC (India) Ltd. (2021) SCC OnLine SC 253
Paragraph 159.1.1:
“The Adjudicating Authority cannot reopen or modify obligations fixed in the approved plan.”
Effect:
This ruling specifically applies to Jaypee Infratech projects. It confirms that once the Suraksha Resolution Plan was approved on
7 March 2023, no builder, authority, or entity can impose new financial liabilities or re-calculate interest for any earlier period.
5. Forensic Illustration — Unit KRH00#.-1#0#
🔍 Illustration: Simple Interest vs. Compound (Interest-on-Interest) — Example as done by Suraksha Realty
Let:
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Principal (P) = ₹4,00,000
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Rate (R) = 9% p.a. (Jaypee) or 18% p.a. (Suraksha)
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Time (T) = 10 years
🔹 Jaypee’s Lawful Simple Interest Calculation (9% p.a.)
Formula: Simple Interest (SI)= (P×R×T ) / 100
Substitute values:SI= (4,00,000×9×10) / 100=₹3,60,000
SI= (4,00,000×9×10) / 100=₹3,60,000
Hence,
Total Payable=P+SI=₹4,00,000+₹3,60,000=₹7,60,000
✅ This is the legal, transparent, pre-CIRP method used by Jaypee — interest is always on the original amount only.
🔸 Suraksha’s Compounded Interest (Interest-on-Interest at 18% p.a.)
Formula: A=P×(1+R/100)^T
Compound Interest (CI) = A−P
Substitute values:
A= 4,00,000×(1+18/ 100)^10.
A = 4,00,000×5.233 = ₹20,93,200
CI= 20,93,200−4,00,000 = ₹16,93,200
Thus,
Total Payable = ₹20.93 lakh (approx.)
Interest alone = ₹16.93 lakh
📉 Comparative Impact
Difference : Suraksha (Compound) - Jaypee (Simple) = ₹16.9 lakh - ₹3.6 lakh = +₹13.3 lakh inflated
6. Interest Status by Period — Legal Position Summary
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Pre-CIRP (before 9 August 2017):
Simple contractual interest @9% per annum — enforceable (as per Builder-Buyer Agreement).
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CIRP / Moratorium Period (9 August 2017 to 24 May 2024):
All interest, penal, or compound charges — extinguished (NCLT ¶17.38 p.62; ¶178(viii) p.204; IBC §14).
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Post-Plan Period (after 24 May 2024):
Any fresh or retrospective interest — unenforceable (NCLT ¶178(i) p.203; NCLAT ¶55 p.60; Supreme Court Essar Steel ¶67 p.45).
7. Practical Impact for Homebuyers
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Only pre-CIRP simple interest is legally recoverable.
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All compounded or post-approval interest demanded by Suraksha Realty Ltd. is void and punishable.
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Any recovery beyond the NCLT-approved figures violates IBC Sections 14, 31, and 74, and amounts to a cognizable financial offence.
Prepared by-
@suveshvsaa13 / X
(A Homebuyer –Krescent Homes & Wish Town, Jaypee Infratech Ltd.)
Date: 9 November 2025
Email: ind.vision47@gmail.com
(Submitted as Annexure — Forensic Illustration on Compound Interest Charging)
Disclaimer:
This annex is a forensic demonstrative illustration prepared from publicly available financial principles and judicial findings.It does not constitute a legal opinion or adjudicated computation, but serves as explanatory evidence to help authorities understand the compounding mechanism that leads to inflated demands.
All judicial references cited (NCLT, NCLAT, Supreme Court) remain the governing and binding authorities.