Noida: After the Supreme Court upheld the National Company Law Tribunal's (NCLT) direction to JAL to return 758 acres land to its debt-ridden subsidiary firm Jaypee Infratech Ltd (JIL), the move gave hope to homebuyers in terms of getting delay compensation. The homebuyers association of Jaypee Infratech had also written a letter to the National Buildings Construction Corporation (NBCC) in this regard.
The homebuyers of insolvent Jaypee Infratech have been demanding for delay compensation, however, state-run NBCC in its resolution plan for the takeover of the incomplete housing project had not made any proposal for compensation to homebuyers.
However, despite no mention of compensation to homebuyers, NBCC’s bids was approved through e-voting with 97.36 per cent of homebuyers and lenders, including IDBI Bank voting in favour in December last year.
Talking to CitySpidey, a homebuyer said, “We have written a letter to NBCC, requesting to consider our demand, however, we are yet get any reply from them.”
The homebuyers, who requested not to be named, further added, “All of us had demanded compensation for delay construction of flats because more than 10 years have passed. When resolution plan of NBCC was approved by CoC, the NBCC had said that its first priority was to complete stalled projects. Undoubtedly, shortage of funds to complete homes was big concern, but now NBCC has enough sources to generate a surplus revenue and hence the homebuyers should be compensated for delay.”
How 758 acres will be crucial for homebuyers and NBCC?
Earlier, after the Allahabad bench of the NCLT accepted the plea of one of largest lender – IDBI Bank, declared JIL bankrupt and directed to proceed insolvency under the Insolvency and Bankruptcy Code (IBC) 2016, a group of homebuyers had then approached the tribunal for seeking its direction to return this land from JAL to JIL.
Homebuyers had contended that the land belong to JIL and not to JAL. “The main issue was that JAL had taken loan against this particular land. And when we pleaded to return it to JIL, the lenders (Banks which given loan to JAL against this land) said they should be considered as financial creditors and their dues should be cleared first,” said a source aware with the matter.
However, hearing the matter, the NCLT had then held that the lenders of JAL do not fall in the category of the financial creditors of corporate debtor JIL just because of the mortgage of JIL’s properties in favour of JAL.
The JAL had then challenged NCLT’s decision into higher bench of tribunal – National Green Tribunal Appellate Tribunal (NCLAT) and the Appellate Tribunal on August 1, 2019 had quashed the verdict of NCLT.
Miffed with NCLAT decision, the homebuyers then approached the Supreme Court to seek its intervention in the matter. Meanwhile, amid much ups and downs in the matter, in January this year, the principal bench of NCLT Delhi transferred the insolvency proceedings in the JIL case to itself from the Allahabad bench of NCLT.
As the homebuyers aware with the development said, this 758 acres of controversial land will play a crucial role in generating revenue required to complete stalled JIL’s housing projects.
What SC ruled on land issue on February 24, 2020?
The apex court while deciding a batch of appeals filed by Interim Resolution Professional of JIL and others, set aside the decision of the NCLAT passed on August 1, last year. The top court restored the NCLT’s earlier order directing JAL to return 758 acres of land to its debt-laden subsidiary firm JIL.
A bench comprising Justices AM Khanwilkar and Dinesh Maheshwari, in its 174 judgement, considered various provisions of the IBC and reversed the verdict of the NCLAT.
“The impugned order dated August 1, 2019 as passed by NCLAT in the batch of appeals is reversed and is set aside,” the bench said.
Justice Maheshwari, who wrote the judgement, said, “Consequently, the order dated May 16, 2018 passed by NCLT is upheld in regard to the findings that the transactions in question are preferential within the meaning of Section 43 of the Code.”
The bench also held that, “To be more specific, the lending banks of JAL cannot claim any status as creditors of the corporate debtor JIL and there could arise no question of their making any claim to be treated as financial creditors as such.”
The banks, involved in the case, are – Axis Bank, Standard Chartered, ICICI Bank, SBI, Bank of Maharashtra, United Bank of India, Central Bank of India, UCO Bank, Karur Vyasa Bank , L&T Infrastructure Finance Company, Canara Bank, Karnataka Bank, IFCI, Allahabad Bank, Jammu & Kashmir Bank and The South Indian Bank Ltd.
Banks have given loans to Jaiprakash Associates, Jaypee Group’s flagship firm against the land bank owned by Jaypee Infratech.