The Supreme Court today directed the embattled real estate firm Jaypee associates to deposit Rs. 2,000 crore by October 27 with its registry and asked the NCLT-appointed interim resolution professional (IRP) to take over its management and work out a plan to protect the interests of homebuyers and creditors.
The apex court, in effect, allowed the insolvency proceedings against Jaypee Infratech to continue but stayed the proceedings initiated against it in other fora like the Consumer Commission. It also restrained the Managing Director and Directors of Jaypee Infratech, a sister company of Jaypee associates, from travelling abroad without its prior permission.
A bench of Chief Justice Dipak Misra and Justices A M Khanwilkar and D Y Chandrachud asked the IRP to submit a resolution plan within 45 days to the court, which shall indicate the protection of interests of homebuyers and the creditors. The apex court, however, allowed Jaypee associates to raise Rs 2000 crore by selling land or any properties with the prior approval of the IRP.
The top court had on September 4 stayed the insolvency proceedings against the real estate firm at National Company Law Tribunal (NCLT). It had also asked the Attorney General to assist it in deciding a batch of petitions opposing the insolvency proceedings and seeking protection of the home buyers’ interests. Flat buyers, under the Insolvency and Bankruptcy Code of 2016, do not fall in the category of secured creditors like banks and hence they can get back their money only if something is left after repaying the secured and operational creditors, one of the pleas filed by some home buyers said.
It was alleged by senior advocate Ajit Sinha, appearing for petitioner Chitra Sharma, that around Rs 25,000 crore worth of money of flat buyers and others has been at stake and the insolvency proceedings were initiated “for a petty sum of Rs 500 crore”. Around 32,000 persons had booked flats in the projects of Jaypee Infratech.
Hundreds of home buyers have been left in the lurch after the NCLT, on August 10, admitted the IDBI Bank’s plea to initiate insolvency proceedings against the debt-ridden realty company for defaulting on a Rs 526-crore loan, the plea said. Jaypee Infratech is into road construction and real estate business. It has constructed the Yamuna Expressway, connecting Delhi-Agra.