Jaypee case: SC refuses to accept Rs 400 crore, asks firm to deposit substantial amount to prove bonafide

The Jaypee Group has also defaulted on a Rs 526 crore loan. File Photo

The Supreme Court on Monday refused to allow Jaypee Associates to deposit Rs 400 crore with its registry as against Rs 2,000 crore directed by it, and asked the real estate firm to submit a substantial amount to prove its bonafide.

The real estate firm, which was asked on September 11 to deposit Rs 2,000 crore with the SC registry by October 27, rushed to the top court, saying no company possessed such a huge amount of “liquid” fund and urged that it should be allowed to deposit Rs 400 crore by Friday.

A bench headed by Chief Justice Dipak Misra said Rs 400 crore was a paltry sum and the firm would have to deposit substantial amount to establish its bonafide. “Arrange whatever money you can arrange, but it must be a bonafide exercise,” the bench, which also comprised Justices A M Khanwilkar and D Y Chandrachud, said when the counsel for the firm said the shareholders’ consent would be needed to sell the assets of the group.

The bench then said the firm might consider depositing at least Rs 1,000 crore by November 13 with its registry. The top court had on September 11 directed Jaypee Associates to deposit Rs 2,000 crore by October 27 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.

It had also restrained the managing director and directors of Jaypee Infratech Ltd from travelling abroad without its permission and asked the parent company, Jaypee Associates, to deposit the money. The top court had asked Jaypee Infratech to hand over the records to the IRP for drafting of a resolution plan indicating protection of interests of over 32,000 hassled home buyers and creditors.

It had also stayed any other proceedings instituted against Jaypee Infratech for any purpose in any forum like the consumer commission, as IRP had been given control of the company’s management. The court had allowed Jaypee Associates to raise Rs 2,000 crore by selling land or properties. The court had also appointed senior advocate Shekhar Naphade as amicus curiae to assist the proceedings of the IRP, which will submit a resolution plan indicating how to safeguard the interest of home buyers and secured creditors.

Additional Solicitor General Tushar Mehta, appearing for the Insolvency and Bankruptcy Board, had said that 627 units had been delivered to home buyers since the proceedings against the company began. Homebuyers, including one Chitra Sharma, had moved the apex court saying around 32,000 people had booked their flats and they were now paying the instalments. The SC had on September 4 stayed the insolvency proceedings against the real estate firm at National Company Law Tribunal (NCLT).

Flat buyers, under the Insolvency and Bankruptcy Code of 2016, did not fall in the category of secured creditors like banks and hence they could get back their money only if something was left after repaying the secured and operational creditors, Sharma, in her plea, said.

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.