Selling Jaypee infra’s assets not advisable: SC

NEW DELHI: The Supreme Court said on Friday that liquidation of Jaypee Infratech Limited (JIL) was not advisable because it would harm the interests of homebuyers.

The court’s comments came during a hearing of a case filed by homebuyers to prevent insolvency proceedings against JIL, which the IDBI Bank sought in an application to the National Company Law Tribunal (NCLT) for defaulting on loans for projects in Noida and Greater Noida.

More than 18,000 homebuyers, who have booked flats but yet to be given possession, have approached the top court as insolvency proceedings could deprive them of any refund.

“When we took up this matter we made it clear that it was to protect the homebuyers who have to get their money back. Liquidation is not advisable,” a bench led by Chief Justice Dipak Misra said when it was told that the resolution plan was rejected by the committee of creditors.

The creditors have rejected an offer of ₹7,000 crore, made by Lakshwadeep Private Limited, saying it was too low.

“We can inform the NCLT about the resolution plan’s failure and request it to not pass any orders until this court decides,” said Parag Tripathi, representing the interim resolution professional (IRP).

As per the insolvency bank code (IBC), he said, the company has to go for liquidation. But he agreed that liquidation would not work for the homebuyers.

JIL owes ₹9,094 crore to a consortium of over a dozen banks led by IDBI.

The homebuyers’ petition says the insolvency law does not treat them on a par with unsecured financial creditors, which means they get less priority when it comes to seeking a refund.

The court asked how much money the real estate firm owed to the homebuyers. Advocate Pawan Shree Agarwal, assisting the bench, said the principal amount was around ₹1,100 crore.

The court was told that JIL has deposited ₹750 crore with the court registry. According to Agarwal, the amount should be distributed to the homebuyers on pro-rata basis.

But Chief Justice Misra said: “They must give at least the principal amount so that we can distribute it.”

His remarks suggested that an order to this effect could be given on the next date of hearing, May 16.

JIL counsels Mukul Rohatgi and Anupam Lal Das argued that there cannot be a resolution within the law since the process failed, and liquidation is not a solution.

They suggested a solution outside the insolvency bank code, prompting the Chief Justice to assure that the company would be heard next week.