Panel of creditors votes against forensic audit of Jaypee accounts

Jaypee Infratech Limited Committee of Creditors (COC) rejected the demand of a forensic audit of accounts of the company, in a voting, the results for which were announced on Tuesday.

Jaypee Infratech Limited Committee of Creditors (COC) rejected the demand of a forensic audit of accounts of the company, in a voting, the results for which were announced on Tuesday.

Jaypee is yet to deliver around 20,000 flats in Wish Town (above) and Jaypee Aman projects.(Virendra Singh Gosain/HT Photo)

Homebuyers had been demanding an independent audit for some five years, to determine why Jaypee Infratech failed to finish the housing projects despite buyers having paid the cost of the flats on time.

On August 9, 2017, the National Company Law Tribunal had appointed Anuj Jain, a chartered accountant as the Interim Resolution Professional (IRP) under Insolvency and Bankruptcy Code, after admitting a corporate insolvency plea from IDBI Bank. The bank had said it needed to recover dues from Jaypee Infratech Limited.

However, in the first round of corporate insolvency resolution process in 2017-18, no new developer or private firm could take over Jaypee’s stalled realty projects in Noida. The second round of process was, therefore, started in 2018 to select a bidder, who could take over the crisis-ridden company and deliver around 20,000 unfinished flats.

In the second round, state-owned National Building Construction Corporation Limited and private-owned Suraksha Asset Reconstruction Company have submitted their bids for taking over Jaypee’s realty projects.

According to the norms, the committee of creditors consisting of around 20,000 aggrieved homebuyers, bankers and IRP have the right to exercise the voting power to decide the fate of the resolution process.

All stakeholders were called to vote on the ‘forensic audit demand’ from February 21 to February 25, 2019.

“We are deeply disappointed because the banks did not let an independent forensic audit take place into the accounts. Around 12,350 homebuyers voted in favour of their demands of a forensic audit. But all banks, who lent money to Jaypee Group except one Syndicate Bank voted against our demand. We demand the truth about where our funds were used and why the builder failed to finish and deliver , must come out,” Ranjeet Jha, Jaypee Group’s flat buyer, said.

Homebuyers had first demanded a forensic audit on March 31, 2014. The CoC needs 51 % votes to make that happen, but only around 34%voted in favour of the forensic audit.

“The banks voted against the demand of forensic audit because truth can come out in the forensic audit. The audit could have established where the funds collected from the homebuyers were used or diverted. We demand that the government look into our issue We will also request the Supreme Court to order a forensic audit of the accounts,” Dinesh Sharma, another buyer, said.

Jaypee group’s two companies — Jaypee Infratech Limited (JIL) and Jaypee Associate Limited (JAL) — had in 2007 proposed to build 32,000 flats and some plots under the Integrated Wish Town project located in Sectors 128, 129,131, 133 and 134 along the Noida-Greater Noida Expressway.

Jaypee Infratech, which developed the 165-km Yamuna Expressway and Formula One circuit, had assured the delivery of flats by 2011-2012. It has delivered around 12,000 flats and plots till now but failed to deliver around 20,000 flats in its Wish Town and Jaypee Aman projects.

Meanwhile, the IRP and COC will take another three to four weeks to finalise the firms that may take over the Jaypee Infratech Limited projects . On March 1, they would discuss the two bids to make way for further progress on the issue.

IRP Anuj Jain and Jaypee group’s managing director Manoj Gaur were not available for comment.