Legal tangles could stall Vedanta-JAL deal

Mumbai: Jaiprakash Associates' (JAL) winning bidder, Anil Agarwal's Vedanta, could face delays in closing the deal due to legal and financial challenges over asset ownership and pledged shares that plague the conglomerate and considering the slow pace at which the judiciary reaches a final conclusion.

Vedanta's ₹12,505-crore offer, submitted on Friday, is ₹250 crore higher than the bid placed by the Adani Group and ₹505 crore above the base price. Dalmia Bharat, Jindal Power and PNC Infratech, which were part of the bidding process, did not submit final bids, likely due to concerns over unresolved legal disputes and the complexity of securing consensus among lenders on guarantees and the treatment of pledged shares. Adani also did not revise its bid in the third, fourth, or fifth rounds, effectively paving the way for Vedanta's selection.

JAL operates in five key business segments: real estate, hospitality, cement, engineering and construction (E&C) and investments in group companies such as power and fertiliser. According to its FY25 annual report, the construction segment contributed the most to revenue at ₹1,604 crore, followed by real estate (₹835 crore) and hospitality (₹421 crore).

Among the multiple litigations JAL is involved in, a key dispute concerns the Yamuna Expressway Industrial Development Authority (Yeida) cancelling the allotment of 2,470 acres in Greater Noida for its Sports City project. The Allahabad High Court in March 2025 upheld the cancellation, and the matter is pending before the Supreme Court.

Yeida cancelled the allotment in 2020, citing unpaid development charges and failure to complete the planned infrastructure. While the authority has pegged the dues at ₹3,621 crore, JAL claims the arrears to be ₹1,483 crore.

The outcome of this litigation could significantly affect the recovery value of JAL's real estate portfolio, which is estimated at ₹19,000 crore. Real estate, its most valued asset, is also where the company is facing the most disputes. The segment includes Jaypee International Sports City, with 2,470 acres of land area including a Formula 1 race track and a cricket stadium; Jaypee Greens with 425 acres (comprising a 7.5-hole golf course, clubs and a resort) and Jaypee Greens Wishtown spread over 1,063 acres (with a golf course, shopping arcade and office spaces).

Separately, JAL has challenged the invocation of pledged shares in its cement joint venture, Bhilai Jaypee Cement (BJCL), by Asset Care & Reconstruction Enterprise, which acquired ₹465 crore debt from Yes Bank. The company alleges wrongful transfer of its 74% stake in the steelmaker and has filed a suit in the Delhi High Court. The matter remains sub-judice.

Further complications arise from the bankruptcy court ordering a freeze on Jaypee's shareholding in BJCL. State-run Steel Authority of India, which has a 26% stake in BJCL (the balance is with JAL), had alleged mismanagement at the JV, which stalled Dalmia Bharat's deal to acquire JAL's cement division for ₹5,666 crore.

JAL's investments in key subsidiaries such as Jaypee Cement Corp and Jaypee Power Ventures are also under stress. Jaypee Cement is undergoing insolvency proceedings, while Jaypee Power shares held by JAL are significantly encumbered, with over 19% pledged or under non-disposal undertakings. Any attempt to gain control over the shareholding without Vedanta's consent could result in litigation.

All four cement plants, with a combined capacity of 5.6 million tonnes per annum, are currently non-operational. In contrast, all five hotels are functional. The E&C division has 17 ongoing projects in power, road, and irrigation, with many facing delays or arbitration. This raises questions about the recoverability of the division's contract value, estimated at ₹23,000 crore.

Additionally, JAL's promoter, Manoj Gaur, has extended personal guarantees exceeding ₹36,950 crore to various lenders, including NARCL, ICICI Bank and State Bank of India. These guarantees could trigger enforcement actions if resolution efforts fail.

While the Insolvency and Bankruptcy Code offers resolution applicants a "clean slate," the enforceability of such protections may be tested in court, particularly in this case which involves third-party rights or regulatory actions.