Hundreds of Jaypee Infratech homebuyers are likely to file PILs before the Supreme Court in the next few days seeking a stay on the NCLT’s order that has practically prohibited them to move to any other judicial authority till the time insolvency resolution process is on. Nearly 32,000 homebuyers have been impacted with the NCLT’s August 9 order that admitted insolvency proceedings against Jaypee Infratech, a subsidiary of Jaiprakash Associates, on the plea of the public sector lender IDBI under section 7 of the Insolvency and Bankruptcy Code (IBC). Meanwhile, the Supreme Court on Thursday adjourned the hearing on a PIL till September 4 after more than a dozen lawyers informed the court that they will file petitions for other buyers and their associations. Twenty-four buyers, led by Gurugram-based resident Chitra Sharma, had alleged that more than 32,000 buyers have been affected by the NCLT’s decision.
The Allahabad Bench of NCLT admitted the IDBI Bank’s plea for initiating insolvency proceedings against the debt-ridden Jaypee Infratech for defaulting on a Rs 526-crore loan. It also appointed Anuj Jain as the insolvency resolution professional (IRP) to carry out the proceedings of the company as, as per the code, the board stands suspended. Following the admission of the insolvency proceedings, the government had come out with two types of forms for the financial and operational creditors for registering their claims and later “F” type of form for submission claims by creditors other than financial and operational creditors. The last date of submission for Form F expired on Thursday. However, the apex court on Thursday refused to stay the direction for filing Form F by the buyers. The bench led by Chief Justice JS Khehar asked the buyers to consolidate their petitions rather than file individual petitions.
Lawyer Abhimanyu Bhandari told the Supreme Court that “this invocation of IBC by the Jaypee Group is complete abuse of process because the main company Jaiprakash Associates, which has the largest asset base, is being run and is not made part of the insolvency process. It’s only Jaypee Infratech, which has the liability, that has been put to insolvency”. Sharma in her petition termed the ministries of finance and corporate affairs’ action of introducing Section 14 of IBC as not only unjust, unfair and unreasonable but also arbitrary and in violation of Articles 14 (equality before law) and 21 (right to life and personal liberty) of the Constitution of India. Senior counsel Ajit Sinha, appearing for Sharma, argued that the flat buyers have been left remedyless as they will neither get their flats nor refund of their hard earned money invested in booking the flats on account of being “unsecured creditors”.
According to the lawyer, the housing sector is blighted with inordinate delays in completion of the projects, owing to the large scale mismanagement of the funds as received by the construction companies from the flat buyers, who have already paid the 95% of the price as demanded by JIL as early as 2011-12. Asserting their rights to avail remedies under consumer protection law, the PIL stated that when the assets will be liquidated, flat buyers will virtually get peanuts since secured creditors will be safeguarded first in the insolvency proceedings.