Jaypee buyers move Supreme Court against insolvency proceedings

Buyers have expressed concern that the case would leave them in a lurch and remediless to either get a house or compensation from the company.

Aggrieved flat-buyers who have invested in Jaypee Infratech’s projects have challenged the insolvency proceedings against the company in the National Company Law Tribunal (NCLT) before the Supreme Court.

Buyers have expressed concern that the case would leave them in a lurch and remediless to either get a house or compensation from the company.

Buyers have expressed concern that the case would leave them in a lurch and remediless to either get a house or compensation from the company.

A bench of Chief Justice JS Khehar and Justice DY Chandrachud immediately accepted the request of 24 buyers to grant them an early hearing after their counsel senior advocate Ajit Sinha pointed out that the buyers had been clubbed with secured creditors (financial institutions) and they would be last in line to receive their dues.

The matter will be heard in court on Thursday.

“They will neither get a home nor a refund of their hard-earned money on account of being unsecured creditors. About 32,000 buyers have booked flats in 27 different housing projects of Jaypee Infratech and the proceedings have left them in a lurch,” Sinha told the court.

NCLT has imposed a moratorium under the Insolvency and Bankruptcy Code, which Sinha said was not in the interest of buyers who will virtually receive nothing when the company’s assets are liquidated. “Secured creditors will get the first and major share. Their interest has been safeguarded,” he said.

The moratorium has restricted buyers from pursuing other remedies, the most important being filing of cases before consumer courts to seek refund along with compensation.

Referring to the provisions of the Insolvency and Bankruptcy Code (new insolvency law), Sinha said the decrees and orders passed by the consumer courts and civil courts in favour of homebuyers cannot be executed due to pendency of insolvency proceedings. He urged that rights of the homebuyers must be protected.

Jaypee Infratech is into road construction and real estate business. It has constructed the Yamuna Expressway, connecting Delhi-Agra.

Hundreds of homebuyers were left high and dry after the National Company Law Tribunal (NCLT) on August 10 admitted the IDBI Bank’s plea for initiating insolvency proceedings against the debt-ridden realty company for defaulting on a Rs 526-crore loan.