Jaypee: SC asks NCLT to initiate insolvency proceedings

NEW DELHI: The Supreme Court on Thursday asked the Allahabad branch of the National Company Law Tribunal (NCLT) to initiate fresh insolvency proceedings against Jaypee Infratech Limited (JIL) and reconvene the committee of creditors (CoC) to include a representative of homebuyers, who said they had been let down by the ruling that will mean longer delays in receiving compensation for the flats they haven’t received for a decade.

NEWDELHI: The Supreme Court on Thursday asked the Allahabad branch of the National Company Law Tribunal (NCLT) to initiate fresh insolvency proceedings against Jaypee Infratech Limited (JIL) and reconvene the committee of creditors (CoC) to include a representative of homebuyers, who said they had been let down by the ruling that will mean longer delays in receiving compensation for the flats they haven’t received for a decade.

A bench led by chief justice Dipak Misra also allowed the Reserve Bank of India (RBI) to direct banks to initiate corporate insolvency resolution proceedings against JIL’s parent company, Jaiprakash Associates Limited (JAL).

Homebuyers, who are being treated as financial creditors under an amended Insolvency and Bankruptcy Code (IBC), were bitterly disappointed by the order, under which said they wouldn’t be allowed a preferential refund of money they have paid to the developer. “The facts which have emerged before the Court from the application filed by the RBI clearly indicate the financial distress of JAL and JIL,” said the bench, also comprising justices AM Khanwilkar and DY Chandrachud. The court rejected JAL’s request to participate in the fresh bidding process for JIL. Their promoters too shall be ineligible, the court said.

Jaypee Infratech had in 2007 proposed to build 32,000 flats and sell some plots under the Integrated Wish Town project. Jaypee Infratech, which developed the 165-km Yamuna Expressway and Formula One circuit, promised buyers the flats would be delivered starting 2011-12.