Jaypee Infratech gets Supreme Court breather

Jaypee Infratech gets Supreme Court breather”

There is finally some hope for almost 32,000 buyers of Jaypee Housing projects after the Supreme Court on Monday stayed the insolvency proceedings initiated against Jaypee Infrastructure Limited (JIL) before the National Company Law Tribunal (NCLT), Allahabad Bench.

The Allahabad bench of National Company Law Tribunal had earlier gave a go-ahead for an insolvency proceedings to be started against Jaypee Infratech based on the provisions of Insolvency and Bankruptcy Code, 2016. We can only comment on the order of Supreme Court after we read it.

The home buyers, in the plea, referred to the provisions of the Code and the order passed by the Allahabad bench of the NCLT and said that even decrees, passed by civil courts and consumer fora, in their favour can not be executed once insolvency proceedings begin.

According to reports, Jaypee Infratech - a subsidiary of Jaiprakash Associates - defaulted or has not made return payment of Rs 526.11 crore of loans due to be paid back to IDBI Bank.

Summary: Sharma suggested that if the insolvency proceedings against the company were unsuccessful, then liquidation proceedings could be initiated.

The Supreme Court has asked IDBI Bank to file an application and has scheduled the hearing in the matter for October 11, he informed.

However, those who had booked flats in Jaypee's housing projects have opposed IDBI Bank's fresh submission before the Supreme Court.

The home buyers had expressed concern that the insolvency proceedings would leave them without remedy to either a house or compensation.

The PIL also said that a direction may be issued to the government that flat owners/buyers be declared as as a secured creditor like banks and FIs.

The petition alleged that the action of the Ministries of Finance and Corporate Affairs of introducing Section 14 of the Code was "unjust, unfair and unreasonable" and violative of Article 14 (Right to Equality) and 21 (Right to Life) of the Constitution. However, on 16 August, IBC was amended to include homebuyers as another category of individual creditors.

Seeking a stay on NCLT's August order, petitioner further urged the court to conduct a forensic audit of Jaypee Infra and Jaiprakash Associates to assess the extent of their bankruptcy, the daily reported.

The government is trying to clean up the multi-crore real estate business with a landmark law created to protect millions of homebuyers facing harassment because of limited legal options at times of dispute.

In a statement released last month, Jain requested home buyers to submit the related claim forms by 24 August, and the supporting documents subsequently, but before a resolution plan is filed.

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