Supreme Court gives big relief to Jaypee Infratech home buyers

Supreme Court To Hear IDBI’s Plea Against Stay On Jaypee Insolvency Proceedings

IDBI Bank moved the Supreme Court on Tuesday against its day-old order that put on hold National Company Law Tribunal's (NCLT) directive to initiate insolvency proceedings against Jaypee Infratech on the bank's plea.

A bench headed by Chief Justice of India (CJI) Dipak Misra and Justices Amitava Roy and A M Khanwilkar took into account the submission of IDBI Bank. The apex court was hearing a plea filed by several homebuyers who had booked flats in several projects of Jaypee Infratech.

On August 9, the Allahabad bench of the National Company Law Tribunal admitted a petition by IDBI Bank for insolvency proceedings against Jaypee Infratech Ltd. and also approved the appointment of an interim resolution professional.

"Your (lordships) order reversed the position and, as a outcome, the company has gone back to the defaulting promoters", Singhvi submitted before the bench. This is in violation of Jaypee flat owners' fundamental right to equality under Article 14 of the Constitution.

32,000 people are affected by the NCLT order as they worry their savings given to the builder for their homes will go waste if NCLT declares the company insolvent and begins proceedings.

The petition further contends that the statutory rights of consumers under Section 2 (d) of the Consumer Protection Act to move different consumer fora in case of deficiency of service can not be taken away by a moratorium issued by a tribunal.

Under the Insolvency and Bankruptcy Code of 2016, flat buyers do not fall under the category of secured creditors like banks.

Earlier there was confusion on whether homebuyers had to submit claim form for financial creditors or operational creditors.

It is the interest of the secured investors that is safeguarded first in the insolvency proceedings. The plan for resolution of the company will be submitted before NCLT for approval. Thereafter, all the assets of the company will form the liquidation estate, which will be sold off to clear the dues of the creditors in the order as provided under Section 53. They were also concerned about the money paid to Jaypee for the apartments, which the developer was yet to hand over.

The PIL said that in the alternative, a direction may be issued to the government that flat owners/buyers be declared as secured creditor like banks and FIs. "We have had a peaceful night's sleep after the court order staying the NCLT proceedings".

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