Next six months crucial for Jaypee after Supreme Court orders recommencement of resolution process

According to the Supreme Court order, the interim resolution professional (IRP) will select a developer in the next six months or allow liquidation of Jaypee Infratech Limited. Also, the apex court has barred Jaypee and its promoters from taking part in the fresh bidding process.

As the Supreme Court ordered recommencement of the resolution process against Jaypee Infratech, the next six months will be crucial for homebuyers, who have waited for flat delivery for a decade, legal experts said.

Homebuyers, in September 2017, had filed a plea in the Supreme Court seeking a speedy resolution. (Sonu Mehta/HT Photo)

According to the Supreme Court order, the interim resolution professional (IRP) will select a developer in the next six months or allow liquidation of Jaypee Infratech Limited. Also, the apex court has barred Jaypee and its promoters from taking part in the fresh bidding process.

On August 9, 2017, the national company law tribunal had appointed Anuj Jain, a chartered accountant, as interim resolution professional (IRP) under the Insolvency and Bankruptcy Code, after admitting an insolvency plea from IDBI Bank, which needed to recover dues from Jaypee Infratech Limited.

“The Jaiprakash Associates Ltd (JAL) tried to take part in the bidding process as it wanted to take over from Jaypee Infratech Ltd (JIL), which is facing insolvency proceedings, and finish the stuck projects. But, after the SC order, this is no longer an option. Who will finish the delayed housing projects in Wish Town and Aman will be finalised in the upcoming bidding process,” Amit Khemka, senior lawyer, said.

Lawyers and chartered accountants said since both companies, JAL and JIL, are facing insolvency and bankruptcy proceedings, homebuyers will have to wait and watch.

“Homebuyers have been suffering as they couldn’t get their flats on time. After the SC order, they are left with no option but to wait for the fresh bidding. They need not worry about the liquidation of JIL or JAL, as the Jaypee Group has enough land and other assets. Liquidation happens in rare cases and it is the last resort. In the case of Jaypee, possibilities are that a new bidder (any developer) will be finalised in the next 180 days,” a chartered accountant, who has worked as an interim resolution professional, said.

Homebuyers, in September 2017, had filed a plea in the Supreme Court seeking a speedy resolution.

“The court didn’t deliver us speedy justice. Also, the SC overlooked our demands for a forensic audit of Jaypee Group, which has misused funds collected from homebuyers. Why didn’t the SC order an audit of Jaypee Group to establish where the money went?,” Ranjeet Jha, a homebuyer and petitioner, said.

Legal advisor of Jaypee Group in a statement said, “We are waiting for the certified copy of the SC order. We will follow the court’s directives.”

Homebuyers said they had hoped that the SC will deliver a verdict like it did in the Amrapali case.

“The SC had told the Amrapali Group that it will allow auction of personal assets to finish flats. But, in our case, the court did not ask the builder why he cheated us,” Krishan Mitroo, a buyer, said.

The Supreme Court’s order is also a major setback for around 1,700 homebuyers, who are looking for a refund and exit from projects. To refund 8% of a total 21,532 homebuyers, there was a requirement of around ₹1,300 crore of which only ₹560 crore was deposited by the Jaypee Group in the Supreme Court.

“Since the SC has now ordered that ₹760 crore be given to the resolution professional, those seeking a refund are disappointed as they need to wait. Now, the committee of creditors will decide the fate of all homebuyers and also the Jaypee Group,” Kumar Mihir, senior advocate, said.