Jaypee Infratech to Involve Homebuyers in Insolvency Proceedings: Supreme Court
Giving a boost to home-buyers’ sentiment, the Supreme Court ordered that homebuyers have to be included in a fresh Committee of Creditors (CoC) for Jaypee Infratech. It is a big relief considering earlier views of banks and other financial creditors were considered while deciding the resolution plan of a company.
The second round of bidding for Jaypee Infratech has also been allowed barring promoting companies- Jaypee Associates (JAL) and Jaypee Infratech (JIL) – from participating in the resolution proceedings citing section 29A of the Insolvency and Bankruptcy Code (IBC).
The President of India cleared amendments to the Insolvency and Bankruptcy Code (IBC) in June this year giving a big relief for homebuyers by allowing them legal rights to claim their deposit back in case the builder goes bankrupt.
With the amendment, homebuyers are now treated as financial creditors which will help them to recover their money from debt-stricken real estate companies.
A bench headed by Chief Justice Dipak Misra today said the insolvency proceedings will conclude in 180 days starting from today.
The bench, also comprising Justices A M Khanwilkar and D Y Chandrachud, said the Rs 750 crore deposited by the JIL in the apex court shall be transferred to NCLT Allahabad.
The apex court has also allowed the Reserve Bank of India (RBI) to direct the banks to initiate separate insolvency proceedings against JIL’s holding company Jaiprakash Associate Limited (JAL).
Lawyers, representing the home buyers, opposed the submission that JAL be allowed to complete the housing projects, saying that it was barred under the law to do so.
Taking note of the enormity of the situation, the bench said it was thought that the liability of the firm was to the tune Rs 2,000 crore and it has now gone beyond Rs 30,000 crore.