The Supreme Court on Wednesday directed Jaiprakash Associates Ltd (JAL), the holding company of infrastructure giant Jaypee, to produce on record details of each and every one of its housing projects spread across the country. With the direction the SC has now made clear that it is committed to protecting the lower middle-class homebuyers who are left high and dry after investing in housing projects.
Entreaties refused
Refusing entreaties made by JAL lawyers that their client is a separate entity and should not be mixed with the insolvency proceedings against the Jaypee group, a Bench led by Chief Justice of India Dipak Misra asked its amicus curiae, Pawan Sree Aggarwal, to create an online portal for JAL homebuyers to voice claims against the company.
The Chief Justice warned the independent directors of JAL to not try and merge the company or change the status of the company to the detriment of the homebuyers when the Supreme Court is seized of the case. The court reiterated that the companies should not create any third party interests.
“We tell all the directors, if you get into merger or do anything, it will be viewed as contempt of this court and Tihar Jail is not very far,” Chief Justice Misra warned orally in court
However, the court agreed to a plea by senior advocate Ranjit Kumar, for the independent directors of JAL, to be exempted from being personally present in the courtroom for every hearing.
Meanwhile, the Bench deferred a plea by the Reserve Bank of India for permission to initiate proceedings against JAL in the National Company Law Tribunal under the Insolvency and Bankruptcy Code. The RBI counsel submitted that JAL owes ₹25,000 crore.
Protecting investments
“We do not want the homebuyers to go out of our jursidiction. They are lower middle class people and we want to protect their investments. We cannot make them run from this court to NCLT and other forums,” Chief Justice Misra orally observed.
Chief Justice Misra reiterated the court's earlier order directing JAL to deposit ₹2,000 crore to show their bona fide. “Pay the money first. Then you (directors) can go to London or wherever,” the Chief Justice observed.
The directors had earlier been directed to furnish details of their personal assets. The court had earlier restrained the managing director and the directors of Jaypee Infratech Ltd from travelling abroad without prior permission and had asked the parent company JAL to deposit the money.
Interim scheme
The Supreme Court had on September 9 placed the insolvency resolution professional (IRP) back in the saddle to manage Jaypee Infratech Limited and draft an interim scheme to bail out over 30,000 harassed home buyers, mostly from the middle and lower income groups, who have invested in the debt-ridden company’s 32 housing projects.
On September 4, the court had stayed insolvency proceedings instituted against Jaypee Infratech by the Allahabad Bench of the National Company Law Tribunal (NCLT).
The stay order was passed on the basis of the argument made on behalf of over 30,000 homebuyers, who have not yet received their flats in 27 different projects of Jaypee Infratech.
The homebuyers had said the proceedings under the Insolvency and Bankruptcy Code (IBC) of 2016 gave priority in clearing the debts of secured creditors like banks and financial institutions. This may leave “unsecured creditors” — individual flat buyers who have invested their hard-earned money for a roof above their heads — in a lurch, penniless.
